Company: SISI
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006895
Chunk: 28

Company: SHINECO, INC.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 1
Chunk 28
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 financial institutions mainly in the PRC.
As of December 31, 2024 and June 30, 2024, the Company had no cash equivalents.

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

Accounts Receivable, Net

Accounts receivable are recorded at net
realizable value, consisting of the carrying amount less an allowance for credit losses, as necessary. As of December 31, 2024 and June
30, 2024, the allowance for credit losses was US$1,725,867 and US$1,356,873, respectively. Accounts are written off against the allowance
after efforts at collection prove unsuccessful.

Advances to Suppliers, Net

Advances to suppliers consist of payments
to suppliers for materials that have not been received. As of December 31, 2024 and June 30, 2024, the allowance for uncollectible advances
to suppliers was US$1,441,757 and US$111,483, respectively.

Credit Losses

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

The Company’s account receivables
and other receivables included in other current assets on the unaudited condensed consolidated balance sheets are within the scope of
ASC Topic 326. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses based upon
assessment of various factors, including historical experience, the age of the accounts receivable and other receivables balances, credit-worthiness
of the customers and other debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions,