Shineco(SISI) - 2025 Q1 - Quarterly Report

Acquisitions and Divestitures - Shineco, Inc. acquired 51% of Changzhou Biowin Pharmaceutical Co., Ltd. for US$9,000,000 in cash and 13,583 shares of common stock[114]. - On September 19, 2023, Shineco Life closed the acquisition of 71.42$2,000,000 and 41,667 shares of restricted common stock[114]. - The company divested its equity interest in Tenet-Jove, terminating its VIE structure, and reclassified its operations as discontinued[115]. Business Segments - The company operates three main business segments: Rapid Diagnostic Products, Agricultural Products, and Healthy Meals, with products sold in multiple countries including Germany, Spain, and the United States[115]. - The Rapid Diagnostic segment focuses on innovative products for common diseases, with operations based in Jiangsu Province, China[114]. - The Agricultural Products segment includes silk and fresh fruit distribution, with operations in Chongqing and sales in regions such as Southeast Asia and Europe[115]. - Fuzhou Meida opened a health-oriented restaurant in Fuzhou, aiming to expand to key cities like Beijing and Shanghai[115]. - The company plans to gradually establish additional branches of its restaurant chain across major cities in China[115]. Financial Performance - Revenue for the three months ended September 30, 2024, was $2,174,285, representing an increase of$528,428 or 32.11% compared to $1,645,857 in the same period of 2023[127]. - Revenue from other agricultural products increased by$540,741 or 35.79%, totaling $2,051,471 for the three months ended September 30, 2024, due to three months of revenue following the acquisition of Wintus[129]. - Gross profit for the three months ended September 30, 2024, was$291,841, an increase of $192,886 or 194.92$98,955 in the same period of 2023[131]. - The company reported a net income of $5,342,124 for the three months ended September 30, 2024, a decrease of$7,900,252 or 147.89% compared to the same period in 2023[127]. - Comprehensive loss was US$2,370,422 for the three months ended September 30, 2024, an increase of US$7,810,511 from a comprehensive income of US$5,440,089 for the same period in 2023[140]. Expenses and Cost Management - General and administrative expenses decreased by$622,890 or 19.11%, totaling $2,636,575 for the three months ended September 30, 2024, primarily due to reduced professional service fees[133]. - Selling expenses decreased by$15,592 or 32.60%, amounting to $32,241 for the three months ended September 30, 2024, as a result of cost control measures[134]. - Research and development expenses decreased by$10,280 or 43.38%, totaling $13,418 for the three months ended September 30, 2024, due to reduced product development activities[135]. - The Company aims to maintain effective cost control through long-term supplier alliances and leveraging economies of scale from its distribution network[118]. Cash Flow and Financing Activities - Net cash used in operating activities for the three months ended September 30, 2024 was approximately US$2.1 million, compared to US$1.5 million for the same period in 2023[149]. - Net cash used in investing activities for the three months ended September 30, 2024 was US$3.1 million, significantly lower than US$12.9 million in the same period of 2023[150]. - Net cash provided by financing activities for the three months ended September 30, 2024 amounted to approximately US$5.1 million, compared to US$0.9 million in the same period of 2023[151]. Debt and Liabilities - As of September 30, 2024, the company had approximately US$13.7 million in short-term bank loans and US$1.8 million in long-term bank loans outstanding[142]. - The company had accumulated a deficit of US$56.4 million as of September 30, 2024, and negative working capital of US$7.3 million[145]. - Current liabilities increased to US$38,993,149 as of September 30, 2024, from US$27,562,855 as of June 30, 2024[146]. - The company intends to continue executing its growth plans and managing market risk while relying on financial support from shareholders to meet working capital needs[145]. Inventory and Asset Management - As of September 30, 2024, the inventory reserve was nil, indicating effective inventory management[123]. - Current assets increased to US$31,687,558 as of September 30, 2024, from US$20,903,961 as of June 30, 2024[146]. - The cash, cash equivalents, and restricted cash at the end of the period was US$258,714, down from US$875,026 at the end of the same period in 2023[148]. - The company experienced a net decrease in cash and cash equivalents of US$136,322 for the three months ended September 30, 2024[148]. Regulatory and Methodological Changes - The adoption of the CECL methodology for credit losses on July 1, 2023, had no material impact on the consolidated financial statements[122]. - The company operates primarily in the PRC, facing unique political, economic, and legal risks that could adversely affect financial performance[119].