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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, 2024

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 |  | 52-2175898
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

Room 1707, Block D, Modern City SOHO,

No. 88, Jianguo Road, Chaoyang District,

Beijing, People’s Republic of China 100022

(Address of principal executive offices) (Zip Code)

(+86) 10-68130220

(Registrant’s telephone number, including area code)

(Former address of principal executive offices) (Zip Code)

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

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

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

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

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 14, 2024, there were 1,734,245 shares of common stock, par value $0.001 per share, outstanding.

TABLE OF CONTENTS

|  | Page Number
PART I. FINANCIAL INFORMATION | 1
Item 1. | Financial Statements | 1
| Condensed Consolidated Balance Sheets (unaudited) | 1
| Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited) | 2
| Condensed Consolidated Statements of Changes in Equity (unaudited) | 3
| Condensed Consolidated Statements of Cash Flows (unaudited) | 4
| Notes to the Condensed Consolidated Financial Statements (unaudited) | 5
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 42
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 58
Item 4. | Controls and Procedures | 58
PART II. OTHER INFORMATION | 59
Item 1. | Legal Proceedings | 59
Item 1A. | Risk Factors | 59
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 59
Item 3. | Defaults Upon Senior Securities | 59
Item 4. | Mine Safety Disclosures | 59
Item 5. | Other Information | 59
Item 6. | Exhibits | 60
SIGNATURES | 61

i

On October 21, 2024, the Company’s stockholders approved a reverse stock split of the Company’s common stock, with a par value of $0.001 per share (the “Common Stock”), at a ratio of not less than 1-fo-2 and not more than 1-for-24, subject to the Company’s board of directors’ (the “Board”) authority to determine the ratio, and on October 23, 2024, the Board approved a 1-for-24 reverse stock split of the Common Stock, which became effective on November 12, 2024 (the “Reverse Stock Split”). As a result of the Reverse Stock Split, each of the twenty-four pre-split shares of the Common Stock outstanding automatically combined and converted to one issued and outstanding share of the Common Stock without any action on the part of the stockholders. Unless otherwise indicated, all share amounts and per share amounts in this report have been presented to give effect to the 1-for-24 reverse stock split of the shares of the Common Stock.

ii

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SHINECO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

|  | September 30, |  |  | June 30, |
|  | 2024 |  |  | 2024 |
|  | (Unaudited) |  |  |  |
ASSETS |  |  |  |  |  |  |  |
CURRENT ASSETS: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 243,033 |  |  | $ | 366,140 |
Restricted cash |  |  | 15,681 |  |  |  | 28,896 |
Accounts receivable, net |  |  | 808,556 |  |  |  | 1,215,114 |
Due from related parties |  |  | 348,737 |  |  |  | 383,745 |
Inventories, net |  |  | 2,431,753 |  |  |  | 1,588,525 |
Advances to suppliers, net |  |  | 16,781,110 |  |  |  | 10,020,707 |
Derivative financial assets |  |  | 6,610 |  |  |  | 6,380 |
Other current assets, net |  |  | 11,052,078 |  |  |  | 7,294,454 |
TOTAL CURRENT ASSETS |  |  | 31,687,558 |  |  |  | 20,903,961 |
Property and equipment, net |  |  | 6,320,643 |  |  |  | 6,279,759 |
Land use right, net |  |  | 616,133 |  |  |  | 615,607 |
Intangible assets, net |  |  | 41,837,606 |  |  |  | 43,043,733 |
Goodwill |  |  | 13,190,284 |  |  |  | 13,190,284 |
Operating lease right-of-use assets |  |  | 161,693 |  |  |  | 146,035 |
TOTAL ASSETS |  | $ | 93,813,917 |  |  | $ | 84,179,379 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |
CURRENT LIABILITIES: |  |  |  |  |  |  |  |
Short-term loans |  | $ | 14,251,420 |  |  | $ | 14,538,525 |
Long-term loans - current portion |  |  | 14,255 |  |  |  | 632,959 |
Accounts payable |  |  | 1,536,368 |  |  |  | 812,914 |
Contract liabilities |  |  | 6,699,226 |  |  |  | 246,850 |
Due to related parties |  |  | 2,315,223 |  |  |  | 2,875,384 |
Other payables and accrued expenses |  |  | 1,880,598 |  |  |  | 2,528,355 |
Operating lease liabilities - current |  |  | 301,980 |  |  |  | 272,787 |
Convertible note payable - current |  |  | 10,562,428 |  |  |  | 4,194,841 |
Deferred income |  |  | 76,541 |  |  |  | 72,610 |
Taxes payable |  |  | 1,355,110 |  |  |  | 1,387,630 |
TOTAL CURRENT LIABILITIES |  |  | 38,993,149 |  |  |  | 27,562,855 |
Income tax payable - non-current portion |  |  | 186,191 |  |  |  | 186,191 |
Operating lease liabilities - non-current |  |  | 25,182 |  |  |  | - |
Convertible note payable - non-current |  |  | - |  |  |  | 8,937,173 |
Long-term loans - non-current |  |  | 1,753,416 |  |  |  | 1,080,159 |
Deferred tax liability |  |  | 9,526,021 |  |  |  | 9,835,306 |
TOTAL LIABILITIES |  |  | 50,483,959 |  |  |  | 47,601,684 |
Commitments and contingencies |  |  | - |  |  |  | - |
EQUITY: |  |  |  |  |  |  |  |
Common stock; par value $0.001, 150,000,000 shares authorized; 1,481,197 and 332,215 shares issued and outstanding at September 30, 2024 and June 30, 2024* |  |  | 1,481 |  |  |  | 332 |
Additional paid-in capital |  |  | 89,182,090 |  |  |  | 69,476,805 |
Subscription receivable |  |  | (3,855,458 | ) |  |  | - |
Subscribed common stock |  |  | - |  |  |  | 6,728,291 |
Statutory reserve |  |  | 4,350,297 |  |  |  | 4,350,297 |
Accumulated deficit |  |  | (56,359,471 | ) |  |  | (54,336,629 | )
Accumulated other comprehensive loss |  |  | (38,004 | ) |  |  | (218,163 | )
Total Stockholders’ equity of Shineco, Inc. |  |  | 33,280,935 |  |  |  | 26,000,933 |
Non-controlling interest |  |  | 10,049,023 |  |  |  | 10,576,762 |
TOTAL EQUITY |  |  | 43,329,958 |  |  |  | 36,577,695 |
TOTAL LIABILITIES AND EQUITY |  | $ | 93,813,917 |  |  | $ | 84,179,379 |

* | Retrospectively restated for effect of the Reverse Stock Split on November 12, 2024.

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

1

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

|  | For the Three Months Ended September 30, |
|  | 2024 |  |  | 2023 |
REVENUE |  | $ | 2,174,285 |  |  | $ | 1,645,857 |
COST OF REVENUE |  |  |  |  |  |  |  |
Cost of products |  |  | 1,881,519 |  |  |  | 1,545,925 |
Business and sales related tax |  |  | 925 |  |  |  | 977 |
Total cost of revenue |  |  | 1,882,444 |  |  |  | 1,546,902 |
GROSS PROFIT |  |  | 291,841 |  |  |  | 98,955 |
OPERATING EXPENSES |  |  |  |  |  |  |  |
General and administrative expenses |  |  | 2,636,575 |  |  |  | 3,259,465 |
Selling expenses |  |  | 32,241 |  |  |  | 47,833 |
Research and development expenses |  |  | 13,418 |  |  |  | 23,698 |
Total operating expenses |  |  | 2,682,234 |  |  |  | 3,330,996 |
LOSS FROM OPERATIONS |  |  | (2,390,393 | ) |  |  | (3,232,041 | )
OTHER INCOME (EXPENSE) |  |  |  |  |  |  |  |
Investment income from derivative financial assets |  |  | 2,277 |  |  |  | 2,768 |
Other income (expenses), net |  |  | (51,935 | ) |  |  | 818 |
Amortization of debt issuance and other costs |  |  | (188,712 | ) |  |  | (166,823 | )
Interest expenses, net |  |  | (222,316 | ) |  |  | (369,211 | )
Total other expenses |  |  | (460,686 | ) |  |  | (532,448 | )
LOSS BEFORE BENEFIT FOR INCOME TAXES FROM CONTINUING OPERATIONS |  |  | (2,851,079 | ) |  |  | (3,764,489 | )
BENEFIT FOR INCOME TAXES |  |  | (292,951 | ) |  |  | (251,366 | )
NET LOSS FROM CONTINUING OPERATIONS |  |  | (2,558,128 | ) |  |  | (3,513,123 | )
DISCONTINUED OPERATIONS: |  |  |  |  |  |  |  |
Loss from discontinued operations, net of taxes |  |  | - |  |  |  | (49,455 | )
Income from disposal of discontinued operations |  |  | - |  |  |  | 8,904,702 |
Net income from discontinued operations |  |  | - |  |  |  | 8,855,247 |
NET INCOME (LOSS) |  |  | (2,558,128 | ) |  |  | 5,342,124 |
Net loss attributable to non-controlling interest |  |  | (535,286 | ) |  |  | (24,071 | )
NET INCOME (LOSS) ATTRIBUTABLE TO SHINECO, INC. |  | $ | (2,022,842 | ) |  | $ | 5,366,195 |
COMPREHENSIVE INCOME (LOSS) |  |  |  |  |  |  |  |
Net income (loss) |  | $ | (2,558,128 | ) |  | $ | 5,342,124 |
Other comprehensive income: foreign currency translation loss |  |  | 187,706 |  |  |  | 97,965 |
Total comprehensive income (loss) |  |  | (2,370,422 | ) |  |  | 5,440,089 |
Less: comprehensive loss attributable to non-controlling interest |  |  | (527,739 | ) |  |  | (40,544 | )
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHINECO, INC. |  | $ | (1,842,683 | ) |  | $ | 5,480,633 |
Weighted average number of shares basic and diluted* |  |  | 862,839 |  |  |  | 131,678 |
Basic and diluted earnings (loss) per common share |  | $ | (2.34 | ) |  | $ | 40.75 |
Earnings (loss) per common share |  |  |  |  |  |  |  |
Continuing operations - Basic and Diluted |  |  | (2.34 | ) |  |  | (26.50 | )
Discontinued operations - Basic and Diluted |  |  | - |  |  |  | 67.25 |
Net earnings (loss) per common share - basic and diluted |  |  | (2.34 | ) |  |  | 40.75 |

* | Retrospectively restated for effect of the Reverse Stock Splits on February 16, 2024 and November 12, 2024.

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

2

SHINECO, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(UNAUDITED)

|  | COMMON STOCK |  |  | SUBSCRIPTION |  |  | COMMON STOCK |  |  | ADDITIONAL PAID-IN |  |  | STATUTORY |  |  | ACCUMULATED |  |  | ACCUMULATED OTHER COMPREHENSIVE |  |  | NON- CONTROLLING |  |  | TOTAL |
|  | SHARES* |  |  | AMOUNT |  |  | RECEIVABLE |  |  | SUBSCRIBED |  |  | CAPITAL |  |  | RESERVE |  |  | DEFICIT |  |  | LOSS |  |  | INTEREST |  |  | EQUITY |
Balance at June 30, 2023 |  |  | 109,972 |  |  | $ | 110 |  |  | $ | (3,782,362 | ) |  | $ | - |  |  | $ | 68,873,846 |  |  | $ | 4,198,107 |  |  | $ | (31,735,422 | ) |  | $ | (4,992,381 | ) |  | $ | 4,291,148 |  |  | $ | 36,853,046 |
Acquisition of Wintus |  |  | 41,667 |  |  |  | 42 |  |  |  | - |  |  |  | - |  |  |  | 2,299,958 |  |  |  | - |  |  |  | - |  |  |  | (110,788 | ) |  |  | 8,197,473 |  |  |  | 10,386,685 |
Disposal of Tenet-Jove |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  |  |  |  | (8,904,702 | ) |  |  | - |  |  |  | - |  |  |  | 4,880,164 |  |  |  | - |  |  |  | (4,024,538 | )
Issuance of common shares for convertible notes redemption |  |  | 37,656 |  |  |  | 38 |  |  |  | - |  |  |  | - |  |  |  | 1,329,962 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,330,000 |
Common stock issued for management and employees |  |  | 15,854 |  |  |  | 16 |  |  |  | 340,010 |  |  |  | - |  |  |  | 540,295 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 880,321 |
Net loss from continuing operations for the period |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,489,847 | ) |  |  | - |  |  |  | (23,276 | ) |  |  | (3,513,123 | )
Net income (loss) from discontinued operation for the period |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 8,856,042 |  |  |  |  |  |  |  | (795 | ) |  |  | 8,855,247 |
Foreign currency translation gain (loss) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 114,438 |  |  |  | (16,473 | ) |  |  | 97,965 |
Balance at September 30, 2023 |  |  | 205,149 |  |  | $ | 206 |  |  | $ | (3,442,352 | ) |  | $ | - |  |  | $ | 64,139,359 |  |  | $ | 4,198,107 |  |  | $ | (26,369,227 | ) |  | $ | (108,567 | ) |  | $ | 12,448,077 |  |  | $ | 50,865,603 |
Balance at June 30, 2024 |  |  | 332,215 |  |  | $ | 332 |  |  | $ | - |  |  | $ | 6,728,291 |  |  | $ | 69,476,805 |  |  | $ | 4,350,297 |  |  | $ | (54,336,629 | ) |  | $ | (218,163 | ) |  | $ | 10,576,762 |  |  | $ | 36,577,695 |
Balance |  |  | 332,215 |  |  | $ | 332 |  |  | $ | - |  |  | $ | 6,728,291 |  |  | $ | 69,476,805 |  |  | $ | 4,350,297 |  |  | $ | (54,336,629 | ) |  | $ | (218,163 | ) |  | $ | 10,576,762 |  |  | $ | 36,577,695 |
Stock issuance |  |  | 760,590 |  |  |  | 761 |  |  |  | (3,855,458 | ) |  |  | (6,728,291 | ) |  |  | 17,010,542 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 6,427,554 |
Issuance of common shares for convertible notes redemption |  |  | 377,375 |  |  |  | 377 |  |  |  | - |  |  |  | - |  |  |  | 2,554,622 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,554,999 |
Common stock issued for management and employees |  |  | 11,017 |  |  |  | 11 |  |  |  | - |  |  |  | - |  |  |  | 140,121 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 140,132 |
Net loss from continuing operations for the year |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,022,842 | ) |  |  | - |  |  |  | (535,286 | ) |  |  | (2,558,128 | )
Net income (loss) from continuing operations for the year |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,022,842 | ) |  |  | - |  |  |  | (535,286 | ) |  |  | (2,558,128 | )
Foreign currency translation gain |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 180,159 |  |  |  | 7,547 |  |  |  | 187,706 |
Balance at September 30, 2024 |  |  | 1,481,197 |  |  | $ | 1,481 |  |  | $ | (3,855,458 | ) |  | $ | - |  |  | $ | 89,182,090 |  |  | $ | 4,350,297 |  |  | $ | (56,359,471 | ) |  | $ | (38,004 | ) |  | $ | 10,049,023 |  |  | $ | 43,329,958 |
Balance |  |  | 1,481,197 |  |  | $ | 1,481 |  |  | $ | (3,855,458 | ) |  | $ | - |  |  | $ | 89,182,090 |  |  | $ | 4,350,297 |  |  | $ | (56,359,471 | ) |  | $ | (38,004 | ) |  | $ | 10,049,023 |  |  | $ | 43,329,958 |

* | Retrospectively restated for effect of the Reverse Stock Splits on February 16, 2024 and November 12, 2024.

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

3

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

|  | For the Three Months Ended September 30, |
|  | 2024 |  |  | 2023 |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |
Net income (loss) |  | $ | (2,558,128 | ) |  | $ | 5,342,124 |
Net income from discontinued operations, net of tax |  |  | - |  |  |  | 8,855,247 |
Net loss from continuing operations |  |  | (2,558,128 | ) |  |  | (3,513,123 | )
Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 1,344,146 |  |  |  | 1,044,646 |
Gain from disposal of property and equipment |  |  | (769 | ) |  |  | - |
Allowance for credit losses and doubtful accounts |  |  | 548,366 |  |  |  | 29,670 |
Reversal of inventory reserve |  |  | (30,893 | ) |  |  | (26,232 | )
Deferred tax benefit |  |  | (293,432 | ) |  |  | (251,366 | )
Amortization of right of use assets |  |  | 39,460 |  |  |  | 17,550 |
Common stock issued for management and employees |  |  | 140,132 |  |  |  | 540,310 |
Amortization of debt issuance and other costs |  |  | 188,712 |  |  |  | 166,823 |
Accrued interest expense for convertible notes |  |  | 196,702 |  |  |  | 233,281 |
Accrued interest income from third parties |  |  | (192,172 | ) |  |  | - |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | 35,218 |  |  |  | 3,989,078 |
Advances to suppliers |  |  | (6,411,163 | ) |  |  | 736,974 |
Inventories |  |  | (739,576 | ) |  |  | (24,869 | )
Other current assets |  |  | (119,341 | ) |  |  | 221,111 |
Accounts payable |  |  | 679,982 |  |  |  | (5,061,341 | )
Contract liabilities |  |  | 6,311,658 |  |  |  | 87,085 |
Deferred income |  |  | 1,289 |  |  |  | 136,808 |
Other payables and accrued expenses |  |  | (1,161,835 | ) |  |  | 383,923 |
Other long-term payable |  |  | - |  |  |  | (35,238 | )
Operating lease liabilities |  |  | (6,005 | ) |  |  | 694 |
Taxes payable |  |  | (57,583 | ) |  |  | (16,908 | )
Net cash used in operating activities from continuing operations |  |  | (2,085,232 | ) |  |  | (1,341,124 | )
Net cash used in operating activities from discontinued operations |  |  | - |  |  |  | (162,009 | )
Net cash used in operating activities |  |  | (2,085,232 | ) |  |  | (1,503,133 | )
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |  |  |
Acquisitions of property and equipment |  |  | (16,064 | ) |  |  | (4,106 | )
Proceeds from disposal of property and equipment |  |  | 869 |  |  |  | - |
Payment made for loans to third parties |  |  | (535,779 | ) |  |  | (103,642 | )
Payment made for loans to related parties |  |  | 47,826 |  |  |  | 96,888 |
Payment for derivative financial assets |  |  | (21,873 | ) |  |  | (9,121 | )
Redemption of derivative financial assets |  |  | 21,873 |  |  |  | 8,844 |
Acquisition of subsidiaries, net of cash |  |  | - |  |  |  | 1,003,678 |
Prepayment for business acquisition |  |  | (2,630,000 | ) |  |  | - |
Disposal of VIEs - Tenet-Jove, net of cash |  |  | - |  |  |  | (13,889,752 | )
Net cash used in investing activities from continuing operations |  |  | (3,133,148 | ) |  |  | (12,897,211 | )
Net cash used in investing activities from discontinued operations |  |  | - |  |  |  | - |
Net cash used in investing activities |  |  | (3,133,148 | ) |  |  | (12,897,211 | )
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |
Proceeds from short-term loans |  |  | 4,959,924 |  |  |  | 4,002,118 |
Repayment of short-term loans |  |  | (5,229,438 | ) |  |  | (3,631,568 | )
Proceeds from long-term loans |  |  | 628,369 |  |  |  | - |
Repayment of long-term loans |  |  | (635,351 | ) |  |  | (13,772 | )
Repayment of loan from third party |  |  | (524,464 | ) |  |  | - |
Repayment of convertible note |  |  | (400,000 | ) |  |  | - |
Proceeds from issuance of common stock |  |  | 6,427,554 |  |  |  | 340,010 |
Repayments of advances from related parties |  |  | (160,113 | ) |  |  | (83,233 | )
Net cash provided by financing activities from continuing operations |  |  | 5,066,481 |  |  |  | 613,555 |
Net cash provided by financing activities from discontinued operations |  |  | - |  |  |  | 292,548 |
Net cash provided by financing activities |  |  | 5,066,481 |  |  |  | 906,103 |
EFFECT OF EXCHANGE RATE CHANGE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH |  |  | 15,577 |  |  |  | 202,508 |
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |  |  | (136,322 | ) |  |  | (13,291,733 | )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - Beginning of the period |  |  | 395,036 |  |  |  | 14,166,759 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - End of the period |  | $ | 258,714 |  |  | $ | 875,026 |
SUPPLEMENTAL CASH FLOW DISCLOSURES: |  |  |  |  |  |  |  |
Cash paid for interest |  | $ | 151,016 |  |  | $ | 118,851 |
SUPPLEMENTAL NON-CASH OPERATING, INVESTING AND FINANCING ACTIVITIES: |  |  |  |  |  |  |  |
Issuance of common shares for convertible notes redemption |  | $ | 2,554,999 |  |  | $ | 1,330,000 |
Issuance of common shares for proceeds received in prior year |  | $ | 6,728,291 |  |  | $ | - |
Issuance of common shares for business acquisition |  | $ | - |  |  | $ | 2,300,000 |
Transferal of equity interest of Tenet Jove for business acquisition of Wintus |  | $ | - |  |  | $ | 37,705,951 |
Right-of-use assets obtained in exchange for operating lease obligations |  | $ | 42,077 |  |  | $ | 32,666 |

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

4

NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS

Shineco, Inc. (“Shineco” or the “Company”) was incorporated in the State of Delaware on August 20, 1997. The Company is a holding company whose primary purpose is to develop business opportunities in the People’s Republic of China (the “PRC” or “China”).

On December 30, 2004, the Company acquired all of the issued and outstanding shares of Beijing Tenet-Jove Technological Development Co., Ltd. (“Tenet-Jove”), a PRC company, in exchange for restricted shares of the Company’s common stock, and the sole operating business of the Company became that of its subsidiary, Tenet-Jove. Tenet-Jove was incorporated on December 15, 2003 under the laws of China. Consequently, Tenet-Jove became a 100% owned subsidiary of Shineco and was officially granted the status of a wholly foreign-owned entity by Chinese authorities on July 14, 2006. This transaction was accounted for as a recapitalization. Tenet-Jove owns 90% interest of Tianjin Tenet Huatai Technological Development Co., Ltd. (“Tenet Huatai”).

On December 31, 2008, June 11, 2011, and May 24, 2012, Tenet-Jove entered into a series of contractual agreements including an Executive Business Cooperation Agreement, a Timely Reporting Agreement, an Equity Interest Pledge Agreement, and an Executive Option Agreement (collectively, the “VIE Agreements”), with each one of the following entities, Ankang Longevity Pharmaceutical (Group) Co., Ltd. (“Ankang Longevity Group”), Yantai Zhisheng International Freight Forwarding Co., Ltd. (“Zhisheng Freight”) and Qingdao Zhihesheng Agricultural Produce Services., Ltd. (“Qingdao Zhihesheng”). On February 24, 2014, Tenet-Jove entered into the same series of contractual agreements with Shineco Zhisheng (Beijing) Bio-Technology Co., Ltd. (“Zhisheng Bio-Tech”), which was incorporated in 2014. Zhisheng Bio-Tech, Zhisheng Freight and Qingdao Zhihesheng are collectively referred to herein as the “Zhisheng VIEs.”

Pursuant to the VIE Agreements, Tenet-Jove has the exclusive right to provide to the Zhisheng VIEs and Ankang Longevity Group consulting services related to their business operations and management. All the above contractual agreements obligate Tenet-Jove to absorb a majority of the risk of loss from the Zhisheng VIEs and Ankang Longevity Group’s activities and entitle Tenet-Jove to receive a majority of their residual returns. In essence, Tenet-Jove has become the primary beneficiary of the operations of the Zhisheng VIEs and Ankang Longevity Group. Therefore, the Zhisheng VIEs and Ankang Longevity Group are treated as variable interest entities (“VIEs”) under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 “Consolidation.” Accordingly, the accounts of these entities are consolidated with those of Tenet-Jove.

Since Shineco is effectively controlled by the majority shareholders of the Zhisheng VIEs and Ankang Longevity Group, Shineco owns 100% of Tenet-Jove. Accordingly, Shineco, Tenet-Jove, and the VIEs, the Zhisheng VIEs and Ankang Longevity Group are effectively controlled by the same majority shareholders. Therefore, Shineco, Tenet-Jove, and the VIEs of Tenet-Jove are considered under common control. The consolidation of Tenet-Jove and its VIEs into Shineco was accounted for at historical cost.

On September 30, 2017, Tenet-Jove established Xinjiang Shineco Taihe Agriculture Technology Ltd. (“Xinjiang Taihe”) with registered capital of RMB10.0 million (approximately US$1.5 million). On September 30, 2017, Tenet-Jove established Xinjiang Tianyi Runze Bioengineering Co., Ltd. (“Runze”) with registered capital of RMB10.0 million (approximately US$1.5 million). Xinjiang Taihe and Runze became wholly-owned subsidiaries of Tenet-Jove. The Company ceased the business operation of Xinjiang Taihe and Runze in September 2020 and October 2020, respectively.

On December 10, 2016, Tenet-Jove entered into a purchase agreement with Tianjin Tajite E-Commerce Co., Ltd. (“Tianjin Tajite”), an online e-commerce company based in Tianjin, China, specializing in distributing Luobuma related products and branded products of Daiso 100-yen shops, pursuant to which Tenet-Jove would acquire a 51% equity interest in Tianjin Tajite for cash consideration of RMB14,000,000 (approximately US$2.1 million). On December 25, 2016, the Company paid the full amount as the deposit to secure the deal. In May 2017, the Company amended the agreement and required Tianjin Tajite to satisfy certain preconditions related to product introductions into China. On October 26, 2017, the Company completed the acquisition for 51% of the shares in Tianjin Tajite. On May 5, 2019, two minority shareholders of Tianjin Tajite transferred their 26.4% of the equity interest to the Company. There was no consideration paid for the transfers, and after the transfers, the Company owns 77.4% equity interest of Tianjin Tajite.

5

On March 13, 2019, Tenet-Jove established Beijing Tenjove Newhemp Biotechnology Co., Ltd. (“TNB”) with registered capital of RMB10.0 million (approximately US$1.5 million). TNB became a wholly-owned subsidiary of Tenet-Jove. The operations of TNB ceased on May 15, 2023.

On July 23, 2020, Shanghai Jiaying International Trade Co., Ltd. (“Shanghai Jiaying”) was established with registered capital of RMB200 million (approximately US$29.9 million). Tenet-Jove owned an equity interest of 90% of Shanghai Jiaying, and the remaining 10% equity interests was owned by an individual shareholder. Jiaying Trade did not engage in any active business operations, and the operations of Shanghai Jiaying ceased on December 21, 2021.

On January 7, 2021, Inner Mongolia Shineco Zhonghemp Biotechnology Co., Ltd. (“SZB”) was established with registered capital of RMB50 million (approximately US$7.5 million). Tenet-Jove owned an equity interest of 55% of SZB, and the remaining 45% equity interests was owned by an individual shareholder. SZB is currently not engaging in any active business operations.

On December 7, 2021, the Company established Shineco Life Science Research Co., Ltd. (“Life Science”) as a wholly foreign-owned entity with registered capital of US$10.0 million.

On April 13, 2022, the Company established Shineco Life Science Group Hong Kong Co., Limited (“Shineco Life”) as a wholly owned entity with registered capital of US$10.0 million. On April 24, 2022, the Company entered into a Share Transfer Agreement with Shineco Life. Pursuant to the agreement, the Company transferred its 100% of the equity interest of Life Science to Shineco Life. There was no consideration paid for the transfer, and after the transfer, Life Science became a wholly-owned subsidiary of Shineco Life.

On May 16, 2023, Fuzhou Meida Health Management Co., Ltd (“Fuzhou Meida”), formerly known as Pangke Planet (Fuzhou) Health Management Co., Ltd, was established with registered capital of RMB1.0 million (approximately US$0.1 million). Life Science owned an equity interest of 51% of Fuzhou Meida, and the remaining 49% equity interests was owned by two shareholders.

On May 16, 2023, Shinkang Technology (Jiangsu) Co., Ltd (“Shinkang”) was established with registered capital of RMB10.0 million (approximately US$1.4 million). Life Science owned an equity interest of 51% of Shinkang, and the remaining 49% equity interests was owned by one shareholder. Shinkang is currently not engaging in any active business operations.

On May 23, 2023, Life Science established Beijing Shineco Chongshi Information Consulting Co., Ltd (“Chongshi”) as a wholly owned entity with registered capital of RMB0.1 million (approximately US$0.01 million). Chongshi is currently not engaging in any active business operations.

On June 8, 2021, Tenet-Jove entered into a Restructuring Agreement with various parties. Pursuant to the terms of the Restructuring Agreement, (i) the Company transferred all of its rights and interests in Ankang Longevity to the Shareholders of Yushe County Guangyuan Forest Development Co., Ltd. (“Guangyuan”) in exchange for the control of 100% of equity interests and assets in Guangyuan; (ii) Tenet-Jove entered a Termination Agreement with Ankang Longevity and the Ankang Shareholders; (iii) as a consideration to the Restructuring Agreement and based on a valuation report on the equity interests of Guangyuan issued by an independent third party, Tenet-Jove relinquished all of its rights and interests in Ankang Longevity and transferred those rights and interests to the Guangyuan Shareholders; and (iv) Guangyuan and the Guangyuan Shareholders entered into a series of variable interest entity agreements with Tenet-Jove. After signing the Restructuring Agreement, the Company and the shareholders of Ankang and Guangyuan actively carried out the transferring of rights and interests in Ankang and Guangyuan, and the transferring was completed subsequently on July 5, 2021. Afterwards, with the completion of all other follow-ups works, on August 16, 2021, the Company, through its subsidiary Tenet-Jove, completed the previously announced acquisition pursuant to the Restructuring Agreement dated June 8, 2021.

6

On December 30, 2022, Shineco Life closed the acquisition of 51% of the issued equity interests of Changzhou Biowin Pharmaceutical Co., Ltd. (“Biowin”), a company established under the laws of China, pursuant to the previously announced stock purchase agreement, dated as of October 21, 2022, among Beijing Kanghuayuan Medicine Information Consulting Co., Ltd., a company established under the laws of China (“Seller”), Biowin, the Company and Shineco Life. As the consideration for the acquisition, the Company paid to Seller US$9,000,000 in cash and the Company issued 13,583 shares of the Company’s common stock, par value US$0.001 per share, to the equity holders of Biowin or any persons designated by Biowin. According to the Supplementary Agreement, dated as of December 30, 2022, by and among Shineco Life, the Seller and Biowin, the Seller owned 51% of the issued equity interests of Biowin before January 1, 2023, and transferred the 51% of the issued equity interests of Biowin together with its controlling rights of production and operation of Biowin to Shineco Life on January 1, 2023.

On May 29, 2023, Shineco Life entered into a stock purchase agreement with Dream Partner Limited, a BVI corporation (“Dream Partner”), Chongqing Wintus Group, a corporation incorporated under the laws of mainland China (“Wintus”), and certain shareholders of Dream Partner (the “Wintus Sellers”), pursuant to which Shineco Life shall acquire 71.42% equity interest in Wintus (the “Acquisition”). As the consideration for the Acquisition, the Company (a) paid the Wintus Sellers an aggregate cash consideration of US$2,000,000; (b) issued certain shareholders, as listed in the agreement, an aggregate of 41,667 shares of the Company’s restricted Common Stock; and (c) transferred and sold to the Wintus Sellers 100% of the Company’s equity interest in Tenet-Jove.

The Company, through its subsidiaries, currently operates three main business segments: 1) Biowin specializes in the development, production and distribution of innovative rapid diagnostic products and related medical devices for the most common diseases (“Rapid Diagnostic and Other Products”); 2) Wintus is engaged in producing, processing and distribution of agricultural products, such as silk and silk fabrics as well as trading of fresh fruit; and (3) Fuzhou Meida operates a health-oriented chain restaurant that specializes in developing healthy meals for people with slow metabolic health and those in recovery from metabolic disorders. Due to the Acquisition mentioned above, the Company’s business segments, that were operated by Tenet-Jove and its subsidiaries, Guangyuan and Zhisheng VIEs which Tenet-Jove is the primary beneficiary of (the “Tenet-Jove Disposal Group”), are classified as discontinued operations on the Company unaudited condensed consolidated financial statements. These business segments are: 1) Tenet-Jove is engaged in manufacturing and selling Bluish Dogbane and related products, also known in Chinese as “Luobuma,” including therapeutic clothing and textile products made from Luobuma; 2) Qingdao Zhihesheng and Guangyuan are engaged in planting, processing, and distributing green agricultural produce; (“Agricultural Products”); and 3) Zhisheng Freight is providing domestic and international logistic services (“Freight Services”).

NOTE 2. GOING CONCERN

As disclosed in the Company’s unaudited condensed consolidated financial statements, the Company had recurring net losses from continuing operations of US$2.6 million and US$3.5 million, and continuing cash outflow of US$2.1 million and US$1.3 million from operating activities for the three months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and June 30, 2024, the Company had accumulated a deficit of US$56.4 million and US$54.3 million, and as of September 30, 2024, the Company had negative working capital of US$7.3 million. The Company’s management believes these factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months. In assessing the Company’s going concern, the Company’s management monitors and analyzes the Company’s cash on-hand and its ability to generate sufficient revenue sources in the future to support its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Direct offering and debt financing have been utilized to finance the working capital requirements of the Company. The continuation of the Company as a going concern through the next twelve months is dependent on the continued financial support from its stockholders.

7

Despite those negative financial trends, as of September 30, 2024, the Company had taken the following actions to enhance the Company’s liquidity:

1) | On June 20, 2024, the Company entered into a securities purchase agreement with certain non-U.S. investors (the “Purchasers”), pursuant to which the Company agreed to sell, and the Purchasers agreed to purchase, severally and not jointly, an aggregate of 58,333 shares of common stock of the Company (the “Shares”) at an offering price of US$120.00 per share for gross proceeds of up to US$7.0 million. As of June 30, 2024, proceeds of approximately US$6.4 million were received, and the remaining proceeds were fully received in July 2024, and all of the Shares were issued on July 8, 2024.
2) | On July 11, 2024, the Company entered into an Underwriting Agreement with EF Hutton LLC, as the representative for several underwriters, relating to the underwritten public offering (the “Offering”) of 77,882 shares of the Common Stock at a public offering price of US$25.68 per share, for aggregate gross proceeds of approximately US$2.0 million, prior to deducting underwriting discounts and other offering expenses. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 11,683 shares of the Common Stock at the public offering price per share, less the underwriting discounts to cover over-allotments, if any. The Offering closed on July 15, 2024, and the 45-day option expired on August 30, 2024. The net proceeds from the offering were approximately US$1.7 million, after deducting the estimated underwriting discounts and commissions and estimated offering expenses.
3) | On August 22, 2024, the Company entered into a securities purchase agreement (the “SPA”) with 22 purchasers, each an unrelated third party to the Company (collectively, the “Purchasers”). Pursuant to the SPA, the Purchasers agree to purchase, and the Company agreed to issue and sell to the Purchasers, an aggregate of 624,375 shares of the Company’s common stock, par value US$0.001 per share (the “Shares”), at a purchase price of US$13.20 per share, and for an aggregate purchase price of US$8,241,750 (the “Offering”). The SPA, the transaction contemplated thereby, and the issuance of the Shares have been approved by the Company’s board of directors. The closing of the transaction contemplated by the SPA took place on September 10, 2024. As of September 30, 2024, proceeds of approximately US$4.4 million were received, and the remaining proceeds are expected to be fully received by December 31, 2024.
4) | The Company has borrowed funds from commercial banks and third parties. As of September 30, 2024, the Company had US$14.3 million in short-term loans outstanding and US$1.8 million in long-term loans outstanding. The management expects that the Company will be able to renew its existing bank loans upon their maturity based on past experience and its good credit history.

Management believes that the foregoing measures collectively will provide sufficient liquidity for the Company to meet its future liquidity needs 12 months from the date of this filing.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information pursuant to the rules of the SEC and have been consistently applied. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended June 30, 2024, which was filed on September 30, 2024.

The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries, for which the Company is the primary beneficiary, including the Hong Kong-registered entities and PRC-registered entities owned by the Company. The results of subsidiaries acquired or disposed of are recorded in the unaudited condensed consolidated income statements from the effective date of acquisition or up to the effective date of disposal, as appropriate. A subsidiary is an entity in which (i) the Company directly or indirectly controls more than 50% of the voting power, or (ii) the Company has the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meetings of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders. However, if the Company demonstrates its ability to control the VIE through the power to govern the activities that most significantly impact the VIE’s economic performance and is obligated to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, then the entity is consolidated. All intercompany transactions and balances among the Company, its subsidiaries, and the VIE have been eliminated upon consolidation.

8

Consolidation of Variable Interest Entities

VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision-making ability. All VIEs and their subsidiaries with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

There are no consolidated assets of the VIEs and the VIEs’ subsidiaries that are collateral for the obligations of the VIEs and the VIEs’ subsidiaries and can only be used to settle the obligations of the VIEs and the VIEs’ subsidiaries.

As the VIEs are incorporated as limited liability companies under the PRC Company Law, creditors or beneficial interest holders of the VIEs do not have recourse to the general credit of the Company for any of the liabilities of the VIEs in normal course of business.

There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIEs and the VIEs’ subsidiaries. However, if the VIEs and the VIEs’ subsidiaries ever need financial support, the Company or its subsidiaries may, at their option and subject to statutory limits and restrictions, provide financial support to the VIEs and the VIEs’ subsidiaries through loans to the shareholder of the VIEs and the VIEs’ subsidiaries or entrustment loans to the VIEs and the VIEs’ subsidiaries.

The carrying amount of the VIEs and their subsidiaries’ consolidated income information held for discontinued operations were as follows:

SCHEDULE OF CONSOLIDATED ASSETS AND LIABILITIES AND INCOME INFORMATION

|  | 2024 |  |  | 2023 |
|  | For the three months ended September 30, |
|  | 2024 |  |  | 2023 |
Income from operations |  | $ | - |  |  | $ | 60,426 |
Net income |  | $ | - |  |  | $ | 60,426 |

Non-controlling Interests

U.S. GAAP requires that non-controlling interests in subsidiaries and affiliates be reported in the equity section of a company’s balance sheet. In addition, the amounts attributable to the non-controlling interests in the net loss of these entities are reported separately in the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss).

Risks and Uncertainties

The operations of the Company are located in the PRC and are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic, and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things. Although the Company has not experienced losses from these factors and believes that it is in compliance with existing laws and regulations, there is no guarantee that the Company will continue to do so in the future.

9

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements as well as the reported amounts of revenue and expenses during the reporting periods. Significant estimates required to be made by management include, but are not limited to, useful lives of property and equipment, and intangible assets, the recoverability of long-lived assets, assessment of expected credit losses for accounts receivable and other current asset, the valuation allowance of deferred taxes, and inventory reserves. Actual results could differ from those estimates.

Revenue Recognition

The Company generates its revenue primarily through sales of Luobuma products, other agricultural products, healthy meals and rapid diagnostic and other products, as well as providing logistic services and other processing services to external customers in accordance with ASC 606. ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

With the adoption of ASC 606, “Revenue from Contracts with Customers,” revenue is recognized when all of the following five steps are met: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; (v) recognize revenue when (or as) each performance obligation is satisfied. The Company has assessed the impact of the guidance by reviewing its existing customer contracts to identify differences that will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control, and principal versus agent considerations. In accordance with ASC 606, the Company evaluates whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. When the Company is a principal, that the Company obtains control of the specified goods or services before they are transferred to the customers, the revenue should be recognized in the gross amount of consideration to which it expects to be entitled in exchange for the specified goods or services transferred. When the Company is an agent and its obligation is to facilitate third parties in fulfilling their performance obligation for specified goods or services, the revenue should be recognized in the net amount for the amount of commission which the Company earns in exchange for arranging for the specified goods or services to be provided by other parties. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606 and therefore there was no material changes to the Company’s financial statements upon adoption of ASC 606.

More specifically, revenue related to the Company’s products and services is generally recognized as follows:

Sales of products: The Company recognized revenue from the sale of products at the point in time when the goods were delivered and title to the goods passed to the customer, provided that there were no uncertainties regarding customer acceptance; persuasive evidence of an arrangement existed; the sales price was fixed or determinable; and collectability was deemed probable.

Revenue from the provision of services: The Company merely acts as an agent in these types of services transactions. Revenue from domestic air and overland freight forwarding services was recognized at the point in time upon the performance of services as stipulated in the underlying contract or when commodities were being released from the customer’s warehouse; the service price was fixed or determinable; and collectability was deemed probable.

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Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, cash on deposit, and other highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less when purchased. The Company maintains cash with various financial institutions mainly in the PRC. As of September 30, 2024 and June 30, 2024, the Company had no cash equivalents.

Under PRC laws, it is generally required that a commercial bank in the PRC that holds third-party cash deposits protect the depositors’ rights over and interests in their deposited money. PRC banks are subject to a series of risk control regulatory standards, and PRC bank regulatory authorities are empowered to take over the operation and management of any PRC bank that faces a material credit crisis. The Company monitors the banks utilized and has not experienced any problems.

Accounts Receivable, Net

Accounts receivable are recorded at net realizable value, consisting of the carrying amount less an allowance for credit losses, as necessary. As of September 30, 2024 and June 30, 2024, the allowance for credit losses was US$1,820,083 and US$1,356,873, respectively. Accounts are written off against the allowance after efforts at collection prove unsuccessful.

Advances to Suppliers, Net

Advances to suppliers consist of payments to suppliers for materials that have not been received. As of September 30, 2024 and June 30, 2024, the allowance for uncollectible advances to suppliers was US$260,962 and US$111,483, respectively.

Credit Losses

On July 1, 2023, the Company adopted Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated financial statements as of July 1, 2023.

The Company’s account receivables and other receivables included in other current assets on the unaudited condensed consolidated balance sheets are within the scope of ASC Topic 326. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses based upon assessment of various factors, including historical experience, the age of the accounts receivable and other receivables balances, credit-worthiness of the customers and other debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the customers and other debtors. The Company also provides specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.

ASC Topic 326 is also applicable to loans to third parties that are included in the other current assets on the unaudited condensed consolidated balance sheets. Management estimates the allowance for credit losses on loans that do not share similar risk characteristics on an individual basis. The key factors considered when determining the above allowances for credit losses include estimated loan collection schedule, discount rate, and assets and financial performance of the borrowers.

Expected credit losses are recorded as general and administrative expenses on the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss). After all attempts to collect a receivable have failed, the receivable is written off against the allowance. In the event the Company recovers amount previously reserved, the Company will reduce the specific allowance for credit losses.

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Inventories, Net

Inventories, which are stated at the lower of cost or net realizable value, consist of raw materials, work-in-progress, and finished goods related to the Company’s products. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost is determined using the weighted average method. The Company periodically evaluates its inventory and records an inventory reserve for certain inventories that may not be saleable or whose cost exceeds net realizable value. As of September 30, 2024 and June 30, 2024, the inventory reserve was nil and US$30,443, respectively.

Business Acquisitions

Business acquisitions are accounted for under the acquisition method. The acquisition method requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a bargain gain from the purchase. The acquiree’s results are included in the Company’s consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values on the date acquired and the excess of the purchase price over the amounts assigned is recorded as goodwill, or if the fair value of the net assets acquired exceeds the purchase price consideration, a bargain purchase gain is recorded. Adjustments to fair value assessments are generally recorded to goodwill over the measurement period (not longer than 12 months). The acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be charged to expense as committed, and requires the Company to recognize and measure certain assets and liabilities, including those arising from contingencies and contingent consideration in a business combination.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of assets acquired. The goodwill impairment test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, goodwill of the reporting unit would be considered impaired. To measure the amount of the impairment loss, the implied fair value of a reporting unit’s goodwill is compared to the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. For each of these tests, the fair value of each of the Company’s reporting units is determined using a combination of valuation techniques, including a discounted cash flow methodology. To corroborate the discounted cash flow analysis performed at each reporting unit, a market approach is utilized using observable market data such as comparable companies in similar lines of business that are publicly traded or which are part of a public or private transaction (to the extent available).

Leases

Lessee accounting

The Company follows FASB ASC No. 842, Leases (“Topic 842”). The Company leases office spaces, warehouse, and farmland which are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually with initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

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Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and includes initial direct costs incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses for minimum lease payments are recognized on a straight-line basis over the lease term. All operating lease ROU assets are reviewed for impairment annually. For the three months ended September 30, 2024 and 2023, the Company did not recognize any impairment of its ROU assets.

Lessor accounting

The Company rents out its office to a third party, which is classified as an operating lease in accordance with Topic 842. The revenue from an operating lease is recognized in other income in the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss) on a straight-line basis over the term of the lease.

Property and Equipment, Net

Property and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for additions, major renewals, and betterments are capitalized, and expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided on a straight-line basis, less estimated residual value, if any, over an asset’s estimated useful life. Farmland leasehold improvements are amortized over the shorter of lease term or estimated useful lives of the underlying assets. The estimated useful lives of the Company’s property and equipment are as follows:

SCHEDULE OF ESTIMATED USEFUL LIVES OF PROPERTY AND EQUIPMENT

|  | Estimated useful lives
Buildings |  | 5-50 years
Machinery and equipment |  | 3-10 years
Motor vehicles |  | 5-15 years
Office equipment |  | 3-10 years
Farmland leasehold improvements |  | 12-18 years
Fixture and furniture |  | 3 years

Construction in progress includes property and equipment in the course of construction for production or for its own use purposes. Construction in progress is carried at cost less any recognized impairment loss. Construction in progress is classified to the appropriate category of property and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Land Use Rights, Net

According to Chinese laws and regulations regarding land use rights, land in urban districts is owned by the State, while land in the rural areas and suburban areas, except otherwise provided for by the State, is collectively owned by individuals designated as resident farmers by the State. In accordance with the legal principle that land ownership is separate from the right to the use of the land, the government grants individuals and companies the rights to use parcels of land for a specified period of time. Land use rights, which are usually prepaid, are stated at cost less accumulated amortization. Amortization is provided over the life of the land use rights, using the straight-line method. The useful life is 50 years, based on the terms of the land use rights.

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Long-lived Assets

Finite-lived assets and intangibles are reviewed for impairment testing when circumstances require. For purposes of evaluating the recoverability of long-lived assets, when undiscounted future cash flows will not be sufficient to recover an asset’s carrying amount, the asset is written down to its fair value. The long-lived assets of the Company that are subject to evaluation consist primarily of property and equipment, land use rights, ROU assets and investments. For the three months ended September 30, 2024 and 2023, the Company did not recognize any impairment of its long-lived assets.

Derivative Financial Assets

Derivative financial assets are measured at fair value and recognized as either assets or liabilities on the unaudited condensed consolidated balance sheets in either other current or non-current assets or other current liabilities or non-current liabilities, depending upon maturity and commitment. Changes in the fair value of derivatives are either recognized periodically in the unaudited condensed consolidated statements of comprehensive income (loss) or in other comprehensive income (loss), depending on the use of the derivatives and whether they qualify for hedge accounting.

The Company selectively uses financial instruments to manage market risk associated with exposure to fluctuations in prices of raw materials for silk products. These financial exposures are monitored and managed by the Company as an integral part of its risk management program. The Company does not engage in derivative instruments for speculative or trading purposes. The Company’s derivative financial assets are not qualified for hedge accounting. Thus, changes in fair value are recognized in “Investment income from derivative financial assets” in the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss). The cash flows of derivative financial assets are classified in the same category as the cash flows from the items subject to the economic hedging relationships. The estimated fair value of the derivatives is determined based on relevant market information.

Derivative financial assets are presented as net if rights of setoff exist, with all of the following conditions met: (a) each of the two parties owes the other determinable amounts; (b) the reporting party has the right to set off the amount owed with the amount owed by the other party; (c) the reporting party intends to set off; and (d) the right of setoff is enforceable at law.

The outstanding derivative financial assets as of September 30, 2024 and June 30, 2024 were US$6,610 and US$6,380, respectively. Investment income from derivative financial assets was US$2,277 and US$2,768 for the three months ended September 30, 2024 and 2023, and the change in fair value of derivative financial assets was immaterial for the three months ended September 30, 2024 and 2023, respectively.

Fair Value of Financial Instruments

The Company follows the provisions of ASC 820, “Fair Value Measurements and Disclosures.” ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs, other than quoted prices in level, that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the asset or liability.

The carrying value of financial instruments included in current assets and liabilities approximate their fair values because of the short-term nature of these instruments.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the unaudited condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for unaudited condensed consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This ASC also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company did not have any uncertain tax positions as of September 30, 2024 and June 30, 2024. The Company had not provided deferred taxes for undistributed earnings of non-U.S. subsidiaries as of September 30, 2024, as it is the Company’s policy to indefinitely reinvest these earnings in non-U.S. operations. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested earnings is not practicable.

The statute of limitations for the Company’s U.S. federal income tax returns and certain state income tax returns remains open for tax year 2022 and thereafter. As of September 30, 2024, the tax years ended December 31, 2019 through December 31, 2023 for the Company’s PRC subsidiaries remained open for statutory examination by PRC tax authorities.

On December 22, 2017, the “Tax Cuts and Jobs Act” (“The Act”) was enacted. Under the provisions of The Act, the U.S. corporate tax rate decreased from 35% to 21%. As the Company has a June 30 fiscal year end, the lower corporate income tax rate was phased in, resulting in a U.S. statutory federal rate of approximately 28% for our fiscal year ended June 30, 2018, and 21% for subsequent fiscal years. Additionally, The Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are subject to U.S. taxation. The change in rate caused the Company to re-measure its income tax liability and record an estimated income tax expense of US$744,766 for the year ended June 30, 2018. On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of The Act. In accordance with SAB 118, additional work is necessary to do a more detailed analysis of The Act as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense in fiscal 2019 when the analysis is complete. The Company elects to pay the transition tax over an eight-year period using specified percentages (eight percent per year for the first five years, 15 percent in year six, 20 percent in year seven, and 25 percent in year eight).

Value-Added Tax

Sales revenue represents the invoiced value of goods, net of a value-added tax (“VAT”). All of the Company’s products that were sold in the PRC were subject to a Chinese value-added tax at rates ranging from 3% to 13%, depending on the type of products sold. For overseas sales, VAT is exempted on the exported goods. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing finished products or acquiring finished products. The Company records a VAT payable or VAT receivable in the accompanying unaudited condensed consolidated financial statements.

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Foreign Currency Translation

The Company uses the United States dollar (“U.S. dollars,” “USD,” or “US$”) for financial reporting purposes. The Company’s subsidiaries and VIEs maintain their books and records in their functional currency of Renminbi (“RMB”), the currency of the PRC.

In general, for consolidation purposes, the Company translates the assets and liabilities of its subsidiaries and VIEs into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statements of income and cash flows are translated at average exchange rates during the reporting periods. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the financial statements of the subsidiaries and VIEs are recorded as accumulated other comprehensive loss.

The balance sheet amounts, with the exception of equity, as of September 30, 2024 and June 30, 2024 were translated at 1 RMB to 0.1426 USD and at 1 RMB to 0.1376 USD, respectively. The average translation rates applied to the income and cash flow statement amounts for the three months ended September 30, 2024 and 2023 were 1 RMB to 0.1396 USD and 1 RMB to 0.1382 USD, respectively.

Convertible Notes Payable

In accordance with ASC 470 Debt with conversion and other option, an embedded beneficial conversion feature present in a convertible instrument shall be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. Issuance costs should be allocated proportionally to the debt host and conversion feature. Deferred financing costs will be discounted and amortized subsequently, and the convertible notes are subsequently carried at amortized cost.

Research and Development Expenses

Research and development costs relating to the development of new processes and significant improvements and refinements to existing processes are expensed when incurred in accordance with the FASB ASC 730, “Research and Development.” The research and development costs primarily comprise employee costs, consultant fees, materials and testing costs, and depreciation to property and equipment used in the research and development activities and other miscellaneous expenses. For the three months ended September 30, 2024 and 2023, total research and development expense from continuing operations were US$13,418 and US$23,698, respectively. No research and development expense were from discontinued operations for the three months ended September 30, 2024 and 2023.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income. The foreign currency translation gain resulting from translation of the financial statements expressed in RMB to USD is reported in other comprehensive income in the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss).

Earnings (Loss) per Share

The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., outstanding convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There is no anti-dilutive effect for the three months ended September 30, 2024 and 2023.

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The following table presents a reconciliation of basic and diluted earnings (loss) per share for the three months ended September 30, 2024 and 2023:

SCHEDULE OF RECONCILIATION OF BASIC AND DILUTED (LOSS) PER SHARE

|  | 2024 |  |  | 2023 |
|  | For the three months ended September 30, |
|  | 2024 |  |  | 2023 |
Net loss from continuing operations attributable to Shineco |  | $ | (2,022,842 | ) |  | $ | (3,489,847 | )
Net income from discontinued operations attributable to Shineco |  |  | - |  |  |  | 8,856,042 |
Net income (loss) attributable to Shineco |  |  | (2,022,842 | ) |  |  | 5,366,195 |
Weighted average shares outstanding - basic and diluted* |  |  | 862,839 |  |  |  | 131,678 |
Net loss from continuing operations per share of common share |  |  |  |  |  |  |  |
Basic and diluted |  | $ | (2.34 | ) |  | $ | (26.50 | )
Net earnings from discontinued operations per share of common share |  |  |  |  |  |  |  |
Basic and diluted |  | $ | - |  |  | $ | 67.25 |
Net earnings (loss) per share of common share |  |  |  |  |  |  |  |
Basic and diluted |  | $ | (2.34 | ) |  | $ | 40.75 |

* | Retrospectively restated for effect of the Reverse Stock Splits on February 16, 2024 and November 12, 2024.

New Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. This ASU requires additional quantitative and qualitative income tax disclosures to enable financial statements users better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. The ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis. The Company plans to adopt this guidance effective July 1, 2025 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718), Scope Application of Profits Interest and Similar Awards. This standard provides clarity regarding whether profits interest and similar awards are within the scope of Topic 718 of the Accounting Standards Codification. This standard is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company plans to adopt this guidance effective July 1, 2025 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

In March 2024, the FASB issued ASU No. 2024-02, “Codification Improvements - Amendments to Remove References to the Concepts Statements.” ASU 2024-02 removes references to various FASB Concepts Statements within the Codification. The guidance in ASU No. 2024-02 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, and can be applied either prospectively to all new transactions recognized on or after the date that the entity first applies the amendments or retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied. Early adoption is permitted. The Company plans to adopt this guidance effective July 1, 2025 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

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

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NOTE 4 – ACCOUNTS RECEIVABLE, NET

The accounts receivable, net consisted of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE

|  | September 30, 2024 |  |  | June 30, 2024 |
Accounts receivable |  | $ | 2,628,639 |  |  | $ | 2,571,987 |
Less: allowance for credit losses |  |  | (1,820,083 | ) |  |  | (1,356,873 | )
Accounts receivable, net |  | $ | 808,556 |  |  | $ | 1,215,114 |

Movement of allowance for credit losses is as follows:

SCHEDULE OF MOVEMENT OF ALLOWANCE FOR DOUBTFUL ACCOUNTS

|  | September 30, 2024 |  |  | June 30, 2024 |
Beginning balance |  | $ | 1,356,873 |  |  | $ | 8,153,850 |
Acquisition of subsidiaries |  |  | - |  |  |  | 173,101 |
Charge to allowance |  |  | 405,878 |  |  |  | 118,499 |
Less: disposal of VIEs |  |  | - |  |  |  | (7,195,304 | )
Foreign currency translation adjustments |  |  | 57,332 |  |  |  | 106,727 |
Ending balance |  | $ | 1,820,083 |  |  | $ | 1,356,873 |

NOTE 5 – INVENTORIES, NET

The inventories, net consisted of the following:

SCHEDULE OF INVENTORIES, NET

|  | September 30, 2024 |  |  | June 30, 2024 |
Raw materials |  | $ | 298,440 |  |  | $ | 290,152 |
Work-in-process |  |  | 179,097 |  |  |  | 338,902 |
Finished goods |  |  | 1,954,216 |  |  |  | 989,914 |
Less: inventory reserve |  |  | - |  |  |  | (30,443 | )
Total inventories, net |  | $ | 2,431,753 |  |  | $ | 1,588,525 |

Work-in-process mainly includes direct costs such as seed selection, fertilizer, labor cost, and subcontractor fees that are spent in growing agricultural products on the leased farmland, and indirect costs which include amortization of the prepayment of the farmland lease fees and farmland development costs. All the costs are accumulated until the time of harvest and then allocated to harvested crop costs when they are sold.

NOTE 6 – ADVANCES TO SUPPLIERS, NET

The advances to suppliers, net consisted of the following:

SCHEDULE OF ADVANCES TO SUPPLIERS

|  | September 30, 2024 |  |  | June 30, 2024 |
Advances to suppliers |  | $ | 17,042,072 |  |  | $ | 10,132,190 |
Less: allowance for doubtful accounts |  |  | (260,962 | ) |  |  | (111,483 | )
Advance to suppliers, net |  | $ | 16,781,110 |  |  | $ | 10,020,707 |

Advances to suppliers consist of mainly payments to suppliers for raw materials or products that have not been received.

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Movement of allowance for doubtful accounts is as follows:

SCHEDULE OF MOVEMENT OF ALLOWANCE FOR DOUBTFUL ACCOUNTS ON ADVANCES TO SUPPLIERS

|  | September 30, 2024 |  |  | June 30, 2024 |
Beginning balance |  | $ | 111,483 |  |  | $ | 10,167,448 |
Acquisition of subsidiaries |  |  | - |  |  |  | 6,385 |
Charge to allowance |  |  | 142,488 |  |  |  | 102,514 |
Less: disposal of VIEs |  |  | - |  |  |  | (10,325,224 | )
Foreign currency translation adjustments |  |  | 6,991 |  |  |  | 160,360 |
Ending balance |  | $ | 260,962 |  |  | $ | 111,483 |

NOTE 7 – OTHER CURRENT ASSETS, NET

Other current assets, net consisted of the following:

SCHEDULE OF OTHER CURRENT ASSETS

|  | September 30, 2024 |  |  | June 30, 2024 |
Loans to third parties (1) |  | $ | 10,491,713 |  |  | $ | 9,445,164 |
Other receivables (2) |  |  | 2,593,910 |  |  |  | 2,464,188 |
Prepayment for business acquisition (3) |  |  | 2,630,000 |  |  |  | - |
Short-term deposits |  |  | 45,681 |  |  |  | 39,966 |
Prepaid expenses |  |  | 2,873 |  |  |  | 1,658 |
Subtotal |  |  | 15,764,177 |  |  |  | 11,950,976 |
Less: allowance for credit losses |  |  | (4,712,099 | ) |  |  | (4,656,522 | )
Total other current assets, net |  | $ | 11,052,078 |  |  | $ | 7,294,454 |

1) | Loans to third-parties are mainly used for short-term funding to support the Company’s external business partners or employees of the Company. These loans bear interest or no interest and have terms of no more than one year. As of September 30, 2024, loans that amounted to US$1,018,722 were carried forward from fiscal year 2023. On September 20, 2023, the Company lent a loan amounting to US$106,916 to a third party for one year, with a maturity date of September 19, 2024. The loan was extended for one year upon maturity. On December 31, 2023, the Company lent a loan amounting to US$1,478,001 to two third parties for one year, with a maturity date of December 30, 2024. On May 28, 2024, the Company lent a loan amounting to US$2,851,082 to a third party for one year, with a maturity date of May 27, 2025. On June 5, 2024, the Company lent a loan amounting to US$4,233,857 to a third party for one year, with a maturity date of June 4, 2025. For loans entered on May 28, 2024 and June 5, 2024, the Company entered into Debt Transfer Agreements with the borrowers (the “Original Borrowers”) and another third party (the “New Borrower”) on August 20, 2024, pursuant to which the Original Borrowers transferred all their debts to the New Borrower, and the New Borrower agreed to fulfill its repayments obligation to the Company in accordance with the term of the original loan agreements. On July 24, 2024 and September 18, 2024, the Company lent loans amounting to US$114,043 and US$390,160 to two third parties for one year, with a maturity date of July 23, 2025 and September 17, 2025, respectively. In addition, the Company also lent a loan amounting to US$42,766 to a third party during the three months ended September 30, 2024, and the amount is due on demand. The Company periodically reviewed the loans to third parties as to whether their carrying values remain realizable, and the Company recorded allowance according to the Company’s accounting policy based on its best estimates. As of September 30, 2024 and June 30, 2024, the total outstanding balance, including principal and interest, amounted to US$10,491,713 and US$9,445,164, respectively, and the allowance for credit losses was US$2,603,639 and US$2,548,557, respectively. The Company’s management will continue putting effort into the collection of overdue loans to third parties.
2) | Other receivable are mainly business advances to officers and staffs represent advances for business travel and sundry expenses, as well as advances for services to other third party.

18

3) | The amount pertains to prepaid purchase consideration made for the acquisition of Jiangsu Fuwang Medical Equipment Co., Ltd (“Fuwang Medical”). The Company entered into an Equity Acquisition Framework Agreement with a shareholder of Fuwang Medical for the acquisition of his equity interests in Fuwang Medical, and the Company made partial payment of the consideration during the three months ended September 30, 2024.

Movement of allowance for credit losses is as follows:

SCHEDULE OF ALLOWANCE FOR DOUBTFUL ACCOUNTS

|  | September 30, 2024 |  |  | June 30, 2024 |
Beginning balance |  | $ | 4,656,522 |  |  | $ | 3,287,793 |
Acquisition of subsidiaries |  |  | - |  |  |  | 36,393 |
Charge to allowance |  |  | - |  |  |  | 2,248,574 |
Less: disposal of VIEs |  |  | - |  |  |  | (610,751 | )
Foreign currency translation adjustments |  |  | 55,577 |  |  |  | (305,487 | )
Ending balance |  | $ | 4,712,099 |  |  | $ | 4,656,522 |

NOTE 8 - PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

|  | September 30, 2024 |  |  | June 30, 2024 |
Buildings |  | $ | 6,324,352 |  |  | $ | 6,167,928 |
Machinery and equipment |  |  | 3,171,944 |  |  |  | 3,051,688 |
Motor vehicles |  |  | 267,456 |  |  |  | 275,366 |
Office equipment |  |  | 101,461 |  |  |  | 97,882 |
Fixture and furniture |  |  | 105,607 |  |  |  | 101,936 |
Construction in progress |  |  | 238,966 |  |  |  | 230,661 |
Subtotal |  |  | 10,209,786 |  |  |  | 9,925,461 |
Less: accumulated depreciation and amortization |  |  | (3,796,620 | ) |  |  | (3,556,394 | )
Less: accumulated impairment for property and equipment |  |  | (92,523 | ) |  |  | (89,308 | )
Total property and equipment, net |  | $ | 6,320,643 |  |  | $ | 6,279,759 |

Depreciation and amortization expense charged to the continuing operations was US$132,208 and US$133,257 for the three months ended September 30, 2024 and 2023, respectively.

Depreciation and amortization expense charged to the discontinued operations was nil and US$2,403 for the three months ended September 30, 2024 and 2023, respectively.

The Company also provides its customers with specialized testing devices as its customers could only use these devices to generate results from these rapid diagnostic products. The ownership of these specialized testing devices is not transferred to its customers, but remains as the Company’s properties. The specialized testing devices will be returned to the Company when they are no longer required by the customer. As of September 30, 2024 and June 30, 2024, properties with net book values of US$19,491 and US$24,223 were held by the Company’s customers.

19

On May 29, 2023, the Company’s Board approved the pledge of real estate property as collateral to guarantee a personal loan of Yuying Zhang, the former chairman of the Board and legal representative of Tenet-Jove. This collateral was provided in exchange for the transfer of the real estate title from Yuying Zhang to a subsidiary of the Company. According to the memorandum between the Company and Yuying Zhang, it was anticipated that the loan would be repaid and the pledge would be released before May 31, 2024. The Company retains the right to claim full compensation if the property is not released by the due date. On May 24, 2023, Yuying Zhang entered into a loan agreement with Weiqing Guo for a principal amount of RMB 15,000,000, with a due date of May 23, 2023. On May 23, 2023, Yuying Zhang entered into a supplementary agreement with Weiqing Guo, wherein the parties agreed to extend the due date of the principal amount from May 23, 2023 to May 23, 2024, and to provide a mortgage guarantee for the repayment of the principal amount. On May 23, 2024, Yuying Zhang entered into another supplementary agreement with Weiqing Guo, wherein the parties agreed to extend the due date of the principal amount from May 23, 2024 to May 23, 2025, and the real estate property continued to be pledged until May 23, 2025. If Yuying Zhang fails to repay the loan and the property is executed by the Court, the Company has the right to pursue compensation from Zhang Yuying based on the market value of the property. As of September 30, 2024 and June 30, 2024, the net book value of the property was US$1,039,868 and US$1,012,381, respectively.

In addition, the Company also pledged certain property and equipment for the Company’s bank loans and its related party’s personal loan (see Note 12 and Note 13).

NOTE 9 - LAND USE RIGHTS, NET

Land use rights are recognized at cost less accumulated amortization. According to the Chinese laws and regulations regarding land use rights, land in urban districts is owned by the state, while land in the rural areas and suburban areas, except otherwise provided for by the state, is collectively owned by individuals designated as resident farmers by the state. However, in accordance with the legal principle that land ownership is separate from the right to the use of the land, the government grants the user a “land use right” to use the land. The Company has the land use right to use the land for 50 years and amortizes the rights on a straight-line basis over the period of 50 years.

SCHEDULE OF LAND USE RIGHTS

|  | September 30, 2024 |  |  | June 30, 2024 |
Land use rights |  | $ | 718,146 |  |  | $ | 709,840 |
Less: accumulated amortization |  |  | (102,013 | ) |  |  | (94,233 | )
Total land use rights, net |  | $ | 616,133 |  |  | $ | 615,607 |

Amortization expense charged to the continuing operations was US$4,849 and US$3,314 for the three months ended September 30, 2024 and 2023, respectively.

No amortization expense charged to the discontinued operations for the three months ended September 30, 2024 and 2023, respectively.

The estimated future amortization expenses are as follows:

SCHEDULE OF FUTURE AMORTIZATION EXPENSES

12 months ending September 30: |  |  |
2025 |  | $ | 19,492 |
2026 |  |  | 19,492 |
2027 |  |  | 19,492 |
2028 |  |  | 19,492 |
2029 |  |  | 19,492 |
Thereafter |  |  | 518,673 |
Total |  | $ | 616,133 |

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NOTE 10 - LEASES

Lessee

The Company leases offices space and warehouse under non-cancelable operating leases, with terms ranging from one to seven and a half years. The lease terms vary from 2 years to 7.5 years. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of ROU assets and lease liabilities. Lease expenses for lease payment are recognized on a straight-line basis over the lease term. Leases with initial terms of 12 months or less are not recorded on the balance sheet.

When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The table below presents the operating lease related assets and liabilities recorded on the balance sheets.

SCHEDULE OF OPERATING LEASE RELATED ASSETS AND LIABILITIES

|  | September 30, 2024 |  |  | June 30, 2024 |
ROU lease assets |  | $ | 161,693 |  |  | $ | 146,035 |
Operating lease liabilities – current |  |  | 301,980 |  |  |  | 272,787 |
Operating lease liabilities – non-current |  |  | 25,182 |  |  |  | - |
Total operating lease liabilities |  | $ | 327,162 |  |  | $ | 272,787 |

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of September 30, 2024 and June 30, 2024:

SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERMS AND DISCOUNT RATES FOR OPERATING LEASES

|  | September 30, 2024 |  |  | June 30, 2024 |
Remaining lease term and discount rate: |  |  |  |  |  |  |  |
Weighted average remaining lease term (years) |  |  | 1.11 |  |  |  | 1.00 |
Weighted average discount rate |  |  | 4.33 | % |  |  | 4.38 | %

The components of lease expenses for continuing operations were as follows:

SCHEDULE OF COMPONENTS OF LEASE EXPENSES

|  | For the three months ended September 30, |
|  | 2024 |  |  | 2023 |
Lease cost |  |  |  |  |  |  |  |
Amortization of right-of-use assets |  | $ | 38,174 |  |  | $ | 15,275 |
Interest of operating lease liabilities |  |  | 1,286 |  |  |  | 2,275 |
Total lease cost |  | $ | 39,460 |  |  | $ | 17,550 |

Rent expenses totaled US$91,018 and US$40,551 from the continuing operations for the three months ended September 30, 2024 and 2023, respectively.

Rent expenses totaled nil and US$51,778 from the discontinued operations for the three months ended September 30, 2024 and 2023, respectively.

21

The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2024:

SCHEDULE OF MATURITIES OF LEASE LIABILITIES

Remainder of 2025 |  | $ | 298,650 |
2026 |  |  | 25,660 |
2027 |  |  | 6,415 |
Total lease payments |  |  | 330,725 |
Less: imputed interest |  |  | (3,563 | )
Present value of lease liabilities |  | $ | 327,162 |

Lessor

On September 21, 2023, the Company entered into a two-year rental agreement with a third party to lease its property for its office space. Rental income of US$15,468 and nil was recorded in other income, net on the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss) for the three months ended September 30, 2024 and 2023, respectively.

NOTE 11 - ACQUISITION

Acquisition of Guangyuan

On June 8, 2021, Tenet-Jove entered into a Restructuring Agreement with various parties. Pursuant to the terms of the Restructuring Agreement, (i) the Company transferred all of its rights and interests in Ankang Longevity to the Shareholders of Yushe County Guangyuan Forest Development Co., Ltd. (“Guangyuan”) in exchange for the control of 100% of equity interests and assets in Guangyuan; (ii) Tenet-Jove entered a Termination Agreement with Ankang Longevity and the Ankang Shareholders; (iii) as a consideration to the Restructuring Agreement and based on a valuation report on the equity interests of Guangyuan issued by an independent third party, Tenet-Jove relinquished all of its rights and interests in Ankang Longevity and transferred those rights and interests to the Guangyuan Shareholders; and (iv) Guangyuan and the Guangyuan Shareholders entered into a series of variable interest entity agreements with Tenet-Jove. After signing the Restructuring Agreement, the Company and the shareholders of Ankang and Guangyuan actively carried out the transferring of rights and interests in Ankang and Guangyuan, and the transferring was completed subsequently on July 5, 2021. Afterwards, with the completion of all other follow-ups works, on August 16, 2021, the Company, through its subsidiary Tenet-Jove, completed the previously announced acquisition pursuant to the Restructuring Agreement dated June 8, 2021.

The management determined that July 5, 2021 was the acquisition date of Guangyuan. The acquisition provides a unique opportunity for the Company to enter the market of planting fast-growing bamboo willows and scenic greening trees.

The transaction was accounted for in accordance with the provisions of ASC 805-10, Business Combinations. The Company retained independent appraisers to advise management in the determination of the fair value of the various assets acquired and liabilities assumed. The values assigned in these financial statements represent management’s best estimate of fair values as of the Acquisition Date.

As required by ASC 805-20, Business Combinations—Identifiable Assets and Liabilities, and Any Non-controlling Interest, management conducted a review to reassess whether they identified all the assets acquired and all the liabilities assumed, and followed ASC 805-20’s measurement procedures for recognition of the fair value of net assets acquired.

22

The following table summarizes the allocation of estimated fair values of net assets acquired and liabilities assumed:

SCHEDULE OF ALLOCATION OF ESTIMATED FAIR VALUES

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 liabilities |  |  | (2,503,607 | )
Operating lease liabilities |  |  | (1,013,492 | )
Total purchase price for acquisition, net of US$112,070 of cash |  | $ | 16,224,379 |

Under ASC 805-10, acquisition-related costs (i.e., advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred, but are expensed in the periods in which the costs are incurred. Acquisition-related costs were nil for the three months ended September 30, 2024 and 2023.

The Company has included the operating results of Guangyuan in the unaudited condensed consolidated financial statements since the Acquisition Date. nil in net sales and US$12,519 in net loss of Guangyuan were included in discontinued operations in the unaudited condensed consolidated financial statements for the three months ended September 30, 2023.

Acquisition of Biowin

On October 21, 2022, the Company, through its wholly-owned subsidiary, Shineco Life, entered into a stock purchase agreement with the Seller and Biowin, pursuant to which Shineco Life would acquire 51% of the issued equity interests of Biowin from Seller. On December 30, 2022, Shineco Life closed the acquisition of 51% of the issued equity interests of Biowin. As the consideration for the acquisition, the Company paid to Seller US$9,000,000 in cash and the Company issued 13,583 shares of the Company’s common stock, par value US$0.001 per share, to the equity holders of Biowin or any persons designated by Biowin, the total consideration of the acquisition was US$12,097,000. According to the Supplementary Agreement, dated as of December 30, 2022, by and among the Shineco Life, the Seller and Biowin, the Seller transferred its controlling rights of production and operation of Biowin to Shineco Life on January 1, 2023. The management determined that January 1, 2023 was the acquisition date of Biowin. The acquisition provides a unique opportunity for the Company to step into the Point-of-Care Testing industry.

The transaction was accounted for in accordance with the provisions of ASC 805-10, Business Combinations. The Company retained independent appraisers to advise management in the determination of the fair value of the various assets acquired and liabilities assumed. The values assigned in these financial statements represent management’s best estimate of fair values as of the Acquisition Date.

As required by ASC 805-20, Business Combinations—Identifiable Assets and Liabilities, and Any Non-controlling Interest, management conducted a review to reassess whether they identified all the assets acquired and all the liabilities assumed, and followed ASC 805-20’s measurement procedures for recognition of the fair value of net assets acquired.

The excess of the purchase price over the aggregate fair value of assets acquired was allocated to goodwill which amounted to US$6,574,743. The results of operations of Biowin have been included in the unaudited condensed consolidated statements of operations from the date of acquisition.

The management performed an evaluation on the impairment of goodwill, and due to the lower-than-expected revenue and profit and unfavorable business environment, the management recorded an impairment loss on goodwill of Biowin, which amounted to US$4,555,996 during the year ended June 30, 2024.

23

The identifiable goodwill acquired and the carrying value consisted of the following:

SCHEDULE OF GOODWILL ACQUIRED

|  | September 30, 2024 |  |  | June 30, 2024 |
Goodwill |  | $ | 6,574,743 |  |  | $ | 6,574,743 |
Less: impairment for goodwill |  |  | (4,555,996 | ) |  |  | (4,555,996 | )
Goodwill, net |  | $ | 2,018,747 |  |  | $ | 2,018,747 |

The following table summarizes the allocation of estimated fair values of net assets acquired and liabilities assumed:

SCHEDULE OF ALLOCATION OF ESTIMATED FAIR VALUES

Accounts receivable, net |  | $ | 807,771 |
Inventories, net |  |  | 784,336 |
Other current assets, net |  |  | 49,979 |
Property and equipment, net |  |  | 138,252 |
Intangible assets |  |  | 12,683,656 |
Operating lease right-of-use assets |  |  | 173,831 |
Goodwill |  |  | 6,574,743 |
Deferred tax assets, net |  |  | 346,523 |
Short-term bank loans |  |  | (1,594,596 | )
Accounts payable |  |  | (349,989 | )
Advances from customers |  |  | (407,437 | )
Other current liabilities |  |  | (446,729 | )
Operating lease liabilities - non-current |  |  | (45,730 | )
Deferred tax liabilities |  |  | (1,937,804 | )
Non-controlling interest |  |  | (5,301,785 | )
Total purchase price for acquisition, net of US$621,979 of cash |  | $ | 11,475,021 |

The fair value of identified intangible assets, which are trademarks and patents, and its estimated useful lives as of September 30, 2024 is as follows:

SCHEDULE OF INTANGIBLE ASSETS

|  |  |  |  | Average |
|  |  |  |  | Useful Life |
|  |  |  |  | (in Years) |
Intangible assets |  | $ | 12,683,656 |  |  |  | 10 |
Less: accumulated amortization |  |  | (2,219,640 | ) |  |  |  |
Total intangible assets, net |  | $ | 10,464,016 |  |  |  |  |

The amortization expense of intangible assets was US$317,092 and US$317,091 from the continuing operations for the three months ended September 30, 2024 and 2023, respectively.

Under ASC 805-10, acquisition-related costs (i.e., advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred, but are expensed in the periods in which the costs are incurred. Acquisition-related costs were nil for the three months ended September 30, 2024 and 2023.

The Company has included the operating results of Biowin in continuing operations in its unaudited condensed consolidated financial statements since the Acquisition Date. US$121,865 in net sales and US$343,908 in net loss of Biowin were included in the unaudited condensed consolidated financial statements for the three months ended September 30, 2024. US$135,127 in net sales and US$296,975 in net loss of Biowin were included in the unaudited condensed consolidated financial statements for the three months ended September 30, 2023.

24

Acquisition of Wintus

On May 29, 2023, Shineco Life entered into a stock purchase agreement with Dream Partner, Wintus and the Wintus Sellers, pursuant to which Shineco Life shall acquire 71.42% equity interest in Wintus. As the consideration for the acquisition, the Company (a) paid the Wintus Sellers an aggregate cash consideration of US$2,000,000; (b) issued certain shareholders, as listed in the agreement, an aggregate of 41,667 shares of the Company’s restricted Common Stock; and (c) transferred and sold to the Sellers 100% of the Company’s equity interest in Tenet-Jove. The management determined that July 31, 2023 was the acquisition date of Wintus.

The transaction was accounted for in accordance with the provisions of ASC 805-10, Business Combinations. The Company retained independent appraisers to advise management in the determination of the fair value of the various assets acquired and liabilities assumed. The values assigned in these financial statements represent management’s best estimate of fair values as of the Acquisition Date.

As required by ASC 805-20, Business Combinations—Identifiable Assets and Liabilities, and Any Non-controlling Interest, management conducted a review to reassess whether they identified all the assets acquired and all the liabilities assumed, and followed ASC 805-20’s measurement procedures for recognition of the fair value of net assets acquired.

The excess of the purchase price over the aggregate fair value of assets acquired was allocated to goodwill, which amounted to US$21,440,360. The results of operations of Wintus have been included in the statements of operations from the date of acquisition.

The management performed an evaluation on the impairment of goodwill, and due to the lower-than-expected revenue and profit and unfavorable business environment, our management recorded an impairment loss on the goodwill of Wintus, which amounted to US$10,268,823 during the year ended June 30, 2024.

The identifiable goodwill acquired and the carrying value consisted of the following:

SCHEDULE OF GOODWILL ACQUIRED

|  | September 30, 2024 |  |  | June 30, 2024 |
Goodwill |  | $ | 21,440,360 |  |  | $ | 21,440,360 |
Less: impairment for goodwill |  |  | (10,268,823 | ) |  |  | (10,268,823 | )
Goodwill, net |  | $ | 11,171,537 |  |  | $ | 11,171,537 |

25

The following table summarizes the allocation of estimated fair values of net assets acquired and liabilities assumed:

SCHEDULE OF ALLOCATION OF ESTIMATED FAIR VALUES

Accounts receivable, net |  | $ | 12,507,353 |
Advances to suppliers, net |  |  | 3,513,448 |
Inventories, net |  |  | 1,782,180 |
Derivative financial assets |  |  | 6,212 |
Other current assets, net |  |  | 1,426,163 |
Property and equipment, net |  |  | 5,407,301 |
Intangible assets |  |  | 36,117,041 |
Operating lease right-of-use assets |  |  | 1,999 |
Goodwill |  |  | 21,440,360 |
Short-term bank loans |  |  | (12,021,992 | )
Accounts payable |  |  | (6,686,700 | )
Advances from customers |  |  | (78,677 | )
Tax payable |  |  | (600,742 | )
Deferred income |  |  | (77,007 | )
Other current liabilities |  |  | (2,277,877 | )
Long-term bank loans |  |  | (2,071,093 | )
Operating lease liabilities - non-current |  |  | (1,847 | )
Deferred tax liabilities |  |  | (9,186,376 | )
Non-controlling interest |  |  | (8,197,473 | )
Total purchase price for acquisition, net of US$1,003,678 of cash |  | $ | 41,002,273 |
Total purchase price for acquisition |  | $ | 41,002,273 |

The fair value of identified intangible assets, which are trademarks and patents, and its estimated useful lives as of September 30, 2024 is as follows:

SCHEDULE OF INTANGIBLE ASSETS

|  |  |  |  | Average
|  |  |  |  | Useful Life
|  |  |  |  | (in Years)
Intangible assets |  | $ | 35,487,273 |  |  | 10
Less: accumulated amortization |  |  | (4,140,182 | ) |  |
Total intangible assets, net |  | $ | 31,347,091 |  |  |

The amortization expense of intangible assets was US$887,181 and US$591,455 from the continuing operations for the three months ended September 30, 2024 and 2023, respectively.

Under ASC 805-10, acquisition-related costs (i.e., advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred, but are expensed in the periods in which the costs are incurred. Acquisition-related costs were nil and US$779,606 for the three months ended September 30, 2024 and 2023, respectively.

The Company has included the operating results of Wintus in continuing operations in its unaudited condensed consolidated financial statements since the Acquisition Date. US$2,051,471 in net sales and US$1,388,496 in net loss of Wintus were included in the unaudited condensed consolidated financial statements for the three months ended September 30, 2024. US$1,510,730 in net sales and US$840,708 in net loss of Wintus were included in the unaudited condensed consolidated financial statements for the three months ended September 30, 2023.

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NOTE 12 - RELATED PARTY TRANSACTIONS

Due from Related Parties, Net

The Company has made temporary advances to certain stockholders and senior management of the Company and to other entities that are either owned by family members of those stockholders or to other entities that the Company has investments in.

As of September 30, 2024 and June 30, 2024, the outstanding amounts due from related parties consisted of the following:

SCHEDULE OF DUE FROM RELATED PARTIES

|  | September 30, 2024 |  |  | June 30, 2024 |
Chongqing Yufan Trading Co., Ltd (“Chongqing Yufan”) |  | $ | 280,668 |  |  | $ | 318,041 |
Chongqing Dream Trading Co., Ltd |  |  | 42,766 |  |  |  | 41,280 |
Wintus China Limited |  |  | 412,379 |  |  |  | 412,379 |
Fujian Xinglinchun Health Industry Co., Ltd |  |  | 25,303 |  |  |  | 24,424 |
Subtotal |  |  | 761,116 |  |  |  | 796,124 |
Less: allowance for credit losses |  |  | (412,379 | ) |  |  | (412,379 | )
Total due from related parties, net |  | $ | 348,737 |  |  | $ | 383,745 |

Due to Related Parties

As of September 30, 2024 and June 30, 2024, the Company had related party payables of US$2,315,223 and US$2,875,384, respectively, in relation to the operations of Biowin and Wintus. These related party obligations are primarily owed to the principal stockholders or certain relatives of the stockholders, and senior management of the Company, who provide funds for the Company’s operations. The payables are unsecured, non-interest bearing, and due on demand.

As of September 30, 2024 and June 30, 2024, the outstanding amounts due to related parties consisted of the following:

SCHEDULE OF DUE TO RELATED PARTIES

|  | September 30, 2024 |  |  | June 30, 2024 |
Wang Sai |  | $ | - |  |  | $ | 58,846 |
Huang Shanchun |  |  | - |  |  |  | 444,595 |
Liu Fengming |  |  | 41,292 |  |  |  | 19,908 |
Zhan Jiarui |  |  | 19,271 |  |  |  | 111,528 |
Liu Xiqiao |  |  | 23,123 |  |  |  | 27,319 |
Lyu Jiajia (a) |  |  | - |  |  |  | 478,547 |
Zhao Pengfei |  |  | 7,128 |  |  |  | 6,880 |
Wang Xiaohui |  |  | 360,598 |  |  |  | 342,562 |
Chi Keung Yan |  |  | 630,535 |  |  |  | 614,427 |
Fuzhou Medashan Biotechnology Co., Ltd. |  |  | 6,539 |  |  |  | 13,297 |
Chongqing Fuling District Renyi Zhilu Silk Industry Co., Ltd |  |  | 890,703 |  |  |  | 412,479 |
Chongqing Huajian Housing Development Co., Ltd (“Chongqing Huajian”) |  |  | 336,034 |  |  |  | 344,996 |
Total due to related parties |  | $ | 2,315,223 |  |  | $ | 2,875,384 |

a. | On September 27, 2023, the Company entered into a loan agreement with Lyu Jiajia to borrow US$800,000 as working capital for one year, with a maturity date of September 29, 2024. The loan has a fixed interest rate of 15.0% per annum. The Company repaid totaling $0.4 million during the year ended June 30, 2024. As of June 30, 2024, the total outstanding balance, including principal and the interest, amounted to US$478,547. During the three months ended September 30, 2024, all of the amounts, including principal and interest due to Lyu Jiajia, were offset with the consideration for shares purchased from the Company.

27

Interest expenses on loans due to related parties were US$14,450 and nil from continued operations for the three months ended September 30, 2024 and 2023, respectively.

Interest expenses on loans due to related parties were nil and US$1,526 from discontinued operations for the three months ended September 30, 2024 and 2023, respectively.

Sales to a Related Party

The Company made sales of US$391,808 and US$130,801 to its related party, Chongqing Fuling District Renyi Zhilu Silk Industry Co., Ltd, for the three months ended September 30, 2024 and 2023, respectively.

Loan guarantee provided by related parties

The Company’s related parties provide a guarantee for the Company’s bank loans (see Note 13).

Loan guarantee provided to a related party

As of September 30, 2024 and June 30, 2024, Chongqing Wintus (New Star) Enterprises Group (“Chongqing Wintus”) provided a guarantee that amounted to US$712,771 and US$687,999 for a bank loan borrowed by Chongqing Yufan, a related party of the Company until December 28, 2025.

Lease from a related party

The Company entered into a two-year lease agreement for the lease of office space from a related party company, of which the CEO is the Company’s shareholder.

As of September 30, 2024, the operating lease right-of-use assets and corresponding operating lease liabilities of leases from the related party were US$63,062 and US$169,977, respectively.

As of June 30, 2024, the operating lease right-of-use assets and corresponding operating lease liabilities of leases from the related party were US$80,746 and US$163,306, respectively.

During the three months ended September 30, 2024 and 2023, the Company incurred operating lease expenses in leases from the related party of US$20,946 and US$20,728, respectively.

NOTE 13 – LOANS

Short-term loans

Short-term loans from third parties

During the year ended June 30, 2024, the Company entered into loan agreements with two third parties. These short-term loans from third parties are mainly used for short-term funding to support the Company’s working capital needs. These loans bear interest or no interest and have terms of no more than three months. As of June 30, 2024, the outstanding balance of short-term loans from third parties amounted to US$1,025,930. One of the loans amounting to US$524,464 was fully repaid by the Company during the three months ended September 30, 2024, and the other loan amounted to US$527,450 was extended for another four months with a new maturity date of December 31, 2024.

The Company recorded interest expenses from continuing operations of US$139,890 and nil for the three months ended September 30, 2024 and 2023, respectively.

Short-term bank loans

Short-term bank loans consisted of the following:

SCHEDULE OF SHORT TERM BANK LOANS

Lender |  | September 30, 2024 |  |  | Maturity Date |  | Int. Rate/Year |
Jiangnan Rural Commercial Bank(a) |  | $ | 427,662 |  |  | 2025/5/21 |  |  | 4.65 | %
Bank of Jiangsu |  |  | 419,964 |  |  | 2025/1/20 |  |  | 4.00 | %
Bank of China(b) |  |  | 420,535 |  |  | 2024/6/26 |  |  | 4.90 | %
United Overseas Bank(c) |  |  | 9,533,450 |  |  | October 2024- March 2025 |  |  | 4.20 | %
Industrial and Commercial Bank of China |  |  | 427,662 |  |  | 2025/06/20 |  |  | 3.75 | %
Bank of China(d) |  |  | 427,662 |  |  | 2025/2/7 |  |  | 3.45 | %
Chongqing Rural Commercial Bank(e) |  |  | 1,354,264 |  |  | 2025/3/18 |  |  | 4.30 | %
Industrial and Commercial Bank of China(f) |  |  | 712,771 |  |  | 2025/9/20 |  |  | 3.10 | %
Total short-term bank loans |  | $ | 13,723,970 |  |  |  |  |  |  |

The loans outstanding were guaranteed by the following properties, entities or individuals:

a. | Guaranteed by Mr. Liu Fengming, the former CEO of the Company, Beijing Kanghuayuan Technology, one of the shareholders of the Company and pledged by the patent rights of the Company.
b. | Guaranteed by Mr. Liu Fengming, the former CEO of the Company, and his wife, Ms. Jie Liang. Upon the maturity of the loan, the bank offered the Company an extension, however, the Company failed to sign the extension agreement due to an administrative issue. As of the date of this report, the Company has not received any notice from the bank for repayment, and it expects to continue using this bank facility.
c. | Guaranteed by Ms. Wang Xiaohui and Mr. Chi Keung Yan, two of the shareholders of the Company, and the family member of Ms. Wang Xiaohui, Chongqing Huajian, Chongqing Yufan and Chongqing Yiyao Electromechanical Co., Ltd. In addition, Chongqing Huajian and Chongqing Yufan also pledged their properties as collateral to guarantee the Company’s loans from United Overseas Bank. As of the date of this report, the Company borrowed additional loans of approximately US$2.5 million under this loan agreement.
d. | Guaranteed by Ms. Wang Xiaohui and her family member, as well as the other subsidiary of the Company, Chongqing Wintus. In addition, Chongqing Huajian and another third party pledged their properties to guarantee the Company’s loan from Bank of China.

e. | Guaranteed by Ms. Wang Xiaohui, one of the shareholders of the Company, her family members, and Chongqing Huajian. The loan is also guaranteed by other subsidiaries of the Company, Wulong Wintus Silk Co., Ltd (“Wulong Wintus”), Chongqing Hongsheng Silk Co., Ltd and Chongqing Liangping Wintus Textile Ltd (“Liangping Wintus”). In addition, Chongqing Huajian pledged its properties to guarantee the Company’s loan from Chongqing Rural Commercial Bank.
f. | The loan is guaranteed by Chongqing Wintus, a subsidiary of the Company. In addition, the Company’s properties with net book values of US$623,712 were pledged as collateral to secure this loan.

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Lender |  | June 30, 2024 |  |  | Maturity Date |  | Int. Rate/Year |
Jiangnan Rural Commercial Bank(a) |  | $ | 412,800 |  |  | 2025/5/21 |  |  | 4.65 | %
Bank of Jiangsu |  |  | 405,369 |  |  | 2025/1/20 |  |  | 4.00 | %
Bank of China(b) |  |  | 405,920 |  |  | 2024/6/26 |  |  | 4.90 | %
United Overseas Bank(c) |  |  | 9,536,508 |  |  | July 2024 - December 2024 |  |  | 4.20 | %
Industrial and Commercial Bank of China |  |  | 412,800 |  |  | 2025/06/20 |  |  | 3.75 | %
Industrial and Commercial Bank of China(d) |  |  | 619,199 |  |  | 2024/9/22 |  |  | 3.45 | %
Bank of China(e) |  |  | 412,800 |  |  | 2025/2/7 |  |  | 3.45 | %
Chongqing Rural Commercial Bank(f) |  |  | 1,307,199 |  |  | 2025/3/18 |  |  | 4.30 | %
Total short-term bank loans |  | $ | 13,512,595 |  |  |  |  |  |  |

The loans outstanding were guaranteed by the following properties, entities or individuals:

a. | Guaranteed by Mr. Liu Fengming, the former CEO of the Company, Beijing Kanghuayuan Technology, one of the shareholders of the Company and pledged by the patent rights of the Company.
b. | Guaranteed by Mr. Liu Fengming, the former CEO of the Company, and his wife, Ms. Jie Liang. Upon the maturity of the loan, the bank offered the Company an extension, however, the Company failed to sign the extension agreement due to an administrative issue. As of the date of this report, the Company has not received any notice from the bank for repayment, and it expects to continue using this bank facility.
c. | Guaranteed by Ms. Wang Xiaohui and Mr. Chi Keung Yan, two of the shareholders of the Company, and the family member of Ms. Wang Xiaohui, Chongqing Huajian, Chongqing Yufan and Chongqing Yiyao Electromechanical Co., Ltd. In addition, Chongqing Huajian and Chongqing Yufan also pledged their properties as collateral to guarantee the Company’s loans from United Overseas Bank. As of the date of this report, the Company borrowed additional loans of approximately US$4.2 million under this loan agreement.
d. | Guaranteed by the other subsidiary of the Company, Chongqing Wintus. In addition, the Company’s properties with net book values of US$605,195 were pledged as collateral to secure this loan as of June 30, 2024. The loan was fully repaid upon maturity.
e. | Guaranteed by Ms. Wang Xiaohui and her family member, as well as the other subsidiary of the Company, Chongqing Wintus. In addition, Chongqing Huajian and another third party pledged their properties to guarantee the Company’s loan from Bank of China.

f. | Guaranteed by Ms. Wang Xiaohui, one of the shareholders of the Company, her family members, and Chongqing Huajian. The loan is also guaranteed by other subsidiaries of the Company, Wulong Wintus Silk Co., Ltd (“Wulong Wintus”), Chongqing Hongsheng Silk Co., Ltd and Chongqing Liangping Wintus Textile Ltd (“Liangping Wintus”). In addition, Chongqing Huajian pledged its properties to guarantee the Company’s loan from Chongqing Rural Commercial Bank.

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Long-term loans

Long-term bank loans consisted of the following:

SCHEDULE OF LONG TERM BANK LOANS

Lender |  | September 30, 2024 |  |  | Maturity Date |  | Int. Rate/Year |
Chongqing Rural Commercial Bank(a) |  | $ | 641,494 |  |  | 2026/9/2 |  |  | 3.35 | %
Bank of Chongqing(b) |  |  | 1,126,177 |  |  | 2026/7/3 |  |  | 4.00 | %
Total long-term bank loans |  | $ | 1,767,671 |  |  |  |  |  |  |
Long-term bank loans-current |  | $ | 14,255 |  |  |  |  |  |  |
Long-term bank loans-non-current |  | $ | 1,753,416 |  |  |  |  |  |  |

The loans outstanding were guaranteed by the following properties, entities or individuals:

a. | Guaranteed by Ms. Wang Xiaohui and Mr. Chi Keung Yan, two of the shareholders of the Company. The loan is also guaranteed by other subsidiaries of the Company, Chongqing Wintus and Wulong Wintus. In addition, Liangping Wintus’s properties with net book values of US$557,560 were pledged as collateral to secure this loan.
b. | Guaranteed by Ms. Wang Xiaohui and Mr. Chi Keung Yan, two of the shareholders of the Company, and the family members of Ms. Wang Xiaohui. In addition, the Company’s properties with net book values of US$1,483,124 were pledged as collateral to secure this loan.

Lender |  | June 30, 2024 |  |  | Maturity Date |  | Int. Rate/Year |
Chongqing Rural Commercial Bank(a) |  | $ | 619,199 |  |  | 2024/9/7 |  |  | 4.85 | %
Bank of Chongqing(b) |  |  | 1,093,919 |  |  | 2026/7/3 |  |  | 4.00 | %
Total long-term bank loans |  | $ | 1,713,118 |  |  |  |  |  |  |
Long-term bank loans-current |  | $ | 632,959 |  |  |  |  |  |  |
Long-term bank loans-non-current |  | $ | 1,080,159 |  |  |  |  |  |  |

The loans outstanding were guaranteed by the following properties, entities or individuals:

a. | Guaranteed by Ms. Wang Xiaohui and Mr. Chi Keung Yan, two of the shareholders of the Company, and the family member of Ms. Wang Xiaohui. The loan is also guaranteed by other subsidiaries of the Company, Chongqing Wintus and Wulong Wintus. In addition, Liangping Wintus’s properties with net book values of US$545,597 were pledged as collateral to secure this loan as of June 30, 2024. The loan was fully repaid upon maturity.
b. | Guaranteed by Ms. Wang Xiaohui and Mr. Chi Keung Yan, two of the shareholders of the Company, and the family members of Ms. Wang Xiaohui. In addition, the Company’s properties with net book values of US$1,451,298 were pledged as collateral to secure this loan as of June 30, 2024.

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The future maturities of long-term bank loans as of September 30, 2024 were as follows:

SCHEDULE OF MATURITIES OF LONG -TERM BANK LOANS

Twelve months ending September 30, |  |  |
2025 |  | $ | 14,255 |
2026 |  |  | 1,753,416 |
Total long-term bank loans |  | $ | 1,767,671 |

The Company recorded interest expenses from continuing operations of US$150,580 and US$114,136 for the three months ended September 30, 2024 and 2023, respectively. The annual weighted average interest rates from continuing operations were 3.89% and 4.37% for the three months ended September 30, 2024 and 2023, respectively. Interest expenses from discontinued operations were both nil for the three months ended September 30, 2024 and 2023, respectively.

NOTE 14 - CONVERTIBLE NOTES PAYABLE

On June 16, 2021, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued an unsecured convertible promissory note with a maturity date of June 17, 2022 (“the Note”) to an institutional accredited investor Streeterville Capital, LLC (“Investor”). The Note has the original principal amount of US$3,170,000 and Investor gave consideration of US$3.0 million, reflecting original issue discount of US$150,000 and Investor’s legal fee of US$20,000. On September 7, 2022, the Company signed an extension amendment with the Investor to extend the maturity date of the Note to June 17, 2023, resulting in an increase of the principal amount to US$3,500,528. On October 21, 2022, the Company signed a standstill agreement with the Investor, pursuant to which the Investor would not seek repayment of any portion of the Note during the period from October 21, 2022 to January 20, 2023. On January 18, 2023, the Investor re-started the repayment of the Notes. Thereafter, the Company signed a second extension amendment dated as June 15, 2023, with the Investor to extend the maturity date to June 17, 2024, thereby increasing the principal amount to US$3,929,498. On December 21, 2023, the Company entered into a preliminary agreement with the Investor, pursuant to which the Investor would not seek repayment of any portion of the Note during the period from December 22, 2023 to April 16, 2024. The Company signed a third extension amendment dated as June 11, 2024, with the Investor to extend the maturity date to June 17, 2025, thereby increasing the principal amount to US$4,340,781.

On July 16, 2021, the Company entered into a Securities Purchase Agreement (the “July Agreement”) pursuant to which the Company issued two unsecured convertible promissory notes with a one-year maturity term (the “Notes”) to the same Investor. The first convertible promissory note (“Note #1”) has an original principal amount of US$3,170,000 and the Investor gave consideration of US$3.0 million, reflecting original issue discount of US$150,000 and Investor’s legal fee of US$20,000. The second convertible promissory note (“Note #2”) has an original principal amount of US$4,200,000 and Investor gave consideration of US$4.0 million, reflecting original issue discount of US$200,000. Interest accrues on the outstanding balance of the Notes at 6% per annum. The Company has received the principal in full from the Investor and used the proceeds for general working capital purposes. As of June 30, 2024, the Notes were fully converted, and shares of the Company’s common stock totaling 1,946,766 were issued by the Company to the Investor, equaling principal and interests amounted to US$7,472,638.

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On August 19, 2021, the Company entered into a Securities Purchase Agreement (the “Agreement”) pursuant to which the Company issued an unsecured convertible promissory note with a maturity date of August 23, 2022 (the “Note”) to the same Investor. The Note has an original principal amount of US$10,520,000 and Investor gave consideration of US$10.0 million, reflecting original issue discount of US$500,000 and Investor’s legal fee of US$20,000. On September 7, 2022, the Company signed an extension amendment with the Investor to extend the maturity date to August 23, 2023, thereby increasing the principal amount to US$11,053,443.50. On October 21, 2022, the Company signed a standstill agreement with the Investor, pursuant to which the Investor will not seek repayment of any portion of the Note during the period from October 21, 2022 to January 20, 2023. Thereafter, the Company signed a second extension amendment dated as June 15, 2023, with the Investor to extend the maturity date to August 23, 2024, thereby increasing the principal amount to US$11,878,241. On December 21, 2023, the Company entered into a preliminary agreement with the Investor, pursuant to which the Investor would not seek repayment of any portion of the Note during the period from December 22, 2023 to April 16, 2024. The Company signed a third extension amendment dated June 11, 2024, with the Investor to extend the maturity date to August 23, 2025, thereby increasing the principal amount to US$10,698,374.

For the above-mentioned convertible promissory notes issued, interest accrues on the outstanding balance of these notes at 6% per annum. The Investor may seek repayment of all or any part of the outstanding balance of the note, at any time after six months from the issue date upon three trading days’ notice, in cash or converting into shares of the Company’s common stock at a price equal to 80% multiplied by the lowest daily volume weighted average price (“VWAP”) during the fifteen trading days immediately preceding the applicable redemption conversion, subject to certain adjustments and ownership limitations specified in the note. Following the receipt of a redemption notice, the Company may either ratify Investor’s proposed allocation in the applicable redemption notice or elect to change the allocation by written notice to Investor within twenty-four (24) hours of its receipt of such redemption notice, so long as the sum of the cash payments and the amount of redemption conversions equal the applicable redemption amount.

For the three months ended September 30, 2024 and 2023, a total of US$188,712 and US$166,823 in amortization of the debt issuance and other costs from continuing operations was recorded on the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss), respectively.

As of September 30, 2024, shares of the Company’s common stock totaling 472,875 were issued by the Company to the Investor equaling principal and interests amounted to US$13,843,360, and cash totaling US$1,050,000 was repaid to the Investor. The Notes balance was US$10,562,428, with a carrying value of US$11,023,314, net of deferred financing costs of US$460,886 was recorded in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2024.

NOTE 15 - TAXES

(a) Corporate Income Taxes

The Company is subject to income taxes on an entity basis on income arising in or derived from the location in which each entity is domiciled.

Shineco is incorporated in the United States and has no operating activities. Shineco Life is incorporated in Hong Kong and is subject to profit taxes in Hong Kong at a rate of 8.25% on assessable profits up to HK$2,000,000 and 16.5% on any part of assessable profits over HK$2,000,000. Tenet-Jove and the VIEs are governed by the Income Tax Laws of the PRC, and are currently subject to tax at a statutory rate of 25% on taxable income. Two VIEs receive a full income tax exemption from the local tax authority of the PRC as agricultural enterprises as long as the favorable tax policy remains unchanged. Biowin is subject to corporate income tax at a reduced rate of 15% starting from December 2019, when it was approved by local government as a High and New Technology Enterprises (“HNTEs”), to December 2022. In December 2022, the Company successfully renewed its HNTE certification with local government and will continue to enjoy the reduced income tax rate of 15% for another three years through December 2025. The subsidiaries of Wintus in the PRC are governed by the Income Tax Laws of the PRC and are currently subject to tax at a statutory rate of 25% on taxable income, except certain subsidiaries that are recognized as small low-profit enterprises. According to the relevant PRC tax policies, once an enterprise meets certain requirements and is identified as a small-scale minimal profit enterprise, the taxable income not more than RMB3 million is subject to a reduced effective rate of 5% during the period from January 1, 2023 to December 31, 2024.

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On December 22, 2017, The Act was enacted. The Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are subject to U.S. taxation. The change in rate has caused the Company to re-measure its income tax liability and record an estimated income tax expense of US$744,766 for the year ended June 30, 2018. In accordance with SAB 118, additional work is necessary to do a more detailed analysis of The Act as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense in fiscal 2019 when the analysis is complete. The Company elects to pay the transition tax over an eight-year period using specified percentages (eight percent per year for the first five years, 15 percent in year six, 20 percent in year seven, and 25 percent in year eight).

i) The components of the income tax provision (benefit) were as follows:

SCHEDULE OF INCOME TAX BENEFIT

|  | For the three months ended September 30, |
|  | 2024 |  |  | 2023 |
Current income tax provision |  | $ | 481 |  |  | $ | - |
Deferred income tax benefit |  |  | (293,432 | ) |  |  | (251,366 | )
Total income tax benefit |  |  | (292,951 | ) |  |  | (251,366 | )
Less: income tax provision, held for discontinued operations |  |  | - |  |  |  | - |
Income tax benefit, held for continuing operations |  | $ | (292,951 | ) |  | $ | (251,366 | )

ii) The components of the deferred tax liability were as follows:

SCHEDULE OF FINANCIAL BASIS AND TAX BASIS OF ASSETS AND LIABILITIES

|  | September 30, 2024 |  |  | June 30, 2024 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for credit loss/doubtful accounts |  | $ | 505,316 |  |  | $ | 352,077 |
Inventory reserve |  |  | - |  |  |  | 1,522 |
Net operating loss carry-forwards |  |  | 1,517,475 |  |  |  | 1,187,887 |
Total |  |  | 2,022,791 |  |  |  | 1,541,486 |
Valuation allowance |  |  | (1,559,787 | ) |  |  | (1,110,668 | )
Total deferred tax assets |  |  | 463,004 |  |  |  | 430,818 |
Deferred tax liability: |  |  |  |  |  |  |  |
Intangible assets |  |  | (9,989,025 | ) |  |  | (10,266,124 | )
Total deferred tax liability |  |  | (9,989,025 | ) |  |  | (10,266,124 | )
Deferred tax liability, net |  | $ | (9,526,021 | ) |  | $ | (9,835,306 | )

Movement of the valuation allowance:

SCHEDULE OF MOVEMENT OF VALUATION ALLOWANCE

|  | September 30, 2024 |  |  | June 30, 2024 |
Beginning balance |  | $ | 1,110,668 |  |  | $ | 2,471,066 |
Acquisition of subsidiaries |  |  | - |  |  |  | 154,481 |
Disposal of Tenet Jove |  |  | - |  |  |  | (2,392,580 | )
Current year addition |  |  | 409,130 |  |  |  | 881,746 |
Exchange difference |  |  | 39,989 |  |  |  | (4,045 | )
Valuation allowance |  | $ | 1,559,787 |  |  | $ | 1,110,668 |

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(b) Value-Added Tax

The Company is subject to a VAT for selling goods. All of the Company’s products that were sold in the PRC were subject to a Chinese value-added tax at rates ranging from 3% to 13%, depending on the type of products sold. For overseas sales, VAT is exempted on the exported goods. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Under commercial practice in the PRC, the Company pays VAT based on tax invoices issued. The tax invoices may be issued subsequent to the date on which revenue is recognized, and there may be a considerable delay between the date on which the revenue is recognized and the date on which the tax invoice is issued.

In the event that the PRC tax authorities dispute the date on which revenue is recognized for tax purposes, the PRC tax office has the right to assess a penalty based on the amount of the taxes which are determined to be late or deficient, and the penalty will be expensed in the period if and when a determination is made by the tax authorities. There were no assessed penalties during the three months ended September 30, 2024 and 2023, respectively.

(c) Taxes Payable

Taxes payable consisted of the following:

SCHEDULE OF TAXES PAYABLE

|  | September 30, 2024 |  |  | June 30, 2024 |
Income tax payable |  | $ | 1,284,580 |  |  | $ | 1,268,904 |
Value added tax payable |  |  | 254,432 |  |  |  | 303,739 |
Business tax and other taxes payable |  |  | 2,289 |  |  |  | 1,178 |
Total tax payable |  | $ | 1,541,301 |  |  | $ | 1,573,821 |
Income tax payable - current portion |  | $ | 1,355,110 |  |  | $ | 1,387,630 |
Income tax payable – non-current portion |  | $ | 186,191 |  |  | $ | 186,191 |

NOTE 16 - STOCKHOLDERS’ EQUITY

Initial Public Offering

On September 28, 2016, the Company completed its initial public offering of 1,713,190 shares of the Common Stock (before the effect of the reverse stock splits mentioned below) at a price of US$4.50 per share for gross proceeds of US$7.7 million and net proceeds of approximately US$5.4 million. The Company’s common shares began trading on September 28, 2016 on the NASDAQ Capital Market under the symbol “TYHT”.

Statutory Reserve

The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”).

Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entities’ registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the board of directors. As of September 30, 2024 and June 30, 2024, the balance of the required statutory reserves was US$4,350,297 and US$4,350,297, respectively.

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On July 10, 2020, the Company’s stockholders approved a 1-for-9 reverse stock split of the Company’s common stock, par value US$0.001 per share, with a market effective date of August 14, 2020 (the “2020 Reverse Stock Split”). As a result of the 2020 Reverse Stock Split, each nine pre-split shares of common stock outstanding automatically combined and converted to one issued and outstanding share of common stock without any action on the part of stockholders. No fractional shares of common stock were issued to any stockholders in connection with the 2020 Reverse Stock Split. Each stockholder was entitled to receive one share of common stock in lieu of the fractional share that would have resulted from the 2020 Reverse Stock Split. The number of the Company’s authorized common stock remained at 100,000,000 shares, and the par value of the common stock following the 2020 Reverse Stock Split remained at US$0.001 per share. As a result of the 2020 Reverse Stock Split, the Company’s shares and per share data as reflected in the unaudited condensed consolidated financial statements were retroactively restated as if the transaction occurred at the beginning of the periods presented.

On April 10, 2021, the Company issued 16,134 shares of common stock to selected investors at a price of US$768.00 per share. The Company received net proceeds of US$7,981,204 and US$3,024,000 was waived by the Company during the year ended June 30, 2024. See Note 18.

On August 30, 2023, the Board of Directors of the Company approved the issuance of shares of common stock pursuant to the Company’s 2023 Equity Incentive Plan (the “2023 Plan”) in the aggregate amount of 15,854 shares (the “Shares”) to its non-officer employees. The fair value of the Shares was US$540,310 based on the fair value of share price US$34.08 at August 30, 2023. The Shares were issued in September 2023.

On May 29, 2023, Shineco Life entered into a stock purchase agreement with Dream Partner, Wintus and the Wintus Sellers, pursuant to which Shineco Life shall acquire 71.42% equity interest in Wintus. As the consideration for the Acquisition, the Company (a) paid the Wintus Sellers an aggregate cash consideration of US$2,000,000; (b) issued certain shareholders, as listed in the agreement, an aggregate of 41,667 shares of the Company’s restricted Common Stock; and (c) transferred and sold to the Sellers 100% of the Company’s equity interest in Tenet-Jove. (Note 11).

On December 22, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain non-US investors (the “Investors”). Under the Purchase Agreement, the Company agreed to sell to the Investors up to 50,000 shares (the “Shares”) of its common stock at a per share purchase price of US$28.80 for gross proceeds of up to US$1,440,000. The Company has received gross proceeds in full from the Investors, and all of the Shares were issued on December 28, 2023.

On February 1, 2024, the Company’s stockholders approved a 1-for-10 reverse stock split of the shares of the Company’s common stock, with a par value of US$0.001 per share, which became effective on February 16, 2024 (the “First 2024 Reverse Stock Split”). As a result of the First 2024 Reverse Stock Split, each of the ten pre-split shares of common stock outstanding automatically combined and converted to one issued and outstanding share of common stock without any action on the part of the stockholders. No fractional shares of common stock were issued to any shareholders in connection with the First 2024 Reverse Stock Split. Each shareholder received one share of common stock in lieu of the fractional share that would have resulted from the First 2024 Reverse Stock Split. The number of the Company’s authorized common stock also increased to 150,000,000 shares, and the par value of the common stock following the First 2024 Reverse Stock Split remained at US$0.001 per share. As a result of the First 2024 Reverse Stock Split, the Company’s shares and per share data as reflected in the unaudited condensed consolidated financial statements have been retroactively restated as if the transaction occurred at the beginning of the periods presented.

On June 18, 2024, the Board of Directors of the Company approved the issuance of shares of common stock pursuant to the Company’s 2024 Equity Incentive Plan (the “2024 Plan”) in the aggregate amount of 30,650 shares (the “Shares”) to its non-officer employees. The fair value of the Shares was US$2,331,852 based on the fair value of the share price of US$76.08 on June 18, 2024. The Shares were issued on June 18, 2024

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On June 20, 2024, the Company entered into a securities purchase agreement with certain non-U.S. investors (the “Purchasers”), pursuant to which the Company agreed to sell, and the Purchasers agreed to purchase, severally and not jointly, an aggregate of 58,333 shares of common stock of the Company (the “Shares”) at an offering price of US$120.00 per share for gross proceeds of up to US$7.0 million. In reliance on the Purchasers’ representations to the Company, the Shares issued in this offering were not subject to the registration requirements of the Securities Act, pursuant to Regulation S promulgated thereunder. As of June 30, 2024, proceeds of approximately US$6.4 million were received, and the remaining proceeds were fully received in July 2024, and all of the Shares were issued on July 8, 2024.

On July 11, 2024, the Company entered into an Underwriting Agreement with EF Hutton LLC, as the representative for several underwriters, relating to the underwritten public offering (the “Offering”) of 77,882 shares of the Common Stock at a public offering price of US$25.68 per share, for aggregate gross proceeds of approximately US$2.0 million, prior to deducting underwriting discounts and other offering expenses. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 11,683 shares of the Common Stock at the public offering price per share, less the underwriting discounts to cover over-allotments, if any. The Offering closed on July 15, 2024, and the 45-day option expired on August 30, 2024. The net proceeds from the offering were approximately US$1.7 million, after deducting the estimated underwriting discounts and commissions and estimated offering expenses. The Company intends to use approximately 50% of the net proceeds from the Offering for mergers and acquisitions, approximately 25% for repaying outstanding convertible notes, and 25% for general corporate purposes.

On August 22, 2024, the Company entered into a securities purchase agreement (the “SPA”) with 22 purchasers, each an unrelated third party to the Company (collectively, the “Purchasers”). Pursuant to the SPA, the Purchasers agree to purchase, and the Company agreed to issue and sell to the Purchasers, an aggregate of 624,375 shares of the Company’s common stock, par value US$0.001 per share (the “Shares”), at a purchase price of US$13.20 per share, and for an aggregate purchase price of US$8,241,750 (the “Offering”). The SPA, the transaction contemplated thereby, and the issuance of the Shares have been approved by the Company’s board of directors. The closing of the transaction contemplated by the SPA took place on September 10, 2024. As of September 30, 2024, proceeds of approximately US$4.4 million were received, and the remaining proceeds are expected to be fully received by December 31, 2024.

On October 21, 2024, the Company’s stockholders approved a 1-for-24 reverse stock split of the shares of the Company’s common stock, with a par value of US$0.001 per share, which became effective on November 12, 2024 (the “Second 2024 Reverse Stock Split”). As a result of the Second 2024 Reverse Stock Split, each of the twenty-four pre-split shares of common stock outstanding automatically combined and converted to one issued and outstanding share of common stock without any action on the part of the stockholders. No fractional shares of common stock were issued to any shareholders in connection with the Second 2024 Reverse Stock Split. Each shareholder received one share of common stock in lieu of the fractional share that would have resulted from the Second 2024 Reverse Stock Split. As a result of the Second 2024 Reverse Stock Split, the Company’s shares and per share data as reflected in the unaudited condensed consolidated financial statements have been retroactively restated as if the transaction occurred at the beginning of the periods presented.

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NOTE 17 - CONCENTRATIONS AND RISKS

The Company maintains principally all bank accounts in the PRC. The cash balance held in the PRC bank accounts was US$205,601 and US$336,776 as of September 30, 2024 and June 30, 2024, respectively.

During the three months ended September 30, 2024 and 2023, almost 100% of the Company’s assets were located in the PRC and 100% of the Company’s revenue was derived from its subsidiaries and VIEs located in the PRC.

For the three months ended September 30, 2024, two customers accounted for approximately 33% of the Company’s total sales from the continuing operations. As of September 30, 2024, one customer accounted for approximately 89% of the Company’s accounts receivable.

For the three months ended September 30, 2023, two customers accounted for approximately 26% of the Company’s total sales from the continuing operations.

For the three months ended September 30, 2024, one vendor accounted for approximately 10.4% of the Company’s total purchases from the continuing operations.

For the three months ended September 30, 2023, one vendor accounted for approximately 18% of the Company’s total purchases from the continuing operations.

NOTE 18 - COMMITMENTS AND CONTINGENCIES

Lease commitments

The Group leases offices for operation under operating leases. Future minimum lease payments of US$330,725 under non-cancellable operating leases with initial terms in excess of one year were included in Note 10.

Legal Contingencies

On November 26, 2021, the Company filed a complaint in the Supreme Court of the State of New York, New York County against Lei Zhang and Yan Li, as defendants, and Transhare Corporation (“Transhare”), as a nominal defendant, asserting that defendants had not paid for certain restricted shares of the Company’s common stock pursuant to stock purchase agreements they executed with the Company. In December, defendants filed an answer and counterclaim against the Company, which they amended on January 27, 2022 after the Company moved to dismiss their counterclaims. They brought claims for, among others, breach of contract, breach of the covenant of good faith and fair dealing, and fraud, asserting that the Company made false and materially misleading statements, specifically regarding the sale of such shares to Lei Zhang and Yan Li and the removal of their restrictive legends. Defendants are seeking money damages of at least US$9 million, punitive damages of US$10 million, plus interest, costs, and fees. In April 2022, the Court granted the Company’s motion for a preliminary injunction to restrain the Company’s transfer agent from removing the restrictive legends on the shares, provided that the Company posts a bond, which the Company declined to do. On June 13, 2022, the restriction imposed on the shares were lifted.

Nominal defendant Transhare Corporation moved to dismiss the defendants’ counterclaim against it for wrongful refusal to remove restrictions pursuant to 6 Del. C. § 8-401, and its motion was fully submitted in April 2022. On September 9, 2022, the Court granted Transhare Corporation’s motion to dismiss defendants’ counterclaim for wrongful refusal to remove restrictions. Defendants have appealed the Court’s September 9, 2022 order dismissing defendants’ counterclaim for wrongful refusal to remove restrictions. On October 3, 2022, the parties submitted a stipulation dismissing defendants’ outstanding counterclaim against Transhare Corporation seeking declaratory judgment.

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The Company participated in a formal mediation with the defendants Lei Zhang and Yan Li on September 18, 2023. As a result of the mediation, the parties were able to reach a settlement agreement in December 2023. The parties executed a Settlement Agreement on December 21, 2023, and the claims by each side were formally dismissed by the court on December 22, 2023. The subscription receivable amounted to US$3,024,000 was waived by the Company during the fiscal year ended June 30, 2024, and the Company will not retrieve the shares that were issued to the defendants.

NOTE 19 - SEGMENT REPORTING

ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Group’s internal organizational management structure as well as information about geographical areas, business segments, and major customers in for details on the Group’s business segments.

The Company’s chief operating decision maker has been identified as the Chief Executive Officer who reviews the financial information of separate operating segments when making decisions about allocating resources and assessing performance of the Group. Based on management’s assessment, the Company has determined that it has following operating segments according to its major products and locations as follows:

● | Developing, manufacturing, and distributing of specialized fabrics, textile products, and other by-products derived from an indigenous Chinese plant called Apocynum Venetum, commonly known as “Bluish Dogbane” or known in Chinese as “Luobuma” (referred to herein as Luobuma), which are reclassified as discontinued operations:
| The operating companies of this segment, namely Tenet-Jove and Tenet Huatai, specialize in Luobuma growing, development and manufacturing of relevant products, as well as purchasing Luobuma raw materials processing.
| This segment’s operations are focused in the north region of Mainland China, mostly carried out in Beijing, Tianjin, and Xinjiang.
● | Planting, processing, and distributing of green and organic agricultural produce as well as growing and cultivating of Chinese Yew trees (“Other agricultural products”), which are reclassified as discontinued operations:

| The operating company of this segment, Qingdao Zhihesheng, is engaged in the business of growing and distributing green and organic vegetables and fruits. This segment has been focusing its efforts on the growing and cultivating of Chinese yew trees (formally known as “taxus media”), a small evergreen tree whose branches can be used for the production of medications believed to be anti-cancer and the tree itself can be used as an ornamental indoor bonsai tree, which are known to have the effect of purifying air quality. The operations of Zhihesheng are located in the East and North regions of Mainland China, mostly carried out in Shandong Province and in Beijing, where Zhihesheng have newly developed over 100 acres of modern greenhouses for cultivating yew trees and other plants.
| The other operating company of this segment, Guangyuan, is engaged in the business of landscaping, afforestation, road greening, scenic greening, garden engineering, landscaping construction, and green afforestation, especially in planting fast-growing bamboo willows and scenic greening trees. The operations of Guangyuan are located in the North regions of Mainland China, mostly carried out in Shanxi Province, where Guangyuan has developed over 350 acres of farmland for cultivating bamboo willows and other plants.
● | Providing domestic air and overland freight forwarding services (“Freight services”), which are reclassified as discontinued operations:
| The operating company of this segment, Zhisheng Freight, is engaged in the business of providing domestic air and overland freight forwarding services by outsourcing these services to a third party. The Company merely serves as an agent and its obligation is to facilitate third-party logistic companies in fulfilling its performance obligation for specified freight services.

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● | Developing, producing and distributing innovative rapid diagnostic products and related medical devices for the most common diseases (“Rapid Diagnostic and Other Products”):
| The operating company of this segment, Biowin, specializes in the development, production and distribution of innovative rapid diagnostic products and related medical devices for the most common diseases. The operations of this segment are located in Jiangsu Province. Its products are sold not only in China but also overseas in countries such as Germany, Spain, Italy, Thailand, Japan and others.

● | Producing, processing and distribution of agricultural products, such as silk and silk fabrics, as well as trading of fresh fruit (“Other agricultural products”):
| The operating company of this segment, Wintus, specializes in producing, processing and distributing agricultural products, such as silk and silk fabrics, as well as fresh fruit. The operations of this segment are located in Chongqing, China. Wintus has established approximately 150,000 acres of mulberry orchards in Fuling District and Wulong District of Chongqing. Wintus operates a silk factory in Liangping District, Chongqing that processes silk products, which are then distributed worldwide through dealers. Its products are sold not only in China but also overseas countries such as the United States, Europe (Germany, France, Italy, Poland), Japan, South Korea, and Southeast Asia (India, Thailand, Indonesia, Bangladesh, and Cambodia), among other countries and regions. In addition to silk products, Wintus also engages in the fruit trading business. It imports fruits from Southeast Asia and other regions, distributing them through dealers to supermarkets and stores nationwide in China.

● | Developing and selling healthy meals for people with slow metabolic health and those in recovery from metabolic disorders. (“Healthy meals products”):
| The operating company of this segment, Fuzhou Meida, operates a health-oriented chain restaurant that focuses on the concept of “improving metabolism through diet.” Fuzhou Meida specializes in developing healthy meals for people with slow metabolic health and those in recovery from metabolic disorders. Fuzhou Meida recently opened its restaurant in Fuzhou City, Fujian Province. The restaurant features an open kitchen and adopts a modern Chinese style, offering a variety of modern Chinese healthy light meals and metabolism-boosting meal sets. The Company plans to gradually establish additional branches in key cities across China, including Beijing, Shanghai, Guangzhou, and other southeastern coastal regions.

The following table presents summarized information by segment for the three months ended September 30, 2024:

SCHEDULE OF INFORMATION BY SEGMENT

|  | For the three months ended September 30, 2024 |
|  | Continuing Operations |  |  | Discontinued Operations |  |  |  |
|  | Rapid diagnostic and other |  |  | Other agricultural |  |  | Healthy meals |  |  | Luobuma |  |  |  |
|  | products |  |  | products |  |  | products |  |  | products |  |  | Total |
Segment revenue |  | $ | 121,865 |  |  | $ | 2,051,471 |  |  | $ | 949 |  |  | $ | - |  |  | $ | 2,174,285 |
Cost of revenue and related business and sales tax |  |  | 56,917 |  |  |  | 1,825,278 |  |  |  | 249 |  |  |  | - |  |  |  | 1,882,444 |
Gross profit |  |  | 64,948 |  |  |  | 226,193 |  |  |  | 700 |  |  |  | - |  |  |  | 291,841 |
Gross profit % |  |  | 53.3 | % |  |  | 11.0 | % |  |  | 73.8 | % |  |  | - |  |  |  | 13.4 | %

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The following table presents summarized information by segment for the three months ended September 30, 2023:

|  | For the three months ended September 30, 2023 |
|  | Continuing Operations |  |  | Discontinued Operations |  |  |  |
|  | Rapid diagnostic and other |  |  | Other agricultural |  |  | Healthy meals |  |  | Luobuma |  |  |  |
|  | products |  |  | products |  |  | products |  |  | products |  |  | Total |
Segment revenue |  | $ | 135,127 |  |  | $ | 1,510,730 |  |  | $ | - |  |  | $ | 4,439 |  |  | $ | 1,650,296 |
Cost of revenue and related business and sales tax |  |  | 43,776 |  |  |  | 1,503,126 |  |  |  | - |  |  |  | 4,183 |  |  |  | 1,551,085 |
Gross profit |  |  | 91,351 |  |  |  | 7,604 |  |  |  | - |  |  |  | 256 |  |  |  | 99,211 |
Gross profit % |  |  | 67.6 | % |  |  | 0.5 | % |  |  | - |  |  |  | 5.8 | % |  |  | 6.0 | %

Total assets as of September 30, 2024 and June 30, 2024 were as follows:

|  | September 30, 2024 |  |  | June 30, 2024 |
Other agricultural products |  | $ | 80,138,418 |  |  | $ | 70,339,148 |
Rapid diagnostic and other products |  |  | 13,603,641 |  |  |  | 13,750,630 |
Healthy meals products |  |  | 71,858 |  |  |  | 89,601 |
Total assets |  | $ | 93,813,917 |  |  | $ | 84,179,379 |

NOTE 20 - DISCONTINUED OPERATIONS

On May 29, 2023, Shineco Life entered into a stock purchase agreement with Dream Partner, Wintus and certain shareholders of Dream Partner (the “Sellers”), pursuant to which Shineco Life shall acquire 71.42% equity interest in Wintus (the “Acquisition”). On September 19, 2023, the Company closed the Acquisition. As the consideration for the Acquisition, the Company (a) paid the Sellers an aggregate cash consideration of US$2,000,000; (b) issued certain shareholders, as listed in the agreement, an aggregate of 41,667 shares of the Company’s restricted Common Stock; and (c) transferred and sold to the Sellers 100% of the Company’s equity interest in Beijing Tenet-Jove Technological Development Co., Ltd.

In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and non-current liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes benefit, shall be reported as a component of net loss separate from the net loss of continuing operations in accordance with ASC 205-20-45. The results of operations of Tenet-Jove Disposal Group have been reclassified to “net income from discontinued operations” in the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss) for the three months ended September 30, 2024 and 2023.

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The summarized operating result of discontinued operations included in the Company’s unaudited condensed consolidated statements of income (loss) and comprehensive income (loss) consist of the following:

SCHEDULE OF DISPOSAL GROUP INCLUDING DISCONTINUED OPERATIONS

|  | For the Three Months Ended September 30, |
|  | 2024 |  |  | 2023 |
REVENUE |  | $ | - |  |  | $ | 4,439 |
COST OF REVENUE |  |  |  |  |  |  |  |
Cost of products |  |  | - |  |  |  | 4,178 |
Business and sales related tax |  |  | - |  |  |  | 5 |
Total cost of revenue |  |  | - |  |  |  | 4,183 |
GROSS PROFIT |  |  | - |  |  |  | 256 |
OPERATING EXPENSES |  |  |  |  |  |  |  |
General and administrative expenses |  |  | - |  |  |  | 41,033 |
Selling expenses |  |  | - |  |  |  | 28,947 |
Total operating expenses |  |  | - |  |  |  | 69,980 |
LOSS FROM OPERATIONS |  |  | - |  |  |  | (69,724 | )
OTHER INCOME |  |  |  |  |  |  |  |
Interest income, net |  |  | - |  |  |  | 20,269 |
Total other income |  |  | - |  |  |  | 20,269 |
LOSS BEFORE BENEFIT FOR INCOME TAXES FROM DISCONTINUED OPERATIONS |  |  | - |  |  |  | (49,455 | )
BENEFIT FOR INCOME TAXES FROM DISCONTINUED OPERATIONS |  |  | - |  |  |  | - |
LOSS FROM DISCONTINUED OPERATIONS, NET OFF TAX |  |  | - |  |  |  | (49,455 | )
INCOME ON DISPOSAL OF DISCONTINUED OPERATIONS |  |  | - |  |  |  | 8,904,702 |
NET INCOME FROM DISCONTINUED OPERATIONS |  |  | - |  |  |  | 8,855,247 |
Net loss attributable to non-controlling interest |  |  | - |  |  |  | (795 | )
NET INCOME FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO SHINECO, INC. |  | $ | - |  |  | $ | 8,856,042 |

NOTE 21 - SUBSEQUENT EVENTS

On October 21, 2024, the Company’s stockholders approved a 1-for-24 reverse stock split of the shares of the Company’s common stock, with a par value of US$0.001 per share, which became effective on November 12, 2024 (the “Second 2024 Reverse Stock Split”). As a result of the Second 2024 Reverse Stock Split, each of the twenty-four pre-split shares of common stock outstanding automatically combined and converted to one issued and outstanding share of common stock without any action on the part of the stockholders. No fractional shares of common stock were issued to any shareholders in connection with the Second 2024 Reverse Stock Split. Each shareholder received one share of common stock in lieu of the fractional share that would have resulted from the Second 2024 Reverse Stock Split. As a result of the Second 2024 Reverse Stock Split, the Company’s shares and per share data as reflected in the unaudited condensed consolidated financial statements have been retroactively restated as if the transaction occurred at the beginning of the periods presented.

These unaudited condensed consolidated financial statements were approved by management and available for issuance on November 14, 2024, and the Company has evaluated subsequent events through this date. No subsequent events required adjustments to or disclosure in these unaudited condensed consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is subject to the safe harbor created by those sections. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “should,” “will,” “could,” and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.

Examples of forward-looking statements include:

| ● | the timing of the development of future products;
| ● | projections of revenue, earnings, capital structure, and other financial items;
| ● | local, regional, national, and global price fluctuations of raw materials;
| ● | statements of our plans and objectives, including those that relate to our proposed expansions and the effect such expansions may have on our revenue;
| ● | statements regarding the capabilities of our business operations;
| ● | statements of expected future economic performance;
| ● | the impact of the COVID-19 pandemic;
| ● | statements regarding competition in our market; and
| ● | assumptions underlying statements regarding us or our business.

The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. Many factors could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Consequently, you should not place undue reliance on these forward-looking statements.

The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Nonetheless, we reserve the right to make such updates from time to time by press release, periodic report, or other method of public disclosure without the need for specific reference to this Quarterly Report. No such update shall be deemed to indicate that other statements not addressed by such update is incorrect or create an obligation to provide any other updates.

The information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes included in this Quarterly Report, and the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report. All monetary figures are presented in U.S. dollars, unless otherwise indicated.

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General Overview

Shineco, Inc. is a holding company incorporated in Delaware. Prior to the following acquisition and the termination of the VIE structure, as a holding company with no material operations of our own, we conducted a substantial majority of our operations through the operating entities established in the People’s Republic of China, or the PRC, primarily the variable interest entities (the “VIEs”). We did not have any equity ownership of the VIEs, instead we received the economic benefits of the VIEs’ business operations through certain contractual arrangements. Our common stock that currently listed on the Nasdaq Capital Markets are shares of our Delaware holding company. The Chinese regulatory authorities could disallow our structure, which could result in a material change in our operations and the value of our securities could decline or become worthless.

On December 30, 2022, Shineco Life Science Group Hong Kong Co., Limited (“Shineco Life”), a company established under the laws of Hong Kong and a wholly owned subsidiary of the Company, closed the acquisition of 51% of the issued equity interests of Changzhou Biowin Pharmaceutical Co., Ltd. (“Biowin”), a company established under the laws of China, pursuant to the previously announced stock purchase agreement, dated as of October 21, 2022, among Beijing Kanghuayuan Medicine Information Consulting Co., Ltd., a company established under the laws of China (“Seller”), Biowin, the Company and Shineco Life. As the consideration for the acquisition, the Company paid to Seller US$9,000,000 in cash and the Company issued 13,583 shares of the Company’s common stock, par value US$0.001 per share, to the equity holders of Biowin or any persons designated by Biowin. According to a supplementary agreement, dated as of December 30, 2022, by and among Shineco Life, the Seller and Biowin, the Seller owned 51% of the issued equity interests of Biowin before January 1, 2023, and transferred the 51% of the issued equity interests of Biowin together with its controlling rights of production and operation of Biowin to Shineco Life on January 1, 2023.

On May 29, 2023, Shineco Life entered into a stock purchase agreement with Dream Partner Limited, a BVI corporation (“Dream Partner”), Chongqing Wintus Group, a corporation incorporated under the laws of mainland China (“Wintus”), and certain shareholders of Dream Partner (the “Sellers”), pursuant to which Shineco Life shall acquire 71.42% equity interest in Wintus (the “Acquisition”). On September 19, 2023, the Company closed the Acquisition. As the consideration for the Acquisition, the Company (a) paid the Sellers an aggregate cash consideration of US$2,000,000; (b) issued certain shareholders, as listed in the agreement, an aggregate of 41,667 shares of the Company’s restricted Common Stock; and (c) transferred and sold to the Sellers 100% of the Company’s equity interest in Beijing Tenet-Jove Technological Development Co., Ltd. (“Tenet-Jove Shares”). Following the closing of the Acquisition and the sale of the Tenet-Jove Shares, the Company divested its equity interest in its operating subsidiary Tenet-Jove (“Tenet-Jove Disposal Group”) and thereby terminated its VIE Structure.

We used our subsidiaries’ vertically and horizontally integrated production, distribution, and sales channels to provide health and well-being focused plant-based products. Through our subsidiary, Biowin, which specializes in the development, production and distribution of innovative rapid diagnostic products and related medical devices for the most common diseases, we also stepped into the Point-of-Care Testing industry. Also, following the acquisition of Wintus, we entered into a new business segment of producing, processing and distributing agricultural products, such as silk, silk fabrics and fresh fruit. Meanwhile, our subsidiary, Fuzhou Meida, opened its restaurant, which is a health-oriented chain restaurant that focuses on the concept of “improving metabolism through diet.” As of September 30, 2024, the Company, through its subsidiaries, operates the following main business segments:

Developing, producing and distributing innovative rapid diagnostic products and related medical devices for the most common diseases (“Rapid Diagnostic and Other Products”) - This segment is conducted through Biowin, which specializes in the development, production and distribution of innovative rapid diagnostic products and related medical devices for the most common diseases. The operations of this segment are located in Jiangsu Province. Its products are sold not only in China, but also overseas countries such as Germany, Spain, Italy, Thailand, Japan and other countries.

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Producing, processing and distribution of agricultural products, such as silk and silk fabrics as well as fresh fruits (“Other agricultural products”): – This segment is conducted through Wintus, which specializes in producing, processing and distribution of agricultural products, such as silk and silk fabrics as well as trading of fresh fruit. The operations of this segment are located in Chongqing, China. Its products are sold not only in China, but also overseas countries such as United States, Europe (Germany, France, Italy, Poland), Japan, South Korea, and Southeast Asia (India, Thailand, Indonesia, Bangladesh, Cambodia), among other countries and regions. In addition to silk products, Wintus also engages in fruit trading business. It imports fruits from Southeast Asia and other regions, distributing them through dealers to supermarkets and stores nationwide in China.

Developing and selling healthy meals for people with slow metabolic health and those in recovery from metabolic disorders. (“Healthy meals products”): – This segment is conducted through Fuzhou Meida, which specializes in developing healthy meals for people with slow metabolic health and those in recovery from metabolic disorders. Fuzhou Meida recently opened its restaurant in Fuzhou city, Fujian Province. The restaurant features an open kitchen and adopts a modern Chinese style, offering a variety of modern Chinese healthy light meals and metabolism-boosting meal sets. The Company plans to gradually establish additional branches in key cities across China, including Beijing, Shanghai, Guangzhou, and other southeastern coastal regions.

Tenet-Jove Disposal Group conducts three other business segments. First, developing, manufacturing, and distributing specialized fabrics, textiles, and other by-products derived from an indigenous Chinese plant Apocynum Venetum, known in Chinese as “Luobuma” or “Bluish Dogbane,” as well as Luobuma raw materials processing; this segment is conducted through our wholly owned subsidiary, Tenet-Jove. Second, planting, processing and distributing green and organic agricultural produce, growing and cultivation of yew trees, as well as planting fast-growing bamboo willows and scenic greening trees; this segment is conducted through Qingdao Zhihesheng and Guangyuan. Third, providing domestic air and overland freight forwarding services by outsourcing these services to a third party; this segment is conducted through Zhisheng Freight. These three business segments were reclassified as discontinued operations. The results of operations of Tenet-Jove Disposal Group have been reclassified to “net income from discontinued operations” in the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss) for the three months ended September 30, 2024 and 2023.

Financing Activities

On June 16, 2021, the Company entered into a securities purchase agreement pursuant to which the Company issued an unsecured convertible promissory note with a one-year maturity term to an institutional accredited investor, Streeterville Capital, LLC (“Investor”). The note had an original principal amount of US$3,170,000 and Investor gave consideration of US$3.0 million, reflecting original issue discount of US$150,000 and Investor’s legal fee of US$20,000. Interest accrues on the outstanding balance of the note at 6% per annum. The Company has received the principal in full from the Investor and used the proceeds for general working capital purposes. On September 7, 2022, the Company signed an extension amendment with the Investor to extend the maturity date to June 17, 2023. On October 21, 2022, the Company signed a standstill agreement with the Investor, pursuant to which the Investor would not seek to redeem any portion of the note during the period from October 21, 2022 to January 20, 2023. On January 18, 2023, the Investor re-started the redemption of the notes. On June 15, 2023, the Company signed an extension amendment with the Investor to extend the maturity date to June 17, 2024. On December 21, 2023, the Company entered into a preliminary agreement with the Investor, pursuant to which the Investor would not seek repayment of any portion of the note during the period from December 22, 2023 to April 16, 2024. On June 11, 2024, the Company signed an extension amendment with the Investor to extend the maturity date to June 17, 2025. As of September 30, 2024, no share of the Company’s common stock under this agreement was issued by the Company to the Investor, and the notes balance was US$4,304,949, with a carrying value of US$4,421,085, net of deferred financing costs of US$116,136 was recorded in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2024.

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On July 16, 2021, the Company entered into another securities purchase agreement with the Investor, pursuant to which the Company issued the Investor two unsecured convertible promissory notes each with a one-year maturity term. The first convertible promissory note had an original principal amount of US$3,170,000 and the Investor gave consideration of US$3.0 million, reflecting original issue discount of US$150,000 and Investor’s legal fee of US$20,000. The second convertible promissory note has the original principal amount of US$4,200,000 and Investor gave consideration of US$4.0 million, reflecting original issue discount of US$200,000. Interest accrues on the outstanding balance of the Notes at 6% per annum. The Company has received the principal in full from the Investor and used the proceeds for general working capital purposes. As of September 30, 2024, the Notes was fully converted and shares of the Company’s common stock totaling 8,112 were issued by the Company to the Investor equaling principal and interests amounted to US$7,472,638.

On August 19, 2021, the Company entered into another securities purchase agreement with the Investor, pursuant to which the Company issued the Investor an unsecured convertible promissory note with a one-year maturity term. The note has an original principal amount of US$10,520,000 and Investor gave consideration of US$10.0 million, reflecting original issue discount of US$500,000 and Investor’s legal fee of US$20,000. Interest accrues on the outstanding balance of the note at 6% per annum. The Company has received the principal in full from the Investor and used the proceeds for general working capital purposes. On September 7, 2022, the Company signed an extension amendment with the Investor to extend the maturity date to August 23, 2023. On October 21, 2022, the Company signed a standstill agreement with the Investor, pursuant to which the Investor will not seek to redeem any portion of the note during the period from October 21, 2022 to January 20, 2023. On June 15, 2023, the Company signed an extension amendment with the Investor to extend the maturity date to August 23, 2024. On December 21, 2023, the Company entered into a preliminary agreement with the Investor, pursuant to which the Investor would not seek repayment of any portion of the note during the period from December 22, 2023 to April 16, 2024. On June 11, 2024, the Company signed an extension amendment with the Investor to extend the maturity date to August 23, 2025. As of September 30, 2024, shares of the Company’s common stock totaling 464,763 were issued by the Company to the Investor equaling principal and interests amounted to US$6,370,722 and cash totaling US$1,050,000 was repaid to the Investor. The notes balance was US$6,257,479, with a carrying value of US$6,602,229, net of deferred financing costs of US$344,750 was recorded in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2024.

On June 20, 2024, the Company entered into a securities purchase agreement with certain non-U.S. investors (the “Purchasers”), pursuant to which the Company agreed to sell, and the Purchasers agreed to purchase, severally and not jointly, an aggregate of 58,333 shares of common stock of the Company (the “Shares”) at an offering price of US$120.00 per share for gross proceeds of up to US$7.0 million. In reliance on the Purchasers’ representations to the Company, the Shares issued in this offering were not subject to the registration requirements of the Securities Act, pursuant to Regulation S promulgated thereunder. As of June 30, 2024, proceeds of approximately US$6.4 million were received, and the remaining proceeds were fully received in July 2024, and all of the Shares were issued on July 8, 2024.

On July 11, 2024, the Company entered into an Underwriting Agreement with EF Hutton LLC, as the representative for several underwriters, relating to the underwritten public offering (the “Offering”) of 77,882 shares of the Common Stock at a public offering price of US$25.68 per share, for aggregate gross proceeds of approximately US$2.0 million, prior to deducting underwriting discounts and other offering expenses. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 11,683 shares of the Common Stock at the public offering price per share, less the underwriting discounts to cover over-allotments, if any. The Offering closed on July 15, 2024, and the 45-day option expired on August 30, 2024. The Offering closed on July 15, 2024, and the 45-day option expired on August 30, 2024. The net proceeds from the offering were approximately US$1.7 million, after deducting the estimated underwriting discounts and commissions and estimated offering expenses.

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On August 22, 2024, the Company entered into a securities purchase agreement (the “SPA”) with 22 purchasers, each an unrelated third party to the Company (collectively, the “Purchasers”). Pursuant to the SPA, the Purchasers agree to purchase, and the Company agreed to issue and sell to the Purchasers, an aggregate of 624,375 shares of the Company’s common stock, par value US$0.001 per share (the “Shares”), at a purchase price of US$13.20 per share, and for an aggregate purchase price of US$8,241,750 (the “Offering”). The SPA, the transaction contemplated thereby, and the issuance of the Shares have been approved by the Company’s board of directors. The closing of the transaction contemplated by the SPA took place on September 10, 2024. As of September 30, 2024, proceeds of approximately US$4.4 million were received, and the remaining proceeds are expected to be fully received by December 31, 2024.

Factors Affecting Financial Performance

We believe that the following factors will affect our financial performance:

Increasing demand for our products – We believe that the increasing demand for our products will have a positive impact on our financial position. We plan to develop new products and expand our distribution network as well as to grow our business through possible mergers and acquisitions of similar or synergetic businesses, all aimed at increasing awareness of our brand, developing customer loyalty, meeting customer demands in various markets and providing solid foundations for our growth. As of the date of this Quarterly Report, however, we do not have any agreements, undertakings or understandings to acquire any such entities and there can be no guarantee that we ever will.

Maintaining effective control of our costs and expenses - Successful cost control depends upon our ability to obtain and maintain adequate material supplies as required by our operations at competitive prices. We will focus on improving our long-term cost control strategies including establishing long-term alliances with certain suppliers to ensure adequate supply is maintained. We will carry forward the economies of scale and advantages from our nationwide distribution network and diversified offerings.

Economic and Political Risks

Our operations are conducted primarily in the PRC and subject to special considerations and significant risks not typically associated with companies operating in North America and/or Western Europe. These include risks with, among others, the political, economic and legal environment and foreign currency exchange. Our results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversions, remittances abroad, and rates and methods of taxation, among other things.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements as well as the reported amounts of revenue and expenses during the reporting period. Critical accounting policies are those accounting policies that may be material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact on financial condition or operating performance. While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies used in the preparation of our unaudited condensed consolidated financial statements require significant judgments and estimates. For additional information relating to these and other accounting policies, see Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this Report.

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Use of Estimates

Significant estimates required to be made by management include, but are not limited to, useful lives of property and equipment, and intangible assets, the recoverability of long-lived assets, assessment of expected credit losses for accounts receivable and other current asset, the valuation allowance of deferred taxes and inventory reserves. Actual results could differ from those estimates.

Credit Losses

On July 1, 2023, we adopted Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The adoption of the credit loss accounting standard has no material impact on our consolidated financial statements as of July 1, 2023.

Our account receivables and other receivables included in other current assets on the unaudited condensed consolidated balance sheets are within the scope of ASC Topic 326. We make estimates of expected credit and collectability trends for the allowance for credit losses based upon assessment of various factors, including historical experience, the age of the accounts receivable and other receivables balances, credit-worthiness of the customers and other debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the customers and other debtors. We also provide specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.

ASC Topic 326 is also applicable to loans to third parties that are included in the other current assets on the unaudited condensed consolidated balance sheets. Management estimates the allowance for credit losses on loans that do not share similar risk characteristics on an individual basis. The key factors considered when determining the above allowances for credit losses include estimated loan collection schedule, discount rate, and assets and financial performance of the borrowers.

Expected credit losses are recorded as general and administrative expenses on the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss). After all attempts to collect a receivable have failed, the receivable is written off against the allowance. In the event we recover amounts previously reserved for, we will reduce the specific allowance for credit losses.

Inventories, Net

Inventories, which are stated at the lower of cost or net realizable value, consist of raw materials, work-in-progress, and finished goods related to our products. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost is determined using the weighted average method. We periodically evaluate our inventory and records an inventory reserve for certain inventories that may not be saleable or whose cost exceeds net realizable value. As of September 30, 2024 and June 30, 2024, the inventory reserve was nil and US$30,443, respectively.

Revenue Recognition

We generate our revenue primarily through sales of Luobuma products, other agricultural products, healthy meals and rapid diagnostic and other products, as well as providing logistic services and other processing services to external customers in accordance with ASC 606. ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

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With the adoption of ASC 606, “Revenue from Contracts with Customers,” revenue is recognized when all of the following five steps are met: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; (v) recognize revenue when (or as) each performance obligation is satisfied. The Company has assessed the impact of the guidance by reviewing its existing customer contracts to identify differences that will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control, and principal versus agent considerations. In accordance with ASC 606, the Company evaluates whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. When the Company is a principal, that the Company obtains control of the specified goods or services before they are transferred to the customers, the revenue should be recognized in the gross amount of consideration to which it expects to be entitled in exchange for the specified goods or services transferred. When the Company is an agent and its obligation is to facilitate third parties in fulfilling their performance obligation for specified goods or services, the revenue should be recognized in the net amount for the amount of commission which the Company earns in exchange for arranging for the specified goods or services to be provided by other parties. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606 and therefore there was no material changes to the Company’s financial statements upon adoption of ASC 606.

More specifically, revenue related to our products and services is generally recognized as follows:

Sales of products: We recognized revenue from the sale of products at the point in time when the goods were delivered and title to the goods passed to the customer, provided that there were no uncertainties regarding customer acceptance; persuasive evidence of an arrangement existed; the sales price was fixed or determinable; and collectability was deemed probable.

Revenue from provision of services: The Company merely acts as an agent in these types of services transactions. Revenue from domestic air and overland freight forwarding services was recognized at the point in time upon the performance of services as stipulated in the underlying contract or when commodities were being released from the customer’s warehouse; the service price was fixed or determinable; and collectability was deemed probable.

Fair Value of Financial Instruments

We follow the provisions of ASC 820, “Fair Value Measurements and Disclosures.” ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs, other than quoted prices in level, that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the asset or liability.

The carrying value of financial instruments included in current assets and liabilities approximate their fair values because of the short-term nature of these instruments.

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Results of Operations for the Three Months Ended September 30, 2024 and 2023

Overview

The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023:

|  | Three Months Ended September 30, |  |  | Variance |
|  | 2024 |  |  | 2023 |  |  | Amount |  |  | % |
Revenue |  | $ | 2,174,285 |  |  | $ | 1,645,857 |  |  | $ | 528,428 |  |  |  | 32.11 | %
Cost of revenue |  |  | 1,882,444 |  |  |  | 1,546,902 |  |  |  | 335,542 |  |  |  | 21.69 | %
Gross profit |  |  | 291,841 |  |  |  | 98,955 |  |  |  | 192,886 |  |  |  | 194.92 | %
General and administrative expenses |  |  | 2,636,575 |  |  |  | 3,259,465 |  |  |  | (622,890 | ) |  |  | (19.11 | )%
Selling expenses |  |  | 32,241 |  |  |  | 47,833 |  |  |  | (15,592 | ) |  |  | (32.60 | )%
Research and development expenses |  |  | 13,418 |  |  |  | 23,698 |  |  |  | (10,280 | ) |  |  | (43.38 | )%
Loss from operations |  |  | (2,390,393 | ) |  |  | (3,232,041 | ) |  |  | 841,648 |  |  |  | (26.04 | )%
Investment income from derivative financial assets |  |  | 2,277 |  |  |  | 2,768 |  |  |  | (491 | ) |  |  | (17.74 | )%
Other income (expenses), net |  |  | (51,935 | ) |  |  | 818 |  |  |  | (52,753 | ) |  |  | (6,449.02 | )%
Amortization of debt issuance and other costs |  |  | (188,712 | ) |  |  | (166,823 | ) |  |  | (21,889 | ) |  |  | 13.12 | %
Interest expenses, net |  |  | (222,316 | ) |  |  | (369,211 | ) |  |  | 146,895 |  |  |  | (39.79 | )%
Loss before income tax benefit from continuing operations |  |  | (2,851,079 | ) |  |  | (3,764,489 | ) |  |  | 913,410 |  |  |  | (24.26 | )%
Benefit for income taxes |  |  | (292,951 | ) |  |  | (251,366 | ) |  |  | (41,585 | ) |  |  | 16.54 | %
Net loss from continuing operations |  |  | (2,558,128 | ) |  |  | (3,513,123 | ) |  |  | 954,995 |  |  |  | (27.18 | )%
Net income from discontinued operations |  |  | - |  |  |  | 8,855,247 |  |  |  | (8,855,247 | ) |  |  | (100.00 | )%
Net income (loss) |  | $ | (2,558,128 | ) |  | $ | 5,342,124 |  |  | $ | (7,900,252 | ) |  |  | (147.89 | )%
Comprehensive income (loss) attributable to Shineco Inc. |  | $ | (1,842,683 | ) |  | $ | 5,480,633 |  |  | $ | (7,323,316 | ) |  |  | (133.62 | )%

Revenue

Currently, we, through our PRC subsidiaries, have three major business segments from continuing operations. First, developing, producing and distributing innovative rapid diagnostic and other products and related medical devices for the most common diseases; this segment is conducted through Biowin. Second, producing, processing and distributing silk products, and providing fruit trading business; this segment is conducted through Wintus. Third, developing and selling healthy meals for people with slow metabolic health and those in recovery from metabolic disorders; this segment is conducted through Fuzhou Meida.

The following table sets forth the breakdown of our revenue for the three months ended September 30, 2024 and 2023, respectively:

|  | Three Months Ended September 30, |  |  | Variance |
|  | 2024 |  |  | % |  |  | 2023 |  |  | % |  |  | Amount |  |  | % |
Rapid diagnostic and other products |  | $ | 121,865 |  |  |  | 5.61 | % |  | $ | 135,127 |  |  |  | 8.21 | % |  | $ | (13,262 | ) |  |  | (9.81 | )%
Other agricultural products |  |  | 2,051,471 |  |  |  | 94.35 | % |  |  | 1,510,730 |  |  |  | 91.79 | % |  |  | 540,741 |  |  |  | 35.79 | %
Healthy meal products |  |  | 949 |  |  |  | 0.04 | % |  |  | - |  |  |  | - |  |  |  | 949 |  |  |  | 100.00 | %
Total Amount |  | $ | 2,174,285 |  |  |  | 100.00 | % |  | $ | 1,645,857 |  |  |  | 100.00 | % |  | $ | 528,428 |  |  |  | 32.11 | %

For the three months ended September 30, 2024 and 2023, revenue from sales of rapid diagnostic and other products was US$121,865 and US$135,127, respectively, representing a decrease of US$13,262, or 9.81%. The decrease was mainly due to a decline in orders we received from our customers, which resulted from the slow recovery of post pandemic economy in China, as well as a decrease in selling prices as we tried to clear some of our remaining stock during the three months ended September 30, 2024.

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For the three months ended September 30, 2024 and 2023, revenue from sales of other agricultural products was US$2,051,471 and US$1,510,730, respectively, representing an increase of US$540,741, or 35.79%. The increase was because we had three months of revenue during the three months ended September 30, 2024 as compared to two months of revenue during the same period last year as we completed the acquisition of Wintus on July 31, 2023.

For the three months ended September 30, 2024 and 2023, revenue from sales of healthy meal products was US$949 and nil, respectively, representing an increase of US$949, or 100.00%. The increase was mainly due to revenue generated by our subsidiary, Fuzhou Meida, which only started to generate revenue in October 2023.

Cost of Revenue and Related Tax

The following table sets forth the breakdown of the cost of revenue for the three months ended September 30, 2024 and 2023, respectively:

|  | Three Months Ended September 30, |  |  | Variance |
|  | 2024 |  |  | % |  |  | 2023 |  |  | % |  |  | Amount |  |  | % |
Rapid diagnostic and other products |  | $ | 56,550 |  |  |  | 3.01 | % |  | $ | 43,186 |  |  |  | 2.79 | % |  | $ | 13,364 |  |  |  | 30.95 | %
Other agricultural products |  |  | 1,824,720 |  |  |  | 96.93 | % |  |  | 1,502,739 |  |  |  | 97.15 | % |  |  | 321,981 |  |  |  | 21.43 | %
Healthy meal products |  |  | 249 |  |  |  | 0.01 | % |  |  | - |  |  |  | - |  |  |  | 249 |  |  |  | 100.00 | %
Business and sales related tax |  |  | 925 |  |  |  | 0.05 | % |  |  | 977 |  |  |  | 0.06 | % |  |  | (52 | ) |  |  | (5.32 | )%
Total Amount |  | $ | 1,882,444 |  |  |  | 100.00 | % |  | $ | 1,546,902 |  |  |  | 100.00 | % |  | $ | 335,542 |  |  |  | 21.69 | %

For the three months ended September 30, 2024 and 2023, cost of revenue from sales of rapid diagnostic and other products was US$56,550 and US$43,186, respectively, representing an increase of US$13,364, or 30.95%. The sales of rapid diagnostic and other products decreased; however, cost of revenue from sales of rapid diagnostic and other products increased during the three months ended September 30, 2024, which was mainly due to the clearance of our remaining stock, as discussed in “—Gross Profit ” below.

For the three months ended September 30, 2024 and 2023, cost of revenue from sales of other agricultural products was US$1,824,720 and US$1,502,739, respectively, representing an increase of US$321,981, or 21.43%. The increase was because we had three months of cost during the three months ended September 30, 2024 as compared to two months of cost during the same period last year as we completed the acquisition of Wintus on July 31, 2023.

For the three months ended September 30, 2024 and 2023, cost of revenue from sales of healthy meal products was US$249 and nil, respectively, representing an increase of US$249, or 100.00%. The increase was mainly due to cost of revenue generated by our subsidiary, Fuzhou Meida, which only started to generate revenue in October 2023.

Gross Profit

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

|  | Three Months Ended September 30, |  |  | Variance |
|  | 2024 |  |  | % |  |  | 2023 |  |  | % |  |  | Amount |  |  | % |
Rapid diagnostic and other products |  | $ | 64,948 |  |  |  | 22.25 | % |  | $ | 91,351 |  |  |  | 92.32 | % |  | $ | (26,403 | ) |  |  | (28.90 | )%
Other agricultural products |  |  | 226,193 |  |  |  | 77.51 | % |  |  | 7,604 |  |  |  | 7.68 | % |  |  | 218,589 |  |  |  | 2,874.66 | %
Healthy meal products |  |  | 700 |  |  |  | 0.24 | % |  |  | - |  |  |  | - |  |  |  | 700 |  |  |  | 100.00 | %
Total Amount |  | $ | 291,841 |  |  |  | 100.00 | % |  | $ | 98,955 |  |  |  | 100.00 | % |  | $ | 192,886 |  |  |  | 194.92 | %

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Gross profit from sales of rapid diagnostic and other products decreased by US$26,403, or 28.90%, for the three months ended September 30, 2024 as compared to the same period in 2023. The decrease in gross profit was due to the decrease in sales as well as the decrease in our selling prices as we tried to clear some of our remaining stock during the three months ended September 30, 2024.

Gross profit from sales of other agricultural products increased by US$218,589, or 2,874.66%, for the three months ended September 30, 2024 as compared to the same period in 2023. The increase in gross profit was mainly due to the increase in sales of other agricultural products during the three months ended September 30, 2024.

Gross profit from sales of healthy meal products increased by US$700, or 100.00%, for the three months ended September 30, 2024 as compared to the same period in 2023. The increase was mainly due to gross profit contributed by our subsidiary, Fuzhou Meida, which only started to generate revenue in October 2023.

Expenses

The following table sets forth the breakdown of our operating expenses for the three months ended September 30, 2024 and 2023, respectively:

|  | Three Months Ended September 30, |  |  | Variance |
|  | 2024 |  |  | % |  |  | 2023 |  |  | % |  |  | Amount |  |  | % |
General and administrative expenses |  | $ | 2,636,575 |  |  |  | 98.30 | % |  | $ | 3,259,465 |  |  |  | 97.85 | % |  | $ | (622,890 | ) |  |  | (19.11 | )%
Selling expenses |  |  | 32,241 |  |  |  | 1.20 | % |  |  | 47,833 |  |  |  | 1.44 | % |  |  | (15,592 | ) |  |  | (32.60 | )%
Research and development expenses |  |  | 13,418 |  |  |  | 0.50 | % |  |  | 23,698 |  |  |  | 0.71 | % |  |  | (10,280 | ) |  |  | (43.38 | )%
Total Amount |  | $ | 2,682,234 |  |  |  | 100.00 | % |  | $ | 3,330,996 |  |  |  | 100.00 | % |  | $ | (648,762 | ) |  |  | (19.48 | )%

General and Administrative Expenses

For the three months ended September 30, 2024, our general and administrative expenses were US$2,636,575, representing a decrease of US$622,890, or 19.11%, as compared to the same period in 2023. The decrease was mainly due to the decreased professional service fee in relation to the acquisition of Wintus of approximately US$780,000, as well as a decrease in staff compensation in relation to the issuance of restricted shares to the management of approximately US$400,000. The decrease was partially offset by the increased allowance for credit losses and doubtful accounts of approximately US$519,000.

Selling Expenses

For the three months ended September 30, 2024, our selling expenses were US$32,241, representing a decrease of US$15,592, or 32.60%, as compared to the same period in 2023. The decrease was mainly due to the implementation of cost control measurements, as we reduced the number of sales personnel and cut down the spending on selling activities during the three months ended September 30, 2024.

Research and Development Expenses

For the three months ended September 30, 2024, our research and development expenses were US$13,418, representing a decrease of US$10,280, or 43.38%, as compared to the same period in 2023. The decrease was mainly due to less research and development activities towards products development during the three months ended September 30, 2024, as we tried to control our costs during the three months ended September 30, 2024.

Amortization of Debt Issuance and Other Costs

For the three months ended September 30, 2024, our amortization of debt issuance and other costs expenses was US$188,712, representing an increase of US$21,889, or 13.12%, as compared to amortization of debt issuance and other costs expenses of US$166,823 for the same period in 2023. The increase was mainly due to the increased amortization of extension fee as the Company signed certain extension amendments with the investor to extend the maturity date of the convertible notes for one more year.

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Interest Expenses, Net

For the three months ended September 30, 2024, our net interest expenses were US$222,316, representing a decrease of US$146,895, or 39.79%, as compared to net interest expenses of US$369,211 in the same period in 2023. The decrease in net interest expenses was mainly attributable to the increased interest income generated from loans to third parties, which was partially offset by the increased interest expenses on short-term and long-term loans borrowed by Wintus. We had three months of interest expenses on loans during the three months ended September 30, 2024 as compared to two months of interest expenses on loans during the same period last year as we completed the acquisition of Wintus on July 31, 2023.

Benefit for Income Taxes

For the three months ended September 30, 2024, our benefit for income taxes was US$292,951, representing an increase of US$41,585, or 16.54%, as compared to benefit for income taxes of US$251,366 in the same period in 2023. The increase in benefit for income taxes was mainly due to the reversal of deferred tax liabilities as a result of the amortization of intangible assets, which are trademarks, patents and land use rights that were revalued upon the acquisition of Wintus.

Net Loss from Continuing Operations

Our net loss from continuing operations was US$2,558,128 for the three months ended September 30, 2024, a decrease of US$954,995, or 27.18%, from net loss from continuing operations of US$3,513,123 in the same period in 2023. The decrease in net loss from continuing operations was primarily a result of the increase in gross profit and a decrease in general and administrative expenses and interest expenses.

Net Income (Loss) from Discontinued Operations

As mentioned above, due to the acquisition of Wintus mentioned above, the Company’s Luobuma, Agricultural Products and Freight Services business segments, that are operated by the Tenet-Jove Disposal Group, are reclassified as discontinued operations on the Company’s unaudited condensed consolidated financial statements. We had a total net income from discontinued operations of nil and US$8,855,247 for the three months ended September 30, 2024 and 2023, respectively.

The summarized operating results of our discontinued operations included in our unaudited condensed consolidated statement of income (loss) and comprehensive income (loss) is as follows:

|  | Three Months Ended September 30, |
|  | 2024 |  |  | 2023 |
Revenue |  | $ | - |  |  | $ | 4,439 |
Cost of revenue |  |  | - |  |  |  | 4,183 |
Gross profit |  |  | - |  |  |  | 256 |
Operating expenses |  |  | - |  |  |  | 69,980 |
Other income, net |  |  | - |  |  |  | 20,269 |
Loss before income tax |  |  | - |  |  |  | (49,455 | )
Provision for income tax |  |  | - |  |  |  | - |
Net loss from discontinued operations |  | $ | - |  |  | $ | (49,455 | )
Income on disposal of discontinued operations |  |  | - |  |  |  | 8,904,702 |
Total net income from discontinued operations |  | $ | - |  |  | $ | 8,855,247 |

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Net Income (Loss)

Our net loss was US$2,558,128 for the three months ended September 30, 2024, as compared to a net income of US$5,342,124 for the same period in 2023. The increase in net loss was primarily a result of the decreased net income from discontinued operation, partially offset by the decreased net loss from continuing operations, as discussed above.

Comprehensive Income (Loss)

The comprehensive loss was US$2,370,422 for the three months ended September 30, 2024, an increase of US$7,810,511 from a comprehensive income of US$5,440,089 for the three months ended September 30, 2023. After the deduction of non-controlling interest, the comprehensive loss attributable to us was US$1,842,683 for the three months ended September 30, 2024, as compared to a comprehensive income attributable to us in the amount of US$5,480,633 for the three months ended September 30, 2023. The increase in comprehensive loss was due to the increased net loss discussed above.

Treasury Policies

We have established treasury policies with the objectives of achieving effective control of treasury operations and of lowering cost of funds. Therefore, funding for all operations and foreign exchange exposure have been centrally reviewed and monitored from the top level. To manage our exposure to fluctuations in exchange rates and interest rates on specific transactions and foreign currency borrowings, currency structured instruments and other appropriate financial instruments will be used to hedge material exposure, if any.

Our policy precludes us from entering into any derivative contracts purely for speculative activities. Through our treasury policies, we aim to:

(a) Minimize interest risk

This is accomplished by loan re-financing and negotiation. We will continue to closely monitor the total loan portfolio and compare the loan margin spread under our existing agreements against the current borrowing interest rates under different currencies and new offers from banks.

(b) Minimize currency risk

In view of the current volatile currency market, we will closely monitor the foreign currency borrowings at the company level. As of September 30, 2024 and June 30, 2024, except the above-mentioned convertible note, we did not engage in any foreign currency borrowings or loan contracts.

Liquidity and Capital Resources

We currently finance our business operations primarily through advances from our related parties, short-term and long-term loans, convertible notes and the sale of our common stock. Our current cash primarily consists of cash on hand and cash in bank, which is unrestricted as to withdrawal and use and is deposited with banks in China.

As of September 30, 2024, we had approximately US$13.7 million in short-term bank loans and US$1.8 million in long-term bank loans outstanding. We expect that we will be able to renew all of the existing bank loans upon their maturity based on our past experience and outstanding credit history.

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On June 16, 2021, we entered into a securities purchase agreement pursuant to which we issued an unsecured convertible promissory note with a one-year maturity term to an institutional accredited investor Streeterville Capital, LLC (“Investor”). The convertible promissory note has the original principal amount of US$3,170,000 and Investor gave consideration of US$3.0 million, reflecting original issue discount of US$150,000 and Investor’s legal fee of US$20,000. We received principal in full from the Investor. On September 7, 2022, we signed an extension amendment with the Investor to extend the maturity date to June 17, 2023. On October 21, 2022, the Company signed a standstill agreement with the Investor, pursuant to which the Investor would not seek to redeem any portion of the note during the period from October 21, 2022 to January 20, 2023. On January 18, 2023, the Investor re-started the redemption of the notes. On June 15, 2023, the Company signed an extension amendment with the Investor to extend the maturity date to June 17, 2024. On December 21, 2023, the Company entered into a preliminary agreement with the Investor, pursuant to which the Investor would not seek repayment of any portion of the note during the period from December 22, 2023 to April 16, 2024. On June 11, 2024, the Company signed an extension amendment with the Investor to extend the maturity date to June 17, 2025.

On July 16, 2021, we entered into a securities purchase agreement pursuant to which we issued two unsecured convertible promissory notes with a one-year maturity term to the same investor. The first convertible promissory note has an original principal amount of US$3,170,000 and the Investor gave consideration of US$3.0 million, reflecting original issue discount of US$150,000 and Investor’s legal fee of US$20,000. The second convertible promissory note has an original principal amount of US$4,200,000 and the Investor gave consideration of US$4.0 million, reflecting original issue discount of US$200,000.

On August 19, 2021, we entered into a securities purchase agreement pursuant to which we issued an unsecured convertible promissory note with a one-year maturity term to the same investor. The Note has the original principal amount of US$10,520,000 and Investor gave consideration of US$10.0 million, reflecting original issue discount of US$500,000 and Investor’s legal fee of US$20,000. We received principal in full from the Investor and we anticipate using the proceeds for general working capital purposes. On September 7, 2022, the Company signed an extension amendment with the Investor to extend the maturity date to August 23, 2023. On October 21, 2022, the Company signed a standstill agreement with the Investor, pursuant to which the Investor will not seek to redeem any portion of the note during the period from October 21, 2022 to January 20, 2023. On June 15, 2023, the Company signed an extension amendment with the Investor to extend the maturity date to August 23, 2024. On December 21, 2023, the Company entered into a preliminary agreement with the Investor, pursuant to which the Investor would not seek repayment of any portion of the note during the period from December 22, 2023 to April 16, 2024. On June 11, 2024, the Company signed an extension amendment with the Investor to extend the maturity date to August 23, 2025.

For the above-mentioned convertible promissory notes issued, as of September 30, 2024, shares of the Company’s common stock totaling 472,875 were issued by the Company to the Investor equaling principal and interests amounted to US$13,843,360, and cash totaling US$1,050,000 was repaid to the Investor. The Notes balance was US$10,562,428, with a carrying value of US$11,023,314, net of deferred financing costs of US$460,886 was recorded in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2024.

On June 20, 2024, the Company entered into a securities purchase agreement with certain non-U.S. investors (the “Purchasers”), pursuant to which the Company agreed to sell, and the Purchasers agreed to purchase, severally and not jointly, an aggregate of 58,333 shares of common stock of the Company (the “Shares”) at an offering price of US$120.00 per share for gross proceeds of up to US$7.0 million. In reliance on the Purchasers’ representations to the Company, the Shares issued in this offering were not subject to the registration requirements of the Securities Act, pursuant to Regulation S promulgated thereunder. As of June 30, 2024, proceeds of approximately US$6.4 million were received, and the remaining proceeds were fully received in July 2024, and all of the Shares were issued on July 8, 2024.

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On July 11, 2024, the Company entered into an Underwriting Agreement with EF Hutton LLC, as the representative for several underwriters, relating to the underwritten public offering (the “Offering”) of 77,882 shares of the Common Stock at a public offering price of US$25.68 per share, for aggregate gross proceeds of approximately US$2.0 million, prior to deducting underwriting discounts and other offering expenses. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 11,683 shares of the Common Stock at the public offering price per share, less the underwriting discounts to cover over-allotments, if any. The Offering closed on July 15, 2024, and the 45-day option expired on August 30, 2024. The net proceeds from the offering were approximately US$1.7 million, after deducting the estimated underwriting discounts and commissions and estimated offering expenses.

On August 22, 2024, the Company entered into a securities purchase agreement (the “SPA”) with 22 purchasers, each an unrelated third party to the Company (collectively, the “Purchasers”). Pursuant to the SPA, the Purchasers agree to purchase, and the Company agreed to issue and sell to the Purchasers, an aggregate of 624,375 shares of the Company’s common stock, par value US$0.001 per share (the “Shares”), at a purchase price of US$13.20 per share, and for an aggregate purchase price of US$8,241,750 (the “Offering”). The SPA, the transaction contemplated thereby, and the issuance of the Shares have been approved by the Company’s board of directors. The closing of the transaction contemplated by the SPA took place on September 10, 2024. As of September 30, 2024, proceeds of approximately US$4.4 million were received, and the remaining proceeds are expected to be fully received by December 31, 2024.

As disclosed in the Company’s unaudited condensed consolidated financial statements, the Company had recurring net losses from continuing operations of US$2.6 million and US$3.5 million, and cash outflow of US$2.1 million and US$1.3 million from operating activities from continuing operations for the three months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and June 30, 2024, the Company had accumulated a deficit of US$56.4 million and US$54.3 million, and as of September 30, 2024, the Company had negative working capital of US$7.3 million. The Company’s management believes these factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months. In assessing the Company’s going concern, the Company’s management monitors and analyzes the Company’s cash on-hand and its ability to generate sufficient revenue sources in the future to support its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Direct offering and debt financing have been utilized to finance the working capital requirements of the Company. The continuation of the Company as a going concern through the next twelve months is dependent on the continued financial support from its stockholders. The Company’s management believes that the Company’s current access to loans, equity financing as well as financial support from its shareholders will be sufficient to meet its working capital needs for at least the next 12 months. The Company intends to continue to carefully execute its growth plans and manage market risk. If the Company fails to satisfy the Nasdaq Stock Market LLC’s (“Nasdaq”) continued listing requirements, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist its common stock. Any continuing failure to remain in compliance with Nasdaq’s continued listing standards and any subsequent failure to timely resume compliance with Nasdaq’s continued listing standards within the applicable cure period could have adverse consequences and, among other things, substantially impair the Company’s ability to raise additional funds and could result in a loss of institutional investor interest and fewer development opportunities for the Company.

Working Capital

The following table provides the information about our working capital as of September 30, 2024 and June 30, 2024:

|  | September 30, 2024 |  |  | June 30, 2024 |
Current assets |  | $ | 31,687,558 |  |  | $ | 20,903,961 |
Current liabilities |  |  | 38,993,149 |  |  |  | 27,562,855 |
Working capital |  | $ | (7,305,591 | ) |  | $ | (6,658,894 | )

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The working capital decreased slightly by US$646,697, or 9.7%, as of September 30, 2024 from June 30, 2024, primarily as a result of an increase in contract liabilities and current portion of convertible note, partially offset by an increase in advances to suppliers and other current assets, as well as a decrease in other payables and accrued expenses.

Capital Commitments and Contingencies

Capital commitments refer to the allocation of funds for the possible purchase in the near future for fixed assets or investment. Contingency refers to a condition that arises from past transactions or events, the outcome of which will be confirmed only by the occurrence or non-occurrence of uncertain futures events.

As of September 30, 2024 and June 30, 2024, we had no other material capital commitments or contingent liabilities.

Contractual Obligations

The Company has no long-term fixed contractual obligations or commitments other than leases that are disclosed in Note 10 in the notes to our unaudited condensed consolidated financial statements.

Off-Balance Sheet Commitments and Arrangements

On May 29, 2023, the Board of the Company approved that we pledged our property as collateral to guarantee a personal loan of a related party, Mr. Yuying Zhang, the legal representative of Tenet-Jove. Based on the memorandum entered between us and Mr. Yuying Zhang, Mr. Yuying Zhang was expected to repay his loan and release the pledge before May 31, 2024, and we have the right to claim full compensation if the property fails to be released by the due date. On May 23, 2024, Mr. Yuying Zhang entered into another supplementary agreement with Weiqing Guo, wherein the parties agreed to extend the due date of the principal amount from May 23, 2024 to May 23, 2025, and the real estate property continued to be pledged until May 23, 2025. If Yuying Zhang fails to repay the loan and the property is executed by the Court, the Company has the right to pursue compensation from Zhang Yuying based on the market value of the property. As of September 30, 2024, the net book value of the property was US$1,039,868.

The Company’s subsidiary, Chongqing Wintus (New Star) Enterprises Group, provided a guarantee amounted to US$712,771 for a bank loan borrowed by Chongqing Yufan Trading Co., Ltd, a related party of the Company until December 28, 2025.

Except for the above-mentioned guarantee, we have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own common stock and classified as stockholders’ equity, or that are not reflected in our unaudited condensed consolidated financial statements.

Cash Flows

The following table provides detailed information about our cash flows for the three months ended September 30, 2024 and 2023, respectively:

|  | Three Months Ended September 30, |
|  | 2024 |  |  | 2023 |
Net cash used in operating activities |  | $ | (2,085,232 | ) |  | $ | (1,503,133 | )
Net cash used in investing activities |  |  | (3,133,148 | ) |  |  | (12,897,211 | )
Net cash provided by financing activities |  |  | 5,066,481 |  |  |  | 906,103 |
Effect of exchange rate changes on cash and cash equivalents |  |  | 15,577 |  |  |  | 202,508 |
Net decrease in cash, cash equivalents and restricted cash |  |  | (136,322 | ) |  |  | (13,291,733 | )
Cash, cash equivalents and restricted cash, beginning of the period |  |  | 395,036 |  |  |  | 14,166,759 |
Cash, cash equivalents and restricted cash, end of the period |  | $ | 258,714 |  |  | $ | 875,026 |

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Operating Activities

Net cash used in operating activities during the three months ended September 30, 2024 was approximately US$2.1 million, consisting of net loss from continuing operations of US$2.6 million, depreciation and amortization expenses of US$1.3 million, and net changes in our operating assets and liabilities, which mainly included an increase in advances to suppliers of US$6.4 million, an increase in inventories of US$0.7 million and a decrease in other payables and accrued expenses of US$1.2 million, partially offset by an increase in contract liabilities of US$6.3 million and an increase in accounts payable of US$0.7 million.

Net cash used in operating activities during the three months ended September 30, 2023 was approximately US$1.5 million, consisting of net loss from continuing operations of US$3.5 million, depreciation and amortization expenses of US$1.0 million, common stock issued for management and employees of US$0.5 million, and net changes in our operating assets and liabilities, which mainly included a decrease in accounts receivable of US$4.0 million, a decrease in advances to suppliers of US$0.7 million and an increase in other payables and accrued expenses of US$0.4 million, partially offset by the decrease in accounts payable of US$5.1 million.

Investing Activities

For the three months ended September 30, 2024, net cash used in investing activities was US$3.1 million, primarily due to prepayment for business acquisition of US$2.6 million and payment made for loans to third parties of US$0.5 million.

For the three months ended September 30, 2023, net cash used in investing activities was US$12.9 million, primarily due to disposal of Tenet-Jove of US$13.9 million, partially offset by the proceeds of business acquisition of Wintus of US$1.0 million.

Financing Activities

For the three months ended September 30, 2024, net cash provided by financing activities amounted to approximately US$5.1 million, due to proceeds from issuance of common stock of US$6.4 million, proceeds from short-term loans of US$5.0 million, proceeds from long-term loans of US$0.6 million, partially offset by the repayment of short-term loans of US$5.2 million and the repayment of long-term loans of US$0.6 million, repayment of loan from third party of US$0.5 million and repayment of convertible note of US$0.4 million.

For the three months ended September 30, 2023, net cash provided by financing activities amounted to approximately US$0.9 million, due to proceeds received from investors for subscription of common stock of US$0.3 million, and proceeds from short-term loans of US$4.0 million, partially offset by the repayment of short-term loans of US$3.6 million.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a small reporting company, we are not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that material information required to be disclosed by us in the reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that the information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based on our review, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of the end of the period covered by this Quarterly Report due to following material weaknesses:

● | a lack of full-time U.S. GAAP personnel in the accounting department to monitor the recording of the transactions; and
● | a lack of segregation of duties for accounting personnel who prepared and reviewed the journal entries.

In order to address the above material weaknesses, our management has taken the following steps:

● | recruiting sufficient qualified professionals with appropriate levels of knowledge and experience to assist in reviewing and resolving accounting issues in routine or complex transactions. To mitigate the reporting risks, we engaged an outside professional consulting firm to supplement our efforts to improve our internal control over financial reporting;
● | improving the communication between management, board of directors, and the Chief Financial Officer; and
● | obtaining proper approval for other significant and non-routine transactions from the board of directors.

We are committed to monitoring the effectiveness of these measures and making any changes that are necessary and appropriate.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the fiscal quarter ended September 30, 2024. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time. Our system contains self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Other than ordinary routine litigation (of which we are not currently involved), we know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation, and there are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our company except as set forth below:

On May 16, 2017, Ms. Guiqin Li (the “Plaintiff”) commenced a lawsuit against the Company in the People’s Court of Chongqing Pilot Free Trade Zone of China. Plaintiff alleged that due to the misguidance given by the Company’s securities trading department, the Plaintiff did not manage to complete the sales of the Company’s common stock on the day of the Company’s initial public offering in the United States. As the price of the Company’s common stock continued falling after initial public offering, the Plaintiff incurred losses and hence is seeking monetary damages against the Company. Based on the judgment of the initial trial, the Company was required to pay the Plaintiff a settlement payment, including the monetary compensation, interests and other legal fees.

In January 2023, the Company entered into a Settlement Agreement and Release with the Plaintiff, pursuant to which the Company paid the Plaintiff a total sum of US$700,645 (approximately RMB 4.8 million) as settlement payment, and upon acceptance of the settlement payment from the Company, the Plaintiff waived, released, and forever discharged the Company from all past and future claims. As of June 30, 2023, the Company has made the payments in full to the Plaintiff according to the Settlement Agreement and Release.

On November 26, 2021, the Company filed a complaint in the Supreme Court of the State of New York, New York County against Lei Zhang and Yan Li, as defendants, and Transhare Corporation, as a nominal defendant, asserting that defendants had not paid for certain restricted shares of the Company’s common stock pursuant to stock purchase agreements they executed with the Company. In December, defendants filed an answer and counterclaim against the Company, which they amended on January 27, 2022 after the Company moved to dismiss their counterclaims. They brought claims for, among others, breach of contract, breach of the covenant of good faith and fair dealing, and fraud, asserting that the Company made false and materially misleading statements, specifically regarding the sale of such shares to Lei Zhang and Yan Li and the removal of their restrictive legends. Defendants are seeking money damages of at least $9 million, punitive damages of $10 million, plus interest, costs, and fees. In April 2022, the Court granted the Company’s motion for a preliminary injunction to restrain the Company’s transfer agent from removing the restrictive legends on the shares, provided that the Company posts a bond, which the Company declined to do. On June 13, 2022, the restriction imposed on the shares were lifted.

Nominal defendant Transhare Corporation moved to dismiss the defendants’ counterclaim against it for wrongful refusal to remove restrictions pursuant to 6 Del. C. § 8-401, and its motion was fully submitted in April 2022. On September 9, 2022, the Court granted Transhare Corporation’s motion to dismiss defendants’ counterclaim for wrongful refusal to remove restrictions. Defendants have appealed the Court’s September 9, 2022 order dismissing defendants’ counterclaim for wrongful refusal to remove restrictions. On October 3, 2022, the parties submitted a stipulation dismissing defendants’ outstanding counterclaim against Transhare Corporation seeking declaratory judgment.

The Company participated in a formal mediation with the defendants Lei Zhang and Yan Li on September 18, 2023. As a result of the mediation, the parties were able to reach a settlement agreement in December 2023. The parties executed a Settlement Agreement on December 21, 2023, and the claims by each side were formally dismissed by the court on December 22, 2023. The subscription receivable amounted to US$3,024,000 was waived by the Company, and the Company will not retrieve the shares that were issued to the defendants.

ITEM 1A. RISK FACTORS.

As a “smaller reporting company,” we are not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On June 20, 2024, the Company entered into a securities purchase agreement (the “SPA”) with certain non-U.S. investors (the “Purchasers”), pursuant to which the Company agreed to sell, and the Purchasers agreed to purchase, severally and not jointly, an aggregate of 58,333 shares of common stock of the Company (the “Shares”) at an offering price of US$120.00 per share (the “Offering”). Each Purchaser represented that he or she is not a resident of the United States and is not a “U.S. person” as defined in Rule 902(k) of Regulation S under the Securities Act and is not acquiring the Shares for the account or benefit of any U.S. person. The Company has received gross proceeds of US$7.0 million from the Purchasers, and all of the Shares were issued on July 8, 2024.

The above-mentioned issuance of securities of the Company is deemed to be exempt under the Securities Act by virtue of Section 4(2) thereof as the transaction does not involve any public offering. In addition, the issuance was deemed not to fall within Section 5 under the Securities Act and to be further exempt under Rule 901 and 903 of Regulation S promulgated thereunder by virtue of being the issuance of securities to non-U.S. citizens or residents, conducted outside the United States and not using any element of interstate commerce.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

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ITEM 6. EXHIBITS

Exhibit Number |  | Description
3.1 |  | Certificate of Incorporation of Shineco, Inc. (incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on July 1, 2015 (Registration No. 333-202803))
3.2 |  | Amended and Restated Bylaws of Shineco, Inc.(incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on July 1, 2015 (Registration No. 333-202803))
3.3 |  | Amendment to Certificate of Incorporation of Shineco, Inc. (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC November 8, 2024)
4.1 |  | Specimen Common Stock Share Certificate (incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on January 27, 2016 (Registration No. 333-202803))
4.2 |  | 2016 Share Incentive Plan (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC September 28, 2016)
4.3 |  | 2022 Equity Incentive Plan (incorporated by reference herein to Exhibit 4.1 filed with Form S-8 filed with the SEC on July 29, 2022)
4.4 |  | Amendment to Convertible Promissory Note, dated September 7, 2022 (Incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC September 28, 2023)
4.5 |  | Amendment to Convertible Promissory Note, dated September 7, 2022 (Incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC September 28, 2023)
4.6 |  | Amendment to Convertible Promissory Note, dated June 15, 2023 (Incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC September 28, 2023)
4.7 |  | Amendment to Convertible Promissory Note, dated June 15, 2023 (Incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC September 28, 2023)
4.8 |  | 2023 Equity Incentive Plan (Incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC September 28, 2023)
4.9 |  | 2024 Equity Incentive Plan (Incorporated by reference to the Company’s Form 8-K filed with the SEC on February 5, 2024)
4.10 |  | Amendment to Convertible Promissory Note, dated June 11, 2024 (Incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC September 30, 2024)
4.11 |  | Amendment to Convertible Promissory Note, dated June 11, 2024 (Incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC September 30, 2024)
4.12 |  | 2025 Equity Incentive Plan (Incorporated by reference to the Company’s Form 8-K filed with the SEC on October 25, 2024)
10.1 |  | Stock Purchase Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC September 20, 2023)
10.2 |  | Stock Purchase Agreement, dated as of October 21, 2022, by and among Shineco, Inc., Shineco Life Science Research Co., Ltd., Beijing Kanghuayuan Medicine Information Consulting Co., Ltd. and Changzhou Biowin Pharmaceutical Co., Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC January 4, 2023)
10.3 |  | Supplementary Agreement to the Stock Purchase Agreement, dated as of December 30, 2022, by and among Beijing Kanghuayuan Medicine Information Consulting Co., Ltd., Shineco Life Science Research Co., Ltd. and Changzhou Biowin Pharmaceutical Co., Ltd. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC January 4, 2023)
31.1 |  | Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934
31.2 |  | Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934
32.1* |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to § 906 of the Sarbanes-Oxley Act of 2002
32.2* |  | Certification of Principal Financial Officer pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to § 906 of the Sarbanes-Oxley Act of 2002
101.INS |  | Inline XBRL Instance Document.
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document.
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* This certification is deemed furnished, and not filed, for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| SHINECO, INC.
Dated: November 14, 2024 | By: | /s/ Jennifer Zhan
|  | Jennifer Zhan
|  | Chief Executive Officer
|  | (Principal Executive Officer)
Dated: November 14, 2024 | By: | /s/ Sai (Sam) Wang
|  | Sai (Sam) Wang
|  | Chief Financial Officer
|  | (Principal Financial and Accounting Officer)

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