Company: SISI
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010889
Chunk: 33

Company: SHINECO, INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 33
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, based on the
terms of the land use rights.

Long-lived Assets

Finite-lived assets and intangibles are reviewed for
impairment testing when circumstances require. For purposes of evaluating the recoverability of long-lived assets, when undiscounted future
cash flows will not be sufficient to recover an asset’s carrying amount, the asset is written down to its fair value. The long-lived
assets of the Company that are subject to evaluation consist primarily of property and equipment, land use rights, ROU assets and investments.
For the nine and three months ended March 31, 2025 and 2024, the Company did not recognize any impairment of its long-lived assets.

Derivative Financial Assets

Derivative financial assets are measured at fair value
and recognized as either assets or liabilities on the unaudited condensed consolidated balance sheets in either other current or non-current
assets or other current liabilities or non-current liabilities, depending upon maturity and commitment. Changes in the fair value of derivatives
are either recognized periodically in the unaudited condensed consolidated statements of loss and comprehensive loss, depending on the
use of the derivatives and whether they qualify for hedge accounting.

The Company selectively uses financial instruments
to manage market risk associated with exposure to fluctuations in prices of raw materials for silk products. These financial exposures
are monitored and managed by the Company as an integral part of its risk management program. The Company does not engage in derivative
instruments for speculative or trading purposes. The Company’s derivative financial assets are not qualified for hedge accounting.
Thus, changes in fair value are recognized in “Investment income from derivative financial assets” under discontinued operations
in the unaudited condensed consolidated statements of loss and comprehensive 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 derivative financial assets from the continuing operations were both
nil as of March 31, 2025 and June 30, 2024.