Company: SISI
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010889
Chunk: 187

Company: SHINECO, INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 2
Chunk 187
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is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost is determined using
the weighted average method. We periodically evaluate our inventory and records an inventory reserve for certain inventories that may
not be saleable or whose cost exceeds net realizable value. As of March 31, 2025 and June 30, 2024, the inventory reserve from the continuing
operations was nil and US$30,443, respectively. As of March 31, 2025 and June 30, 2024, the inventory reserve from the discontinued operations
was both nil.

Revenue Recognition

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

With the adoption of ASC 606,
“Revenue from Contracts with Customers,” revenue is recognized when all of the following five steps are met: (i)
identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) determine the
transaction price; (iv) allocate the transaction price to the performance obligations; (v) recognize revenue when (or as) each
performance obligation is satisfied. The Company has assessed the impact of the guidance by reviewing its existing customer
contracts to identify differences that will result from applying the new requirements, including the evaluation of its performance
obligations, transaction price, customer payments, transfer of control, and principal versus agent considerations. In accordance
with ASC 606, the Company evaluates whether it is appropriate to record the gross amount of product sales and related costs or the
net amount earned as commissions. When the Company is a principal, that the Company obtains control of the specified goods or
services before they are transferred to the customers, the revenue should be recognized in the gross amount of consideration to
which it expects to be entitled in exchange for the specified goods or services transferred. When the Company is an agent and its
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