Company: SISI
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006895
Chunk: 26

Company: SHINECO, INC.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 1
Chunk 26
---
 considerations and significant risks not typically associated with companies in North America and
Western Europe. These include risks associated with, among others, the political, economic, and legal environment and foreign currency
exchange. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the
PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency
conversion, remittances abroad, and rates and methods of taxation, among other things. Although the Company has not experienced losses
from these factors and believes that it is in compliance with existing laws and regulations, there is no guarantee that the Company will
continue to do so in the future.

Use of Estimates

The preparation of the unaudited condensed
consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed
consolidated financial statements as well as the reported amounts of revenue and expenses during the reporting periods. Significant estimates
required to be made by management include, but are not limited to, useful lives of property and equipment, and intangible assets, the
recoverability of long-lived assets, assessment of expected credit losses for accounts receivable and other current asset, the valuation
allowance of deferred taxes, and inventory reserves. Actual results could differ from those estimates.

Revenue Recognition

The Company generates its 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