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), Yes x No ¨

and (2) has been subject to such filing requirements for the past 90 days. Yes þx No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þx No ¨

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

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.x¨

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

As of November ~~11, 2016,~~13, 2017, the registrant had 21,034,072 shares of common stock outstanding.

~~EXPLANATORY NOTE~~

This Amendment No. 1 to our Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2016, amends in its entirety the Quarterly Report on Form 10-Q that was originally filed on November 14, 2016 (the "Quarterly Report").

The restatements are being made in accordance with ASC 250, “Accounting Changes and Error Corrections.” The disclosure provision of ASC 250 requires a company that corrects an error to disclose that its previously issued financial statements have been restated, a description of the nature of the error, the effect of the correction on each financial statement line item and any per share amount affected for each prior period presented, and the cumulative effect on retained earnings (deficit) in the statement of financial position as of the beginning of each period presented.

On May 4, 2017, management of the Company determined that the previously issued financial statements contained in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 should be amended to correct errors in those financial statements. Management discussed these matters with the Audit Committee, which approved the recommendation of management to restate the financial statements. The Audit Committee discussed the issues related to the non-reliance and restatement with the Company’s independent auditor, Friedman LLP. A draft of the Company’s current report on Form 8-K dated May 10, 2017 was provided to such auditor for review prior to filing.

The Company determined that other payables and additional paid-in capital were not properly recorded in the previously issued unaudited condensed consolidated financial statements as of September 30, 2016.

~~The effects of the Company’s previously issued unaudited condensed consolidated financial statements as of September 30, 2016 are summarized as follows:~~

~~Selected Unaudited Condensed Consolidated Balance Sheets Information as of September 30, 2016~~

Previously
Reported Adjustment Restated

Other payables $ 2,135,695 $ 843,844 $ 2,979,539
Additional paid-in capital $ 23,581,146 $ (843,844 ) $ 22,737,302

~~Selected Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2016~~

Three months ended September 30, 2016
Previously
Reported Adjustment Restated
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issuance cost payable $ - $ 843,844 $ 843,844
Proceeds from public offerings, net of offering cost $ 6,238,393 $ (843,844 ) $ 5,394,549

TABLE OF CONTENTS

		Page Number

PART I. FINANCIAL INFORMATION		2F-1

Item 1.	Financial Statements	2F-1

	Condensed Consolidated Balance Sheets (unaudited)	2F-1

	Condensed Consolidated Statements of Income and Comprehensive Income (Loss) (unaudited)	3F-2

	Condensed Consolidated Statements of Cash Flows (unaudited)	4F-3

	Notes to the Condensed Consolidated Financial Statements (unaudited)	5F-4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	244

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3516

Item 4.	Controls and Procedures	3516

PART II. OTHER INFORMATION		3617

Item 1.	Legal Proceedings	3617

Item 1A.	Risk Factors	3617

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3617

Item 3.	Defaults Upon Senior Securities	3617

Item 4.	Mine Safety Disclosures	3617

Item 5.	Other Information	3617

Item 6.	Exhibits	3618

SIGNATURES		3719

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains certain statements of a forward-looking nature. 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,” “we believe,” “we 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;

•

statements of our plans and objectives, including those that relate to our proposed expansions and the effect such expansions may have on our revenues;

•

statements regarding the capabilities of our business operations;

•

statements of expected future economic performance;

•

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. We discuss our known material risks under the heading “Risk Factors” in our Registration Statement on Form S-1. 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, the Company reserves 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 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.

PART I – FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

~~ITEM 1.FINANCIAL STATEMENTS~~

SHINECO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(UNAUDITED)~~

ASSETS
	September 30,			June 30,			September 30,			June 30,
	2016			2016			2017			2017
	(As restated)						(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	28,669,501		$	22,009,374		$	27,728,940		$	23,154,551
Accounts receivable, net - third parties		5,818,230			4,464,098
- unconsolidated entity		1,323,794			1,088,144
Accounts receivable, net								13,152,878			14,480,004
Due from related parties		1,253,670			1,671,435			454,765			448,833
Inventories		4,041,813			4,608,179			2,287,546			2,346,273
Advances to suppliers, net		436,399			53,024			2,765,611			2,396,123
Loans to third parties, net		649,093			560,234			-			830,090
Other receivables, net		575,650			463,361			561,838			535,700
Short-term deposit		114,720			100,270			167,867			158,894
Prepaid leases - current, net		476,708			478,565
Prepaid expenses		13,118			33,117			250,730			375,459
TOTAL CURRENT ASSETS		43,372,696			35,529,801			47,370,175			44,725,927

Property and equipment at cost, net of accumulated depreciation and amortization		10,867,205			11,035,199			10,380,424			10,320,396
Land use right, net of accumulated amortization		1,394,961			1,408,765			1,363,063			1,346,631
Investments		4,909,452			4,766,847			5,945,030			5,695,080
Deposit for business acquisition								2,103,710			2,065,686
Long-term deposit and other noncurrent assets		118,588			120,357			113,650			112,883
Prepaid leases-non current, net		3,726,008			3,860,327
Prepaid leases								3,735,559			3,784,533
Deferred tax assets		330,103			327,492			264,677			233,834
TOTAL ASSETS							$	71,276,288		$	68,284,970

TOTAL ASSETS	$	64,719,013		$	57,048,788

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Short-term loans-banks	$	2,730,043		$	2,745,945
Short-term loans							$	2,253,975		$	2,663,628
Accounts payable		304,642			259,803			146,027			158,068
Advances from customers		40,726			9,597			657,701			5,439
Due to related parties		341,329			244,915			305,191			257,880
Other payables and accrued expenses		2,979,539			1,999,622			263,596			337,107
Taxes payable		1,235,047			1,278,142			1,667,745			1,608,926
TOTAL LIABILITIES		7,631,326			6,538,024			5,294,235			5,031,048

Commitments and contingencies								-			-

EQUITY:
Common stock; par value $0.001, 100,000,000 shares authorized;
21,034,072 and 19,320,882 shares issued and outstanding at
September 30, 2016 and June 30, 2016		21,034			19,321
21,034,072 and21,034,072 shares issued and outstanding at September 30, 2017 and June 30, 2017								21,034			21,034
Additional paid-in capital		22,737,302			17,344,466			22,737,302			22,737,302
Statutory reserve		3,317,188			3,242,139			3,570,859			3,484,449
Retained earnings		32,111,057			30,837,399			40,234,223			39,064,743
Accumulated other comprehensive loss		(2,080,888	)		(1,887,929	)		(1,691,594	)		(3,140,982	)
Total Stockholders' equity of Shineco, Inc.		56,105,693			49,555,396			64,871,824			62,166,546
Non-controlling interest		981,994			955,368			1,110,229			1,087,376
TOTAL EQUITY		57,087,687			50,510,764			65,982,053			63,253,922

TOTAL LIABILITIES AND EQUITY	$	64,719,013		$	57,048,788		$	71,276,288		$	68,284,970

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

2F-1

SHINECO, INC.

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

(UNAUDITED)

For the Three Months Ended September 30,
2016 2015

REVENUE $ 6,366,664 $ 7,285,919

COST OF REVENUE
Cost of product and services 4,436,172 4,856,878
Business and sales related tax 15,545 16,594

GROSS PROFIT 1,914,947 2,412,447

OPERATING EXPENSES
General and administrative expenses 473,764 515,154
Selling expenses 380,318 487,882
Total operating expense 854,082 1,003,036

INCOME FROM OPERATIONS 1,060,865 1,409,411

OTHER INCOME
Income from equity method investments 401,172 340,049
Other income (expense) 85,901 (19,644 )
Interest income, net 32,753 35,268
Total other income 519,826 355,673

INCOME BEFORE INCOME TAX PROVISION 1,580,691 1,765,084

PROVISIONS FOR INCOME TAXES 201,636 300,949

NET INCOME 1,379,055 1,464,135

Less: net income attributable to non-controlling interest 30,348 42,011

NET INCOME ATTRIBUTABLE TO SHINECO, INC. $ 1,348,707 $ 1,422,124

COMPREHENSIVE INCOME (LOSS)
Net income $ 1,379,055 $ 1,464,135
Other comprehensive loss: foreign currency translation loss (196,681 ) (1,874,132 )
Total comprehensive income (loss) 1,182,374 (409,997 )
Comprehensive income attributable to non-controlling interest 26,626 33,145

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHINECO, INC. $ 1,155,748 $ (443,142 )

Weighted average number of shares basic and diluted 19,376,747 19,320,882

Basic and diluted earnings per common share $ 0.07 $ 0.07
~~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,
2016 2015
(As restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,379,055 $ 1,464,135
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 157,010 271,535
Provision for doubtful accounts 103,880 102,095
Change of inventory reserve (24,836 ) (54,064 )
Deferred tax provision (benefit) (3,883 ) 9,015
Income from equity method investments (401,172 ) (340,049 )

Changes in operating assets and liabilities:
Accounts receivable (1,367,631 ) 2,434,329
Advances to suppliers (383,769 ) 407,671
Inventories 573,591 954,514
Other receivables (204,953 ) (9,590 )
Prepaid expenses 5,034 113,530
Due from related parties 280,988 25,288
Prepaid leases 119,398 126,998
Accounts payable 45,871 62,908
Advances from customers 31,181 (24,080 )
Other payables and accrued expenses 143,166 111,399
Taxes payable (37,421 ) 19,163
NET CASH PROVIDED BY OPERATING ACTIVITIES 415,509 5,674,797

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (22,131 ) (2,950 )
Loan advances to third parties (108,648 ) (56,335 )
Collections on loans to related parties 130,495 218,264
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (284 ) 158,979

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank loans 781,469 1,116,784
Proceeds from private equity - 169,987
Repayment of short-term bank loans (786,719 ) (1,224,969 )
Stock issuance cost payable 843,844 -
Proceeds from public offerings, net of offering cost of $2,314,806 5,394,549 -
Proceeds from advances from related parties 97,413 31,650
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,330,556 93,452

EFFECT OF EXCHANGE RATE CHANGE ON CASH (85,654 ) (331,958 )

NET INCREASE IN CASH 6,660,127 5,595,270

CASH-Beginning of the Period 22,009,374 6,056,105

CASH-End of the Period $ 28,669,501 $ 11,651,375

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income tax $ 65,436 $ 242,698
Cash paid for interest $ 39,303 $ 176,134
For the Three Months Ended September 30,
2017 2016

REVENUE $ 7,809,494 $ 6,366,664

COST OF REVENUE
    Cost of product and services 5,705,511 4,436,172
    Business and sales related tax 15,613 15,545
              Total cost of revenue 5,721,124 4,451,717

GROSS PROFIT 2,088,370 1,914,947

OPERATING EXPENSES
    General and administrative expenses 835,551 473,764
    Selling expenses 294,936 380,318
              Total operating expenses 1,130,487 854,082

INCOME FROM OPERATIONS 957,883 1,060,865

OTHER INCOME
    Income from equity method investments 148,458 161,182
    Purchase rebate income 368,803 239,990
    Other income 85,619 85,901
    Interest income (expense), net (19,185 ) 32,753
              Total other income 583,695 519,826

INCOME BEFORE PROVISION FOR INCOME TAXES 1,541,578 1,580,691

PROVISION FOR INCOME TAXES 282,857 201,636

NET INCOME 1,258,721 1,379,055

    Less: net income attributable to non-controlling interest 2,831 30,348

NET INCOME ATTRIBUTABLE TO SHINECO, INC. $ 1,255,890 $ 1,348,707

COMPREHENSIVE INCOME
    Net income $ 1,258,721 $ 1,379,055
    Other comprehensive income (loss): foreign currency translation gain (loss) 1,469,410 (196,681 )
    Total comprehensive income 2,728,131 1,182,374
    Less: comprehensive income attributable to non-controlling interest 22,853 26,626

COMPREHENSIVE INCOME ATTRIBUTABLE TO SHINECO, INC. $ 2,705,278 $ 1,155,748

    Weighted average number of shares basic and diluted 21,034,072 19,376,747

    Basic and diluted earnings per common share $ 0.06 $ 0.07

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

4F-2

SHINECO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

For the Three Months Ended September 30,
2017 2016

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,258,721 $ 1,379,055
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 146,627 157,010
(Recovery of) provision for doubtful accounts (109,121 ) 103,880
Increase (decrease) in inventory reserve 93,453 (24,836 )
Deferred tax benefit (26,479 ) (3,883 )
Income from equity method investments (148,458 ) (161,182 )

Changes in operating assets and liabilities:
Accounts receivable 1,621,378 (1,607,621 )
Advances to suppliers (336,622 ) (383,769 )
Inventories 8,229 573,591
Other receivables 345,841 (204,953 )
Prepaid expense and other assets 124,496 5,034
Due from related parties 2,324 280,988
Prepaid leases 118,365 119,398
Accounts payable (14,916 ) 45,871
Advances from customers 650,665 31,181
Other payables (79,636 ) 143,166
Taxes payable 30,257 (37,421 )
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,685,124 415,509

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (7,335 ) (22,131 )
Loan advances to third parties - (108,648 )
Repayments of loans from third parties 830,717 -
Repayments of loans from related parties - 130,495
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 823,382 (284 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-termloans 299,840 781,469
Repayment of short-termloans (757,470 ) (786,719 )
Stock issuance cost payable - 843,844
Proceeds from initial public offering, net of offering costs - 5,394,549
Proceeds from advances from related parties 42,466 97,413
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (415,164 ) 6,330,556

EFFECT OF EXCHANGE RATE CHANGE ON CASH 481,047 (85,654 )

NET INCREASE IN CASH 4,574,389 6,660,127

CASH - Beginning of the Period 23,154,551 22,009,374

CASH - End of thePeriod $ 27,728,940 $ 28,669,501

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income tax $ 273,474 $ 65,436
Cash paid for interest $ 36,208 $ 39,303
~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

F-3
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

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 (“PRC” or “China”).
On December 30, 2004, the Company acquired all of the issued and outstanding shares of Beijing Tenet-Jove Technological Development ~~Corp.~~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 (“WFOE”) by Chinese ~~authority~~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, ~~respectively,~~ Tenet-Jove entered into a series of contractual agreements with ~~the owners of~~ Ankang Longevity Pharmaceutical (Group) Co., Ltd. (“Ankang Longevity Group”), ~~each of~~ Yantai Zhisheng International Freight Forwarding Co., ~~Ltd~~Ltd. (“Zhisheng Freight”), Yantai Zhisheng International Trade Co., ~~Ltd~~Ltd. (“Zhisheng Trade”), Yantai Mouping District Zhisheng Agricultural Produce Cooperative (“Zhisheng Agricultural”) and Qingdao Zhihesheng Agricultural Produce Services., ~~Ltd~~Ltd. (“Qingdao Zhihesheng”). On February 24, 2014, Tenet-Jove ~~also subsequently~~ entered into the same series of contractual agreements with ~~ShinecoZhisheng~~Shineco Zhisheng (Beijing) Bio-Technology Co., ~~Ltd~~Ltd. (“Zhisheng Bio-Tech”), which ~~is a new company~~was incorporated in 2014. Zhisheng Bio-Tech, Zhisheng Freight, Zhisheng Trade, Zhisheng Agricultural, and Qingdao Zhihesheng are collectively referred to herein as “Zhisheng Group”. ~~These~~The contractual agreements include an Executive Business Cooperation ~~Agreement;~~Agreement, Timely Reporting ~~Agreements;~~Agreement, Equity Interest Pledge Agreement and Executive Option Agreement.
On April 19, 2017, Tenet-Jove established Xinjiang Tiankunrunze Biological Engineering Co., Ltd. (“Tiankunrunze”) and owned 65% interest of Tiankunrunze. On April 28, 2017, Tiankunrunze established Xinjiang Tianzhuo Technology Development Co., Ltd. (“Tianzhuo”) with registered capital of RMB 10.0 million ($1,450,233). On May 22, 2017, Tiankunrunze established Xinjiang Tianhuihechuang Agriculture Development Co., Ltd. (“Tianhuihechuang”) with registered capital of RMB 10.0 million ($1,452,294). On May 23, 2017, Tiankunrunze established Xinjiang Tianxintongye Biotechnology Development Co., Ltd. (“Tianxintongye”) with registered capital of RMB 10.0 million ($1,451,615). Tianzhuo, Tianhuihechuang and Tianxintongye became subsidiaries of Tenet-Jove.
On May 2, 2017, the Company and its subsidiary Tiankunrunze have entered into a Strategic Cooperation Agreement with Beijing Zhongke Biorefinery Engineering Technology Co., Ltd. (“Biorefinery”), a leading high-tech biomass refining company financially backed by the Chinese Academy of Sciences Institute of Process Engineering, to establish the Institute of Chinese Apocynum Industrial Technology Research (“ICAITR”). Pursuant to the Strategic Cooperation Agreement the three parties agreed to establish the ICAITR and each will own 45%, 35% and 20% of the equity interests of ICAITR, respectively. Shineco and Tiankunrunze will invest RMB 5.0 million ($737,745) as the registered capital, and Biorefinery will invest technology such as the patent for “Steam Explosion Degumming” as well as other resources.

Pursuant to the above agreements, Tenet-Jove has the exclusive right to provide to Zhisheng Group 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 Group and Ankang Longevity Group’s activities and entitle Tenet-Jove to receive a majority of their residual returns. In essence, Tenet-Jove has gained effective control over the Zhisheng Group and Ankang Longevity Group. Therefore, the ~~Company believes that~~ Zhisheng Group and Ankang Longevity Group ~~should be considered~~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.

F-4
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Since Shineco is effectively controlled by the majority shareholders of the Zhisheng Group and Ankang Longevity ~~Group.~~Group, Shineco owns 100% ~~equity interest~~ of Tenet-Jove. Accordingly, Shineco, Tenet-Jove, and its VIEs, the Zhisheng Group and Ankang Longevity Group are effectively controlled by the same majority shareholders. Therefore, Shineco, Tenet-Jove and its VIEs are considered under common control. The consolidation of Tenet-Jove and its VIEs into Shineco has been accounted for at historical cost and prepared on the basis as if the aforementioned exclusive contractual agreements between Tenet-Jove and its VIEs had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements.

The Company, its subsidiaries, its VIEs and its VIEs’ subsidiaries (collectively the “Group”) operate three main business segments: 1) Tenet-Jove is engaged in ~~planting,~~ manufacturing and selling of Bluish Dogbane and related products, also known in Chinese as “Luobuma”, including therapeutic clothing and textile products made from Luobuma; 2) Zhisheng Group is engaged in the business of planting, processing and distributing of green agricultural produce as well as providing domestic and international logistic services for agricultural products (“Agricultural Products”); and, 3) Ankang Longevity Group ~~develops and~~ manufactures traditional Chinese medicinal herbal ~~medicinal~~ products as well as other retail pharmaceutical products. These different business activities and products can potentially be integrated and benefit from one and other.

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~

NOTE 2 - 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 of a 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, ~~2016,~~2017, which was filed on ~~September 28, 2016.~~October 13, 2017.

The unaudited condensed consolidated financial statements of the Company reflect the principal activities of the Company, its subsidiaries, its VIEs and its VIEs’ subsidiaries. The non-controlling interest represents the minority shareholders’ interest in the Company’s majority owned subsidiaries. All intercompany transactions have been eliminated.
~~Restatement of Financial Statements~~
The Company has restated its quarterly unaudited condensed consolidated financial statements as of and for the period ended September 30, 2016. The Company determined that the previously issued unaudited condensed consolidated financial statements contained in the Company’s Quarterly Reports on Form 10-Q for the quarter ended September 30, 2016 should be amended to correct errors in those financial statements and that the unaudited condensed consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q as of and for the three months ended September 30, 2016 (the “Original Filing”), should no longer be relied upon.
~~The general nature and scope of the adjustment is summarized as follows:~~
~~Correct offering expenses~~— The Company correct offering expenses of $843,844 in connection with their initial public offering as of September 30, 2016. The Company made adjustment of $843,844 to other payables and additional paid-in capital as of September 30, 2016 to correct the error.
~~The effects of the Company’s previously issued unaudited condensed consolidated financial statements as of September 30, 2016 are summarized as follows:~~
~~Selected Unaudited Condensed Consolidated Balance Sheets Information as of September 30, 2016~~
Previously
Reported Adjustment Restated

Other payables $ 2,135,695 $ 843,844 $ 2,979,539
Additional paid-in capital $ 23,581,146 $ (843,844 ) $ 22,737,302
~~Selected Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2016~~
Three months ended September 30, 2016
Previously
Reported Adjustment Restated
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issuance cost payable $ - $ 843,844 $ 843,844
Proceeds from public offerings, net of offering cost $ 6,238,393 $ (843,844 ) $ 5,394,549

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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.

The carrying amount of the VIEs and their subsidiaries’ consolidated assets and liabilities are as follows:

September 30, 2016 June 30, 2016 September 30, 2017 June 30, 2017

Current assets $ 32,034,133 $ 30,560,208 $ 43,596,320 $ 40,584,817
Plant and equipment, net 9,450,530 9,595,357 9,003,058 8,958,282
Other noncurrent assets 10,113,163 10,136,632 10,926,075 10,707,344
Total assets 51,597,826 50,292,197 63,525,453 60,250,443
Total liabilities (5,246,197 ) (4,398,424 ) (5,016,236 ) (4,662,387 )
Net assets $ 46,351,629 $ 45,893,773 $ 58,509,217 $ 55,588,056

Non-controlling Interests

US 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 net income ~~(loss)~~ of ~~those subsidiaries~~these entities are reported separately in the unaudited condensed consolidated statements of income and comprehensive ~~income (loss).~~income.

F-5
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Risks and Uncertainties

The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal ~~environments~~environment in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC 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 other factors, 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 situations and believes that it is in compliance with existing laws and regulations, ~~this may not be indicative of future results.~~changes could effect..

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~

Members of the current management team own controlling interests in the Company and are also the owners of the VIEs in the PRC. The Company only controls the VIEs through contractual arrangements which obligate it to absorb the risk of loss and to receive the residual expected returns. As such, the controlling shareholders of the Company and the VIEs could cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the Company would not retain control of the VIEs.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements as well as the reported amounts of revenue and expenses during the reporting ~~period.~~periods. Significant estimates required to be made by management include, but are not limited to, useful lives of property, plant, and equipment, and intangible assets, the recoverability of long-lived assets and the valuation of accounts receivable, accrued expenses, taxes payable and inventory ~~reserve.~~reserves. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue from sales of ~~bluish dogbane~~Luobuma products, Chinese medicinal herbal products and agricultural products, as well as providing logistic ~~service~~services and other processing ~~service~~services to external customers. The Company recognizes revenue when all of the following have occurred: (i) there is persuasive evidence of an arrangement with a customer; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) the Company’s collection of such fees is ~~reasonable~~reasonably assured. These criteria, as related to the Company’s revenue, are considered to have been met as follows:

Sales of products: The Company recognizes revenue onfrom the sale of products when the goods are delivered and title to the goods passes to the customer provided that there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exists; the sales price is fixed or determinable; and collectability is deemed probable.

Revenue from the rendering of services: Revenue from international freight forwarding, domestic air and overland freight forwarding services ~~are~~is recognized upon ~~the completion of~~ the performance of services as stipulated in the underlying contract or when commodities are being released from the customer’s warehouse; the service price is fixed or determinable; and collectability is deemed probable.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, cash on ~~deposits~~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 ~~and cash equivalents~~ with various financial institutions mainly in the PRC. Balances in banks in the PRC are uninsured. As of September 30, 2017 and June 30, 2017, the Company had no cash equivalents.
F-6
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

Accounts Receivable

Accounts receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as necessary. The Company reviews the accounts receivable on a periodic basis and makes general and specific ~~allowance~~allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, the customers’ historical payment history, their current credit-worthiness and current economic trends. As of September 30, ~~2016~~2017 and June 30, ~~2016,~~2017, the ~~allowances~~allowance for doubtful accounts ~~were $99,067~~was $17,898 and ~~$103,968,~~$48,450, respectively. Accounts are written off against the allowance after efforts at collection prove unsuccessful.

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~

Accounts receivable-unconsolidated entity represents the amount due from Shaanxi Pharmaceutical Group Pai’ang Medicine Co. Ltd. (“Shaanxi Pharmaceutical Group”). The joint-venture company established by Shaanxi Pharmaceutical and the Company are required to exclusively purchase certain raw materials and drug products from Shaanxi Pharmaceutical Group. In return, Shaanxi Pharmaceutical Group has agreed to compensate Ankang Longevity Group with a preferred distribution that equals to 7% of the total purchases made from Shaanxi Pharmaceutical Group. The accounts receivable mainly represents the preferred distribution due from Shaanxi Pharmaceutical Group.
Inventories

Inventories, which are stated at the lower of cost or current market value, ~~consisting~~consist of raw materials, work-in-progress, and finished goods related to the Company’s products. Cost is determined using the first in first out (FIFO) method. Market value is the lower of replacement cost or net realizable value. Agricultural products that the Company farms are recorded at cost, which includes direct costs such as seed selection, fertilizer, labor cost and contract ~~fee~~fees that are spent in growing agricultural products on the leased farmland, and indirect costs which include amortization of ~~prepayment~~prepayments of farmland ~~lease fee~~leases and farmland development costs. All the costs are accumulated until the time of harvest and then allocated to the harvested crops costs when they are sold. The Company periodically evaluates its inventory and records an inventory reserve for certain inventories that may not be ~~saleable.~~
saleable or whose cost exceeds market prices.

Advances to Suppliers

Advances to suppliers consist of ~~balance paid~~payments to suppliers for materials that have not been received. Advances to suppliers are reviewed periodically to determine whether their carrying value has become impaired. As of September 30, ~~2016~~2017 and June 30, ~~2016,~~2017, the Company had an allowance for uncollectible advances to suppliers ~~in the amount~~ of ~~$10,079~~$29,958 and ~~$10,118,~~$17,618, respectively.

Loans to Third Parties

Loans to third parties consist of various cash advances to unrelated companies and individuals, with whom the Company has business relationships. The loans are due within one year with no ~~interest rate.~~interest. Loans to third parties are reviewed periodically as to whether their carrying values remain realizable.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for additions, major ~~renewal~~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,~~life. Farmland leasehold improvements are amortized over the shorter of lease term or ~~remaining lease period~~estimated useful lives of the underlying assets. ~~Following are the~~The estimated useful lives of the Company’s property and ~~equipment:~~equipment are as follows:

Estimated useful lives

Buildings 20-50 years
Machinery equipment 5-10 years
Motor vehicles 5-10 years
Office equipment 5-10 years
Farmland leasehold improvements 12-18 years

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~

F-7

Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Land Use ~~Right~~Rights

~~Under PRC law, all~~According to the Chinese laws and regulations regarding land use rights, land in ~~the PRC~~urban districts is owned by the ~~government~~State, while land in the rural areas and ~~cannot be sold~~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 ~~an individual or company. The~~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 respective useful lives, using the straight-line method. ~~Estimated~~The estimated useful life is ~~50-years,~~50 years, based on the term of the land use rights.
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, plant and equipment, land use rights, investments and long-term prepaid ~~lease.~~leases. For the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, the Company did not recognize any impairment of its long-lived assets.
Fair Value of Financial Instruments

The Company ~~adopted~~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 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 assets or liabilities.

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. ~~Valuation allowances are~~A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for 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 does not have any uncertain tax positions at September 30, ~~2016~~2017 and June 30, ~~2016.~~2017. The Company has not provided deferred taxes of undistributed earnings of non-U.S. subsidiaries at September 30, 2017, 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.
F-8
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

The statute of limitations for the Company’s U.S. federal income tax returns and certain state income tax returns remains open for tax years ~~2013~~2007 and after. As of September 30, ~~2016,~~2017, the tax years ended June 30, ~~2007~~2012 through June 30, ~~2016~~2017 for the Company’s People’s Republic of China (“PRC”) subsidiaries remain open for statutory examination by PRC tax authorities.

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 are sold in the PRC are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing ~~their~~ finished ~~product~~products or acquiring ~~its~~ finished products. The Company ~~recorded~~records a VAT payable or VAT receivable ~~net of payment~~ in the accompanying unaudited condensed consolidated financial statements.

Foreign Currency Translation

The Company uses the United States dollar (“U.S. dollars” or “USD”) 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 ~~period.~~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 ~~income~~ (loss).

The balance sheet amounts, with the exception of equity, at September 30, ~~2016~~2017 and June 30, ~~2016~~2017 were translated at 1 RMB to ~~$0.1499~~0.1503 USD and at 1 RMB to ~~$0.1505~~0.1475 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the three months ended September 30, ~~2016~~2017 and ~~2015~~2016 were at 1 RMB to ~~$0.1500~~0.1499 USD and at 1 RMB to ~~$0.1595~~0.1500 USD, respectively.

Comprehensive Income ~~(Loss)~~

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

Equity Investment

An investment in which the Company has the ability to exercise significant influence, but does not have a controlling interest, is accounted for using the equity method. Significant influence is generally considered to exist when the Company has an ownership interest in the voting stock between 20% and 50%, and other factors, such as representation on the Board of Directors, voting rights and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate.

11
F-9

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

Earnings per Share

The Company computes earnings 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 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., 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, ~~2016~~2017 and ~~2015.~~2016.

New Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02 Amendments to the ASC 842 Leases. This update requires a lessee to recognize the assets and liability (the lease liability) arising from operating leases on the balance sheet for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Within a twelve months or less lease term, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. If a lessee makes this election, it should recognize lease expense on a straight-line basis over the lease term. In transition, this update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company does not currently expect the adoption of ASU 2016-02 to have a material impact on the Company’s financial statements unless it enters into a new long-term lease.
In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (ASC 718): Improvements to Employee Share-Based Payment Accounting. The objective is to identity, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The areas for simplification include the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Some of the areas apply only to nonpublic entities. For public business entities, the ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the ASU is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The adoption of ASU 2016-09 did not impact our financial statements.
In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (ASC 606): Identifying Performance Obligations and Licensing. The objective is to clarify the two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for these areas. The ASU affects the guidance in ASU 2014-09, Revenue from Contracts with Customers (ASC 606), which is not yet effective. The effective date and transition requirements for this ASU are the same as the effective date and transition requirements in ASC 606 (and any other Topic amended by ASU 2014-09). ASU 2015-14, Revenue from Contracts with Customers (ASC 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. The Company does not expect the adoption of ASU 2016-10 to have a material impact on the Company’s financial statements.
In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (ASC 606): Narrow-Scope Improvements and Practical Expedients. The objective is to address certain issues identified by the FASB-IASB Joint Transition Resource Group for Revenue Recognition. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements for ASC 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14, Revenue from Contracts with Customers (ASC 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. The Company does not expect the adoption of ASU 2016-12 to have a material impact on the Company’s financial statements.
F-10
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
In June 2016 the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which eliminates the probable initial recognition threshold for credit losses in current U.S. GAAP, and instead requires an organization to record a current estimate of all expected credit losses over the contractual term for financial assets carried at amortized cost. This is commonly referred to as the current expected credit losses (“CECL”) methodology. Expected credit losses for financial assets held at the reporting date will be measured based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 does not change the existing write-off principle in U.S. GAAP or current nonaccrual practices, nor does it change accounting requirements for loans held for sale or certain other financial assets which are measured at the lower of amortized cost or fair value. As a public business entity that is an SEC filer, ASU 2016-13 becomes effective for the Company on January 1, 2020, although early application is permitted for 2019. The Company is currently evaluating the potential effects on the Company’s financial statements, if any.
In August 2016, the FASB ~~has~~ issued ~~Accounting Standards Update (ASU)~~ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company ~~is currently evaluating~~does not expect the adoption of ASU 2016-15 to have a material impact ~~of this new standard~~ on ~~its consolidated~~the Company’s financial ~~statements and related disclosures.~~statements.

In ~~October~~November 2016, the FASB ~~has~~issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance will be effective in the first quarterly of 2018 and early adoption is permitted. The Company does not expect the adoption of ASU 2016-18 to have a material impact on the Company’s financial statements.
In January 2017, the FASB issued ASU No. ~~2016-17, Consolidation~~2017-01, Business Combinations (Topic ~~810)~~805): ~~Interest Held through Related Parties That Are under Common Control, to provide guidance on~~Clarifying the ~~evaluation of whether a reporting entity is the primary beneficiary~~definition of a ~~VIE by amending how a reporting entity, that~~business. The amendments in this ASU is ~~a single decision maker~~to clarify the definition of a ~~VIE, treats indirect interests in that entity held through related parties that are under common control.~~business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company does not believe the adoption of this ASU would have a material effect on the Company’s financial statements.
In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, which amends the scope of modification accounting for share-based payment arrangements and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. For all entities, this ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in anany interim period. The ~~Company is currently evaluating the impact~~adoption of this ~~new standard~~ASU is not expected to have a material effect on ~~its consolidated~~the Company’s financial ~~statements and related disclosures.~~

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~statements.

F-11
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 3- INVENTORIES

The inventories consist of the following:

September 30, 2016 June 30, 2016 September 30, 2017 June 30, 2017

Raw materials $ 677,905 $ 825,028 $ 980,069 $ 1,167,553
Work-in-process 2,551,602 3,230,729 363,449 672,966
Finished goods 1,583,832 1,354,176 1,893,854 1,346,437
Packing materials 19,757 17,531
Less: inventory reserve (791,283 ) (819,285 ) (949,826 ) (840,683 )
$ 4,041,813 $ 4,608,179
Total $ 2,287,546 $ 2,346,273

Work-in-process includes direct costs such as seed selection, fertilizer, labor cost and subcontractor ~~fee~~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 ~~fee~~fees and farmland development ~~cost.~~costs. All the costs are accumulated until the time of harvest and then allocated to harvested ~~crops~~crop costs when they are sold.

NOTE 4- PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

September 30, 2016 June 30, 2016 September 30, 2017 June 30, 2017

Buildings $ 10,685,249 $ 10,726,872 $ 10,709,838 $ 10,516,245
Building improvement 52,629 52,834
Machinery equipment 462,369 443,846
Building improvements 52,750 51,797
Machinery and equipment 484,829 474,888
Motor vehicles 230,536 231,434 49,547 48,651
Construction in progress 449,760 451,512 450,795 442,646
Office equipment 209,090 208,022 162,805 153,836
Farmland leasehold improvement 3,152,662 3,164,943
Farmland leasehold improvements 3,159,917 3,102,803
15,242,295 15,279,463 15,070,481 14,790,866
Less: accumulated depreciation and amortization (4,375,090 ) (4,244,264 ) (4,690,057 ) (4,470,470 )
Property, plant and equipment, net $ 10,867,205 11,035,199 $ 10,380,424 $ 10,320,396

Depreciation and amortization expense charged to operations ~~were~~was $136,982 and $147,367 ~~and $261,255~~ for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

Farmland leasehold improvements consist of following:

September 30, 2016 June 30, 2016 September 30, 2017 June 30, 2017

Blueberry farm land leasehold reconstruction $ 2,422,015 $ 2,431,450
Blueberry farmland leasehold reconstruction $ 2,427,589 $ 2,383,711
Yew tree planting base reconstruction 271,355 272,412 271,980 267,064
Greenhouse renovation 459,292 461,081 460,348 452,028
Total farmland leasehold improvement $ 3,152,662 $ 3,164,943
Total farmland leasehold improvements $ 3,159,917 $ 3,102,803

13
F-12

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 5- LAND USE RIGHTS ~~NET~~

~~The Company states land~~Land use ~~right~~rights are recognized at cost less accumulated amortization. ~~All~~According to the Chinese laws and regulations regarding land use rights, land in urban districts is owned by the State, while land in the ~~People’s Republic~~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 ~~China is government owned and cannot be sold to any individual or company. However,~~the land, the government grants the user a “land use right” (the “Right”) to use the land. The Company has the Right to use the land for 50 years and amortizes the ~~Right~~rights on a straight-line basis over the period of 50 years.

September 30, 2016 June 30, 2016 September 30, 2017 June 30, 2017

Land use rights $ 1,667,557 $ 1,674,053 $ 1,671,395 $ 1,641,181
Less: accumulated amortization (272,596 ) (265,288 ) (308,332 ) (294,550 )
Land use rights, net $ 1,394,961 $ 1,408,765 $ 1,363,063 $ 1,346,631

For the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, the Company ~~incurred~~recognized amortization expense of ~~$8,342~~$9,645 and ~~$8,873,~~$9,643, respectively.

The estimated future amortization expenses are as follows:

Twelve months ending September 30:

2017 $ 33,351
2018 33,351 $ 33,428
2019 33,351 33,428
2020 33,351 33,428
2021 33,351 33,428
2022 33,428
Thereafter 1,228,206 1,195,923
Total $ 1,394,961 $ 1,363,063

NOTE 6-6 - INVESTMENTS

Ankang Longevity Group entered into two equity investment agreements with ~~a third party,~~ Shaanxi Pharmaceutical Group Pai’ang Medicine Co. Ltd. (“Shaanxi Pharmaceutical Group”), a Chinese state-owned pharmaceutical enterprise to invest a total of RMB 6.8 million (approximately $1.0 million) to form a joint venture pharmacy retail company called Shaanxi Pharmaceutical Sunsimiao Drugstores Ankang Retail Chain Co., Ltd. (“Sunsimiao Drugstores”), and a joint venture pharmaceutical wholesale distribution company named Shaanxi Pharmaceutical Holding Group Longevity Pharmacy Co., Ltd. (“Shaanxi Longevity Pharmacy”). Ankang Longevity Group obtained 49% interest in each of these two new joint venture companies. These two joint ventures ~~are~~were formed as new business entities to collaborate with Shaanxi Pharmaceutical Group to expand sales to regional hospitals and clinics and to establish the presence of retail pharmacies under the Brand name “Sunsimiao”. The investments are accounted for using the equity method because Ankang Longevity Group has significant influence, but no control of these two entities. Ankang Longevity Group recorded income of ~~$161,182~~$148,458 and ~~$148,600~~$161,182 for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively, from the ~~investment,~~investments, which was included in “Income from equity method investments” in the unaudited condensed consolidated statements of income and comprehensive ~~income (loss).~~

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~income.

Ankang Longevity Group entered into a supplemental agreement with Shaanxi Pharmaceutical ~~Group Pai’ang Medicine Co. Ltd. (“Shaanxi Pharmaceutical Group”).~~Group. According to the supplemental agreement, the new joint-venture companies established by Shaanxi Pharmaceutical Group and Ankang Longevity Group are required to exclusively purchase certain raw materials and drug products from Shaanxi Pharmaceutical Group. In return, Shaanxi Pharmaceutical Group has agreed to compensate Ankang Longevity Group with a ~~preferred distribution equal to~~purchase rebate of 7% of the total purchases made from Shaanxi Pharmaceutical Group. For the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, a total of $368,803 and $239,990 ~~and $191,449 were~~was recognized by Ankang Longevity Group from this supplemental agreement in addition to its 49% share of the income from the joint ventures, respectively.
F-13
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

On October 21, 2013, the Company, through its controlled subsidiaries, Zhisheng Freight and Zhisheng Agricultural, entered into an agreement with an unrelated third party, Zhejiang Zhen’Ai Network Warehousing Services Co., Ltd. (“Zhen’Ai Network”), and invested RMB 14.5 million (approximately $2.2 million) into Tiancang Systematic Warehousing project (“Tiancang Project”) operated by Zhen’Ai Network. The Tiancang Project is an online platform established to provide comprehensive warehousing and logistic solutions to companies involved in E-commerce. The Company is entitled to ~~a profit sharing of~~ 29% of Tiancang Project’s after-tax net income annually, less 30% statutory reserve and 10% employee welfare fund. When the amount of the accumulated statutory reserve reaches 30% of the total investment for the Tiancang Project, no additional appropriation of the statutory reserve is required. ~~The Tiancang Project is currently up and running.~~ For the three months ended September 30, 2017 and 2016, the Company did not record investment income from this investment.
On November 21, 2016, the Company (the “Investor”) entered into an agreement with Original Lab Inc., a California corporation (the “Investee”), and made a payment of $200,000 in exchange for the right to acquire certain shares of the Investee’s common stock and preferred stock. For the three months ended September 30, 2017, the Company did not record investment income from this investment.

The Company’s investments in unconsolidated entities consist of the following:

September 30, 2016 June 30, 2016 September 30, 2017 June 30, 2017

Shaanxi Pharmacy Holding Group Longevity Pharmacy Co., Ltd ( Ankang Longevity Pharmacy ) $ 2,219,652 $ 2,091,531
Shaanxi Pharmacy Sunsimiao Drugstores Ankang Chain Co., Ltd 515,959 493,008
Shaanxi Pharmaceutical Holding Group Longevity Pharmacy Co., Ltd. (Ankang Longevity Pharmacy) $ 2,921,271 $ 2,744,391
Shaanxi Pharmaceutical Sunsimiao Drugstores Ankang Chain Co., Ltd. 644,916 611,228
Zhejiang Zhen’Ai Network Warehousing Services Co., Ltd. 2,173,841 2,182,308 2,178,843 2,139,461
Original Lab Inc. 200,000 200,000
Total $ 4,909,452 $ 4,766,847 $ 5,945,030 $ 5,695,080

Summarized financial information of unconsolidated entities is as follows:

September 30, 2016 June 30, 2016 September 30, 2017 June 30, 2017

Current assets $ 28,507,486 $ 28,450,106 $ 35,535,941 $ 32,880,168
Noncurrent assets 329,169 386,764 264,785 281,162
Current liabilities 23,269,212 23,577,799 28,538,267 26,328,322

For the three months ended September 30, For the three months ended September 30,
2016 2015 2017 2016

Net sales $ 7,072,032 $ 6,844,997 $ 7,445,561 $ 7,072,032
Gross profit 895,484 1,056,799 969,677 895,484
Income from operations 328,365 355,607 303,766 328,365
Net income 328,941 354,568 302,975 328,941
NOTE 7 - DEPOSIT FOR BUSINESS ACQUISITION
On December 12, 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 Japanese health products to the elderly, pursuant to which Tenet-Jove intends to acquire a 51% equity interest in Tianjin Tajite for cash consideration of RMB 14,000,000 (approximately $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 that requires that Tianjin Tajite to satisfy certain preconditions related to product introductions into China. On October 26, 2017, the Company has completed the acquisition for 51% of the shares in Tianjin Tajite.

15
F-14

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 7-8 - PREPAID LEASES

One of the Company’s controlled subsidiaries, Zhisheng Group entered into several farmland lease contracts with farmer cooperatives to lease farmland in order to plant and grow organic ~~vegetable,~~vegetables, fruit and Chinese yew trees. The lease ~~term varies~~terms vary from 5 years to 24 years. The aggregate prepaid lease payments on these leases ~~amounts to~~was approximately RMB ~~36.8~~36.7 million (approximately ~~$5.52~~$5.5 million). Zhisheng Group ~~paid off~~prepaid the entire required lease ~~amount~~amounts plus transfer fees at the beginning of the lease.

These leases are accounted for as operating leases and will be amortized each year on a straight-line basis over the lease terms. The amortization expense is initially recorded as work in process ~~under~~in the inventory account during the growing period and then transferred to harvested crops costs at the time of harvest and then allocated to cost of sales when they are sold.

~~The prepaid leases consist of the following:~~
September 30, 2016 June 30, 2016

Current $ 476,708 $ 478,565
Non-current 3,726,008 3,860,327
Total $ 4,202,716 $ 4,338,892
~~Further~~Future amortization expense ~~is as~~will be recognizedas follows:

Twelve months ending September 30:

2017 $ 476,708
2018 473,460 $ 474,550
2019 473,460 474,550
2020 408,995 388,398
2021 215,598 216,094
2022 216,094
Thereafter 2,154,495 1,965,873
Total $ 4,202,716 $ 3,735,559

NOTE 8-9 - SHORT-TERM LOANS

Short-term loans consist of the following:

Lender September 30,
2016 Maturity
Date Int.
Rate/Year
Wanxiang Trust Co., Ltd-a $ 31,483 2017-9-9 13.67 %
Agricultural Bank of China-c 749,600 2017-8-18 5.71 %
Agricultural Bank of China-d 449,760 2016-10-27 * 5.27 %
Agricultural Bank of China-d 1,199,360 2016-11-18 5.22 %
Agricultural Bank of China-d 299,840 2017-4-7 5.22 %
Total $ 2,730,043

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
Lender September 30, 2017 Maturity
Date Int.
Rate/Year
Agricultural Bank of China-b $ 300,530 2017-10-16 * 5.22 %
Agricultural Bank of China-d 1,202,120 2017-12-7 5.22 %
Agricultural Bank of China-d 300,530 2018-7-3 5.22 %
Agricultural Bank of China-e 450,795 2017-11-15 5.22 %
Total $ 2,253,975

Lender June 30, 2017 Maturity
Date Int.
Rate/Year
Wanxiang Trust Co., Ltd-a $ 7,746 2017-9-9 * 13.48 %
Agricultural Bank of China-b 295,098 2017-10-16 * 5.22 %
Agricultural Bank of China-c 737,745 2017-8-17 * 5.66 %
Agricultural Bank of China-d 1,180,392 2017-12-7 5.22 %
Agricultural Bank of China-e 442,647 2017-11-15 5.22 %
Total $ 2,663,628
F-15

Lender June 30, 2016 Maturity
Date Int.
Rate/Year
Chongqing Alibaba Micro-Credit Company-a $ 36,873 2016-9-9 * 15.21 %
Agricultural Bank of China-b 301,008 2016-9-24 * 5.52 %
Agricultural Bank of China-d 451,512 2016-8-9 * 5.82 %
Agricultural Bank of China-d 451,512 2016-10-27 * 5.27 %
Agricultural Bank of China-d 1,204,032 2016-11-18 5.22 %
Agricultural Bank of China-d 301,008 2017-4-7 5.22 %
Total $ 2,745,945
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

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

a. Not collateralized or guaranteed.

b. Collateralized by the building owned by Xiaoyan Chen and Jing Chen, who are both ~~the~~ related parties of the ~~company.~~Company. Xiaoyan Chen is one of the shareholders of Ankang Longevity ~~Pharmaceutical (Group) Co., Ltd.~~Group. Jing Chen is the sister of the Xiaoyan Chen but not a shareholder of Ankang Longevity Group.

c. Guaranteed by commercial credit guaranty companies unrelated to the Company.

d. Guaranteed by a commercial credit guaranty company, unrelated to the Company and also by Jiping Chen, a shareholder of the Company.

* ~~The Company repaid the loans in full on maturity date.~~
e. Guaranteed by a third-party company and also by Jiping Chen, a shareholder of the Company.
* The Company repaid the loans in full on maturity date.

The Company recorded interest expense of ~~$39,303~~$36,028 and ~~$38,898~~$39,303 for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively. The annual weighted average interest rates are ~~5.48%~~5.38% and ~~6.71%~~5.48% for the three months ended September 30, 2017 and 2016, ~~and 2015,~~ respectively.

NOTE 9-10 - RELATED PARTY TRANSACTIONS

DUE FROM RELATED PARTIES

The Company had previously made temporary advances to certain shareholders of the Company ~~as well as several~~and to other entities that are either owned by ~~directors or~~ family members of those ~~directors.~~shareholders or to other entities that the Company has investments in. Those advances are due on demand, non-interest ~~bearing, except for the advance to Xinyang Yifangyuan Garden Technology Co., Ltd., which bears fixed annual interest rate of 4.17%.~~bearing.

As of September 30, ~~2016~~2017 and June 30, ~~2016,~~2017, the outstanding amounts due from related parties consist of the following:

September 30, 2016 June 30, 2016

Xinyang Yifangyuan Garden Technology Co., Ltd $ 368,410 $ 500,784
Shaanxi Pharmaceutical Group Pai’ang Medicine Co. Ltd 462,825 820,728
Yang Bin 149,920 150,504
Zhang Xin 115,438 93,312
Chang Song 147,330 85,035
Wang Qi Wei 8,247 8,279
Tian Shuangpeng - 11,288
Qi Qiuchi 1,500 1,505
$ 1,253,670 $ 1,671,435

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
For the three months ended September 30, 2016 and 2015, interest income of $56,248 and $59,895 recognized on these loans was included in “Interest income, net” on the unaudited condensed consolidated statements of income and comprehensive income (loss).
September 30, 2017 June 30, 2017

Yang Bin $ 150,265 $ 147,550
Zhang Xin 93,164 91,480
Chang Song 74,381 73,037
Zhang Xinyu 62,572 61,441
Zhang Hua 42,074 28,034
Beijing Huiyinansheng Asset Management Co., Ltd 22,540 22,132
Zhang Yuying - 15,567
Wang Qiwei 8,266 8,117
Tian Shuangpeng 1,503 1,475
$ 454,765 $ 448,833

DUE TO RELATED PARTIES

As of September 30, ~~2016~~2017 and June 30, ~~2016,~~2017, the Company ~~has~~had related party payables of ~~$341,329~~$305,191 and ~~$244,915,~~$257,880, respectively, mainly due to the principal shareholders or certain relatives of the ~~shareholder~~shareholders of the Company who lend funds for the Company’s operations. The payables are unsecured, non-interest bearing and due on demand.

September 30, 2016 June 30, 2016

Wu Yang 185,976 96,398
Xiong Kun 85,005 -
Wang Sai 58,108 120,854
Zhang Yuying 11,673 26,769
Huiyin Ansheng 567 894
$ 341,329 $ 244,915
F-16
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2017 June 30, 2017

Wu Yang $ 96,245 $ 94,505
Wang Sai 115,830 71,942
Zhao Min 93,116 91,433
$ 305,191 $ 257,880

SALES TO ~~AND PURCHASES FROM~~ RELATED PARTIES

For the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, the Company recorded sales to Shaanxi Pharmaceutical Group, ~~Pai’ang Medicine Co., Ltd,~~ a related party , of $771,604 and $800,199, ~~and $746,475,~~ respectively. ~~There were no purchases from related parties for the three months ended~~As of September 30, ~~2016~~2017 and ~~2015.~~June 30, 2017, the balance of accounts receivable due from Shaanxi Pharmaceutical Group was $1,790,094 and $2,205,453, respectively.

NOTE ~~10-~~11 - 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. Tenet-Jove and its VIEs entities are governed by the Income Tax Laws of the PRC, and are currently subject to tax at a statutory rate of 25% on ~~net income reported after appropriated tax adjustment.~~taxable income. Two VIE entities 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.

i) The components of the income tax expense are as follows:

For the three months ended
September 30,
2016 2015
Current income tax provision $ 205,519 $ 291,934
Deferred income tax provision (benefit) (3,883 ) 9,015
Total $ 201,636 $ 300,949
18
~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
For the three months ended
September 30,
2017 2016
Current income tax provision $ 309,336 $ 205,519
Deferred income tax benefit (26,479 ) (3,883 )
Total $ 282,857 $ 201,636

ii) The following table summarizes deferred tax assets resulting from differences between the financial reporting basis and tax basis of assets and liabilities:

September 30, 2016 June 30, 2016 September 30, 2017 June 30, 2017

Allowance for doubtful accounts $ 133,765 $ 123,818 $ 28,055 $ 24,598
Inventory reserve 196,338 203,674 236,622 209,236
Net operating loss carry-forwards 113,680 114,122 113,941 111,882
Total 443,783 441,614 378,618 345,716
Valuation allowance (113,680 ) (114,122 ) (113,941 ) (111,882 )
Deferred tax assets, net $ 330,103 $ 327,492 $ 264,677 $ 233,834
F-17
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Movement of the valuation allowance:

September 30, 2017 June 30, 2017

Beginning balance $ 111,882 $ 114,122
Exchange difference 2,059 (2,240 )
Ending balance $ 113,941 $ 111,882
Three months Ended
September 30, 2016 Year Ended
June 30, 2016

Beginning balance $ 114,122 $ 108,932
Current year addition - 13,971
Exchange difference (442 ) (8,781 )
Ending balance $ 113,680 $ 114,122
(b) Value Added Tax

The Company is subject to a value added tax (“VAT”) for selling merchandise. The applicable VAT rate is 17% for products sold in the PRC. 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 ~~the~~ commercial practice ofin 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 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, 2017 and 2017.

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~

(c) Taxes Payable

Taxes payable consists of the following:

September 30, 2016 June 30, 2016 September 30, 2017 June 30, 2017

Income tax payable $ 1,169,247 $ 1,201,641 $ 1,605,869 $ 1,541,548
Value added tax payable 60,266 69,955 55,118 60,685
Business tax and other taxes payable 5,534 6,546 6,758 6,693
$ 1,235,047 $ 1,278,142 $ 1,667,745 $ 1,608,926

NOTE ~~11 –SHAREHOLDERS’~~12 – SHAREHOLDERS’ EQUITY

Initial Public Offering

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

F-18
~~Stock Incentive Plan~~
On September 23, 2016, the Board of Directors of the Company approved a stock incentive plan (“Plan”). Pursuant to the Plan, the Company plans to file a registration statement on Form S-8, as soon as practicable, to register up to 2,103,407 of the Company’s shares of common stock. As of the date of this report, the Company has not issued any options to purchase the Company's shares of common stock and the Company has not filed the Form S-8 registration statement.
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

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 is 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, ~~2016~~2017 and June 30, ~~2016,~~2017, the balance of the statutory reserve was ~~$3,317,188~~$3,570,859 and ~~$3,242,139,~~$3,484,449, respectively.

NOTE ~~12- CONCENTRATION~~13 - CONCENTRATIONS AND RISKS

The Company maintains ~~certain~~principally all bank accounts in the PRC for which ~~are not protected by Federal Deposit Insurance Corporation (“FDIC”) insurance or other~~there is no insurance. The cash balance held in the PRC bank accounts was ~~$28,528,892~~$27,622,150 and ~~$21,986,817~~$23,112,124 as of September 30, ~~2016~~2017 and June 30, ~~2016,~~2017, respectively.

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~

During the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, almost 100% of the Company's assets were located in the PRC and 100% of the Company's revenues were derived from its subsidiaries and VIEs located in the PRC.

For the three months ended September 30, 2017, three customers accounted for approximately 22%, 12% and 10% of the Company’s total sales, respectively. At September 30, 2017, four customers accounted for approximately 69% of the Company’s accounts receivable. For the three months ended September 30, 2016, three customers accounted for approximately 38%, 11% and 11% of the Company’s total sales, respectively. At September 30, 2016, two customers accounted for approximately 72% of the Company’s accounts receivable.
For the three months ended September 30, ~~2015, two customers~~2017, five vendors accounted for approximately ~~37%~~19%, 13%, 12%, 11% and 11% of the ~~Company's~~Company’s total ~~sales,~~purchases, respectively.
For the three months ended September 30, 2016, six vendors accounted for approximately 17%, 17%, 13%, 12%, 11% and 10% of the Company’s total purchases, respectively. ~~For the three months ended September 30, 2015, five vendors accounted for approximately 20%, 17%, 14%, 12% and 10% of the Company's total purchases, respectively.~~
NOTE 14 - COMMITMENTS AND CONTINGENCIES

~~NOTE 13- COMMITMENTS AND CONTINGENCIES~~
Lease Commitments

The Company leases ~~eight~~nine main office spaces under non-cancelable operating lease agreements through ~~February 28, 2019.~~December 10, 2020. The Company also leases farmland under a non-cancelable operating lease agreement through April 26, 2041. Most of those operating lease payments are scheduled on a quarterly basis. The future minimum rental payments are as follows:
Twelve months ending September 30:

2017 $ 392,089
2018 392,089 $ 640,936
2019 217,550 449,057
2020 215,991 288,379
2021 215,991 222,137
2022 215,885
Thereafter 4,364,205 4,011,857
Total $ 5,797,915 $ 5,828,251

Rent expense totaled ~~$99,839~~$128,456 and ~~$32,352~~$99,839 for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

F-19
Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
In addition, the Company sublets the above-mentioned farmland to a third party under a non-cancelable operating lease agreement through May 31, 2020. The future minimum sublease rental income to be received is as follows:
Twelve months ending September 30:

2017 $ 215,991
2018 215,991 $ 209,888
2019 215,991 209,888
2020 143,995 143,923
Total $ 791,968 $ 563,699

Sublease ~~rent~~rental income totaled ~~$53,998~~$53,971 and ~~$57,435~~$53,998 for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

Legal Contingencies

~~From time to time,~~On May 16, 2017, Bonwick Capital Partners, LLC (“Plaintiff”) commenced a lawsuit (Case No. 1:17-cv-03681-PGG) against the Company ~~is a party to various legal actions arising~~ in the ~~ordinary course~~United States District Court for the Southern District of ~~business. The~~New York. Plaintiff alleges that the Company ~~accrues costs associated~~entered into an agreement with ~~these matters when they become probable and~~Plaintiff (the “Agreement”), pursuant to which Plaintiff was to provide the ~~amount can be reasonably estimated. Legal costs incurred~~Company with financial advisory services in connection with ~~loss contingencies are expensed as incurred. The Company's management does not expect any liability from~~ the ~~disposition of such claims and litigation individually or~~Company’s initial public offering in the ~~aggregate would have a material adverse impact on~~United States. Plaintiff alleges that the ~~Company's consolidated financial position, results of operations~~Company breached the Agreement and ~~cash flows.~~ seeks money damages up to $6 million. The Company believes that these claims are without merit and intends to vigorously defend itself.

NOTE ~~14-~~15 - 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 financial statements for details on the Group's business segments.

~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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 three operating segments according to ~~the~~its major products and locations as follows:

Ø 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):

The operating companies of this segment, namely Tenet-Jove and Tenet Huatai, specialize in Luobuma developing and manufacturing of relevant products. ~~With rich experience and broad channels in domestic market, the Group is leading in Luobuma textile production and other by-products.~~

This segment’s operations are focused in the north region of Mainland China, mostly carried out in Beijing and Tianjin City.

Ø ~~Planting, processing~~Processing and distributing of traditional Chinese medicinal herbal products as well as other pharmaceutical products (“Herbal products”):

The operating companies of this segment, namely AnKang Longevity Group and its subsidiaries, ~~plant and~~ process more than 600 kinds of Chinese medicinal herbal products with an established domestic sales and distribution network.

Ankang Longevity Group is also engaged in the retail pharmacy business and the operating revenue, which is not material, is also included in this segment due to immaterial amount. Ankang Longevity Group also started a joint-venture pharmacy retail and wholesale distribution business in the second quarter of 2013 with a large Chinese pharmaceutical company, Shaanxi Pharmaceutical Holdings Group, aiming to expand its pharmacy retail and wholesale business. The operations of this segment are mainly located in the Mid-western region of Mainland China.segment.
F-20

Shineco, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Ø Planting, processing and distributing of green and organic agricultural produce as well as growing and cultivating of Chinese Yew trees (“Agricultural products”):

The operating companies of this segment, the Zhisheng Group, ~~engage~~is engaged in the business of growing and distributing green and organic vegetables and fruits as well as providing logistics services for distributing agricultural products. This segment has been focusing its efforts on the growing and cultivating of Chinese yew ~~tree~~trees (formally known as “taxus media”), a small evergreen tree whose branches can be used for the production of anti-cancer ~~medication~~medications and the tree itself can be used ~~for~~as an ornamental indoor bonsai tree, which are known to have the effect of purifying air quality.

The operations of this segment are located in the East and North regions of Mainland China, mostly carried out in Shandong Province and in Beijing where the Zhisheng Group has newly developed over 100 acres of modern greenhouses for cultivating yew trees and other plants.

The following table presents summarized information by segment for the three months ended September 30, ~~2016::~~2017:

For the three months ended September 30, 2016
Bluish Herbal Agricultural
dogbane products products Total
Segment revenue $ 737,461 $ 3,180,371 $ 2,448,832 $ 6,366,664
Cost of goods 367,220 2,437,713 1,631,239 4,436,172
Business and sales related tax 3,604 11,941 - 15,545
Gross profit 366,637 730,717 817,593 1,914,947
Gross profit contribution % 19.1 % 38.2 % 42.7 % 100.0 %
22
~~Shineco, Inc.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
For the three months ended September 30, 2017
Bluish Herbal Agricultural
dogbane products products Total
Segment revenue $ 1,046,297 $ 3,265,893 $ 3,497,304 $ 7,809,494
Cost of goods 581,291 2,585,063 2,539,157 5,705,511
Business and sales related tax 4,472 11,141 - 15,613
Gross profit 460,534 669,689 958,147 2,088,370
Gross profit contribution % 22.1 % 32.1 % 45.8 % 100.0 %

The following table presents summarized information by segment for the three months ended September 30, ~~2015:~~2016:

For the three months ended September 30, 2015 For the three months ended September 30, 2016
Bluish Herbal Agricultural Bluish Herbal Agricultural
dogbane products products Total dogbane products products Total
Segment revenue $ 1,095,545 $ 3,480,179 $ 2,710,195 $ 7,285,919 $ 737,461 $ 3,180,371 $ 2,448,832 $ 6,366,664
Cost of goods 400,218 2,694,258 1,762,402 4,856,878 367,220 2,437,713 1,631,239 4,436,172
Business and sales related tax 4,275 12,319 - 16,594 3,604 11,941 - 15,545
Gross profit 691,052 773,602 947,793 2,412,447 366,637 730,717 817,593 1,914,947
Gross profit contribution % 28.6 % 32.1 % 39.3 % 100.0 % 19.1 % 38.2 % 42.7 % 100.0 %

Total Assets as of

September 30, 2016 June 30, 2016 September 30, 2017 June 30, 2017

Bluish Dogbane or “Luobuma” $ 7,095,069 $ 6,963,093 $ 7,188,041 $ 6,983,551
Herbal products 35,006,114 28,088,515 37,142,813 35,222,278
Agricultural products 22,617,830 21,997,180 26,945,434 26,079,141
$ 64,719,013 $ 57,048,788 $ 71,276,288 $ 68,284,970
NOTE 16 – SUBSEQUENT EVENTS
On October 27, 2017, the Company, through its subsidiary Tianjin Tajit E-Commerce Ltd., obtained contractual rights to distribute branded products of Daiso Industries Co., Ltd.(“Daiso”), a large franchise of 100-yen shops founded in Japan, via JD.com (“JD”), the largest e-commerce company and largest retailer in China. On November 3, 2017, the Companyfurther developed the cooperation with Daiso by entering into a supply and purchase agreement (the “Agreement”) for the purpose of establishing a continuous supply and sale of Daiso’s products in China. Pursuant to the Agreement, Shineco shall purchase Daiso Products in the amount of approximate RMB 20 million no later than December 31, 2017 and add orders as circumstance requires. The term of the Agreement is currently one year, and it extends for one additional year at each expiration date unless written notice of termination is given by either of the parties of the Agreement.
On November 1, 2017, the Company established an Apocynum Industrial Park in Xinjiang, China.

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

The following discussion and analysis of the results of our operations and financial condition for the three months ended September 30, ~~2016~~2017 and ~~2015~~2016 should be read in conjunction with our unaudited condensed consolidated financial statements, and the notes to those unaudited condensed consolidated financial statements that are included elsewhere in this ~~Report.~~Report and our annual report on Form 10-K for the twelve months ended June 30, 2017 and 2016, including the consolidated financial statements and notes thereto. All monetary figures are presented in U.S. dollars, unless otherwise indicated.

Forward-Looking Statements

The statements in this discussion that are not historical facts are “forward-looking statements.” The words “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” “continue,” the negative forms thereof, or similar expressions, are intended to identify forward-looking statements, although not all forward-looking statements are identified by those words or expressions. Forward-looking statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control. Actual results, performance or achievements may differ materially from those expressed or implied by forward-looking statements depending on a variety of important factors, including, but not limited to, weather, local, regional, national and global ~~coke~~Luobuma and ~~coal~~herbal medicines price fluctuations, ~~levels of coal and coke production in the region, the demand for raw materials such as iron and steel which require coke to produce,~~ availability of financing and interest rates, competition, changes in, or failure to comply with, government regulations, costs, uncertainties and other effects of legal and other administrative proceedings, and other risks and uncertainties. We are not undertaking to update or revise any forward-looking statement, whether as a result of new information, future events or circumstances or otherwise.
Business Overview

Shineco, Inc. (the “Company”, “we”, “us” and “our”) was incorporated in the State of Delaware on August 20, 1997. 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 our restricted shares of common stock. Consequently, Tenet-Jove became our 100% owned subsidiary and its operating business became that of the Company. Tenet-Jove was incorporated on December ~~16,~~15, 2003 under the laws of China and was officially granted the status of a Wholly Foreign-Owned Entity (“WFOE”) by Chinese authorities on July 14, 2006. This transaction was accounted for as a recapitalization. Tenet-Jove owns a 90% interest of Tianjin Tenet Huatai Technological Development Co., Ltd. (“Tenet Huatai”).
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On December 31, 2008, June 11, 2011 and May 24, 2012, ~~respectively,~~ Tenet-Jove entered into a series of contractual agreements with ~~the owner of~~ Ankang Longevity Pharmaceutical (Group) Co., Ltd. (“Ankang Longevity Group”), ~~each of~~ Yantai Zhisheng International Freight Forwarding Co., ~~Ltd~~Ltd. (“Zhisheng Freight”), Yantai Zhisheng International Trade Co., ~~Ltd~~Ltd. (“Zhisheng Trade”), Yantai Mouping District Zhisheng Agricultural Produce Cooperative (“Zhisheng Agricultural”) and Qingdao Zhihesheng Agricultural Produce Services., ~~Ltd~~Ltd. (“Qingdao Zhihesheng”). On February 24, 2014, Tenet-Jove ~~also subsequently~~ entered into the same series of contractual agreements with ~~ShinecoZhisheng~~Shineco Zhisheng (Beijing) Bio-Technology Co., ~~Ltd~~Ltd. (“Zhisheng Bio-Tech”), which ~~is a new company~~was incorporated in 2014. Zhisheng Bio-Tech, Zhisheng Freight, Zhisheng Trade, Zhisheng Agricultural, and Qingdao Zhihesheng are collectively referred to herein as “Zhisheng Group.” ~~These~~The contractual agreements include an Executive Business Cooperation ~~Agreement;~~Agreement, Timely Reporting ~~Agreement;~~Agreement, Equity Interest Pledge Agreement and Executive Option Agreement.

Pursuant to these agreements, Tenet-Jove has the exclusive right to provide to Zhisheng Group and Ankang Longevity Group consulting services related to their business ~~operation~~operations and management. All these contractual agreements obligate Tenet-Jove to absorb a majority of the risk of loss from the Zhisheng Group and Ankang Longevity Group’s activities and entitle Tenet-Jove to receive a majority of their residual returns. In essence, Tenet-Jove has gained effective control over the Zhisheng Group and Ankang Longevity Group. Based on these contractual arrangements, ~~we believe that~~the Zhisheng Group and Ankang Longevity ~~should be considered~~are treated as Variable Interest Entities (“VIEs”) under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 “Consolidation”. Accordingly, the accounts of these entities are consolidated with those of Tenet-Jove. We carry out all of our business in China through our PRC subsidiaries, our VIEs and their subsidiaries. Currently, we operate three main business segments: (i) Tenet-Jove is engaged in the manufacturing and selling of ~~Luobuma~~Bluish Dogbane and related products, also known in Chinese as ~~“Luobuma”,~~“Luobuma,” including therapeutic clothing and textile products made from Luobuma; (ii) Zhisheng Group is engaged in the business of planting, processing and distributing of green agricultural produce as well as providing domestic and international logistic services for agricultural products (“Agricultural Products”); and, (iii) Ankang Longevity ~~develops and~~ manufactures traditional Chinese medicinal herbal ~~medicinal~~ products as well as other retail pharmaceutical products. These different business activities and products can potentially be integrated and benefit from one and other.

On April 19, 2017, Tenet-Jove established Xinjiang Tiankunrunze Biological Engineering Co., Ltd. (“Tiankunrunze”) and continues to own 65% interest of Tiankunrunze. On April 28, 2017, Tiankunrunze established Xinjiang Tianzhuo Technology Development Co., Ltd. (“Tianzhuo”) with registered capital of RMB 10.0 million ($1,450,233). On May 22, 2017, Tiankunrunze established Xinjiang Tianhuihechuang Agriculture Development Co., Ltd. (“Tianhuihechuang”) with registered capital of RMB 10.0 million ($1,452,294). On May 23, 2017, Tiankunrunze established Xinjiang Tianxintongye Biotechnology Development Co., Ltd. (“Tianxintongye”) with registered capital of RMB 10.0 million ($1,451,615). Tianzhuo, Tianhuihechuang and Tianxintongye became subsidiaries of Tenet-Jove.
On May 2, 2017, the Company and its subsidiary Tiankunrunze entered into a Strategic Cooperation Agreement with Beijing Zhongke Biorefinery Engineering Technology Co., Ltd. (“Biorefinery”), a leading high-tech biomass refining company financially backed by the Chinese Academy of Sciences Institute of Process Engineering, to establish the Institute of Chinese Apocynum Industrial Technology Research (“ICAITR”). Pursuant to the Strategic Cooperation Agreement, the three parties agreed to establish the ICAITR and each will own 45%, 35% and 20% of the equity interests of ICAITR, respectively. Shineco and Tiankunrunze will invest RMB 5.0 million ($737,745) as the registered capital, and Biorefinery will invest technology such as the patent for “Steam Explosion Degumming,” as well as other resources.
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On September 21, 2017, the Company, through its wholly owned subsidiary Tenet-Jove, entered into a Strategic Cooperation Agreement (the “Agreement”) with Mr. Jianjun Wang, who is experienced in apocynum planting, manufacturing and knowledgeable in apocynum market and administration procedures with relevant authorities in apocynum industry in China, to establish an Apocynum Industrial Park in Xinjiang, China. Pursuant to the Agreement entered into on September 21, 2017, both parties have agreed to establish a joint venture company, namely, Xinjiang Shineco Taihe Agriculture Technology Ltd. (“Xinjiang Taihe”) to hold and operate the Apocynum Industrial Park, with a total investment of RMB 50 million (approximately $7.57 million USD), of which the Company will invest RMB 47.5 million and Mr. Wang will invest RMB 2.5 million. Upon the closing of the Agreement, Shineco will own 95% of the equity interest of Xinjiang Taihe.
Factors Affecting Financial Performance

We believe that the following factors will affect our financial performance:
Increasing demand for our products - The increasing demand for our ~~Luobuma therapeutic products, our~~ Chinese medicinal herbal ~~medicinal~~ products and our agricultural 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 continuous growth. WeAs of the date of this Report however, we do not ~~currently~~ have any agreements, undertakings or understandings to acquire any such ~~entity.~~entities and there can be no guarantee that we ever will.

Expansion of our sources of supply, production capacity and sales network - To meet the increasing demand for our products, we need to expand our sources of supply and production capacity. We plan to make capital improvements in our existing production facilities, which would improve both their efficiency and capacity. In the short-run, we intend to increase our investment in our reliable supply network, personnel training, information technology applications and logistic system upgrades. We also participate in two non-equity investment opportunities through a VIE, both of which ~~are~~we expect to provide us with new ~~network~~networks and platforms.

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. Moreover, we will step up our efforts in higher value added products of Luobuma by using an exclusive and patented technology, to optimize quality management, procurement processes and cost control, and give full play to the strong production capacity and trustworthy sales teams to maximize our profit and bring better long-term return for our shareholders.

Economic and Political Risks

Our operations are conducted primarily in the PRC. Accordingly, our business, financial conditions and results may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.

Our operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks with, among others, the political, economic and legal environment and foreign currency exchange. Our Company’s 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.

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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 ~~revenues~~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 ~~and related disclosures in~~during the ~~financial statements.~~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 2 to our unaudited condensed consolidated financial statements included elsewhere in this ~~report.~~Report.

Consolidation of Variable Interest Entities

In accordance with accounting standards regarding consolidation of VIEs, 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.

Use of Estimates

The preparation of 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 period. Significant estimates required to be made by management include, but are not limited to, useful lives of property, plant, and equipment, and intangible assets, the recoverability of long-lived assets and the valuation of accounts receivable, accrued expenses and taxes payable and inventory ~~reserve.~~reserves. Actual results could differ from those estimates.

Accounts Receivable

Accounts receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as necessary. The Company reviews the accounts receivable on a periodic basis and makes general and specific ~~allowance~~allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, the customers’ historical payment history, their current credit-worthiness and current economic trends. Accounts are written off against the allowance after efforts at collection prove unsuccessful.

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Inventories

Inventories, which are stated at the lower of cost or current market value, ~~consisting~~consist of raw materials, work-in-progress, and finished goods related to the Company’s products. Cost is determined using the first in first out (“FIFO”) method. Market value is the lower of replacement cost or net realizable value. Agricultural products that the Company farms are recorded at cost, which includes direct costs such as seed selection, fertilizer, labor cost and contract ~~fee~~fees that are spent in growing agricultural products on the leased farmland, and indirect costs which include amortization of ~~prepayment~~prepayments of farmland ~~lease fee~~leases and farmland development cost. All the costs are accumulated until the time of harvest and then allocated to the harvested crops costs when they are sold. The Company periodically evaluates its inventory and records an inventory reserve for certain inventories that may not be ~~saleable.~~saleable or whose cost exceeds market prices.

Revenue Recognition

The Company recognizes revenue from sales of Luobuma products, Chinese medicinal herbal products and agricultural products, as well as providing logistic service and other processing ~~service~~services to external customers. The Company recognizes revenue when all of the following have occurred: (i) there is persuasive evidence of an arrangement with a customer, (ii) delivery has occurred or services have been rendered, (iii) the sales price is fixed or determinable, and (iv) the Company’s collection of such fees is ~~reasonable~~reasonably assured. These criteria, as related to the Company’s revenue, are considered to have been met as follows:

Sales of products: the Company recognizes revenue onfrom the sale of products when the goods are delivered and title to the goods passes to the customer provided that there are no uncertainties regarding customer acceptance; persuasive evidence of ~~the~~ an arrangement exists; the sales price is fixed or determinable; and collectability is deemed probable.

Revenue from the rendering of services: Revenue from international freight forwarding, domestic air and overland freight forwarding services ~~are~~is recognized upon ~~the completion of~~ the performance of services as stipulated in the underlying contract or when commodities are being released from the customer’s ~~warehouse.~~warehouse; the service price is fixed or determinable; and collectability is deemed probable.

Fair Value of Financial Instruments

The Company ~~adopted~~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.
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Level 2 applies to assets or liabilities for which there are inputs other than quoted prices 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 assets or liabilities.

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.

Results of Operations for the Three Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

Overview

The following table summarizes our results of operations for the three months ended September 30, ~~2016~~2017 and ~~2015:~~2016:

Three Months Ended September 30, Variance
Three Months Ended
September 30,
Variance
2016 2015 Amount % 2017 2016 Amount %
Revenue $ 6,366,664 $ 7,285,919 $ (919,255 ) (12.62 )% $ 7,809,494 $ 6,366,664 $ 1,442,830 22.66 %
Cost of revenue 4,451,717 4,873,472 (421,755 ) (8.65 )% 5,721,124 4,451,717 1,269,407 28.51 %
Gross profit 1,914,947 2,412,447 (497,500 ) (20.62 )% 2,088,370 1,914,947 173,423 9.06 %
General and administrative expense 473,764 515,154 (41,390 ) (8.03 )%
Selling and distribution expense 380,318 487,882 (107,564 ) (22.05 )%
General and administrative expenses 835,551 473,764 361,787 76.36 %
Selling expenses 294,936 380,318 (85,382 ) (22.45 )%
Income from operations 1,060,865 1,409,411 (348,546 ) (24.73 )% 957,883 1,060,865 (102,982 ) (9.71 )%
Income from equity method investments 401,172 340,049 61,123 17.97 % 148,458 161,182 (12,724 ) (7.89 )%
Other income (expense) 85,901 (19,644 ) 105,545 (537.29 )%
Interest income 32,753 35,268 (2,515 ) (7.13 )%
Purchase rebate income 368,803 239,990 128,813 53.67 %
Other income 85,619 85,901 (282 ) (0.33 )%
Interest income (expense) (19,185 ) 32,753 (51,938 ) (158.57 )%
Income before income tax provision 1,580,691 1,765,084 (184,393 ) (10.45 )% 1,541,578 1,580,691 (39,113 ) (2.47 )%
Provision for income taxes 201,636 300,949 (99,313 ) (33.00 )% 282,857 201,636 81,221 40.28 %
Net income $ 1,379,055 $ 1,464,135 $ (85,080 ) (5.81 )% $ 1,258,721 $ 1,379,055 $ (120,334 ) (8.73 )%
Comprehensive income (loss) attributable to Shineco Inc. $ 1,155,748 $ (443,142 ) $ 1,598,890 (360.81 )%
Comprehensive income attributable to Shineco Inc. $ 2,705,278 $ 1,155,748 $ 1,549,530 134.07 %

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Revenue

Currently, we have three types of revenue streams deriving from our three major 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.” This segment is channeled through our directly owned subsidiary, Tenet-Jove. Second, processing and distributing traditional Chinese medicinal herbal ~~medicine~~ products as well as other pharmaceutical products. This segment is conducted by our Ankang Longevity Group VIEs. And third, planting, processing and distributing green and organic agricultural produce as well as growing and cultivation of yew trees. This segment is conducted through our VIEs, the Zhisheng Group.

The following table sets forth the breakdown of our revenue for each of our three segments, for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively:

Three Months Ended September 30, Variance
2017 % 2016 % Amount %
Sales of Luobuma products $ 1,046,297 13.40 % $ 737,461 11.59 % $ 308,836 41.88 %
Sales of Chinese medicinal herbal products 3,265,893 41.82 % 3,180,371 49.95 % 85,522 2.69 %
Sales of other agricultural products 3,497,304 44.78 % 2,448,832 38.46 % 1,048,472 42.82 %
Total Amount $ 7,809,494 100.00 % $ 6,366,664 100.00 % $ 1,442,830 22.66 %
Three Months Ended September 30, Variance
2016 % 2015 % Amount %
Sales of Luobuma products $ 737,461 11.59 % $ 1,095,545 15.04 % $ (358,084 ) (32.69 )%
Sales of Chinese medicinal herbal products 3,180,371 49.95 % 3,480,179 47.76 % (299,808 ) (8.61 )%
Sales of other agricultural products 2,448,832 38.46 % 2,710,195 37.20 % (261,363 ) (9.64 )%
Total Amount $ 6,366,664 100.00 % $ 7,285,919 100.00 % $ (919,255 ) (12.62 )%
For the three months ended September 30, 2017 and 2016, revenue from sales of Luobuma products was $1,046,297 and $737,461, respectively, which represented an increase of $308,836 or 41.88%. The increase of revenue from this segment was due to increased sales volume of our health awareness related products. The sales volume increase was mainly due to the increase in our number of customers. The Company enhanced online sales promotions during the three months ended September 30, 2017.

For the three months ended September 30, ~~2016~~2017 and 2015, revenue from sales of Luobuma products was $737,461 and $1,095,545, respectively, which represented a decrease of $358,084 or 32.69%. The decrease of revenue from this segment was primarily due to the decreased sales price of our products. The Company focused on selling a portion of slow-moving products with a price equal to cost, which results in less revenue recognized during the three months ended September 30, 2016. Moreover, the sales volume also decreased and resulted in the decreased sales of Luobuma products for the three months ended September 30, 2016, ~~as compared to the same period in 2015.~~

~~For the three months ended September 30, 2016 and 2015,~~ revenue from sales of Chinese medicinal herbal products was ~~$3,180,371~~$3,265,893 and ~~$3,480,179,~~$3,180,371, respectively, representing a ~~decrease~~slight increase of ~~$299,808~~$85,522 or ~~8.61%~~2.69%. The ~~decrease~~increase was ~~primarily~~mainly due to the fact that we fulfilled more sales orders from customers for the three months ended September 30, 2017 than the same period in ~~order to meet the qualifications of a new standard promulgated by the local government, the Company reduced production of certain types of traditional Chinese herbal medicines.~~2016.

For the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, revenue from sales of other agricultural products was ~~$2,448,832~~$3,497,304 and ~~$2,710,195,~~$2,448,832, respectively, representing ~~a decrease~~an increase of ~~$261,363~~$1,048,472 or ~~9.64%~~42.82%. The ~~decrease~~increase was mainly ~~attributable~~due to the ~~reduced~~increase in sales volume of yew trees. ~~The Company faced temporary difficulties~~In addition, in ~~purchasing yew trees from upstream vendors because~~ the ~~vendors had limited stock.~~second quarter of 2017, we developed a new business line of storage, which contributed approximately $0.4 million revenue in the three months ended September 30, 2017 compared to the corresponding period of 2016.
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Cost of Revenue

The following table sets forth the breakdown of the Company’s cost of revenue for each of our three segments, for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively:

Three Months Ended September 30, Variance
2016 % 2015 % Amount %
Sales of Luobuma products $ 367,220 8.25 % $ 400,218 8.21 % $ (32,998 ) (8.25 )%
Sales of Chinese medicinal herbal products 2,437,713 54.76 % 2,694,258 55.28 % (256,545 ) (9.52 )%
Sales of other agricultural products 1,631,239 36.64 % 1,762,402 36.16 % (131,163 ) (7.44 )%
Business and sales related tax 15,545 0.35 % 16,594 0.35 % (1,049 ) (6.32 )%
Total Amount $ 4,451,717 100.00 % $ 4,873,472 100.00 % $ (421,755 ) (8.65 )%
Three Months Ended September 30, Variance
2017 % 2016 % Amount %
Sales of Luobuma products $ 581,291 10.16 % $ 367,220 8.25 % $ 214,071 58.30 %
Sales of Chinese medicinal herbal products 2,585,063 45.18 % 2,437,713 54.76 % 147,350 6.04 %
Sales of other agricultural products 2,539,157 44.39 % 1,631,239 36.64 % 907,918 55.66 %
Business and sales related tax 15,613 0.27 % 15,545 0.35 % 68 0.44 %
Total Amount $ 5,721,124 100.00 % $ 4,451,717 100.00 % $ 1,269,407 28.51 %

For the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, cost of revenue from sales of our Luobuma products was ~~$367,220~~$581,291 and ~~$400,218,~~$367,220, respectively, representing ~~a decrease~~an increase of ~~$32,998~~$214,071 or ~~8.25%~~58.30%. The ~~decrease~~increase of cost of revenue was mainly due to ~~the reduced total production output. Moreover, the~~increased sales volume of our health awareness related products. The percentage of the ~~decrease~~increase in cost of revenue was ~~lower~~higher than the ~~decrease~~increase in sales during this period, ~~which resulted from higher unit fixed cost~~primarily due to ~~decreased production output.~~
the higher raw material costs for the three months ended September 30, 2017 as compared to the corresponding period in 2016.

For the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, cost of revenue from sales of Chinese medicinal herbal products was ~~$2,437,713~~$2,585,063 and ~~$2,694,258,~~$2,437,713, respectively, representing ~~a decrease~~an increase of ~~$256,545~~$147,350 or ~~9.52%~~6.04%. The increase was mainly due to increased sales orders for the three months ended September 30, 2017 compared to the same period in 2016. The percentage of the ~~decrease~~increase in ~~costs~~cost of revenue was ~~proportional to~~higher than the ~~percentage of the decrease~~increase in sales during this period, primarily due to the ~~stable gross margin of our Chinese medicine herbal products.~~higher raw material and labor costs we incurred in the three months ended September 20, 2017 as compared with those in the corresponding period in 2016.

For the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, cost of revenue from sales of other agricultural products was ~~$1,631,239~~$2,539,157 and ~~$1,762,402,~~$1,631,239, respectively, representing ~~a decrease~~an increase of ~~$131,163~~$907,918 or ~~7.44%~~55.66%. The increase was mainly due to the increase in sales volume of yew trees. Since the second quarter of fiscal 2017, we developed a storage business line which has a relatively high cost compared with sales of our agricultural products, resulting in higher percentage of the ~~decrease~~increase in ~~costs was proportional to the percentage~~cost of ~~the decrease in~~revenue than sales ~~due to the stable gross margin of those products.~~during this period.

Gross Profit

The following table sets forth the breakdown of the Company’s gross profit for each of our three segments, for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively:

Three Months Ended September 30, Variance
2016 % 2015 % Amount %
Sales of Luobuma products $ 366,637 19.15 % $ 691,052 28.65 % $ (324,415 ) (46.95 )%
Sales of Chinese medicinal herbal products 730,717 38.16 % 773,602 32.06 % (42,885 ) (5.54 )%
Sales of other agricultural products 817,593 42.69 % 947,793 39.29 % (130,200 ) (13.74 )%
Total Amount $ 1,914,947 100.00 % $ 2,412,447 100.00 % $ (497,500 ) (0.21 )%
Three Months Ended September 30, Variance
2017 % 2016 % Amount %
Sales of Luobuma products $ 460,534 22.05 % $ 366,637 19.15 % $ 93,897 25.61 %
Sales of Chinese medicinal herbal products 669,689 32.07 % 730,717 38.16 % (61,028 ) (8.35 )%
Sales of other agricultural products 958,147 45.88 % 817,593 42.69 % 140,554 17.19 %
Total Amount $ 2,088,370 100.00 % $ 1,914,947 100.00 % $ 173,423 9.06 %

Gross profit from Luobuma product sales ~~decreased~~increased by ~~$324,415~~$93,897 and gross profit contribution percentage ~~decreased~~increased by ~~46.95%~~25.61% for the three months ended September 30, ~~2016~~2017 as compared to the same period of ~~2015.~~2016. The ~~decrease~~increase in gross profit was primarily due to ~~a decrease~~increase in sales volume ~~which led to a higher unit cost and a lower gross profit. In addition,~~resulting from the ~~Company sold a portion~~sale of ~~slow-moving products with a price equal to cost, which results in~~health products. The percentage of ~~decrease~~increase in gross profit ~~higher~~was lower than the percentage of ~~decrease~~increase in sales ~~during~~mainly due to the higher raw material costs for the three months ended September 30, 2017 as compared to the corresponding period in 2016.
Gross profit from sales of Chinese medicinal herbal products ~~had a decrease of $42,885~~decreased by $61,028 or 8.35% for the three months ended September 30, ~~2016~~2017 as compared to the same period of ~~2015, primarily due to decreased sales orders. Thus, contribution percentage of~~2016. The decrease mainly resulted from higher raw material and labor costs we incurred in ~~gross profit was slightly lower than the percentage of decrease in sales, for~~ the three months ended September ~~30, 2016~~20, 2017 as compared towith those in the ~~same~~corresponding period ~~of 2015.~~in 2016.
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Gross profit from sales of other agricultural products ~~decreased~~increased by ~~$130,200~~$140,554 or 17.19% for the three months ended September 30, ~~2016~~2017 as compared to the same period of ~~2015.~~2016. The ~~decrease~~increase was ~~primarily a result~~mainly due to the increase in sales volume of ~~decreased sales volume. As mentioned above, the Company faced temporary difficulties in purchasing~~ yew trees ~~from upstream vendors because the vendors had limited stock. Thus, we had relatively higher purchase cost~~ and increased storage business line with lower gross ~~profit.~~
margin.

Expenses

The following table sets forth the breakdown of our operating expenses for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively:

Three Months Ended September 30, Variance
2017 % 2016 % Amount %
General and administrative expenses $ 835,551 73.91 % $ 473,764 55.47 % $ 361,787 76.36 %
Selling expenses 294,936 26.09 % 380,318 44.53 % (85,382 ) (22.45 )%
Total Amount $ 1,130,487 100.00 % $ 854,082 100.00 % $ 276,405 32.36 %
Three Months Ended September 30, Variance
2016 % 2015 % Amount %
General and administrative expenses $ 473,764 55.47 % $ 515,154 51.36 % $ (41,390 ) (8.03 )%
Selling and distribution expense 380,318 44.53 % 487,882 48.64 % (107,564 ) (22.05 )%
Total Amount $ 854,082 100.00 % $ 1,003,036 100.00 % $ (148,954 ) (14.85 )%
General and Administrative Expenses

For the three months ended September 30, ~~2016,~~2017, our general and administrative expenses were ~~$473,764,~~$835,551, representing ~~a decrease~~an increase of ~~$41,390~~$361,787 or ~~8.03%~~76.36%, as compared to the same period of ~~2015.~~2016. The ~~decrease~~increase was primarily ~~attributable to decreased professional fees, partially offset by the increased rent expense of Zhisheng Agricultural, during the three months ended September 30, 2016 as compared~~due to the ~~same period~~incorporation of ~~2015.~~Tiankunrunze in April 19, 2017 and increased professional service fees, such as attorney’s fees, consulting fees and auditing fees.

Selling ~~and Distribution Expense~~Expenses

For the three months ended September 30, ~~2016,~~2017, our selling and distribution expenses were ~~$380,318,~~$294,936, representing a decrease of ~~$107,564,~~$85,382, or ~~22.05%~~22.45%, as compared to the same period of ~~2015.~~2016. The decrease was primarily due to decreased advertising ~~expense.~~expenses, salary expenses, and service fees of e-commerce websites, partially offset by increased promotion expenses during the three months ended September 30, 2017 compared to the same period of 2016.

Incomefrom Equity Method Investments

We ~~formed~~are 49% participants in two joint ventures ~~namely,~~with Shaanxi Pharmaceutical Group Pai’ang Medicine Co. Ltd. (“Shaanxi Pharmaceutical Group”): Shaanxi Pharmaceutical Sunsimiao Drugstores Ankang Retail Chain Co., Ltd. (“Sunsimiao Drugstores”), and Shaanxi Pharmaceutical Holding Group Longevity Pharmacy Co., Ltd. (“Shaanxi Longevity Pharmacy”) ~~with Shaanxi Pharmaceutical Group. We obtained a 49% equity interest in each of these two new joint venture companies.~~. We recorded net income of ~~$161,182~~$148,458 and ~~$148,600~~$161,182 from these equity method investments for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively. The ~~increase~~decrease in net income was primarily due to ~~the higher~~lower net profit in the two joint ventures in the current period.

We ~~had~~invested RMB 14.5 million (approximately $2.2 million) into Tiancang Systematic Warehousing project (“Tiancang Project”) operated by Zhen’Ai Network. The Tiancang Project is currently operational. For the three months ended September 30, 2017 and 2016, we did not record investment income from Zhen’Ai Network.
On November 21, 2016, the Company (the “Investor”) entered into an agreement with Original Lab Inc., a California corporation (the “Investee”), pursuant to which the Investor made a payment of $200,000 to the Investee in exchange for the right to acquire certain shares of the Investee’s common stock and preferred stock. For the three months ended September 30, 2017, the Company did not record investment income from this investment.
12
Purchase Rebate Income
We are party to a supplemental agreement with Shaanxi Pharmaceutical Group. According to the supplemental agreement, the ~~new~~participants in the joint venture companies established by Shaanxi Pharmaceutical Group and Ankang Longevity Group are required to purchase certain raw materials and drug products exclusively from Shaanxi Pharmaceutical Group. In return, Shaanxi Pharmaceutical Group has agreed to compensate Ankang Longevity Group with a ~~preferred distribution equal to~~purchase rebate of 7% of the total purchases made from Shaanxi Pharmaceutical Group. For the three months ended September 30, ~~2016,~~2017, total income of ~~$239,990~~$368,803 was recognized by Ankang Longevity Group from this supplemental agreement, compared to ~~$191,449~~$239,990 in the same period in ~~2015~~2016 due to anthe increase in purchases in the current period.

We invested RMB 14.5 million (approximately $2.2 million) into Tiancang Systematic Warehousing project (“Tiancang Project”) operated by Zhen’Ai Network. The Tiancang Project is currently up and running. For the three months ended September 30, 2016 and 2015, Zhisheng Freight did not recognize any investment income from Zhen’Ai Network.
Interest Income (Expense), net

For the three months ended September 30, ~~2016,~~2017, our net interest ~~income~~expense was ~~$32,753~~$19,185 as compared to ~~$35,268~~interest income of $32,753 in the same period of ~~2015.~~2016. The significant decrease in net interest income ~~mainly reflected~~was primarily due to decreased interest income on the ~~effect~~loan to Xinyang Yifangyuan Garden Technology Co., Ltd. (“Xinyang Yifangyuan”). Xinyang Yifangyuan paid off the loan of ~~depreciation~~RMB 3,000,000 in December, 2016. Interest income of ~~foreign currencies in terms of RMB.~~nil and $56,248 was recognized on the loans for the three months ended September 30, 2017 and 2016, respectively.
Provision for Income Taxes

For the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, the Company’s provision for income taxes ~~decreased~~increased by ~~$99,313~~$81,221 or ~~33.00% from $300,949~~40.28 % to $282,857 for the three months ended September 30, ~~2015 to~~2017 from $201,636 for the three months ended September 30, 2016. The ~~decrease~~increase in the Company’s provision for income taxes was primarily due to ~~decreased~~increased taxable income of Tenet-Jove and Ankang Longevity Group for the period indicated.

Net Income

Our net income decreased by ~~$85,080~~$120,334 or ~~5.81%~~8.73% for the three months ended September 30, ~~2016~~2017 as compared to the same period of ~~2015.~~2016. The decrease in net income was primarily a result of the ~~decrease~~increase in ~~gross profit,~~general and administrative expenses, partially offset by the ~~decrease in operating expense and the~~ increase in ~~other income.~~revenue.

Comprehensive Income
The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to US$ is reported in other comprehensive loss in the unaudited condensed consolidated statements of income and comprehensive income (loss). The comprehensive income ~~(loss)~~was $2,728,131 for the three months ended September 30, 2017, an increase of $1,545,757 from comprehensive income of $1,182,374 for the three months ended September 30, 2016. After deduction of non-controlling interest, the comprehensive income attributable to ~~Shineco, Inc. increased by $1,598,890~~the Company was $2,705,278 for the three months ended September 30, 2017, compared to comprehensive income of $1,155,748 for the three months ended September 30, ~~2016 from comprehensive loss of $443,142 for the three months ended September 30, 2015 due to the RMB’s significant weakening against the U.S. dollar during the corresponding period in 2015.~~2016.

Liquidity and Capital Resources

We currently finance our business operations primarily through cash ~~provided by operating activities~~flows from operations and ~~bank~~our initial public offering, as well as from short-term loans. 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.

On September 28, 2016, we completed the initial public offering of 1,713,190 shares of the Company’s common stock at a price of $4.50 per share for gross proceeds of $7.7 million and net proceeds of approximately $5.4 million. We intend to use 54%, 16%, 25% and 5% of the proceeds received ~~through~~from our IPO infor the expansion of a high-pressure steam degumming proceed project, development of Ziyang County, China Chinese herbal medicine farm, a processing plants project and development of e-commerce platform projects and working capital, respectively.

13
~~As of September 30, 2016 and June 30, 2016, we possessed cash of $28,669,501 and $22,009,374, respectively.~~
Management believes that our current cash, cash flows ~~provided by operating activities,~~from current and future operations, and access to loans will be sufficient to meet our working capital needs for at least the next 12 months. We intend to continue to carefully execute our growth plans and manage market risk.
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, ~~2016~~2017 and June 30, ~~2016,~~2017, we do not engage in any foreign currency borrowings or loan contracts.


Working Capital

The following table provides the information about our working capital at September 30, ~~2016~~2017 and June 30, ~~2016:~~2017:

September 30, 2017 June 30, 2017

Current Assets $ 47,370,175 $ 44,725,927
Current Liabilities 5,294,235 5,031,048
Working Capital $ 42,075,940 $ 39,694,879
September 30, 2016 June 30, 2016
　　
Current Assets $ 43,372,696 $ 35,529,801
Current Liabilities 　7,631,326 　6,538,024
Working Capital $ 35,741,370 $ 28,991,777
14

The working capital increased by ~~$6,749,593~~$2,381,061 or ~~23.28%~~6.0% at September 30, 2017 from June 30, ~~2016 to September 30, 2016,~~2017, primarily as a result of an increase in cash due to ~~the net proceeds from our initial public offering~~better operating results during the three months ended September 30, ~~2016.~~2017. We believe that we currently have sufficient working capital to run our business.

As of September 30, ~~2016~~2017 and June 30, ~~2016,~~2017, the other major ~~components~~component of our working capital ~~included inventory and~~is accounts receivable. ~~Our inventory balance decreased by 12.29%~~
The accounts receivable as of September 30, 2017 were $13,152,878, a decrease of approximately 9.17% from ~~$4,608,179~~$14,480,004 as of June 30, ~~2016 to $4,041,813 as of September 30, 2016, which was~~2017, mainly due to the decreased work in process of yew trees. The average inventory turnover days of finished goods in our industry ranges from 40 days to 60 days. Our inventory turnover days for raw materials and finished goods were around the industry average, because we tried to manage and control our inventory stockpile.
The accounts receivable, including accounts receivable from unconsolidated entities, as of September 30, 2016 were $7,142,024, an increase of approximately 28.63% from $5,552,242 as of June 30, 2016, mainly due to an increasea decrease of revenue receivable from Qingdao Zhihesheng and Ankang Longevity Group. In January 2017, the Company entered into two accounts receivable repayment plans with two major customers, Qingdao Ship Owners Association and Shaanxi Pharmaceutical ~~Group. The turnover days~~Group, who each agreed to pay RMB 2.0 million ($300,530 as of ~~trade receivables were 89.7 days for the three months ended~~ September 30, ~~2016, compared to 74.6 days in~~2017) per month starting from March 2017, and the ~~corresponding period last period. The average turnover days~~balance of accounts receivable ~~in our industry is approximately 40 days.~~from them as of December 31, 2016 will be paid off before December 31, 2017. As date of ~~September 30, 2016, about 61.7% of our outstanding~~this Report, the account receivables from these two major customers were ~~aged within 90 days, which was in compliance~~collected under the repayment plan. In the meanwhile, the Company continually made sales transactions with ~~our credit terms.~~
these two customers.

Capital Commitments and Contingencies

Capital commitments refer to the allocation of funds for athe possible ~~liability~~purchase in the near future ~~arising out of capital expenditures.~~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, ~~2016~~2017 and ~~2015~~June 30, 2017, we had no material capital commitments or contingent liabilities.

Cash Flows

The following table provides detailed information about our net cash flows for the three months ended September 30, ~~2016~~2017 and ~~2015.~~2016.

For the three months ended September 30,
2016 2015
(Restated)
Net cash provided by operating activities $ 415,509 $ 5,674,797
Net cash provided by (used in) investing activities (284 ) 158,979
Net cash provided by financing activities 6,330,556 93,452
Effect of exchange rate changes on cash (85,654 ) (331,958 )
Net increase in cash 6,660,127 5,595,270
Cash, beginning of period 22,009,374 6,056,105
Cash, end of period $ 28,669,501 $ 11,651,375
For the three months ended September 30,
2017 2016

Net cash provided by operating activities $ 3,685,124 $ 415,509
Net cash provided by (used in) investing activities 823,382 (284 )
Net cash provided by (used in) financing activities (415,164 ) 6,330,556
Effect of exchange rate changes on cash 481,047 (85,654 )
Net increase in cash 4,574,389 6,660,127
Cash, beginning of period 23,154,551 22,009,374
Cash, end of period $ 27,728,940 $ 28,669,501

Operating Activities

Net cash provided by operating activities during the three months ended September 30, 2017 was approximately $3.7 million, consisting of net income of $1.3 million and net changes in our operating assets and liabilities, which mainly included a decrease in accounts receivable of $1.6 million and an increase in advances from customers of $0.7 million. Net cash provided by operating activities during the three months ended September 30, 2016 was approximately $0.4 million, consisting of net income of $1.4 million, net changes in our operating assets and liabilities, which mainly included an increase in accounts receivable of $1.4 million, reduction in inventory of $0.6 million and repayment in advances to suppliers of $0.4 million. Net cash provided by operating activities during the three months ended September 30, 2015 was approximately $5.7 million, consisting of net income of $1.5 million and net changes in our operating assets and liabilities, which mainly included collection in accounts receivable of $2.4 million, reduction in inventory of $1.0 million and decrease in advance to suppliers of $0.4 million.
15

Investing Activities

For the three months ended September 30, ~~2016,~~2017, net cash provided by investing activities amounted to $823,382 as compared to net cash used in investing activities ~~amounted to~~of $284 ~~as compared to net cash provided by investing activities of $158,979~~ for the same period of ~~2015.~~2016. The ~~decrease~~increase in net cash provided by investing activities was primarily due to collections on loans to ~~related parties of $130,495, partially offset by loan advances to~~ third parties of ~~$108,648 for~~$0.8 million during the three months ended September 30, ~~2016.~~2017.
Financing Activities

For the three months ended September 30, ~~2016,~~2017, net cash ~~provided by~~used in financing activities amounted to ~~$6,330,556,~~$0.4 million, as opposed to net cash provided by financing activities of ~~$93,452~~$6.3 million for the same period of ~~2015.~~2016. The ~~increase~~decrease of $6.7 million in net cash provided by financing activities was primarily due to net repayment of short-term loans of $0.5 million for the three months ended September 30, 2017 and net proceeds from our initial public offering of ~~$5,394,549~~$5.4 million for the three months ended September 30, 2016.

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 the Company’s disclosure controls and procedures were not effective at the reasonable assurance level as of the end of the period covered by this ~~report~~Report due to following material weaknesses:

·   ~~Lack of~~The Company does not have U.S. GAAP full-time ~~U.S. GAAP~~qualified personnel in the accounting department to monitor the recording of the daily transactions; and,

·       Lack of segregation of duties for accounting personnel who prepared and reviewed the journal entries.
·       ~~Failure to record properly certain expenses associated with our initial public offering, which resulted in a need to restate this quarterly report.~~

In order to address the above material weaknesses, our management plans to take the following steps:

·      Recruiting sufficient qualified professionals with appropriate levels of knowledge of U.S. GAAP 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, our board of directors and the Chief Financial Officer; and

·      Obtaining proper approval for other significant and non-routine transactions from the Board of Directors.
16

The Company believes the foregoing measures will remediate the identified material weaknesses in future periods. The Company is 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~~Other than described above, there have been 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 our ~~third~~first fiscal quarter of ~~2016.~~2018. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect all 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.


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

~~From time to time,~~Other than ordinary routine litigation (of which we ~~may be subject to legal proceedings and claims in the ordinary course of business. 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 ~~any litigation~~our company except as set forth below:
On May 16, 2017, Bonwick Capital Partners, LLC (“Plaintiff”) commenced a lawsuit (Case No. 1:17-cv-03681-PGG) against the ~~outcome of which, if determined adversely to us, would individually or~~Company in the ~~aggregate be reasonably expected~~United States District Court for the Southern District of New York. Plaintiff alleges that the Company entered into an agreement with Plaintiff (the “Agreement”), pursuant to ~~have a material adverse effect on our business, operating results, cash flows or~~which Plaintiff was to provide the Company with financial ~~condition.~~advisory services in connection with the Company’s initial public offering in the United States. Plaintiff alleges that the Company breached the Agreement and seeks money damages up to $6 million. The Company believes that these claims are without merit and intends to vigorously defend itself.

ITEM 1A.RISK FACTORS.

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

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

None.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.OTHER INFORMATION.
None.

17
~~On November 4, 2016 the Company moved its executive offices to Room 1001, Building T5, DaZu Square, Daxing District, Beijing.~~

ITEM 6.EXHIBITS

Exhibit
Number Description
3.1 Certificate of Incorporation of Shineco, Inc.⁽¹⁾
3.2 Amended and Restated Bylaws of Shineco, Inc.⁽¹⁾
4.1 Specimen Common Stock Share Certificate⁽²⁾
31.1 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

101. INS XBRL Instance Document *
101. SCH XBRL Taxonomy Extension Schema Document *
101. CAL XBRL Taxonomy Extension Calculation Linkbase Document*
101. DEF XBRL Taxonomy Extension Definition Linkbase Document*
101. LAB XBRL Taxonomy Extension Label Linkbase Document*
101. PRE XBRL Taxonomy Extension Presentation Linkbase Document*

* Filed herewith.

(1) Incorporated by reference to the Amendment No. 1 to Registration Statement on Form S-1 filed by the Company with the Securities and Exchange Commission on July 1, 2015.

(2) Incorporated by reference to the Amendment No. 5 to Registration Statement on Form S-1 filed by the Company with the SEC on January 27, 2016.

36
18

SIGNATURES

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

SHINECO, INC.

Dated: ~~May 12,~~November 14, 2017 By: /s/ Yuying Zhang
Yuying Zhang
Chief Executive Officer
(Principal Executive Officer)

Dated: ~~May 12,~~November 14, 2017 By: /s/ ~~Sam~~Sai (Sam) Wang
~~Sam~~Sai (Sam) Wang
Chief Financial Officer
(Principal Financial and Accounting Officer)

19

Delaware	52-2175898
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Room 1001, Building T5, DaZu Square, Daxing District, Beijing People’s Republic of China	100176
(Address of principal executive offices)	(Zip Code)

Large accelerated filer	~~Large~~ ¨	Accelerated ~~Filer~~ ¨filer	~~Accelerated Filer~~ ¨

Non-accelerated filer	~~Non-accelerated filer~~ ¨ (Do not check if a smaller reporting company)	Smaller reporting companyþ
		x
		Emerging growth company	x

For the transition period from	_____________________ to ______________________

	Previously
	Reported		Adjustment			Restated

Other payables	$	2,135,695	$	843,844		$	2,979,539
Additional paid-in capital	$	23,581,146	$	(843,844	)	$	22,737,302

	Three months ended September 30, 2016
	Previously
	Reported		Adjustment			Restated
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issuance cost payable	$	-	$	843,844		$	843,844
Proceeds from public offerings, net of offering cost	$	6,238,393	$	(843,844	)	$	5,394,549

	For the Three Months Ended September 30,
	2016			2015

REVENUE	$	6,366,664		$	7,285,919

COST OF REVENUE
Cost of product and services		4,436,172			4,856,878
Business and sales related tax		15,545			16,594

GROSS PROFIT		1,914,947			2,412,447

OPERATING EXPENSES
General and administrative expenses		473,764			515,154
Selling expenses		380,318			487,882
Total operating expense		854,082			1,003,036

INCOME FROM OPERATIONS		1,060,865			1,409,411

OTHER INCOME
Income from equity method investments		401,172			340,049
Other income (expense)		85,901			(19,644	)
Interest income, net		32,753			35,268
Total other income		519,826			355,673

INCOME BEFORE INCOME TAX PROVISION		1,580,691			1,765,084

PROVISIONS FOR INCOME TAXES		201,636			300,949

NET INCOME		1,379,055			1,464,135

Less: net income attributable to non-controlling interest		30,348			42,011

NET INCOME ATTRIBUTABLE TO SHINECO, INC.	$	1,348,707		$	1,422,124

COMPREHENSIVE INCOME (LOSS)
Net income	$	1,379,055		$	1,464,135
Other comprehensive loss: foreign currency translation loss		(196,681	)		(1,874,132	)
Total comprehensive income (loss)		1,182,374			(409,997	)
Comprehensive income attributable to non-controlling interest		26,626			33,145

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHINECO, INC.	$	1,155,748		$	(443,142	)

Weighted average number of shares basic and diluted		19,376,747			19,320,882

Basic and diluted earnings per common share	$	0.07		$	0.07

	September 30, 2016			June 30, 2016			September 30, 2017			June 30, 2017

Current assets	$	32,034,133		$	30,560,208		$	43,596,320		$	40,584,817
Plant and equipment, net		9,450,530			9,595,357			9,003,058			8,958,282
Other noncurrent assets		10,113,163			10,136,632			10,926,075			10,707,344
Total assets		51,597,826			50,292,197			63,525,453			60,250,443
Total liabilities		(5,246,197	)		(4,398,424	)		(5,016,236	)		(4,662,387	)
Net assets	$	46,351,629		$	45,893,773		$	58,509,217		$	55,588,056

		Estimated useful lives

Buildings		20-50 years
Machinery equipment		5-10 years
Motor vehicles		5-10 years
Office equipment		5-10 years
Farmland leasehold improvements		12-18 years

Twelve months ending September 30:

2017	$	33,351
2018		33,351	$	33,428
2019		33,351		33,428
2020		33,351		33,428
2021		33,351		33,428
2022				33,428
Thereafter		1,228,206		1,195,923
Total	$	1,394,961	$	1,363,063

	September 30, 2016		June 30, 2016

Current	$	476,708	$	478,565
Non-current		3,726,008		3,860,327
Total	$	4,202,716	$	4,338,892

Lender	September 30, 2016		Maturity Date		Int. Rate/Year
Wanxiang Trust Co., Ltd-a	$	31,483	2017-9-9			13.67	%
Agricultural Bank of China-c		749,600	2017-8-18			5.71	%
Agricultural Bank of China-d		449,760	2016-10-27	*		5.27	%
Agricultural Bank of China-d		1,199,360	2016-11-18			5.22	%
Agricultural Bank of China-d		299,840	2017-4-7			5.22	%
Total	$	2,730,043

	September 30, 2016		June 30, 2016

Xinyang Yifangyuan Garden Technology Co., Ltd	$	368,410	$	500,784
Shaanxi Pharmaceutical Group Pai’ang Medicine Co. Ltd		462,825		820,728
Yang Bin		149,920		150,504
Zhang Xin		115,438		93,312
Chang Song		147,330		85,035
Wang Qi Wei		8,247		8,279
Tian Shuangpeng		-		11,288
Qi Qiuchi		1,500		1,505
	$	1,253,670	$	1,671,435

	September 30, 2016		June 30, 2016

Wu Yang		185,976		96,398
Xiong Kun		85,005		-
Wang Sai		58,108		120,854
Zhang Yuying		11,673		26,769
Huiyin Ansheng		567		894
	$	341,329	$	244,915

	For the three months ended September 30,
	2016			2015
Current income tax provision	$	205,519		$	291,934
Deferred income tax provision (benefit)		(3,883	)		9,015
Total	$	201,636		$	300,949

	September 30, 2017		June 30, 2017

Beginning balance	$	111,882	$	114,122
Exchange difference		2,059		(2,240	)
Ending balance	$	113,941	$	111,882

	Three months Ended September 30, 2016			Year Ended June 30, 2016

Beginning balance	$	114,122		$	108,932
Current year addition		-			13,971
Exchange difference		(442	)		(8,781	)
Ending balance	$	113,680		$	114,122

Twelve months ending September 30:

2017	$	392,089
2018		392,089	$	640,936
2019		217,550		449,057
2020		215,991		288,379
2021		215,991		222,137
2022				215,885
Thereafter		4,364,205		4,011,857
Total	$	5,797,915	$	5,828,251

	For the three months ended September 30, 2016
	Bluish			Herbal			Agricultural
	dogbane			products			products			Total
Segment revenue	$	737,461		$	3,180,371		$	2,448,832		$	6,366,664
Cost of goods		367,220			2,437,713			1,631,239			4,436,172
Business and sales related tax		3,604			11,941			-			15,545
Gross profit		366,637			730,717			817,593			1,914,947
Gross profit contribution %		19.1	%		38.2	%		42.7	%		100.0	%

	Three Months Ended September 30,					Variance						Three Months Ended September 30,					Variance
	2016		2015			Amount			%			2017			2016		Amount			%
Revenue	$	6,366,664	$	7,285,919		$	(919,255	)		(12.62	)%	$	7,809,494		$	6,366,664	$	1,442,830			22.66	%
Cost of revenue		4,451,717		4,873,472			(421,755	)		(8.65	)%		5,721,124			4,451,717		1,269,407			28.51	%
Gross profit		1,914,947		2,412,447			(497,500	)		(20.62	)%		2,088,370			1,914,947		173,423			9.06	%
General and administrative expense		473,764		515,154			(41,390	)		(8.03	)%
Selling and distribution expense		380,318		487,882			(107,564	)		(22.05	)%
General and administrative expenses													835,551			473,764		361,787			76.36	%
Selling expenses													294,936			380,318		(85,382	)		(22.45	)%
Income from operations		1,060,865		1,409,411			(348,546	)		(24.73	)%		957,883			1,060,865		(102,982	)		(9.71	)%
Income from equity method investments		401,172		340,049			61,123			17.97	%		148,458			161,182		(12,724	)		(7.89	)%
Other income (expense)		85,901		(19,644	)		105,545			(537.29	)%
Interest income		32,753		35,268			(2,515	)		(7.13	)%
Purchase rebate income													368,803			239,990		128,813			53.67	%
Other income													85,619			85,901		(282	)		(0.33	)%
Interest income (expense)													(19,185	)		32,753		(51,938	)		(158.57	)%
Income before income tax provision		1,580,691		1,765,084			(184,393	)		(10.45	)%		1,541,578			1,580,691		(39,113	)		(2.47	)%
Provision for income taxes		201,636		300,949			(99,313	)		(33.00	)%		282,857			201,636		81,221			40.28	%
Net income	$	1,379,055	$	1,464,135		$	(85,080	)		(5.81	)%	$	1,258,721		$	1,379,055	$	(120,334	)		(8.73	)%
Comprehensive income (loss) attributable to Shineco Inc.	$	1,155,748	$	(443,142	)	$	1,598,890			(360.81	)%
Comprehensive income attributable to Shineco Inc.												$	2,705,278		$	1,155,748	$	1,549,530			134.07	%

Exhibit Number		Description
3.1		Certificate of Incorporation of Shineco, Inc.⁽¹⁾
3.2		Amended and Restated Bylaws of Shineco, Inc.⁽¹⁾
4.1		Specimen Common Stock Share Certificate⁽²⁾
31.1		Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2		Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

101. INS		XBRL Instance Document *
101. SCH		XBRL Taxonomy Extension Schema Document *
101. CAL		XBRL Taxonomy Extension Calculation Linkbase Document*
101. DEF		XBRL Taxonomy Extension Definition Linkbase Document*
101. LAB		XBRL Taxonomy Extension Label Linkbase Document*
101. PRE		XBRL Taxonomy Extension Presentation Linkbase Document*

	SHINECO, INC.

Dated: ~~May 12,~~November 14, 2017	By:	/s/ Yuying Zhang
		Yuying Zhang
		Chief Executive Officer
		(Principal Executive Officer)

Dated: ~~May 12,~~November 14, 2017	By:	/s/ ~~Sam~~Sai (Sam) Wang
		~~Sam~~Sai (Sam) Wang
		Chief Financial Officer
		(Principal Financial and Accounting Officer)