# EDGAR Filing Document

**Accession Number:** 0001300734
**File Stem:** 0001493152-23-006119
**Filing Date:** 2023-2
**Character Count:** 138900
**Document Hash:** e973171596e84edfbe029160d772386f
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-23-006119.hdr.sgml**: 20230227

**ACCESSION NUMBER**: 0001493152-23-006119

**CONFORMED SUBMISSION TYPE**: 8-K/A

**PUBLIC DOCUMENT COUNT**: 18

**CONFORMED PERIOD OF REPORT**: 20221230

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230227

**DATE AS OF CHANGE**: 20230227

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SHINECO, INC.
- **CENTRAL INDEX KEY:** 0001300734
- **STANDARD INDUSTRIAL CLASSIFICATION:** AGRICULTURE PRODUCTION - CROPS [0100]
- **IRS NUMBER:** 522175898
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** 8-K/A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-37776
- **FILM NUMBER:** 23676579

**BUSINESS ADDRESS:**
- **STREET 1:** RM 3D-1603, NEW WORLD CENTER APARTMENT,
- **STREET 2:** CHONG WEN MEN WAI BLVD,
- **CITY:** BEIJING
- **STATE:** F4
- **ZIP:** 100062
- **BUSINESS PHONE:** (86) 10-67084339

**MAIL ADDRESS:**
- **STREET 1:** RM 3D-1603, NEW WORLD CENTER APARTMENT,
- **STREET 2:** CHONG WEN MEN WAI BLVD,
- **CITY:** BEIJING
- **STATE:** F4
- **ZIP:** 100062

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SUPCOR, INC.
- **DATE OF NAME CHANGE:** 20050328

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Supcor, Inc.
- **DATE OF NAME CHANGE:** 20041015

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SupCor, Inc.
- **DATE OF NAME CHANGE:** 20040817

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K/A**

**(Amendment No. 1)**

**CURRENT REPORT**

**PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES EXCHANGE ACT OF 1934**

Date of Report (Date of earliest event reported): December 30, 2022

**SHINECO, INC.**

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Delaware** | **001-37776** | **52-2175898** |
| (State or other jurisdiction<br> of incorporation) | (Commission<br> File Number) | (IRS Employer<br> Identification No.) |

---

---

| | |
|:---|:---|
| **Room 3310, North Tower, Zhengda Center,**<br> **No. 20, Jinhe East Road, Chaoyang District**<br> **Beijing, People's Republic of China** | **100020** |
| (Address of principal executive offices) | (Zip Code) |

---

Registrant's telephone number, including area code: (+86) 10-59246103

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| **Common Stock, $0.001 par value** | **SISI** | **The NASDAQ Stock Market LLC** |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

**EXPLANATORY NOTE**

As previously disclosed by Shineco, Inc. (the "Company") in its Current Report on Form 8-K filed on January 4, 2023 (the "Original 8-K"), on December 30, 2022, Shineco Life Science Research Co., Ltd. ("Subsidiary"), a company established under the laws of China and indirect wholly owned subsidiary of the Company, closed the acquisition of 51% of the issued equity interests of Changzhou Biowin Pharmaceutical Co., Ltd., a company established under the laws of China ("Biowin"), pursuant to the previously announced stock purchase agreement, dated as of October 21, 2022, among Beijing Kanghuayuan Medicine Information Consulting Co., Ltd., a company established under the laws of China, Biowin, the Company and Subsidiary.

This Current Report on Form 8-K/A supplements and amends the Original 8-K to file the financial information required by Items 9.01(a) and 9.01(b) of Form 8-K.

**Item 9.01 Financial Statements and Exhibits.**

**(a) Financial Statements of Business Acquired** 

The audited financial statements of Biowin, including the audited consolidated balance sheets of Biowin as of June 30, 2022 and 2021, and the audited consolidated statements of income (loss) and comprehensive income (loss), statements of changes in equity and statements of cash flows of Biowin for each of the two years ended June 30, 2022 and 2021, and the notes related thereto, are filed as Exhibit 99.1 to this Current Report on Form 8-K/A and are incorporated by reference into this Item 9.01(a).

The Report of Independent Registered Public Accounting Firm, issued by Ling Xin CPAs, dated February 27, 2023, relating to the audited consolidated financial statements of Biowin, is filed as Exhibit 99.1 to this Current Report on Form 8-K/A and is incorporated by reference into this Item 9.01(a).

The unaudited consolidated balance sheet of Biowin as of December 31, 2022 and the unaudited consolidated statements of income (loss) and comprehensive income (loss), statements of changes in equity and statements of cash flows of Biowin for the six month periods ended December 31, 2022 and 2021, and the notes related thereto, are filed as Exhibit 99.2 to this Current Report on Form 8-K/A and are incorporated by reference into this Item 9.01(a).

**(b) Pro Forma Financial Information** 

The unaudited pro forma condensed combined financial statements, as adjusted for the Biowin acquisition, which include the unaudited pro forma condensed combined balance sheet as of December 31, 2022, and the unaudited pro forma condensed combined statements of operations for the six month period ended December 31, 2022, and for the year ended June 30, 2022 and the notes related thereto, are filed as Exhibit 99.3 to this Current Report on Form 8-K/A and are incorporated by reference into this Item 9.01(b).

(d) Exhibits:

All exhibits are filed herewith, unless otherwise indicated.

---

| | |
|:---|:---|
| **Exhibit**<br> **No.** | **Descriptions** |
| 23.1 | [Consent of Ling Xin CPAs.](ex23-1.htm) |
| 99.1 | [Audited consolidated balance sheets of Biowin as of June 30, 2022 and 2021, and the audited consolidated statements of income (loss) and comprehensive income (loss), statements of changes in equity and statements of cash flows of Biowin for each of the two years ended June 30, 2022 and 2021, and the notes related thereto, and the Report of Independent Registered Public Accounting Firm issued by Ling Xin CPAs.](ex99-1.htm) |
| 99.2 | [Unaudited consolidated balance sheet of Biowin as of December 31, 2022 and the unaudited consolidated statements of income (loss) and comprehensive income (loss), statements of changes in equity and statements of cash flows of Biowin for the six month periods ended December 31, 2022 and 2021, and the notes related thereto.](ex99-2.htm) |
| 99.3 | [Unaudited pro forma condensed combined balance sheet as of December 31, 2022, and the unaudited pro forma condensed combined statements of operations for the six month period ended December 31, 2022, and for the year ended June 30, 2022 and the notes related thereto.](ex99-3.htm) |
| 104 | Cover Page Interactive Date File (embedded within the Inline XBRL document). |

---

**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: February 27, 2023

---

| | |
|:---|:---|
| SHINECO, INC. | SHINECO, INC. |
| By: | */s/ Jennifer Zhan* |
| Name: | Jennifer Zhan |
| Title: | Chief Executive Officer |

---

## Exhibit 23.1

**Exhibit 23.1**

**Ling Xin Certified Public Accountants**

Room 1803,18th floor, building 3,19 Bei yuan East Road, Chaoyang District, Beijing, China

Email: lingxin@lxcpas.cn TEL +(8610)8495 7819

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to use in the Registration Statement on Form S-3 (No. 333- 261229) and (No. 333-250160) and the Registration Statement on Form S-8 (No. 333- 266385) of Shineco, Inc. of our report dated February 27, 2023, relating to the consolidated financial statements of Changzhou Biowin Pharmaceutical Co., Ltd., including the consolidated balance sheets of Changzhou Biowin Pharmaceutical Co., Ltd. and its subsidiary as of June 30, 2022 and 2021, and the related consolidated statements of income and comprehensive income, changes in shareholders' equity, and cash flows for each of the years in the two-year period ended June 30, 2022, which appear in this Current Report on Form 8-K/A of Shineco Inc.

/s/ Ling Xin CPAs

Beijing, China

February 27, 2023

## Exhibit 99.1

**Exhibit 99.1** 

**BIOWIN PHARMACEUTICAL CO., LTD.**

**CONSOLIDATED FINANCIAL STATEMENTS**

**YEARS ENDED JUNE 30, 2022 AND 2021**

**AND**

**REPORT OF INDEPENDENT REGISTERED**

**PUBLIC ACCOUNTING FIRM**

**BIOWIN PHARMACEUTICAL CO., LTD.**

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| **[Report of Independent Registered Public Accounting Firm](#a_001)** | 1 |
| **Consolidated Financial Statements** |  |
| &nbsp;&nbsp;&nbsp;[Consolidated Balance Sheets](#a_002) | 2 |
| &nbsp;&nbsp;&nbsp;[Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)](#a_003) | 3 |
| &nbsp;&nbsp;&nbsp;[Consolidated Statements of Changes in Equity](#a_004) | 4 |
| &nbsp;&nbsp;&nbsp;[Consolidated Statements of Cash Flows](#a_005) | 5 |
| &nbsp;&nbsp;&nbsp;[Notes to Consolidated Financial Statements](#a_006) | 6 – 18 |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and

Shareholders of Changzhou Biowin Pharmaceutical Co., Ltd.

We have audited the accompanying balance sheets of Changzhou Biowin Pharmaceutical Co., Ltd. (the "Company") as of June 30, 2022 and 2021, and the related statements of income (loss) and comprehensive income (loss), changes in equity and cash flows for each of the two years in the period ended June 30, 2022. The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the results of their operations and their cash flows for each of the two years in the period ended June 30, 2022 in conformity with accounting principles generally accepted in the United States of America.

<u>s/ Ling Xin CPAs</u> <br> Beijing, PRC

February 27, 2023

**CHANGZHOU BIOWIN PHARMACEUTICAL CO., LTD.** 

**CONSOLIDATED BALANCE SHEETS** 

---

| | | |
|:---|:---|:---|
|  | June 30,<br>2022 | June 30,<br>2021 |
| **ASSETS** |  |  |
| **CURRENT ASSETS:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $526608 | $210640 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 433553 | 167877 |
| &nbsp;&nbsp;&nbsp;Inventories, net | 562000 | 599055 |
| &nbsp;&nbsp;&nbsp;Advances to suppliers, net | 364138 | 81135 |
| &nbsp;&nbsp;&nbsp;Other current assets, net | 49038 | 2648 |
| **TOTAL CURRENT ASSETS** | 1935337 | 1061355 |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 227545 | 261407 |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 212559 | 288073 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets, net | 205913 | 318753 |
| **TOTAL ASSETS** | $**2581354** | $**1929588** |
| **LIABILITIES AND EQUITY** |  |  |
| **CURRENT LIABILITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Short-term bank loans | $1194440 | $851676 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 103009 | 76134 |
| &nbsp;&nbsp;&nbsp;Advances from customers | 516087 | 376421 |
| &nbsp;&nbsp;&nbsp;Due to related parties | 112657 | 228667 |
| &nbsp;&nbsp;&nbsp;Other payables and accrued expenses | 173598 | 316207 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities - current | 90071 | 214727 |
| &nbsp;&nbsp;&nbsp;Taxes payable | 16453 | 3324 |
| **TOTAL CURRENT LIABILITIES** | 2206315 | 2067156 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities - non-current | 142395 | 241100 |
| **TOTAL LIABILITIES** | 2348710 | 2308256 |
| **Commitments and contingencies** |  |  |
| **SHAREHOLDERS' EQUITY (DEFICIT)** |  |  |
| &nbsp;&nbsp;&nbsp;Registered capital | 1531795 | 1531795 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 1406005 | 1406005 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (2700516) | (3320783) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive gain (loss) | (4640) | 4315 |
| **TOTAL SHAREHOLDERS' EQUITY (DEFICIT)** | 232644 | (378668) |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)** | $**2581354** | $**1929588** |

---

The accompanying notes are an integral part of these consolidated financial statements.

**CHANGZHOU BIOWIN PHARMACEUTICAL CO., LTD.**

**CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)** 

---

| | | |
|:---|:---|:---|
|  | For the Years Ended June 30, | For the Years Ended June 30, |
|  | 2022 | 2021 |
| **REVENUE** | $4169488 | $1623413 |
| **COST OF REVENUE** |  |  |
| &nbsp;&nbsp;&nbsp;Cost of product and services | 940330 | 289991 |
| &nbsp;&nbsp;&nbsp;Business and sales related tax | 7138 | 8379 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of revenue | 947468 | 298370 |
| **GROSS INCOME** | 3222020 | 1325043 |
| **OPERATING EXPENSES** |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 665417 | 684512 |
| &nbsp;&nbsp;&nbsp;Selling expenses | 723707 | 532393 |
| &nbsp;&nbsp;&nbsp;Research and development expenses | 1154045 | 443789 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 2543169 | 1660694 |
| **INCOME (LOSS) FROM OPERATIONS** | 678851 | (335651) |
| **OTHER INCOME (EXPENSE)** |  |  |
| &nbsp;&nbsp;&nbsp;Other income, net | 100112 | 24125 |
| &nbsp;&nbsp;&nbsp;Interest expenses, net | (53450) | (31900) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expenses) | 46662 | (7775) |
| **INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES** | 725513 | (343426) |
| **PROVISION (BENEFIT) FOR INCOME TAXES** | 105246 | (43023) |
| **NET INCOME (LOSS)** | 620267 | (300403) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation loss | (8955) | (13782) |
| **TOTAL COMPREHENSIVE INCOME (LOSS)** | $611312 | $(314185) |

---

The accompanying notes are an integral part of these consolidated financial statements

**CHANGZHOU BIOWIN PHARMACEUTICAL CO., LTD.**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)**

**FOR THE YEARS ENDED JUNE 30, 2022 AND 2021**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |<br>**REGISTERED**<br>**CAPITAL** |<br>**ADDITIONAL<br> PAID-IN**<br>**CAPITAL** |<br>**ACCUMULATED**<br>**DEFICIT** | **ACCUMULATED**<br>**OTHER<br> COMPREHENSIVE**<br>**GAIN (LOSS)** | **TOTAL**<br>**SHAREHOLDERS' EQUITY**<br> **(DEFICIT)** |
| **Balance at June 30, 2020** | $1531795 | $1406005 | $(3020380) | $18097 | $(64483) |
| Net loss for the year |  |  | (300403) |  | (300403) |
| Foreign currency translation loss | - | - |  | (13782) | (13782) |
| **Balance at June 30, 2021** | $1531795 | $1406005 | $(3320783) | $4315 | $(378668) |
| Net income for the year |  |  | 620267 |  | 620267 |
| Foreign currency translation loss | - | - |  | (8955) | (8955) |
| **Balance at June 30, 2022** | $1531795 | $1406005 | $(2700516) | $(4640) | $232644 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**CHANGZHOU BIOWIN PHARMACEUTICAL CO., LTD.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | For the Years Ended June 30, | For the Years Ended June 30, |
|  | 2022 | 2021 |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |
| Net income (loss) | $620267 | $(300403) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation | 79371 | 121077 |
| &nbsp;&nbsp;&nbsp;Provision for (reversal of) doubtful accounts | (34044) | 47392 |
| &nbsp;&nbsp;&nbsp;Amortization of right of use assets | 67654 | 62098 |
| &nbsp;&nbsp;&nbsp;Deferred tax provision (benefit) | 105246 | (43023) |
| **Changes in operating assets and liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | (343329) | (20353) |
| &nbsp;&nbsp;&nbsp;Advances to suppliers | (322112) | 18211 |
| &nbsp;&nbsp;&nbsp;Inventories | 16190 | (28595) |
| &nbsp;&nbsp;&nbsp;Other current assets | 69521 | 36768 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 30716 | (39445) |
| &nbsp;&nbsp;&nbsp;Advances from customers | 158913 | (17517) |
| &nbsp;&nbsp;&nbsp;Other payables and accrued expenses | (136230) | (95239) |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | (214836) | (28880) |
| &nbsp;&nbsp;&nbsp;Taxes payable | 13747 | (1582) |
| Net cash provided by (used in) operating activities | 111074 | (289491) |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Acquisitions of property and equipment | (50818) | (29022) |
| Net cash used in investing activities | (50818) | (29022) |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from short-term bank loans | 1704216 | 830463 |
| &nbsp;&nbsp;&nbsp;Repayment of short-term bank loans | (1316894) | (452980) |
| &nbsp;&nbsp;&nbsp;Proceeds from (repayments of) advances from related parties | (111883) | 12633 |
| Net cash provided by financing activities | 275439 | 390116 |
| EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS | (19727) | 13705 |
| **NET INCREASE IN CASH AND CASH EQUIVALENTS** | 315968 | 85308 |
| **CASH AND CASH EQUIVALENTS - Beginning of the year** | 210640 | 125332 |
| **CASH AND CASH EQUIVALENTS - End of the year** | $526608 | $210640 |
| **SUPPLEMENTAL CASH FLOW DISCLOSURES:** |  |  |
| Cash paid for interest | $48226 | $31797 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS**

Changzhou Biowin Pharmaceutical Co., Ltd. ("Biowin" or the "Company") was incorporated on November 22, 2011 in accordance with PRC laws and is a high-tech enterprise specializing in development, production and distribution of innovative rapid diagnostic products and related medical devices for the most common diseases.

On April 26, 2018, the Company acquired Changzhou Biowin Pharmaceutical Development Co., Ltd ("Biowin Development"), which was incorporated on September 17, 2014 in accordance with PRC laws with registered capital of RMB1.0 million (US$162,595), and Biowin Development became a wholly-owned subsidiary of the Company.

**NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Basis of Presentation and Principles of Consolidation***

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The consolidated financial statements of the Company reflect the principal activities of the Company and its subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

***Risks and Uncertainties***

The operations of the Company are located in the PRC and are subject to special 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 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 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, the recoverability of long-lived assets, and the valuation of accounts receivable, advances to suppliers, deferred taxes, and inventory reserves. Actual results could differ from those estimates.

***Revenue Recognition***

The Company previously recognized revenue from sales of products to external customers. The Company recognized revenue when all of the following have occurred: (i) there was persuasive evidence of an arrangement with a customer; (ii) delivery had occurred or services had been rendered; (iii) the sales price was fixed or determinable; and (iv) our collection of such fees was reasonably assured. These criteria, as related to our revenue, were considered to have been met as follows:

*Sales of products:* The Company recognized revenue from the sale of products when the goods were delivered and title to the goods passed to the customer, provided that there were no uncertainties regarding customer acceptance; persuasive evidence of an arrangement existed; the sales price was fixed or determinable; and collectability was deemed probable.

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 performance obligations; (v) recognize revenue when (or as) each performance obligation is satisfied. The Company adopted the new revenue standard beginning July 1, 2018, and adopted a modified retrospective approach upon adoption. The Company has assessed the impact of the guidance by reviewing its existing customer contracts to identify differences that will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control, and principal versus agent considerations. In accordance with ASC 606, the Company evaluates whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. When the Company is a principal, that the Company obtains control of the specified goods or services before they are transferred to the customers, the revenues should be recognized in the gross amount of consideration to which it expects to be entitled in exchange for the specified goods or services transferred. When the Company is an agent and its obligation is to facilitate third parties in fulfilling their performance obligation for specified goods or services, the revenues should be recognized in the net amount for the amount of commission which the Company earns in exchange for arranging for the specified goods or services to be provided by other parties. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606 and therefore there was no material changes to the Company's consolidated financial statements upon adoption of ASC 606.

*Disaggregation of Revenue*

The Company disaggregates its revenue by geographic areas, as the Company believes it best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors. The Company's disaggregation of revenue for the years ended June 30, 2022 and 2021 are as follows:

<u>Geographic Information</u>

The summary of the Company's total revenue by geographic area for the years ended June 30, 2022 and 2021 was as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended<br> June 30,** | **For the Years Ended<br> June 30,** |
|  | **2022** | **2021** |
| China domestic market | $1777338 | $1178336 |
| Overseas market | 2392150 | 445077 |
| Total revenue | $4169488 | $1623413 |

---

***Cash and Cash Equivalents***

Cash and cash equivalents consist of cash on hand, cash on deposit, and other highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less when purchased. The Company maintains cash with various financial institutions mainly in the PRC. As of June 30, 2022 and 2021, the Company had no cash equivalents.

Under PRC law, it is generally required that a commercial bank in the PRC that holds third-party cash deposits protect the depositors' rights over and interests in their deposited money. PRC banks are subject to a series of risk control regulatory standards, and PRC bank regulatory authorities are empowered to take over the operation and management of any PRC bank that faces a material credit crisis. The Company monitors the banks utilized and has not experienced any problems.

***Accounts Receivable, Net***

Accounts receivable are recorded at net realizable value, consisting of the carrying amount less an allowance for uncollectible accounts, as necessary. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, the customers' historical payment history, their current credit-worthiness, and current economic trends. The fair value of long-term receivables is determined using a present value technique by discounting the future expected contractual cash flows using current rates at which similar instruments would be issued at the measurement date. As of June 30, 2022 and 2021, the allowance for doubtful accounts was US$115,788 and US$58,712, respectively. Accounts are written off against the allowance after efforts at collection prove unsuccessful.

***Inventories, Net***

Inventories, which are stated at the lower of cost or net realizable value, consist of raw materials and finished goods related to the Company's products. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost is determined using the first in first out ("FIFO") method. The Company periodically evaluates its inventory and records an inventory reserve for certain inventories that may not be saleable or whose cost exceeds net realizable value. As of June 30, 2022 and 2021, the inventory reserve was US$54,493 and US$56,517, respectively.

***Advances to Suppliers, Net***

Advances to suppliers consist of payments to suppliers for materials that have not been received. Advances to suppliers are reviewed periodically to determine whether their carrying value has become impaired. As of June 30, 2022 and 2021, the Company had an allowance for uncollectible advances to suppliers of US$60,654 and US$37,485, respectively.

***Leases***

The Company follows FASB ASC No. 842, *Leases* ("Topic 842"). The Company leases one office space, which is classified as operating lease in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually with initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use ("ROU") asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and includes initial direct costs incurred. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses for minimum lease payments are recognized on a straight-line basis over the lease term. All operating lease right-of-use assets are reviewed for impairment annually. There was no impairment for operating lease right-of-use lease assets as of June 30, 2022 and 2021.

 ****

***Property and Equipment, Net***

Property and equipment are stated at cost, less accumulated depreciation. Expenditures for additions, major renewals, and betterments are capitalized, and expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided on a straight-line basis, less estimated residual value, if any, over an asset's estimated useful life. The estimated useful lives of the Company's property and equipment are as follows:

---

| | |
|:---|:---|
|  | **Estimated useful lives** |
| Machinery equipment | 3-10 years |
| Office equipment | 3-5 years |

---

***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 and ROU assets. For the years ended June 30, 2022 and 2021, the Company did not recognize any impairment of its long-lived assets.

***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 the measurement of the fair value of the asset or liability.

The carrying value of financial instruments included in current assets and liabilities approximate their fair values because of the short-term nature of these instruments.

***Research and Development Expenses***

Research and development costs relating to the development of new processes, including 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 years ended June 30, 2022 and 2021, total research and development expense were approximately US$1,154,045 and US$443,789, respectively.

 ****

***Income Taxes***

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The provisions of ASC 740-10-25, "Accounting for Uncertainty in Income Taxes," prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This ASC also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. No penalties or interest relating to income taxes were incurred during the years ended June 30, 2022 and 2021. The Company did not have any uncertain tax positions at June 30, 2022 and 2021.

The Company is subject to the income tax laws of the PRC. No significant income was generated outside the PRC for the years ended June 30, 2022 and 2021. As of June 30, 2022, the tax years ended December 31, 2017 through December 31, 2021 for the Company remain open for statutory examination by PRC tax authorities.

***Value-Added Tax***

Sales revenue represents the invoiced value of goods, net of a value-added tax ("VAT"). The VAT is based on gross sales price and VAT rates range from 3% to 13% in the years ended June 30, 2022 and 2021, depending on the type of products sold. For overseas sales, VAT is exempted on the exported goods. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing finished products or acquiring finished products. The Company records a VAT payable or VAT receivable in the accompanying consolidated financial statements.

***Foreign Currency Translation***

The Company uses the United States dollar ("U.S. dollars," "USD," or "US$") for financial reporting purposes. The Company and its subsidiary maintain their books and records in their functional currency of Renminbi ("RMB"), the currency of the PRC.

In general, for consolidation purposes, the Company translates the assets and liabilities 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 Company are recorded as accumulated other comprehensive gain (loss).

The balance sheet amounts, with the exception of equity, at June 30, 2022 and 2021 were translated at 1 RMB to 0.1493 USD and at 1 RMB to 0.1549 USD, respectively. The average translation rates applied to the income and cash flow statement amounts for the years ended June 30, 2022 and 2021 were 1 RMB to 0.1549 USD and 1 RMB to 0.1510 USD, respectively.

***Comprehensive Income (Loss)***

Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive loss. The foreign currency translation loss resulting from translation of the financial statements expressed in RMB to USD is reported in other comprehensive loss in the consolidated statements of income (loss) and comprehensive income (loss).

***Segment Reporting***

The Company uses the management approach in determining reportable operating segments. The management approach considers the internal reporting used by the Company's chief operating decision maker for making operating decisions about the allocation of resources of the segment and the assessment of its performance in determining the Company's reportable operating segments. Management has determined that the Company has one operating segment.

***New Accounting Pronouncements***

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently amended by Accounting Standards Update 2018-19, *Codification Improvements to Topic 326, Financial Instruments—Credit Losses,* Accounting Standards Update 2019-04 *Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments*, and Accounting Standards Update 2019-05, *Targeted Transition Relief.* For public entities, ASU 2016-13 and its amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. In November 2019, the FASB issued ASU 2019-10, "Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)" ("ASU 2019-10"). ASU 2019-10 (i) provides a framework to stagger effective dates for future major accounting standards and (ii) amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities. Specifically, ASU 2019-10 changes some effective dates for certain new standards on the following topics in the FASB Accounting Standards Codification (ASC): (a) Derivatives and Hedging (ASC 815) – now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021; (b) Leases (ASC 842) - now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021; (c) Financial Instruments — Credit Losses (ASC 326) - now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years; and (d) Intangibles — Goodwill and Other (ASC 350) - now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company plans to adopt this guidance effective July 1, 2023 and the adoption of this ASU is not expected to have a material impact on its financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. The FASB is issuing this Update as part of its initiative to reduce complexity in accounting standards (the "Simplification Initiative"). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The specific areas of potential simplification in this ASU were submitted by stakeholders as part of the Simplification Initiative. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted this ASU on July 1, 2021 and the adoption of this ASU did not have a material impact on its financial statements.

The Company believes that other recent accounting pronouncement updates will not have a material effect on the Company's consolidated financial statements.

**NOTE 3 – ACCOUNTS RECEIVABLE, NET**

The accounts receivable, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| Accounts receivable | $549341 | $226589 |
| Less: allowance for doubtful accounts | (115788) | (58712) |
| Accounts receivable, net | $433553 | $167877 |

---

Movement of allowance for doubtful accounts is as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| Beginning balance | $58712 | $97942 |
| Charge to (reversal of) expense | 61408 | (47302) |
| Foreign currency translation adjustments | (4332) | $8072 |
| Ending balance | $115788 | $58712 |

---

**NOTE 4 – INVENTORIES, NET**

The inventories, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| Raw materials | $335853 | $393974 |
| Finished goods | 280640 | 261598 |
| Less: inventory reserve | (54493) | (56517) |
| Total inventories, net | $562000 | $599055 |

---

Inventories include raw materials and finished goods. Provision for inventory reserve was both US$ Nil for the years ended June 30, 2022 and 2021.

**NOTE 5 – ADVANCES TO SUPPLIERS, NET**

The advances to suppliers, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| Advances to suppliers | $424792 | $118620 |
| Less: allowance for doubtful accounts | (60654) | (37485) |
| Advance to suppliers, net | $364138 | $81135 |

---

Advances to suppliers consist of mainly payments to suppliers for raw materials or products that have not been received.

Movement of allowance for doubtful accounts is as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| Beginning balance | $37485 | $25149 |
| Charge to expense | 25434 | 9705 |
| Foreign currency translation adjustments | (2265) | 2631 |
| Ending balance | $60654 | $37485 |

---

**NOTE 6 - PROPERTY AND EQUIPMENT, NET**

Property and equipment, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| Machinery and equipment | $1164343 | $1153667 |
| Office equipment | 18401 | 19084 |
| Subtotal | 1182744 | 1172751 |
| Less: accumulated depreciation | (955199) | (911344) |
| Total property and equipment, net | $227545 | $261407 |

---

Depreciation expense was US$79,371 and US$121,077 for the years ended June 30, 2022 and 2021, respectively.

**NOTE 7 - LEASES**

The Company leases one office space under non-cancelable operating leases with terms of 7.5 years. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of ROU assets and lease liabilities. Lease expenses for lease payment are recognized on a straight-line basis over the lease term. Leases with initial terms of 12 months or less are not recorded on the balance sheet.

The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The table below presents the operating lease related assets and liabilities recorded on the balance sheets.

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| ROU lease assets | $212559 | $288073 |
| Operating lease liabilities – current | 90071 | 214727 |
| Operating lease liabilities – non-current | 142395 | 241100 |
| Total operating lease liabilities | $232466 | $455827 |

---

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| Remaining lease term and discount rate: |  |  |
| Weighted average remaining lease term (years) | 2.92 | 3.92 |
| Weighted average discount rate | 4.61% | 4.61% |

---

Rent expenses totaled US$84,577 and US$78,517 for the years ended June 30, 2022 and 2021, respectively.

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2022:

---

| | |
|:---|:---|
| **Twelve months ending June 30,** | **Lease Payment** |
| 2023 | $98541 |
| 2024 | 98541 |
| 2025 | 49271 |
| Total lease payments | 246353 |
| Less: imputed interest | (13887) |
| Present value of lease liabilities | $232466 |

---

**NOTE 8 - RELATED PARTY TRANSACTIONS**

**(a)** **Nature of Relationships with Related Parties** 

 ****

---

| | |
|:---|:---|
| **Name** | **Relationship with the Company** |
| Mr. Fengming Liu | Chief Executive Officer ("CEO"), the legal representative of the Company |
| Mrs. Lixia Yan | One of the directors of the Company |
| Mr. Yifan He | One of the directors of the Company |
| Beijing Kanghuayuan Technology Development Co., Ltd. ("Beijing Kanghuayuan") | One of the shareholders of the Company |
| Changzhou Kanghuayuan Biotechnology Co., Ltd. ("Changzhou Kanghuayuan") | An entity controlled by one of the shareholders of the Company |
| Guangzhou Kangfan Medical Equipment Co., Ltd. ("Guangzhou Kangfan") | An entity controlled by one of the directors of the Company |

---

 ****

**(b)** **Due to Related Parties** 

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| Mr. Fengming Liu | $78713 | $180938 |
| Mrs. Lixia Yan | 23199 | 23228 |
| Mr. Yifan He | 3280 | 11276 |
| Guangzhou Kangfan | 7465 | 7743 |
| Changzhou Kanghuayuan | - | 5482 |
| Total due to related parties | $112657 | $228667 |

---

As of June 30, 2022 and 2021, the balance due to related parties mainly consisted of advances from the Company's related parties for working capital purposes during the Company's normal course of business. These advances are unsecured, non-interest bearing, and due on demand.

**(c)** **Loan guarantee provided by related parties** 

The Company's related parties provide guarantee for the Company's short-term bank loans (see Note 9).

**NOTE 9 - SHORT-TERM BANK LOANS**

Short-term bank loans consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
| **Lender** | **June 30,<br> 2022** | **Maturity <br> Date** | **Int. <br> Rate/Year** |
| Bank of Suzhou - a | $298610 | 2023/3/14 | 4.35% |
| Jiangnan Rural Bank of Jiangsu-b | 447915 | 2023/3/30 | 5.20% |
| Bank of Jiangsu-c | 447915 | 2023/6/15 | 4.20% |
| Total short-term bank loans | $1194440 |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| **Lender** | **June 30,<br> 2021** | **Maturity <br> Date** | **Int. <br> Rate/Year** |
| Bank of Suzhou-a | $309701 | 2022/3/15 \* | 4.35% |
| Bank of Jiangsu-a | 154850 | 2022/4/5 \* | 4.36 |
| Jiangnan Rural Commercial Bank-b | 154850 | 2022/3/11 \* | 6.35 |
| Jiangnan Rural Commercial Bank-b | 154850 | 2022/4/15 \* | 5.20% |
| Jiangnan Rural Commercial Bank-b | 77425 | 2022/5/1 \* | 4.80% |
| Total short-term bank loans | $851676 |  |  |

---

\* These loans have been fully repaid.

The loans outstanding were guaranteed by the following properties, entities or individuals:

a. Guaranteed
 by Mr. Fengming Liu, the CEO of the Company.

b. Pledged
 by the patent rights of the Company.

c. Guaranteed
 by Mr. Fengming Liu, the CEO of the Company, Beijing Kanghuayuan, one of the shareholders of the Company, and Biowin Development,
 the wholly-owned subsidiary of the Company.

The Company recorded interest expenses of US$48,226 and US$31,797 for the years ended June 30, 2022 and 2021, respectively. The annual weighted average interest rates were 4.77% and 4.59% for the years ended June 30, 2022 and 2021, respectively.

**NOTE 10 – TAXES**

**(a) Corporate Income Taxes**

Under the Enterprise Income Tax ("EIT") Law of PRC, domestic enterprises and Foreign Investment Enterprises (the "FIE") are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. The Company is incorporated in the PRC and is subject to corporate income tax at a reduced rate of 15% starting from December 2019, when it was approved by local government as a High and New Technology Enterprises ("HNTEs"), to December 2022. In December 2022, the Company successfully renewed its HNTE certification with local government and will continue to enjoy the reduced income tax rate of 15% for another three years through December 2025.

 ****

***i) The components of the income tax expense (benefit) were as follows:***

---

| | | |
|:---|:---|:---|
|  | **For the years ended**<br> **June 30,** | **For the years ended**<br> **June 30,** |
|  | **2022** | **2021** |
| Current income tax provision | $- | $- |
| Deferred income tax provision (benefit) | 105246 | (43023) |
| Total income tax expense (benefit) | $105246 | $(43023) |

---

***ii) The components of the deferred tax assets were as follows:***

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Allowance for doubtful accounts | $33543 | $38532 |
| &nbsp;&nbsp;&nbsp;Inventory reserve | 13623 | 14129 |
| &nbsp;&nbsp;&nbsp;Net operating loss carry-forwards | 592468 | 666109 |
| &nbsp;&nbsp;&nbsp;Subtotal | 639634 | 718770 |
| &nbsp;&nbsp;&nbsp;Valuation allowance | (433721) | (400017) |
| Total deferred tax assets, net | $205913 | $318753 |

---

Movement of the valuation allowance:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| Beginning balance | $400017 | $322870 |
| Current year addition | 49838 | 47240 |
| Exchange difference | (16134) | 29907 |
| Ending balance | $433721 | $400017 |

---

**(b) Value-Added Tax**

The Company is subject to a VAT for selling merchandise. The applicable VAT rate range from 3% to 13% in the years ended June 30, 2022 and 2021, depending on the type of products sold. For overseas sales, VAT is exempted on the exported goods. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Under commercial practice in the PRC, the Company pays VAT based on tax invoices issued. The tax invoices may be issued subsequent to the date on which revenue is recognized, and there may be a considerable delay between the date on which the revenue is recognized and the date on which the tax invoice is issued.

In the event that the PRC tax authorities dispute the date on which revenue is recognized for tax purposes, the PRC tax office has the right to assess a penalty based on the amount of the taxes which are determined to be late or deficient, and the penalty will be expensed in the period if and when a determination is made by the tax authorities. There were no assessed penalties during the years ended June 30, 2022 and 2021, respectively.

**(c) Taxes Payable**

Taxes payable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **June 30,**<br> **2021** |
| Value added tax payable | $14534 | $2807 |
| Business tax and other taxes payable | 1919 | 517 |
| Total tax payable | $16453 | $3324 |

---

**NOTE 11 — SHAREHOLDER'S EQUITY**

***Capital Contribution***

The Company was incorporated on November 22, 2011 with an initial registered capital of RMB 3.0 million (US$473,789), the registered capital was subsequently increased to RMB 3.75 million (US$592,448) and RMB 9.8 million (US$1,531,795) on April 25, 2012 and August 23, 2017, respectively.

***Statutory Reserve***

The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC ("PRC GAAP").

Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entities' registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the board of directors. As of June 30, 2022 and 2021, the balance of the required statutory reserves was both US$ Nil.

**NOTE 12 - CONCENTRATIONS AND RISKS**

The Company maintains principally all bank accounts in the PRC. The cash balance held in the PRC bank accounts was US$523,203 and US$207,790 as of June 30, 2022 and 2021, respectively.

During the years ended June 30, 2022 and 2021, 100% of the Company's assets were located in the PRC and 100% of the Company's revenues were derived from its subsidiary located in the PRC.

For the year ended June 30, 2022, two customers accounted for approximately 25% of the Company's total sales. At June 30, 2022, two customers accounted for approximately 66% of the Company's accounts receivable.

For the year ended June 30, 2021, one customer accounted for approximately 17% of the Company's total sales. At June 30, 2021, two customers accounted for approximately 30% of the Company's accounts receivable.

For the year ended June 30, 2022, four vendors accounted for approximately 47% of the Company's total purchases.

For the year ended June 30, 2021, three vendors accounted for approximately 49% of the Company's total purchases.

**NOTE 13 - COMMITMENTS AND CONTINGENCIES**

*Legal Contingencies*

On June 2, 2022, Changzhou Longcheng Yingcai Venture Capital Co., Ltd. (the "Plaintiff") commenced a lawsuit against the Company in the Changzhou Intermediate People's Court of Jiangsu Province of China. Plaintiff alleged that the Company entered into an agreement with the Plaintiff, pursuant to which the Company should seek to be listed successfully within 60 months after receiving the Plaintiff's RMB 3.0 million (US$0.4 million) funding (the "Fund"), including the Company's registered capital contribution of RMB 225,000 (US$33.6 thousand) and additional paid-in capital contribution of RMB 2,775,000 (US$0.4 million), respectively, otherwise the Company should fulfill the equity repurchase obligation to repurchase the Plaintiff's equity interests in the Company. The Company did not manage to list within 60 days after receiving the Fund and did not fulfill the equity repurchase obligation. Therefore, the Plaintiff alleged that the Company breached the agreement and seek the refund of RMB 3.0 million (US$0.4 million) and additional money damages against the Company. In September 2022, the Company entered into a Settlement Agreement and Release with the Plaintiff, pursuant to which the Company should pay the Plaintiff a total sum of RMB 6.2 million (US$0.9 million) settlement payment including the Fund and interests, among which, RMB 1.0 million (US$0.1 million) should be paid before September 22, 2023, RMB 2.6 million (US$0.4 million) should be paid before September 22, 2024 and RMB 2.6 million (US$0.4 million) should be paid before September 22, 2025. In addition, the Company should pay the fund occupancy fee based on the value of the Fund from September 23, 2022 to the date of payment of the Fund. Upon acceptance of the settlement payment from the Company, the Plaintiff waived, released, and forever discharged the Company from all past and future claims. As the date of this report, no payment has been made to Plaintiff by the Company.

**NOTE 14 - SUBSEQUENT EVENTS**

On July 25, 2022, the Company entered into a loan agreement with Bank of China to borrow US$447,915 (RMB3,000,000) as working capital for one year, with maturity date of July 24, 2023. The loan bears a fixed interest rate of 3.70% per annum. The loan is guaranteed by Mr. Fengming Liu, the legal representative of the Company, and his wife, Mrs. Jie Liang.

On October 21, 2022, Beijing Kanghuayuan Medicine Information Consulting Co., Ltd. ("Beijing Kanghuayuan"), the controlling shareholder of the Company, and Biowin entered into a stock purchase agreement with Shineco Life Science Research Co., Ltd. ("Life Science" or "Buyer"), a company established under the laws of China and indirect wholly owned subsidiary of Shineco, Inc., pursuant to which the Buyer would acquire 51% of the issued equity interests of Biowin from Beijing Kanghuayuan. On December 30, 2022, the Buyer closed the acquisition of 51% of the issued equity interests of Biowin. As the consideration for the acquisition, Beijing Kanghuayuan received US$9.0 million in cash from the Buyer. According to the Supplementary Agreement, dated as of December 30, 2022, by and among Biowin, Beijing Kanghuayuan and the Buyer, Beijing Kanghuayuan transferred its controlling rights of production and operation of Biowin to the Buyer from January 1, 2023.

These consolidated financial statements were approved by management and available for issuance on February 27, 2023, and the Company has evaluated subsequent events through this date. No subsequent events required adjustments to or disclosure in these consolidated financial statements.

## Exhibit 99.2

**Exhibit 99.2** 

**BIOWIN PHARMACEUTICAL CO., LTD.**

**UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SIX MONTHS ENDED DECEMBER 31, 2022 AND 2021**

**BIOWIN PHARMACEUTICAL CO., LTD.**

**TABLE OF CONTENTS**

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| | |
|:---|:---|
| **Unaudited Condensed Consolidated Financial Statements** |  |
| &nbsp;&nbsp;&nbsp;[Unaudited Condensed Consolidated Balance Sheets](#xcd_001) | 1 |
| &nbsp;&nbsp;&nbsp;[Unaudited Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)](#xcd_002) | 2 |
| &nbsp;&nbsp;&nbsp;[Unaudited Condensed Consolidated Statements of Changes in Equity](#xcd_003) | 3 |
| &nbsp;&nbsp;&nbsp;[Unaudited Condensed Consolidated Statements of Cash Flows](#xcd_004) | 4 |
| &nbsp;&nbsp;&nbsp;[Notes to Unaudited Condensed Consolidated Financial Statements](#xcd_005) | 5 – 17 |

---

**CHANGZHOU BIOWIN PHARMACEUTICAL CO., LTD.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(UNAUDITED)** 

---

| | | |
|:---|:---|:---|
|  | December 31,<br>2022 | June 30,<br>2022 |
| **ASSETS** |  |  |
| **CURRENT ASSETS:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $621979 | $526608 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 807771 | 433553 |
| &nbsp;&nbsp;&nbsp;Inventories, net | 549299 | 562000 |
| &nbsp;&nbsp;&nbsp;Advances to suppliers, net | 19511 | 364138 |
| &nbsp;&nbsp;&nbsp;Other current assets, net | 30468 | 49038 |
| **TOTAL CURRENT ASSETS** | 2029028 | 1935337 |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 190790 | 227545 |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 173831 | 212559 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets, net | 346523 | 205913 |
| **TOTAL ASSETS** | $**2740172** | $**2581354** |
| **LIABILITIES AND EQUITY** |  |  |
| **CURRENT LIABILITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Short-term bank loans | $1594596 | $1194440 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 349989 | 103009 |
| &nbsp;&nbsp;&nbsp;Advances from customers | 407437 | 516087 |
| &nbsp;&nbsp;&nbsp;Due to related parties | 35998 | 112657 |
| &nbsp;&nbsp;&nbsp;Other payables and accrued expenses | 194859 | 173598 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities - current | 185120 | 90071 |
| &nbsp;&nbsp;&nbsp;Taxes payable | 30752 | 16453 |
| **TOTAL CURRENT LIABILITIES** | 2798751 | 2206315 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities - non-current | 45730 | 142395 |
| **TOTAL LIABILITIES** | 2844481 | 2348710 |
| **Commitments and contingencies** |  |  |
| **SHAREHOLDERS' EQUITY (DEFICIT)** |  |  |
| &nbsp;&nbsp;&nbsp;Registered capital | 1531795 | 1531795 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 1406005 | 1406005 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (3026914) | (2700516) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (15195) | (4640) |
| **TOTAL SHAREHOLDERS' EQUITY (DEFICIT)** | (104309) | 232644 |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)** | $**2740172** | $**2581354** |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**CHANGZHOU BIOWIN PHARMACEUTICAL CO., LTD.**

**CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)** 

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | For the Six Months Ended December 31, | For the Six Months Ended December 31, |
|  | 2022 | 2021 |
| **REVENUE** | $1914279 | $2238415 |
| **COST OF REVENUE** |  |  |
| &nbsp;&nbsp;&nbsp;Cost of product and services | 982784 | 533227 |
| &nbsp;&nbsp;&nbsp;Business and sales related tax | 1857 | 3289 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of revenue | 984641 | 536516 |
| **GROSS INCOME** | 929638 | 1701899 |
| **OPERATING EXPENSES** |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 780275 | 280815 |
| &nbsp;&nbsp;&nbsp;Selling expenses | 176293 | 298663 |
| &nbsp;&nbsp;&nbsp;Research and development expenses | 459381 | 454692 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 1415949 | 1034170 |
| **INCOME (LOSS) FROM OPERATIONS** | (486311) | 667729 |
| **OTHER INCOME (EXPENSE)** |  |  |
| &nbsp;&nbsp;&nbsp;Other income, net | 46591 | 100030 |
| &nbsp;&nbsp;&nbsp;Interest expenses, net | (31593) | (24832) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income | 14998 | 75198 |
| **INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES** | (471313) | 742927 |
| **PROVISION (BENEFIT) FOR INCOME TAXES** | (144915) | 58262 |
| **NET INCOME (LOSS)** | (326398) | 684665 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation income (loss) | (10555) | 1878 |
| **TOTAL COMPREHENSIVE INCOME (LOSS)** | $(336953) | $686543 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

**CHANGZHOU BIOWIN PHARMACEUTICAL CO., LTD.**

**CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY(DEFICIT)**

**FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 AND 2021**

**(UNAUDITED)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **REGISTERED**<br>**CAPITAL** | **ADDITIONAL<br> PAID-IN**<br>**CAPITAL** | **ACCUMULATED**<br>**DEFICIT** | **ACCUMULATED<br> OTHER<br> COMPREHENSIVE**<br>**GAIN (LOSS)** | **TOTAL<br> SHAREHOLDERS'<br> EQUITY**<br> **(DEFICIT)** |
| **Balance at June 30, 2021** | $1531795 | $1406005 | $(3320783) | $4315 | $(378668) |
| Net income for the period |  |  | 684665 |  | 684665 |
| Foreign currency translation gain | - | - | - | 1878 | 1878 |
| **Balance at December 31, 2021** | $1531795 | $1406005 | $(2636118) | $6193 | $307875 |
| **Balance at June 30, 2022** | $1531795 | $1406005 | $(2700516) | $(4640) | $232644 |
| Net loss for the period |  |  | (326398) |  | (326398) |
| Foreign currency translation loss | - | - | - | (10555) | (10555) |
| **Balance at December 31, 2022** | $1531795 | $1406005 | $(3026914) | $(15195) | $(104309) |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**CHANGZHOU BIOWIN PHARMACEUTICAL CO., LTD.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | For the Six Months Ended December 31, | For the Six Months Ended December 31, |
|  | 2022 | 2021 |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |
| Net income (loss) | $(326398) | $684665 |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation | 37182 | 38350 |
| &nbsp;&nbsp;&nbsp;Provision for doubtful accounts | 359156 | 26290 |
| &nbsp;&nbsp;&nbsp;Provision for inventory reserve | 172706 |  |
| &nbsp;&nbsp;&nbsp;Amortization of right of use assets | 32173 | 32862 |
| &nbsp;&nbsp;&nbsp;Deferred tax provision (benefit) | (144915) | 58262 |
| **Changes in operating assets and liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | (741064) | (430112) |
| &nbsp;&nbsp;&nbsp;Advances to suppliers | 329330 | (203820) |
| &nbsp;&nbsp;&nbsp;Inventories | (176306) | 184810 |
| &nbsp;&nbsp;&nbsp;Other current assets | 17346 | 28590 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 247105 | (15922) |
| &nbsp;&nbsp;&nbsp;Advances from customers | (92568) | (5268) |
| &nbsp;&nbsp;&nbsp;Other payables and accrued expenses | 31092 | (103347) |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities |  | (118369) |
| &nbsp;&nbsp;&nbsp;Taxes payable | 14608 | 5088 |
| Net cash provided by (used in) operating activities | (240553) | 182079 |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Acquisitions of property and equipment | (7389) | (43553) |
| Net cash used in investing activities | (7389) | (43553) |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from short-term bank loans | 429898 | 155468 |
| &nbsp;&nbsp;&nbsp;Repayment of short-term bank loans |  | (155468) |
| &nbsp;&nbsp;&nbsp;Repayments of advances from related parties | (72540) | (38030) |
| Net cash provided by (used in) financing activities | 357358 | (38030) |
| EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS | (14045) | 4312 |
| **NET INCREASE IN CASH AND CASH EQUIVALENTS** | 95371 | 104808 |
| **CASH AND CASH EQUIVALENTS - Beginning of the period** | 526608 | 210640 |
| **CASH AND CASH EQUIVALENTS - End of the period** | $621979 | $315448 |
| **SUPPLEMENTAL CASH FLOW DISCLOSURES:** |  |  |
| Cash paid for interest | $33419 | $21521 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS**

Changzhou Biowin Pharmaceutical Co., Ltd. ("Biowin" or the "Company") was incorporated on November 22, 2011 in accordance with PRC laws and is a high-tech enterprise specializing in development, production and distribution of innovative rapid diagnostic products and related medical devices for the most common diseases.

On April 26, 2018, the Company acquired Changzhou Biowin Pharmaceutical Development Co., Ltd ("Biowin Development"), which was incorporated on September 17, 2014 in accordance with PRC laws with registered capital of RMB1.0 million (US$162,595), and Biowin Development became a wholly-owned subsidiary of the Company.

**NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Basis of Presentation and Principles of Consolidation***

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP") for interim financial information pursuant to the rules of the SEC and have been consistently applied. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the Company's audited financial statements for the year ended June 30, 2022. The unaudited condensed consolidated financial statements of the Company reflect the principal activities of the Company and its subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

***Risks and Uncertainties***

The operations of the Company are located in the PRC and are subject to special 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, the recoverability of long-lived assets, and the valuation of accounts receivable, advances to suppliers, deferred taxes, and inventory reserves. Actual results could differ from those estimates.

***Revenue Recognition***

The Company previously recognized revenue from sales of products to external customers. The Company recognized revenue when all of the following have occurred: (i) there was persuasive evidence of an arrangement with a customer; (ii) delivery had occurred or services had been rendered; (iii) the sales price was fixed or determinable; and (iv) our collection of such fees was reasonably assured. These criteria, as related to our revenue, were considered to have been met as follows:

*Sales of products:* The Company recognized revenue from the sale of products when the goods were delivered and title to the goods passed to the customer, provided that there were no uncertainties regarding customer acceptance; persuasive evidence of an arrangement existed; the sales price was fixed or determinable; and collectability was deemed probable.

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 performance obligations; (v) recognize revenue when (or as) each performance obligation is satisfied. The Company adopted the new revenue standard beginning July 1, 2018, and adopted a modified retrospective approach upon adoption. The Company has assessed the impact of the guidance by reviewing its existing customer contracts to identify differences that will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control, and principal versus agent considerations. In accordance with ASC 606, the Company evaluates whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. When the Company is a principal, that the Company obtains control of the specified goods or services before they are transferred to the customers, the revenues should be recognized in the gross amount of consideration to which it expects to be entitled in exchange for the specified goods or services transferred. When the Company is an agent and its obligation is to facilitate third parties in fulfilling their performance obligation for specified goods or services, the revenues should be recognized in the net amount for the amount of commission which the Company earns in exchange for arranging for the specified goods or services to be provided by other parties. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606 and therefore there was no material changes to the Company's unaudited condensed consolidated financial statements upon adoption of ASC 606.

*Disaggregation of Revenue*

The Company disaggregates its revenue by geographic areas, as the Company believes it best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors. The Company's disaggregation of revenue for the six months ended December 31, 2022 and 2021 are as follows:

<u>Geographic Information</u>

The summary of the Company's total revenue by geographic area for the six months ended December 31, 2022 and 2021 was as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> December 31,** | **For the Six Months Ended<br> December 31,** |
|  | **2022** | **2021** |
| China domestic market | $750212 | $544114 |
| Overseas market | 1164067 | 1694301 |
| Total revenue | $1914279 | $2238415 |

---

***Cash and Cash Equivalents***

Cash and cash equivalents consist of cash on hand, cash on deposit, and other highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less when purchased. The Company maintains cash with various financial institutions mainly in the PRC. As of December 31, 2022 and June 30, 2022, the Company had no cash equivalents.

Under PRC law, it is generally required that a commercial bank in the PRC that holds third-party cash deposits protect the depositors' rights over and interests in their deposited money. PRC banks are subject to a series of risk control regulatory standards, and PRC bank regulatory authorities are empowered to take over the operation and management of any PRC bank that faces a material credit crisis. The Company monitors the banks utilized and has not experienced any problems.

***Accounts Receivable, Net***

Accounts receivable are recorded at net realizable value, consisting of the carrying amount less an allowance for uncollectible accounts, as necessary. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, the customers' historical payment history, their current credit-worthiness, and current economic trends. The fair value of long-term receivables is determined using a present value technique by discounting the future expected contractual cash flows using current rates at which similar instruments would be issued at the measurement date. As of December 31, 2022 and June 30, 2022, the allowance for doubtful accounts was US$475,264 and US$115,788, respectively. Accounts are written off against the allowance after efforts at collection prove unsuccessful.

***Inventories, Net***

Inventories, which are stated at the lower of cost or net realizable value, consist of raw materials and finished goods related to the Company's products. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost is determined using the first in first out ("FIFO") method. The Company periodically evaluates its inventory and records an inventory reserve for certain inventories that may not be saleable or whose cost exceeds net realizable value. As of December 31, 2022 and June 30, 2022, the inventory reserve was US$227,619 and US$54,493, respectively.

***Advances to Suppliers, Net***

Advances to suppliers consist of payments to suppliers for materials that have not been received. Advances to suppliers are reviewed periodically to determine whether their carrying value has become impaired. As of December 31, 2022 and June 30, 2022, the Company had an allowance for uncollectible advances to suppliers of US$59,774 and US$60,654, respectively.

***Leases***

The Company follows FASB ASC No. 842, *Leases* ("Topic 842"). The Company leases one office space, which is classified as operating lease in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually with initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use ("ROU") asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and includes initial direct costs incurred. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses for minimum lease payments are recognized on a straight-line basis over the lease term. All operating lease right-of-use assets are reviewed for impairment annually. There was no impairment for operating lease right-of-use lease assets as of December 31, 2022 and June 30, 2022.

 ****

***Property and Equipment, Net***

Property and equipment are stated at cost, less accumulated depreciation. Expenditures for additions, major renewals, and betterments are capitalized, and expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided on a straight-line basis, less estimated residual value, if any, over an asset's estimated useful life. The estimated useful lives of the Company's property and equipment are as follows:

---

| | |
|:---|:---|
|  | **Estimated useful lives** |
| Machinery equipment | 3-10 years |
| Office equipment | 3-5 years |

---

***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 and ROU assets. For the six months ended December 31, 2022 and 2021, the Company did not recognize any impairment of its long-lived assets.

***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 the measurement of the fair value of the asset or liability.

The carrying value of financial instruments included in current assets and liabilities approximate their fair values because of the short-term nature of these instruments.

***Research and Development Expenses***

Research and development costs relating to the development of new processes, including 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, 2022 and 2021, total research and development expense were approximately US$459,381 and US$454,692, respectively.

 ****

***Income Taxes***

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the unaudited condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The provisions of ASC 740-10-25, "Accounting for Uncertainty in Income Taxes," prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This ASC also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. No penalties or interest relating to income taxes were incurred during the six months ended December 31, 2022 and 2021. The Company did not have any uncertain tax positions at December 31, 2022 and June 30, 2022.

The Company is subject to the income tax laws of the PRC. No significant income was generated outside the PRC for the six months ended December 31, 2022 and 2021. As of December 31, 2022, the tax years ended December 31, 2018 through December 31, 2022 for the Company remain open for statutory examination by PRC tax authorities.

***Value-Added Tax***

Sales revenue represents the invoiced value of goods, net of a value-added tax ("VAT"). The VAT is based on gross sales price and VAT rates range from 3% to 13% in the six months ended December 31, 2022 and 2021, depending on the type of products sold. For overseas sales, VAT is exempted on the exported goods. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing finished products or acquiring finished products. The Company records a VAT payable or VAT receivable in the unaudited condensed accompanying consolidated financial statements.

***Foreign Currency Translation***

The Company uses the United States dollar ("U.S. dollars," "USD," or "US$") for financial reporting purposes. The Company and its subsidiary maintain their books and records in their functional currency of Renminbi ("RMB"), the currency of the PRC.

In general, for consolidation purposes, the Company translates the assets and liabilities 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 Company are recorded as accumulated other comprehensive loss.

The balance sheet amounts, with the exception of equity, at December 31, 2022 and June 30, 2022 were translated at 1 RMB to 0.1450 USD and at 1 RMB to 0.1493 USD, respectively. The average translation rates applied to the income and cash flow statement amounts for the six months ended December 31, 2022 and 2021 were 1 RMB to 0.1433 USD and 1 RMB to 0.1555 USD, respectively.

***Comprehensive Income (Loss)***

Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to USD is reported in other comprehensive income (loss) in the unaudited condensed consolidated statements of income (loss) and comprehensive income (loss).

***Segment Reporting***

The Company uses the management approach in determining reportable operating segments. The management approach considers the internal reporting used by the Company's chief operating decision maker for making operating decisions about the allocation of resources of the segment and the assessment of its performance in determining the Company's reportable operating segments. Management has determined that the Company has one operating segment.

***New Accounting Pronouncements***

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently amended by Accounting Standards Update 2018-19, *Codification Improvements to Topic 326, Financial Instruments—Credit Losses,* Accounting Standards Update 2019-04 *Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments*, and Accounting Standards Update 2019-05, *Targeted Transition Relief.* For public entities, ASU 2016-13 and its amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. In November 2019, the FASB issued ASU 2019-10, "Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)" ("ASU 2019-10"). ASU 2019-10 (i) provides a framework to stagger effective dates for future major accounting standards and (ii) amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities. Specifically, ASU 2019-10 changes some effective dates for certain new standards on the following topics in the FASB Accounting Standards Codification (ASC): (a) Derivatives and Hedging (ASC 815) – now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021; (b) Leases (ASC 842) - now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021; (c) Financial Instruments — Credit Losses (ASC 326) - now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years; and (d) Intangibles — Goodwill and Other (ASC 350) - now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company plans to adopt this guidance effective July 1, 2023 and the adoption of this ASU is not expected to have a material impact on its financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. The FASB is issuing this Update as part of its initiative to reduce complexity in accounting standards (the "Simplification Initiative"). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The specific areas of potential simplification in this ASU were submitted by stakeholders as part of the Simplification Initiative. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted this ASU on July 1, 2021 and the adoption of this ASU did not have a material impact on its financial statements.

The Company believes that other recent accounting pronouncement updates will not have a material effect on the Company's unaudited condensed consolidated financial statements.

**NOTE 3 – ACCOUNTS RECEIVABLE, NET**

The accounts receivable, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| Accounts receivable | $1283035 | $549341 |
| Less: allowance for doubtful accounts | (475264) | (115788) |
| Accounts receivable, net | $807771 | $433553 |

---

Movement of allowance for doubtful accounts is as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| Beginning balance | $115788 | $58712 |
| Charge to expense | 358679 | 61408 |
| Foreign currency translation adjustments | 797 | $(4332) |
| Ending balance | $475264 | $115788 |

---

**NOTE 4 – INVENTORIES, NET**

The inventories, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| Raw materials | $481829 | $335853 |
| Finished goods | 295089 | 280640 |
| Less: inventory reserve | (227619) | (54493) |
| Total inventories, net | $549299 | $562000 |

---

Inventories include raw materials and finished goods. For the six months ended December 31, 2022 and 2021, provision for inventory reserve was US$172,706 and US$ Nil, respectively.

**NOTE 5 – ADVANCES TO SUPPLIERS, NET**

The advances to suppliers, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| Advances to suppliers | $79285 | $424792 |
| Less: allowance for doubtful accounts | (59774) | (60654) |
| Advance to suppliers, net | $19511 | $364138 |

---

Advances to suppliers consist of mainly payments to suppliers for raw materials or products that have not been received.

Movement of allowance for doubtful accounts is as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| Beginning balance | $60654 | $37485 |
| Charge to expense | 874 | 25434 |
| Foreign currency translation adjustments | (1754) | (2265) |
| Ending balance | $59774 | $60654 |

---

**NOTE 6 - PROPERTY AND EQUIPMENT, NET**

Property and equipment, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| Machinery and equipment | $1135973 | $1164343 |
| Office equipment | 19852 | 18401 |
| Subtotal | 1155825 | 1182744 |
| Less: accumulated depreciation | (965035) | (955199) |
| Total property and equipment, net | $190790 | $227545 |

---

Depreciation expense was US$37,182 and US$38,350 for the six months ended December 31, 2022 and 2021, respectively.

**NOTE 7 - LEASES**

The Company leases one office space under non-cancelable operating leases with terms of 7.5 years. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of ROU assets and lease liabilities. Lease expenses for lease payment are recognized on a straight-line basis over the lease term. Leases with initial terms of 12 months or less are not recorded on the balance sheet.

The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The table below presents the operating lease related assets and liabilities recorded on the balance sheets.

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| ROU lease assets | $173831 | $212559 |
| Operating lease liabilities – current | 185120 | 90071 |
| Operating lease liabilities – non-current | 45730 | 142395 |
| Total operating lease liabilities | $230850 | $232466 |

---

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of December 31, 2022 and June 30, 2022:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| Remaining lease term and discount rate: |  |  |
| Weighted average remaining lease term (years) | 2.42 | 2.92 |
| Weighted average discount rate | 4.61% | 4.61% |

---

Rent expenses totaled US$53,164 and US$41,769 for the six months ended December 31, 2022 and 2021, respectively.

The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2022:

---

| | |
|:---|:---|
|  | **Lease Payment** |
| Remainder of 2023 | $95676 |
| 2024 | 95676 |
| 2025 | 47838 |
| Total lease payments | 239190 |
| Less: imputed interest | (8340) |
| Present value of lease liabilities | $230850 |

---

**NOTE 8 - RELATED PARTY TRANSACTIONS**

**(a)** **Nature of Relationships with Related Parties** 

 ****

---

| | |
|:---|:---|
| **Name** | **Relationship with the Company** |
| Mr. Fengming Liu | Chief Executive Officer ("CEO"), the legal representative of the Company |
| Mrs. Lixia Yan | One of the directors of the Company |
| Mr. Yifan He | One of the directors of the Company |
| Beijing Kanghuayuan Technology Development Co., Ltd. ("Beijing Kanghuayuan") | One of the shareholders of the Company |
| Guangzhou Kangfan Medical Equipment Co., Ltd. ("Guangzhou Kangfan") | An entity controlled by one of the directors of the Company |

---

**(b)** **Due to Related Parties** 

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| Mr. Fengming Liu | $34216 | $78713 |
| Mrs. Lixia Yan | 1782 | 23199 |
| Mr. Yifan He |  | 3280 |
| Guangzhou Kangfan | - | 7465 |
| Total due to related parties | $35998 | $112657 |

---

As of December 31, 2022 and June 30, 2022, the balance due to related parties mainly consisted of advances from the Company's related parties for working capital purposes during the Company's normal course of business. These advances are unsecured, non-interest bearing, and due on demand.

**(c)** **Loan Guarantee Provided by Related Parties** 

The Company's related parties provide guarantee for the Company's short-term bank loans (see Note 9).

**NOTE 9 - SHORT-TERM BANK LOANS**

Short-term bank loans consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
| **Lender** | **December 31,<br> 2022** | **Maturity <br> Date** | **Int. <br> Rate/Year** |
| Bank of Suzhou-a | $289926 | 2023/3/14 | 4.35% |
| Jiangnan Rural Commercial Bank-b | 434890 | 2023/3/30 | 5.20% |
| Bank of Jiangsu-c | 434890 | 2023/6/15 | 4.20% |
| Bank of China-d | 434890 | 2023/7/24 | 3.70% |
| Total short-term bank loans | $1594596 |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| **Lender** | **June 30, 2022** | **Maturity <br> Date** | **Int. <br> Rate/Year** |
| Bank of Suzhou - a | $298610 | 2023/3/14 | 4.35% |
| Jiangnan Rural Bank of Jiangsu-b | 447915 | 2023/3/30 | 5.20% |
| Bank of Jiangsu-c | 447915 | 2023/6/15 | 4.20% |
| Total short-term bank loans | $1194440 |  |  |

---

The loans outstanding were guaranteed by the following properties, entities or individuals:

a. Guaranteed
 by Mr. Fengming Liu, the CEO of the Company.

b. Pledged
 by the patent rights of the Company.

c. Guaranteed
 by Mr. Fengming Liu, the CEO of the Company, Beijing Kanghuayuan , one of the shareholders of the Company, and Biowin Development,
 the wholly-owned subsidiary of the Company.

d. Guaranteed
 by Mr. Fengming Liu, the CEO of the Company, and his wife, Mrs. Jie Liang.

The Company recorded interest expenses of US$33,419 and US$21,521 for the six months ended December 31, 2022 and 2021, respectively. The annual weighted average interest rates were 4.33% and 4.92% for the six months ended December 31, 2022 and 2021, respectively.

**NOTE 10 – TAXES**

**(a) Corporate Income Taxes**

Under the Enterprise Income Tax ("EIT") Law of PRC, domestic enterprises and Foreign Investment Enterprises (the "FIE") are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. The Company is incorporated in the PRC and is subject to corporate income tax at a reduced rate of 15% starting from December 2019, when it was approved by local government as a High and New Technology Enterprises ("HNTEs"), to December 2022. In December 2022, the Company successfully renewed its HNTE certification with local government and will continue to enjoy the reduced income tax rate of 15% for another three years through December 2025.

 ****

***i) The components of the income tax expense (benefit) were as follows:***

---

| | | |
|:---|:---|:---|
|  | **For the six months ended**<br> **December 31,** | **For the six months ended**<br> **December 31,** |
|  | **2022** | **2021** |
| Current income tax provision | $- | $- |
| Deferred income tax provision (benefit) | (144915) | 58262 |
| Total income tax expense (benefit) | $(144915) | $58262 |

---

***ii) The components of the deferred tax assets were as follows:***

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Allowance for doubtful accounts | $87973 | $33543 |
| &nbsp;&nbsp;&nbsp;Inventory reserve | 39434 | 13623 |
| &nbsp;&nbsp;&nbsp;Net operating loss carry-forwards | 614678 | 592468 |
| &nbsp;&nbsp;&nbsp;Subtotal | 742085 | 639634 |
| &nbsp;&nbsp;&nbsp;Valuation allowance | (395562) | (433721) |
| Total deferred tax assets, net | $346523 | $205913 |

---

Movement of the valuation allowance:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| Beginning balance | $433721 | $400017 |
| Current year addition (reduction) | (25253) | 49838 |
| Exchange difference | (12906) | (16134) |
| Ending balance | $395562 | $433721 |

---

**(b) Value-Added Tax**

The Company is subject to a VAT for selling merchandise. The applicable VAT rate range from 3% to 13% in the six months ended December 31, 2022 and 2021, depending on the type of products sold. For overseas sales, VAT is exempted on the exported goods. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Under commercial practice in the PRC, the Company pays VAT based on tax invoices issued. The tax invoices may be issued subsequent to the date on which revenue is recognized, and there may be a considerable delay between the date on which the revenue is recognized and the date on which the tax invoice is issued.

In the event that the PRC tax authorities dispute the date on which revenue is recognized for tax purposes, the PRC tax office has the right to assess a penalty based on the amount of the taxes which are determined to be late or deficient, and the penalty will be expensed in the period if and when a determination is made by the tax authorities. There were no assessed penalties during the six months ended December 31, 2022 and 2021, respectively.

**(c) Taxes Payable**

Taxes payable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **June 30,**<br> **2022** |
| Value added tax payable | $28347 | $14534 |
| Business tax and other taxes payable | 2405 | 1919 |
| Total tax payable | $30752 | $16453 |

---

**NOTE 11 — SHAREHOLDER'S EQUITY**

***Capital Contribution***

The Company was incorporated on November 22, 2011 with an initial registered capital of RMB 3.0 million (US$473,789), the registered capital was subsequently increased to RMB 3.75 million (US$592,448) and RMB 9.8 million (US$1,531,795) on April 25, 2012 and August 23, 2017, respectively.

***Statutory Reserve***

The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC ("PRC GAAP").

Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entities' registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the board of directors. As of December 31, 2022 and June 30, 2022, the balance of the required statutory reserves was both US$ Nil.

**NOTE 12 - CONCENTRATIONS AND RISKS**

The Company maintains principally all bank accounts in the PRC. The cash balance held in the PRC bank accounts was US$614,243 and US$523,203 as of December 31, 2022 and June 30, 2022, respectively.

During the six months ended December 31, 2022 and 2021, 100% of the Company's assets were located in the PRC and 100% of the Company's revenues were derived from its subsidiary located in the PRC.

For the six months ended December 31, 2022, two customers accounted for approximately 57% of the Company's total sales. At December 31, 2022, four customers accounted for approximately 86% of the Company's accounts receivable.

For the six months ended December 31, 2021, four customers accounted for approximately 70% of the Company's total sales.

For the six months ended December 31, 2022, four vendors accounted for approximately 60% of the Company's total purchases.

For the six months ended December 31, 2021, three vendors accounted for approximately 48% of the Company's total purchases.

**NOTE 13 - COMMITMENTS AND CONTINGENCIES**

*Legal Contingencies*

On June 2, 2022, Changzhou Longcheng Yingcai Venture Capital Co., Ltd. (the "Plaintiff") commenced a lawsuit against the Company in the Changzhou Intermediate People's Court of Jiangsu Province of China. Plaintiff alleged that the Company entered into an agreement with the Plaintiff, pursuant to which the Company should seek to be listed successfully within 60 months after receiving the Plaintiff's RMB 3.0 million (US$0.4 million) funding (the "Fund"), including the Company's registered capital contribution of RMB 225,000 (US$33.6 thousand) and additional paid-in capital contribution of RMB 2,775,000 (US$0.4 million), respectively, otherwise the Company should fulfill the equity repurchase obligation to repurchase the Plaintiff's equity interests in the Company. The Company did not manage to list within 60 days after receiving the Fund and did not fulfill the equity repurchase obligation. Therefore, the Plaintiff alleged that the Company breached the agreement and seek the refund of RMB 3.0 million (US$0.4 million) and additional money damages against the Company. In September 2022, the Company entered into a Settlement Agreement and Release with the Plaintiff, pursuant to which the Company should pay the Plaintiff a total sum of RMB 6.2 million (US$0.9 million) settlement payment including the Fund and interests, among which, RMB 1.0 million (US$0.1 million) should be paid before September 22, 2023, RMB 2.6 million (US$0.4 million) should be paid before September 22, 2024 and RMB 2.6 million (US$0.4 million) should be paid before September 22, 2025. In addition, the Company should pay the fund occupancy fee based on the value of the Fund from September 23, 2022 to the date of payment of the Fund. Upon acceptance of the settlement payment from the Company, the Plaintiff waived, released, and forever discharged the Company from all past and future claims. As the date of this report, no payment has been made to Plaintiff by the Company.

**NOTE 14 - SUBSEQUENT EVENTS**

On October 21, 2022, Beijing Kanghuayuan Medicine Information Consulting Co., Ltd. ("Beijing Kanghuayuan"), the controlling shareholder of the Company, and Biowin entered into a stock purchase agreement with Shineco Life Science Research Co., Ltd. ("Life Science" or "Buyer"), a company established under the laws of China and indirect wholly owned subsidiary of Shineco, Inc., pursuant to which the Buyer would acquire 51% of the issued equity interests of Biowin from Beijing Kanghuayuan. On December 30, 2022, the Buyer closed the acquisition of 51% of the issued equity interests of Biowin. As the consideration for the acquisition, Beijing Kanghuayuan received US$9.0 million in cash from the Buyer. According to the Supplementary Agreement, dated as of December 30, 2022, by and among Biowin, Beijing Kanghuayuan and the Buyer, Beijing Kanghuayuan transferred its controlling rights of production and operation of Biowin to the Buyer from January 1, 2023.

These unaudited condensed consolidated financial statements were approved by management and available for issuance on February 27, 2023, and the Company has evaluated subsequent events through this date. No subsequent events required adjustments to or disclosure in these unaudited condensed consolidated financial statements.

## Exhibit 99.3

**Exhibit 99.3** 

**SHINECO, INC.**

**UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION**

**Introduction**

On October 21, 2022, Shineco, Inc. (the "Company"), through its wholly-owned subsidiary, Shineco Life Science Research Co., Ltd. ("Shineco Life Science"), entered into a stock purchase agreement (the "Agreement") with Beijing Kanghuayuan Medicine Information Consulting Co., Ltd., a company established under the laws of China ("Seller"), and Changzhou Biowin Pharmaceutical Co., Ltd., a company established under the laws of China ("Biowin"), pursuant to which Shineco Life Science would acquire 51% of the issued equity interests of Biowin from Seller (the "Acquisition"). On December 30, 2022, Shineco Life Science closed the acquisition of 51% of the issued equity interests of Biowin. As the consideration for the acquisition, the Company paid to Seller US$9.0 million in cash and the Company issued 3,260,000 shares (the "Shares") of the Company's common stock, par value US$0.001 per share (the "Common Stock") to the equity holders of Biowin or any persons designated by Biowin. According to the Supplementary Agreement, dated as of December 30, 2022, by and among the Shineco Life Science, the Seller and Biowin, the Seller enjoyed 51% of the issued equity interests of Biowin before January 1, 2023, and transferred the 51% of the issued equity interests of Biowin together with its controlling rights of production and operation of Biowin to the Subsidiary from January 1, 2023.

The following unaudited pro forma condensed combined financial information is presented to illustrate the estimated pro forma effect of the Acquisition.

The unaudited pro forma condensed combined financial information presented has been prepared in accordance with Article 11 of Regulation S-X, Pro Forma Financial Information, as amended by the SEC's final rule, Release No. 33-10786 "Amendments to Financial Disclosures about Acquired and Disposed Businesses." Release No. 33-10786 replaces the pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction ("Transaction Accounting Adjustments") and the option to present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur ("Management's Adjustments"). The Company has elected not to present Management's Adjustments and has only presented Transaction Accounting Adjustments in the following unaudited pro forma condensed combined financial information.

The unaudited proforma condensed combined balance sheet as of December 31, 2022, together with the unaudited condensed combined statements of operations for the year ended June 30, 2022 and for the six months ended December 31, 2022 presented herein gives effect to the Acquisition as if the transaction had occurred at the beginning of such periods and includes certain adjustments that are directly attributable to the transaction which are expected to have a continuing impact on the Company, and are factually supportable, as summarized in the accompanying notes and assumptions.

The pro forma adjustments and allocation of the Purchase Price are preliminary, are based on management's current estimates of the fair value of the assets to be acquired and liabilities to be assumed, and are based on currently available information, including preliminary work performed by independent valuation specialists.

As of the date hereof, we have not completed the detailed valuation analysis and calculations necessary to arrive at final estimates of the fair market value of the assets of Biowin to be acquired and the liabilities to be assumed and the related allocations of the Purchase Price. Accordingly, certain of Biowin's assets and liabilities are presented at their respective carrying amounts and should be treated as preliminary values.

Actual results will differ from the unaudited pro forma condensed combined financial information provided herein once we have completed the valuation analysis necessary to finalize the required Purchase Price allocations and identified any additional conforming accounting policy changes for Biowin. There can be no assurance that such finalization will not result in material changes to the unaudited pro forma condensed combined financial information presented.

Assumptions and estimates underlying the unaudited pro forma adjustments set forth in the unaudited pro forma condensed combined financial statements are described in the accompanying notes below.

The unaudited pro forma condensed combined financial information and accompanying notes are based on, and should be read in conjunction with, (i) the historical audited consolidated financial statements of the Company and accompanying notes for the year ended June 30, 2022, included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022; and the historical unaudited consolidated financial statements of the Company and accompanying notes for the period ended December 31, 2022, included in the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2022, and (ii) the historical audited financial statements of Biowin and accompanying notes included for the year ended June 30, 2022, and the historical unaudited financial statements of Biowin and accompanying notes for the six months period ended December 31, 2022, each of which are filed as Exhibits 99.1 and 99.2, respectively, with this Current Report on Form 8-K/A.

The following unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and are based on currently available information and assumptions that we believe are reasonable under the circumstances. They do not purport to represent what our actual consolidated results of operations or the consolidated financial position would have been had the Acquisition been completed on the dates indicated, or on any other date, nor are they necessarily indicative of our future consolidated results of operations or consolidated financial position as a result of the Acquisition. Our actual financial position and results of operations will differ, perhaps significantly, from the pro forma amounts reflected herein due to a variety of factors, including access to additional information, changes in value not currently identified and changes in operating results of the Company and Biowin following the date of the unaudited pro forma condensed combined financial statements.

**SHINECO, INC.**

**UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET**

**AS OF DECEMBER 31, 2022**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **SHINECO, INC.** | **BIOWIN** | **Pro Forma<br> Adjustments** | **Note** | **Pro Forma<br> Combined** |
| **ASSETS** |  |  |  |  |  |
| **CURRENT ASSETS:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $16442607 | $621979 | $(9140985) | (e)(f) | $7923601 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 2191397 | 807771 |  |  | 2999168 |
| &nbsp;&nbsp;&nbsp;Due from related parties, net | 5830947 |  |  |  | 5830947 |
| &nbsp;&nbsp;&nbsp;Inventories, net | 18184515 | 549299 | 235037 | (o) | 18968851 |
| &nbsp;&nbsp;&nbsp;Advances to suppliers, net |  | 19511 |  |  | 19511 |
| &nbsp;&nbsp;&nbsp;Prepayment for business acquisition | 12097000 |  |  | (i) | 12097000 |
| &nbsp;&nbsp;&nbsp;Other current assets, net | 1533641 | 30468 |  |  | 1564109 |
| **TOTAL CURRENT ASSETS** | 56280107 | 2029028 | (8905948) |  | 49403187 |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 1168891 | 190790 | (52538) | (p) | 1307143 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net |  |  | 10781107 | (a)(h) | 10781107 |
| &nbsp;&nbsp;&nbsp;Investment in unconsolidated entity | 611225 |  |  |  | 611225 |
| &nbsp;&nbsp;&nbsp;Long-term deposit and other noncurrent assets | 7192 |  |  |  | 7192 |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 992591 | 173831 |  |  | 1166422 |
| &nbsp;&nbsp;&nbsp;Goodwill |  |  | 6574743 | (b) | 6574743 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets, net | - | 346523 | - |  | 346523 |
| **TOTAL ASSETS** | $**59060006** | $**2740172** | $**8397365** |  | $**70197543** |
| **LIABILITIES AND EQUITY** |  |  |  |  |  |
| **CURRENT LIABILITIES:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Short-term bank loans | $- | $1594596 | $— |  | $1594596 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 1502 | 349989 |  |  | 351491 |
| &nbsp;&nbsp;&nbsp;Advances from customers |  | 407437 |  |  | 407437 |
| &nbsp;&nbsp;&nbsp;Due to related parties | 2465083 | 35998 |  |  | 2501081 |
| &nbsp;&nbsp;&nbsp;Other payables and accrued expenses | 2623870 | 194859 |  |  | 2818729 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities - current | 232656 | 185120 |  |  | 417776 |
| &nbsp;&nbsp;&nbsp;Convertible note payable | 14724932 |  |  |  | 14724932 |
| &nbsp;&nbsp;&nbsp;Taxes payable | 575231 | 30752 |  |  | 605983 |
| **TOTAL CURRENT LIABILITIES** | 20623274 | 2798751 |  |  | 23422025 |
| Income tax payable - noncurrent portion | 446860 |  |  |  | 446860 |
| Operating lease liabilities - non-current | 561490 | 45730 |  |  | 607220 |
| Deferred tax liabilities | - | - | 1652422 | (j)(m) | 1652422 |
| **TOTAL LIABILITIES** | 21631624 | 2844481 | 1652422 |  | 26128527 |
| **Commitments and contingencies** |  |  |  |  |  |
| **SHAREHOLDERS' EQUITY (DEFICIT)** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Common stock; par value $0.001, 100,000,000 shares authorized; |  |  |  |  |  |
| 22,917,356 shares issued and outstanding at December 31, 2022 | 19657 |  | 3260 | (c) | 22917 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 63985227 | 2937800 | 155940 | (c)(d) | 67078967 |
| &nbsp;&nbsp;&nbsp;Subscription receivable | (3532340) |  |  |  | (3532340) |
| &nbsp;&nbsp;&nbsp;Statutory reserve | 4198107 |  |  |  | 4198107 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (23581618) | (3026914) | 2001455 | (e)(d)(g)(m)(n) | (24607077) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive gain (loss) | (3268590) | (15195) | 9560 | (n) | (3274225) |
| **TOTAL SHAREHOLDERS' EQUITY (DEFICIT)** | 37820443 | (104309) | 2170215 |  | 39886349 |
| &nbsp;&nbsp;&nbsp;Non-controlling interest | (392061) | - | 4574728 | (k)(n) | 4182667 |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)** | $**59060006** | $**2740172** | $**8397365** |  | $**70197543** |

---

**SHINECO, INC.**

 **UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS**

 **FOR THE SIX MONTHS ENDED DECEMBER 31, 2022**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **SHINECO, INC.** | **BIOWIN** | **Pro Forma<br> Adjustments** | **Note** | **Pro Forma<br> Combined** |
| REVENUE | $1074945 | $1914279 | $— |  | $2989224 |
| COST OF REVENUE |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cost of product and services | 822752 | 982784 |  |  | 1805536 |
| &nbsp;&nbsp;&nbsp;Stock written off due to natural disaster | 462936 |  |  |  | 462936 |
| &nbsp;&nbsp;&nbsp;Business and sales related tax | 2 | 1857 |  |  | 1859 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of revenue | 1285690 | 984641 | - |  | 2270331 |
| GROSS INCOME (LOSS) | (210745) | 929638 | - |  | 718893 |
| OPERATING EXPENSES |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 4203856 | 780275 | 634183 | (g) | 5618314 |
| &nbsp;&nbsp;&nbsp;Research and development expenses |  | 459381 |  |  | 459381 |
| &nbsp;&nbsp;&nbsp;Selling expenses | 18551 | 176293 |  |  | 194844 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | $4222407 | $1415949 | $634183 |  | $6272539 |
| LOSS FROM OPERATIONS | (4433152) | (486311) | (634183) |  | (5553646) |
| OTHER INCOME (EXPENSE) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Loss from equity method investment | (6221) |  |  |  | (6221) |
| &nbsp;&nbsp;&nbsp;Other income, net | 28758 | 46591 |  |  | 75349 |
| &nbsp;&nbsp;&nbsp;Amortization of debt issuance costs | (355972) |  |  |  | (355972) |
| &nbsp;&nbsp;&nbsp;Interest expenses, net | (448244) | (31593) |  |  | (479837) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expenses) | (781679) | 14998 | - |  | (766681) |
| LOSS BEFORE PROVISION FOR INCOME TAXES | (5214831) | (471313) | (634183) |  | (6320327) |
| BENEFIT FOR INCOME TAXES | - | (144915) | (95127) |  | (240042) |
| NET LOSS | (5214831) | (326398) | (539056) |  | (6080285) |
| &nbsp;&nbsp;&nbsp;Net loss attributable to non-controlling interest | (5236) | - | (424072) | (n) | (429308) |
| NET LOSS ATTRIBUTABLE TO SHINECO, INC. | (5209595) | (326398) | (114984) |  | (5650977) |
| COMPREHENSIVE LOSS |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | (5214831) | (326398) | (539056) |  | (6080285) |
| &nbsp;&nbsp;&nbsp;Other comprehensive loss: foreign currency translation loss | (1156311) | (10555) |  |  | (1166866) |
| &nbsp;&nbsp;&nbsp;Total comprehensive loss | (6371142) | (336953) | (539056) |  | (7247151) |
| &nbsp;&nbsp;&nbsp;Less: comprehensive income (loss) attributable to non-controlling interest | 6287 | - | (429244) | (n) | (422957) |
| COMPREHENSIVE LOSS ATTRIBUTABLE TO SHINECO, INC. | $(6377429) | $(336953) | $(109812) |  | $(6824194) |
| Weighted average number of shares basic and diluted | 16249657 | - | 3260000 | (l) | 19509657 |
| &nbsp;&nbsp;&nbsp;Basic and diluted loss per common share | $(0.32) |  |  |  | (0.31) |

---

**SHINECO, INC.**

**UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS**

**FOR THE YEAR ENDED JUNE 30, 2022**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **SHINECO, INC.** | **BIOWIN** | **Pro Forma<br> Adjustments** | **Note** | **Pro Forma<br> Combined** |
| REVENUE | $2186460 | $4169488 | $— |  | $6355948 |
| COST OF REVENUE |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cost of product and services | 2222880 | 940330 |  |  | 3163210 |
| &nbsp;&nbsp;&nbsp;Stock written off due to natural disaster | 1574241 |  |  |  | 1574241 |
| &nbsp;&nbsp;&nbsp;Business and sales related tax | 2 | 7138 |  |  | 7140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of revenue | 3797123 | 947468 | - |  | 4744591 |
| GROSS INCOME (LOSS) | (1610663) | 3222020 | - |  | 1611357 |
| OPERATING EXPENSES |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 20216802 | 665417 | 1409351 | (e)(g) | 22291570 |
| &nbsp;&nbsp;&nbsp;Research and development expenses |  | 1154045 |  |  | 1154045 |
| &nbsp;&nbsp;&nbsp;Selling expenses | 43197 | 723707 |  |  | 766904 |
| &nbsp;&nbsp;&nbsp;Impairment loss of distribution rights | 1140551 | - |  |  | 1140551 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | $21400550 | $2543169 | $1409351 |  | $25353070 |
| INCOME (LOSS) FROM OPERATIONS | (23011213) | 678851 | (1409351) |  | (23741713) |
| OTHER INCOME (EXPENSE) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Impairment loss on an unconsolidated entity | $(165349) | $— | $— |  | $(165349) |
| &nbsp;&nbsp;&nbsp;Loss from equity method investment | (132554) |  |  |  | (132554) |
| &nbsp;&nbsp;&nbsp;Other income, net | 51253 | 100112 |  |  | 151365 |
| &nbsp;&nbsp;&nbsp;Amortization of debt issuance costs | (1379777) |  |  |  | (1379777) |
| &nbsp;&nbsp;&nbsp;Interest expenses, net | (288370) | (53450) |  |  | (341820) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expenses) | (1914797) | 46662 | - |  | (1868135) |
| INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES FROM CONTINUING OPERATIONS | (24926010) | 725513 | (1409351) |  | (25609848) |
| BENEFITS (EXPENSES) FOR INCOME TAXES | (292266) | 105246 | (190255) |  | (377275) |
| INCOME (LOSS) FROM CONTINUING OPERATIONS | (24633744) | 620267 | (1219096) |  | (25232573) |
| DISCONTINUED OPERATIONS: |  |  |  |  |  |
| Loss on disposal of discontinued operations | (2433395) | - |  |  | (2433395) |
| Net loss from discontinued operations | (2433395) | - | - |  | (2433395) |
| NET INCOME (LOSS) | (27067139) | 620267 | (1219096) |  | (27665968) |
| &nbsp;&nbsp;&nbsp;Net loss attributable to non-controlling interest | (34045) |  | (297814) | (n) | (331859) |
| NET INCOME (LOSS) ATTRIBUTABLE TO SHINECO, INC. | (27033094) | 620267 | (921282) |  | (27334109) |
| COMPREHENSIVE INCOME (LOSS) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) | (27067139) | 620267 | (1219096) |  | (27665968) |
| &nbsp;&nbsp;&nbsp;Other comprehensive loss: foreign currency translation loss | (1332936) | (8955) |  |  | (1341891) |
| &nbsp;&nbsp;&nbsp;Total comprehensive income (loss) | (28400075) | 611312 | (1219096) |  | (29007859) |
| &nbsp;&nbsp;&nbsp;Less: comprehensive income (loss) attributable to non-controlling interest | 1970 | - | (302202) | (n) | (300232) |
| COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHINECO, INC. | $(28402045) | $611312 | $(916894) |  | $(28707627) |
| Weighted average number of shares basic and diluted | 9458077 | - | 3260000 | (l) | 12718077 |
| &nbsp;&nbsp;&nbsp;Basic and diluted loss per common share | (2.86) |  |  |  | (2.17) |
| Loss per common share |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Continuing operations - Basic and Diluted | (2.60) |  |  |  | (1.98) |
| &nbsp;&nbsp;&nbsp;Discontinued operations - Basic and Diluted | (0.26) |  |  |  | (0.19) |
| Net loss per common share - basic and diluted | (2.86) |  |  |  | (2.17) |

---

**Note 1. Basis of Pro Forma Presentation**

The unaudited pro forma condensed combined financial statements are derived from the historical consolidated financial statements of the Company and the historical financial statements of Biowin. The unaudited pro forma condensed combined financial statements are prepared as a business combination using the purchase accounting method.

The unaudited proforma condensed combined balance sheet as of December 31, 2022, together with the unaudited condensed combined statements of operations for the year ended June 30, 2022 and for the six months ended December 31, 2022 presented herein gives effect to the Acquisition as if the transaction had occurred at the beginning of such periods and includes certain adjustments that are directly attributable to the transaction which are expected to have a continuing impact on the Company, and are factually supportable, as summarized in the accompanying notes and assumptions.

The Acquisition will be accounted for under the purchase accounting method of accounting in accordance with FASB ASC 805, Business Combinations, using the fair value concepts defined in ASC 820, Fair Value Measurements and Disclosures. We are treated as the "acquirer" and Biowin is treated as the "acquired" company for financial reporting purposes. Accordingly, the purchase consideration allocated to the Biowin business's net assets and liabilities for preparation of the unaudited pro forma condensed combined balance sheet is based upon their estimated preliminary fair values assuming the Acquisition was completed as of December 31, 2022. The amount of the purchase consideration that was in excess of the estimated preliminary fair values of the Biowin's business's net assets and liabilities at December 31, 2022 is recorded as goodwill in the unaudited pro forma condensed combined balance sheet.

We have not yet completed the detailed valuation studies necessary to arrive at the final estimates of the fair value of Biowin's assets to be acquired, the liabilities to be assumed and the related allocations of the Purchase Price.

The unaudited pro forma condensed combined financial information includes pro forma adjustments that are (i) directly attributable to the Acquisition, (ii) factually supportable, and (iii) with respect to the unaudited condensed combined pro forma statements of operations, expected to have a continuing impact on the results of operations of the combined company.

Actual results may differ from these unaudited pro forma condensed combined financial statements once we have determined the final Purchase Price for Biowin and have completed the valuation studies necessary to finalize the required Purchase Price allocations and identified any additional conforming accounting policy changes. There can be no assurance that such finalization will not result in material changes to the unaudited pro forma condensed combined financial information presented. The preliminary unaudited pro forma Purchase Price allocation has been made solely for preparing these unaudited pro forma condensed combined financial statements.

These unaudited pro forma condensed combined financial statements do not purport to represent what the actual consolidated results of operations of the Company would have been had the Merger been completed on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.

**Note 2. Accounting Policies**

The unaudited pro forma condensed combined financial statements may not reflect all reclassifications necessary to conform Biowin's presentation to that of the Company's. As a result, we may identify differences between the accounting policies of the two companies that, when conformed, could have a material impact on the combined financial statements.

**Note 3. Preliminary Purchase Consideration and Purchase Price Allocation**

Under the purchase method of accounting, the identifiable assets acquired and liabilities assumed are recorded at the fair values. The Purchase Price allocation provided in these pro forma condensed combined financial statements is preliminary and based on estimates of the fair value as of December 31, 2022, not January 1, 2023 which was the actual date of the Merger Closing.

We have engaged a third-party valuation company to assist us with valuation of the Biowin's assets and liabilities. The detailed valuation necessary to estimate the fair value of the assets acquired and liabilities assumed has not yet been completed; accordingly, the adjustments to record the assets acquired and liabilities assumed at fair value reflect the best estimate of the Company and are subject to change once additional analyses are completed. There can be no assurance that such third-party valuation work will not result in material changes from the preliminary accounting treatment included in the accompanying unaudited pro forma condensed combined financial statements.

The Purchase Price, as provided in the Merger Agreement, provides for the Sellers to receive 3,260,000 common shares of the Company and US$9.0 million in cash consideration. The 3,260,000 common shares were fair valued, taking into consideration a liquidity discount reflecting the 180-day resale restriction on the issued shares.

---

| | |
|:---|:---|
| Estimated fair value of common shares issued | $3097000 |
| Cash | 9000000 |
| Estimated fair value of consideration transferred | $12097000 |

---

The table below represents the preliminary allocation of the estimated total Purchase Price to Biowin's business's assets and liabilities in the Merger based on our preliminary estimate of their respective fair values.

---

| | |
|:---|:---|
| **Description** | **Estimated<br> Fair Value** |
| Assets acquired: |  |
| Cash and cash equivalents | $621979 |
| Accounts receivable, net | 807771 |
| Inventory | 784336 |
| Prepaid expenses and deposits | 49979 |
| Property and equipment, net | 138252 |
| Intangible assets | 12683656 |
| Operating lease right-of-use assets | 173831 |
| Goodwill | 6574743 |
| Deferred tax assets, net | 346523 |
| Total assets acquired | 22181070 |
| Liabilities assumed: |  |
| Short-term bank loans | 1594596 |
| Accounts payable | 349989 |
| Advances from customers | 407437 |
| Other current liabilities | 446729 |
| Operating lease liabilities - non-current | 45730 |
| Deferred tax liabilities | 1937804 |
| Total liabilities acquired | 4782285 |
| Less: non-controlling interest | 5301785 |
| Estimated fair value of net assets acquired | $12097000 |

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Our unaudited pro forma Purchase Price allocation includes certain identifiable intangible assets with an estimated fair value of approximately US$12,683,656. These intangible assets include patents, trademarks, trade secrets and product formulation knowledge each of which is expected to have a finite life and are expected to be amortized using the straight-line method over the respective lives of each asset.

Goodwill represents the amount of the Purchase Price in excess of the estimated preliminary amounts assigned to the fair value of the Biowin's assets acquired and the liabilities assumed. Since these amounts are estimates, the final amount of goodwill recorded may differ materially from the amount presented. Goodwill will not be amortized, but will be tested for impairment at least annually for events or circumstances that may indicate a possible impairment exists. In the event management determines that the value of goodwill has been impaired, we will incur an impairment charge during the period in which the determination is made.

The preliminary fair value of the identifiable intangible assets acquired was estimated using a combination of different methods under the Cost-Based Approach. The Cost-Based Approach is a general way of determining a value indication of a business, business ownership interest, security, or intangible asset by using one or more methods that convert anticipated economic benefits into a present single amount. This valuation technique requires us to make certain assumptions about future operating and financial performance and cash flow, and other such variables which are discounted to present value using a discount rate that reflects the risk factors associated with future cash flow, the characteristics of the assets acquired, the relationship between the assets acquired and the business as a whole, and the experience of the acquired business. Such valuation methodologies and estimates are subject to change, possibly materially, as additional information becomes available and as additional analyses are performed.

This preliminary unaudited pro forma Purchase Price allocation has been made solely for the purpose of preparing these unaudited pro forma condensed combined financial statements. The final total consideration and amounts allocated to Biowin's acquired assets and assumed liabilities could differ materially from the preliminary amounts presented in these unaudited pro forma condensed combined financial statements. A decrease in the fair value of the assets or an increase in the fair value of the liabilities from the preliminary valuations presented would result in a dollar-for-dollar corresponding increase in the amount of goodwill that will result from the Merger. In addition, if the value of the property and equipment and identifiable intangible assets is higher than the amounts included in these unaudited pro forma condensed combined financial statements, it may result in higher depreciation and amortization expense than is presented in the unaudited pro forma condensed combined statements of operations. Any such increases could be material and could result in our actual future financial condition and results of operations differing materially from those presented in the unaudited pro forma condensed combined financial statements.

**Note 4. Adjustments to Unaudited Pro Forma Condensed Combined Financial Statements**

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Merger and has been prepared for informational purposes only and are not intended to indicate the results of future operations or the financial position of either company.

The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to events that are directly attributable to the Merger, factually supportable, and with respect to the statements of operations, expected to have a continuing impact on the results of the Company.

The following items are presented as reclassifications in the unaudited pro forma condensed combined financial statements:

&nbsp;&nbsp;&nbsp;&nbsp;(a) Adjustment
 includes preliminary estimated fair value of intangible assets acquired by Biowin.

(b) Adjustment
 reflects preliminary estimated goodwill.

(c) Adjustment
 reflects the preliminary estimated fair value of the common shares issued to Biowin's equity holders. This equity consideration
 is included in the preliminary estimated fair value of the consideration transferred in the Merger.

(d) Adjustment
 includes the elimination of the historical additional paid-in capital and accumulated deficit of Biowin.

(e) Represents
 pro forma adjustment to eliminate transaction expenses related to the Merger incurred by the Company and Biowin, which will not be
 recurring after the completion of the Merger.

&nbsp;&nbsp;&nbsp;&nbsp;(f) Adjustment
 reflects the cash consideration to be paid to acquire Biowin.

(g) Includes
 the cumulative impact of preliminary amortization expense for identifiable intangible assets acquired.

(h) Adjustment
 includes the cumulative impact of the amortization of identifiable intangible assets.

(i) Release
 of prepayment for business acquisition of Biowin made in advance as the consideration of US$12,097,000.

(j) To
 record the increase of deferred tax liabilities as a result of the increase in value of intangible assets and inventories, which
 may be taxable in the future.

(k) Adjustment
 reflects portion of net assets of Biowin attributable to 49% non-controlling interest.

(l) Increase
 in the weighted average shares in connection with the issuance of 3,260,000 common shares as the consideration of the acquisition.

(m) To
 record the reversal of deferred tax liabilities as a result of the amortization of identifiable intangible assets.

(n) Adjustment
 reflects portion of comprehensive income (loss) of Biowin attributable to 49% non-controlling interest.

(o) Adjustment
 includes preliminary estimated fair value of inventories acquired by Biowin.

(p) Adjustment
 includes preliminary estimated fair value of property and equipment acquired by Biowin.