10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________ to ______________________

Commission File Number: 001-37776

SHINECO, INC.

(Exact name of registrant as specified in its charter)

Delaware	52-2175898
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
Room 1001, Building T5, DaZu Square, Daxing District, Beijing People’s Republic of China	100176
(Address of principal executive offices)	(Zip Code)

(+86) 10-87227366

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report) 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), Yes x  No ¨

and (2) has been subject to such filing requirements for the past 90 days. Yes x   No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes x  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,  smaller  reporting  company,  or an emerging  growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging  growth company”  in  Rule  12b-2  of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	x
		Emerging growth company	x

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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ¨      No x

As of November 13, 2017, the registrant had 21,034,072 shares of common stock outstanding.

TABLE OF CONTENTS

		Page Number
PART I.  FINANCIAL INFORMATION		F-1
Item 1.	Financial Statements	F-1
	Condensed Consolidated Balance Sheets (unaudited)	F-1
	Condensed Consolidated Statements of Income and Comprehensive Income (Loss) (unaudited)	F-2
	Condensed Consolidated Statements of Cash Flows (unaudited)	F-3
	Notes to the Condensed Consolidated Financial Statements (unaudited)	F-4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	16
PART II.  OTHER INFORMATION		17
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	18
SIGNATURES		19

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains certain statements of a forward-looking nature. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “should,” “will,” “could” and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.

Examples of forward-looking statements include:

• the timing of the development of future products;

• projections of revenue, earnings, capital structure and other financial items;

• statements of our plans and objectives, including those that relate to our proposed expansions and the effect such expansions may have on our revenues;

• statements regarding the capabilities of our business operations;

• statements of expected future economic performance;

• statements regarding competition in our market; and

• assumptions underlying statements regarding us or our business.

The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. We discuss our known material risks under the heading “Risk Factors” in our Registration Statement on Form S-1. Many factors could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Consequently, you should not place undue reliance on these forward-looking statements.

The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Nonetheless, the Company reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this Report. No such update shall be deemed to indicate that other statements not addressed by such update is incorrect or create an obligation to provide any other updates.

3

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SHINECO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS
	September 30,			June 30,
	2017			2017
	(Unaudited)
CURRENT ASSETS:
Cash	$	27,728,940		$	23,154,551
Accounts receivable, net		13,152,878			14,480,004
Due from related parties		454,765			448,833
Inventories		2,287,546			2,346,273
Advances to suppliers, net		2,765,611			2,396,123
Loans to third parties, net		-			830,090
Other receivables, net		561,838			535,700
Short-term deposit		167,867			158,894
Prepaid expenses		250,730			375,459
TOTAL CURRENT ASSETS		47,370,175			44,725,927
Property and equipment at cost, net of accumulated depreciation and amortization		10,380,424			10,320,396
Land use right, net of accumulated amortization		1,363,063			1,346,631
Investments		5,945,030			5,695,080
Deposit for business acquisition		2,103,710			2,065,686
Long-term deposit and other noncurrent assets		113,650			112,883
Prepaid leases		3,735,559			3,784,533
Deferred tax assets		264,677			233,834
TOTAL  ASSETS	$	71,276,288		$	68,284,970
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term loans	$	2,253,975		$	2,663,628
Accounts payable		146,027			158,068
Advances from customers		657,701			5,439
Due to related parties		305,191			257,880
Other payables and accrued expenses		263,596			337,107
Taxes payable		1,667,745			1,608,926
TOTAL LIABILITIES		5,294,235			5,031,048
Commitments and contingencies		-			-
EQUITY:
Common stock; par value $0.001, 100,000,000 shares authorized;
21,034,072 and 21,034,072 shares issued and outstanding at September 30, 2017 and  June 30, 2017		21,034			21,034
Additional paid-in capital		22,737,302			22,737,302
Statutory reserve		3,570,859			3,484,449
Retained earnings		40,234,223			39,064,743
Accumulated other comprehensive loss		(1,691,594	)		(3,140,982	)
Total Stockholders' equity of Shineco, Inc.		64,871,824			62,166,546
Non-controlling interest		1,110,229			1,087,376
TOTAL EQUITY		65,982,053			63,253,922
TOTAL LIABILITIES AND EQUITY	$	71,276,288		$	68,284,970

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

F-1

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

	For the Three Months Ended September 30,
	2017			2016
REVENUE	$	7,809,494		$	6,366,664
COST OF REVENUE
Cost of product and services		5,705,511			4,436,172
Business and sales related tax		15,613			15,545
Total cost of revenue		5,721,124			4,451,717
GROSS PROFIT		2,088,370			1,914,947
OPERATING EXPENSES
General and administrative expenses		835,551			473,764
Selling expenses		294,936			380,318
Total operating expenses		1,130,487			854,082
INCOME FROM OPERATIONS		957,883			1,060,865
OTHER INCOME
Income from equity method investments		148,458			161,182
Purchase rebate income		368,803			239,990
Other income		85,619			85,901
Interest income (expense), net		(19,185	)		32,753
Total other income		583,695			519,826
INCOME BEFORE PROVISION FOR INCOME TAXES		1,541,578			1,580,691
PROVISION FOR INCOME TAXES		282,857			201,636
NET INCOME		1,258,721			1,379,055
Less: net income attributable to non-controlling interest		2,831			30,348
NET INCOME ATTRIBUTABLE TO SHINECO, INC.	$	1,255,890		$	1,348,707
COMPREHENSIVE INCOME
Net income	$	1,258,721		$	1,379,055
Other comprehensive income (loss): foreign currency translation gain (loss)		1,469,410			(196,681	)
Total comprehensive income		2,728,131			1,182,374
Less: comprehensive income attributable to non-controlling interest		22,853			26,626
COMPREHENSIVE INCOME ATTRIBUTABLE TO SHINECO, INC.	$	2,705,278		$	1,155,748
Weighted average number of shares basic and diluted		21,034,072			19,376,747
Basic and diluted earnings per common share	$	0.06		$	0.07

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

F-2

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Three Months Ended September 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,258,721		$	1,379,055
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		146,627			157,010
(Recovery of) provision for doubtful accounts		(109,121	)		103,880
Increase (decrease) in inventory reserve		93,453			(24,836	)
Deferred tax benefit		(26,479	)		(3,883	)
Income from equity method investments		(148,458	)		(161,182	)
Changes in operating assets and liabilities:
Accounts receivable		1,621,378			(1,607,621	)
Advances to suppliers		(336,622	)		(383,769	)
Inventories		8,229			573,591
Other receivables		345,841			(204,953	)
Prepaid expense and other assets		124,496			5,034
Due from related parties		2,324			280,988
Prepaid leases		118,365			119,398
Accounts payable		(14,916	)		45,871
Advances from customers		650,665			31,181
Other payables		(79,636	)		143,166
Taxes payable		30,257			(37,421	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		3,685,124			415,509
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment		(7,335	)		(22,131	)
Loan advances to third parties		-			(108,648	)
Repayments of loans from third parties		830,717			-
Repayments of loans from related parties		-			130,495
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		823,382			(284	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans		299,840			781,469
Repayment of short-term loans		(757,470	)		(786,719	)
Stock issuance cost payable		-			843,844
Proceeds from initial public offering, net of offering costs		-			5,394,549
Proceeds from advances from related parties		42,466			97,413
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(415,164	)		6,330,556
EFFECT OF EXCHANGE RATE CHANGE ON CASH		481,047			(85,654	)
NET INCREASE IN CASH		4,574,389			6,660,127
CASH - Beginning of the Period		23,154,551			22,009,374
CASH - End of the Period	$	27,728,940		$	28,669,501
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income tax	$	273,474		$	65,436
Cash paid for interest	$	36,208		$	39,303

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

F-3

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS

Shineco, Inc. (“Shineco” or the “Company”) was incorporated in the State of Delaware on August 20, 1997. The Company is a holding company whose primary purpose is to develop business opportunities in the People’s Republic of China (“PRC” or “China”).

On December 30, 2004, the Company acquired all of the issued and outstanding shares of Beijing Tenet-Jove Technological Development Co., Ltd. (“Tenet-Jove”), a PRC company, in exchange for restricted shares of the Company’s common stock, and the sole operating business of the Company became that of its subsidiary, Tenet-Jove. Tenet-Jove was incorporated on December 15, 2003 under the laws of China. Consequently, Tenet-Jove became a 100% owned subsidiary of Shineco and was officially granted the status of a Wholly Foreign-Owned Entity (“WFOE”) by Chinese authorities on July 14, 2006. This transaction was accounted for as a recapitalization. Tenet-Jove owns 90% interest of Tianjin Tenet Huatai Technological Development Co., Ltd. (“Tenet Huatai”).

On December 31, 2008, June 11, 2011 and May 24, 2012, Tenet-Jove entered into a series of contractual agreements with Ankang Longevity Pharmaceutical (Group) Co., Ltd. (“Ankang Longevity Group”), Yantai Zhisheng International Freight Forwarding Co., Ltd. (“Zhisheng Freight”), Yantai Zhisheng International Trade Co., Ltd. (“Zhisheng Trade”), Yantai Mouping District Zhisheng Agricultural Produce Cooperative (“Zhisheng Agricultural”) and Qingdao Zhihesheng Agricultural Produce Services., Ltd. (“Qingdao Zhihesheng”). On February 24, 2014, Tenet-Jove entered into the same series of contractual agreements with Shineco Zhisheng (Beijing) Bio-Technology Co., Ltd. (“Zhisheng Bio-Tech”), which was incorporated in 2014. Zhisheng Bio-Tech, Zhisheng Freight, Zhisheng Trade, Zhisheng Agricultural, and Qingdao Zhihesheng are collectively referred to herein as “Zhisheng Group”. The contractual agreements include an Executive Business Cooperation Agreement, Timely Reporting Agreement, Equity Interest Pledge Agreement and Executive Option Agreement.

On April 19, 2017, Tenet-Jove established Xinjiang Tiankunrunze Biological Engineering Co., Ltd. (“Tiankunrunze”) and owned 65% interest of Tiankunrunze. On April 28, 2017, Tiankunrunze established Xinjiang Tianzhuo Technology Development Co., Ltd. (“Tianzhuo”) with registered capital of RMB 10.0 million ($1,450,233). On May 22, 2017, Tiankunrunze established Xinjiang Tianhuihechuang Agriculture Development Co., Ltd. (“Tianhuihechuang”) with registered capital of RMB 10.0 million ($1,452,294). On May 23, 2017, Tiankunrunze established Xinjiang Tianxintongye Biotechnology Development Co., Ltd. (“Tianxintongye”) with registered capital of RMB 10.0 million ($1,451,615). Tianzhuo, Tianhuihechuang and Tianxintongye became subsidiaries of Tenet-Jove.

On May 2, 2017, the Company and its subsidiary Tiankunrunze have entered into a Strategic Cooperation Agreement with Beijing Zhongke Biorefinery Engineering Technology Co., Ltd. (“Biorefinery”), a leading high-tech biomass refining company financially backed by the Chinese Academy of Sciences Institute of Process Engineering, to establish the Institute of Chinese Apocynum Industrial Technology Research (“ICAITR”). Pursuant to the Strategic Cooperation Agreement the three parties agreed to establish the ICAITR and each will own 45%, 35% and 20% of the equity interests of ICAITR, respectively. Shineco and Tiankunrunze will invest RMB 5.0 million ($737,745) as the registered capital, and Biorefinery will invest technology such as the patent for “Steam Explosion Degumming” as well as other resources.

Pursuant to the above agreements, Tenet-Jove has the exclusive right to provide to Zhisheng Group and Ankang Longevity Group consulting services related to their business operations and management. All the above contractual agreements obligate Tenet-Jove to absorb a majority of the risk of loss from the Zhisheng Group and Ankang Longevity Group’s activities and entitle Tenet-Jove to receive a majority of their residual returns. In essence, Tenet-Jove has gained effective control over the Zhisheng Group and Ankang Longevity Group. Therefore, the Zhisheng Group and Ankang Longevity Group are treated as Variable Interest Entities (“VIEs”) under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 “Consolidation”. Accordingly, the accounts of these entities are consolidated with those of Tenet-Jove.

F-4

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Since Shineco is effectively controlled by the majority shareholders of the Zhisheng Group and Ankang Longevity Group, Shineco owns 100% of Tenet-Jove. Accordingly, Shineco, Tenet-Jove, and its VIEs, the Zhisheng Group and Ankang Longevity Group are effectively controlled by the same majority shareholders. Therefore, Shineco, Tenet-Jove and its VIEs are considered under common control. The consolidation of Tenet-Jove and its VIEs into Shineco has been accounted for at historical cost and prepared on the basis as if the aforementioned exclusive contractual agreements between Tenet-Jove and its VIEs had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements.

The Company, its subsidiaries, its VIEs and its VIEs’ subsidiaries (collectively the “Group”) operate three main business segments: 1) Tenet-Jove is engaged in manufacturing and selling of Bluish Dogbane and related products, also known in Chinese as “Luobuma”, including therapeutic clothing and textile products made from Luobuma; 2) Zhisheng Group is engaged in the business of planting, processing and distributing of green agricultural produce as well as providing domestic and international logistic services for agricultural products (“Agricultural Products”); and, 3) Ankang Longevity Group manufactures  traditional Chinese medicinal herbal products as well as other retail pharmaceutical products. These different business activities and products can potentially be integrated and benefit from one and other.

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 of a full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended June 30, 2017, which was filed on October 13, 2017.

The unaudited condensed consolidated financial statements of the Company reflect the principal activities of the Company, its subsidiaries, its VIEs and its VIEs’ subsidiaries. The non-controlling interest represents the minority shareholders’ interest in the Company’s majority owned subsidiaries. All intercompany transactions have been eliminated.

Consolidation of Variable Interest Entities

VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs and their subsidiaries with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The carrying amount of the VIEs and their subsidiaries’ consolidated assets and liabilities are as follows:

	September 30, 2017			June 30, 2017
Current assets	$	43,596,320		$	40,584,817
Plant and equipment, net		9,003,058			8,958,282
Other noncurrent assets		10,926,075			10,707,344
Total assets		63,525,453			60,250,443
Total liabilities		(5,016,236	)		(4,662,387	)
Net assets	$	58,509,217		$	55,588,056

Non-controlling Interests

US GAAP requires that non-controlling interests in subsidiaries and affiliates be reported in the equity section of a company’s balance sheet. In addition, the amounts attributable to the net income of these entities are reported separately in the unaudited condensed consolidated statements of income and comprehensive income.

F-5

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Risks and Uncertainties

The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environment in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC 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 other factors, 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 situations and believes that it is in compliance with existing laws and regulations, changes could effect..

Members of the current management team own controlling interests in the Company and are also the owners of the VIEs in the PRC. The Company only controls the VIEs through contractual arrangements which obligate it to absorb the risk of loss and to receive the residual expected returns. As such, the controlling shareholders of the Company and the VIEs could cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the Company would not retain control of the VIEs.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with US 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, plant, and equipment, and intangible assets, the recoverability of long-lived assets and the valuation of accounts receivable, accrued expenses, taxes payable and inventory reserves. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue from sales of Luobuma products, Chinese medicinal herbal products and agricultural products, as well as providing logistic services and other processing services to external customers. The Company recognizes revenue when all of the following have occurred: (i) there is persuasive evidence of an arrangement with a customer; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) the Company’s collection of such fees is reasonably assured. These criteria, as related to the Company’s revenue, are considered to have been met as follows:

Sales of products: The Company recognizes revenue from the sale of products when the goods are delivered and title to the goods passes to the customer provided that there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exists; the sales price is fixed or determinable; and collectability is deemed probable.

Revenue from the rendering of services: Revenue from international freight forwarding, domestic air and overland freight forwarding services is recognized upon the performance of services as stipulated in the underlying contract or when commodities are being released from the customer’s warehouse; the service price is fixed or determinable; and collectability is deemed probable.

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. Balances in banks in the PRC are uninsured. As of September 30, 2017 and June 30, 2017, the Company had no cash equivalents.

F-6

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Accounts Receivable

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. As of September 30, 2017 and June 30, 2017, the allowance for doubtful accounts was $17,898 and $48,450, respectively. Accounts are written off against the allowance after efforts at collection prove unsuccessful.

Inventories

Inventories, which are stated at the lower of cost or current market value, consist of raw materials, work-in-progress, and finished goods related to the Company’s products. Cost is determined using the first in first out (FIFO) method. Market value is the lower of replacement cost or net realizable value. Agricultural products that the Company farms are recorded at cost, which includes direct costs such as seed selection, fertilizer, labor cost and contract fees that are spent in growing agricultural products on the leased farmland, and indirect costs which include amortization of prepayments of farmland leases and farmland development costs. All the costs are accumulated until the time of harvest and then allocated to the harvested crops costs when they are sold. The Company periodically evaluates its inventory and records an inventory reserve for certain inventories that may not be saleable or whose cost exceeds market prices.

Advances to Suppliers

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 September 30, 2017 and June 30, 2017, the Company had an allowance for uncollectible advances to suppliers of $29,958 and $17,618, respectively.

Loans to Third Parties

Loans to third parties consist of various cash advances to unrelated companies and individuals, with whom the Company has business relationships. The loans are due within one year with no interest. Loans to third parties are reviewed periodically as to whether their carrying values remain realizable.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. 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. Farmland leasehold improvements are amortized over the shorter of lease term or estimated useful lives of the underlying assets. The estimated useful lives of the Company’s property and equipment are as follows:

	Estimated useful lives
Buildings	20-50 years
Machinery equipment	5-10 years
Motor vehicles	5-10 years
Office equipment	5-10 years
Farmland leasehold improvements	12-18 years

F-7

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Land Use Rights

According to the Chinese laws and regulations regarding land use rights, land in urban districts is owned by the State, while land in the rural areas and suburban areas, except otherwise provided for by the State, is collectively owned by individuals designated as resident farmers by the State. In accordance with the legal principle that land ownership is separate from the right to the use of the land, the government grants individuals and companies the rights to use parcels of land for a specified period of time. Land use rights which are usually prepaid, are stated at cost less accumulated amortization. Amortization is provided over the respective useful lives, using the straight-line method. The estimated useful life is 50 years, based on the term of the land use rights.

Long-lived Assets

Finite-lived assets and intangibles are reviewed for impairment testing when circumstances require. For purposes of evaluating the recoverability of long-lived assets, when undiscounted future cash flows will not be sufficient to recover an asset’s carrying amount, the asset is written down to its fair value. The long-lived assets of the Company that are subject to evaluation consist primarily of property, plant and equipment, land use rights, investments and long-term prepaid leases. For the three months ended September 30, 2017 and 2016, 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 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 assets or liabilities.

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.

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. The Company does not have any uncertain tax positions at September 30, 2017 and June 30, 2017. The Company has not provided deferred taxes of undistributed earnings of non-U.S. subsidiaries at September 30, 2017, as it is the Company's policy to indefinitely reinvest these earnings in non-U.S. operations. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested earnings is not practicable.

F-8

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The statute of limitations for the Company’s U.S. federal income tax returns and certain state income tax returns remains open for tax years 2007 and after. As of September 30, 2017, the tax years ended June 30, 2012 through June 30, 2017 for the Company’s People’s Republic of China (“PRC”) subsidiaries 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”). All of the Company’s products that are sold in the PRC are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. This 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 unaudited condensed consolidated financial statements.

Foreign Currency Translation

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

The balance sheet amounts, with the exception of equity, at September 30, 2017 and June 30, 2017 were translated at 1 RMB to 0.1503 USD and at 1 RMB to 0.1475 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the three months ended September 30, 2017 and 2016 were at 1 RMB to 0.1499 USD and at 1 RMB to 0.1500 USD, respectively.

Comprehensive Income

Comprehensive income consists of two components, net income 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 and comprehensive income.

Equity Investment

An investment in which the Company has the ability to exercise significant influence, but does not have a controlling interest, is accounted for using the equity method. Significant influence is generally considered to exist when the Company has an ownership interest in the voting stock between 20% and 50%, and other factors, such as representation on the Board of Directors, voting rights and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate.

F-9

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Earnings per Share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There is no anti-dilutive effect for the three months ended September 30, 2017 and 2016.

New Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02 Amendments to the ASC 842 Leases. This update requires a lessee to recognize the assets and liability (the lease liability) arising from operating leases on the balance sheet for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Within a twelve months or less lease term, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. If a lessee makes this election, it should recognize lease expense on a straight-line basis over the lease term. In transition, this update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company does not currently expect the adoption of ASU 2016-02 to have a material impact on the Company’s financial statements unless it enters into a new long-term lease.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (ASC 718): Improvements to Employee Share-Based Payment Accounting. The objective is to identity, evaluate, and improve areas of generally accepted accounting principles (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 areas for simplification include the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Some of the areas apply only to nonpublic entities. For public business entities, the ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the ASU is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The adoption of ASU 2016-09 did not impact our financial statements.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (ASC 606): Identifying Performance Obligations and Licensing. The objective is to clarify the two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for these areas. The ASU affects the guidance in ASU 2014-09, Revenue from Contracts with Customers (ASC 606), which is not yet effective. The effective date and transition requirements for this ASU are the same as the effective date and transition requirements in ASC 606 (and any other Topic amended by ASU 2014-09). ASU 2015-14, Revenue from Contracts with Customers (ASC 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. The Company does not expect the adoption of ASU 2016-10 to have a material impact on the Company’s financial statements.

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (ASC 606): Narrow-Scope Improvements and Practical Expedients. The objective is to address certain issues identified by the FASB-IASB Joint Transition Resource Group for Revenue Recognition. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements for ASC 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14, Revenue from Contracts with Customers (ASC 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. The Company does not expect the adoption of ASU 2016-12 to have a material impact on the Company’s financial statements.

F-10

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

In June 2016 the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which eliminates the probable initial recognition threshold for credit losses in current U.S. GAAP, and instead requires an organization to record a current estimate of all expected credit losses over the contractual term for financial assets carried at amortized cost. This is commonly referred to as the current expected credit losses (“CECL”) methodology. Expected credit losses for financial assets held at the reporting date will be measured based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 does not change the existing write-off principle in U.S. GAAP or current nonaccrual practices, nor does it change accounting requirements for loans held for sale or certain other financial assets which are measured at the lower of amortized cost or fair value. As a public business entity that is an SEC filer, ASU 2016-13 becomes effective for the Company on January 1, 2020, although early application is permitted for 2019. The Company is currently evaluating the potential effects on the Company’s financial statements, if any.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company does not expect the adoption of ASU 2016-15 to have a material impact on the Company’s financial statements.

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance will be effective in the first quarterly of 2018 and early adoption is permitted. The Company does not expect the adoption of ASU 2016-18 to have a material impact on the Company’s financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business. The amendments in this ASU is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company does not believe the adoption of this ASU would have a material effect on the Company’s financial statements.

In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, which amends the scope of modification accounting for share-based payment arrangements and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. For all entities, this ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The adoption of this ASU is not expected to have a material effect on the Company’s financial statements.

F-11

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 3- INVENTORIES

The inventories consist of the following:

	September 30, 2017			June 30, 2017
Raw materials	$	980,069		$	1,167,553
Work-in-process		363,449			672,966
Finished goods		1,893,854			1,346,437
Less: inventory reserve		(949,826	)		(840,683	)
Total	$	2,287,546		$	2,346,273

Work-in-process includes direct costs such as seed selection, fertilizer, labor cost and subcontractor fees that are spent in growing agricultural products on the leased farmland, and indirect costs which include amortization of the prepayment of the farmland lease fees and farmland development costs. All the costs are accumulated until the time of harvest and then allocated to harvested crop costs when they are sold.

NOTE 4- PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

	September 30, 2017			June 30, 2017
Buildings	$	10,709,838		$	10,516,245
Building improvements		52,750			51,797
Machinery and equipment		484,829			474,888
Motor vehicles		49,547			48,651
Construction in progress		450,795			442,646
Office equipment		162,805			153,836
Farmland leasehold improvements		3,159,917			3,102,803
		15,070,481			14,790,866
Less: accumulated depreciation and amortization		(4,690,057	)		(4,470,470	)
Property, plant and equipment, net	$	10,380,424		$	10,320,396

Depreciation and amortization expense charged to operations was $136,982 and $147,367 for the three months ended September 30, 2017 and 2016, respectively.

Farmland leasehold improvements consist of following:

	September 30, 2017		June 30, 2017
Blueberry farmland leasehold reconstruction	$	2,427,589	$	2,383,711
Yew tree planting base reconstruction		271,980		267,064
Greenhouse renovation		460,348		452,028
Total farmland leasehold improvements	$	3,159,917	$	3,102,803

F-12

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 5- LAND USE RIGHTS

Land use rights are recognized at cost less accumulated amortization. According to the Chinese laws and regulations regarding land use rights, land in urban districts is owned by the State, while land in the rural areas and suburban areas, except otherwise provided for by the State, is collectively owned by individuals designated as resident farmers by the State. However, in accordance with the legal principle that land ownership is separate from the right to the use of the land, the government grants the user a “land use right” (the “Right”) to use the land. The Company has the Right to use the land for 50 years and amortizes the rights on a straight-line basis over the period of 50 years.

	September 30, 2017			June 30, 2017
Land use rights	$	1,671,395		$	1,641,181
Less: accumulated amortization		(308,332	)		(294,550	)
Land use rights, net	$	1,363,063		$	1,346,631

For the three months ended September 30, 2017 and 2016, the Company recognized amortization expense of $9,645 and $9,643, respectively.

The estimated future amortization expenses are as follows:

Twelve months ending September 30:
2018	$	33,428
2019		33,428
2020		33,428
2021		33,428
2022		33,428
Thereafter		1,195,923
Total	$	1,363,063

NOTE 6 - INVESTMENTS

Ankang Longevity Group entered into two equity investment agreements with Shaanxi Pharmaceutical Group Pai’ang Medicine Co. Ltd. (“Shaanxi Pharmaceutical Group”), a Chinese state-owned pharmaceutical enterprise to invest a total of RMB 6.8 million (approximately $1.0 million) to form a joint venture pharmacy retail company called Shaanxi Pharmaceutical Sunsimiao Drugstores Ankang Retail Chain Co., Ltd. (“Sunsimiao Drugstores”), and a joint venture pharmaceutical wholesale distribution company named Shaanxi Pharmaceutical Holding Group Longevity Pharmacy Co., Ltd. (“Shaanxi Longevity Pharmacy”). Ankang Longevity Group obtained 49% interest in each of these two new joint venture companies. These two joint ventures were formed as new business entities to collaborate with Shaanxi Pharmaceutical Group to expand sales to regional hospitals and clinics and to establish the presence of retail pharmacies under the Brand name “Sunsimiao”. The investments are accounted for using the equity method because Ankang Longevity Group has significant influence, but no control of these two entities. Ankang Longevity Group recorded income of $148,458 and $161,182 for the three months ended September 30, 2017 and 2016, respectively, from the investments, which was included in “Income from equity method investments” in the unaudited condensed consolidated statements of income and comprehensive income.

Ankang Longevity Group entered into a supplemental agreement with Shaanxi Pharmaceutical Group. According to the supplemental agreement, the new joint-venture companies established by Shaanxi Pharmaceutical Group and Ankang Longevity Group are required to exclusively purchase certain raw materials and drug products from Shaanxi Pharmaceutical Group. In return, Shaanxi Pharmaceutical Group has agreed to compensate Ankang Longevity Group with a purchase rebate of 7% of the total purchases made from Shaanxi Pharmaceutical Group. For the three months ended September 30, 2017 and 2016, a total of $368,803 and $239,990 was recognized by Ankang Longevity Group from this supplemental agreement in addition to its 49% share of the income from the joint ventures, respectively.

F-13

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

On October 21, 2013, the Company, through its controlled subsidiaries, Zhisheng Freight and Zhisheng Agricultural, entered into an agreement with an unrelated third party, Zhejiang Zhen’Ai Network Warehousing Services Co., Ltd. (“Zhen’Ai Network”), and invested RMB 14.5 million (approximately $2.2 million) into Tiancang Systematic Warehousing project (“Tiancang Project”) operated by Zhen’Ai Network. The Tiancang Project is an online platform established to provide comprehensive warehousing and logistic solutions to companies involved in E-commerce. The Company is entitled to 29% of Tiancang Project’s after-tax net income annually, less 30% statutory reserve and 10% employee welfare fund. When the amount of the accumulated statutory reserve reaches 30% of the total investment for the Tiancang Project, no additional appropriation of the statutory reserve is required. For the three months ended September 30, 2017 and 2016, the Company did not record investment income from this investment.

On November 21, 2016, the Company (the “Investor”) entered into an agreement with Original Lab Inc., a California corporation (the “Investee”), and made a payment of $200,000 in exchange for the right to acquire certain shares of the Investee’s common stock and preferred stock. For the three months ended September 30, 2017, the Company did not record investment income from this investment.

The Company’s investments in unconsolidated entities consist of the following:

	September 30, 2017		June 30, 2017
Shaanxi Pharmaceutical Holding Group Longevity Pharmacy Co., Ltd. (Ankang Longevity Pharmacy)	$	2,921,271	$	2,744,391
Shaanxi Pharmaceutical Sunsimiao Drugstores Ankang Chain Co., Ltd.		644,916		611,228
Zhejiang Zhen’Ai Network Warehousing Services Co., Ltd.		2,178,843		2,139,461
Original Lab Inc.		200,000		200,000
Total	$	5,945,030	$	5,695,080

Summarized financial information of unconsolidated entities is as follows:

	September 30, 2017		June 30, 2017
Current assets	$	35,535,941	$	32,880,168
Noncurrent assets		264,785		281,162
Current liabilities		28,538,267		26,328,322

	For the three months ended September 30,
	2017		2016
Net sales	$	7,445,561	$	7,072,032
Gross profit		969,677		895,484
Income from operations		303,766		328,365
Net income		302,975		328,941

NOTE 7 - DEPOSIT FOR BUSINESS ACQUISITION

On December 12, 2016, Tenet-Jove entered into a purchase agreement with Tianjin Tajite E-Commerce Co., Ltd. (“Tianjin Tajite”), an online e-commerce company based in Tianjin, China, specializing in distributing Luobuma related products and Japanese health products to the elderly, pursuant to which Tenet-Jove intends to acquire a 51% equity interest in Tianjin Tajite for cash consideration of RMB 14,000,000 (approximately $2.1 million). On December 25, 2016, the Company paid the full amount as the deposit to secure the deal. In May, 2017, the Company amended the agreement that requires that Tianjin Tajite to satisfy certain preconditions related to product introductions into China. On October 26, 2017, the Company has completed the acquisition for 51% of the shares in Tianjin Tajite.

F-14

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 8 - PREPAID LEASES

One of the Company’s controlled subsidiaries, Zhisheng Group entered into several farmland lease contracts with farmer cooperatives to lease farmland in order to plant and grow organic vegetables, fruit and Chinese yew trees. The lease terms vary from 5 years to 24 years. The aggregate prepaid lease payments on these leases was approximately RMB 36.7 million (approximately $5.5 million). Zhisheng Group prepaid the entire required lease amounts plus transfer fees at the beginning of the lease.

These leases are accounted for as operating leases and will be amortized each year on a straight-line basis over the lease terms. The amortization expense is initially recorded as work in process in the inventory account during the growing period and then transferred to harvested crops costs at the time of harvest and then allocated to cost of sales when they are sold.

Future amortization expense will be recognizedas follows:

Twelve months ending September 30:
2018	$	474,550
2019		474,550
2020		388,398
2021		216,094
2022		216,094
Thereafter		1,965,873
Total	$	3,735,559

NOTE 9 - SHORT-TERM LOANS

Short-term loans consist of the following:

Lender	September 30, 2017		Maturity Date		Int. Rate/Year
Agricultural Bank of China-b	$	300,530	2017-10-16	*		5.22	%
Agricultural Bank of China-d		1,202,120	2017-12-7			5.22	%
Agricultural Bank of China-d		300,530	2018-7-3			5.22	%
Agricultural Bank of China-e		450,795	2017-11-15			5.22	%
Total	$	2,253,975

Lender	June 30, 2017		Maturity Date		Int. Rate/Year
Wanxiang Trust Co., Ltd-a	$	7,746	2017-9-9	*		13.48	%
Agricultural Bank of China-b		295,098	2017-10-16	*		5.22	%
Agricultural Bank of China-c		737,745	2017-8-17	*		5.66	%
Agricultural Bank of China-d		1,180,392	2017-12-7			5.22	%
Agricultural Bank of China-e		442,647	2017-11-15			5.22	%
Total	$	2,663,628

F-15

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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

a. Not collateralized or guaranteed.

b. Collateralized by the building owned by Xiaoyan Chen and Jing Chen, who are both related parties of the Company. Xiaoyan Chen is one of the shareholders of Ankang Longevity Group. Jing Chen is the sister of the Xiaoyan Chen but not a shareholder of Ankang Longevity Group.

c. Guaranteed by commercial credit guaranty companies unrelated to the Company.

d. Guaranteed by a commercial credit guaranty company, unrelated to the Company and also by Jiping Chen, a shareholder of the Company.

e. Guaranteed by a third-party company and also by Jiping Chen, a shareholder of the Company.

* The Company repaid the loans in full on maturity date.

The Company recorded interest expense of $36,028 and $39,303 for the three months ended September 30, 2017 and 2016, respectively. The annual weighted average interest rates are 5.38% and 5.48% for the three months ended September 30, 2017 and 2016, respectively.

NOTE 10 - RELATED PARTY TRANSACTIONS

DUE FROM RELATED PARTIES

The Company had previously made temporary advances to certain shareholders of the Company and to other entities that are either owned by family members of those shareholders or to other entities that the Company has investments in. Those advances are due on demand, non-interest bearing.

As of September 30, 2017 and June 30, 2017, the outstanding amounts due from related parties consist of the following:

	September 30, 2017		June 30, 2017
Yang Bin	$	150,265	$	147,550
Zhang Xin		93,164		91,480
Chang Song		74,381		73,037
Zhang Xinyu		62,572		61,441
Zhang Hua		42,074		28,034
Beijing Huiyinansheng Asset Management Co., Ltd		22,540		22,132
Zhang Yuying		-		15,567
Wang Qiwei		8,266		8,117
Tian Shuangpeng		1,503		1,475
	$	454,765	$	448,833

DUE TO RELATED PARTIES

As of September 30, 2017 and June 30, 2017, the Company had related party payables of $305,191 and $257,880, respectively, mainly due to the principal shareholders or certain relatives of the shareholders of the Company who lend funds for the Company’s operations. The payables are unsecured, non-interest bearing and due on demand.

F-16

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

	September 30, 2017		June 30, 2017
Wu Yang	$	96,245	$	94,505
Wang Sai		115,830		71,942
Zhao Min		93,116		91,433
	$	305,191	$	257,880

SALES TO RELATED PARTIES

For the three months ended September 30, 2017 and 2016, the Company recorded sales to Shaanxi Pharmaceutical Group, a related party , of $771,604 and $800,199, respectively. As of September 30, 2017 and June 30, 2017, the balance of accounts receivable due from Shaanxi Pharmaceutical Group was $1,790,094 and $2,205,453, respectively.

NOTE 11 - TAXES

(a) Corporate Income Taxes

The Company is subject to income taxes on an entity basis on income arising in or derived from the location in which each entity is domiciled.

Shineco is incorporated in the United States and has no operating activities. Tenet-Jove and its VIEs entities are governed by the Income Tax Laws of the PRC, and are currently subject to tax at a statutory rate of 25% on taxable income. Two VIE entities receive a full income tax exemption from the local tax authority of the PRC as agricultural enterprises as long as the favorable tax policy remains unchanged.

i) The components of the income tax expense are as follows:

	For the three months ended September 30,
	2017			2016
Current income tax provision	$	309,336		$	205,519
Deferred income tax benefit		(26,479	)		(3,883	)
Total	$	282,857		$	201,636

ii) The following table summarizes deferred tax assets resulting from differences between the financial reporting basis and tax basis of assets and liabilities:

	September 30, 2017			June 30, 2017
Allowance for doubtful accounts	$	28,055		$	24,598
Inventory reserve		236,622			209,236
Net operating loss carry-forwards		113,941			111,882
Total		378,618			345,716
Valuation allowance		(113,941	)		(111,882	)
Deferred tax assets, net	$	264,677		$	233,834

F-17

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Movement of the valuation allowance:

	September 30, 2017		June 30, 2017
Beginning balance	$	111,882	$	114,122
Exchange difference		2,059		(2,240	)
Ending balance	$	113,941	$	111,882

(b) Value Added Tax

The Company is subject to a value added tax (“VAT”) for selling merchandise. The applicable VAT rate is 17% for products sold in the PRC. 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 will be expensed in the period if and when a determination is made by the tax authorities. There were no assessed penalties during the three months ended September 30, 2017 and 2017.

(c) Taxes Payable

Taxes payable consists of the following:

	September 30, 2017		June 30, 2017
Income tax payable	$	1,605,869	$	1,541,548
Value added tax payable		55,118		60,685
Business tax and other taxes payable		6,758		6,693
	$	1,667,745	$	1,608,926

NOTE 12 – SHAREHOLDERS’ EQUITY

Initial Public Offering

On September 28, 2016, the Company completed its initial public offering of 1,713,190 shares of common stock at a price of $4.50 per share for gross proceeds of $7.7 million and net proceeds of approximately $5.4 million. The Company’s common shares began trading on September 28, 2016 on the NASDAQ Capital Market under the symbol “TYHT .”

F-18

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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 is 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 September 30, 2017 and June 30, 2017, the balance of the statutory reserve was $3,570,859 and $3,484,449, respectively.

NOTE 13 - CONCENTRATIONS AND RISKS

The Company maintains principally all bank accounts in the PRC for which there is no insurance. The cash balance held in the PRC bank accounts was $27,622,150 and $23,112,124 as of September 30, 2017 and June 30, 2017, respectively.

During the three months ended September 30, 2017 and 2016, almost 100% of the Company's assets were located in the PRC and 100% of the Company's revenues were derived from its subsidiaries and VIEs located in the PRC.

For the three months ended September 30, 2017, three customers accounted for approximately 22%, 12% and 10% of the Company’s total sales, respectively. At September 30, 2017, four customers accounted for approximately 69% of the Company’s accounts receivable. For the three months ended September 30, 2016, three customers accounted for approximately 38%, 11% and 11% of the Company’s total sales, respectively. At September 30, 2016, two customers accounted for approximately 72% of the Company’s accounts receivable.

For the three months ended September 30, 2017, five vendors accounted for approximately 19%, 13%, 12%, 11% and 11% of the Company’s total purchases, respectively. For the three months ended September 30, 2016, six vendors accounted for approximately 17%, 17%, 13%, 12%, 11% and 10% of the Company’s total purchases, respectively.

 NOTE 14 - COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases nine main office spaces under non-cancelable operating lease agreements through December 10, 2020. The Company also leases farmland under a non-cancelable operating lease agreement through April 26, 2041. Most of those operating lease payments are scheduled on a quarterly basis.  The future minimum rental payments are as follows:

Twelve months ending September 30:
2018	$	640,936
2019		449,057
2020		288,379
2021		222,137
2022		215,885
Thereafter		4,011,857
Total	$	5,828,251

Rent expense totaled $128,456 and $99,839 for the three months ended September 30, 2017 and 2016, respectively.

F-19

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

In addition, the Company sublets the above-mentioned farmland to a third party under a non-cancelable operating lease agreement through May 31, 2020. The future minimum sublease rental income to be received is as follows:

Twelve months ending September 30:
2018	$	209,888
2019		209,888
2020		143,923
Total	$	563,699

Sublease rental income totaled $53,971 and $53,998 for the three months ended September 30, 2017 and 2016, respectively.

Legal Contingencies

On May 16, 2017, Bonwick Capital Partners, LLC (“Plaintiff”) commenced a lawsuit (Case No. 1:17-cv-03681-PGG) against the Company in the United States District Court for the Southern District of New York. Plaintiff alleges that the Company entered into an agreement with Plaintiff (the “Agreement”), pursuant to which Plaintiff was to provide the Company with financial advisory services in connection with the Company’s initial public offering in the United States. Plaintiff alleges that the Company breached the Agreement and seeks money damages up to $6 million. The Company believes that these claims are without merit and intends to vigorously defend itself.

NOTE 15 - SEGMENT REPORTING

ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Group's internal organizational management structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Group's business segments.

The Company's chief operating decision maker has been identified as the Chief Executive Officer who reviews the financial information of separate operating segments when making decisions about allocating resources and assessing performance of the Group. Based on management's assessment, the Company has determined that it has three operating segments according to its major products and locations as follows:

Ø Developing, manufacturing and distributing of specialized fabrics, textile products and other by-products derived from an indigenous Chinese plant called Apocynum Venetum, commonly known as “Bluish Dogbane” or known in Chinese as “Luobuma” (referred to herein as Luobuma):

The operating companies of this segment, namely Tenet-Jove and Tenet Huatai, specialize in Luobuma developing and manufacturing of relevant products.

This segment’s operations are focused in the north region of Mainland China, mostly carried out in Beijing and Tianjin City.

Ø Processing and distributing of traditional Chinese medicinal herbal products as well as other pharmaceutical products (“Herbal products”):

The operating companies of this segment, namely AnKang Longevity Group and its subsidiaries, process more than 600 kinds of Chinese medicinal herbal products with an established domestic sales and distribution network.

Ankang Longevity Group is also engaged in the retail pharmacy business and the operating revenue, which is not material, is also included in this segment.

F-20

Shineco, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Ø Planting, processing and distributing of green and organic agricultural produce as well as growing and cultivating of Chinese Yew trees (“Agricultural products”):

The operating companies of this segment, the Zhisheng Group, is engaged in the business of growing and distributing green and organic vegetables and fruits as well as providing logistics services for distributing agricultural products. This segment has been focusing its efforts on the growing and cultivating of Chinese yew trees (formally known as “taxus media”), a small evergreen tree whose branches can be used for the production of anti-cancer medications and the tree itself can be used as an ornamental indoor bonsai tree, which are known to have the effect of purifying air quality.

The operations of this segment are located in the East and North regions of Mainland China, mostly carried out in Shandong Province and in Beijing where the Zhisheng Group has newly developed over 100 acres of modern greenhouses for cultivating yew trees and other plants.

The following table presents summarized information by segment for the three months ended September 30, 2017:

	For the three months ended September 30, 2017
	Bluish			Herbal			Agricultural
	dogbane			products			products			Total
Segment revenue	$	1,046,297		$	3,265,893		$	3,497,304		$	7,809,494
Cost of goods		581,291			2,585,063			2,539,157			5,705,511
Business and sales related tax		4,472			11,141			-			15,613
Gross profit		460,534			669,689			958,147			2,088,370
Gross profit contribution %		22.1	%		32.1	%		45.8	%		100.0	%

The following table presents summarized information by segment for the three months ended September 30, 2016:

	For the three months ended September 30, 2016
	Bluish			Herbal			Agricultural
	dogbane			products			products			Total
Segment revenue	$	737,461		$	3,180,371		$	2,448,832		$	6,366,664
Cost of goods		367,220			2,437,713			1,631,239			4,436,172
Business and sales related tax		3,604			11,941			-			15,545
Gross profit		366,637			730,717			817,593			1,914,947
Gross profit contribution %		19.1	%		38.2	%		42.7	%		100.0	%

Total Assets as of

	September 30, 2017		June 30, 2017
Bluish Dogbane or “Luobuma”	$	7,188,041	$	6,983,551
Herbal products		37,142,813		35,222,278
Agricultural products		26,945,434		26,079,141
	$	71,276,288	$	68,284,970

NOTE 16 – SUBSEQUENT EVENTS

On October 27, 2017, the Company, through its subsidiary Tianjin Tajit E-Commerce Ltd., obtained contractual rights to distribute branded products of Daiso Industries Co., Ltd.(“Daiso”), a large franchise of 100-yen shops founded in Japan, via JD.com (“JD”), the largest e-commerce company and largest retailer in China. On November 3, 2017, the Company further developed the cooperation with Daiso by entering into a supply and purchase agreement (the “Agreement”) for the purpose of establishing a continuous supply and sale of Daiso’s products in China. Pursuant to the Agreement, Shineco shall purchase Daiso Products in the amount of approximate RMB 20 million no later than December 31, 2017 and add orders as circumstance requires. The term of the Agreement is currently one year, and it extends for one additional year at each expiration date unless written notice of termination is given by either of the parties of the Agreement.

On November 1, 2017, the Company established an Apocynum Industrial Park in Xinjiang, China.

F-21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

The following discussion and analysis of the results of our operations and financial condition for the three months ended September 30, 2017 and 2016 should be read in conjunction with our unaudited condensed consolidated financial statements, and the notes to those unaudited condensed consolidated financial statements that are included elsewhere in this Report and our annual report on Form 10-K for the twelve months ended June 30, 2017 and 2016, including the consolidated financial statements and notes thereto. All monetary figures are presented in U.S. dollars, unless otherwise indicated.

Forward-Looking Statements

The statements in this discussion that are not historical facts are “forward-looking statements.” The words “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” “continue,” the negative forms thereof, or similar expressions, are intended to identify forward-looking statements, although not all forward-looking statements are identified by those words or expressions. Forward-looking statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control. Actual results, performance or achievements may differ materially from those expressed or implied by forward-looking statements depending on a variety of important factors, including, but not limited to, weather, local, regional, national and global Luobuma and herbal medicines price fluctuations, availability of financing and interest rates, competition, changes in, or failure to comply with, government regulations, costs, uncertainties and other effects of legal and other administrative proceedings, and other risks and uncertainties. We are not undertaking to update or revise any forward-looking statement, whether as a result of new information, future events or circumstances or otherwise.

Business Overview    

Shineco, Inc. (the “Company”, “we”, “us” and “our”) was incorporated in the State of Delaware on August 20, 1997. On December 30, 2004, the Company acquired all of the issued and outstanding shares of Beijing Tenet-Jove Technological Development Co., Ltd. (“Tenet-Jove”), a PRC company, in exchange for our restricted shares of common stock. Consequently, Tenet-Jove became our 100% owned subsidiary and its operating business became that of the Company. Tenet-Jove was incorporated on December 15, 2003 under the laws of China and was officially granted the status of a Wholly Foreign-Owned Entity (“WFOE”) by Chinese authorities on July 14, 2006. This transaction was accounted for as a recapitalization. Tenet-Jove owns a 90% interest of Tianjin Tenet Huatai Technological Development Co., Ltd. (“Tenet Huatai”).

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On December 31, 2008, June 11, 2011 and May 24, 2012, Tenet-Jove entered into a series of contractual agreements with Ankang Longevity Pharmaceutical (Group) Co., Ltd. (“Ankang Longevity Group”), Yantai Zhisheng International Freight Forwarding Co., Ltd. (“Zhisheng Freight”), Yantai Zhisheng International Trade Co., Ltd. (“Zhisheng Trade”), Yantai Mouping District Zhisheng Agricultural Produce Cooperative (“Zhisheng Agricultural”) and Qingdao Zhihesheng Agricultural Produce Services., Ltd. (“Qingdao Zhihesheng”). On February 24, 2014, Tenet-Jove entered into the same series of contractual agreements with Shineco Zhisheng (Beijing) Bio-Technology Co., Ltd. (“Zhisheng Bio-Tech”), which was incorporated in 2014. Zhisheng Bio-Tech, Zhisheng Freight, Zhisheng Trade, Zhisheng Agricultural, and Qingdao Zhihesheng are collectively referred to herein as “Zhisheng Group.” The contractual agreements include an Executive Business Cooperation Agreement, Timely Reporting Agreement, Equity Interest Pledge Agreement and Executive Option Agreement.

 Pursuant to these agreements, Tenet-Jove has the exclusive right to provide to Zhisheng Group and Ankang Longevity Group consulting services related to their business operations and management. All these contractual agreements obligate Tenet-Jove to absorb a majority of the risk of loss from the Zhisheng Group and Ankang Longevity Group’s activities and entitle Tenet-Jove to receive a majority of their residual returns. In essence, Tenet-Jove has gained effective control over the Zhisheng Group and Ankang Longevity Group. Based on these contractual arrangements, the Zhisheng Group and Ankang Longevity are treated as Variable Interest Entities (“VIEs”) under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 “Consolidation”. Accordingly, the accounts of these entities are consolidated with those of Tenet-Jove. We carry out all of our business in China through our PRC subsidiaries, our VIEs and their subsidiaries. Currently, we operate three main business segments: (i) Tenet-Jove is engaged in the manufacturing and selling of Bluish Dogbane and related products, also known in Chinese as “Luobuma,” including therapeutic clothing and textile products made from Luobuma; (ii) Zhisheng Group is engaged in the business of planting, processing and distributing of green agricultural produce as well as providing domestic and international logistic services for agricultural products (“Agricultural Products”); and, (iii) Ankang Longevity manufactures traditional Chinese medicinal herbal products as well as other retail pharmaceutical products. These different business activities and products can potentially be integrated and benefit from one and other.

On April 19, 2017, Tenet-Jove established Xinjiang Tiankunrunze Biological Engineering Co., Ltd. (“Tiankunrunze”) and continues to own 65% interest of Tiankunrunze. On April 28, 2017, Tiankunrunze established Xinjiang Tianzhuo Technology Development Co., Ltd. (“Tianzhuo”) with registered capital of RMB 10.0 million ($1,450,233). On May 22, 2017, Tiankunrunze established Xinjiang Tianhuihechuang Agriculture Development Co., Ltd. (“Tianhuihechuang”) with registered capital of RMB 10.0 million ($1,452,294). On May 23, 2017, Tiankunrunze established Xinjiang Tianxintongye Biotechnology Development Co., Ltd. (“Tianxintongye”) with registered capital of RMB 10.0 million ($1,451,615). Tianzhuo, Tianhuihechuang and Tianxintongye became subsidiaries of Tenet-Jove.

On May 2, 2017, the Company and its subsidiary Tiankunrunze entered into a Strategic Cooperation Agreement with Beijing Zhongke Biorefinery Engineering Technology Co., Ltd. (“Biorefinery”), a leading high-tech biomass refining company financially backed by the Chinese Academy of Sciences Institute of Process Engineering, to establish the Institute of Chinese Apocynum Industrial Technology Research (“ICAITR”). Pursuant to the Strategic Cooperation Agreement, the three parties agreed to establish the ICAITR and each will own 45%, 35% and 20% of the equity interests of ICAITR, respectively. Shineco and Tiankunrunze will invest RMB 5.0 million ($737,745) as the registered capital, and Biorefinery will invest technology such as the patent for “Steam Explosion Degumming,” as well as other resources.

5

On September 21, 2017, the Company, through its wholly owned subsidiary Tenet-Jove, entered into a Strategic Cooperation Agreement (the “Agreement”) with Mr. Jianjun Wang, who is experienced in apocynum planting, manufacturing and knowledgeable in apocynum market and administration procedures with relevant authorities in apocynum industry in China, to establish an Apocynum Industrial Park in Xinjiang, China. Pursuant to the Agreement entered into on September 21, 2017, both parties have agreed to establish a joint venture company, namely, Xinjiang Shineco Taihe Agriculture Technology Ltd. (“Xinjiang Taihe”) to hold and operate the Apocynum Industrial Park, with a total investment of RMB 50 million (approximately $7.57 million USD), of which the Company will invest RMB 47.5 million and Mr. Wang will invest RMB 2.5 million. Upon the closing of the Agreement, Shineco will own 95% of the equity interest of Xinjiang Taihe.

Factors Affecting Financial Performance

We believe that the following factors will affect our financial performance:

Increasing demand for our products - The increasing demand for our Chinese medicinal herbal products and our agricultural products will have a positive impact on our financial position. We plan to develop new products and expand our distribution network as well as to grow our business through possible mergers and acquisitions of similar or synergetic businesses, all aimed at increasing awareness of our brand, developing customer loyalty, meeting customer demands in various markets and providing solid foundations for our continuous growth. As of the date of this Report however, we do not have any agreements, undertakings or understandings to acquire any such entities and there can be no guarantee that we ever will.

Expansion of our sources of supply, production capacity and sales network - To meet the increasing demand for our products, we need to expand our sources of supply and production capacity. We plan to make capital improvements in our existing production facilities, which would improve both their efficiency and capacity. In the short-run, we intend to increase our investment in our reliable supply network, personnel training, information technology applications and logistic system upgrades. We also participate in two non-equity investment opportunities through a VIE, both of which we expect to provide us with new networks and platforms.

Maintaining effective control of our costs and expenses -Successful cost control depends upon our ability to obtain and maintain adequate material supplies as required by our operations at competitive prices. We will focus on improving our long-term cost control strategies including establishing long-term alliances with certain suppliers to ensure adequate supply is maintained. We will carry forward the economies of scale and advantages from our nationwide distribution network and diversified offerings. Moreover, we will step up our efforts in higher value added products of Luobuma by using an exclusive and patented technology, to optimize quality management, procurement processes and cost control, and give full play to the strong production capacity and trustworthy sales teams to maximize our profit and bring better long-term return for our shareholders.

Economic and Political Risks

Our operations are conducted primarily in the PRC. Accordingly, our business, financial conditions and results may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.

Our operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks with, among others, the political, economic and legal environment and foreign currency exchange. Our Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversions, remittances abroad, and rates and methods of taxation, among other things.

6

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires the use of 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 period. Critical accounting policies are those accounting policies that may be material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact on financial condition or operating performance. While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies used in the preparation of our unaudited condensed consolidated financial statements require significant judgments and estimates. For additional information relating to these and other accounting policies, see Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Report.

Consolidation of Variable Interest Entities

In accordance with accounting standards regarding consolidation of VIEs, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision-making ability. All VIEs and their subsidiaries with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

Use of Estimates

The preparation of 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 period. Significant estimates required to be made by management include, but are not limited to, useful lives of property, plant, and equipment, and intangible assets, the recoverability of long-lived assets and the valuation of accounts receivable, accrued expenses and taxes payable and inventory reserves. Actual results could differ from those estimates.

Accounts Receivable

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. Accounts are written off against the allowance after efforts at collection prove unsuccessful.

7

Inventories

Inventories, which are stated at the lower of cost or current market value, consist of raw materials, work-in-progress, and finished goods related to the Company’s products. Cost is determined using the first in first out (“FIFO”) method. Market value is the lower of replacement cost or net realizable value. Agricultural products that the Company farms are recorded at cost, which includes direct costs such as seed selection, fertilizer, labor cost and contract fees that are spent in growing agricultural products on the leased farmland, and indirect costs which include amortization of prepayments of farmland leases and farmland development cost. All the costs are accumulated until the time of harvest and then allocated to the harvested crops costs when they are sold. The Company periodically evaluates its inventory and records an inventory reserve for certain inventories that may not be saleable or whose cost exceeds market prices.

Revenue Recognition

The Company recognizes revenue from sales of Luobuma products, Chinese medicinal herbal products and agricultural products, as well as providing logistic service and other processing services to external customers. The Company recognizes revenue when all of the following have occurred: (i) there is persuasive evidence of an arrangement with a customer, (ii) delivery has occurred or services have been rendered, (iii) the sales price is fixed or determinable, and (iv) the Company’s collection of such fees is reasonably assured. These criteria, as related to the Company’s revenue, are considered to have been met as follows:

Sales of products: the Company recognizes revenue from the sale of products when the goods are delivered and title to the goods passes to the customer provided that there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exists; the sales price is fixed or determinable; and collectability is deemed probable.

Revenue from the rendering of services: Revenue from international freight forwarding, domestic air and overland freight forwarding services is recognized upon the performance of services as stipulated in the underlying contract or when commodities are being released from the customer’s warehouse; the service price is fixed or determinable; and collectability is deemed probable.

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.

8

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices 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 assets or liabilities.

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.

Results of Operations for the Three Months Ended September 30, 2017 and 2016

Overview

The following table summarizes our results of operations for the three months ended September 30, 2017 and 2016: 

	Three Months Ended September 30,					Variance
	2017			2016		Amount			%
Revenue	$	7,809,494		$	6,366,664	$	1,442,830			22.66	%
Cost of revenue		5,721,124			4,451,717		1,269,407			28.51	%
Gross profit		2,088,370			1,914,947		173,423			9.06	%
General and administrative expenses		835,551			473,764		361,787			76.36	%
Selling expenses		294,936			380,318		(85,382	)		(22.45	)%
Income from operations		957,883			1,060,865		(102,982	)		(9.71	)%
Income from equity method investments		148,458			161,182		(12,724	)		(7.89	)%
Purchase rebate income		368,803			239,990		128,813			53.67	%
Other income		85,619			85,901		(282	)		(0.33	)%
Interest income (expense)		(19,185	)		32,753		(51,938	)		(158.57	)%
Income before income tax provision		1,541,578			1,580,691		(39,113	)		(2.47	)%
Provision for income taxes		282,857			201,636		81,221			40.28	%
Net income	$	1,258,721		$	1,379,055	$	(120,334	)		(8.73	)%
Comprehensive income attributable to Shineco Inc.	$	2,705,278		$	1,155,748	$	1,549,530			134.07	%

9

Revenue

Currently, we have three types of revenue streams deriving from our three major business segments: First, developing, manufacturing and distributing specialized fabrics, textiles and other by-products derived from an indigenous Chinese plant Apocynum Venetum, known in Chinese as “Luobuma” or “Bluish Dogbane.” This segment is channeled through our directly owned subsidiary, Tenet-Jove. Second, processing and distributing traditional Chinese medicinal herbal products as well as other pharmaceutical products. This segment is conducted by our Ankang Longevity Group VIEs. And third, planting, processing and distributing green and organic agricultural produce as well as growing and cultivation of yew trees. This segment is conducted through our VIEs, the Zhisheng Group.

The following table sets forth the breakdown of our revenue for each of our three segments, for the three months ended September 30, 2017 and 2016, respectively:

	Three Months Ended September 30,										Variance
	2017		%			2016		%			Amount		%
Sales of Luobuma products	$	1,046,297		13.40	%	$	737,461		11.59	%	$	308,836		41.88	%
Sales of Chinese medicinal herbal products		3,265,893		41.82	%		3,180,371		49.95	%		85,522		2.69	%
Sales of other agricultural products		3,497,304		44.78	%		2,448,832		38.46	%		1,048,472		42.82	%
Total Amount	$	7,809,494		100.00	%	$	6,366,664		100.00	%	$	1,442,830		22.66	%

For the three months ended September 30, 2017 and 2016, revenue from sales of Luobuma products was $1,046,297 and $737,461, respectively, which represented an increase of $308,836 or 41.88%. The increase of revenue from this segment was due to increased sales volume of our health awareness related products. The sales volume increase was mainly due to the increase in our number of customers. The Company enhanced online sales promotions during the three months ended September 30, 2017.

For the three months ended September 30, 2017 and 2016, revenue from sales of Chinese medicinal herbal products was $3,265,893 and $3,180,371, respectively, representing a slight increase of $85,522 or 2.69%. The increase was mainly due to the fact that we fulfilled more sales orders from customers for the three months ended September 30, 2017 than the same period in 2016.

For the three months ended September 30, 2017 and 2016, revenue from sales of other agricultural products was $3,497,304 and $2,448,832, respectively, representing an increase of $1,048,472 or 42.82%. The increase was mainly due to the increase in sales volume of yew trees. In addition, in the second quarter of 2017, we developed a new business line of storage, which contributed approximately $0.4 million revenue in the three months ended September 30, 2017 compared to the corresponding period of 2016.

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Cost of Revenue

The following table sets forth the breakdown of the Company’s cost of revenue for each of our three segments, for the three months ended September 30, 2017 and 2016, respectively:

	Three Months Ended September 30,										Variance
	2017		%			2016		%			Amount		%
Sales of Luobuma products	$	581,291		10.16	%	$	367,220		8.25	%	$	214,071		58.30	%
Sales of Chinese medicinal herbal products		2,585,063		45.18	%		2,437,713		54.76	%		147,350		6.04	%
Sales of other agricultural products		2,539,157		44.39	%		1,631,239		36.64	%		907,918		55.66	%
Business and sales related tax		15,613		0.27	%		15,545		0.35	%		68		0.44	%
Total Amount	$	5,721,124		100.00	%	$	4,451,717		100.00	%	$	1,269,407		28.51	%

For the three months ended September 30, 2017 and 2016, cost of revenue from sales of our Luobuma products was $581,291 and $367,220, respectively, representing an increase of $214,071 or 58.30%. The increase of cost of revenue was mainly due to increased sales volume of our health awareness related products. The percentage of the increase in cost of revenue was higher than the increase in sales during this period, primarily due to the higher raw material costs for the three months ended September 30, 2017 as compared to the corresponding period in 2016.

For the three months ended September 30, 2017 and 2016, cost of revenue from sales of Chinese medicinal herbal products was $2,585,063 and $2,437,713, respectively, representing an increase of $147,350 or 6.04%. The increase was mainly due to increased sales orders for the three months ended September 30, 2017 compared to the same period in 2016. The percentage of the increase in cost of revenue was higher than the increase in sales during this period, primarily due to the higher raw material and labor costs we incurred in the three months ended September 20, 2017 as compared with those in the corresponding period in 2016.

For the three months ended September 30, 2017 and 2016, cost of revenue from sales of other agricultural products was $2,539,157 and $1,631,239, respectively, representing an increase of $907,918 or 55.66%. The increase was mainly due to the increase in sales volume of yew trees. Since the second quarter of fiscal 2017, we developed a storage business line which has a relatively high cost compared with sales of our agricultural products, resulting in higher percentage of the increase in cost of revenue than sales during this period.

Gross Profit

The following table sets forth the breakdown of the Company’s gross profit for each of our three segments, for the three months ended September 30, 2017 and 2016, respectively:   

	Three Months Ended September 30,										Variance
	2017		%			2016		%			Amount			%
Sales of Luobuma products	$	460,534		22.05	%	$	366,637		19.15	%	$	93,897			25.61	%
Sales of Chinese medicinal herbal products		669,689		32.07	%		730,717		38.16	%		(61,028	)		(8.35	)%
Sales of other agricultural products		958,147		45.88	%		817,593		42.69	%		140,554			17.19	%
Total Amount	$	2,088,370		100.00	%	$	1,914,947		100.00	%	$	173,423			9.06	%

Gross profit from Luobuma product sales increased by $93,897 and gross profit contribution percentage increased by 25.61% for the three months ended September 30, 2017 as compared to the same period of 2016. The increase in gross profit was primarily due to increase in sales volume resulting from the sale of health products. The percentage of increase in gross profit was lower than the percentage of increase in sales mainly due to the higher raw material costs for the three months ended September 30, 2017 as compared to the corresponding period in 2016.

Gross profit from sales of Chinese medicinal herbal products decreased by $61,028 or 8.35% for the three months ended September 30, 2017 as compared to the same period of 2016. The decrease mainly resulted from higher raw material and labor costs we incurred in the three months ended September 20, 2017 as compared with those in the corresponding period in 2016.

11

Gross profit from sales of other agricultural products increased by $140,554 or 17.19% for the three months ended September 30, 2017 as compared to the same period of 2016. The increase was mainly due to the increase in sales volume of yew trees and increased storage business line with lower gross margin.

Expenses

The following table sets forth the breakdown of our operating expenses for the three months ended September 30, 2017 and 2016, respectively:

	Three Months Ended September 30,										Variance
	2017		%			2016		%			Amount			%
General and administrative expenses	$	835,551		73.91	%	$	473,764		55.47	%	$	361,787			76.36	%
Selling expenses		294,936		26.09	%		380,318		44.53	%		(85,382	)		(22.45	)%
Total Amount	$	1,130,487		100.00	%	$	854,082		100.00	%	$	276,405			32.36	%

General and Administrative Expenses

For the three months ended September 30, 2017, our general and administrative expenses were $835,551, representing an increase of $361,787 or 76.36%, as compared to the same period of 2016. The increase was primarily due to the incorporation of Tiankunrunze in April 19, 2017 and increased professional service fees, such as attorney’s fees, consulting fees and auditing fees.

Selling Expenses

For the three months ended September 30, 2017, our selling and distribution expenses were $294,936, representing a decrease of $85,382, or 22.45%, as compared to the same period of 2016. The decrease was primarily due to decreased advertising expenses, salary expenses, and service fees of e-commerce websites, partially offset by increased promotion expenses during the three months ended September 30, 2017 compared to the same period of 2016.

Income from Equity Method Investments

We are 49% participants in two joint ventures with Shaanxi Pharmaceutical Group Pai’ang Medicine Co. Ltd. (“Shaanxi Pharmaceutical Group”): Shaanxi Pharmaceutical Sunsimiao Drugstores Ankang Retail Chain Co., Ltd. (“Sunsimiao Drugstores”), and Shaanxi Pharmaceutical Holding Group Longevity Pharmacy Co., Ltd. (“Shaanxi Longevity Pharmacy”). We recorded net income of $148,458 and $161,182 from these equity method investments for the three months ended September 30, 2017 and 2016, respectively. The decrease in net income was primarily due to lower net profit in the two joint ventures in the current period.

We invested RMB 14.5 million (approximately $2.2 million) into Tiancang Systematic Warehousing project (“Tiancang Project”) operated by Zhen’Ai Network. The Tiancang Project is currently operational. For the three months ended September 30, 2017 and 2016, we did not record investment income from Zhen’Ai Network.

On November 21, 2016, the Company (the “Investor”) entered into an agreement with Original Lab Inc., a California corporation (the “Investee”), pursuant to which the Investor made a payment of $200,000 to the Investee in exchange for the right to acquire certain shares of the Investee’s common stock and preferred stock. For the three months ended September 30, 2017, the Company did not record investment income from this investment.

12

Purchase Rebate Income

We are party to a supplemental agreement with Shaanxi Pharmaceutical Group. According to the supplemental agreement, the participants in the joint venture companies established by Shaanxi Pharmaceutical Group and Ankang Longevity Group are required to purchase certain raw materials and drug products exclusively from Shaanxi Pharmaceutical Group. In return, Shaanxi Pharmaceutical Group has agreed to compensate Ankang Longevity Group with a purchase rebate of 7% of the total purchases made from Shaanxi Pharmaceutical Group. For the three months ended September 30, 2017, total income of $368,803 was recognized by Ankang Longevity Group from this supplemental agreement, compared to $239,990 in the same period in 2016 due to the increase in purchases in the current period.

Interest Income (Expense), net

For the three months ended September 30, 2017, our net interest expense was $19,185 as compared to interest income of $32,753 in the same period of 2016. The significant decrease in net interest income was primarily due to decreased interest income on the loan to Xinyang Yifangyuan Garden Technology Co., Ltd. (“Xinyang Yifangyuan”). Xinyang Yifangyuan paid off the loan of RMB 3,000,000 in December, 2016. Interest income of nil and $56,248 was recognized on the loans for the three months ended September 30, 2017 and 2016, respectively.

Provision for Income Taxes

For the three months ended September 30, 2017 and 2016, the Company’s provision for income taxes increased by $81,221 or 40.28 % to $282,857 for the three months ended September 30, 2017 from $201,636 for the three months ended September 30, 2016. The increase in the Company’s provision for income taxes was primarily due to increased taxable income of Tenet-Jove and Ankang Longevity Group for the period indicated.

Net Income

Our net income decreased by $120,334 or 8.73% for the three months ended September 30, 2017 as compared to the same period of 2016. The decrease in net income was primarily a result of the increase in general and administrative expenses, partially offset by the increase in revenue.

Comprehensive Income

The comprehensive income was $2,728,131 for the three months ended September 30, 2017, an increase of $1,545,757 from comprehensive income of $1,182,374 for the three months ended September 30, 2016. After deduction of non-controlling interest, the comprehensive income attributable to the Company was $2,705,278 for the three months ended September 30, 2017, compared to comprehensive income of $1,155,748 for the three months ended September 30, 2016.

Liquidity and Capital Resources

We currently finance our business operations primarily through cash flows from operations and our initial public offering, as well as from short-term loans. Our current cash primarily consists of cash on hand and cash in bank, which is unrestricted as to withdrawal and use and is deposited with banks in China.

On September 28, 2016, we completed the initial public offering of 1,713,190 shares of the Company’s common stock at a price of $4.50 per share for gross proceeds of $7.7 million and net proceeds of approximately $5.4 million. We intend to use 54%, 16%, 25% and 5% of the proceeds received from our IPO for the expansion of a high-pressure steam degumming proceed project, development of Ziyang County, China Chinese herbal medicine farm, a processing plants project and development of e-commerce platform projects and working capital, respectively.  

13

Management believes that our current cash, cash flows from current and future operations, and access to loans will be sufficient to meet our working capital needs for at least the next 12 months. We intend to continue to carefully execute our growth plans and manage market risk.  

Treasury Policies

We have established treasury policies with the objectives of achieving effective control of treasury operations and of lowering cost of funds. Therefore, funding for all operations and foreign exchange exposure have been centrally reviewed and monitored from the top level. To manage our exposure to fluctuations in exchange rates and interest rates on specific transactions and foreign currency borrowings, currency structured instruments and other appropriate financial instruments will be used to hedge material exposure, if any.

Our policy precludes us from entering into any derivative contracts purely for speculative activities. Through our treasury policies, we aim to:

(a) Minimize interest risk

This is accomplished by loan re-financing and negotiation. We will continue to closely monitor the total loan portfolio and compare the loan margin spread under our existing agreements against the current borrowing interest rates under different currencies and new offers from banks.

(b) Minimize currency risk

In view of the current volatile currency market, we will closely monitor the foreign currency borrowings at the company level. As of September 30, 2017 and June 30, 2017, we do not engage in any foreign currency borrowings or loan contracts.

Working Capital

The following table provides the information about our working capital at September 30, 2017 and June 30, 2017:

	September 30, 2017		June 30, 2017
Current Assets	$	47,370,175	$	44,725,927
Current Liabilities		5,294,235		5,031,048
Working Capital	$	42,075,940	$	39,694,879

14

The working capital increased by $2,381,061 or 6.0% at September 30, 2017 from June 30, 2017, primarily as a result of an increase in cash due to better operating results during the three months ended September 30, 2017. We believe that we currently have sufficient working capital to run our business.

As of September 30, 2017 and June 30, 2017, the other major component of our working capital is accounts receivable.

The accounts receivable as of September 30, 2017 were $13,152,878, a decrease of approximately 9.17% from $14,480,004 as of June 30, 2017, mainly due to a decrease of revenue receivable from Qingdao Zhihesheng and Ankang Longevity Group. In January 2017, the Company entered into two accounts receivable repayment plans with two major customers, Qingdao Ship Owners Association and Shaanxi Pharmaceutical Group, who each agreed to pay RMB 2.0 million ($300,530 as of September 30, 2017) per month starting from March 2017, and the balance of accounts receivable from them as of December 31, 2016 will be paid off before December 31, 2017. As date of this Report, the account receivables from these two major customers were collected under the repayment plan. In the meanwhile, the Company continually made sales transactions with these two customers.

 Capital Commitments and Contingencies

Capital commitments refer to the allocation of funds for the possible purchase in the near future for fixed assets or investment. Contingency refers to a condition that arises from past transactions or events, the outcome of which will be confirmed only by the occurrence or non-occurrence of uncertain futures events.

As of September 30, 2017 and June 30, 2017, we had no material capital commitments or contingent liabilities.

Cash Flows

The following table provides detailed information about our net cash flows for the three months ended September 30, 2017 and 2016.

	For the three months ended September 30,
	2017			2016
Net cash provided by operating activities	$	3,685,124		$	415,509
Net cash provided by (used in) investing activities		823,382			(284	)
Net cash provided by (used in) financing activities		(415,164	)		6,330,556
Effect of exchange rate changes on cash		481,047			(85,654	)
Net increase in cash		4,574,389			6,660,127
Cash, beginning of period		23,154,551			22,009,374
Cash, end of period	$	27,728,940		$	28,669,501

Operating Activities

Net cash provided by operating activities during the three months ended September 30, 2017 was approximately $3.7 million, consisting of net income of $1.3 million and net changes in our operating assets and liabilities, which mainly included a decrease in accounts receivable of $1.6 million and an increase in advances from customers of $0.7 million. Net cash provided by operating activities during the three months ended September 30, 2016 was approximately $0.4 million, consisting of net income of $1.4 million, net changes in our operating assets and liabilities, which mainly included an increase in accounts receivable of $1.4 million, reduction in inventory of $0.6 million and repayment in advances to suppliers of $0.4 million. 

15

Investing Activities

For the three months ended September 30, 2017, net cash provided by investing activities amounted to $823,382 as compared to net cash used in investing activities of $284 for the same period of 2016. The increase in net cash provided by investing activities was primarily due to collections on loans to third parties of $0.8 million during the three months ended September 30, 2017.

Financing Activities

For the three months ended September 30, 2017, net cash used in financing activities amounted to $0.4 million, as opposed to net cash provided by financing activities of $6.3 million for the same period of 2016. The decrease of $6.7 million in net cash provided by financing activities was primarily due to net repayment of short-term loans of $0.5 million for the three months ended September 30, 2017 and net proceeds from our initial public offering of $5.4 million for the three months ended September 30, 2016.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a small reporting company, we are not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that material information required to be disclosed by us in the reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that the information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on our review, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were not effective at the reasonable assurance level as of the end of the period covered by this Report due to following material weaknesses:

·   The Company does not have U.S. GAAP full-time qualified personnel in the accounting department to monitor the recording of the daily transactions; and,

·       Lack of segregation of duties for accounting personnel who prepared and reviewed the journal entries.

In order to address the above material weaknesses, our management plans to take the following steps:

·      Recruiting sufficient qualified professionals with appropriate levels of knowledge of U.S. GAAP and experience to assist in reviewing and resolving accounting issues in routine or complex transactions. To mitigate the reporting risks, we engaged an outside professional consulting firm to supplement our efforts to improve our internal control over financial reporting;

·       Improving the communication between management, our board of directors and the Chief Financial Officer; and

·      Obtaining proper approval for other significant and non-routine transactions from the Board of Directors.

16

The Company believes the foregoing measures will remediate the identified material weaknesses in future periods. The Company is committed to monitoring the effectiveness of these measures and making any changes that are necessary and appropriate.

(b) Changes in Internal Control over Financial Reporting

Other than described above, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during our first fiscal quarter of 2018. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect all misstatements. Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time. Our system contains self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Other than ordinary routine litigation (of which we are not currently involved), we know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation, and there are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our company except as set forth below:

On May 16, 2017, Bonwick Capital Partners, LLC (“Plaintiff”) commenced a lawsuit (Case No. 1:17-cv-03681-PGG) against the Company in the United States District Court for the Southern District of New York. Plaintiff alleges that the Company entered into an agreement with Plaintiff (the “Agreement”), pursuant to which Plaintiff was to provide the Company with financial advisory services in connection with the Company’s initial public offering in the United States. Plaintiff alleges that the Company breached the Agreement and seeks money damages up to $6 million. The Company believes that these claims are without merit and intends to vigorously defend itself.

ITEM 1A. RISK FACTORS.

As a smaller reporting company, we are not required to provide the information otherwise required by this Item. 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

17

ITEM 6. EXHIBITS

Exhibit Number	Description
3.1	Certificate of Incorporation of Shineco, Inc. (1)
3.2	Amended and Restated Bylaws of Shineco, Inc. (1)
4.1	Specimen Common Stock Share Certificate (2)
31.1	Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2	Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
101. INS	XBRL Instance Document *
101. SCH	XBRL Taxonomy Extension Schema Document *
101. CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101. DEF	XBRL Taxonomy Extension Definition Linkbase Document*
101. LAB	XBRL Taxonomy Extension Label Linkbase Document*
101. PRE	XBRL Taxonomy Extension Presentation Linkbase Document*

* Filed herewith.

(1) Incorporated by reference to the Amendment No. 1 to Registration Statement on Form S-1 filed by the Company with the Securities and Exchange Commission on July 1, 2015.

(2) Incorporated by reference to the Amendment No. 5 to Registration Statement on Form S-1 filed by the Company with the SEC on January 27, 2016.

18

SIGNATURES

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, thereunto duly authorized.

	SHINECO, INC.
Dated: November 14, 2017	By:	/s/ Yuying Zhang
		Yuying Zhang
		Chief Executive Officer
		(Principal Executive Officer)
Dated: November 14, 2017	By:	/s/ Sai (Sam) Wang
		Sai (Sam) Wang
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

19

EX-31.1

EXHIBIT 31.1

 I, Yuying Zhang, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2017 of Shineco, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2017	/s/ Yuying Zhang
	Yuying Zhang
	Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

I, Sai (Sam) Wang, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2017 of Shineco, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2017	/s/ Sai (Sam) Wang
	Sai (Sam) Wang
	Chief Finance Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

Certification Pursuant To

Section 906 of Sarbanes-Oxley Act of 2002

I, Yuying Zhang, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1.	The Quarterly report on Form 10-Q for Shineco, Inc. for the period ended September 30, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2017	/s/ Yuying Zhang
	Yuying Zhang
	Chief Executive Officer (Principal Executive Officer)

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.

EX-32.2

EXHIBIT 32.2

Certification Pursuant To

Section 906 of Sarbanes-Oxley Act of 2002

I, Sai (Sam) Wang, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1.	The Quarterly report on Form 10-Q for Shineco, Inc. for the period ended September 30, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2017	/s/ Sai (Sam) Wang
	Sai (Sam) Wang
	Chief Finance Officer (Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.

XML

Document And Entity Information - shares	3 Months Ended
	Sep. 30, 2017	Nov. 13, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Entity Registrant Name	SHINECO, INC.
Entity Central Index Key	0001300734
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Trading Symbol	TYHT
Entity Common Stock, Shares Outstanding		21,034,072

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2017	Jun. 30, 2017
CURRENT ASSETS:
Cash	$ 27,728,940	$ 23,154,551
Accounts receivable, net	13,152,878	14,480,004
Due from related parties	454,765	448,833
Inventories	2,287,546	2,346,273
Advances to suppliers, net	2,765,611	2,396,123
Loans to third parties, net	0	830,090
Other receivables, net	561,838	535,700
Short-term deposit	167,867	158,894
Prepaid expenses	250,730	375,459
TOTAL CURRENT ASSETS	47,370,175	44,725,927
Property and equipment at cost, net of accumulated depreciation and amortization	10,380,424	10,320,396
Land use right, net of accumulated amortization	1,363,063	1,346,631
Investments	5,945,030	5,695,080
Deposit for business acquisition	2,103,710	2,065,686
Long-term deposit and other noncurrent assets	113,650	112,883
Prepaid leases	3,735,559	3,784,533
Deferred tax assets	264,677	233,834
TOTAL ASSETS	71,276,288	68,284,970
CURRENT LIABILITIES:
Short-term loans	2,253,975	2,663,628
Accounts payable	146,027	158,068
Advances from customers	657,701	5,439
Due to related parties	305,191	257,880
Other payables and accrued expenses	263,596	337,107
Taxes payable	1,667,745	1,608,926
TOTAL LIABILITIES	5,294,235	5,031,048
Commitments and contingencies
EQUITY:
Common stock; par value $0.001, 100,000,000 shares authorized; 21,034,072 and 21,034,072 shares issued and outstanding at September 30, 2017 and June 30, 2017	21,034	21,034
Additional paid-in capital	22,737,302	22,737,302
Statutory reserve	3,570,859	3,484,449
Retained earnings	40,234,223	39,064,743
Accumulated other comprehensive loss	(1,691,594)	(3,140,982)
Total Stockholders' equity of Shineco, Inc.	64,871,824	62,166,546
Non-controlling interest	1,110,229	1,087,376
TOTAL EQUITY	65,982,053	63,253,922
TOTAL LIABILITIES AND EQUITY	$ 71,276,288	$ 68,284,970

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2017	Jun. 30, 2017
Common stock; par value (in dollars per shares)	$ 0.001	$ 0.001
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares, Issued	21,034,072	21,034,072
Common Stock, Shares, Outstanding	21,034,072	21,034,072

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
REVENUE	$ 7,809,494	$ 6,366,664
COST OF REVENUE
Cost of product and services	5,705,511	4,436,172
Business and sales related tax	15,613	15,545
Total cost of revenue	5,721,124	4,451,717
GROSS PROFIT	2,088,370	1,914,947
OPERATING EXPENSES
General and administrative expenses	835,551	473,764
Selling expenses	294,936	380,318
Total operating expenses	1,130,487	854,082
INCOME FROM OPERATIONS	957,883	1,060,865
OTHER INCOME
Income from equity method investments	148,458	161,182
Purchase rebate income	368,803	239,990
Other income	85,619	85,901
Interest income (expense), net	(19,185)	32,753
Total other income	583,695	519,826
INCOME BEFORE PROVISION FOR INCOME TAXES	1,541,578	1,580,691
PROVISION FOR INCOME TAXES	282,857	201,636
NET INCOME	1,258,721	1,379,055
Less: net income attributable to non-controlling interest	2,831	30,348
NET INCOME ATTRIBUTABLE TO SHINECO, INC.	1,255,890	1,348,707
COMPREHENSIVE INCOME
Net income	1,258,721	1,379,055
Other comprehensive income (loss): foreign currency translation gain (loss)	1,469,410	(196,681)
Total comprehensive income	2,728,131	1,182,374
Less: comprehensive income attributable to non-controlling interest	22,853	26,626
COMPREHENSIVE INCOME ATTRIBUTABLE TO SHINECO, INC.	$ 2,705,278	$ 1,155,748
Weighted average number of shares basic and diluted	21,034,072	19,376,747
Basic and diluted earnings per common share	$ 0.06	$ 0.07

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 1,258,721	$ 1,379,055
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	146,627	157,010
(Recovery of) provision for doubtful accounts	(109,121)	103,880
Increase (decrease) in inventory reserve	93,453	(24,836)
Deferred tax benefit	(26,479)	(3,883)
Income from equity method investments	(148,458)	(161,182)
Changes in operating assets and liabilities:
Accounts receivable	1,621,378	(1,607,621)
Advances to suppliers	(336,622)	(383,769)
Inventories	8,229	573,591
Other receivables	345,841	(204,953)
Prepaid expense and other assets	124,496	5,034
Due from related parties	2,324	280,988
Prepaid leases	118,365	119,398
Accounts payable	(14,916)	45,871
Advances from customers	650,665	31,181
Other payables	(79,636)	143,166
Taxes payable	30,257	(37,421)
NET CASH PROVIDED BY OPERATING ACTIVITIES	3,685,124	415,509
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment	(7,335)	(22,131)
Loan advances to third parties	0	(108,648)
Repayments of loans from third parties	830,717	0
Repayments of loans from related parties	0	130,495
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	823,382	(284)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans	299,840	781,469
Repayment of short-term loans	(757,470)	(786,719)
Stock issuance cost payable	0	843,844
Proceeds from initial public offering, net of offering costs	0	5,394,549
Proceeds from advances from related parties	42,466	97,413
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(415,164)	6,330,556
EFFECT OF EXCHANGE RATE CHANGE ON CASH	481,047	(85,654)
NET INCREASE IN CASH	4,574,389	6,660,127
CASH - Beginning of the Period	23,154,551	22,009,374
CASH - End of the Period	27,728,940	28,669,501
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income tax	273,474	65,436
Cash paid for interest	$ 36,208	$ 39,303

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ORGANIZATION AND NATURE OF OPERATIONS

3 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

  NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS

Shineco, Inc. (“Shineco” or the “Company”) was incorporated in the State of Delaware on August 20, 1997. The Company is a holding company whose primary purpose is to develop business opportunities in the People’s Republic of China (“PRC” or “China”).

On December 30, 2004, the Company acquired all of the issued and outstanding shares of Beijing Tenet-Jove Technological Development Co., Ltd. (“Tenet-Jove”), a PRC company, in exchange for restricted shares of the Company’s common stock, and the sole operating business of the Company became that of its subsidiary, Tenet-Jove. Tenet-Jove was incorporated on December 15, 2003 under the laws of China. Consequently, Tenet-Jove became a 100% owned subsidiary of Shineco and was officially granted the status of a Wholly Foreign-Owned Entity (“WFOE”) by Chinese authorities on July 14, 2006. This transaction was accounted for as a recapitalization. Tenet-Jove owns 90% interest of Tianjin Tenet Huatai Technological Development Co., Ltd. (“Tenet Huatai”).

On December 31, 2008, June 11, 2011 and May 24, 2012, Tenet-Jove entered into a series of contractual agreements with Ankang Longevity Pharmaceutical (Group) Co., Ltd. (“Ankang Longevity Group”), Yantai Zhisheng International Freight Forwarding Co., Ltd. (“Zhisheng Freight”), Yantai Zhisheng International Trade Co., Ltd. (“Zhisheng Trade”), Yantai Mouping District Zhisheng Agricultural Produce Cooperative (“Zhisheng Agricultural”) and Qingdao Zhihesheng Agricultural Produce Services., Ltd. (“Qingdao Zhihesheng”). On February 24, 2014, Tenet-Jove entered into the same series of contractual agreements with Shineco Zhisheng (Beijing) Bio-Technology Co., Ltd. (“Zhisheng Bio-Tech”), which was incorporated in 2014. Zhisheng Bio-Tech, Zhisheng Freight, Zhisheng Trade, Zhisheng Agricultural, and Qingdao Zhihesheng are collectively referred to herein as “Zhisheng Group”. The contractual agreements include an Executive Business Cooperation Agreement, Timely Reporting Agreement, Equity Interest Pledge Agreement and Executive Option Agreement.

On April 19, 2017, Tenet-Jove established Xinjiang Tiankunrunze Biological Engineering Co., Ltd. (“Tiankunrunze”) and owned 65% interest of Tiankunrunze. On April 28, 2017, Tiankunrunze established Xinjiang Tianzhuo Technology Development Co., Ltd. (“Tianzhuo”) with registered capital of RMB 10.0 million ($1,450,233). On May 22, 2017, Tiankunrunze established Xinjiang Tianhuihechuang Agriculture Development Co., Ltd. (“Tianhuihechuang”) with registered capital of RMB 10.0 million ($1,452,294). On May 23, 2017, Tiankunrunze established Xinjiang Tianxintongye Biotechnology Development Co., Ltd. (“Tianxintongye”) with registered capital of RMB 10.0 million ($1,451,615). Tianzhuo, Tianhuihechuang and Tianxintongye became subsidiaries of Tenet-Jove.

On May 2, 2017, the Company and its subsidiary Tiankunrunze have entered into a Strategic Cooperation Agreement with Beijing Zhongke Biorefinery Engineering Technology Co., Ltd. (“Biorefinery”), a leading high-tech biomass refining company financially backed by the Chinese Academy of Sciences Institute of Process Engineering, to establish the Institute of Chinese Apocynum Industrial Technology Research (“ICAITR”). Pursuant to the Strategic Cooperation Agreement the three parties agreed to establish the ICAITR and each will own 45%, 35% and 20% of the equity interests of ICAITR, respectively. Shineco and Tiankunrunze will invest RMB 5.0 million ($737,745) as the registered capital, and Biorefinery will invest technology such as the patent for “Steam Explosion Degumming” as well as other resources.

Pursuant to the above agreements, Tenet-Jove has the exclusive right to provide to Zhisheng Group and Ankang Longevity Group consulting services related to their business operations and management. All the above contractual agreements obligate Tenet-Jove to absorb a majority of the risk of loss from the Zhisheng Group and Ankang Longevity Group’s activities and entitle Tenet-Jove to receive a majority of their residual returns. In essence, Tenet-Jove has gained effective control over the Zhisheng Group and Ankang Longevity Group. Therefore, the Zhisheng Group and Ankang Longevity Group are treated as Variable Interest Entities (“VIEs”) under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 “Consolidation”. Accordingly, the accounts of these entities are consolidated with those of Tenet-Jove.

Since Shineco is effectively controlled by the majority shareholders of the Zhisheng Group and Ankang Longevity Group, Shineco owns 100% of Tenet-Jove. Accordingly, Shineco, Tenet-Jove, and its VIEs, the Zhisheng Group and Ankang Longevity Group are effectively controlled by the same majority shareholders. Therefore, Shineco, Tenet-Jove and its VIEs are considered under common control. The consolidation of Tenet-Jove and its VIEs into Shineco has been accounted for at historical cost and prepared on the basis as if the aforementioned exclusive contractual agreements between Tenet-Jove and its VIEs had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements.

The Company, its subsidiaries, its VIEs and its VIEs’ subsidiaries (collectively the “Group”) operate three main business segments: 1) Tenet-Jove is engaged in manufacturing and selling of Bluish Dogbane and related products, also known in Chinese as “Luobuma”, including therapeutic clothing and textile products made from Luobuma; 2) Zhisheng Group is engaged in the business of planting, processing and distributing of green agricultural produce as well as providing domestic and international logistic services for agricultural products (“Agricultural Products”); and, 3) Ankang Longevity Group manufactures  traditional Chinese medicinal herbal products as well as other retail pharmaceutical products. These different business activities and products can potentially be integrated and benefit from one and other.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

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 of a full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended June 30, 2017, which was filed on October 13, 2017.

The unaudited condensed consolidated financial statements of the Company reflect the principal activities of the Company, its subsidiaries, its VIEs and its VIEs’ subsidiaries. The non-controlling interest represents the minority shareholders’ interest in the Company’s majority owned subsidiaries. All intercompany transactions have been eliminated.

Consolidation of Variable Interest Entities

VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs and their subsidiaries with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The carrying amount of the VIEs and their subsidiaries’ consolidated assets and liabilities are as follows:

	September 30, 2017		June 30, 2017
Current assets	$	43,596,320	$	40,584,817
Plant and equipment, net		9,003,058		8,958,282
Other noncurrent assets		10,926,075		10,707,344
Total assets		63,525,453		60,250,443
Total liabilities		(5,016,236)		(4,662,387)
Net assets	$	58,509,217	$	55,588,056

Non-controlling Interests

US GAAP requires that non-controlling interests in subsidiaries and affiliates be reported in the equity section of a company’s balance sheet. In addition, the amounts attributable to the net income of these entities are reported separately in the unaudited condensed consolidated statements of income and comprehensive income.

Risks and Uncertainties

The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environment in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC 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 other factors, 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 situations and believes that it is in compliance with existing laws and regulations, changes could effect..

Members of the current management team own controlling interests in the Company and are also the owners of the VIEs in the PRC. The Company only controls the VIEs through contractual arrangements which obligate it to absorb the risk of loss and to receive the residual expected returns. As such, the controlling shareholders of the Company and the VIEs could cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the Company would not retain control of the VIEs.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with US 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, plant, and equipment, and intangible assets, the recoverability of long-lived assets and the valuation of accounts receivable, accrued expenses, taxes payable and inventory reserves. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue from sales of Luobuma products, Chinese medicinal herbal products and agricultural products, as well as providing logistic services and other processing services to external customers. The Company recognizes revenue when all of the following have occurred: (i) there is persuasive evidence of an arrangement with a customer; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) the Company’s collection of such fees is reasonably assured. These criteria, as related to the Company’s revenue, are considered to have been met as follows:

Sales of products: The Company recognizes revenue from the sale of products when the goods are delivered and title to the goods passes to the customer provided that there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exists; the sales price is fixed or determinable; and collectability is deemed probable.

Revenue from the rendering of services:  Revenue from international freight forwarding, domestic air and overland freight forwarding services is recognized upon the performance of services as stipulated in the underlying contract or when commodities are being released from the customer’s warehouse; the service price is fixed or determinable; and collectability is deemed probable.

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. Balances in banks in the PRC are uninsured. As of September 30, 2017 and June 30, 2017, the Company had no cash equivalents.

Accounts Receivable

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. As of September 30, 2017 and June 30, 2017, the allowance for doubtful accounts was $17,898 and $48,450, respectively. Accounts are written off against the allowance after efforts at collection prove unsuccessful.

 

Inventories

Inventories, which are stated at the lower of cost or current market value, consist of raw materials, work-in-progress, and finished goods related to the Company’s products. Cost is determined using the first in first out (FIFO) method. Market value is the lower of replacement cost or net realizable value. Agricultural products that the Company farms are recorded at cost, which includes direct costs such as seed selection, fertilizer, labor cost and contract fees that are spent in growing agricultural products on the leased farmland, and indirect costs which include amortization of prepayments of farmland leases and farmland development costs. All the costs are accumulated until the time of harvest and then allocated to the harvested crops costs when they are sold. The Company periodically evaluates its inventory and records an inventory reserve for certain inventories that may not be saleable or whose cost exceeds market prices.

Advances to Suppliers

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 September 30, 2017 and June 30, 2017, the Company had an allowance for uncollectible advances to suppliers of $29,958 and $17,618, respectively.

 

Loans to Third Parties

Loans to third parties consist of various cash advances to unrelated companies and individuals, with whom the Company has business relationships. The loans are due within one year with no interest. Loans to third parties are reviewed periodically as to whether their carrying values remain realizable.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. 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. Farmland leasehold improvements are amortized over the shorter of lease term or estimated useful lives of the underlying assets. The estimated useful lives of the Company’s property and equipment are as follows:

	Estimated useful lives
Buildings	20-50 years
Machinery equipment	5-10 years
Motor vehicles	5-10 years
Office equipment	5-10 years
Farmland leasehold improvements	12-18 years

Land Use Rights

According to the Chinese laws and regulations regarding land use rights, land in urban districts is owned by the State, while land in the rural areas and suburban areas, except otherwise provided for by the State, is collectively owned by individuals designated as resident farmers by the State. In accordance with the legal principle that land ownership is separate from the right to the use of the land, the government grants individuals and companies the rights to use parcels of land for a specified period of time. Land use rights which are usually prepaid, are stated at cost less accumulated amortization. Amortization is provided over the respective useful lives, using the straight-line method. The estimated useful life is 50 years, based on the term of the land use rights.

 

Long-lived Assets

Finite-lived assets and intangibles are reviewed for impairment testing when circumstances require. For purposes of evaluating the recoverability of long-lived assets, when undiscounted future cash flows will not be sufficient to recover an asset’s carrying amount, the asset is written down to its fair value. The long-lived assets of the Company that are subject to evaluation consist primarily of property, plant and equipment, land use rights, investments and long-term prepaid leases. For the three months ended September 30, 2017 and 2016, 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 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 assets or liabilities.

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.

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. The Company does not have any uncertain tax positions at September 30, 2017 and June 30, 2017. The Company has not provided deferred taxes of undistributed earnings of non-U.S. subsidiaries at September 30, 2017, as it is the Company's policy to indefinitely reinvest these earnings in non-U.S. operations. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested earnings is not practicable.

The statute of limitations for the Company’s U.S. federal income tax returns and certain state income tax returns remains open for tax years 2007 and after. As of September 30, 2017, the tax years ended June 30, 2012 through June 30, 2017 for the Company’s People’s Republic of China (“PRC”) subsidiaries 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”). All of the Company’s products that are sold in the PRC are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. This 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 unaudited condensed consolidated financial statements.

 

Foreign Currency Translation

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

The balance sheet amounts, with the exception of equity, at September 30, 2017 and June 30, 2017 were translated at 1 RMB to 0.1503 USD and at 1 RMB to 0.1475 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the three months ended September 30, 2017 and 2016 were at 1 RMB to 0.1499 USD and at 1 RMB to 0.1500 USD, respectively.

 

Comprehensive Income

Comprehensive income consists of two components, net income 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 and comprehensive income.

Equity Investment

An investment in which the Company has the ability to exercise significant influence, but does not have a controlling interest, is accounted for using the equity method. Significant influence is generally considered to exist when the Company has an ownership interest in the voting stock between 20% and 50%, and other factors, such as representation on the Board of Directors, voting rights and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate.

 

Earnings per Share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There is no anti-dilutive effect for the three months ended September 30, 2017 and 2016.

New Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02 Amendments to the ASC 842 Leases. This update requires a lessee to recognize the assets and liability (the lease liability) arising from operating leases on the balance sheet for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Within a twelve months or less lease term, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. If a lessee makes this election, it should recognize lease expense on a straight-line basis over the lease term. In transition, this update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company does not currently expect the adoption of ASU 2016-02 to have a material impact on the Company’s financial statements unless it enters into a new long-term lease.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (ASC 718): Improvements to Employee Share-Based Payment Accounting. The objective is to identity, evaluate, and improve areas of generally accepted accounting principles (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 areas for simplification include the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Some of the areas apply only to nonpublic entities. For public business entities, the ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the ASU is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The adoption of ASU 2016-09 did not impact our financial statements.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (ASC 606): Identifying Performance Obligations and Licensing. The objective is to clarify the two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for these areas. The ASU affects the guidance in ASU 2014-09, Revenue from Contracts with Customers (ASC 606), which is not yet effective. The effective date and transition requirements for this ASU are the same as the effective date and transition requirements in ASC 606 (and any other Topic amended by ASU 2014-09). ASU 2015-14, Revenue from Contracts with Customers (ASC 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. The Company does not expect the adoption of ASU 2016-10 to have a material impact on the Company’s financial statements.

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (ASC 606): Narrow-Scope Improvements and Practical Expedients. The objective is to address certain issues identified by the FASB-IASB Joint Transition Resource Group for Revenue Recognition. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements for ASC 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14, Revenue from Contracts with Customers (ASC 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. The Company does not expect the adoption of ASU 2016-12 to have a material impact on the Company’s financial statements.

In June 2016 the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which eliminates the probable initial recognition threshold for credit losses in current U.S. GAAP, and instead requires an organization to record a current estimate of all expected credit losses over the contractual term for financial assets carried at amortized cost. This is commonly referred to as the current expected credit losses (“CECL”) methodology. Expected credit losses for financial assets held at the reporting date will be measured based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 does not change the existing write-off principle in U.S. GAAP or current nonaccrual practices, nor does it change accounting requirements for loans held for sale or certain other financial assets which are measured at the lower of amortized cost or fair value. As a public business entity that is an SEC filer, ASU 2016-13 becomes effective for the Company on January 1, 2020, although early application is permitted for 2019. The Company is currently evaluating the potential effects on the Company’s financial statements, if any.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company does not expect the adoption of ASU 2016-15 to have a material impact on the Company’s financial statements.

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance will be effective in the first quarterly of 2018 and early adoption is permitted. The Company does not expect the adoption of ASU 2016-18 to have a material impact on the Company’s financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business. The amendments in this ASU is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company does not believe the adoption of this ASU would have a material effect on the Company’s financial statements.

In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, which amends the scope of modification accounting for share-based payment arrangements and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. For all entities, this ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The adoption of this ASU is not expected to have a material effect on the Company’s financial statements.

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INVENTORIES

3 Months Ended

Sep. 30, 2017

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

NOTE 3- INVENTORIES

The inventories consist of the following:

	September 30, 2017		June 30, 2017
Raw materials	$	980,069	$	1,167,553
Work-in-process		363,449		672,966
Finished goods		1,893,854		1,346,437
Less: inventory reserve		(949,826)		(840,683)
Total	$	2,287,546	$	2,346,273

Work-in-process includes direct costs such as seed selection, fertilizer, labor cost and subcontractor fees that are spent in growing agricultural products on the leased farmland, and indirect costs which include amortization of the prepayment of the farmland lease fees and farmland development costs. All the costs are accumulated until the time of harvest and then allocated to harvested crop costs when they are sold.

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PROPERTY AND EQUIPMENT, NET

3 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

NOTE 4- PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

	September 30, 2017		June 30, 2017
Buildings	$	10,709,838	$	10,516,245
Building improvements		52,750		51,797
Machinery and equipment		484,829		474,888
Motor vehicles		49,547		48,651
Construction in progress		450,795		442,646
Office equipment		162,805		153,836
Farmland leasehold improvements		3,159,917		3,102,803
		15,070,481		14,790,866
Less: accumulated depreciation and amortization		(4,690,057)		(4,470,470)
Property, plant and equipment, net	$	10,380,424	$	10,320,396

Depreciation and amortization expense charged to operations was $136,982 and $147,367 for the three months ended September 30, 2017 and 2016, respectively.

Farmland leasehold improvements consist of following:

	September 30, 2017		June 30, 2017
Blueberry farmland leasehold reconstruction	$	2,427,589	$	2,383,711
Yew tree planting base reconstruction		271,980		267,064
Greenhouse renovation		460,348		452,028
Total farmland leasehold improvements	$	3,159,917	$	3,102,803

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LAND USE RIGHTS

3 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

NOTE 5- LAND USE RIGHTS

Land use rights are recognized at cost less accumulated amortization. According to the Chinese laws and regulations regarding land use rights, land in urban districts is owned by the State, while land in the rural areas and suburban areas, except otherwise provided for by the State, is collectively owned by individuals designated as resident farmers by the State. However, in accordance with the legal principle that land ownership is separate from the right to the use of the land, the government grants the user a “land use right” (the “Right”) to use the land. The Company has the Right to use the land for 50 years and amortizes the rights on a straight-line basis over the period of 50 years.

	September 30, 2017		June 30, 2017
Land use rights	$	1,671,395	$	1,641,181
Less: accumulated amortization		(308,332)		(294,550)
Land use rights, net	$	1,363,063	$	1,346,631

For the three months ended September 30, 2017 and 2016, the Company recognized amortization expense of $9,645 and $9,643, respectively.

The estimated future amortization expenses are as follows:

Twelve months ending September 30:
2018	$	33,428
2019		33,428
2020		33,428
2021		33,428
2022		33,428
Thereafter		1,195,923
Total	$	1,363,063

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INVESTMENTS

3 Months Ended

Sep. 30, 2017

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

NOTE 6 - INVESTMENTS

Ankang Longevity Group entered into two equity investment agreements with Shaanxi Pharmaceutical Group Pai’ang Medicine Co. Ltd. (“Shaanxi Pharmaceutical Group”), a Chinese state-owned pharmaceutical enterprise to invest a total of RMB 6.8 million (approximately $1.0 million) to form a joint venture pharmacy retail company called Shaanxi Pharmaceutical Sunsimiao Drugstores Ankang Retail Chain Co., Ltd. (“Sunsimiao Drugstores”), and a joint venture pharmaceutical wholesale distribution company named Shaanxi Pharmaceutical Holding Group Longevity Pharmacy Co., Ltd. (“Shaanxi Longevity Pharmacy”). Ankang Longevity Group obtained 49% interest in each of these two new joint venture companies. These two joint ventures were formed as new business entities to collaborate with Shaanxi Pharmaceutical Group to expand sales to regional hospitals and clinics and to establish the presence of retail pharmacies under the Brand name “Sunsimiao”. The investments are accounted for using the equity method because Ankang Longevity Group has significant influence, but no control of these two entities. Ankang Longevity Group recorded income of $148,458 and $161,182 for the three months ended September 30, 2017 and 2016, respectively, from the investments, which was included in “Income from equity method investments” in the unaudited condensed consolidated statements of income and comprehensive income.

Ankang Longevity Group entered into a supplemental agreement with Shaanxi Pharmaceutical Group. According to the supplemental agreement, the new joint-venture companies established by Shaanxi Pharmaceutical Group and Ankang Longevity Group are required to exclusively purchase certain raw materials and drug products from Shaanxi Pharmaceutical Group. In return, Shaanxi Pharmaceutical Group has agreed to compensate Ankang Longevity Group with a purchase rebate of 7% of the total purchases made from Shaanxi Pharmaceutical Group. For the three months ended September 30, 2017 and 2016, a total of $368,803 and $239,990 was recognized by Ankang Longevity Group from this supplemental agreement in addition to its 49% share of the income from the joint ventures, respectively.

On October 21, 2013, the Company, through its controlled subsidiaries, Zhisheng Freight and Zhisheng Agricultural, entered into an agreement with an unrelated third party, Zhejiang Zhen’Ai Network Warehousing Services Co., Ltd. (“Zhen’Ai Network”), and invested RMB 14.5 million (approximately $2.2 million) into Tiancang Systematic Warehousing project (“Tiancang Project”) operated by Zhen’Ai Network. The Tiancang Project is an online platform established to provide comprehensive warehousing and logistic solutions to companies involved in E-commerce. The Company is entitled to 29% of Tiancang Project’s after-tax net income annually, less 30% statutory reserve and 10% employee welfare fund. When the amount of the accumulated statutory reserve reaches 30% of the total investment for the Tiancang Project, no additional appropriation of the statutory reserve is required. For the three months ended September 30, 2017 and 2016, the Company did not record investment income from this investment.

On November 21, 2016, the Company (the “Investor”) entered into an agreement with Original Lab Inc., a California corporation (the “Investee”), and made a payment of $200,000 in exchange for the right to acquire certain shares of the Investee’s common stock and preferred stock. For the three months ended September 30, 2017, the Company did not record investment income from this investment.

The Company’s investments in unconsolidated entities consist of the following:

	September 30, 2017		June 30, 2017
Shaanxi Pharmaceutical Holding Group Longevity Pharmacy Co., Ltd. (Ankang Longevity Pharmacy)	$	2,921,271	$	2,744,391
Shaanxi Pharmaceutical Sunsimiao Drugstores Ankang Chain Co., Ltd.		644,916		611,228
Zhejiang Zhen’Ai Network Warehousing Services Co., Ltd.		2,178,843		2,139,461
Original Lab Inc.		200,000		200,000
Total	$	5,945,030	$	5,695,080

Summarized financial information of unconsolidated entities is as follows:

	September 30, 2017		June 30, 2017
Current assets	$	35,535,941	$	32,880,168
Noncurrent assets		264,785		281,162
Current liabilities		28,538,267		26,328,322

	For the three months ended September 30,
	2017		2016
Net sales	$	7,445,561	$	7,072,032
Gross profit		969,677		895,484
Income from operations		303,766		328,365
Net income		302,975		328,941

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DEPOSIT FOR BUSINESS ACQUISITION

3 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

NOTE 7 - DEPOSIT FOR BUSINESS ACQUISITION

On December 12, 2016, Tenet-Jove entered into a purchase agreement with Tianjin Tajite E-Commerce Co., Ltd. (“Tianjin Tajite”), an online e-commerce company based in Tianjin, China, specializing in distributing Luobuma related products and Japanese health products to the elderly, pursuant to which Tenet-Jove intends to acquire a 51% equity interest in Tianjin Tajite for cash consideration of RMB 14,000,000 (approximately $2.1 million). On December 25, 2016, the Company paid the full amount as the deposit to secure the deal. In May, 2017, the Company amended the agreement that requires that Tianjin Tajite to satisfy certain preconditions related to product introductions into China. On October 26, 2017, the Company has completed the acquisition for 51% of the shares in Tianjin Tajite.

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PREPAID LEASES

3 Months Ended

Sep. 30, 2017

PREPAID LEASES [Abstract]

Prepaid Leases [Text Block]

NOTE 8 - PREPAID LEASES

One of the Company’s controlled subsidiaries, Zhisheng Group entered into several farmland lease contracts with farmer cooperatives to lease farmland in order to plant and grow organic vegetables, fruit and Chinese yew trees. The lease terms vary from 5 years to 24 years. The aggregate prepaid lease payments on these leases was approximately RMB 36.7 million (approximately $5.5 million). Zhisheng Group prepaid the entire required lease amounts plus transfer fees at the beginning of the lease.

These leases are accounted for as operating leases and will be amortized each year on a straight-line basis over the lease terms. The amortization expense is initially recorded as work in process in the inventory account during the growing period and then transferred to harvested crops costs at the time of harvest and then allocated to cost of sales when they are sold.

Future amortization expense will be recognizedas follows:

Twelve months ending September 30:
2018	$	474,550
2019		474,550
2020		388,398
2021		216,094
2022		216,094
Thereafter		1,965,873
Total	$	3,735,559

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SHORT-TERM LOANS

3 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 9 - SHORT-TERM LOANS

Short-term loans consist of the following:

			Maturity		Int.
Lender	September 30, 2017		Date		Rate/Year
Agricultural Bank of China-b	$	300,530	2017-10-16	*		5.22	%
Agricultural Bank of China-d		1,202,120	2017-12-7			5.22	%
Agricultural Bank of China-d		300,530	2018-7-3			5.22	%
Agricultural Bank of China-e		450,795	2017-11-15			5.22	%
Total	$	2,253,975

			Maturity		Int.
Lender	June 30, 2017		Date		Rate/Year
Wanxiang Trust Co., Ltd-a	$	7,746	2017-9-9	*		13.48	%
Agricultural Bank of China-b		295,098	2017-10-16	*		5.22	%
Agricultural Bank of China-c		737,745	2017-8-17	*		5.66	%
Agricultural Bank of China-d		1,180,392	2017-12-7			5.22	%
Agricultural Bank of China-e		442,647	2017-11-15			5.22	%
Total	$	2,663,628

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

a. Not collateralized or guaranteed.

b. Collateralized by the building owned by Xiaoyan Chen and Jing Chen, who are both related parties of the Company. Xiaoyan Chen is one of the shareholders of Ankang Longevity Group. Jing Chen is the sister of the Xiaoyan Chen but not a shareholder of Ankang Longevity Group.

c. Guaranteed by commercial credit guaranty companies unrelated to the Company.

d. Guaranteed by a commercial credit guaranty company, unrelated to the Company and also by Jiping Chen, a shareholder of the Company.

e. Guaranteed by a third-party company and also by Jiping Chen, a shareholder of the Company.

* The Company repaid the loans in full on maturity date.

The Company recorded interest expense of $36,028 and $39,303 for the three months ended September 30, 2017 and 2016, respectively. The annual weighted average interest rates are 5.38% and 5.48% for the three months ended September 30, 2017 and 2016, respectively.

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RELATED PARTY TRANSACTIONS

3 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 10 - RELATED PARTY TRANSACTIONS

DUE FROM RELATED PARTIES

The Company had previously made temporary advances to certain shareholders of the Company and to other entities that are either owned by family members of those shareholders or to other entities that the Company has investments in. Those advances are due on demand, non-interest bearing.

As of September 30, 2017 and June 30, 2017, the outstanding amounts due from related parties consist of the following:

	September 30, 2017		June 30, 2017
Yang Bin	$	150,265	$	147,550
Zhang Xin		93,164		91,480
Chang Song		74,381		73,037
Zhang Xinyu		62,572		61,441
Zhang Hua		42,074		28,034
Beijing Huiyinansheng Asset Management Co., Ltd		22,540		22,132
Zhang Yuying		-		15,567
Wang Qiwei		8,266		8,117
Tian Shuangpeng		1,503		1,475
	$	454,765	$	448,833

DUE TO RELATED PARTIES

As of September 30, 2017 and June 30, 2017, the Company had related party payables of $305,191 and $257,880, respectively, mainly due to the principal shareholders or certain relatives of the shareholders of the Company who lend funds for the Company’s operations. The payables are unsecured, non-interest bearing and due on demand.

	September 30, 2017		June 30, 2017
Wu Yang	$	96,245	$	94,505
Wang Sai		115,830		71,942
Zhao Min		93,116		91,433
	$	305,191	$	257,880

SALES TO RELATED PARTIES

For the three months ended September 30, 2017 and 2016, the Company recorded sales to Shaanxi Pharmaceutical Group, a related party , of $771,604 and $800,199, respectively. As of September 30, 2017 and June 30, 2017, the balance of accounts receivable due from Shaanxi Pharmaceutical Group was $1,790,094 and $2,205,453, respectively.

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TAXES

3 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 11 - TAXES

(a) Corporate Income Taxes

The Company is subject to income taxes on an entity basis on income arising in or derived from the location in which each entity is domiciled.

Shineco is incorporated in the United States and has no operating activities. Tenet-Jove and its VIEs entities are governed by the Income Tax Laws of the PRC, and are currently subject to tax at a statutory rate of 25% on taxable income. Two VIE entities receive a full income tax exemption from the local tax authority of the PRC as agricultural enterprises as long as the favorable tax policy remains unchanged.

i) The components of the income tax expense are as follows:

	For the three months ended
	September 30,
	2017		2016
Current income tax provision	$	309,336	$	205,519
Deferred income tax benefit		(26,479)		(3,883)
Total	$	282,857	$	201,636

ii) The following table summarizes deferred tax assets resulting from differences between the financial reporting basis and tax basis of assets and liabilities:

	September 30, 2017		June 30, 2017
Allowance for doubtful accounts	$	28,055	$	24,598
Inventory reserve		236,622		209,236
Net operating loss carry-forwards		113,941		111,882
Total		378,618		345,716
Valuation allowance		(113,941)		(111,882)
Deferred tax assets, net	$	264,677	$	233,834

Movement of the valuation allowance:

	September 30, 2017		June 30, 2017
Beginning balance	$	111,882	$	114,122
Exchange difference		2,059		(2,240)
Ending balance	$	113,941	$	111,882

(b) Value Added Tax

The Company is subject to a value added tax (“VAT”) for selling merchandise. The applicable VAT rate is 17% for products sold in the PRC. 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 will be expensed in the period if and when a determination is made by the tax authorities. There were no assessed penalties during the three months ended September 30, 2017 and 2017.

(c) Taxes Payable

Taxes payable consists of the following:

	September 30, 2017		June 30, 2017
Income tax payable	$	1,605,869	$	1,541,548
Value added tax payable		55,118		60,685
Business tax and other taxes payable		6,758		6,693
	$	1,667,745	$	1,608,926

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SHAREHOLDERS' EQUITY

3 Months Ended

Sep. 30, 2017

Equity [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 12 – SHAREHOLDERS’ EQUITY

Initial Public Offering

On September 28, 2016, the Company completed its initial public offering of 1,713,190 shares of common stock at a price of $4.50 per share for gross proceeds of $7.7 million and net proceeds of approximately $5.4 million. The Company’s common shares began trading on September 28, 2016 on the NASDAQ Capital Market under the symbol “TYHT .”

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 is 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 September 30, 2017 and June 30, 2017, the balance of the statutory reserve was $3,570,859 and $3,484,449, respectively.

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CONCENTRATIONS AND RISKS

3 Months Ended

Sep. 30, 2017

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

NOTE 13 - CONCENTRATIONS AND RISKS

The Company maintains principally all bank accounts in the PRC for which there is no insurance. The cash balance held in the PRC bank accounts was $27,622,150 and $23,112,124 as of September 30, 2017 and June 30, 2017, respectively.

During the three months ended September 30, 2017 and 2016, almost 100% of the Company's assets were located in the PRC and 100% of the Company's revenues were derived from its subsidiaries and VIEs located in the PRC.

For the three months ended September 30, 2017, three customers accounted for approximately 22%, 12% and 10% of the Company’s total sales, respectively. At September 30, 2017, four customers accounted for approximately 69% of the Company’s accounts receivable. For the three months ended September 30, 2016, three customers accounted for approximately 38%, 11% and 11% of the Company’s total sales, respectively. At September 30, 2016, two customers accounted for approximately 72% of the Company’s accounts receivable.

For the three months ended September 30, 2017, five vendors accounted for approximately 19%, 13%, 12%, 11% and 11% of the Company’s total purchases, respectively. For the three months ended September 30, 2016, six vendors accounted for approximately 17%, 17%, 13%, 12%, 11% and 10% of the Company’s total purchases, respectively.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 14 - COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases nine main office spaces under non-cancelable operating lease agreements through December 10, 2020. The Company also leases farmland under a non-cancelable operating lease agreement through April 26, 2041. Most of those operating lease payments are scheduled on a quarterly basis.  The future minimum rental payments are as follows:

Twelve months ending September 30:
2018	$	640,936
2019		449,057
2020		288,379
2021		222,137
2022		215,885
Thereafter		4,011,857
Total	$	5,828,251

Rent expense totaled $128,456 and $99,839 for the three months ended September 30, 2017 and 2016, respectively.

In addition, the Company sublets the above-mentioned farmland to a third party under a non-cancelable operating lease agreement through May 31, 2020. The future minimum sublease rental income to be received is as follows:

Twelve months ending September 30:
2018	$	209,888
2019		209,888
2020		143,923
Total	$	563,699

Sublease rental income totaled $53,971 and $53,998 for the three months ended September 30, 2017 and 2016, respectively.

Legal Contingencies

On May 16, 2017, Bonwick Capital Partners, LLC (“Plaintiff”) commenced a lawsuit (Case No. 1:17-cv-03681-PGG) against the Company in the United States District Court for the Southern District of New York. Plaintiff alleges that the Company entered into an agreement with Plaintiff (the “Agreement”), pursuant to which Plaintiff was to provide the Company with financial advisory services in connection with the Company’s initial public offering in the United States. Plaintiff alleges that the Company breached the Agreement and seeks money damages up to $6 million. The Company believes that these claims are without merit and intends to vigorously defend itself.

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SEGMENT REPORTING

3 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

NOTE 15 - SEGMENT REPORTING

ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Group's internal organizational management structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Group's business segments.

The Company's chief operating decision maker has been identified as the Chief Executive Officer who reviews the financial information of separate operating segments when making decisions about allocating resources and assessing performance of the Group. Based on management's assessment, the Company has determined that it has three operating segments according to its major products and locations as follows:

Ø Developing, manufacturing and distributing of specialized fabrics, textile products and other by-products derived from an indigenous Chinese plant called Apocynum Venetum, commonly known as “Bluish Dogbane” or known in Chinese as “Luobuma” (referred to herein as Luobuma):

The operating companies of this segment, namely Tenet-Jove and Tenet Huatai, specialize in Luobuma developing and manufacturing of relevant products.

This segment’s operations are focused in the north region of Mainland China, mostly carried out in Beijing and Tianjin City.

Ø Processing and distributing of traditional Chinese medicinal herbal products as well as other pharmaceutical products (“Herbal products”):

The operating companies of this segment, namely AnKang Longevity Group and its subsidiaries, process more than 600 kinds of Chinese medicinal herbal products with an established domestic sales and distribution network.

Ankang Longevity Group is also engaged in the retail pharmacy business and the operating revenue, which is not material, is also included in this segment.

Ø Planting, processing and distributing of green and organic agricultural produce as well as growing and cultivating of Chinese Yew trees (“Agricultural products”):

The operating companies of this segment, the Zhisheng Group, is engaged in the business of growing and distributing green and organic vegetables and fruits as well as providing logistics services for distributing agricultural products. This segment has been focusing its efforts on the growing and cultivating of Chinese yew trees (formally known as “taxus media”), a small evergreen tree whose branches can be used for the production of anti-cancer medications and the tree itself can be used as an ornamental indoor bonsai tree, which are known to have the effect of purifying air quality.

The operations of this segment are located in the East and North regions of Mainland China, mostly carried out in Shandong Province and in Beijing where the Zhisheng Group has newly developed over 100 acres of modern greenhouses for cultivating yew trees and other plants.

The following table presents summarized information by segment for the three months ended September 30, 2017:

	For the three months ended September 30, 2017
	Bluish			Herbal			Agricultural
	dogbane			products			products			Total
Segment revenue	$	1,046,297		$	3,265,893		$	3,497,304		$	7,809,494
Cost of goods		581,291			2,585,063			2,539,157			5,705,511
Business and sales related tax		4,472			11,141			-			15,613
Gross profit		460,534			669,689			958,147			2,088,370
Gross profit contribution %		22.1	%		32.1	%		45.8	%		100.0	%

The following table presents summarized information by segment for the three months ended September 30, 2016:

	For the three months ended September 30, 2016
	Bluish			Herbal			Agricultural
	dogbane			products			products			Total
Segment revenue	$	737,461		$	3,180,371		$	2,448,832		$	6,366,664
Cost of goods		367,220			2,437,713			1,631,239			4,436,172
Business and sales related tax		3,604			11,941			-			15,545
Gross profit		366,637			730,717			817,593			1,914,947
Gross profit contribution %		19.1	%		38.2	%		42.7	%		100.0	%

Total Assets as of

	September 30, 2017		June 30, 2017
Bluish Dogbane or “Luobuma”	$	7,188,041	$	6,983,551
Herbal products		37,142,813		35,222,278
Agricultural products		26,945,434		26,079,141
	$	71,276,288	$	68,284,970

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SUBSEQUENT EVENTS

3 Months Ended

Sep. 30, 2017

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 16 – SUBSEQUENT EVENTS

On October 27, 2017, the Company, through its subsidiary Tianjin Tajit E-Commerce Ltd., obtained contractual rights to distribute branded products of Daiso Industries Co., Ltd.(“Daiso”), a large franchise of 100-yen shops founded in Japan, via JD.com (“JD”), the largest e-commerce company and largest retailer in China. On November 3, 2017, the Company further developed the cooperation with Daiso by entering into a supply and purchase agreement (the “Agreement”) for the purpose of establishing a continuous supply and sale of Daiso’s products in China. Pursuant to the Agreement, Shineco shall purchase Daiso Products in the amount of approximate RMB 20 million no later than December 31, 2017 and add orders as circumstance requires. The term of the Agreement is currently one year, and it extends for one additional year at each expiration date unless written notice of termination is given by either of the parties of the Agreement.

On November 1, 2017, the Company established an Apocynum Industrial Park in Xinjiang, China.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation [Policy Text Block]

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 of a full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended June 30, 2017, which was filed on October 13, 2017.

The unaudited condensed consolidated financial statements of the Company reflect the principal activities of the Company, its subsidiaries, its VIEs and its VIEs’ subsidiaries. The non-controlling interest represents the minority shareholders’ interest in the Company’s majority owned subsidiaries. All intercompany transactions have been eliminated.

Consolidation, Variable Interest Entity, Policy [Policy Text Block]

Consolidation of Variable Interest Entities

VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs and their subsidiaries with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The carrying amount of the VIEs and their subsidiaries’ consolidated assets and liabilities are as follows:

	September 30, 2017		June 30, 2017
Current assets	$	43,596,320	$	40,584,817
Plant and equipment, net		9,003,058		8,958,282
Other noncurrent assets		10,926,075		10,707,344
Total assets		63,525,453		60,250,443
Total liabilities		(5,016,236)		(4,662,387)
Net assets	$	58,509,217	$	55,588,056

Consolidation, Subsidiaries or Other Investments, Consolidated Entities, Policy [Policy Text Block]

Non-controlling Interests

US GAAP requires that non-controlling interests in subsidiaries and affiliates be reported in the equity section of a company’s balance sheet. In addition, the amounts attributable to the net income of these entities are reported separately in the unaudited condensed consolidated statements of income and comprehensive income.

Risks and Uncertainties [Policy Text Block]

Risks and Uncertainties

The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environment in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC 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 other factors, 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 situations and believes that it is in compliance with existing laws and regulations, changes could effect..

Members of the current management team own controlling interests in the Company and are also the owners of the VIEs in the PRC. The Company only controls the VIEs through contractual arrangements which obligate it to absorb the risk of loss and to receive the residual expected returns. As such, the controlling shareholders of the Company and the VIEs could cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the Company would not retain control of the VIEs.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with US 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, plant, and equipment, and intangible assets, the recoverability of long-lived assets and the valuation of accounts receivable, accrued expenses, taxes payable and inventory reserves. Actual results could differ from those estimates.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company recognizes revenue from sales of Luobuma products, Chinese medicinal herbal products and agricultural products, as well as providing logistic services and other processing services to external customers. The Company recognizes revenue when all of the following have occurred: (i) there is persuasive evidence of an arrangement with a customer; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) the Company’s collection of such fees is reasonably assured. These criteria, as related to the Company’s revenue, are considered to have been met as follows:

Sales of products: The Company recognizes revenue from the sale of products when the goods are delivered and title to the goods passes to the customer provided that there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exists; the sales price is fixed or determinable; and collectability is deemed probable.

Revenue from the rendering of services:  Revenue from international freight forwarding, domestic air and overland freight forwarding services is recognized upon the performance of services as stipulated in the underlying contract or when commodities are being released from the customer’s warehouse; the service price is fixed or determinable; and collectability is deemed probable.

Cash and Cash Equivalents, Policy [Policy Text Block]

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. Balances in banks in the PRC are uninsured. As of September 30, 2017 and June 30, 2017, the Company had no cash equivalents.

Receivables, Policy [Policy Text Block]

Accounts Receivable

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. As of September 30, 2017 and June 30, 2017, the allowance for doubtful accounts was $17,898 and $48,450, respectively. Accounts are written off against the allowance after efforts at collection prove unsuccessful.

Inventory, Policy [Policy Text Block]

Inventories

Inventories, which are stated at the lower of cost or current market value, consist of raw materials, work-in-progress, and finished goods related to the Company’s products. Cost is determined using the first in first out (FIFO) method. Market value is the lower of replacement cost or net realizable value. Agricultural products that the Company farms are recorded at cost, which includes direct costs such as seed selection, fertilizer, labor cost and contract fees that are spent in growing agricultural products on the leased farmland, and indirect costs which include amortization of prepayments of farmland leases and farmland development costs. All the costs are accumulated until the time of harvest and then allocated to the harvested crops costs when they are sold. The Company periodically evaluates its inventory and records an inventory reserve for certain inventories that may not be saleable or whose cost exceeds market prices.

Advances to Suppliers [Policy Text Block]

Advances to Suppliers

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 September 30, 2017 and June 30, 2017, the Company had an allowance for uncollectible advances to suppliers of $29,958 and $17,618, respectively.

Finance, Loans and Leases Receivable, Policy [Policy Text Block]

Loans to Third Parties

Loans to third parties consist of various cash advances to unrelated companies and individuals, with whom the Company has business relationships. The loans are due within one year with no interest. Loans to third parties are reviewed periodically as to whether their carrying values remain realizable.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. 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. Farmland leasehold improvements are amortized over the shorter of lease term or estimated useful lives of the underlying assets. The estimated useful lives of the Company’s property and equipment are as follows:

	Estimated useful lives
Buildings	20-50 years
Machinery equipment	5-10 years
Motor vehicles	5-10 years
Office equipment	5-10 years
Farmland leasehold improvements	12-18 years

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Land Use Rights

According to the Chinese laws and regulations regarding land use rights, land in urban districts is owned by the State, while land in the rural areas and suburban areas, except otherwise provided for by the State, is collectively owned by individuals designated as resident farmers by the State. In accordance with the legal principle that land ownership is separate from the right to the use of the land, the government grants individuals and companies the rights to use parcels of land for a specified period of time. Land use rights which are usually prepaid, are stated at cost less accumulated amortization. Amortization is provided over the respective useful lives, using the straight-line method. The estimated useful life is 50 years, based on the term of the land use rights.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

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, plant and equipment, land use rights, investments and long-term prepaid leases. For the three months ended September 30, 2017 and 2016, the Company did not recognize any impairment of its long-lived assets.

Fair Value of Financial Instruments, Policy [Policy Text Block]

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 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 assets or liabilities.

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.

Income Tax, Policy [Policy Text Block]

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. The Company does not have any uncertain tax positions at September 30, 2017 and June 30, 2017. The Company has not provided deferred taxes of undistributed earnings of non-U.S. subsidiaries at September 30, 2017, as it is the Company's policy to indefinitely reinvest these earnings in non-U.S. operations. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested earnings is not practicable.

The statute of limitations for the Company’s U.S. federal income tax returns and certain state income tax returns remains open for tax years 2007 and after. As of September 30, 2017, the tax years ended June 30, 2012 through June 30, 2017 for the Company’s People’s Republic of China (“PRC”) subsidiaries remain open for statutory examination by PRC tax authorities.

Value Added Tax [Policy Text Block]

Value Added Tax

Sales revenue represents the invoiced value of goods, net of a Value-Added Tax (“VAT”). All of the Company’s products that are sold in the PRC are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. This 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 unaudited condensed consolidated financial statements.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation

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

The balance sheet amounts, with the exception of equity, at September 30, 2017 and June 30, 2017 were translated at 1 RMB to 0.1503 USD and at 1 RMB to 0.1475 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the three months ended September 30, 2017 and 2016 were at 1 RMB to 0.1499 USD and at 1 RMB to 0.1500 USD, respectively.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income

Comprehensive income consists of two components, net income 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 and comprehensive income.

Equity Method Investments, Policy [Policy Text Block]

Equity Investment

An investment in which the Company has the ability to exercise significant influence, but does not have a controlling interest, is accounted for using the equity method. Significant influence is generally considered to exist when the Company has an ownership interest in the voting stock between 20% and 50%, and other factors, such as representation on the Board of Directors, voting rights and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate.

Earnings Per Share, Policy [Policy Text Block]

Earnings per Share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There is no anti-dilutive effect for the three months ended September 30, 2017 and 2016.

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02 Amendments to the ASC 842 Leases. This update requires a lessee to recognize the assets and liability (the lease liability) arising from operating leases on the balance sheet for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Within a twelve months or less lease term, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. If a lessee makes this election, it should recognize lease expense on a straight-line basis over the lease term. In transition, this update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company does not currently expect the adoption of ASU 2016-02 to have a material impact on the Company’s financial statements unless it enters into a new long-term lease.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (ASC 718): Improvements to Employee Share-Based Payment Accounting. The objective is to identity, evaluate, and improve areas of generally accepted accounting principles (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 areas for simplification include the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Some of the areas apply only to nonpublic entities. For public business entities, the ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the ASU is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The adoption of ASU 2016-09 did not impact our financial statements.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (ASC 606): Identifying Performance Obligations and Licensing. The objective is to clarify the two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for these areas. The ASU affects the guidance in ASU 2014-09, Revenue from Contracts with Customers (ASC 606), which is not yet effective. The effective date and transition requirements for this ASU are the same as the effective date and transition requirements in ASC 606 (and any other Topic amended by ASU 2014-09). ASU 2015-14, Revenue from Contracts with Customers (ASC 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. The Company does not expect the adoption of ASU 2016-10 to have a material impact on the Company’s financial statements.

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (ASC 606): Narrow-Scope Improvements and Practical Expedients. The objective is to address certain issues identified by the FASB-IASB Joint Transition Resource Group for Revenue Recognition. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements for ASC 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14, Revenue from Contracts with Customers (ASC 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. The Company does not expect the adoption of ASU 2016-12 to have a material impact on the Company’s financial statements.

In June 2016 the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which eliminates the probable initial recognition threshold for credit losses in current U.S. GAAP, and instead requires an organization to record a current estimate of all expected credit losses over the contractual term for financial assets carried at amortized cost. This is commonly referred to as the current expected credit losses (“CECL”) methodology. Expected credit losses for financial assets held at the reporting date will be measured based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 does not change the existing write-off principle in U.S. GAAP or current nonaccrual practices, nor does it change accounting requirements for loans held for sale or certain other financial assets which are measured at the lower of amortized cost or fair value. As a public business entity that is an SEC filer, ASU 2016-13 becomes effective for the Company on January 1, 2020, although early application is permitted for 2019. The Company is currently evaluating the potential effects on the Company’s financial statements, if any.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company does not expect the adoption of ASU 2016-15 to have a material impact on the Company’s financial statements.

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance will be effective in the first quarterly of 2018 and early adoption is permitted. The Company does not expect the adoption of ASU 2016-18 to have a material impact on the Company’s financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business. The amendments in this ASU is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company does not believe the adoption of this ASU would have a material effect on the Company’s financial statements.

In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, which amends the scope of modification accounting for share-based payment arrangements and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. For all entities, this ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The adoption of this ASU is not expected to have a material effect on the Company’s financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Schedule of Variable Interest Entities [Table Text Block]

The carrying amount of the VIEs and their subsidiaries’ consolidated assets and liabilities are as follows:

	September 30, 2017		June 30, 2017
Current assets	$	43,596,320	$	40,584,817
Plant and equipment, net		9,003,058		8,958,282
Other noncurrent assets		10,926,075		10,707,344
Total assets		63,525,453		60,250,443
Total liabilities		(5,016,236)		(4,662,387)
Net assets	$	58,509,217	$	55,588,056

Summary of Estimated useful lives of Property and Equipment [Table Text Block]

The estimated useful lives of the Company’s property and equipment are as follows:

	Estimated useful lives
Buildings	20-50 years
Machinery equipment	5-10 years
Motor vehicles	5-10 years
Office equipment	5-10 years
Farmland leasehold improvements	12-18 years

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INVENTORIES (Tables)

3 Months Ended

Sep. 30, 2017

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

The inventories consist of the following:

	September 30, 2017		June 30, 2017
Raw materials	$	980,069	$	1,167,553
Work-in-process		363,449		672,966
Finished goods		1,893,854		1,346,437
Less: inventory reserve		(949,826)		(840,683)
Total	$	2,287,546	$	2,346,273

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PROPERTY AND EQUIPMENT, NET (Tables)

3 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Property and equipment consist of the following:

	September 30, 2017		June 30, 2017
Buildings	$	10,709,838	$	10,516,245
Building improvements		52,750		51,797
Machinery and equipment		484,829		474,888
Motor vehicles		49,547		48,651
Construction in progress		450,795		442,646
Office equipment		162,805		153,836
Farmland leasehold improvements		3,159,917		3,102,803
		15,070,481		14,790,866
Less: accumulated depreciation and amortization		(4,690,057)		(4,470,470)
Property, plant and equipment, net	$	10,380,424	$	10,320,396

Schedule of Leasehold Improvements [Table Text Block]

Farmland leasehold improvements consist of following:

	September 30, 2017		June 30, 2017
Blueberry farmland leasehold reconstruction	$	2,427,589	$	2,383,711
Yew tree planting base reconstruction		271,980		267,064
Greenhouse renovation		460,348		452,028
Total farmland leasehold improvements	$	3,159,917	$	3,102,803

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LAND USE RIGHTS (Tables)

3 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

The Company has the Right to use the land for 50 years and amortizes the rights on a straight-line basis over the period of 50 years.

	September 30, 2017		June 30, 2017
Land use rights	$	1,671,395	$	1,641,181
Less: accumulated amortization		(308,332)		(294,550)
Land use rights, net	$	1,363,063	$	1,346,631

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

The estimated future amortization expenses are as follows:

Twelve months ending September 30:
2018	$	33,428
2019		33,428
2020		33,428
2021		33,428
2022		33,428
Thereafter		1,195,923
Total	$	1,363,063

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INVESTMENTS (Tables)

3 Months Ended

Sep. 30, 2017

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments [Table Text Block]

The Company’s investments in unconsolidated entities consist of the following:

	September 30, 2017		June 30, 2017
Shaanxi Pharmaceutical Holding Group Longevity Pharmacy Co., Ltd. (Ankang Longevity Pharmacy)	$	2,921,271	$	2,744,391
Shaanxi Pharmaceutical Sunsimiao Drugstores Ankang Chain Co., Ltd.		644,916		611,228
Zhejiang Zhen’Ai Network Warehousing Services Co., Ltd.		2,178,843		2,139,461
Original Lab Inc.		200,000		200,000
Total	$	5,945,030	$	5,695,080

Equity Method Investments Summarized Financial Information [Table Text Block]

Summarized financial information of unconsolidated entities is as follows:

	September 30, 2017		June 30, 2017
Current assets	$	35,535,941	$	32,880,168
Noncurrent assets		264,785		281,162
Current liabilities		28,538,267		26,328,322

	For the three months ended September 30,
	2017		2016
Net sales	$	7,445,561	$	7,072,032
Gross profit		969,677		895,484
Income from operations		303,766		328,365
Net income		302,975		328,941

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PREPAID LEASES (Tables)

3 Months Ended

Sep. 30, 2017

PREPAID LEASES [Abstract]

Schedule of Operating Lease Further Amortization Expense [Table Text Block]

Future amortization expense will be recognizedas follows:

Twelve months ending September 30:
2018	$	474,550
2019		474,550
2020		388,398
2021		216,094
2022		216,094
Thereafter		1,965,873
Total	$	3,735,559

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SHORT-TERM LOANS (Tables)

3 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Schedule of Short-term Debt [Table Text Block]

Short-term loans consist of the following:

			Maturity		Int.
Lender	September 30, 2017		Date		Rate/Year
Agricultural Bank of China-b	$	300,530	2017-10-16	*		5.22	%
Agricultural Bank of China-d		1,202,120	2017-12-7			5.22	%
Agricultural Bank of China-d		300,530	2018-7-3			5.22	%
Agricultural Bank of China-e		450,795	2017-11-15			5.22	%
Total	$	2,253,975

			Maturity		Int.
Lender	June 30, 2017		Date		Rate/Year
Wanxiang Trust Co., Ltd-a	$	7,746	2017-9-9	*		13.48	%
Agricultural Bank of China-b		295,098	2017-10-16	*		5.22	%
Agricultural Bank of China-c		737,745	2017-8-17	*		5.66	%
Agricultural Bank of China-d		1,180,392	2017-12-7			5.22	%
Agricultural Bank of China-e		442,647	2017-11-15			5.22	%
Total	$	2,663,628

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

a. Not collateralized or guaranteed.

b. Collateralized by the building owned by Xiaoyan Chen and Jing Chen, who are both related parties of the Company. Xiaoyan Chen is one of the shareholders of Ankang Longevity Group. Jing Chen is the sister of the Xiaoyan Chen but not a shareholder of Ankang Longevity Group.

c. Guaranteed by commercial credit guaranty companies unrelated to the Company.

d. Guaranteed by a commercial credit guaranty company, unrelated to the Company and also by Jiping Chen, a shareholder of the Company.

e. Guaranteed by a third-party company and also by Jiping Chen, a shareholder of the Company.

* The Company repaid the loans in full on maturity date.

XML

RELATED PARTY TRANSACTIONS (Tables)

3 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Schedule Of Amounts Due From Related Parties [Table Text Block]

As of September 30, 2017 and June 30, 2017, the outstanding amounts due from related parties consist of the following:

	September 30, 2017		June 30, 2017
Yang Bin	$	150,265	$	147,550
Zhang Xin		93,164		91,480
Chang Song		74,381		73,037
Zhang Xinyu		62,572		61,441
Zhang Hua		42,074		28,034
Beijing Huiyinansheng Asset Management Co., Ltd		22,540		22,132
Zhang Yuying		-		15,567
Wang Qiwei		8,266		8,117
Tian Shuangpeng		1,503		1,475
	$	454,765	$	448,833

Schedule Of Amounts Due To Related Parties [Table Text Block]

The payables are unsecured, non-interest bearing and due on demand.

	September 30, 2017		June 30, 2017
Wu Yang	$	96,245	$	94,505
Wang Sai		115,830		71,942
Zhao Min		93,116		91,433
	$	305,191	$	257,880

XML

TAXES (Tables)

3 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

i) The components of the income tax expense are as follows:

	For the three months ended
	September 30,
	2017		2016
Current income tax provision	$	309,336	$	205,519
Deferred income tax benefit		(26,479)		(3,883)
Total	$	282,857	$	201,636

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

ii) The following table summarizes deferred tax assets resulting from differences between the financial reporting basis and tax basis of assets and liabilities:

	September 30, 2017		June 30, 2017
Allowance for doubtful accounts	$	28,055	$	24,598
Inventory reserve		236,622		209,236
Net operating loss carry-forwards		113,941		111,882
Total		378,618		345,716
Valuation allowance		(113,941)		(111,882)
Deferred tax assets, net	$	264,677	$	233,834

Summary of Valuation Allowance [Table Text Block]

Movement of the valuation allowance:

	September 30, 2017		June 30, 2017
Beginning balance	$	111,882	$	114,122
Exchange difference		2,059		(2,240)
Ending balance	$	113,941	$	111,882

Schedule of Taxes Payable [Table Text Block]

Taxes payable consists of the following:

	September 30, 2017		June 30, 2017
Income tax payable	$	1,605,869	$	1,541,548
Value added tax payable		55,118		60,685
Business tax and other taxes payable		6,758		6,693
	$	1,667,745	$	1,608,926

XML

COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

The future minimum rental payments are as follows:

Twelve months ending September 30:
2018	$	640,936
2019		449,057
2020		288,379
2021		222,137
2022		215,885
Thereafter		4,011,857
Total	$	5,828,251

Schedule of Future Minimum Rental Receivables for Operating Leases [Table Text Block]

The future minimum sublease rental income to be received is as follows:

Twelve months ending September 30:
2018	$	209,888
2019		209,888
2020		143,923
Total	$	563,699

XML

SEGMENT REPORTING (Tables)

3 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

The following table presents summarized information by segment for the three months ended September 30, 2017:

	For the three months ended September 30, 2017
	Bluish			Herbal			Agricultural
	dogbane			products			products			Total
Segment revenue	$	1,046,297		$	3,265,893		$	3,497,304		$	7,809,494
Cost of goods		581,291			2,585,063			2,539,157			5,705,511
Business and sales related tax		4,472			11,141			-			15,613
Gross profit		460,534			669,689			958,147			2,088,370
Gross profit contribution %		22.1	%		32.1	%		45.8	%		100.0	%

The following table presents summarized information by segment for the three months ended September 30, 2016:

	For the three months ended September 30, 2016
	Bluish			Herbal			Agricultural
	dogbane			products			products			Total
Segment revenue	$	737,461		$	3,180,371		$	2,448,832		$	6,366,664
Cost of goods		367,220			2,437,713			1,631,239			4,436,172
Business and sales related tax		3,604			11,941			-			15,545
Gross profit		366,637			730,717			817,593			1,914,947
Gross profit contribution %		19.1	%		38.2	%		42.7	%		100.0	%

Total Assets as of

	September 30, 2017		June 30, 2017
Bluish Dogbane or “Luobuma”	$	7,188,041	$	6,983,551
Herbal products		37,142,813		35,222,278
Agricultural products		26,945,434		26,079,141
	$	71,276,288	$	68,284,970

XML

ORGANIZATION AND NATURE OF OPERATIONS (Details Textual) ¥ in Millions	Sep. 30, 2017	May 23, 2017 USD ($)	May 23, 2017 CNY (¥)	May 22, 2017 USD ($)	May 22, 2017 CNY (¥)	May 02, 2017 USD ($)	May 02, 2017 CNY (¥)	Apr. 28, 2017 USD ($)	Apr. 28, 2017 CNY (¥)	Apr. 19, 2017
Tenet-Jove Technological Development Corp., Ltd [Member]
Organization And Nature Of Operations [Line Items]
Minority Interest Ownership Percentage By Parent	100.00%
Tenet Huatai Technological Development Co., Ltd [Member]
Organization And Nature Of Operations [Line Items]
Equity Method Investment, Ownership Percentage	90.00%
Tiankunrunze [Member]
Organization And Nature Of Operations [Line Items]
Equity Method Investment, Ownership Percentage						45.00%	45.00%			65.00%
Tianzhuo [Member]
Organization And Nature Of Operations [Line Items]
Equity Method Investment Summarized Financial Information, Equity								$ 1,450,233	¥ 10.0
Tianhuihechuang [Member]
Organization And Nature Of Operations [Line Items]
Equity Method Investment Summarized Financial Information, Equity				$ 1,452,294	¥ 10.0
Tianxintongye [Member]
Organization And Nature Of Operations [Line Items]
Equity Method Investment Summarized Financial Information, Equity		$ 1,451,615	¥ 10.0
Shineco [Member]
Organization And Nature Of Operations [Line Items]
Equity Method Investment, Ownership Percentage						35.00%	35.00%
Biorefinery [Member]
Organization And Nature Of Operations [Line Items]
Equity Method Investment, Ownership Percentage						20.00%	20.00%
Shineco and Tiankunrunze [Member]
Organization And Nature Of Operations [Line Items]
Equity Method Investment Summarized Financial Information, Equity						$ 737,745	¥ 5.0

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Variable Interest Entity [Line Items]
Total assets	$ 63,525,453	$ 60,250,443
Total liabilities	(5,016,236)	(4,662,387)
Net assets	58,509,217	55,588,056
Property, Plant and Equipment [Member]
Variable Interest Entity [Line Items]
Total assets	9,003,058	8,958,282
Current Assets [Member]
Variable Interest Entity [Line Items]
Total assets	43,596,320	40,584,817
Other Noncurrent Assets [Member]
Variable Interest Entity [Line Items]
Total assets	$ 10,926,075	$ 10,707,344

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1)	3 Months Ended
	Sep. 30, 2017
Minimum [Member] | Buildings [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	20 years
Minimum [Member] | Machinery equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Minimum [Member] | Motor vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Minimum [Member] | Office equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Minimum [Member] | Farmland leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	12 years
Maximum [Member] | Buildings [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	50 years
Maximum [Member] | Machinery equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Maximum [Member] | Motor vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Maximum [Member] | Office equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Maximum [Member] | Farmland leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	18 years

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual)	3 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016	Jun. 30, 2017 USD ($)
Significant Accounting Policies [Line Items]
Allowance for Doubtful Accounts Receivable	$ 17,898		$ 48,450
Advances To Suppliers	$ 29,958		$ 17,618
Finite-Lived Intangible Asset, Useful Life	50 years
Foreign Currency Exchange Rate, Translation	0.1503		0.1475
Foreign Currency Transactions Weighted Average Exchange Rate	0.1499	0.1500
Value added Tax Rate	17.00%
Minimum [Member]
Significant Accounting Policies [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	20.00%
Maximum [Member]
Significant Accounting Policies [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	50.00%
Land Use Rights [Member]
Significant Accounting Policies [Line Items]
Finite-Lived Intangible Asset, Useful Life	50 years

XML

INVENTORIES (Details) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Inventory [Line Items]
Raw materials	$ 980,069	$ 1,167,553
Work-in-process	363,449	672,966
Finished goods	1,893,854	1,346,437
Less: inventory reserve	(949,826)	(840,683)
Total	$ 2,287,546	$ 2,346,273

XML

PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 15,070,481	$ 14,790,866
Less: accumulated depreciation and amortization	(4,690,057)	(4,470,470)
Property, plant and equipment, net	10,380,424	10,320,396
Buildings [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	10,709,838	10,516,245
Building improvement [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	52,750	51,797
Machinery equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	484,829	474,888
Motor vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	49,547	48,651
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	450,795	442,646
Office equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	162,805	153,836
Farmland leasehold improvement [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 3,159,917	$ 3,102,803

XML

PROPERTY AND EQUIPMENT, NET (Details 1) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Property, Plant and Equipment [Line Items]
Total farmland leasehold improvement	$ 3,159,917	$ 3,102,803
Blueberry farmland leasehold reconstruction [Member]
Property, Plant and Equipment [Line Items]
Total farmland leasehold improvement	2,427,589	2,383,711
Yew tree planting base reconstruction [Member]
Property, Plant and Equipment [Line Items]
Total farmland leasehold improvement	271,980	267,064
Greenhouse renovation [Member]
Property, Plant and Equipment [Line Items]
Total farmland leasehold improvement	$ 460,348	$ 452,028

XML

PROPERTY AND EQUIPMENT, NET (Details Textual) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Property, Plant and Equipment [Line Items]
Depreciation, Depletion and Amortization, Nonproduction, Total	$ 136,982	$ 147,367

XML

LAND USE RIGHTS (Details) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Goodwill [Line Items]
Land use rights	$ 1,671,395	$ 1,641,181
Less: accumulated amortization	(308,332)	(294,550)
Total	$ 1,363,063	$ 1,346,631

XML

LAND USE RIGHTS (Details 1) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Twelve months ending June 30:
2018	$ 33,428
2019	33,428
2020	33,428
2021	33,428
2022	33,428
Thereafter	1,195,923
Total	$ 1,363,063	$ 1,346,631

XML

LAND USE RIGHTS (Details Textual) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	50 years
Amortization	$ 9,645	$ 9,643

XML

INVESTMENTS (Details) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	$ 5,945,030	$ 5,695,080
Shaanxi Pharmaceutical Holding Group Longevity Pharmacy Co., Ltd. (Ankang Longevity Pharmacy) [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	2,921,271	2,744,391
Shaanxi Pharmaceutical Sunsimiao Drugstores Ankang Chain Co., Ltd. [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	644,916	611,228
Zhejiang Zhen’Ai Network Warehousing Services Co., Ltd. [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	2,178,843	2,139,461
Original Lab Inc. [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	$ 200,000	$ 200,000

XML

INVESTMENTS (Details 1) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Schedule of Equity Method Investments [Line Items]
Current assets	$ 35,535,941	$ 32,880,168
Noncurrent assets	264,785	281,162
Current liabilities	$ 28,538,267	$ 26,328,322

XML

INVESTMENTS (Details 2) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Schedule of Equity Method Investments [Line Items]
Net sales	$ 7,445,561	$ 7,072,032
Gross profit	969,677	895,484
Income from operations	303,766	328,365
Net income	$ 302,975	$ 328,941

XML

INVESTMENTS (Details Textual) ¥ in Millions	1 Months Ended		3 Months Ended
	Nov. 21, 2016 USD ($)	Oct. 21, 2013 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 CNY (¥)	Jun. 30, 2017 USD ($)	Oct. 21, 2013 CNY (¥)
Schedule of Equity Method Investments [Line Items]
Equity Method Investments			$ 5,945,030			$ 5,695,080
Tiancang Systematic Warehousing Project [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments		$ 2,200,000					¥ 14.5
Equity Method Investments Percentage of Share on Net Income Loss		29.00%
Equity Method Investments Percentage of Statutory Reserve Deductible		30.00%
Equity Method Investments, Percentage of Employee Welfare Fund Contributions Deductible		10.00%
Equity Method Investments Percentage of Statutory Reserve Threshold		30.00%
Original Lab Inc. [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments			200,000			$ 200,000
Payments to Acquire Businesses and Interest in Affiliates	$ 200,000
Ankang Longevity Group [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments			1,000,000		¥ 6.8
Income (Loss) from Equity Method Investments			$ 148,458	$ 161,182
Ankang Longevity Group [Member] | Sunsimiao Drugstores [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage			49.00%		49.00%
Ankang Longevity Group [Member] | Shaanxi Pharmaceutical Group [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage			49.00%		49.00%
Percentage of Preferred Distribution			7.00%
Proceeds from Equity Method Investment, Dividends or Distributions, Return of Capital			$ 368,803	$ 239,990

XML

DEPOSIT FOR BUSINESS ACQUISITION (Details Textual) - Tianjin Tajite [Member] $ in Millions	Dec. 12, 2016 USD ($)	Dec. 12, 2016 CNY (¥)
Business Acquisition, Percentage of Voting Interests Acquired	51.00%	51.00%
Payments to Acquire Businesses, Gross	$ 2.1	¥ 14,000,000

XML

PREPAID LEASES (Details)	3 Months Ended
	Sep. 30, 2017 USD ($)
2018	$ 474,550
2019	474,550
2020	388,398
2021	216,094
2022	216,094
Thereafter	1,965,873
Total	$ 3,735,559

XML

PREPAID LEASES (Details Textual) ¥ in Millions, $ in Millions	3 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2017 CNY (¥)
Operating Leases, Rent Expense	$ 5.5	¥ 36.7
Maximum [Member]
Operating Lease, Lease Term	24 years	24 years
Minimum [Member]
Operating Lease, Lease Term	5 years	5 years

XML

SHORT-TERM LOANS (Details) - USD ($)		3 Months Ended		12 Months Ended
		Sep. 30, 2017		Jun. 30, 2017
Short-term Debt		$ 2,253,975		$ 2,663,628
Wanxiang Trust Co., Ltd [Member]
Short-term Debt	[1]			$ 7,746
Debt Instrument, Maturity Date	[1],[2]			Sep. 09, 2009
Short-term Debt, Weighted Average Interest Rate	[1]			13.48%
Agricultural Bank of China One [Member]
Short-term Debt	[3]	$ 300,530		$ 295,098
Debt Instrument, Maturity Date	[2],[3]	Oct. 16, 2017		Oct. 16, 2017
Short-term Debt, Weighted Average Interest Rate	[3]	5.22%		5.22%
Agricultural Bank of China Two [Member]
Short-term Debt		$ 1,202,120	[4]	$ 737,745	[5]
Debt Instrument, Maturity Date		Dec. 07, 2017	[4]	Aug. 17, 2017	[2],[5]
Short-term Debt, Weighted Average Interest Rate		5.22%	[4]	5.66%	[5]
Agricultural Bank of China Three [Member]
Short-term Debt	[4]	$ 300,530		$ 1,180,392
Debt Instrument, Maturity Date	[4]	Jul. 03, 2018		Dec. 07, 2017
Short-term Debt, Weighted Average Interest Rate	[4]	5.22%		5.22%
Agricultural Bank of China Four [Member]
Short-term Debt	[6]	$ 450,795		$ 442,647
Debt Instrument, Maturity Date	[6]	Nov. 15, 2017		Nov. 11, 2015
Short-term Debt, Weighted Average Interest Rate	[6]	5.22%		5.22%

[1] Not collateralized or guaranteed.

[2] The Company repaid the loans in full on maturity date.

[3] Collateralized by the building owned by Xiaoyan Chen and Jing Chen, who are both related parties of the Company. Xiaoyan Chen is one of the shareholders of Ankang Longevity Group. Jing Chen is the sister of the Xiaoyan Chen but not a shareholder of Ankang Longevity Group.

[4] Guaranteed by a commercial credit guaranty company, unrelated to the Company and also by Jiping Chen, a shareholder of the Company.

[5] Guaranteed by commercial credit guaranty companies unrelated to the Company.

[6] Guaranteed by a third-party company and also by Jiping Chen, a shareholder of the Company.

XML

SHORT-TERM LOANS (Details Textual) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Interest Expense, Debt	$ 36,028	$ 39,303
Short-term Debt, Interest Rate Increase	5.38%	5.48%

XML

RELATED PARTY TRANSACTIONS (Details) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Related Party Transaction [Line Items]
Due from Related Parties, Current	$ 454,765	$ 448,833
Yang Bin [Member]
Related Party Transaction [Line Items]
Due from Related Parties, Current	150,265	147,550
Zhang Xin [Member]
Related Party Transaction [Line Items]
Due from Related Parties, Current	93,164	91,480
Chang Song [Member]
Related Party Transaction [Line Items]
Due from Related Parties, Current	74,381	73,037
Zhang Xinyu [Member]
Related Party Transaction [Line Items]
Due from Related Parties, Current	62,572	61,441
Zhang Hua [Member]
Related Party Transaction [Line Items]
Due from Related Parties, Current	42,074	28,034
Beijing Huiyinansheng Asset Management Co., Ltd [Member]
Related Party Transaction [Line Items]
Due from Related Parties, Current	22,540	22,132
Zhang Yuying [Member]
Related Party Transaction [Line Items]
Due from Related Parties, Current	0	15,567
Wang Qiwei [Member]
Related Party Transaction [Line Items]
Due from Related Parties, Current	8,266	8,117
Tian Shuangpeng [Member]
Related Party Transaction [Line Items]
Due from Related Parties, Current	$ 1,503	$ 1,475

XML

RELATED PARTY TRANSACTIONS (Details 1) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Related Party Transaction [Line Items]
Due to Related Parties, Current	$ 305,191	$ 257,880
Wu Yang [Member]
Related Party Transaction [Line Items]
Due to Related Parties, Current	96,245	94,505
Wang Sai [Member]
Related Party Transaction [Line Items]
Due to Related Parties, Current	115,830	71,942
Zhao Min [Member]
Related Party Transaction [Line Items]
Due to Related Parties, Current	$ 93,116	$ 91,433

XML

RELATED PARTY TRANSACTIONS (Details Textual) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Jun. 30, 2017
Related Party Transaction [Line Items]
Due to Related Parties, Current	$ 305,191		$ 257,880
Revenue from Related Parties	771,604	$ 800,199
Shaanxi Pharmaceutical Group [Member]
Related Party Transaction [Line Items]
Accounts Receivable, Related Parties, Current	$ 1,790,094		$ 2,205,453

XML

TAXES (Details) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Income Tax [Line Items]
Current income tax provision	$ 309,336	$ 205,519
Deferred income tax benefit	(26,479)	(3,883)
Total	$ 282,857	$ 201,636

XML

TAXES (Details 1) - USD ($)	Sep. 30, 2017	Jun. 30, 2017	Jun. 30, 2016
Income Tax [Line Items]
Allowance for doubtful accounts	$ 28,055	$ 24,598
Inventory reserve	236,622	209,236
Net operating loss carry-forwards	113,941	111,882
Total	378,618	345,716
Valuation allowance	(113,941)	(111,882)	$ (114,122)
Deferred tax assets, net	$ 264,677	$ 233,834

XML

TAXES (Details 2) - USD ($)	3 Months Ended	12 Months Ended
	Sep. 30, 2017	Jun. 30, 2017
Income Tax [Line Items]
Beginning balance	$ 111,882	$ 114,122
Exchange difference	2,059	(2,240)
Ending balance	$ 113,941	$ 111,882

XML

TAXES (Details 4) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Income Tax [Line Items]
Income tax payable	$ 1,605,869	$ 1,541,548
Value added tax payable	55,118	60,685
Business tax and other taxes payable	6,758	6,693
Taxes Payable, Current, Total	$ 1,667,745	$ 1,608,926

XML

TAXES (Details Textual)	3 Months Ended
	Sep. 30, 2017
Income Tax [Line Items]
Value Added Tax Rate Percentage	17.00%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	25.00%

XML

SHAREHOLDERS' EQUITY (Details Textual) - USD ($)	1 Months Ended	3 Months Ended
	Sep. 28, 2016	Sep. 30, 2017	Sep. 30, 2016	Jun. 30, 2017
Statutory Reserve Disclosure [Line Items]
Statutory Surplus Reserve Percentage		10.00%
Statutory Reserve Percentage On Registered Capital		50.00%
Statutory Accounting Practices, Statutory Capital and Surplus Required		$ 3,570,859		$ 3,484,449
Proceeds from Issuance Initial Public Offering		$ 0	$ 5,394,549
IPO [Member]
Statutory Reserve Disclosure [Line Items]
Stock Issued During Period, Shares, New Issues	1,713,190
Share Price	$ 4.50
Proceeds from Issuance Initial Public Offering	$ 5,400,000
Stock Issued During Period, Value, New Issues	$ 7,700,000

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CONCENTRATIONS AND RISKS (Details Textual) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Concentration Risk [Line Items]
Cash and Cash Equivalents, at Carrying Value, Beginning Balance	$ 27,728,940	$ 28,669,501	$ 23,154,551	$ 22,009,374
Sales Revenue, Net [Member] | Customer One Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	22.00%	38.00%
Sales Revenue, Net [Member] | Customer Two Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	12.00%	11.00%
Sales Revenue, Net [Member] | Customer Three Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	10.00%	11.00%
Accounts Receivable [Member] | Four Customers [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	69.00%
Accounts Receivable [Member] | Two Customers [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage		72.00%
Cost of Goods, Total [Member] | Supplier One Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	19.00%	17.00%
Cost of Goods, Total [Member] | Supplier Two Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	13.00%	17.00%
Cost of Goods, Total [Member] | Supplier Three Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	12.00%	13.00%
Cost of Goods, Total [Member] | Supplier Four Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	11.00%	12.00%
Cost of Goods, Total [Member] | Supplier Five Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	11.00%	11.00%
Cost of Goods, Total [Member] | Supplier Six Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage		10.00%
CHINA
Concentration Risk [Line Items]
Cash and Cash Equivalents, at Carrying Value, Beginning Balance	$ 27,622,150		$ 23,112,124
CHINA | Assets, Total [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	100.00%
CHINA | Sales Revenue, Segment [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage		100.00%

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COMMITMENTS AND CONTINGENCIES (Details)	Sep. 30, 2017 USD ($)
Schedule Of Future Minimum Rental Payments For Operating Leases [Line Items]
2018	$ 640,936
2019	449,057
2020	288,379
2021	222,137
2022	215,885
Thereafter	4,011,857
Total	$ 5,828,251

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COMMITMENTS AND CONTINGENCIES (Details 1)	Sep. 30, 2017 USD ($)
Future Minimum Payments Receivable for Operating Leases [Line Items]
2018	$ 209,888
2019	209,888
2020	143,923
Total	$ 563,699

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COMMITMENTS AND CONTINGENCIES (Details Textual) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Commitments And Contingencies [Line Items]
Operating Leases, Rent Expense, Net	$ 128,456	$ 99,839
Lease Expiration Date	May 31, 2020
Operating Leases, Income Statement, Sublease Revenue	$ 53,971	$ 53,998
Bonwick Capital Partners, Llc [Member]
Commitments And Contingencies [Line Items]
Loss Contingency, Damages Sought, Value	$ 6,000,000
Loss Contingency, Lawsuit Filing Date	May 16, 2017
Loss Contingency, Allegations	Plaintiff alleges that the Company entered into an agreement with Plaintiff (the “Agreement”), pursuant to which Plaintiff was to provide the Company with financial advisory services in connection with the Company’s initial public offering in the United States. Plaintiff alleges that the Company breached the Agreement

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SEGMENT REPORTING (Details) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Jun. 30, 2017
Segment Reporting Information [Line Items]
Segment revenue	$ 7,809,494	$ 6,366,664
Gross profit	2,088,370	1,914,947
Assets	71,276,288		$ 68,284,970
Sales Revenue, Segment [Member]
Segment Reporting Information [Line Items]
Segment revenue	7,809,494	6,366,664
Cost of goods	5,705,511	4,436,172
Business and sales related tax	15,613	15,545
Gross profit	$ 2,088,370	$ 1,914,947
Gross profit contribution %	100.00%	100.00%
Bluish Dogbane [Member]
Segment Reporting Information [Line Items]
Assets	$ 7,188,041		6,983,551
Bluish Dogbane [Member] | Sales Revenue, Segment [Member]
Segment Reporting Information [Line Items]
Segment revenue	1,046,297	$ 737,461
Cost of goods	581,291	367,220
Business and sales related tax	4,472	3,604
Gross profit	$ 460,534	$ 366,637
Gross profit contribution %	22.10%	19.10%
Herbal Products [Member]
Segment Reporting Information [Line Items]
Assets	$ 37,142,813		35,222,278
Herbal Products [Member] | Sales Revenue, Segment [Member]
Segment Reporting Information [Line Items]
Segment revenue	3,265,893	$ 3,180,371
Cost of goods	2,585,063	2,437,713
Business and sales related tax	11,141	11,941
Gross profit	$ 669,689	$ 730,717
Gross profit contribution %	32.10%	38.20%
Agricultural Products [Member]
Segment Reporting Information [Line Items]
Assets	$ 26,945,434		$ 26,079,141
Agricultural Products [Member] | Sales Revenue, Segment [Member]
Segment Reporting Information [Line Items]
Segment revenue	3,497,304	$ 2,448,832
Cost of goods	2,539,157	1,631,239
Business and sales related tax	0	0
Gross profit	$ 958,147	$ 817,593
Gross profit contribution %	45.80%	42.70%

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SUBSEQUENT EVENTS (Details Textual) ¥ in Millions	Oct. 27, 2017 CNY (¥)
Subsequent Event [Member]
Subsequent Event [Line Items]
Value of Products To Be Purchased	¥ 20