UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-8
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
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
No.) |
T1, South Tower, Jiazhaoye Square
Chaoyang
District, Beijing, People’s Republic of China, 100022
(Address
of Principal Executive Offices) (Zip Code)
2023
Equity Incentive Plan
(Full
title of the plans)
Vcorp
Services, LLC
1013
Centre Road, Suite 403-B
Wilmington,
DE 19805
New
Castle County
845-425-0077
(Name
and address of agent for service)
(+86)
10-59246103
(Telephone
number, including area code, of agent for service)
It
is requested that copies of notices and communications from the Securities and Exchange Commission be sent to:
Huan
Lou, Esq.
David
Manno, Esq.
Sichenzia
Ross Ference LLP
1185
Avenue of the Americas, 31st Floor
New
York, NY 10036
(212)
930-9700
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☒ |
Smaller
reporting company ☒ |
| |
Emerging
growth company ☐ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
EXPLANATORY
NOTE
This
Registration Statement on Form S-8 (this “Registration Statement”) is being filed by Shineco, Inc., a Delaware corporation
(the “Company”) relating to 4,000,000 shares of common stock, $0.001 par value per share (the “Common Stock”),
issuable under 2023 Equity Incentive Plan.
This
Registration Statement also includes a prospectus (the “Reoffer Prospectus”) prepared in accordance with General Instruction
C of Form S-8 and in accordance with the requirements of Part I of Form S-3. This Reoffer Prospectus may be used for the reoffer and
resale of shares of Common Stock on a continuous or delayed basis that may be deemed to be “restricted securities” and/or
“control securities” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”),
and the rules and regulations promulgated thereunder, that are issuable to certain of our executive officers, employees, consultants
and directors identified in the Reoffer Prospectus. The number of shares of Common Stock included in the Reoffer Prospectus represents
shares of Common Stock issuable to the selling stockholders pursuant to equity awards, including stock options and restricted stock grants,
granted to the selling stockholders and does not necessarily represent a present intention to sell any or all such shares of Common Stock.
As
specified in General Instruction C of Form S-8, until such time as we meet the registrant requirements for use of Form S-3, the number
of shares of Common Stock to be offered by means of this reoffer prospectus, by each of the selling security holders, and any other person
with whom he or she is acting in concert for the purpose of selling our shares of Common Stock, may not exceed, during any three month
period, the amount specified in Rule 144(e) of the Securities Act.
PART
I
INFORMATION
REQUIRED IN THE SECTION 10(a) PROSPECTUS
| Item
1. |
Plan
Information. |
The
Company will provide each recipient of a grant under the 2023 Equity Incentive Plan (the “Recipients”) with documents
that contain information related to the 2023 Equity Incentive Plan (the “Plan”), and other information including,
but not limited to, the disclosure required by Item 1 of Form S-8, which information is not required to be and is not being filed as
a part of this Registration Statement on Form S-8 (the “Registration Statement”) or as prospectuses or prospectus
supplements pursuant to Rule 424 under the Securities Act. The foregoing information and the documents incorporated by reference in response
to Item 3 of Part II of this Registration Statement, taken together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act. A Section 10(a) prospectus will be given to each Recipient who receives shares of Common Stock covered by this
Registration Statement, in accordance with Rule 428(b)(1) under the Securities Act.
| Item
2. |
Registrant
Information and Employee Plan Annual Information. |
Upon
written or oral request, any of the documents incorporated by reference in Item 3 of Part II of this Registration Statement (which documents
are incorporated by reference in this Section 10(a) Prospectus) and other documents required to be delivered to eligible employers, non-employee
directors and consultants pursuant to Rule 428(b) are available without charge by contacting:
Jennifer
Zhan
Chief
Executive Officer
Shineco,
Inc.
T1, South Tower, Jiazhaoye
Square
Chaoyang District, Beijing, People’s Republic of China, 100022
(+86)
10-59246103
REOFFER
PROSPECTUS
SHINECO,
INC.
Up
to 3,805,000 Shares of Common Stock
Issuable
under certain awards granted under
2023
Equity Incentive Plan
This
reoffer prospectus relates to the public resale, from time to time, of an aggregate of 3,805,000 shares (the “Shares”)
of our common stock, $0.001 par value per share (the “Common Stock”) by certain security holders identified herein
in the section titled “Selling Securityholders”. Such shares may be acquired in connection with common underlying options
issued under 2023 Equity Incentive Plan. You should read this reoffer prospectus carefully before you invest in our Common Stock.
Such
resales shall take place on NASDAQ, or such other stock market or exchange on which our Common Stock may be listed or quoted, in negotiated
transactions or otherwise, at market prices prevailing at the time of the sale or at prices otherwise negotiated (see “Plan of
Distribution” starting on page 24 of this reoffer prospectus). We will receive no part of the proceeds from sales made under
this reoffer prospectus. The Selling Securityholders will bear all sales commissions and similar expenses. Any other expenses incurred
by us in connection with the registration and offering and not borne by the Selling Securityholders will be borne by us.
This
reoffer prospectus has been prepared for the purposes of registering our shares of Common Stock under the Securities Act to allow for
future sales by Selling Securityholders on a continuous or delayed basis to the public without restriction, provided that the amount
of shares of Common Stock to be offered or resold under this Reoffer Prospectus by each Selling Securityholder or other person with whom
he or she is acting in concert for the purpose of selling shares of Common Stock, may not exceed, during any three-month period, the
amount specified in Rule 144(e) under the Securities Act. We have not entered into any underwriting arrangements in connection with the
sale of the shares covered by this reoffer prospectus. The Selling Securityholders identified in this reoffer prospectus, or their pledgees,
donees, transferees or other successors-in-interest, may offer the shares covered by this reoffer prospectus from time to time through
public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated
prices.
The
securities offered by this reoffer prospectus involve a high degree of risks. Shineco is a holding company incorporated in Delaware.
As a holding company with no material operations of its own, Shineco conducts a substantial amount of its operations through Dream
Partners and its operating subsidiaries in China. The common stock offered in this reoffer prospectus is the capital stock of Shineco,
the Delaware holding company.
Because
of Shineco’s corporate structure, the Company is subject to the risks due to uncertainty of the interpretation and the application
of the PRC laws and regulations. As of the date of this reoffer prospectus, there is no laws, regulations or other rules that require
the China based operating entities to obtain permission or approvals from any Chinese authorities to list or continue listing Shineco
or its affiliate’s securities on U.S. stock exchanges, and nor does Shineco have received or was denied such permission. However,
there is no guarantee that Shineco will receive or not be denied permission from Chinese authorities to continue listing on U.S. exchanges
in the future.
Shineco
is also subject to the legal and operational risks associated with being based in and having the majority of its operations in China.
These risks could result in material changes in operations, or a complete hindrance of Shineco’s ability to offer or continue to
offer its securities to investors, and could cause the value of Shineco’s securities to significantly decline or become worthless.
Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little
advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies
listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding
the efforts in anti-monopoly enforcement. On July 6, 2021, the General Office of the Communist Party of China Central Committee and the
General Office of the State Council jointly issued an announcement to crack down on illegal activities in the securities market and promote
the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen
cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas,
and to establish and improve the system of extraterritorial application of the PRC securities laws. On July 10, 2021, the PRC State Internet
Information Office issued the Measures of Cybersecurity Review, which requires cyberspace companies with personal information of more
than one (1) million users that want to list their securities on a non-Chinese stock exchange to file a cybersecurity review with the
Office of Cybersecurity Review of China. On December 28, 2021, a total of thirteen governmental departments of the PRC, including the
Cyberspace Administration of China (the “CAC”), issued the Measures of Cybersecurity Review, which became effective on February
15, 2022. The Cybersecurity Review Measures provide that an online platform operator, which possesses personal information of at least
one million users, must apply for a cybersecurity review by the CAC if it intends to be listed in foreign countries. Because our current
operations do not possess personal information from more than one million users at this moment, Shineco does not believe that it is subject
to the cybersecurity review by the CAC.
As
of the date of this reoffer prospectus, neither the Measures of Cybersecurity Review nor the anti-monopoly regulatory actions has impacted
Shineco’s ability to conduct its business, accept foreign investments, or continue its listing on Nasdaq or on another non-Chinese
stock exchange; however, there are uncertainties in the interpretation and enforcement of these new laws and guidelines, which could
materially and adversely impact the Company’s overall business and financial outlook. In summary, the recent statements and regulatory
actions by China’s government related to the use of variable interest entities and data security or antimonopoly concerns have
not affected our ability to conduct our business, accept foreign investments, or list on a U.S. or other foreign exchange. However, since
these statements and regulatory actions by the PRC government are newly published and official guidance and related implementation rules
have not been issued, it is highly uncertain what the potential impact such modified or new laws and regulations will have on Shineco’s
daily business operation, the ability to accept foreign investments and list on a U.S. or non-Chinese exchange. The Standing Committee
of the National People’s Congress (the “SCNPC”) or other PRC regulatory authorities may in the future promulgate laws,
regulations or implementing rules that would require Shineco or any of its subsidiaries to obtain regulatory approval from Chinese authorities
before listing in the U.S. See “Risk Factors - Risks Associated With Doing Business in China” on page 11.
Our
common stock may be prohibited from trading on a national exchange or “over-the-counter” markets under the Holding Foreign
Companies Accountable Act (the “HFCAA”) if the Public Company Accounting Oversight Board (“PCAOB”) determines
that it is unable to inspect or fully investigate our auditor and as a result the exchange where our securities are traded may delist
our securities. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (the
“AHFCAA”), which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an
issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive
years instead of three consecutive years. Pursuant to the HFCAA, the PCAOB issued a Determination Report on December 16, 2021, which
found that the PCAOB was unable to inspect or investigate completely certain named registered public accounting firms headquartered in
mainland China and Hong Kong. Our independent registered public accounting firm is headquartered in Singapore and has been inspected
by the PCAOB on a regular basis and as such, it is not affected by or subject to the PCAOB’s Determination Report. Notwithstanding
the foregoing, in the future, if there is any regulatory change or step taken by PRC regulators that does not permit our auditor to provide
audit documentations located in China or Hong Kong to the PCAOB for inspection or investigation, you may be deprived of the benefits
of such inspection which could result in limitation on or restriction to our access to the U.S. capital markets and trading of our securities,
including trading on the national exchange and trading on “over-the-counter” markets.
Instead
of a Chinese operating company, Shineco is a holding company incorporated in the State of Delaware. You will be purchasing the shares
of common stock of Shineco, the domestic holding company with offshore subsidiaries and affiliates pursuant to this registration statement.
You are not directly investing in any of our affiliated entities.
Shineco’s
operating subsidiaries receive substantially all of the Company’s revenue in RMB. As of the date of this reoffer prospectus, neither
Shineco or our subsidiaries have the intention to distribute earnings on any corporate level in the near future. We intend
to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in
the foreseeable future. As of the date of this reoffer prospectus, none of our consolidated subsidiaries have made any
transfers of cash, dividends or distributions to Shineco or shareholders of Shineco.
Our
Common Stock is quoted on NASDAQ under the symbol “SISI” and the last reported sale price of our Common Stock on September
26, 2023 was $0.144 per share .
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED
IF THIS REOFFER PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The
date of this reoffer prospectus is September 29, 2023
SHINECO,
INC.
TABLE
OF CONTENTS
Except
where the context otherwise requires, the terms, “we,” “us,” “our” or “the Company,”
refer to the business of Shineco, Inc., an Delaware corporation and its subsidiaries.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
reoffer prospectus and the documents and information incorporated by reference in this reoffer prospectus include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended, or the Exchange Act. These statements are based on our management’s beliefs and assumptions and
on information currently available to our management. Such forward-looking statements include those that express plans, anticipation,
intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact.
All
statements in this reoffer prospectus and the documents and information incorporated by reference in this reoffer prospectus that are
not historical facts are forward-looking statements. We may, in some cases, use terms such as “anticipates,” “believes,”
“could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,”
“predicts,” “projects,” “should,” “will,” “would” or similar expressions
or the negative of such items that convey uncertainty of future events or outcomes to identify forward-looking statements.
Forward-looking
statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake
no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except
as may be required by applicable law. Although we believe that the expectations reflected in the forward-looking statements are reasonable,
we cannot guarantee future results, levels of activity, performance or achievements.
We
caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees
or assurances of future performance.
Information
regarding market and industry statistics contained in this reoffer prospectus, including the documents that we incorporate by reference,
is included based on information available to us that we believe is accurate. It is generally based on academic and other publications
that are not produced for purposes of securities offerings or economic analysis. Forecasts and other forward-looking information obtained
from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market
size, revenue and market acceptance of products and services. Except as required by U.S. federal securities laws, we have no obligation
to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect those statements.
PROSPECTUS
SUMMARY
The
Securities and Exchange Commission (the “Commission”) allows us to ‘‘incorporate by reference’’ certain
information that we file with the Commission, which means that we can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be part of this reoffer prospectus, and information that we file
later with the Commission will update automatically, supplement and/or supersede the information disclosed in this reoffer prospectus.
Any statement contained in a document incorporated or deemed to be incorporated by reference in this reoffer prospectus shall be deemed
to be modified or superseded for purposes of this reoffer prospectus to the extent that a statement contained in this reoffer prospectus
or in any other document that also is or is deemed to be incorporated by reference in this reoffer prospectus modifies or supersedes
such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute
a part of this reoffer prospectus. You should read the following summary together with the more detailed information regarding our company,
our Common Stock and our financial statements and notes to those statements appearing elsewhere in this reoffer prospectus or incorporated
herein by reference.
Our
Company
General
Overview
Shineco,
Inc. is a holding company incorporated in Delaware. As a holding company with no material operations of our own, we conduct a substantial
majority of our operations through the operating entities established in the British Virgin Islands and the People’s Republic
of China, or the PRC. The Company operates through its majority owned subsidiary Dream Partner Limited (“Dream Partner”) a
holding company incorporated in British Virgin Islands, and its subsidiary Chongqing Wintus Group, a corporation incorporated under the
laws of mainland China (“Wintus”)
Our common stock that currently listed on the Nasdaq Capital Markets
are shares of our Delaware holding company.
The
Company via its subsidiaries’ integrates the production, processing, export and domestic trade of cocoon silk products in the
silk manufacturing industrial chain, established for more than 20 years, committed to the research and development, production and
sales of functional silk fabrics. Through Wintus the Company owns several large-scale sericulture bases in mainland China, where we
can use them to cultivate silkworm cocoons, which is the raw material for silk production. The Company also has production plant
equipped with advanced machinery, such as Italian rapier looms to produce silk fabric. The Company’s products are sold
domestically and globally, mainly in India. The Company cooperates with a number of scientific research institutions conducting silk
fabric innovative research and development and market applications, and launching a variety of new functional silk fabrics, which
possess various qualities, such as waterproof, oilproof, antibacterial, antiviral and other characters, in response to
market demand. The Company advocates a healthy, comfortable and tasteful lifestyle, creates economic and social benefits with high
value-added products, and enhances the core competitiveness of enterprises. The Company generates revenue from the following three streams:
Processing
and distributing agricultural produce as well as growing and cultivating mulberry trees and silkworm cocoons - Wintus
currently breeds silkworms and produces related agricultural products, and continues to develop the sericulture base. Wintus works
closely with domestic scientific research institutions to promote mulberry seeds, silkworm seeds and advanced production modes
according to local conditions, reduce the risk of sericulture planting, reduce labor intensity and increase farmers’ income.
The adequate output and high quality of silkworm cocoons in our own sericulture base not only can ensure our own fabric production
and manufacturing, but also can satisfy the outside customers. Wintus also carries out fruit distribution
business through collaboration with many domestic fruit traders, and continuously expand the domestic market with high quality
imported fruits. Wintus imports high quality fruits from Southeast Asian countries, such as Thailand and
Malaysia.
Processing
and distributing silk and silk fabrics as well as other by-products – Processing and distributing silk and silk
fabrics is our major business. We conduct this segment of our business relying on our own bases and factory. Through the integrated
operation system of trade, industry and agriculture, we can achieve real and controllable raw materials, control the production
costs and production cycles. In the last 20 years of development, we have continued to innovate and upgrade, introduced advanced
intelligent manufacturing equipment, improved production efficiency and product quality, developed innovative varieties, and had
strong market competitiveness and won the recognition of new and old customers. Our silk textiles are sold
domestically and globally, mainly in India.
Distributing
automotive batteries for production of electric automotive - In 2020, Wintus began to export automotive batteries to U.S.
automakers for manufacturing electric automotives. Due to the new policy requirements of “manufacturing returning to the United States” introduced in the second half of 2022, American automobile manufacturers have adjusted their procurement strategies accordingly
and selected more products produced and assembled in the United States. After this, our revenue from sales of automotive
batteries declined significantly.
Factors
Affecting Financial Performance
The
Company believes that the following factors will affect our financial performance:
Increasing
demand for our products – The Company believes that the increasing demand for its agricultural products will have a
positive impact on its financial position. The Company plans to develop new products and expand its distribution network as well as
to grow its business through product innovation, aiming at increasing its brand awareness, developing customer loyalty,
meeting customer demands in various markets and providing solid foundations for its growth.
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 aur operations at competitive prices. The Company will focus on improving its long-term
cost control strategies including establishing long-term alliances with certain suppliers to ensure adequate supply. The Company
currently enjoys forward the economies of scale and advantages from the nationwide distribution network and diversified
offerings.
Economic
and Political Risks
The
Company’s operations are conducted primarily in the PRC and subject to special considerations and significant risks associated
with suppliers and customers in Southeast Asia and North America. These risks include the political, economic and legal environment
and foreign currency exchange risks. The Company’s financial results may be adversely affected by changes in the political and
social conditions in the PRC, and PRC 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.
Recent
Development
On
September 19, 2023, Shineco Life Science Group Hong Kong Co., Limited (“Shineco Life”), a company established under the laws
of Hong Kong and a wholly owned subsidiary of the Company (together as the “Buying Parties”) closed the
acquisition of 71.42% equity interest (the “Acquisition”) in Dream Partner Limited, a BVI corporation (“Dream Partner”),
pursuant to the stock purchase agreement (the “Agreement”) dated May 29, 2023, entered into by and among the Buying Parties,
Dream Partner, Chongqing Wintus Group, a corporation incorporated under the laws of mainland China (“Wintus”) and certain
shareholders of Dream Partner (the “Sellers,” together with Dream Partner and Wintus as the “Selling Parties”).
As
the consideration for the Acquisition, the Company (a) paid the Sellers an aggregate cash consideration of $2,000,000 (the “Cash
Consideration”); (b) issued certain shareholders, as listed in the Agreement, an aggregate of 10,000,000 shares of the Company’s
restricted Common Stock (the “Shares”); and (c) transferred and sold to the Sellers 100% of the Company’s equity interest
in Beijing Tenet-Jove Technological Development Co., Ltd. (the “Tenet-Jove Shares”).
Following
the closing of the Acquisition and the sale of the Tenet-Jove Shares, the Company divested its equity interest in its operating subsidiary
Beijing Tenet-Jove Technological Development Co., Ltd. (“Tenet-Jove”) and thereby loosing its VIE Structure.
Corporate
Structure
The
chart below depicts the corporate structure of the Company as of the date of this reoffer prospectus.
Intellectual
Property
Trademarks
We
regard our trademarks as an important part of our business due to the name recognition of our customers. Our subsidiary, Wintus, has
obtained 20 trademark registrations at the China Trademark Office. As of the date of this prospectus, we are not aware of any valid claim
or challenges to our right to use our registered trademark or any counterfeit or other infringement to our registered trademark.
Employees
As
of June 30, 2023 we employed a total of 87 full-time and no part-time employees in the following functions.
| Department | |
June 30, 2023 | |
| Senior Management | |
| 12 | |
| Human Resource & Administration | |
| 9 | |
| Finance | |
| 11 | |
| Research & Development | |
| 6 | |
| Production & Procurement | |
| 38 | |
| Sales & Marketing | |
| 11 | |
| Total | |
| 87 | |
Our
employees are not represented by a labor organization or covered by a collective bargaining agreement. We have not experienced any work
stoppages.
The
Company plans to hire additional employees as required. Its management and employees enjoy both compensation and welfare benefits pursuant
to Chinese laws. We are required under PRC law to make contributions to employee benefit plans at specified percentages of our after-tax
profit. In addition, we are required by PRC law to cover employees in China with various types of social insurance. In 2023 and 2022,
we contributed approximately $200,875 and $136,398, respectively, to employee social insurance. The effect on our liquidity by the payments
for these contributions is immaterial. We believe that we are in material compliance with the relevant PRC employment laws.
Relevant
PRC Regulations
Permissions
from the PRC Authorities to Issue Our Common Stock to Foreign Investors
As
of the date of this report, Shineco and our subsidiaries, (1) are not required to obtain any permission from any PRC authorities
to offer, sell or issue our common stock to non-Chinese investors, (2) are not covered by the permission requirements from the China
Securities Regulatory Commission (the “CSRC”), Cyberspace Administration of China (the “CAC”), or any other regulatory
agency that is required to approve of the Wintus’ operations, and (3) have not received nor been denied such permissions by
any PRC authorities. Nevertheless, the General Office of the Central Committee of the Communist Party of China and the General Office
of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,”
or the July 6, 2021 Opinions, which were made available to the public on July 6, 2021. The July 6, 2021 Opinions emphasized the need
to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings
by Chinese companies. Given the current PRC regulatory environment, it is uncertain whether and when we, any of our subsidiaries, will be required to obtain any permission from the PRC government to list or continue listing on a U.S. stock exchange in the future,
and even when we obtain such permission, whether it will be denied or rescinded. We have been closely monitoring regulatory developments
in China regarding any necessary approvals from the CSRC, CAC or other PRC governmental authorities required for overseas listings.
If
(i) we, our subsidiaries inadvertently conclude that any of such permission was not required or (ii) it is determined in
the future that the approval of the CSRC, CAC or any other regulatory authority is required for maintaining listing of our securities
on Nasdaq, we will actively seek such permissions or approvals but may face sanctions by the CSRC, CAC or other PRC regulatory agencies.
These regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China,
limit our operations in China, delay or restrict the repatriation of the proceeds from offerings into China or take other actions that
could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading
price of our securities. The CSRC, CAC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for
us, to halt offerings before settlement and delivery of our securities. Any uncertainties and/or negative publicity regarding such an
approval requirement could have a material adverse effect on the trading price of our securities. In the event that we failed to obtain
such required approvals or permissions, it would be likely that our securities would be delisted from the Nasdaq or any other foreign
exchange our securities are listed then.
The
Holding Foreign Companies Accountable Act
On
May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act (“HFCAA”) requiring a foreign company
to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company
uses a foreign auditor not subject to PCAOB inspection. On December 18, 2020, the Holding Foreign Companies Accountable Act or HFCAA
was signed into law. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which became law in December 2020
and prohibits foreign companies from listing their securities on U.S. exchanges if the company has been unavailable for PCAOB inspection
or investigation for three consecutive years.
Our
common stock may be prohibited from trading on a national exchange or “over-the-counter” markets under the HFCAA if the Public
Company Accounting Oversight Board (“PCAOB”) determines that it is unable to inspect or fully investigate our auditor and
as a result the exchange where our securities are traded may delist our securities. Furthermore, on June 22, 2021, the U.S. Senate passed
the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”), which was signed into law on December 29, 2022,
amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor
is not subject to PCAOB inspections for two consecutive years instead of three consecutive years. Pursuant to the HFCAA, the PCAOB issued
a Determination Report on December 16, 2021, which found that the PCAOB was unable to inspect or investigate completely certain named
registered public accounting firms headquartered in mainland China and Hong Kong. Our independent registered public accounting firm is
headquartered in Singapore and has been inspected by the PCAOB on a regular basis and as such, it is not affected by or subject to the
PCAOB’s Determination Report. Notwithstanding the foregoing, in the future, if there is any regulatory change or step taken by
PRC regulators that does not permit our auditor to provide audit documentations located in China or Hong Kong to the PCAOB for inspection
or investigation, you may be deprived of the benefits of such inspection which could result in limitation on or restriction to our access
to the U.S. capital markets and trading of our securities, including trading on the national exchange and trading on “over-the-counter”
markets.
Our
auditor, an independent registered public accounting firm, as an auditor of companies that are traded publicly in the United States and
a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to
assess its compliance with the applicable professional standards. Our newly engaged auditor Assensture PAC is headquartered in Singapore,
and is subject to inspection by the PCAOB on a regular basis.
| The Offering |
| Outstanding Common Stock: |
43,840,642
shares of our Common Stock are outstanding as
of September 26, 2023. |
| |
|
| Common Stock Offered: |
Up to 3,805,000 shares of Common Stock for sale by the selling securityholders for their own account pursuant to the Plan. |
| |
|
| Selling Securityholders: |
The selling securityholders are set forth in the section titled “Selling Securityholders” of this reoffer prospectus on page 23. The amount of securities to be offered or resold by means of the reoffer prospectus by the designated selling securityholders may not exceed, during any three month period, the amount specified in Rule 144(e). |
| |
|
| Use of proceeds: |
We will not receive any proceeds from the sale of our Common Stock by the selling securityholders. |
| |
|
| Risk Factors: |
The securities offered hereby involve a high degree of risk. See “Risk Factors.” |
| |
|
| Nasdaq trading symbol: |
SISI |
RISK
FACTORS
Risks
Relating to Our Corporate Structure
Risks
Associated With Doing Business in China
Changes
in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the
profitability of our business.
The
PRC’s economy is in a transition from a planned economy to a market-oriented economy subject to five-year and annual plans adopted
by the government that set national economic development goals. Policies of the PRC government can have significant effects on the economic
conditions within the PRC. The PRC government has confirmed that economic development will follow the model of a market economy. Under
this direction, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and
business development in the PRC will follow market forces. While we believe that this trend will continue, there can be no assurance
that this will be the case. A change in policies by the PRC government could adversely affect our interests by, among other factors:
changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources
of supplies, or the expropriation or nationalization of private enterprises. Although the PRC government has been pursuing economic reform
policies for more than two decades, there is no assurance that the government will continue to pursue such policies or that such policies
may not be significantly altered, especially in the event of a change in leadership, social or political disruption, confiscatory taxation,
restrictions on currency conversion, imports or sources of supplies, or ability to continue as a for-profit enterprise, expropriation
or nationalization of private enterprises, changes in the allocation of resources or other circumstances affecting the PRC’s political,
economic and social environment.
Substantial
uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations
could have a significant impact upon the business that we may be able to conduct in the PRC and accordingly on the results of our operations
and financial condition.
Our
business operations conducted through our subsidiaries in China, may be adversely affected by the current and future political environment in the
PRC. The Chinese government exerts substantial influence and control over the manner in which we must conduct our business activities.
Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations. Under the current government leadership,
the government of the PRC has been pursuing reform policies which have adversely affected China-based operating companies whose securities
are listed in the United States, with significant policies changes being made from time to time without notice. There are substantial
uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations
governing our business, or the enforcement and performance of our contractual arrangements with borrowers in the event of the imposition
of statutory liens, death, bankruptcy or criminal proceedings. Only after 1979 did the Chinese government begin to promulgate a comprehensive
system of laws that regulate economic affairs in general, deal with economic matters such as foreign investment, corporate organization
and governance, commerce, taxation and trade, as well as encourage foreign investment in China. Although the influence of the law has
been increasing, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently
cover all aspects of economic activities in China. Also, because these laws and regulations are relatively new, and because of the limited
volume of published cases and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve
significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively.
In addition, there have been constant changes and amendments of laws and regulations over the past 30 years in order to keep up with
the rapidly changing society and economy in China. Because government agencies and courts provide interpretations of laws and regulations
and decide contractual disputes and issues, their inexperience in adjudicating new business and new polices or regulations in certain
less developed areas causes uncertainty and may affect our business. Consequently, we cannot predict the future direction of Chinese
legislative activities with respect to either businesses with foreign investment or the effectiveness on enforcement of laws and regulations
in China. The uncertainties, including new laws and regulations and changes of existing laws, as well as judicial interpretation by inexperienced
officials in the agencies and courts in certain areas, may cause possible problems to foreign investors. Although the PRC government
has been pursuing economic reform policies for more than two decades, the PRC government continues to exercise significant control over
economic growth in the PRC through the allocation of resources, controlling payments of foreign currency, setting monetary policy and
imposing policies that impact particular industries in different ways. We cannot assure you that the PRC government will continue to
pursue policies favoring a market oriented economy or that existing policies will not be significantly altered, especially in the event
of a change in leadership, social or political disruption, or other circumstances affecting political, economic and social life in the
PRC. Any adverse changes in Chinese laws and regulations and the Chinese government’s significant oversight and discretion over
the conduct of our business could significantly limit or completely hinder our ability to offer or continue to offer securities to investors
and cause the value of our securities to significantly decline or be worthless.
Adverse
regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory
scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance
requirements for companies like us with significant China-based operations, all of which could increase our compliance costs, subject
us to additional disclosure requirements.
The
recent regulatory developments in China, in particular with respect to restrictions on China-based companies raising capital offshore,
may lead to additional regulatory review in China over our financing and capital raising activities in the United States. In addition,
we may be subject to industry-wide regulations that may be adopted by the relevant PRC authorities, which may have the effect of limiting
our service offerings, restricting the scope of our operations in China, or causing the suspension or termination of our business operations
in China entirely, all of which will materially and adversely affect our business, financial condition and results of operations. We
may have to adjust, modify, or completely change our business operations in response to adverse regulatory changes or policy developments,
and we cannot assure you that any remedial action adopted by us can be completed in a timely, cost-efficient, or liability-free manner
or at all.
On
July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman of
the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating
companies before their registration statements will be declared effective. On August 1, 2021, the China Securities Regulatory Commission
stated in a statement that it had taken note of the new disclosure requirements announced by the SEC regarding the listings of Chinese
companies and the recent regulatory development in China, and that both countries should strengthen communications on regulating China-related
issuers. We cannot guarantee that we will not be subject to tightened regulatory review and we could be exposed to government interference
in China.
A
slowdown or other adverse developments in the PRC economy may harm our customers and the demand for our services and our products.
All
of our operations are conducted in the PRC. Although the PRC economy has grown significantly in recent years, there is no assurance that
this growth will continue. A slowdown in overall economic growth, an economic downturn, a recession or other adverse economic developments
in the PRC could significantly reduce the demand for our products and services.
If
relations between the United States and China worsen, investors may be unwilling to hold or buy our stock and our stock price may decrease.
At
various times during recent years, the United States and China have had significant disagreements over political and economic issues.
Controversies may arise in the future between these two countries that may affect our economic outlook both in the United States and
in China. Any political or trade controversies between the United States and China, whether or not directly related to our business,
could reduce the price of our common stock.
Future
inflation in China may inhibit the profitability of our business in China.
In
recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. Rapid economic growth can lead
to growth in the money supply and rising inflation. If prices for our services and products rise at a rate that is insufficient to compensate
for the rise in the costs of supplies, it may have an adverse effect on profitability. These factors have led to the adoption by Chinese
government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and
contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take
other action, which could inhibit economic activity in China, and thereby harm the market for our services and products.
The
fluctuation of the Renminbi may have a material adverse effect on your investment.
The
change in value of the Renminbi against the U.S. dollar and other currencies is affected by, various factors, such as changes in China’s
political and economic conditions and China’s foreign exchange controls. On July 21, 2005, the PRC government changed its decade-old
policy of pegging the value of the Renminbi to the U.S. dollar. Under such policy, the Renminbi was permitted to fluctuate within a narrow
and managed band against a basket of certain foreign currencies. Later on, the People’s Bank of China has decided to further implement
the reform of the RMB exchange regime and to enhance the flexibility of RMB exchange rates. Such changes in policy have resulted in a
significant appreciation of the Renminbi against the U.S. dollar since 2005. There remains significant international pressure on the
PRC government to adopt a more flexible currency policy, which could result in a further and more significant adjustment of the Renminbi
against the U.S. dollar. Any significant appreciation or revaluation of the Renminbi may have a material adverse effect on the value
of, and any dividends payable on, shares of our common stock in foreign currency terms. More specifically, if we decide to convert our
Renminbi into U.S. dollars, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount
available to us. To the extent that we need to convert U.S. dollars we receive from our 2018 offering into Renminbi for our operations,
appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion.
In addition, appreciation or depreciation in the exchange rate of the Renminbi to the U.S. dollar could materially and adversely affect
the price of shares of our common stock in U.S. dollars without giving effect to any underlying change in our business or results of
operations.
Restrictions
on currency exchange may limit our ability to receive and use our revenue effectively.
Substantially
all of our revenue is denominated in Renminbi. As a result, restrictions on currency exchange may limit our ability to use revenue generated
in Renminbi to fund any business activities we may have outside China in the future or to make dividend payments to our stockholders
in U.S. dollars. Under current PRC laws and regulations, Renminbi is freely convertible for current account items, such as trade and
service-related foreign exchange transactions and dividend distributions. However, Renminbi is not freely convertible for direct investment
or loans or investments in securities outside China, unless such use is approved by SAFE. For example, foreign exchange transactions
under our subsidiary’s capital account, including principal payments in respect of foreign currency-denominated obligations, remain
subject to significant foreign exchange controls and the approval requirement of SAFE. The statutory limit for the total amount of foreign
debts of a foreign-invested company is the difference between the amount of total investment as approved by MOFCOM or its local counterpart
and the amount of registered capital of such foreign-invested company. These limitations could affect our ability to convert Renminbi
into foreign currency for capital expenditures.
Our
subsidiaries and affiliated entities in China are subject to restrictions on making dividends and other payments to us.
We
are a holding company and rely principally on dividends paid by our subsidiary in China for our cash needs, including paying dividends
and other cash distributions to our stockholders to the extent we choose to do so, servicing any debt we may incur and paying our operating
expenses. Current PRC regulations permit our subsidiary in China to pay dividends to us only out of its accumulated profits, if any,
determined in accordance with Chinese accounting standards and regulations. Under the applicable requirements of PRC law, our
wholly-owned subsidiaries in China may only distribute dividends after it has made allowances to fund certain statutory reserves. These
reserves are not distributable as cash dividends. In addition, if our subsidiaries or our affiliated entities in China incur debt on
their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments
to us. Any such restrictions may materially affect such entities’ ability to make dividends or make payments, in service fees or
otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations.
The
newly enacted “Holding Foreign Companies Accountable Act” and proposed “Accelerating Holding Foreign Companies Accountable
Act” both call for additional and more stringent criteria to be applied to restrictive market companies upon assessing the qualification
of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to
our offering and if our auditors fail to permit the PCAOB to inspect the auditing firm, our common stock may be subject to delisting.
On
April 21, 2020, the SEC and the PCAOB released a joint statement highlighting the risks associated with investing in companies based
in or having substantial operations in certain “restrictive markets,” including China. The joint statement emphasized the
risks associated with lack of access from the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in the
markets where the PCAOB has limited access to the local auditing firms and their work.
December
18, 2020, the “Holding Foreign Companies Accountable Act” was signed by President Donald Trump and became law. This legislation
requires certain issuers to establish that they are not owned or controlled by a foreign government. Specifically, an issuer must make
this certification if the PCAOB is unable to audit specified reports because the issuer has retained a foreign public accounting firm
that is not subject to inspection by the PCAOB. Furthermore, if the PCAOB is unable to inspect the issuer’s public accounting firm
for three consecutive years, the issuer’s securities are banned from trading on a national stock exchange.
On
September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which became law in December 2020. In June 2021, the Senate
passed the AHFCAA, which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer’s
securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead
of three consecutive years.
The
limited PCAOB inspection in China prevents the PCAOB from fully evaluating audits and quality control procedures of the auditors in China.
As a result, investors may be deprived of the benefits of such PCAOB inspections and supervision. The inability of the PCAOB to conduct
inspections of auditors in China makes it more difficult to evaluate the effectiveness of these public accounting firms’ audit
procedures or quality control procedures, which could cause existing investors and potential investors in our Ordinary Shares to lose
confidence in our audit procedures and audited financial statements.
Our
current auditor, Assensture PAC, is an independent registered public accounting firm with the PCAOB and is subject to laws in the U.S.
pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor
is subject to inspection by the PCAOB on a regular basis. However, the above recent developments may have added uncertainties to our
offerings, to which Nasdaq may apply additional and more stringent criteria with respect to our auditor’s audit and quality control
procedures, adequacy of personnel and training, sufficiency of resources, geographic reach, and experience as related to their audits.
The
PRC’s legal and judicial system may not adequately protect our business and operations and the rights of foreign investors.
The
legal and judicial systems in the PRC are still rudimentary, and enforcement of existing laws is uncertain. As a result, it may be impossible
to obtain swift and equitable enforcement of laws that do exist, or to obtain enforcement of the judgment of one court by a court of
another jurisdiction. The PRC’s legal system is based on the civil law regime, that is, it is based on written statutes. A decision
by one judge does not set a legal precedent that is required to be followed by judges in other cases. In addition, the interpretation
of Chinese laws may be varied to reflect domestic political changes.
The
promulgation of new laws, changes to existing laws and the pre-emption of local regulations by national laws may adversely affect foreign
investors. There can be no assurance that a change in leadership, social or political disruption, or unforeseen circumstances affecting
the PRC’s political, economic or social life, will not affect the PRC government’s ability to continue to support and pursue
these reforms. Such a shift could have a material adverse effect on our business and prospects.
Because
our principal assets are located outside of the United States and most of our directors and officers reside outside the United States,
it may be difficult for you to enforce your rights based on U.S. federal securities laws against us and our officers and directors in
the U.S. or to enforce a U.S. court judgment against us or them in the PRC.
Most
of our directors and officers reside outside the United States. In addition, our operating subsidiaries are located in the PRC and substantially
all of their assets are located outside of the United States. It may therefore be difficult for investors in the United States to enforce
their legal rights against us based on the civil liability provisions of the U.S. federal securities laws against us in the courts of
either the U.S. or the PRC and, even if civil judgments are obtained in U.S. courts, it may be difficult to enforce such judgments in
PRC courts.
Certain
PRC regulations, including the M&A Rules and national security regulations, may require a complicated review and approval process
which could make it more difficult for us to pursue growth through acquisitions in China.
The
M&A Rules established additional procedures and requirements that could make merger and acquisition activities in China by foreign
investors more time-consuming and complex. For example, the MOFCOM must be notified in the event a foreign investor takes control of
a PRC domestic enterprise. In addition, certain acquisitions of domestic companies by offshore companies that are related to or affiliated
with the same entities or individuals of the domestic companies, are subject to approval by the MOFCOM. In addition, the Implementing
Rules Concerning Security Review on Mergers and Acquisitions by Foreign Investors of Domestic Enterprises, issued by the MOFCOM in August
2011, require that mergers and acquisitions by foreign investors in “any industry with national security concerns” be subject
to national security review by the MOFCOM. In addition, any activities attempting to circumvent such review process, including structuring
the transaction through a proxy or contractual control arrangement, are strictly prohibited. There is significant uncertainty regarding
the interpretation and implementation of these regulations relating to merger and acquisition activities in China. In addition, complying
with these requirements could be time-consuming, and the required notification, review or approval process may materially delay or affect
our ability to complete merger and acquisition transactions in China. As a result, our ability to seek growth through acquisitions may
be materially and adversely affected. In addition, if the MOFCOM determines that we should have obtained its approval for our entry into
contractual arrangements with our affiliated entities, we may be required to file for remedial approvals. There is no assurance that
we would be able to obtain such approval from the MOFCOM. We may also be subject to administrative fines or penalties by the MOFCOM that
may require us to limit our business operations in the PRC, delay or restrict the conversion and remittance of our funds in foreign currencies
into the PRC or take other actions that could have material and adverse effect on our business, financial condition and results of operations.
PRC
regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making loans or
additional capital contributions to our PRC subsidiary and affiliated entities, which could harm our liquidity and our ability to fund
and expand our business.
As
an offshore holding company of our PRC subsidiary, we may (i) make loans to our PRC subsidiary and affiliated entities, (ii) make additional
capital contributions to our PRC subsidiary, (iii) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries,
and (iv) acquire offshore entities with business operations in China in an offshore transaction. However, most of these uses are subject
to PRC regulations and approvals. For example:
| |
● |
loans
by us to our wholly-owned subsidiary in China, which is a foreign-invested enterprise, cannot exceed statutory limits and must be
registered with the State Administration of Foreign Exchange of the PRC (or SAFE) or its local counterparts; |
| |
● |
loans
by us to our affiliated entities, which are domestic PRC entities, over a certain threshold must be approved by the relevant government
authorities and must also be registered with SAFE or its local counterparts; and |
| |
● |
capital
contributions to our wholly-owned subsidiary must file a record with the MOFCOM or its local counterparts and shall also be limited
to the difference between the registered capital and the total investment amount. |
We
cannot assure you that we will be able to obtain these government registrations or filings on a timely basis, or at all. If we fail to
finish such registrations or filings, our ability to capitalize our PRC subsidiary’s operations may be adversely affected, which
could adversely affect our liquidity and our ability to fund and expand our business.
On
March 30, 2015, the State Administration of Foreign Exchange (SAFE) promulgated a notice relating to the administration of foreign-invested
company of its capital contribution in foreign currency into Renminbi (Hui Fa [2015]19) (or Circular 19). Although Circular 19 has fastened
the administration relating to the settlement of exchange of foreign-investment, allows the foreign-invested company to settle the exchange
on a voluntary basis, it still requires that the bank review the authenticity and compliance of a foreign-invested company’s settlement
of exchange in previous time, and the settled in Renminbi converted from foreign currencies shall deposit on the foreign exchange settlement
account, and shall not be used for several purposes as listed in the “negative list”. As a result, the notice may limit our
ability to transfer funds to our operations in China through our PRC subsidiary, which may affect our ability to expand our business.
Meanwhile, the foreign exchange policy is unpredictable in China, it shall be various with the nationwide economic pattern, the strict
foreign exchange policy may have an adverse impact in our capital cash and may limit our business expansion.
Governmental
control of the convertibility of Renminbi and restrictions on the transfer of cash into and out of China may constrain our liquidity
and adversely affect our ability to use cash in our operation.
The
PRC government also imposes controls on the convertibility of the Renminbi into foreign currencies. Under existing PRC foreign exchange
regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related
transactions, can be made in foreign currencies without prior approval from SAFE, by complying with certain procedural requirements.
Approvals from appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out
of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion,
impose any restriction on access of foreign currencies for current account transactions.
As
an offshore holding company of our PRC subsidiary, the majority of our income is received in Renminbi. If the PRC government imposes
restrictions on access of foreign currencies for current account transactions, we may not be able to pay dividends in foreign currencies
to our stockholders.
A
failure by the beneficial owners of our shares who are PRC residents to comply with certain PRC foreign exchange regulations could restrict
our ability to distribute profits, restrict our overseas and cross-border investment activities and subject us to liability under PRC
law.
SAFE
has promulgated regulations, including the Notice on Relevant Issues Relating to Domestic Residents’ Investment and Financing and
Round-Trip Investment through Special Purpose Vehicles (or SAFE Circular No. 37), effective on July 4, 2014, and its appendices, that
require PRC residents, including PRC institutions and individuals, to register with local branches of SAFE in connection with their direct
establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’
legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular No. 37
as a “special purpose vehicle.” SAFE Circular No. 37 further requires amendment to the registration in the event of any significant
changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer
or exchange, merger, division or other material event. In the event that a PRC stockholder holding interests in a special purpose vehicle
fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit
distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose
vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary. Further, failure to comply with the
various SAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion.
These
regulations apply to our direct and indirect stockholders who are PRC residents and may apply to any offshore acquisitions or share transfers
that we make in the future if our shares are issued to PRC residents. However, in practice, different local SAFE branches may have different
views and procedures on the application and implementation of SAFE regulations, and since SAFE Circular No. 37 was relatively new, there
remains uncertainty with respect to its implementation. As of the date of this reoffer prospectus, all PRC residents known to us that
currently hold direct or indirect interests in our company have completed the necessary registrations with SAFE as required by SAFE Circular
37. However, we may not be informed of the identities of all the PRC residents or entities holding direct or indirect interest in our
company, nor can we compel our beneficial owners to comply with the requirements of SAFE Circular 37. However, we cannot assure you that
these individuals or any other direct or indirect stockholders or beneficial owners of our company who are PRC residents will be able
to successfully complete the registration or update the registration of their direct and indirect equity interest as required in the
future. If they fail to make or update the registration, our stockholders could be subject to fines and legal penalties, and SAFE could
restrict our cross-border investment activities and our foreign exchange activities, including restricting our PRC subsidiary’s
ability to distribute dividends to, or obtain loans denominated in foreign currencies from, our company, or prevent us from paying dividends.
As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.
Increases
in labor costs in the PRC may adversely affect our business and our profitability.
The
economy of China has been experiencing significant growth, leading to inflation and increased labor costs. China’s overall economy
and the average wage in the PRC are expected to continue to grow. Future increases in China’s inflation and material increases
in the cost of labor may materially and adversely affect our profitability and results of operations.
Compliance
with China’s new Data Security Law, Measures on Cybersecurity Review (revised draft for public consultation), Personal Information
Protection Law (second draft for consultation), regulations and guidelines relating to the multi-level protection scheme and any other
future laws and regulations may entail significant expenses and could materially affect our business.
China
has implemented or will implement rules and is considering a number of additional proposals relating to data protection. China’s
new Data Security Law promulgated by the Standing Committee of the National People’s Congress of China in June 2021, or the Data
Security Law, will take effect in September 2021. The Data Security Law provides that the data processing activities must be conducted
based on “data classification and hierarchical protection system” for the purpose of data protection and prohibits entities
in China from transferring data stored in China to foreign law enforcement agencies or judicial authorities without prior approval by
the Chinese government. As the Data Security Law has not yet come into effect, we may need to make adjustments to our data processing
practices to comply with this law.
Additionally,
China’s Cyber Security Law, requires companies to take certain organizational, technical and administrative measures and other
necessary measures to ensure the security of their networks and data stored on their networks. Specifically, the Cyber Security Law provides
that China adopt a multi-level protection scheme (MLPS), under which network operators are required to perform obligations of security
protection to ensure that the network is free from interference, disruption or unauthorized access, and prevent network data from being
disclosed, stolen or tampered. Under the MLPS, entities operating information systems must have a thorough assessment of the risks and
the conditions of their information and network systems to determine the level to which the entity’s information and network systems
belong-from the lowest Level 1 to the highest Level 5 pursuant to the Measures for the Graded Protection and the Guidelines for Grading
of Classified Protection of Cyber Security. The grading result will determine the set of security protection obligations that entities
must comply with. Entities classified as Level 2 or above should report the grade to the relevant government authority for examination
and approval.
Recently,
the Cyberspace Administration of China has taken action against several Chinese internet companies in connection with their initial public
offerings on U.S. securities exchanges, for alleged national security risks and improper collection and use of the personal information
of Chinese data subjects. According to the official announcement, the action was initiated based on the National Security Law, the Cyber
Security Law and the Measures on Cybersecurity Review, which are aimed at “preventing national data security risks, maintaining
national security and safeguarding public interests.” On July 10, 2021, the Cyberspace Administration of China published a revised
draft of the Measures on Cybersecurity Review, expanding the cybersecurity review to data processing operators in possession of personal
information of over 1 million users if the operators intend to list their securities in a foreign country.
It
is unclear at the present time how widespread the cybersecurity review requirement and the enforcement action will be and what effect
they will have on the life sciences sector generally and the Company in particular. China’s regulators may impose penalties for
non-compliance ranging from fines or suspension of operations, and this could lead to us delisting from the U.S. stock market.
Also,
on August 20, 2021, the National People’s Congress passed the Personal Information Protection Law, which will be implemented on
November 1, 2021. The law creates a comprehensive set of data privacy and protection requirements that apply to the processing of personal
information and expands data protection compliance obligations to cover the processing of personal information of persons by organizations
and individuals in China, and the processing of personal information of persons in China outside of China if such processing is for purposes
of providing products and services to, or analyzing and evaluating the behavior of, persons in China. The law also proposes that critical
information infrastructure operators and personal information processing entities who process personal information meeting a volume threshold
to-be-set by Chinese cyberspace regulators are also required to store in China personal information generated or collected in China,
and to pass a security assessment administered by Chinese cyberspace regulators for any export of such personal information. Lastly,
the draft contains proposals for significant fines for serious violations of up to RMB 50 million or 5% of annual revenues from the prior
year.
Interpretation,
application and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through
new legislation, amendments to existing legislation and changes in enforcement. Compliance with the Cyber Security Law and the Data Security
Law could significantly increase the cost to us of providing our service offerings, require significant changes to our operations or
even prevent us from providing certain service offerings in jurisdictions in which we currently operate or in which we may operate in
the future. Despite our efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection
and information security, it is possible that our practices, offerings or platform could fail to meet all of the requirements imposed
on us by the Cyber Security Law, the Data Security Law and/or related implementing regulations. Any failure on our part to comply with
such law or regulations or any other obligations relating to privacy, data protection or information security, or any compromise of security
that results in unauthorized access, use or release of personally identifiable information or other data, or the perception or allegation
that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing counterparties
from contracting with us or result in investigations, fines, suspension or other penalties by Chinese government authorities and private
claims or litigation, any of which could materially adversely affect our business, financial condition and results of operations. Even
if our practices are not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation
and brand and adversely affect our business, financial condition and results of operations. Moreover, the legal uncertainty created by
the Data Security Law and the recent Chinese government actions could materially adversely affect our ability, on favorable terms, to
raise capital, including engaging in follow-on offerings of our securities in the U.S. market or the Stock Exchange of Hong Kong.
Our
current corporate structure and business operations may be affected by the newly enacted Foreign Investment Law.
On
March 15, 2019, the National People’s Congress approved the Foreign Investment Law, which became effective on January 1, 2020.
The Foreign Investment Law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements
would be deemed as foreign-invested enterprises if they are ultimately “controlled” by foreign investors. However, it has
a catch-all provision under definition of “foreign investment” that includes investments made by foreign investors in China
through other means as provided by laws, administrative regulations or the State Council. Therefore, it still leaves space for interpretation,
future laws, administrative regulations or provisions of the State Council to include contractual arrangements as a form of foreign investment.
The
Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate
in industries specified as either “restricted” or “prohibited” from foreign investment on a “negative list”.
The Special Administrative Measures for Access to Foreign Investment (Negative List) (2020 Edition) (Order No. 32 of the National Development
and Reform Commission and the Ministry of Commerce), came into effect on July 23, 2020, further shortened the “negative list”
compared to the 2019 edition, increasing foreign investment openness to the services, manufacturing and agriculture industries.
The
Foreign Investment Law provides that foreign-invested entities operating in “restricted” or “prohibited” industries
will require market entry clearance and other approvals from relevant PRC government authorities. If any business of our subsidiaries
is “restricted” or “prohibited” from foreign investment under the “negative list” effective at
the time, we may be deemed to be in violation of the Foreign Investment Law, we may be required to restructure our business operations,
any of which may have material adverse effects on our business operations.
In
light of recent events indicating greater oversight by the CAC over data security, we may be subject to a variety of PRC laws and other
obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a
material adverse effect on our business, our listing on Nasdaq, financial condition, and results of operations.
The
regulatory requirements with respect to cybersecurity and data privacy are constantly evolving and can be subject to varying interpretations,
and significant changes, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with the
cybersecurity and data privacy requirements in a timely manner, or at all, may subject us to government enforcement actions and investigations,
fines, penalties, suspension or disruption of our operations, among other things. The Cybersecurity Law, which was adopted by the National
People’s Congress on November 7, 2016 and came into force on June 1, 2017, and the Cybersecurity Review Measures, or the “Review
Measures,” which were promulgated on April 13, 2020, provide that personal information and important data collected and generated
by a critical information infrastructure operator in the course of its operations in China must be stored in China, and if a critical
information infrastructure operator purchases internet products and services that affect or may affect national security, it should be
subject to cybersecurity review by the CAC. In addition, a cybersecurity review is required where critical information infrastructure
operators, or the “CIIOs,” purchase network-related products and services, which products and services affect or may affect
national security. Due to the lack of further interpretations, the exact scope of what constitute a “CIIO” remains unclear.
Further, the PRC government authorities may have wide discretion in the interpretation and enforcement of these laws.
On
June 10, 2021, the Standing Committee of the National People’s Congress promulgated the Data Security Law, which took effect on
September 1, 2021. The Data Security Law requires that data shall not be collected by theft or other illegal means, and also provides
for a data classification and hierarchical protection system. The data classification and hierarchical protection system puts data into
different groups according to its importance in economic and social development, and the damages it may cause to national security, public
interests, or the legitimate rights and interests of individuals and organizations in case the data is falsified, damaged, disclosed,
illegally obtained or illegally used. In addition, the Office of the Central Cyberspace Affairs Commission and the Office of Cybersecurity
Review under the CAC, published the Measures of Cybersecurity Review (Revised Draft for Comments) on July 10, 2021, which provides that,
aside from CIIOs, data processing operators engaging in data processing activities that affect or may affect national security, must
be subject to the cybersecurity review by the Cybersecurity Review Office. On December 28, 2021, a total of thirteen governmental departments
of the PRC, including the PRC State Internet Information Office, issued the Measures of Cybersecurity Review, which became effective
on February 15, 2022. According to the Measures of Cybersecurity Review, a cybersecurity review is conducted by the CAC, to assess potential
national security risks that may be brought about by any procurement, data processing, or overseas listing. The Measures of Cybersecurity
Review further, if effective, would require that critical information infrastructure operators and services and data processing operators
that possess personal data of at least one (1) million users must apply for a review by the Cybersecurity Review Office of PRC, if they
plan to conduct securities listings on foreign exchanges. In addition to the new Measures of Cybersecurity Review, it also remains uncertain
whether any future regulatory changes would impose additional restrictions on companies like us.
However,
it remains uncertain as to how the Measures of Cybersecurity Review will be interpreted or implemented and whether the PRC regulatory
agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Measures
of Cybersecurity Review. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we expect to
take all reasonable measures and actions to comply therewith. However, we cannot assure you that PRC regulatory agencies, including the
CAC, would take the same view as we do, and we will not be subject to the cybersecurity review by the CAC or designated as a CIIO. We
may experience disruptions to our operations should we be required to have a cybersecurity review by the CAC. Any cybersecurity review
could also result in uncertainty to our continued Nasdaq listing, negative impacts on our share trading prices and diversion of our managerial
and financial resources.
The
Chinese government exerts substantial influence over the manner in which we must conduct our business activities. If the Chinese government
intervenes or influences our operations in the future, it could result in a material change in our operations and/or the value of your
common stock.
The
Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through
regulations and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those
relating to taxation, insurance commissions, property and other matters. The central or local governments of these jurisdictions may
impose new and restrictive regulations or interpretations of existing regulations that would require additional expenditures and efforts
on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including
any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local
variations in the implementation of economic policies, could have a significant effect on economic conditions in China, and result in
a material change in our operations and/or the value of our common stock.
For
example, the Chinese cybersecurity regulator announced on July 2, 2021, that it had begun an investigation of Didi Global Inc. (NYSE:
DIDI) and two days later ordered that Didi Global Inc.’s application be removed from all the smartphone application stores in China.
Given
the example of Didi Global Inc. and recent statements of by the Chinese government indicating an intent to exert more oversight and control
overseas offerings and foreign investments in China-based companies, such regulatory actions could significantly limit or completely
hinder our ability to offer or continue to offer securities to investors and cause the value and trading prices of our common stock to
significantly decline or become worthless.
We
have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC, CAC or other PRC governmental
authorities required for overseas listings. If (i) we, our subsidiaries inadvertently conclude that any of such permission
was not required or (ii) it is determined in the future that the approval of the CSRC, CAC or any other regulatory authority is required
for maintaining listing of our securities on Nasdaq, we will actively seek such permissions or approvals but may face sanctions by the
CSRC, CAC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit
our ability to pay dividends outside of China, limit our operations in China, delay or restrict the repatriation of the proceeds from
offerings into China or take other actions that could have a material adverse effect on our business, financial condition, results of
operations and prospects, as well as the trading price of our securities. The CSRC, CAC or other PRC regulatory agencies also may take
actions requiring us, or making it advisable for us, to halt offerings before settlement and delivery of our securities. Any uncertainties
and/or negative publicity regarding such an approval requirement could have a material adverse effect on the trading price of our securities.
In the event that we failed to obtain such required approvals or permissions, it would be likely that our securities would be delisted
from Nasdaq or any other foreign exchange our securities are listed then.
Although
we are currently not required to obtain any permission from any PRC government to continue listing our common stock on Nasdaq, it will
remain uncertain when and whether we will be required to obtain any permission from the PRC government to continue listing our shares
of common stock on Nasdaq, and even when we obtain such permission in accordance with the new rules and regulations, it will be unclear
whether such permission will be rescinded or revoked at some point in time.
Risks
Related To Our Business
If
we are unable to effectively manage Wintus’s business, our reputation and operating results may be harmed.
Following
the Acquisition, we will need to integrate the silk products and other businesses of Wintus into the operations of the Company. As our
management has no prior experience in these fields, we may be unable to successfully integrate these into our business operations. If
we are unable to do so for any reason, our reputation and operating results may be harmed and we would be unable to realize the business-related
benefits of the transaction.
Wintus
is highly susceptible to changes in market demand for the types of silk-based products it sells.
A
significant portion of Wintus’s revenues are derived from its silk-based products. We therefore will become highly susceptible
to changes in market demand for silk-based products, which may be impacted by factors over which we have limited or no control. Factors
that could lead to a decline in market demand for silk-based products in general include economic conditions, demand for luxury goods
and evolving consumer preferences. A substantial downturn in market demand for such silk-based products may have a material adverse effect
on our business and on our results of operations.
Competitors
and potential competitors may develop products and technologies that make ours obsolete or garner greater market share than ours.
Wintus’s
ability to compete successfully will depend on its ability to demonstrate that its products are superior to and/or less expensive than
other products available in the market. Some of its competitors have the benefit of marketing their products under brand names that have
better market recognition than Wintus or have stronger marketing and distribution channels. Increased competition as to any of Wintus’s
products could result in price reduction, reduced margins and loss of market share, which could negatively affect Wintus’s profitability.
Certain
of Wintus’s competitors may benefit from government support and other incentives that are not available to Wintus. As a result,
Wintus’s competitors may be able to develop competing and/or superior products and compete more aggressively and sustain that competition
over a longer period of time than Wintus can. As more companies develop new intellectual property in Wintus’s markets, a competitor
could acquire patent or other rights that may limit Wintus’s ability to successfully market its products.
If
Wintus’s technologies or products are stolen, misappropriated, or reverse engineered, others could use the technologies to produce
competing technologies or products.
Third
parties, including collaborators, contractors, and others involved in Wintus’s business often have access to its technologies.
If such technologies or products were to be stolen, misappropriated, or reverse engineered, they could be used by other parties that
may be able to reproduce Wintus’s technologies or products using such technologies for their own commercial gain. If this were
to occur, it would be difficult for us to challenge this type of use.
Wintus
operates in a regulated industry in China which subjects its operations to regulatory and political risks
The
Wintus Group presently holds a number of permits and licenses in China to operate its business operations, including a food business
license. The group may be subject to additional licensing requirements for its business operations due to changing regulatory policies
or the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government
authorities.
Moreover,
the PRC government has recently indicated an intent to exert more oversight over securities offerings that are conducted overseas and/or
foreign investment in China-based businesses, such as Wintus, and published a series of proposed rules for public comments in this regard,
the enaction timetable, final content, interpretation and implementation of which remains uncertain. Therefore, there are substantial
uncertainties as to how PRC governmental authorities will regulate overseas listing in general and whether we will be required to complete
filing or obtain any specific regulatory approvals from the CSRC, CAC or any other PRC governmental authorities for our future offshore
offerings. If we had inadvertently concluded that such approvals were not required, or if applicable laws, regulations or interpretations
change in a way that requires us to obtain such approval in the future, we may be unable to obtain such necessary approvals in a timely
manner, or at all, and such approvals may be rescinded even if obtained. Any such circumstance could subject us to penalties, including
fines, suspension of business and revocation of required licenses, significantly limit or completely hinder our ability to continue to
offer securities to investors and cause the value of our Common Stock to significantly decline or be worthless.
We
face a number of additional risks related to the operations of our business.
You
should carefully consider each of the risk factors set forth in our filings with the SEC, including our Annual Report on Form 10-K for
the fiscal year ended June 30, 2023 in evaluating our business and prospects. The risks and uncertainties described in this proxy statement
are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial
may also impair our business operations. If any of the risks actually occur, our business and financial results could be harmed. In that
case the trading price of our common stock could decline.
Risks
Relating to Investment in Our Common Stock
An
active and visible trading market for our common stock may not develop.
We
cannot predict whether an active market for our common stock will develop in the future. In the absence of an active trading market:
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● |
Investors
may have difficulty buying and selling or obtaining market quotations; |
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|
|
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Market
visibility for our common stock may be limited; and |
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|
|
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A
lack of visibility for our common stock may have a depressive effect on the market price for our common stock. |
The
trading price of our common stock is subject to significant fluctuations in response to variations in quarterly operating results, changes
in analysts’ earnings estimates, announcements of innovations by us or our competitors, general conditions in the industry in which
we operate and other factors. These fluctuations, as well as general economic and market conditions, may have a material or adverse effect
on the market price of our common stock.
The
market price for our common stock may be volatile.
The
market price for our common stock may be volatile and subject to wide fluctuations due to factors such as:
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● |
the
perception of U.S. investors and regulators of U.S. listed Chinese companies; |
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|
|
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actual
or anticipated fluctuations in our quarterly operating results; |
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|
|
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● |
changes
in financial estimates by securities research analysts; |
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|
|
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● |
negative
publicity, studies or reports; |
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|
|
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● |
conditions
in Chinese and global cybersecurity product markets; |
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|
|
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● |
our
capability to match and compete with technology innovations in the industry; |
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|
|
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● |
changes
in the economic performance or market valuations of other companies in the same industry; |
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|
|
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● |
announcements
by us or our competitors of acquisitions, strategic partnerships, joint ventures or capital commitments; |
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|
|
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addition
or departure of key personnel; |
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|
|
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● |
fluctuations
of exchange rates between RMB and the U.S. dollar; |
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|
|
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natural
disasters, fires, explosions, acts of terrorism or war, or disease or other adverse health developments, including those related
to the COVID-19 pandemic; and |
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|
|
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● |
general
economic or political conditions in or impacting China. |
In
addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the
operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of
our common stock.
Our
common stock may in the future be considered a “penny stock,” and thereby be subject to additional sale and trading regulations
that may make it more difficult to sell.
Our
common stock may in the future be considered to be a “penny stock” if it does not qualify for one of the exemptions from
the definition of “penny stock” under Section 3a51-1 of the Exchange Act, as amended. Our common stock may be a “penny
stock” if it meets one or more of the following conditions: (i) the stock trades at a price less than $5.00 per share; (ii) it
is NOT traded on a “recognized” national exchange; (iii) it is not quoted on the NASDAQ Capital Market, or even if so, has
a price less than $5.00 per share; or (iv) is issued by a company that has been in business less than three years with net tangible assets
less than $5 million. The principal result or effect of being designated a “penny stock” is that securities broker-dealers
participating in sales of our common stock will be subject to the “penny stock” regulations set forth in Rules 15-2 through
15g-9 promulgated under the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential
investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document
at least two business days before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires
broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock
to that investor. This procedure requires the broker-dealer to: (i) obtain from the investor information concerning his or her financial
situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in
penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable
of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor,
confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance
with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to third
parties or to otherwise dispose of them in the market or otherwise.
We
are not likely to pay cash dividends in the foreseeable future.
We
currently intend to retain any future earnings for use in the operation and expansion of our business. Accordingly, we do not expect
to pay any cash dividends in the foreseeable future, but will review this policy as circumstances dictate. Should we determine to pay
dividends in the future, our ability to do so will depend upon the receipt of dividends or other payments from our subsidiaries.
The subsidiaries may, from time to time, be subject to restrictions on its ability to make distributions to us, including restrictions
on the conversion of RMB into U.S. dollars or other hard currency and other regulatory restrictions.
USE
OF PROCEEDS
The
shares which may be sold under this reoffer prospectus will be sold for the respective accounts of each of the Selling Securityholders
listed herein (which includes our executive officers and directors). Accordingly, we will not realize any proceeds from the sale of the
shares of our Common Stock. We will receive proceeds from the exercise of the options; however, no
assurance can be given as to when or if any or all of the options will be exercised. If any options are exercised, the proceeds derived
therefrom will be used for working capital and general corporate purposes. All expenses of the registration of the shares will be paid by us. See “Selling Securityholders”
and “Plan of Distribution.”
SELLING
SECURITYHOLDERS
We
are registering for resale the shares covered by this reoffer prospectus to permit the Selling Securityholders identified below and their
pledgees, donees, transferees and other successors-in-interest that receive their securities from a Selling Securityholder as a gift,
partnership distribution or other non-sale related transfer after the date of this reoffer prospectus to resell the shares when and as
they deem appropriate. The Selling Securityholders acquired, or may acquire, these shares from us pursuant to the Plans. The shares may
not be sold or otherwise transferred by the Selling Securityholders unless and until the applicable awards vest and are exercised, as
applicable, in accordance with the terms and conditions of the Plans. The Selling Security Holders may resell all, a portion, or none
of the shares of common stock from time to time.
The following table sets forth:
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the
name of each Selling Securityholder; |
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● |
the
number and percentage of shares of our Common Stock that each Selling Securityholder beneficially owned as of September 26,
2023, prior to the offering for resale of the shares under this reoffer prospectus; |
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● |
the
number of shares of our Common Stock that may be offered for resale for the account of each Selling Securityholder under this reoffer
prospectus; and |
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● |
the
number and percentage of shares of our Common Stock to be beneficially owned by each Selling Securityholder after the offering of
the resale shares (assuming all of the offered resale shares are sold by such Selling Securityholder). |
Information
with respect to beneficial ownership is based upon information obtained from the Selling Securityholders. Because the Selling Securityholders
may offer all or part of the shares of Common Stock, which they own pursuant to the offering contemplated by this reoffer prospectus,
and because its offering is not being underwritten on a firm commitment basis, no estimate can be given as to the amount of shares that
will be held upon termination of this offering.
The
number of shares in the column ‘‘Number of Shares Being Offered’’ represents all of the shares of our Common
Stock that each Selling Securityholder may offer under this reoffer prospectus. We do not know how long the Selling Securityholders will
hold the shares before selling them or how many shares they will sell. The shares of our Common Stock offered by this reoffer prospectus
may be offered from time to time by the Selling Securityholders listed below. We cannot assure you that any of the Selling Securityholders
will offer for sale or sell any or all of the shares of Common Stock offered by them by this reoffer prospectus.
| | |
Number of Shares Beneficially Owned Prior to Offering (1) | | |
Number of Shares Being Offered | | |
Number of Shares Beneficially Owned After Offering (2) | |
| Securityholders | |
Number | | |
Percent (%) | | |
Number | | |
Number | | |
Percent (%) | |
| Tianyi Huang | |
| 750,000 | | |
| 1.71 | % | |
| 750,000 | | |
| 0 | | |
| 0 | % |
| Jiajia Lyu | |
| 1,000,000 | | |
| 2.28 | % | |
| 1,000,000 | | |
| 0 | | |
| 0 | % |
| Yanfen Chen | |
| 400,000 | | |
| 0.91 | % | |
| 400,000 | | |
| 0 | | |
| 0 | % |
| Yongjun Lu | |
| 105,000 | | |
| 0.24 | % | |
| 105,000 | | |
| 0 | | |
| 0 | % |
| Yun Shi | |
| 1,550,000 | | |
| 3.54 | % | |
| 1,550,000 | | |
| 0 | | |
| 0 | % |
| (1) |
The
number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Securities Exchange Act of
1934, as amended, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rule,
beneficial ownership includes any shares as to which the Selling Securityholder has sole or shared voting power or investment power
and also any shares which the Selling Securityholder has the right to acquire within 60 days. Applicable percentage ownership is
based on 43,840,642 shares of Common Stock outstanding as of September 26, 2023. |
| (2) |
Assumes
that all shares of Common Stock to be offered, as set forth above, are sold pursuant to this offering and that no other shares of
Common Stock are acquired or disposed of by the Selling Securityholders prior to the termination of this offering. Because the Selling
Securityholders may sell all, some or none of their shares of Common Stock or may acquire or dispose of other shares of Common Stock,
no reliable estimate can be made of the aggregate number of shares of Common Stock that will be sold pursuant to this offering or
the number or percentage of shares of Common Stock that each Selling Securityholder will own upon completion of this offering. |
PLAN
OF DISTRIBUTION
We
are registering the Shares covered by this reoffer prospectus to permit the Selling Stockholders to conduct public secondary trading
of these Shares from time to time after the date of this reoffer prospectus. We will not receive any of the proceeds of the sale of the
Shares offered by this reoffer prospectus. The aggregate proceeds to the Selling Stockholders from the sale of the Shares will be the
purchase price of the Shares less any discounts and commissions. We will not pay any brokers’ or underwriters’ discounts
and commissions in connection with the registration and sale of the Shares covered by this reoffer prospectus. The Selling Stockholders
reserve the right to accept and, together with their respective agents, to reject, any proposed purchases of Shares to be made directly
or through agents.
The
Shares offered by this reoffer prospectus may be sold from time to time to purchasers:
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● |
directly
by the Selling Stockholders, or |
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● |
through
underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, commissions or agent’s commissions
from the Selling Stockholders or the purchasers of the Shares. |
Any
underwriters, broker-dealers or agents who participate in the sale or distribution of the Shares may be deemed to be “underwriters”
within the meaning of the Securities Act. As a result, any discounts, commissions or concessions received by any such broker-dealer or
agents who are deemed to be underwriters will be deemed to be underwriting discounts and commissions under the Securities Act. Underwriters
are subject to the prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities under the
Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We will make copies of this
reoffer prospectus available to the Selling Stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities
Act. To our knowledge, there are currently no plans, arrangements or understandings between the Selling Stockholders and any underwriter,
broker-dealer or agent regarding the sale of the Shares by the Selling Stockholders.
The
Shares may be sold in one or more transactions at:
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● |
prevailing
market prices at the time of sale; |
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prices
related to such prevailing market prices; |
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● |
varying
prices determined at the time of sale; or |
These
sales may be effected in one or more transactions:
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● |
on
any national securities exchange or quotation service on which the Shares may be listed or quoted at the time of sale, including
the NASDAQ; |
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● |
in
the over-the-counter market; |
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● |
in
transactions otherwise than on such exchanges or services or in the over-the-counter market; |
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any
other method permitted by applicable law; or |
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● |
through
any combination of the foregoing. |
These
transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as an agent on both sides
of the trade.
At
the time a particular offering of the Shares is made, a prospectus supplement, if required, will be distributed, which will set forth
the name of the Selling Stockholders, the aggregate amount of Shares being offered and the terms of the offering, including, to the extent
required, (1) the name or names of any underwriters, broker-dealers or agents, (2) any discounts, commissions and other terms constituting
compensation from the Selling Stockholders and (3) any discounts, commissions or concessions allowed or reallowed to be paid to broker-dealers.
The
Selling Stockholders will act independently of us in making decisions with respect to the timing, manner, and size of each resale or
other transfer. There can be no assurance that the Selling Stockholders will sell any or all of the Shares under this reoffer prospectus.
Further, we cannot assure you that the Selling Stockholders will not transfer, distribute, devise or gift the Shares by other means not
described in this reoffer prospectus. In addition, any Shares covered by this reoffer prospectus that qualify for sale under Rule 144
of the Securities Act may be sold under Rule 144 rather than under this reoffer prospectus. The Shares may be sold in some states only
through registered or licensed brokers or dealers. In addition, in some states the Shares may not be sold unless they have been registered
or qualified for sale or an exemption from registration or qualification is available and complied with.
The
Selling Stockholders and any other person participating in the sale of the Shares will be subject to the Exchange Act. The Exchange Act
rules include, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the Shares by the Selling
Stockholders and any other person. In addition, Regulation M may restrict the ability of any person engaged in the distribution of the
Shares to engage in market-making activities with respect to the particular Shares being distributed. This may affect the marketability
of the Shares and the ability of any person or entity to engage in market-making activities with respect to the Shares.
The
Selling Stockholders may indemnify any broker or underwriter that participates in transactions involving the sale of the Shares against
certain liabilities, including liabilities arising under the Securities Act.
LEGAL
MATTERS
The
validity of the issuance of the securities offered by this reoffer prospectus will be passed upon for us by Sichenzia Ross Ference LLP,
New York, New York.
EXPERTS
The
consolidated financial statements of Shineco, Inc. as of June 30, 2023 have been audited by AssentSure PAC, independent registered
public accounting firm, as set forth in their report thereon, which is incorporated herein by reference given on the authority of such
firm as experts in accounting and auditing.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC allows us to incorporate by reference the information we file with them under certain conditions, which means that we can disclose
important information to you by referring you to those documents. The information incorporated by reference is considered to be a part
of this reoffer prospectus and any information that we file subsequent to this reoffer prospectus with the SEC will automatically update
and supersede this information. The documents we are incorporating by reference are as follows:
| |
(a) |
our
Annual Report for the year ended June 30, 2023 on Form 10-K filed on September 28, 2023; |
| |
|
|
| |
(b) |
our
Quarterly Reports on Form 10-Q for the quarter ended September 30, 2022, December 31, 2022 and March 31, 2023; |
| |
|
|
| |
(c) |
our
Current Reports on Form 8-K filed on July
25, 2022, July
27, 2022, August
1, 2022, August
15, 2022, August
17, 2022, August
19, 2022, September
30, 2022, October
25, 2022, December
22, 2022, January
4, 2023, January
18, 2023, February
27, 2023, March
23, 2023, June
2, 2023, June
23, 2023, June
30, 2023, July
24, 2023, and September
21, 2023; and |
| |
(d) |
the
description of the common stock, $0.001 par value per share, contained in our registration statement on Form 8-A filed with the Commission
on May 13, 2016 pursuant to Section 12(b) of the Exchange Act and all amendments or reports filed by us for the purpose of updating
those descriptions. |
All
documents filed by us pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act after the initial filing date of this reoffer
prospectus, through the date declared effective, until the termination of the offering of securities contemplated by this reoffer prospectus
shall be deemed to be incorporated by reference into this reoffer prospectus. These documents that we file later with the SEC and that
are incorporated by reference in this reoffer prospectus will automatically update information contained in this reoffer prospectus or
that was previously incorporated by reference into this reoffer prospectus. You will be deemed to have notice of all information incorporated
by reference in this reoffer prospectus as if that information was included in this reoffer prospectus.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
FOR
SECURITIES ACT LIABILITIES
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the
registrant, the registrant has been informed that in the opinion of the Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly, and special reports, along with other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC’s website at http://www.sec.gov; you can also find our filings on our company website: https://www.biosisi.com/financials&Filings.html.
This
reoffer prospectus is part of a registration statement on Form S-3 that we filed with the SEC to register the securities offered hereby
under the Securities Act. This reoffer prospectus does not contain all of the information included in the registration statement, including
certain exhibits and schedules. You may obtain the registration statement and exhibits to the registration statement from the SEC at
the address listed above or from the SEC’s internet site.
SHINECO,
INC.
UP
TO 3,805,000 SHARES OF COMMON STOCK
REOFFER
PROSPECTUS
September
29, 2023
PART
II
INFORMATION
REQUIRED IN THE REGISTRATION STATEMENT
Item
3. Incorporation of Documents by Reference.
The
SEC allows us to incorporate by reference the information we file with them under certain conditions, which means that we can disclose
important information to you by referring you to those documents. The information incorporated by reference is considered to be a part
of this prospectus and any information that we file subsequent to this reoffer prospectus with the SEC will automatically update and
supersede this information. The documents we are incorporating by reference are as follows:
| |
(a) |
our
Annual Report for the year ended June 30, 2023, on Form 10-K filed on September 28, 2023; |
| |
|
|
| |
(b) |
our
Quarterly Reports on Form 10-Q for the quarter ended September 30, 2022, December 31, 2022 and March 31, 2023; |
| |
|
|
| |
(c) |
our
Current Reports on Form 8-K filed on July
25, 2022, July
27, 2022, August
1, 2022, August
15, 2022, August
17, 2022, August
19, 2022, September
30, 2022, October
25, 2022, December
22, 2022, January
4, 2023, January
18, 2023, February
27, 2023, March
23, 2023, June
2, 2023, June
23, 2023, June
30, 2023, July
24, 2023, and September 21, 2023; and |
| |
(d) |
the
description of the common stock, $0.001 par value per share, contained in our registration statement on Form 8-A filed with the Commission
on May 13, 2016 pursuant to Section 12(b) of the Exchange Act and all amendments or reports filed by us for the purpose of updating
those descriptions. |
All
documents filed by us pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act after the initial filing date of this reoffer
prospectus, through the date declared effective, until the termination of the offering of securities contemplated by this reoffer prospectus
shall be deemed to be incorporated by reference into this reoffer prospectus. These documents that we file later with the SEC and that
are incorporated by reference in this reoffer prospectus will automatically update information contained in this reoffer prospectus or
that was previously incorporated by reference into this reoffer prospectus. You will be deemed to have notice of all information incorporated
by reference in this reoffer prospectus as if that information was included in this reoffer prospectus.
Item
4. Description of Securities.
Not
applicable.
Item
5. Interests of Named Experts and Counsel.
Not
applicable.
Item
6. Indemnification of Directors and Officers.
Section
102 of the Delaware General Corporation Law allows a corporation to eliminate the personal liability of directors of a corporation to
the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached
the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment
of a dividend or approved a stock repurchase in violation of the Delaware General Corporation Law, or obtained an improper personal benefit.
Under
Section 145 of the General Corporation Law of the State of Delaware, we can indemnify our directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities Act. Our certificate of incorporation provides that, pursuant
to Delaware law, our directors shall not be liable for monetary damages for breach of the directors’ fiduciary duty of care to
us and our stockholders. This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of the director’s duty of loyalty to us or our stockholders, for acts
or omissions not in good faith or involving intentional misconduct or knowing violations of the law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under
Delaware law. The provision also does not affect a director’s responsibilities under any other law, such as the federal securities
laws or state or federal environmental laws.
Section
174 of the Delaware General Corporation Law provides, among other things, that a director who willfully or negligently approves of an
unlawful payment of dividends or an unlawful stock purchase or redemption may be held liable for such actions. A director who was either
absent when the unlawful actions were approved or dissented at the time, may avoid liability by causing his or her dissent to such actions
to be entered in the books containing minutes of the meetings of our board of directors at the time such action occurred or immediately
after such absent director receives notice of the unlawful acts.
Our
amended and restated bylaws provide for the indemnification of our directors and officers to the fullest extent permitted by the Delaware
General Corporation Law. Our amended and restated bylaws further provide that our board of directors has discretion to indemnify our
agents and employees. We are required to advance, prior to the final disposition of any proceeding, promptly on request, all expenses
incurred by any director or executive officer in connection with that proceeding on receipt of an undertaking by or on behalf of that
director or executive officer to repay those amounts if it should be determined ultimately that he or she is not entitled to be indemnified
under the bylaws or otherwise. We are not, however, required to advance any expenses in connection with any proceeding if our board determines,
pursuant to Delaware law, that the claimant has not met the standards of conduct which make it permissible under the Delaware General
Corporation Law for the corporation to indemnify the claimant for the amount claimed.
As
of the date of this reoffer prospectus, we have not entered into any indemnification agreement with our directors or officers, and our
directors and officers are not covered by directors’ and officers’ liability insurance policies.
Item
7. Exemption from Registration Claimed.
The
issuance of the Shares being offered by the Form S-3 resale prospectus were deemed to be exempt from registration under the Securities
Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D or Regulation S promulgated thereunder) as transactions by
an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions
to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate
legends were placed upon the stock certificates issued in these transactions. All recipients had adequate access, through their relationships
with us, to information about the Registrant.
Item
8. Exhibits.
EXHIBIT
INDEX
Item
9. Undertakings.
| (a) |
The
undersigned registrant hereby undertakes: |
| |
(1) |
To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| |
(i) |
To
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| |
|
|
| |
(ii) |
To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set
forth in the “Calculation of Registration Fee” table in the effective registration statement. |
| |
(iii) |
To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement; |
provided,
however, Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-1,
Form S-3, Form SF-3 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained
in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement, or, as to a registration statement on Form S-3, Form SF-3
or Form F-3, is contained in a form of prospectus filed pursuant to § 230.424(b) of this chapter that is part of the registration
statement.
| |
(2) |
That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof. |
| |
(3) |
To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering. |
| |
(4) |
That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
(A)
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration statement; and
(B)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on
Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required
by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier
of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the
offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date
an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the
registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is
part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or
modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such effective date; or
| |
(5) |
That,
for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b)
That for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Beijing, on September 29, 2023.
|
SHINECO,
INC. |
| |
|
|
| |
By: |
/s/
Jennifer Zhan |
| |
|
Jennifer
Zhan |
| |
|
Chief
Executive Officer |
POWER
OF ATTORNEY
KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Jennifer
Zhan as his/hers true and lawful attorneys-in-fact and agents, with full power of substitution, for him/her in any and all capacities,
to sign any or all amendments to this Registration Statement on Form S-8 (including post-effective amendments), and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully for all intents and purposes as he might or could do in person, hereby and about the premises hereby
ratifying and confirming all that said attorneys-in-fact and agent, proxy and agent, or her substitute, may lawfully do or cause to be
done by virtue hereof
Pursuant
to the requirements of the Securities Act of 1933, as amended, the following persons in the capacities and on the dates indicated have
signed this Registration Statement below.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Jennifer Zhan |
|
Chief
Executive Officer |
|
September
29, 2023 |
| Jennifer
Zhan |
|
(Principal
Executive Officer) |
|
|
| |
|
|
|
|
| /s/
Sai (Sam) Wang |
|
Chief
Financial Officer and Director |
|
September
29, 2023 |
| Sai
(Sam) Wang |
|
(Principal
Financial and Accounting Officer) |
|
|
| |
|
|
|
|
| /s/
Xiqiao Liu |
|
Director
and Chief Operating Officer |
|
September
29, 2023 |
| Xiqiao
Liu |
|
|
|
|
| |
|
|
|
|
| /s/
Mike Zhao |
|
Chairman
of the Board |
|
September
29, 2023 |
| Mike
Zhao |
|
|
|
|
| |
|
|
|
|
| /s/
Jin Liu |
|
Director |
|
September
29, 2023 |
| Jin
Liu |
|
|
|
|
| |
|
|
|
|
| /s/
Aamir Ali Quraishi |
|
Director |
|
September
29, 2023 |
| Aamir
Ali Quraishi |
|
|
|
|
| |
|
|
|
|
| /s/
Hu Li |
|
Director |
|
September
29, 2023 |
| Hu
Li |
|
|
|
|
Exhibit 4.1
SHINECO,
INC.
2023
SHARE INCENTIVE PLAN
1.
Purpose of the Plan.
This
2023 Equity Incentive Plan (the “Plan”) is intended as an incentive, to retain in the employment of and as directors,
officers, consultants, advisors and employees to Shineco, Inc., a Delaware corporation (the “Company”), and any Subsidiary
of the Company, within the meaning of Section 424(f) of the United States Internal Revenue Code of 1986, as amended (the “Code”),
persons of training, experience and ability, to attract new directors, officers, consultants, advisors and employees whose services are
considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development
and financial success of the Company and its Subsidiaries.
It
is further intended that certain options granted pursuant to the Plan shall constitute incentive stock options within the meaning of
Section 422 of the Code (the “Incentive Options”) while certain other options granted pursuant to the Plan shall be
nonqualified stock options (the “Nonqualified Options”). Incentive Options and Nonqualified Options are hereinafter
referred to collectively as “Options.”
The Company intends that the Plan meet the requirements of Rule 16b-3 (“Rule
16b-3”) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that
transactions of the type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company pursuant
to the Plan will be exempt from the operation of Section 16(b) of the Exchange Act. In all cases, the terms, provisions, conditions and
limitations of the Plan shall be construed and interpreted consistent with the Company’s intent as stated in this Section 1.
2.
Administration of the Plan.
The
authority to manage the operation of and administer the Plan shall be vested in the Board of Directors of the Company (the “Board”)
or the Compensation Committee (the “Committee”) as delegated by the Board. The Board or Committee if so delegated
by the Board shall be hereinafter referred to as the “Administrator.” To qualify as the Administrator, the Committee shall
consist of and maintain two or more directors who are (i) “Independent Directors” (as such term is defined under the rules
of the NASDAQ Stock Market) and (ii) “Non-Employee Directors” (as such term is defined in Rule 16b-3), which shall serve
at the pleasure of the Board. The Administrator subject to Sections 3, 5 and 6 hereof, shall have full power and authority to designate
recipients of Options and restricted stock (“Restricted Stock”), and to determine the terms and conditions of the
respective Option and Restricted Stock agreements (which need not be identical) and to interpret the provisions and supervise the administration
of the Plan. The Administrator shall have the authority, without limitation, to designate which Options granted under the Plan shall
be Incentive Options and which shall be Nonqualified Options. To the extent any Option does not qualify as an Incentive Option, it shall
constitute a separate Nonqualified Option.
Subject
to the provisions of the Plan, the Administrator shall interpret the Plan and all Options and Restricted Stock (the “Securities”)
granted under the Plan, shall make such rules as it deems necessary for the proper administration of the Plan, shall make all other determinations
necessary or advisable for the administration of the Plan and shall correct any defects or supply any omission or reconcile any inconsistency
in the Plan or in any Securities granted under the Plan in the manner and to the extent that the Administrator deems desirable to carry
into effect the Plan or any Securities. The act or determination of a majority of the Administrator shall be the act or determination
of the Administrator and any decision reduced to writing and signed by all of the members of the Administrator shall be fully effective
as if it had been made by a majority of the Administrator at a meeting duly held for such purpose. Subject to the provisions of the Plan,
any action taken or determination made by the Administrator pursuant to this and the other Sections of the Plan shall be conclusive on
all parties.
In the event that for any reason the Committee is unable to act or if the Committee at the time of any grant, award or other
acquisition under the Plan does not consist of two or more Non-Employee Directors, or if there shall be no such Committee, or if the
Board otherwise determines to administer the Plan, then the Plan shall be administered by the Board and any such grant, award or other
acquisition may be approved or ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3.
3.
Designation of Optionees and Grantees.
The
persons eligible for participation in the Plan as recipients of Options (the “Optionees”) or Restricted Stock (the
“Grantees” and together with Optionees, the “Participants”) shall include directors, officers and
employees of, and consultants and advisors to, the Company or any Subsidiary; provided that Incentive Options may only be granted to
employees of the Company and any Subsidiary. In selecting Participants, and in determining the number of shares to be covered by each
Option or award of Restricted Stock granted to Participants, the Administrator may consider any factors it deems relevant, including,
without limitation, the office or position held by the Participant or the Participant’s relationship to the Company, the Participant’s
degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary, the Participant’s length
of service, promotions and potential. A Participant who has been granted an Option or Restricted Stock hereunder may be granted an additional
Option or Options, or Restricted Stock if the Administrator shall so determine.
4.
Stock Reserved for the Plan.
Subject
to adjustment as provided in Section 8 hereof, a maximum of 4,000,000 shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”), shall be subject to the Plan. The shares of Common Stock subject to the Plan shall consist
of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of Common
Stock shall be and is hereby reserved for such purpose. Any of such shares of Common Stock that may remain unissued and that are not
subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purposes of the Plan, but until termination
of the Plan the Company shall at all times reserve a sufficient number of shares of Common Stock to meet the requirements of the Plan.
Should any Securities expire or be canceled prior to its exercise, satisfaction of conditions or vesting in full, as applicable, or should
the number of shares of Common Stock to be delivered upon the exercise or vesting in full of an Option or award of Restricted Stock be
reduced for any reason, the shares of Common Stock theretofore subject to such Option or Restricted Stock, as applicable, may be subject
to future Options or Restricted Stock under the Plan.
5.
Terms and Conditions of Options.
Options
granted under the Plan shall be subject to the following conditions and shall contain such additional terms and conditions, not inconsistent
with the terms of the Plan, as the Administrator shall deem desirable:
(a)
Option Price. The purchase price of each share of Common Stock purchasable under an Incentive Option shall be determined by the
Administrator at the time of grant, but shall not be less than 100% of the Fair Market Value (as defined below) of such share of Common
Stock on the date the Option is granted; provided, however, that with respect to an Optionee who, at the time such Incentive
Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes
of stock of the Company or of any Subsidiary, the purchase price per share of Common Stock shall be at least 110% of the Fair Market
Value per share of Common Stock on the date of grant. The purchase price of each share of Common Stock purchasable under a Nonqualified
Option shall not be less than 100% of the Fair Market Value of such share of Common Stock on the date the Option is granted. The exercise
price for each Option shall be subject to adjustment as provided in Section 8 below. “Fair Market Value” means the
closing price on the final trading day immediately prior to the grant date of the Common Stock on the NASDAQ Capital Market or other
principal securities exchange on which shares of Common Stock are listed (if the shares of Common Stock are so listed), or, if not so
listed, the mean between the closing bid and asked prices of publicly traded shares of Common Stock in the over the counter market, or,
if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company,
or as determined by the Administrator in a manner consistent with the provisions of the Code. Anything in this Section 5(a) to the contrary
notwithstanding, in no event shall the purchase price of a share of Common Stock be less than the minimum price permitted under the rules
and policies of any national securities exchange on which the shares of Common Stock are listed.
(b)
Option Term. The term of each Option shall be fixed by the Administrator, but no Option shall be exercisable more than ten years
after the date such Option is granted and in the case of an Incentive Option granted to an Optionee who, at the time such Incentive Option
is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or of any Subsidiary, no such Incentive Option shall be exercisable more than five years after the date such Incentive
Option is granted.
(c)
Exercisability. Subject to Section 5(j) hereof, Options shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Administrator at the time of grant; provided, however, that in the absence of
any Option vesting periods designated by the Administrator at the time of grant, Options shall vest and become exercisable as to one-third
of the total number of shares subject to the Option on each of the first, second and third anniversaries of the date of grant; and provided
further that no Options shall be exercisable until such time as any vesting limitation required by Section 16 of the Exchange Act, and
related rules, shall be satisfied if such limitation shall be required for continued validity of the exemption provided under Rule 16b-3(d)(3).
Upon
the occurrence of a “Change in Control” (as hereinafter defined), the Administrator may accelerate the vesting and exercisability
of outstanding Options, in whole or in part, as determined by the Administrator in its sole discretion. In its sole discretion, the Administrator
may also determine that, upon the occurrence of a Change in Control, each outstanding Option shall terminate within a specified number
of days after notice to the Optionee thereunder, and each such Optionee shall receive, with respect to each share of Common Stock subject
to such Option, an amount equal to the excess of the Fair Market Value of such shares immediately prior to such Change in Control over
the exercise price per share of such Option; such amount shall be payable in cash, in one or more kinds of property (including the property,
if any, payable in the transaction) or a combination thereof, as the Administrator shall determine in its sole discretion.
For
purposes of the Plan, unless otherwise defined in an employment agreement between the Company and the relevant Optionee, a Change in
Control shall be deemed to have occurred if:
(i)
a tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding voting
securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of the surviving
or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the
commencement of such offer), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;
(ii)
the Company shall be merged or consolidated with another corporation, unless as a result of such merger or consolidation more than 50%
of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of
the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries, and
their affiliates;
(iii)
the Company shall sell substantially all of its assets to another corporation that is not wholly owned by the Company, unless as a result
of such sale more than 50% of such assets shall be owned in the aggregate by the stockholders of the Company (as of the time immediately
prior to such transaction), any employee benefit plan of the Company or its Subsidiaries and their affiliates; or
(iv) a Person (as defined
below) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially or of
record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving or resulting corporation
shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the first acquisition of such
securities by such Person), any employee benefit plan of the Company or its Subsidiaries, and their affiliates.
Notwithstanding
the foregoing, if Change of Control is defined in an employment agreement between the Company and the relevant Optionee, then, with respect
to such Optionee, Change of Control shall have the meaning ascribed to it in such employment agreement.
For
purposes of this Section 5(c), ownership of voting securities shall take into account and shall include ownership as determined by applying
the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange Act. In addition, for such purposes, “Person”
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; provided,
however, that a Person shall not include (A) the Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its Subsidiaries; (C) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (D) a corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportion as their ownership of stock of the Company.
(d)
Method of Exercise. Options to the extent then exercisable may be exercised in whole or in part at any time during the option
period, by giving written notice to the Company specifying the number of shares of Common Stock to be purchased, accompanied by payment
in full of the purchase price, in cash, or by check or such other instrument as may be acceptable to the Administrator. As determined
by the Administrator, in its sole discretion, at or after grant, payment in full or in part may be made at the election of the Optionee
(i) in the form of Common Stock owned by the Optionee (based on the Fair Market Value of the Common Stock which is not the subject of
any pledge or security interest, (ii) in the form of shares of Common Stock withheld by the Company from the shares of Common Stock otherwise
to be received with such withheld shares of Common Stock having a Fair Market Value equal to the exercise price of the Option, or (iii)
by a combination of the foregoing, such Fair Market Value determined by applying the principles set forth in Section 5(a), provided that
the combined value of all cash and cash equivalents and the Fair Market Value of any shares surrendered to the Company is at least equal
to such exercise price and except with respect to (ii) above, such method of payment will not cause a disqualifying disposition of all
or a portion of the Common Stock received upon exercise of an Incentive Option. An Optionee shall have the right to dividends and other
rights of a stockholder with respect to shares of Common Stock purchased upon exercise of an Option at such time as the Optionee (i)
has given written notice of exercise and has paid in full for such shares, and (ii) has satisfied such conditions that may be imposed
by the Company with respect to the withholding of taxes.
(e)
Non-transferability of Options. Options are not transferable and may be exercised solely by the Optionee during his lifetime or
after his death by the person or persons entitled thereto under his will or the laws of descent and distribution. The Administrator,
in its sole discretion, may permit a transfer of a Nonqualified Option to (i) a trust for the benefit of the Optionee, (ii) a member
of the Optionee’s immediate family (or a trust for his or her benefit) or (iii) pursuant to a domestic relations order. Any attempt
to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, any Option contrary to
the provisions hereof shall be void and ineffective and shall give no right to the purported transferee.
(f)
Termination by Death. Unless otherwise determined by the Administrator, if any Optionee’s employment with or service to
the Company or any Subsidiary terminates by reason of death, the Option may thereafter be exercised, to the extent then exercisable (or
on such accelerated basis as the Administrator shall determine at or after grant), by the legal representative of the estate or by the
legatee of the Optionee under the will of the Optionee, for a period of one (1) year after the date of such death (or, if later, such
time as the Option may be exercised pursuant to Section 14(d) hereof) or until the expiration of the stated term of such Option as provided
under the Plan, whichever period is shorter.
(g) Termination by Reason of Disability. Unless otherwise determined by the Administrator,
if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of Disability (as defined below),
then any Option held by such Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination due to
Disability (or on such accelerated basis as the Administrator shall determine at or after grant), but may not be exercised after ninety
(90) days after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant
to Section 14(d) hereof) or the expiration of the stated term of such Option, whichever period is shorter; provided, however,
that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be exercisable
to the extent to which it was exercisable at the time of death for a period of one (1) year after the date of such death (or, if later,
such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is
shorter. “Disability” shall mean an Optionee’s total and permanent disability; provided, that if Disability
is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Disability
shall have the meaning ascribed to it in such employment agreement
(h)
Termination by Reason of Retirement. Unless otherwise determined by the Administrator, if any Optionee’s employment with
or service to the Company or any Subsidiary terminates by reason of Normal or Early Retirement (as such terms are defined below), any
Option held by such Optionee may thereafter be exercised to the extent it was exercisable at the time of such Retirement (or on such
accelerated basis as the Administrator shall determine at or after grant), but may not be exercised after ninety (90) days after the
date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof)
or the expiration of the stated term of such Option, whichever date is earlier; provided, however, that, if the Optionee
dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be exercisable, to the extent
to which it was exercisable at the time of death, for a period of one (1) year after the date of such death (or, if later, such time
as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is shorter.
For
purposes of this paragraph (h), “Normal Retirement” shall mean retirement from active employment with the Company
or any Subsidiary on or after the normal retirement date specified in the applicable Company or Subsidiary pension plan or if no such
pension plan, age 65, and “Early Retirement” shall mean retirement from active employment with the Company or any
Subsidiary pursuant to the early retirement provisions of the applicable Company or Subsidiary pension plan or if no such pension plan,
age 55.
(i) Other
Terminations. Unless otherwise determined by the Administrator upon grant, if any Optionee’s employment with or service to
the Company or any Subsidiary is terminated by such Optionee for any reason other than death, Disability, Normal or Early Retirement
or Good Reason (as defined below), the Option shall thereupon terminate, except that the portion of any Option that was exercisable
on the date of such termination of employment or service may be exercised for the lesser of ninety (90) days after the date of
termination (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the balance of such
Option’s term, which ever period is shorter. The transfer of an Optionee from the employ of or service to the Company to the
employ of or service to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a
termination of employment or service for purposes of the Plan.
(i) In the event that the Optionee’s employment or service with
the Company or any Subsidiary is terminated by the Company or such Subsidiary for “cause” any unexercised portion of any
Option shall immediately terminate in its entirety. For purposes hereof, unless otherwise defined in an employment agreement between
the Company and the relevant Optionee, “Cause” shall exist upon a good-faith determination by the Board, following a
hearing before the Board at which an Optionee was represented by counsel and given an opportunity to be heard, that such Optionee
has been accused of fraud, dishonesty or act detrimental to the interests of the Company or any Subsidiary of Company or that such
Optionee has been accused of or convicted of an act of willful and material embezzlement or fraud against the Company or of a felony
under any state or federal statute; provided, however, that it is specifically understood that “Cause”
shall not include any act of commission or omission in the good-faith exercise of such Optionee’s business judgment as a
director, officer or employee of the Company, as the case may be, or upon the advice of counsel to the Company. Notwithstanding the
foregoing, if Cause is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such
Optionee, Cause shall have the meaning ascribed to it in such employment agreement.
(ii)
In the event that an Optionee is removed as a director, officer or employee by the Company at any time other than for “Cause”
or resigns as a director, officer or employee for “Good Reason” the Option granted to such Optionee may be exercised by the
Optionee, to the extent the Option was exercisable on the date such Optionee ceases to be a director, officer or employee. Such Option
may be exercised at any time within one (1) year after the date the Optionee ceases to be a director, officer or employee (or, if later,
such time as the Option may be exercised pursuant to Section 14(d) hereof), or the date on which the Option otherwise expires by its
terms; whichever period is shorter, at which time the Option shall terminate; provided, however, if the Optionee dies before
the Options terminate and are no longer exercisable, the terms and provisions of Section 5(f) shall control. For purposes of this Section
5(i), and unless otherwise defined in an employment agreement between the Company and the relevant Optionee, Good Reason shall exist
upon the occurrence of the following:
| |
(A) |
the
assignment to Optionee of any duties inconsistent with the position in the Company that Optionee held immediately prior to the assignment; |
| |
|
|
| |
(B) |
a
Change of Control resulting in a significant adverse alteration in the status or conditions of Optionee’s participation with
the Company or other nature of Optionee’s responsibilities from those in effect prior to such Change of Control, including
any significant alteration in Optionee’s responsibilities immediately prior to such Change in Control; and |
| |
|
|
| |
(C) |
the
failure by the Company to continue to provide Optionee with benefits substantially similar to those enjoyed by Optionee prior to
such failure. |
Notwithstanding
the foregoing, if Good Reason is defined in an employment agreement between the Company and the relevant Optionee, then, with respect
to such Optionee, Good Reason shall have the meaning ascribed to it in such employment agreement.
(j)
Limit on Value of Incentive Option. The aggregate Fair Market Value, determined as of the date the Incentive Option is granted,
of Common Stock for which Incentive Options are exercisable for the first time by any Optionee during any calendar year under the Plan
(and/or any other stock option plans of the Company or any Subsidiary) shall not exceed $100,000. Should it be determined that an Incentive
Stock Option granted under the Plan exceeds such maximum for any reason other than a failure in good faith to value the Stock subject
to such option, the excess portion of such option shall be considered a Nonqualified Option. To the extent the employee holds two (2)
or more such Options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability
of such Option as Incentive Stock Options under the Federal tax laws shall be applied on the basis of the order in which such Options
are granted. If, for any reason, an entire Option does not qualify as an Incentive Stock Option by reason of exceeding such maximum,
such Option shall be considered a Nonqualified Option.
6.
Terms and Conditions of Restricted Stock.
Restricted
Stock may be granted under this Plan aside from, or in association with, any other award and shall be subject to the following conditions
and shall contain such additional terms and conditions (including provisions relating to the acceleration of vesting of Restricted Stock
upon a Change of Control), not inconsistent with the terms of the Plan, as the Administrator shall deem desirable:
(a)
Grantee rights. A Grantee shall have no rights to an award of Restricted Stock unless and until Grantee accepts the award within
the period prescribed by the Administrator and, if the Administrator shall deem desirable, makes payment to the Company in cash, or by
check or such other instrument as may be acceptable to the Administrator. After acceptance and issuance of a certificate or certificates,
as provided for below, the Grantee shall have the rights of a stockholder with respect to Restricted Stock subject to the non-transferability
and forfeiture restrictions described in Section 6(d) below.
(b)
Issuance of Certificates. The Company shall issue in the Grantee’s name a certificate or certificates for the shares of
Common Stock associated with the award promptly after the Grantee accepts such award.
(c)
Delivery of Certificates. Unless otherwise provided, any certificate or certificates issued evidencing shares of Restricted Stock
shall not be delivered to the Grantee until such shares are free of any restrictions specified by the Administrator at the time of grant.
(d)
Forfeitability, Non-transferability of Restricted Stock. Shares of Restricted Stock are forfeitable until the terms of the Restricted
Stock grant have been satisfied. Shares of Restricted Stock are not transferable until the date on which the Administrator has specified
such restrictions have lapsed. Unless otherwise provided by the Administrator at or after grant, distributions in the form of dividends
or otherwise of additional shares or property in respect of shares of Restricted Stock shall be subject to the same restrictions as such
shares of Restricted Stock.
(e)
Change of Control. Upon the occurrence of a Change in Control as defined in Section 5(c), the Administrator may accelerate the
vesting of outstanding Restricted Stock, in whole or in part, as determined by the Administrator, in its sole discretion.
(f) Termination
of Employment. Unless otherwise determined by the Administrator at or after grant, in the event the Grantee ceases to be an employee
or otherwise associated with the Company for any other reason, all shares of Restricted Stock theretofore awarded to him which are still
subject to restrictions shall be forfeited and the Company shall have the right to complete the blank stock power. The Administrator
may provide (on or after grant) that restrictions or forfeiture conditions relating to shares of Restricted Stock will be waived in whole
or in part in the event of termination resulting from specified causes, and the Administrator may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.
7.
Term of Plan.
No
Securities shall be granted pursuant to the Plan on or after the date which is ten years from the effective date of the Plan, but Options
and awards of Restricted Stock theretofore granted may extend beyond that date.
8.
Capital Change of the Company.
In
the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or other change in corporate structure affecting
the Common Stock of the Company, the Administrator shall make an appropriate and equitable adjustment in the number and kind of shares
reserved for issuance under the Plan and (A) in the number and option price of shares subject to outstanding Options granted under the
Plan, to the end that after such event each Optionee’s proportionate interest shall be maintained (to the extent possible) as immediately
before the occurrence of such event. The Administrator shall, to the extent feasible, make such other adjustments as may be required
under the tax laws so that any Incentive Options previously granted shall not be deemed modified within the meaning of Section 424(h)
of the Code. Appropriate adjustments shall also be made in the case of outstanding Restricted Stock granted under the Plan.
The
adjustments described above will be made only to the extent consistent with continued qualification of the Option under Section 422 of
the Code (in the case of an Incentive Option) and Section 409A of the Code.
9.
Purchase for Investment/Conditions.
Unless
the Options and shares covered by the Plan have been registered under the Securities Act of 1933, as amended (the “Securities
Act”), or the Company has determined that such registration is unnecessary, each person exercising or receiving Securities
under the Plan may be required by the Company to give a representation in writing that he is acquiring the securities for his own account
for investment and not with a view to, or for sale in connection with, the distribution of any part thereof. The Administrator may impose
any additional or further restrictions on awards of Securities as shall be determined by the Administrator at the time of award.
10.
Taxes.
(a)
The Company may make such provisions as it may deem appropriate, consistent with applicable law, in connection with any Securities granted
under the Plan with respect to the withholding of any taxes (including income or employment taxes) or any other tax matters.
(b)
If any Grantee, in connection with the acquisition of Restricted Stock, makes the election permitted under Section 83(b) of the Code
(that is, an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), such Grantee shall
notify the Company of the election with the Internal Revenue Service pursuant to regulations issued under the authority of Code Section
83(b).
(c) If any Grantee shall make any disposition of shares of Common Stock issued pursuant to the exercise of an Incentive Option
under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Grantee shall
notify the Company of such disposition within ten (10) days hereof.
11.
Effective Date of Plan.
The
Plan shall be effective on June 28, 2023, when the Plan was approved by majority vote of the Company’s stockholders
on June 28, 2023.
12.
Amendment and Termination.
The
Board may amend, suspend, or terminate the Plan, except that no amendment shall be made that would impair the rights of any Participant
under Securities theretofore granted without the Participant’s consent, and except that no amendment shall be made which, without
the approval of the stockholders of the Company would:
(a)
materially increase the number of shares that may be issued under the Plan, except as is provided in Section 8;
(b)
materially increase the benefits accruing to the Participants under the Plan;
(c)
materially modify the requirements as to eligibility for participation in the Plan;
(d)
decrease the exercise price of an Incentive Option to less than 100% of the Fair Market Value per share of Common Stock on the date of
grant thereof or the exercise price of a Nonqualified Option to less than 100% of the Fair Market Value per share of Common Stock on
the date of grant thereof;
(e)
extend the term of any Option beyond that provided for in Section 5(b);
(f)
except as otherwise provided in Sections 5(d) and 8 hereof, reduce the exercise price of outstanding Options or effect repricing through
cancellations and re-grants of new Options;
(g)
increase the number of shares of Common Stock to be issued or issuable under the Plan to an amount that is equal to or in excess of 19.99%
of the number of shares of Common Stock outstanding before the issuance of the stock or securities; or
(h)
otherwise require stockholder approval pursuant to the rules and regulations of the NASDAQ Stock Market.
Subject
to the forgoing, the Administrator may amend the terms of any Option theretofore granted, prospectively or retrospectively, but no such
amendment shall impair the rights of any Optionee without the Optionee’s consent.
It
is the intention of the Board that the Plan comply strictly with the provisions of Section 409A of the Code and Treasury Regulations
and other Internal Revenue Service guidance promulgated thereunder (the “Section 409A Rules”) and the Administrator
shall exercise its discretion in granting awards hereunder (and the terms of such awards), accordingly. The Plan and any grant of an
award hereunder may be amended from time to time (without, in the case of an award, the consent of the Participant) as may be necessary
or appropriate to comply with the Section 409A Rules.
13.
Government Regulations.
The
Plan, and the grant and exercise or conversion, as applicable, of Securities hereunder, and the obligation of the Company to issue and
deliver shares under such Securities shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental
agencies, national securities exchanges and interdealer quotation systems as may be required.
14.
General Provisions.
(a)
Certificates. All certificates for shares of Common Stock delivered under the Plan shall be subject to such stop transfer orders
and other restrictions as the Administrator may deem advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, or other securities commission having jurisdiction, any applicable Federal or state securities law, any stock
exchange or interdealer quotation system upon which the Common Stock is then listed or traded and the Administrator may cause a legend
or legends to be placed on any such certificates to make appropriate reference to such restrictions.
(b)
Employment Matters. Neither the adoption of the Plan nor any grant or award under the Plan shall confer upon any Participant who
is an employee of the Company or any Subsidiary any right to continued employment or, in the case of a Participant who is a director,
continued service as a director, with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right
of the Company or any Subsidiary to terminate the employment of any of its employees, the service of any of its directors or the retention
of any of its consultants or advisors at any time.
(c)
Limitation of Liability. No member of the Administrator, or any officer or employee of the Company acting on behalf of the Administrator,
shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and
all members of the Administrator and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted
by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation.
(d)
Registration of Stock. Notwithstanding any other provision in the Plan, no Option may be exercised unless and until the Common
Stock to be issued upon the exercise thereof has been registered under the Securities Act and applicable state securities laws, or are,
in the opinion of counsel to the Company, exempt from such registration in the United States. The Company shall not be under any obligation
to register under applicable federal or state securities laws any Common Stock to be issued upon the exercise of an Option granted hereunder
in order to permit the exercise of an Option and the issuance and sale of the Common Stock subject to such Option, although the Company
may in its sole discretion register such Common Stock at such time as the Company shall determine. If the Company chooses to comply with
such an exemption from registration, the Common Stock issued under the Plan may, at the direction of the Administrator, bear an appropriate
restrictive legend restricting the transfer or pledge of the Common Stock represented thereby, and the Administrator may also give appropriate
stop transfer instructions with respect to such Common Stock to the Company’s transfer agent.
15.
Non-Uniform Determinations.
The
Administrator’s determinations under the Plan, including, without limitation, (i) the determination of the Participants to receive
awards, (ii) the form, amount and timing of such awards, (iii) the terms and provisions of such awards and (ii) the agreements evidencing
the same, need not be uniform and may be made by it selectively among Participants who receive, or who are eligible to receive, awards
under the Plan, whether or not such Participants are similarly situated.
16.
Governing Law.
The
validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with
the internal laws of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable federal law.
Exhibit
5.1
September
29, 2023
VIA
ELECTRONIC TRANSMISSION
Securities
and Exchange Commission
100
F Street, N.E.
Washington,
DC 20549
| |
Re: |
Shineco,
Inc. Form S-8 Registration Statement |
Ladies
and Gentlemen:
We
refer to the above-captioned registration statement on Form S-8 (the “Registration Statement”) under the Securities Act of
1933, as amended (the “Act”), filed by Shineco, Inc., a Delaware corporation (the “Company”), with the Securities
and Exchange Commission.
We
have examined the originals, photocopies, certified copies or other evidence of such records of the Company, certificates of officers
of the Company and public officials, and other documents as we have deemed relevant and necessary as a basis for the opinion hereinafter
expressed. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us
as certified copies or photocopies and the authenticity of the originals of such latter documents.
Based
on our examination mentioned above, we are of the opinion that the securities being issued pursuant to the Registration Statement are
duly authorized and will be, when so issued, legally and validly issued, and fully paid and non-assessable.
We
hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement. In giving the foregoing consent, we do not
hereby admit that we are in the category of persons whose consent is required under Section 7 of the Act, or the rules and regulations
of the Securities and Exchange Commission.
| |
Very
truly yours, |
| |
|
| |
/s/
Sichenzia Ross Ference LLP |
| |
Sichenzia
Ross Ference LLP |
1185
Avenue of the Americas | 31st Floor | New York, NY | 10036
T
(212) 930 9700 | F (212) 930 9725 | WWW.SRF.LAW
Exhibit
23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation
by reference in this Form S-8 of our report dated September 28, 2023 relating to the consolidated financial statements of Shineco,
Inc., appearing in its Annual Report on Form 10-K for the year ended June 30, 2023. Our report contains an explanatory paragraph regarding
the Company’s ability to continue as a going concern.
We
also consent to the reference to our firm under the heading “Experts” in the Registration Statement.
/s/
Assentsure PAC
Singapore
September
29, 2023
Exhibit
107
CALCULATION
OF REGISTRATION FEE
Table
1: Newly Registered Securities
| |
|
Security
Type |
|
Security
Class Title |
|
Fee
Calculation
Rule |
|
Amount
Registered(1) |
|
|
Proposed
Maximum
Offering Price
Per Share |
|
|
Maximum
Aggregate
Offering Price |
|
Fee
Rate |
|
|
Amount
of
Registration
Fee |
|
| Fees
to Be Paid |
|
Equity |
|
Common
Stock, par value $0.001 per share |
|
457(c)
and (h) |
|
|
4,000,000 |
(2) |
|
$ |
0.1385 |
(3) |
|
$ |
554,000.00 |
(3) |
|
0.0001102 |
|
|
$ |
61.0508 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Fees
Previously Paid |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Fee Offsets |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Fee Due |
|
|
$ |
61.0508 |
|
| (1) |
Pursuant
to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), this Registration Statement on
Form S-8 shall also be deemed to cover such additional securities which become issuable by reason of any stock dividend, stock split,
recapitalization or any other similar transactions. |
| |
|
| (2) |
Consists
of 4,000,000 shares of common stock of Shineco, Inc., par value $0.001 per share (“Common Stock”), available
for issuance under the 2023 Equity Incentive Plan. |
| |
|
| (3) |
Estimated
solely for the purpose of calculating the registration fee under Rule 457(c) and (h) of the Securities Act on the basis of the average
of the high and low sales price per share of Common Stock on September 26, 2023, as reported on the Nasdaq Capital Market. |
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