Company: SISI
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006895
Chunk: 36

Company: SHINECO, INC.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 1
Chunk 36
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RC.

In general, for consolidation purposes,
the Company translates the assets and liabilities of its subsidiaries and VIEs into U.S. dollars using the applicable exchange rates
prevailing at the balance sheet date, and the statements of income and cash flows are translated at average exchange rates during the
reporting periods. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily
agree with changes in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments
resulting from the translation of the financial statements of the subsidiaries and VIEs are recorded as accumulated other comprehensive
loss.

    16

The balance sheet amounts, with the exception
of equity, as of December 31, 2024 and June 30, 2024 were translated at 1 RMB to 0.1370 USD and at 1 RMB to 0.1376 USD, respectively.
The average translation rates applied to the income and cash flow statement amounts for the six months ended December 31, 2024 and 2023
were 1 RMB to 0.1393 USD and 1 RMB to 0.1385 USD, respectively. The average translation rates applied to the income and cash flow statement
amounts for the three months ended December 31, 2024 and 2023 were 1 RMB to 0.1390 USD and 1 RMB to 0.1388 USD, respectively.

Convertible Notes Payable

In accordance with ASC 470 Debt with
conversion and other option, an embedded beneficial conversion feature present in a convertible instrument shall be recognized separately
at issuance by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. Issuance
costs should be allocated proportionally to the debt host and conversion feature. Deferred financing costs will be discounted and amortized
subsequently, and the convertible notes are subsequently carried at amortized cost.

Research and Development Expenses

Research and development costs relating
to the development of new processes and significant improvements and refinements to existing processes are expensed when incurred in
accordance with the FASB ASC 730, “Research and Development.” The research and development costs primarily comprise employee
costs, consultant fees, materials and testing costs, and depreciation to property and equipment used in the research and development
activities and other miscellaneous expenses. For the six months ended December 31, 2024