SHINECO, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL CONDITIONS AND OPERATING RESULTS (Form 10-Q)

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Forward-looking statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and is subject to the safe harbor created by those
sections. All statements other than statements of historical fact are
"forward-looking statements" for purposes of federal and state securities laws.
Forward-looking statements involve risks and uncertainties, such as statements
about our plans, objectives, expectations, assumptions or future events. In some
cases, you can identify forward-looking statements by terminology such as
"anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect,"
"believe," "intend," "may," "should," "will," "could," and similar expressions
denoting uncertainty or an action that may, will or is expected to occur in the
future. These statements involve estimates, assumptions, known and unknown
risks, uncertainties, and other factors that could cause actual results to
differ materially from any future results, performances or achievements
expressed or implied by the forward-looking statements.

The following are examples of forward-looking statements:

? the development schedule for future products;

? projections of revenues, profits, capital structure and other

elements;

? local, regional, national and worldwide price of Luobuma and herbal medicines

fluctuation;

? statements of our plans and objectives, including those relating to our

proposed extensions and the effect these extensions may have on our revenues;

  ? statements regarding the capabilities of our business operations;

  ? statements of expected future economic performance;

  ? the impact of the COVID-19 outbreak;

  ? statements regarding competition in our market; and

  ? assumptions underlying statements regarding us or our business.


The ultimate correctness of these forward-looking statements depends upon a
number of known and unknown risks and events. When reviewing the discussion
below, you should keep in mind the substantial risks and uncertainties that
impact our business. In particular, we encourage you to review the risks and
uncertainties described in "Risk Factors" in our annual report on Form 10-K for
the fiscal year ended June 30, 2022 filed with the SEC on September 28, 2022
(the "Annual Report") and other SEC filings. These risks and uncertainties could
cause actual results to differ materially from those projected or implied by our
forward-looking statements contained in this report. In addition, many factors
could cause our actual results to differ materially from those expressed or
implied in our forward-looking statements. Consequently, you should not place
undue reliance on these forward-looking statements.

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

The information included in this Management's Discussion and Analysis of
Financial Condition and Results of Operations should be read in conjunction with
our unaudited condensed consolidated financial statements and the notes included
in this Quarterly Report, and the audited consolidated financial statements and
notes and Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in our Annual Report. All monetary figures are
presented in U.S. dollars, unless otherwise indicated.

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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
People's Republic of China, or the PRC, primarily the variable interest entities
(the "VIEs"). We do not have any equity ownership of the VIEs, instead we are
entitled to receive the economic benefits of the VIEs' business operations
through certain contractual arrangements. Our common stock that currently listed
on the Nasdaq Capital Markets are shares of our Delaware holding company that
maintains service agreements with the associated operating companies. The
Chinese regulatory authorities could disallow our structure, which could result
in a material change in our operations and the value of our securities could
decline or become worthless.

We use our subsidiaries and the VIEs' vertically and horizontally integrated
production, distribution, and sales channels to provide health and well-being
focused plant-based products. Our products are only sold domestically in China.
We utilize modern engineering technologies and biotechnologies to produce, among
other products, Chinese herbal medicines, organic agricultural produce, and
specialized textiles. Our health and well-being focused plant-based products
business is divided into three major segments:

Processing and distributing traditional Chinese herbal medicine products as well
as other pharmaceutical products - This segment is conducted through Ankang
Longevity Pharmaceutical (Group) Co., Ltd. ("Ankang Longevity Group"), a Chinese
company formerly under contractual arrangement with the Company which operates
66 cooperative retail pharmacies throughout Ankang, a city in southern Shaanxi
province, China, through which we sell directly to individual customers
traditional Chinese medicinal products produced by us as well as by third
parties. Ankang Longevity Group also owns a factory specializing in decoction,
which is the process by which solid materials are heated or boiled in order to
extract liquids, and distributes decoction products to wholesalers and
pharmaceutical companies around China.

On June 8, 2021, Tenet-Jove entered into a Restructuring Agreement with various
parties. Pursuant to the terms of the Restructuring Agreement, (i) the Company
transferred all of its rights and interests in Ankang Longevity Group to Yushe
County Guangyuan Forest Development Co., Ltd. ("Guangyuan")'s Shareholders in
exchange for the Guangyuan Shareholders entering into VIE agreements with
Tenet-Jove, which composes of one group of similar identifiable assets; (ii)
Tenet-Jove entered a Termination Agreement with Ankang Longevity Group and the
Ankang Longevity Group Shareholders; (iii) as a consideration to the
Restructuring Agreement and based on a valuation report on the equity interests
of Guangyuan issued by an independent third party, Tenet-Jove relinquished all
of its rights and interests in Ankang Longevity Group and transferred those
rights and interests to the Guangyuan Shareholders; and (iv) Guangyuan and the
Guangyuan Shareholders entered into a series of variable interest entity
agreements with Tenet-Jove. After signing of the Restructuring Agreement, the
Company and the shareholders of Ankang Longevity Group and Guangyuan actively
carried out the transferring of rights and interests in Ankang Longevity Group
and Guangyuan, and the transferring was completed subsequently on July 5, 2021.
Afterwards, with the completion of all other follow-ups works, on August 16,
2021, the Company, through its subsidiary Tenet-Jove, completed the previously
announced acquisition pursuant to the Restructuring Agreement dated June 8,
2021. The management determined that July 5, 2021 was the disposal date of
Ankang Longevity Group. The results of operations of Ankang Longevity Group have
been reclassified to "net loss from discontinued operations" in the unaudited
condensed consolidated statements of loss and comprehensive loss for the three
months ended September 30, 2022 and 2021.

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Processing and distributing green and organic agricultural produce as well as
growing and cultivating yew trees (taxus media) - We currently cultivate and
sell yew mainly to group and corporate customers, but do not currently process
yew into Chinese or Western medicines. This segment is conducted through the
VIEs: Qingdao Zhihesheng Agricultural Produce Services, Ltd ("Qingdao
Zhihesheng"). Meanwhile, we entered the market of planting fast-growing bamboo
willows and scenic greening trees through the newly acquired VIE, Yushe County
Guangyuan Forest Development Co., Ltd. ("Guangyuan"). The operations of this
segment are located in the North regions of Mainland China, mostly carried out
in Shanxi Province.

Providing domestic air and overland freight forwarding services - We currently
provide domestic air and overland freight forwarding services by outsourcing
these services to a third party. This segment is conducted through our VIE,
Yantai Zhisheng International Freight Forwarding Co., Ltd ("Zhisheng Freight").

Developing and distributing specialized fabrics, textiles, and other byproducts
derived from an indigenous Chinese plant Apocynum Venetum, grown in the Xinjiang
region of China, and known in Chinese as "Luobuma" or "bluish dogbane" - Our
Luobuma products are specialized textile and health supplement products designed
to incorporate traditional Eastern medicines with modern scientific methods.
These products are predicated on centuries-old traditions of Eastern herbal
remedies derived from the Luobuma raw material. This segment is channeled
through our directly-owned subsidiary, Beijing Tenet-Jove Technological
Development Co., Ltd. ("Tenet-Jove"), and its 90% subsidiary Tianjin Tenet
Huatai Technological Development Co., Ltd. ("Tenet Huatai").

Fundraising activities

On June 16, 2021, the Company entered into a securities purchase agreement
pursuant to which the Company issued an unsecured convertible promissory note
with a one-year maturity term to an institutional accredited investor,
Streeterville Capital, LLC ("Investor"). The note had an original principal
amount of US$3,170,000 and Investor gave consideration of US$3.0 million,
reflecting original issue discount of US$150,000 and Investor's legal fee of
US$20,000. Interest accrues on the outstanding balance of the note at 6% per
annum. The Company has received the principal in full from the Investor and used
the proceeds for general working capital purposes. On September 7, 2022, the
Company signed an extension amendment with the Investor to extend the maturity
date to June 15, 2023. As of September 30, 2022, no share of the Company's
common stock under this agreement was issued by the Company to the Investor, and
the Notes balance was US$3,443,571, with a carrying value of US$3,513,947, net
of deferred financing costs of US$70,376 was recorded in the accompanying
unaudited condensed consolidated balance sheets.

On July 16, 2021, the Company entered into another securities purchase agreement
with the Investor, pursuant to which the Company issued the Investor two
unsecured convertible promissory notes each with a one-year maturity term. The
first convertible promissory note had an original principal amount of
US$3,170,000 and the Investor gave consideration of US$3.0 million, reflecting
original issue discount of US$150,000 and Investor's legal fee of US$20,000. The
second convertible promissory note has the original principal amount of
US$4,200,000 and Investor gave consideration of US$4.0 million, reflecting
original issue discount of US$200,000. Interest accrues on the outstanding
balance of the Notes at 6% per annum. The Company has received the principal in
full from the Investor and used the proceeds for general working capital
purposes. As of September 30, 2022, the Notes was fully converted and shares of
the Company's common stock totaling 1,946,766 were issued by the Company to the
Investor equaling principal and interests amounted to US$7,472,638.

On August 19, 2021, the Company entered into another securities purchase
agreement with the Investor, pursuant to which the Company issued the Investor
an unsecured convertible promissory note with a one-year maturity term. The note
has an original principal amount of US$10,520,000 and Investor gave
consideration of US$10.0 million, reflecting original issue discount of
US$500,000 and Investor's legal fee of US$20,000. Interest accrues on the
outstanding balance of the note at 6% per annum. The Company has received the
principal in full from the Investor and used the proceeds for general working
capital purposes. On September 7, 2022, the Company signed an extension
amendment with the Investor to extend the maturity date to August 18, 2023. As
of September 30, 2022, shares of the Company's common stock totaling 427,699
were issued by the Company to the Investor equaling principal and interests
amounted to US$420,000, and the Notes balance was US$10,839,668, with a carrying
value of US$11,087,163, net of deferred financing costs of US$247,495 was
recorded in the accompanying unaudited condensed consolidated balance sheets.

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On June 13, 2022, the Company entered into a certain stock purchase agreement
(the "SPA") with certain non-U.S. investors (the "Purchasers"), pursuant to
which the Company agreed to sell, and the Purchasers agreed to purchase,
severally and not jointly, an aggregate of 2,354,500 shares of common stock of
the Company (the "Shares") at a price of US$2.12 per share. The Company's
shareholders approved the offer and sale of the Shares at a meeting of the
shareholders of the Company that was held on July 21, 2022. The closing for the
offer and sale of the Shares occurred on July 26, 2022 and the Company issued
the Shares in exchange for gross proceeds of $5.0 million.

On August 11, 2022, the Company entered into a securities purchase agreement
(the "Purchase Agreement") with certain non-US investors (the "Investors").
Under the Purchase Agreement, the Company will sell to the Investors, up to
1,921,683 shares (the "Shares") of its common stock at a per share purchase
price of $0.915 (subject to the terms and conditions of the Purchase Agreement)
for gross proceeds of up to US$1,758,340. As the date of this report, proceeds
amounted to US$1.0 million has been received by the Company, and the remaining
balance of the proceeds is expected to be fully collected by December 31, 2022.

Factors Affecting Financial Performance

We believe the following factors will affect our financial performance:

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

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

Economic and Political Risks

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

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COVID-19 Impact

The COVID-19 outbreak has resulted in the implementation of significant
governmental measures, including lockdowns, closures, quarantines, and travel
bans, intended to control the spread of the virus. In accordance with the
epidemic control measures imposed by the local governments related to COVID-19,
our offices and retail stores remained closed or had limited business operations
after the Chinese New Year holiday until early April 2020. In addition, COVID-19
had caused severe disruptions in transportation, limited access to our
facilities and limited support from workforce employed in our operations, and as
a result, we experienced delays or the inability to delivery our products to
customers on a timely basis. Further, some of our customers or suppliers
experienced financial distress, delayed or defaults on payment, sharp
diminishing of business, or suffer disruptions in their business due to the
outbreak. Any decreased collectability of accounts receivable, delayed raw
materials supply, bankruptcy of small and medium businesses, or early
termination of agreements due to deterioration in economic conditions could
negatively impact our results of operations. Wider-spread COVID-19 in China and
globally could prolong the deterioration in economic conditions and could cause
decreases in or delays in spending and reduce and/or negatively impact our
short-term ability to grow our revenue.

Due to the resurgence of COVID-19 cases in China, our headquarter in Beijing was
closed down on April 25, 2022 and only resumed our business in mid-June 2022.
Meanwhile, the business of our subsidiaries and VIEs was also negatively
affected during this period, including but not limited to the execution of our
sales contract and fulfillment of customer orders and the collection of the
payments from customers in a timely manner. The resurgence of COVID-19 impact on
our operating results and financial performance seems to be temporary, we will
continue to monitor and modify the operating strategies in response to the
COVID-19. The extent of the future impact of COVID-19 is still highly uncertain
and cannot be predicted as of the date our unaudited condensed consolidated
financial statements are released.

Significant Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. generally
accepted accounting principles ("U.S. GAAP") requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the unaudited
condensed consolidated financial statements as well as the reported amounts of
revenue and expenses during the reporting period. Critical accounting policies
are those accounting policies that may be material due to the levels of
subjectivity and judgment necessary to account for highly uncertain matters or
the susceptibility of such matters to change, and that have a material impact on
financial condition or operating performance. While we base our estimates and
judgments on our experience and on various other factors that we believe to be
reasonable under the circumstances, actual results may differ from these
estimates under different assumptions or conditions. We believe the following
critical accounting policies used in the preparation of our unaudited condensed
consolidated financial statements require significant judgments and estimates.
For additional information relating to these and other accounting policies, see
Note 3 to our unaudited condensed consolidated financial statements included
elsewhere in this Report.

Consolidation of variable interest entities

VIEs are generally entities that do not have sufficient equity to finance their activities without additional financial support from other parties or whose shareholders do not have adequate decision-making capacity. All VIEs and their affiliates with which the Company is involved must be assessed to determine the primary beneficiary of the risks and rewards of the VIE. The Prime Recipient is required to consolidate the VIE for financial reporting purposes.

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Use of Estimates

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

Accounts Receivable, Net

Accounts receivable are recorded at net realizable value consisting of the
carrying amount less an allowance for uncollectible accounts, as necessary. We
review the accounts receivable on a periodic basis and makes general and
specific allowances when there is doubt as to the collectability of individual
balances. In evaluating the collectability of individual receivable balances, we
consider many factors, including the age of the balance, the customers'
historical payment history, their current credit-worthiness and current economic
trends. The fair value of long-term receivables is determined using a present
value technique by discounting the future expected contractual cash flows using
current rates at which similar instruments would be issued at the measurement
date. As of September 30, 2022 and June 30, 2022, the allowance for doubtful
accounts was US$7,205,783 and US$7,317,236, respectively. Accounts are written
off against the allowance after efforts at collection prove unsuccessful.

Inventories, net

Inventories, which are stated at the lower of cost or net realizable value,
consist of raw materials, work-in-progress, and finished goods related to our
products. Cost is determined using the first in first out method. Agricultural
products that we farm are recorded at cost, which includes direct costs such as
seed selection, fertilizer, labor cost, and contract fees that are spent in
growing agricultural products on the leased farmland, and indirect costs such as
amortization of prepayments of farmland leases and farmland development costs.
All the costs are accumulated until the time of harvest and then allocated to
the harvested crops costs when they are sold. We periodically evaluate our
inventory and records an inventory reserve for certain inventories that may not
be saleable or whose cost exceeds net realizable value. As of September 30, 2022
and June 30, 2022, the inventory reserve was US$1,173,594 and US$1,249,543,
respectively.

Revenue recognition

Previously, we recognized revenue from sales of Luobuma products, Chinese herbal medicinal products and agricultural products, as well as the provision of logistics and other processing services to external customers. We recognize revenue when all of the following have occurred: (i) there was persuasive evidence of an agreement with a customer; (ii) delivery had taken place or the services had been rendered; (iii) the sale price was fixed or determinable; and (iv) our collection of such charges was reasonably assured. These criteria, related to our income, were considered to be met as follows:

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

Revenue from provision of services: The Company merely acts as an agent in this
type of services transactions. Revenue from domestic air and overland freight
forwarding services was recognized upon the performance of services as
stipulated in the underlying contract or when commodities were being released
from the customer's warehouse; the service price was fixed or determinable; and
collectability was deemed probable.

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

Fair value of financial instruments

We follow the provisions of ASC 820, "Fair Value Measurements and Disclosures."
ASC 820 clarifies the definition of fair value, prescribes methods for measuring
fair value, and establishes a fair value hierarchy to classify the inputs used
in measuring fair value as follows:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs, other than
quoted prices in level, that are observable for the asset or liability such as
quoted prices for similar assets or liabilities in active markets; quoted prices
for identical assets or liabilities in markets with insufficient volume or
infrequent transactions (less active markets); or model-derived valuations in
which significant inputs are observable or can be derived principally from, or
corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs
to the valuation methodology that are significant to the measurement of the fair
value of the asset or liability.

The carrying value of financial instruments included in current assets and liabilities approximates their fair value due to the short-term nature of these instruments.

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Results of operations for the three months ended September 30, 2022 and 2021

Insight

The following table summarizes our operating results for the three months ended September 30, 2022 and 2021:

                                         Three Months Ended
                                           September 30,                       Variance
                                       2022             2021             Amount            %
Revenue                            $    535,698     $     629,758     $    (94,060 )       (14.94 )%
Cost of revenue                         626,575         1,359,303         (732,728 )       (53.90 )%
Gross loss                              (90,877 )        (729,545 )        638,668         (87.54 )%
General and administrative
expenses                              1,886,443         8,573,656       (6,687,213 )       (78.00 )%
Selling expenses                         13,101             8,342            4,759          57.05 %
Impairment loss of distribution
rights                                        -         1,140,551       (1,140,551 )      (100.00 )%
Loss from operations                 (1,990,421 )     (10,452,094 )      8,461,673         (80.96 )%
Loss from equity method
investments                              (6,304 )         (27,920 )         21,616         (77.42 )%
Other income, net                        14,735               970           13,765       1,419.07 %
Amortization of debt issuance
costs                                  (154,403 )        (458,978 )        304,575         (66.36 )%
Interest expenses, net                 (305,927 )        (170,199 )       (135,728 )        79.75 %
Loss before income tax provision
from continuing operations           (2,442,320 )     (11,108,221 )      8,665,901         (78.01 )%
Provision for income taxes                    -                 -                -              -
Net loss from continuing
operations                           (2,442,320 )     (11,108,221 )      8,665,901         (78.01 )%
Net loss from discontinued
operations                                    -        (3,135,237 )      3,135,237        (100.00 )%
Net loss                           $ (2,442,320 )   $ (14,243,458 )   $ 11,801,138         (82.85 )%
Comprehensive loss attributable
to Shineco Inc.                    $ (4,744,406 )   $ (14,258,967 )   $  9,514,561         (66.73 )%



Revenue

Currently, we, through our PRC subsidiaries and the VIEs, have three revenue
streams derived from our three major business segments from continuing
operations. First, developing, manufacturing, and distributing specialized
fabrics, textiles, and other by-products derived from an indigenous Chinese
plant Apocynum Venetum, known in Chinese as "Luobuma" or "Bluish Dogbane," as
well as Luoboma raw materials processing; this segment is channeled through our
wholly owned subsidiary, Tenet-Jove. Second, planting, processing and
distributing green and organic agricultural produce, growing and cultivation of
yew trees, as well as planting fast-growing bamboo willows and scenic greening
trees; this segment is conducted through Qingdao Zhihesheng and Guangyuan.
Third, providing domestic air and overland freight forwarding services by
outsourcing these services to a third party; this segment is conducted through
Zhisheng Freight. For the business segment, that processing and distributing
traditional Chinese medicinal herbal products as well as other pharmaceutical
products; this segment is conducted via the VIE, Ankang Longevity Group and its
subsidiaries, which was disposed and did not generate any sales during the three
months ended September 30, 2021.

The following table sets forth the breakdown of our revenue for each of the
three segments for the three months ended September 30, 2022 and 2021,
respectively:

                                           Three Months Ended September 30,                     Variance
                                     2022           %           2021           %          Amount          %
Luobuma products                   $   5,574         1.04 %   $  13,508         2.14 %   $  (7,934 )     (58.74 )%
Other agricultural products          428,596        80.01 %     452,387    
   71.84 %     (23,791 )      (5.26 )%
Freight services                     101,528        18.95 %     163,863        26.02 %     (62,335 )     (38.04 )%
Total Amount                       $ 535,698       100.00 %   $ 629,758       100.00 %   $ (94,060 )     (14.94 )%



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For the three months ended September 30, 2022 and 2021, revenue from sales of
Luobuma products was US$5,574 and US$13,508, respectively, which represented a
slight decrease of US$7,934, or 58.74%. The decrease of revenue from this
segment was mainly due to the decrease in revenue from Tenet-Jove and Tenet
Huatai. The low revenue from sales of Luobuma products is because we did not
launch any new products and reduced our resources and investments in our
E-commerce distribution channel, and currently, we mainly focused on clearing
off our remaining old stocks. Hence, revenue from this segment continued falling
during the three months ended September 30, 2022 as compared to the same period
in 2021.

For the three months ended September 30, 2022 and 2021, revenue from sales of
other agricultural products was US$428,596 and US$452,387, respectively,
representing a slight decrease of US$23,791, or 5.26%. Since our sales of yew
trees were adversely affected by the COVID-19 outbreak, we modified our
operating strategies in response to the pandemic. Instead of selling more
unmatured yew trees, we are now cultivating more matured yew trees, which can be
used to extract Taxol, a more valuable chemical substance which is used
experimentally as a drug in the treatment of cancer.

For the three months ended September 30, 2022 and 2021, revenue from provision
of freight services was US$101,528 and US$ 163,863, respectively, representing a
decrease of US$62,335, or 38.04%. The decrease was mainly due to we outsourced
our domestic and international logistic services to third-party logistic
companies due to the change in our business strategies. Since we merely served
as an agent in this type of transactions, our revenue from domestic and
international logistic services was recognized in the net amount during the
three months ended September 30, 2022.

Cost of revenue and related tax

The following table shows the breakdown of the cost of products for each of our three segments for the three months ended September 30, 2022 and 2021:

                                            Three Months Ended September 30,                       Variance
                                     2022           %            2021            %           Amount           %
Luobuma products                   $     206         0.03 %   $   141,838        10.44 %   $ (141,632 )      (99.85 )%
Other agricultural products          548,942        87.61 %     1,068,254        78.59 %     (519,312 )      (48.61 )%
Freight services                      77,427        12.36 %       147,956        10.88 %      (70,529 )      (47.67 )%
Business and sales related tax             -         0.00 %         1,255  
      0.09 %       (1,255 )     (100.00 )%
Total Amount                       $ 626,575       100.00 %   $ 1,359,303       100.00 %   $ (732,728 )      (53.90 )%



For the three months ended September 30, 2022 and 2021, cost of revenue from
sales of our Luobuma products was US$206 and US$141,838, respectively,
representing a decrease of US$141,632, or 99.85%. The decrease was mainly due to
the decreased allowance we accrued for our slow-moving inventories amounted to
US$ 137,244 on our remaining old stocks during the three months ended September
30, 2022.

For the three months ended September 30, 2022 and 2021, cost of revenue from
sales of other agricultural products was US$548,942 and US$1,068,254,
respectively, representing a decrease of US$519,312, or 48.61%. The decrease was
mainly due to less stock written off during the three months ended September 30,
2022. Due to the continuous impact of Covid-19 in China, which resulted in the
damage and death of a large number of yew trees, we continued writing off a
large amount of our inventory during the three months ended September 30, 2022.

For the three months ended September 30, 2022 and 2021, cost of revenue from
provision of freight services was US$77,427 and US$147,956, respectively,
representing a decrease of US$70,529, or 47.67%. The decrease was due to
decreased cost of revenue from domestic and international logistic services, as
we now only acted as an agent in this type of this transactions as mentioned
above.

44





Gross Loss

The following table shows the breakdown of the gross loss for each of our three segments for the three months ended September 30, 2022 and 2021:

                                             Three Months Ended September 30,                       Variance
                                      2022           %             2021           %           Amount           %
Luobuma products                   $    5,368        (5.91 )%   $ (128,330 )      17.59 %    $ 133,698       (104.18 )%
Other agricultural products          (120,346 )     132.43 %      (615,867 )      84.42 %      495,521        (80.46 )%
Freight services                       24,101       (26.52 )%       14,652        (2.01 )%       9,449         64.49 %
Total Amount                       $  (90,877 )     100.00 %    $ (729,545 )     100.00 %    $ 638,668        (87.54 )%



Gross loss from Luobuma product sales decreased by US$133,698 or 104.18%, for
the three months ended September 30, 2022 as compared to the same period in
2021. The decrease was mainly due to decrease in allowance we accrued for our
slow-moving inventories during the three months ended September 30, 2022.

Gross loss from sales of other agricultural products decreased by US$495,521, or
80.46%, for the three months ended September 30, 2022 as compared to the same
period in 2021. The decrease in gross loss was mainly due to less stock written
off as mentioned above, as well as less price discounts we offered to our
customers during the three months ended September 30, 2022.

Gross income from provision of freight services increased slightly by US$9,449,
or 64.49%, for the three months ended September 30, 2022 as compared to the same
period in 2021. As mentioned above, we outsourced our domestic and international
logistic services to third-party logistic companies due to the change in our
business strategies, which improved our operating efficiency and profitability
during the three months ended September 30, 2022.

Expenses

The following table shows the breakdown of our operating expenses for the three months ended September 30, 2022 and 2021, respectively:

                                             Three Months Ended September 30,                         Variance
                                      2022            %            2021            %            Amount            %
General and administrative
expenses                           $ 1,886,443        99.31 %   $ 8,573,656        88.18 %   $ (6,687,213 )      (78.00 )%
Selling expenses                        13,101         0.69 %         8,342         0.09 %          4,759         57.05 %
Impairment loss of distribution
rights                                       -         0.00 %     1,140,551        11.73 %     (1,140,551 )     (100.00 )%
Total Amount                       $ 1,899,544       100.00 %   $ 9,722,549

100.00% ($7,823,005) (80.46)%

General and administrative expenses

For the three months ended September 30, 2022, our general and administrative
expenses were US$1,886,443, representing a decrease of US$6,687,213, or 78.00%,
as compared to the same period in 2021. The decrease was mainly due to the
deceased bad debt expense during the three months ended September 30, 2022, as
we recorded a significant amount of bad debt expense as a result of the impact
from COVID-19 during the same period last year. We recorded allowance according
to our accounting policy based on our best estimates. Management will continue
putting effort in collection of overdue receivables and utilize our advances to
our vendors. The decrease was partially offset by the increased intermediary fee
paid to a third party as commission for the Company intended acquisition as well
as the increased stock compensation expenses incurred during the three months
ended September 30, 2022.

45




Impairment Loss of distribution rights

For the three months ended September 30, 2022 and 2021, our impairment loss of
distribution right was US$ nil and US$1,140,551, respectively. We acquired
distribution rights to distribute branded products of Daiso 100-yen shops
through the acquisition of Tianjin Tajite. During the three months ended
September 30, 2021, the management performed evaluation on the impairment of
distribution rights. As the Company is unable to generate any revenue and profit
from the distribution right due to the unfavorable policy of China Customs and
current business environment caused by the continuous impact from the COVID-19,
the management fully recorded an impairment loss on distribution rights of
Tianjin Tajite.

Loss from investments under the equity method

Our VIE, Guangyuan has a 20% equity interest in Shanxi Pharmaceutical Group
Yushe Pharmaceutical Development Co., Ltd. ("Yushe Pharmaceutical"). We recorded
a loss of US$ 4,186 for the three months ended September 30, 2021 from this
investment. As we fully impaired the investment subsequently, no income or loss
was recorded for the three months ended September 30, 2022 from this investment.

On August 31, 2021, we entered into a capital injection agreement with the other
shareholders of Shanghai Gaojing Private Fund Management ("Gaojing Private
Fund"), a Chinese private fund management company, to complete the injection of
a total RMB 4.8 million (approximately US$0.75 million) for its 32% equity
interest in Gaojing Private Fund. We recorded a loss of US$6,304 and US$23,734
for the three months ended September 30, 2022 and 2021 from this investment,
respectively. The decrease in net loss was primarily due to lower net loss
generated by the equity investment company in the current period.

Amortization of debt issuance costs

For the three months ended September 30, 2022, our amortization of debt issuance
costs expenses was US$154,403, representing a decrease of US$304,575, or 66.36%,
as compared to amortization of debt issuance costs expenses of US$458,978 in the
same period in 2021. We entered into four convertible note agreements and two of
them was fully converted, hence, resulted in a decrease in amortization of debt
issuance costs expenses for the three months ended September 30, 2022 as
compared to the same period last year.

Interest expense, net

For the three months ended September 30, 2022, our net interest expenses were
US$305,927, representing an increase of US$135,728, or 79.75%, as compared to
net interest expenses of US$170,199 in the same period in 2021. The increase in
net interest expenses was attributable to the increased interest expenses on
loans borrowed from third parties, and the interest expense incurred for the
convertible notes issued by us. The increase was partial offset by the interest
income generated from loans to third parties and related parties during the
three months ended September 30, 2022.

Net loss from continuing operations

Our net loss from continuing operations was US$2,442,320 for the three months
ended September 30, 2022, a decrease of US$8,665,901, or 78.01%, from net loss
from continuing operations of US$11,108,221 for the three months ended September
30, 2021. The decrease in net loss was primarily a result of the decrease in
general and administrative expenses, impairment loss of distribution rights and
amortization of debt issuance costs.

46




Net loss from discontinued operations

As mentioned above, after signing of the Restructuring Agreement on June 8,
2021, we and the shareholders of Ankang Longevity Group and Guangyuan actively
carried out the transferring of rights and interests in Ankang Longevity Group
and Guangyuan, and the transferring was completed subsequently on July 5, 2021,
and the management determined that July 5, 2021 was the disposal date of Ankang
Longevity Group. We had a total net loss from discontinued operations of
US$3,135,237 for the three months ended September 30, 2021.

Net loss

Our net loss was US$2,442,320 for the three months ended September 30, 2022, a
decrease of US$11,801,138 or 82.85%, from a net loss of US$14,243,458 for the
same period in 2021. The decrease in net loss was primarily a result of the
decreased net loss from continuing operations, as well as the decreased net loss
from discontinued operations as mentioned above.

Overall loss

The comprehensive loss was US$4,723,658 for the three months ended September 30,
2022, a decrease of US$9,519,230 from a comprehensive loss of US$14,242,888 for
the same period in 2021. After deduction of non-controlling interest, the
comprehensive loss attributable to us was US$4,744,406 for the three months
ended September 30, 2022, compared to a comprehensive loss attributable to us in
the amount of US$14,258,967 for the three months ended September 30, 2021. The
decrease of comprehensive loss was due to the decrease in net loss as mentioned
above.

Treasury Policies

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

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

(a) Minimize interest rate risk

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

(b) Minimize currency risk

In view of the current volatile currency market, we will closely monitor the
foreign currency borrowings at the company level. As of September 30, 2022 and
June 30, 2022, except the above-mentioned convertible note, we did not engage in
any foreign currency borrowings or loan contracts.

47




Cash and capital resources

We currently finance our business operations primarily through advances from our
related parties, convertible notes and the sale of our common stock. Our current
cash primarily consists of cash on hand and cash in bank, which is unrestricted
as to withdrawal and use and is deposited with banks in China.

On April 10, 2021we issued 3,872,194 common shares to selected investors at a price of US $3.2 per share. We received net proceeds of
$7,981,204 and $3,024,000 was exceptional from September 30, 2022.

On June 16, 2021, we entered into a securities purchase agreement pursuant to
which we issued an unsecured convertible promissory note with a one-year
maturity term to an institutional accredited investor Streeterville Capital, LLC
("Investor"). The convertible promissory note has the original principal amount
of US$3,170,000 and Investor gave consideration of US$3.0 million, reflecting
original issue discount of US$150,000 and Investor's legal fee of US$20,000. We
received principal in full from the Investor. On September 7, 2022, we signed an
extension amendment with the Investor to extend the maturity date to June 15,
2023.

On July 16, 2021, we entered into a securities purchase agreement pursuant to
which we issued two unsecured convertible promissory notes with a one-year
maturity term to the same investor. The first convertible promissory note has an
original principal amount of US$3,170,000 and the Investor gave consideration of
US$3.0 million, reflecting original issue discount of US$150,000 and Investor's
legal fee of US$20,000. The second convertible promissory note has an original
principal amount of US$4,200,000 and the Investor gave consideration of US$4.0
million, reflecting original issue discount of US$200,000.

On August 19, 2021, we entered into a securities purchase agreement pursuant to
which we issued an unsecured convertible promissory note with a one-year
maturity term to the same investor. The Note has the original principal amount
of US$10,520,000 and Investor gave consideration of US$10.0 million, reflecting
original issue discount of US$500,000 and Investor's legal fee of US$20,000. We
received principal in full from the Investor and we anticipate using the
proceeds for general working capital purposes. On September 7, 2022, the Company
signed an extension amendment with the Investor to extend the maturity date to
August 18, 2023.

For the above-mentioned convertible promissory notes issued, as of September 30,
2022, shares of the Company's common stock totaling 2,374,465 were issued by the
Company to the Investor equaling principal and interests amounted to
US$7,892,638, and the Notes balance was US$14,283,239, with a carrying value of
US$14,601,110, net of deferred financing costs of US$317,871.

On December 6, 2021, we entered into a securities purchase agreement with GHS
Investments, LLC ("GHS"). Under the Purchase Agreement, we sold GHS 291,775
shares of its common stock at a per share purchase price of $6.8546 for gross
proceeds of $2,000,000. After the deduction of issuance cost, we received net
proceeds of US$1,970,000.

On April 11, 2022, we entered into a securities purchase agreement (the
"Purchase Agreement") with Jing Wang (the "Investor"). Under the Purchase
Agreement, we will sell to the Investor, up to 973,451 shares (the "Shares") of
its common stock at a per share purchase price of $2.26 (subject to the terms
and conditions of the Purchase Agreement) for gross proceeds of up to $2,200,000
which were fully received, and the Shares were issued to the Investor on April
18, 2022.

48





On June 13, 2022, we entered into a certain stock purchase agreement (the "SPA")
with certain non-U.S. investors (the "Purchasers"), pursuant to which we agreed
to sell, and the Purchasers agreed to purchase, severally and not jointly, an
aggregate of 2,354,500 shares of common stock of the Company (the "Shares") at a
price of US$2.12 per share. our shareholders approved the offer and sale of the
Shares at a meeting of the shareholders of the Company that was held on July 21,
2022. The closing for the offer and sale of the Shares occurred on July 26, 2022
and we issued the Shares in exchange for gross proceeds of $5.0 million.

On August 11, 2022, the Company entered into a securities purchase agreement
(the "Purchase Agreement") with certain non-US investors (the "Investors").
Under the Purchase Agreement, the Company will sell to the Investors, up to
1,921,683 shares (the "Shares") of its common stock at a per share purchase
price of $0.915 (subject to the terms and conditions of the Purchase Agreement)
for gross proceeds of up to US$1,758,340. As the date of this report, proceeds
amounted to US$1.0 million has been received by the Company, and the remaining
balance of the proceeds is expected to be fully collected by December 31, 2022.

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

Working Capital

The following table provides information about our working capital at
September 30, 2022 and June 30, 2022:

                       September 30,        June 30,
                           2022               2022

Current Assets        $    53,785,997     $ 59,735,425
Current Liabilities        20,371,268       29,040,302
Working Capital       $    33,414,729     $ 30,695,123


The working capital increased by US$2,719,606, or 8.9%, as of September 30, 2022
from June 30, 2022, primarily as a result of an increase in cash and cash
equivalents and a decrease in other payables and accrued expenses, partially
offset by the decrease in current assets held for discontinued operations as of
September 30, 2022.

Capital commitments and contingencies

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

On May 16, 2017, Mrs. Guiqin Li (the "Plaintiff") commenced a lawsuit against us
in the People's Court of Chongqing Pilot Free Trade Zone of China. Plaintiff
alleged that due to the misguidance given by our security trading department,
the Plaintiff did not manage to complete the sales of our common stock on the
day of our initial public offering in the United States. As the price of our
common stock continued falling after initial public offering, the Plaintiff
incurred losses and hence seek money damages against us. Based on the judgment
of the first trail, we required to pay the Plaintiff a settlement payment,
including the money compensation, interests and other legal fees. As of
September 30, 2022, we accrued a total sum of US$829,969 (approximately RMB 5.9
million) for this lawsuit. We made the appeal to the People's Court, and will
vigorously defend itself and seek for less settlement payment in the second
trail of this litigation.

49





On November 26, 2021, the Company filed a complaint in the Supreme Court of the
State of New York, New York County against Lei Zhang and Yan Li, as defendants,
and Transhare Corporation, as a nominal defendant, asserting that defendants had
not paid for restricted shares of the Company stock pursuant to stock purchase
agreements they executed with the Company. The Company is seeking money damages
of $9,088,125.00 plus interest, punitive damages, and reimbursement of all
costs, expenses, and attorneys' fees. In December, defendants filed an answer
and counterclaims against the Company, which they amended on January 27, 2022
after the Company moved to dismiss their counterclaims. They claimed that the
Company made false and materially misleading statements, specifically regarding
the sale of the shares and the removal of their restrictive legends. Defendants
seek a declaratory judgment, indemnification, and monetary damages of at least
$9 million, punitive damages of $10 million, plus interest, costs, and fees. In
April 2022, the Court granted the Company's motion for a preliminary injunction
to restrain the Company's transfer agent from removing the restrictive legends
on the shares, provided that the Company posts a bond in the amount of US$1.5
million by May 20, 2022, which the Company declined to do. On June 13, 2022, the
restriction imposed on the shares were lifted.



The Company moved to dismiss the counterclaims, and its motion was fully
submitted in April 2022. On September 9, 2022, the Court granted the Company's
motion to dismiss defendants' counterclaims on all but three counterclaims.
Defendants' outstanding counterclaims are for breach of contract, conversion,
and wrongful refusal to remove restrictions pursuant to 6 Del. C. § 8-401.



Nominal defendant Transhare Corporation moved to dismiss the defendants'
counterclaim against it for wrongful refusal to remove restrictions pursuant to
6 Del. C. § 8-401, and its motion was fully submitted in April 2022. On
September 9, 2022, the Court granted Transhare Corporation's motion to dismiss
defendants' counterclaim for wrongful refusal to remove restrictions. Defendants
have appealed the Court's September 9, 2022 order dismissing defendants'
counterclaim for wrongful refusal to remove restrictions. On October 3, 2022 the
parties submitted a stipulation dismissing defendants' outstanding counterclaim
against Transhare Corporation seeking declaratory judgment.



Trial is currently scheduled for September 18, 2023. The outcome of this legal
proceeding is uncertain at this point. The Company intends to recover on its
claims, and vigorously defend itself in this litigation. As of September 30,
2022, the total unpaid shares issued to Lei Zhang and Yan Li by the Company was
982,500 shares, and the subscription receivable was amounted to US$3,024,000
which was recorded on the unaudited condensed consolidated balance sheet.


From September 30, 2022 and June 30, 2022we had no other significant capital commitments or contingent liabilities.

Off-balance sheet commitments and arrangements

We have not entered into any other financial guarantees or other commitments to
guarantee the payment obligations of any third parties. In addition, we have not
entered into any derivative contracts that are indexed to our own common stock
and classified as stockholders' equity, or that are not reflected in our
unaudited condensed consolidated financial statements.

Cash flow

The following table provides detailed information on our free cash flow for the three months ended September 30, 2022 and 2021:

                                                      Three Months Ended September 30,
                                                         2022                  2021
Net cash used in operating activities              $     (2,109,145 )     $    (5,264,781 )
Net cash provided by (used in) investing
activities                                               11,083,120           (25,954,544 )
Net cash provided by financing activities                   921,047        

20,436,888

Effect of exchange rate changes on cash and cash
equivalents                                                (822,080 )             (11,884 )
Net increase (decrease) in cash and cash
equivalents                                               9,072,942           (10,794,321 )
Cash and cash equivalents, beginning of the
period                                                   15,165,231        

29,024,394

Cash and cash equivalents, end of period $24,238,173 $

   18,230,073



50





Operating Activities

Net cash used in operating activities during the three months ended September
30, 2022 was approximately US$2.1 million, consisting of net loss from
continuing operations of US$2.4 million, net recovery of bad debt expenses of
US$0.6 million, restricted shares issued for management of US$0.6 million, and
net changes in our operating assets and liabilities, which mainly included a
decrease in advances to suppliers of US$0.9 million and an increase in
inventories of US$0.7 million.

Net cash used in operating activities during the three months ended September
30, 2021 was approximately US$5.3 million, consisting of net loss from
continuing operations of US$11.1 million, bad debt expenses of US$7.4 million,
impairment loss on distribution rights of US$1.1 million, and net changes in our
operating assets and liabilities, which mainly included an increase in other
current assets of US$3.2 million, partially offset by the decreased in advances
to suppliers and increased in other payable and accrued expenses.

Investing activities

For the three months ended September 30, 2022, net cash provided by investing
activities was US$11.1 million, primarily due to repayments of loans to third
parties of US$11.0 million.

For the three months ended September 30, 2021the net cash used in investing activities was US$26.0 millionmainly due to Ankang’s divestment of
$12.7 millionthe payment of other current assets of $12.7 million and interest in an unconsolidated entity of $0.5 million.

Fundraising activities

For the three months ended September 30, 2022, net cash provided by financing
activities amounted to approximately US$0.9 million, due to proceeds from
issuance of common stock of US$1.0 million, partially offset by the repayment of
advances from related parties of US$0.1 million.

For the three months ended September 30, 2021net cash financing activities amounted to approximately $20.4 millionprimarily due to the proceeds from the issuance of common shares of $2.4 millionproceeds from the issuance of a convertible note of US$17.0 million.

51

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