Company: SISI
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006895
Chunk: 33

Company: SHINECO, INC.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 1
Chunk 33
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 value are recognized in “Investment income from derivative financial assets” in the unaudited
condensed consolidated statements of income (loss) and comprehensive income (loss). The cash flows of derivative financial assets are
classified in the same category as the cash flows from the items subject to the economic hedging relationships. The estimated fair value
of the derivatives is determined based on relevant market information.

Derivative financial assets are presented
as net if rights of setoff exist, with all of the following conditions met: (a) each of the two parties owes the other determinable amounts;
(b) the reporting party has the right to set off the amount owed with the amount owed by the other party; (c) the reporting party intends
to set off; and (d) the right of setoff is enforceable at law.

The outstanding derivative financial
assets as of December 31, 2024 and June 30, 2024 were US$6,969 and US$6,380, respectively. Investment income from derivative financial
assets was US$4,239 and US$1,962 for the six and three months ended December 31, 2024, respectively, and US$3,534 and US$766 for the
six and three months ended December 31, 2023, respectively. The change in fair value of derivative financial assets was immaterial for
the six and three months ended December 31, 2024 and 2023, respectively.

Fair Value of Financial Instruments

The Company 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 in level, 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