Company: SISI
Filing Date: 2025-03-13
Form Type: S-1/A
Source: 0001493152-25-010206
Chunk: 31

Company: SHINECO, INC.
Filing Date: 2025-03-13
Form: S-1/A
Chunk 31
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 such as the risk factors set forth in our most recent Annual Report on Form 10-K on file with the SEC. If any of the following events actually occurs, our business, operating results, prospects, or financial condition could be materially and adversely affected. The risks described below are not the only ones that we and our subsidiaries face. Additional risks not presently known to us and our subsidiaries or that we currently deem immaterial may also significantly impair our business operations and could result in a complete loss of your investment.

Risks Related to Our Corporate Structure

If the PRC government deems that our previous VIE structure did not comply with PRC regulatory restrictions on foreign investment in the relevant industries or other laws or regulations of the PRC, or if these regulations or the interpretation of existing regulations change in the future, Shineco’s shares may decline in value or become worthless.

Shineco is a holding company incorporated in Delaware. As a holding company with no operations of our own, we conducted a substantial majority of our operations through the former VIEs prior to the termination of the VIE structure in September 2023. Due to PRC legal restrictions on foreign ownership in any internet-related businesses we envisioned exploring and operating, we did not own any equity interest in the former VIEs, and instead we received the economic benefits of the former VIEs’ business operations through certain contractual arrangements. Our common stock that is currently listed on the Nasdaq Capital Market are shares of common stock of our Delaware holding company.

In the opinion of Beijing Yingke Law Firm, our PRC legal counsel, our previous corporate structure and contractual arrangements complied with the applicable PRC laws and regulations. Our PRC legal counsel also believe that each of the contracts among our then wholly-owned PRC subsidiary, the consolidated former VIEs and their respective shareholders were valid, binding and enforceable in accordance with the terms thereof. However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. In addition, the contractual agreements with the former VIEs have not been tested in court in China and this structure involves unique risks to investors. Thus, the PRC governmental authorities may take a view contrary to the opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structure will be adopted or if adopted, what they would provide. PRC laws and regulations governing the validity of these contractual arrangements are uncertain and the relevant government authorities have broad discretion in interpreting these laws and regulations