Company: SISI
Filing Date: 2025-01-14
Form Type: S-3
Source: 0001493152-25-002134
Chunk: 3

Company: SHINECO, INC.
Filing Date: 2025-01-14
Form: S-3
Chunk 3
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 the variable interest entities (the “VIEs”) were not equivalent to an equity ownership in the business of the VIEs but were used to replicate foreign investments in China-based companies where Chinese law prohibit or limit direct foreign investment in Chinese companies belonging to certain categories. Where Shineco operated its business through such contractual relationships, it was subject to risks related to such operation. Prior to the Wintus Acquisition and the termination of the VIE structure, any references to control or benefits that accrued to Shineco because of the VIEs were limited to, and subject to conditions we had satisfied for consolidation of the VIEs under U.S. GAAP. Prior to the Wintus Acquisition and the termination of the VIE structure, the VIEs were consolidated for accounting purposes but none of them was an entity in which Shineco owned equity. Prior to the Wintus Acquisition and the termination of the VIE structure, Shineco did not conduct any active operations and was the primary beneficiary of the VIEs for accounting purposes. Our stockholders did not own any equity in any of Shineco’s subsidiaries or the VIEs.

Prior to the Wintus Acquisition and the termination of the VIE structure, Shineco was also subject to the legal and operational risks associated with being based in and having the majority of its operations in China and operating through VIEs. These risks could result in material changes in operations, or a complete hindrance of Shineco’s ability to offer or continue to offer its securities to investors, and could cause the value of Shineco’s securities to significantly decline or become worthless. Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using the variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued an announcement to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. On July 10,