UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-QSB

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2006

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to __________________

SHINECO, INC.

(Exact name of small business issuer as specified in its charter)

Delaware	000-50913	52-2175898
(State or other Jurisdiction of Employer)	(Commission Identification #)	(IRS file number)

Room 3106, Building B,

#39 East 3rd Ring Middle Road, Chaoyang District

(Address of Principal Executive Office - Street and Number)

Beijing, PR China  100022

(City, State and ZIP Code)

(0086) 10-58693011

Issuer's telephone number

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act: Common Stock $.001 par value

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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes o   No x

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

Class of Stock	Outstanding April 30, 2006
Common Stock ($.001 par value)	9,298,823

REPORTS TO SECURITY HOLDERS

We are a reporting company under the requirements of the Securities Exchange Act of 1934 and will file quarterly, annual and other reports with the Securities and Exchange Commission. This quarterly report contains the required audited financial statements. We are not required to deliver a quarterly report to security holders and will not voluntarily deliver a copy of the quarterly report to security holders, except in connection with our annual meeting of shareholders. The reports and other information filed by us will be available for inspection and copying at the public reference facilities of the Commission, 100 F Street, N.E., Washington, D.C. 20549.

Copies of such material may be obtained by mail from the Public Reference Section of the Commission at 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission maintains a World Wide Website on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission.

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SHINECO, INC.

Form 10-QSB

For the Quarterly Period Ended March 31, 2006

Table of Contents

		Page No.
	Cautionary Statement and Risk Factors that May Affect Future Results
PART I
ITEM 1.	Selected Financial Statements
	Balance Sheet – March 31, 2006 (unaudited)
	Statements of Operations – Three Months Ended March 31, 2006 and 2005 (unaudited)
	Statements of Cash Flows – Three Months Ended March 31, 2006 and 2005 (unaudited)
	Notes to Financial Statements (unaudited)
ITEM 2.	Management’s Discussion and Analysis and Plan of Operation
ITEM 3.	Controls and Procedures
PART II
ITEM 1.	Legal Proceedings
ITEM 2.	Changes in Securities
ITEM 3.	Defaults Upon Senior Securities
ITEM 4.	Submission of Matters to a Vote of Security Holders
ITEM 5.	Other Information
ITEM 6.	Exhibits and Reports on Form 8-K
	Signatures

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS: Certain statements contained herein constitute "forward-looking statements" within the meaning of Section 27 A of the Securities Exchange Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "plans," "may," "intends," "will," or similar terms. These statements appear in a number of places in this report and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company's business and growth strategies and (ii) the Company's financing plans.

You are cautioned that any forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties. Actual results may differ from forward-looking statements.

RISK FACTORS: Risks, uncertainties and other important factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, the following:

·   Shineco’s success depends heavily upon the continued active participation of our President, Yuying Zhang, and our Director Weixing Yin;

·   our stock is subject to the Penny Stock rules, which impose additional requirements and suitability standards on stock buyers; these rules may decrease the market’s interest in our stock;

·   actions by competitors that negatively affect us—the Chinese herbal remedy market is extremely competitive, and we face competition from a number of larger, better-funded companies;

·   our business depends upon continuing product development and technological change; if we cannot keep up with technological change, we could suffer financial losses;

·   we depend heavily on our proprietary technology; if we cannot protect our patents and proprietary rights, we may lose business;

·   we do the large majority of our business in China; if the Chinese economy slows down, our business could slow down as well;

·   the uncertain legal environment in China could limit the legal protections available to you;

·   the effects of weather and natural disasters or widespread public health problems, including the avian flu, could negatively affect our business and results of operations;

·   changes in China’s political and economic policies could hurt our business;

·   restrictions on currency exchange may limit our ability to receive or use our revenues effectively;

·   the value of our securities will be affected by the foreign exchange rate between U.S. dollars and the Chinese renminbi;

·   the market price for our common stock (if one ever develops) will likely be very volatile;

·   stockholders could experience substantial dilution if we issue more stock to raise more money;

·   a large portion of our common stock is controlled by a small number of stockholders who in effect control our business, which means you will have little or no influence on our business;

·   there is no established market for our stock, so you may never be able to sell your shares;

·   we have never paid dividends and do not intend to pay dividends for the foreseeable future, given our need to retain earnings to finance the development and expansion of our business;

·   the risk that you will never see a return on your investment, and the stock may become worthless;

·   other risks or uncertainties described elsewhere in this report and in other reports we have filed and will file with the Securities and Exchange Commission (SEC).

Forward-looking statements speak only as of the date of the report, presentation or filing in which they are made.  Except to the extent required by the federal securities laws, Shineco and its subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I

ITEM 1.                                                      SELECTED FINANCIAL STATEMENTS

SHINECO, INC.

CONSOLIDATED BALANCE SHEETS

	March 31,		December 31,
	2006		2005
ASSETS
Current assets
Cash and cash equivalents	$	87,443	$	273,367
Trade receivables, net		1,338,571		1,906,004
Other receivables		219,235		275,138
Vendor deposits		821,109		178,262
Prepaid expenses		128,985		29,813
Inventories		2,013,707		1,906,756
Total current assets		4,609,050		4,569,340
Property, plant and equipment, net		177,082		120,538
Related party receivables		19,367		41,721
Investment in unconsolidated subsidiaries		80,286		78,335
Intangibles, net		156,817		162,674
Total assets	$	5,042,602	$	4,972,608
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Trade payables		967,828	$	882,609
Related party payables		199,367		259,788
Accrued liabilities		21,242		41,356
Other payables		78,780		84,167
Notes payable		663,552		675,324
Taxes payable		24,438		41,271
Customer deposits		207,228		202,964
Accrued employee benefits		87,902		49,928
Accrued dividends on preferred stock		28,000		7,000
Total current liabilities		2,278,337		2,244,407
Series A Convertible preferred stock, net of subscription receivable of $401,065;    par value $.001; liquidation preference $.70 per share;    5,000,000 shares authorized; 2,000,000  shares issued and outstanding		998,935		998,935
Total liabilities		3,277,272		3,243,342
Minority interest		13,285		12,837
Stockholders' equity
Common stock: par value $.001; 25,000,000 shares authorized;    9,298,823 shares issued and outstanding		9,299		9,299
Additional paid in capital		1,079,908		1,079,908
Retained earnings		606,504		573,699
Accumulated other comprehensive income		56,334		53,523
Total stockholders' equity		1,752,045		1,716,429
Total liabilities and stockholders' equity	$	5,042,602	$	4,972,608

See Notes to Consolidated Financial Statements.

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SHINECO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

	Three months ended
	March 31,
	2006			2005
				Restated
Revenues
Sales revenues	$	444,048		$	532,474
Cost of goods sold		172,568			225,834
Gross profit		271,480			306,640
Operating expenses
Other selling expenses		33,026			25,609
Other general and administrative expenses		162,375			153,428
Total operating expenses		195,401			179,037
Net operating income		76,079			127,603
Other income (expense)
Interest expense	$	(19,523	)	$	(22,461	)
Income(loss)on equity  investments		(2,290	)		--
Other		(1,619	)		235
Total other income (expense)		(23,432	)		(22,226	)
Income before taxes and minority interest		52,647			105,377
Provision for income taxes		--			(1,007	)
Income before minority interest		52,647			104,370
Minority interest in loss (income) of subsidiaries		1,158			--
Income  from continuing operations		53,805			104,370
Income from operations of disposed subsidiaries		--			75
Net income from discontinued operations		--			75
Net income	$	53,805		$	104,445
Foreign currency translation adjustment		2,811			--
Comprehensive income	$	56,616		$	104,445
Basic earnings (loss) per common share:
From continuing operations	$	0.00		$	0.01
From discontinued operations	$	--		$	--
From net income	$	0.00		$	0.01
Diluted earnings (loss) per common share:
From continuing operations	$	0.00		$	0.01
From discontinued operations	$	--		$	--
From net income	$	0.00		$	0.01
Denominator for basic earnings per share		9,298,823			9,298,823
Denominator for diluted earnings per share		9,298,823			9,300,160

See Notes to Consolidated Financial Statements.

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SHINECO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three months ended March 31,
	2006			2005
				Restated
Cash flows from operating activities:
Net income	$	53,805		$	104,445
Adjustments to reconcile net income to net cash provided by (used in) operations:
Depreciation and amortization		10,425			11333
Minority interest		(1,606	)		(138	)
Changes in operating assets and liabilities:
Trade receivables		550,932			44,691
Other receivables		25,903			(143,612	)
Vendor deposits		(642,847	)		(69,011	)
Prepaid expenses		(99,172	)		24,275
Inventories		(106,951	)		(117,289	)
Trade payables		85,219			(13,667	)
Accrued liabilities		(20,114	)		64,949
Other payables		(4,939	)		1,019,333
Taxes payable		(16,833	)		(64,651	)
Customer deposits		4,264			(36,862	)
Accrued employee benefits		37,974			--
Net cash provided by (used in) operations		(123,940	)		823,796
Cash flows from investing activities:
Purchase of property and equipment		(4,500	)		(5,870	)
Related party receivable		11,898			--
Net cash provided by (used in) investing activities		7,398			(5,870	)
Cash flows from financing activities:
Related party payables		(60,421	)		79,046
Repayments on short-term notes payable		(11,772	)		(588,201	)
Proceeds from short term loans		--			(314,009	)
Net cash provided by (used in) financing activities		(72,193	)		(823,164	)
Effect of rate changes on cash		2,811			--
Decrease in cash and cash equivalents		(185,924	)		(5,238	)
Cash and cash equivalents, beginning of period		273,367			64,272
Cash and cash equivalents, end of period	$	87,443		$	59,034
Supplemental disclosures of cash flow information:
Cash paid for interest	$	19,523		$	22,461
Cash paid for income taxes	$	--		$	65,658
Supplemental disclosures of non-cash investing and financing activities:
Preferred stock dividends accrued but not paid	$	21,000		$	--
Office furnishings purchased with debt	$	56,250		$	--

See notes to consolidated financial statements.

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SHINECO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.            NATURE OF OPERATIONS

Shineco, Inc. (the Company) was incorporated on August 20, 1997 in the State of Delaware as Supcor, Inc. On December 30, 2004 the Company acquired all of the outstanding stock of Beijing Tenet Jove Technological Development Co., Ltd. (“Beijing Tenet Jove”) in exchange for stock of the Company. The stock exchange agreement is subject to the approval of the Chinese government, and the approval has not yet been received from the PRC government and until such approval is received the ownership of Beijing Tenet Jove by Shineco is legally unenforceable in the PRC, but the Company is confident that such approval will be received. The consolidated results of operations are primarily those of Beijing Tenet Jove and its consolidated subsidiaries.

Beijing Tenet Jove was incorporated on December 16, 2003 under the laws of the People’s Republic of China (the PRC). In the PRC, Ltd, or Limited, is equivalent to Inc, or Incorporated, in the United States (US).

The Company primarily manufactures and sells (1) Far Infrared Therapeutic Clothing and Textile Products, (2) Apocynum-based Nutritional Supplements, and (3.) FIR Multi-functional Therapeutic Devices, which are innovative therapeutic products for complementary treatment of both acute and chronic health concerns. By incorporating traditional Chinese medical methodology with modern bio-technology, we have developed and commercialized over 100 products under our brand name of “天益Tenethealth®”, which means “Benefit from Nature.”

2.           BASIS OF PRESENTATION

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) and have been retroactively restated to give effect to the recapitalization due to a reverse merger consummated on December 30, 2004. This basis differs from that used in the statutory accounts of the Company, which were prepared in accordance with the accounting principles and relevant financial regulations applicable to enterprises in the PRC. All necessary intercompany transactions and balances have been eliminated in consolidation, and all necessary adjustments have been made to present the consolidated financial statements in accordance with US GAAP.

The accompanying consolidated financial statements include the accounts of the Company and its 90% owned subsidiary, Tianjin Tenet Health.

3.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ECONOMIC AND POLITICAL RISKS

The Company faces a number of risks and challenges as a result of having primary operations and markets in the PRC. Changing political climates in the PRC could have a significant effect on the Company’s business.

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ESTIMATES

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of the statements of cash flows, cash and cash equivalents includes cash on hand and demand deposits held by banks. None of the Company’s deposits are insured by the Federal Deposit Insurance Corporation or any other entity of the U.S. government.

TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable are recognized and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful accounts is made when collection of the full amount becomes questionable. The allowance for doubtful accounts was $110,080 and $86,226 at March 31, 2006 and December 31, 2005, respectively. Bad debt expense recognized during the first quarter of 2006 and whole year of 2005 was $23,854 and $79,540, respectively.

OTHER RECEIVABLES

Other receivables consist primarily of advances made to third parties. The balances due to the Company were $219,235 and $275,138 at March 31, 2006 and December 31, 2005, respectively.

INVENTORIES

Inventories consist of raw materials, packaging materials, sub-contracting materials, production costs, and finished products. The inventories are valued at the lower of cost (first-in, first-out method) or market. The balances of the Company were $2,013,707 and $ 1,906,756 at March 31, 2006 and December 31, 2005, respectively.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is carried at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the useful lives of the assets. Amortization of leasehold improvements is calculated on a straight-line basis over the life of the asset or the term of the lease, whichever is shorter. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are charged to expense as incurred.  Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation related to property and equipment used in production is reported in cost of sales.

Property and equipment are depreciated over their estimated useful lives as follows:

Machinery and equipment	10 years
Vehicles	7 years
Office equipment	7 years
Office furnishings	5 years

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Long-term assets of the Company are reviewed annually to assess whether the carrying value has become impaired, according to the guidelines established in Statement of Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The Company also evaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. No impairment of assets was recorded in the periods reported.

REVENUE RECOGNITION

Revenues are recognized as earned when the following four criteria are met: (1) a customer issues purchase orders or otherwise agrees to purchase products; (2) products are delivered to the customer; (3) pricing is fixed or determined in accordance with the purchase order or agreement; and (4) collectibility is reasonably assured. The Company sells its products primarily at the wholesale level and does not allow returns of its products. Consequently, no reserve for future returns has been established.

The Company has agreements with distributors for the territorial marketing of its products. No fees are paid to the Company by the distributors for such agreements.

FOREIGN CURRENCY AND COMPREHENSIVE INCOME

The accompanying consolidated financial statements are presented in United States (US) dollars. The functional currency is the Renminbi (RMB). The consolidated financial statements are translated into US dollars from RMB at year-end exchange rates for assets and liabilities, and weighted average exchange rates for revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

RMB is not freely convertible into the currency of other nations. All such exchange transactions must take place through authorized institutions. There is no guarantee the RMB amounts could have been, or could be, converted into US dollars at rates used in translation.

TAXES

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

Currently, the Company has recorded only minimal income taxes and no deferred taxes because it is a high-tech company registered in Chinese Zhongguancun Science Park. In China, high-tech companies are encouraged to promote their technologies to the market, so the Company is exempted from income tax for its first three years.

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EARNINGS PER SHARE

Basic earnings per common share ("EPS") are calculated by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings per common share are calculated by adjusting the weighted average outstanding shares, assuming conversion of all potentially dilutive securities, such as stock options, warrants and conversion features attached to preferred stock or debt.

The Company issued convertible preferred stock on December 1, 2005, but no exercise can be made until after one year from issue, and then only if there is a public market for the common stock of the Company. At March 31, 2006 there were no exercisable conversion rights attached to the preferred stock.

The numerators and denominators used in the computations of basic and diluted EPS are presented in the following table:

4.           COMMON AND PREFERRED STOCK TRANSACTIONS

On November 12, 2005 the Company effected a 1:2 reverse stock split. Immediately prior to the split there were 18,597,640 common shares outstanding and immediately following the split there were 9,298,823 common shares outstanding.

On December 1, 2005 the Company issued 2,000,000 shares of Series A Convertible Preferred Stock (“Preferred”) at $.70 per share for an aggregate amount of $1,400,000 less subscriptions receivable of $401,065. The Preferred stock has a par value of $0.001 and a stated value and liquidation preference of $0.70 per share. The Preferred stock bears cumulative dividends at 6% per annum, is redeemable for cash for $0.70 per share plus unpaid dividends at the Company’s option and has a mandatory redemption clause for those same amounts in the case of a change in control. The stock is convertible, after one year from the date of issue, for common stock at 88% of the market price of the common stock on the date of conversion. For every four common shares received upon conversion the converting shareholder is also to receive a warrant to purchase one additional share of common stock at an exercise price of $2.00 per share. The Preferred stockholders are protected from dilution and have voting rights equal to the common shares they would hold as if converted at the time of any vote. The cumulative dividend and redemption features make the Preferred stock more akin to debt than to equity. Accordingly, the redemption value is presented as a liability on the balance sheet. The conversion feature is not detachable and has therefore not been provided with a value separate from the Preferred stock.

5.           RELATED PARTY TRANSACTIONS

Related party receivables consist of advances due from stockholders. The amounts bear no interest and are payable on demand. Balances at March 31, 2006 and December 31, 2005 are $19,367 and $41,721, respectively.

Related party payables consist of loans from its stockholders. The loans bear no interest and are payable on demand. Balances at March 31, 2006 and December 31, 2005 are $199,367 and $259,788, respectively.

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6.           PROPERTY, PLANT AND EQUIPMENT

The balances of Property, plant and equipment net were $177,082 and $120,538 at March 31, 2006 and December 31, 2005, respectively.

	March 31, 2006			December 31, 2005
Machinery and equipment	$	27,394		$	27,270
Vehicles		52,693			52,455
Office equipment		78,510			74,010
Office furnishings		56,250			--
Subtotal		214,847			153,735
Less: accumulated depreciation		(37,765	)		(33,197	)
Net property and equipment	$	177,082		$	120,538

Depreciation expense was $4,568 and $7,662 for the first quarter of 2006 and the whole year of 2005, respectively.

7.           INVESTMENTS

During 2005 and 2006, the Company acquired equity interests in eight of its distributors by contributing inventory to such distributors. The Company accounts for these investments using the equity method if the ownership percentage exceeds 20% or if the ownership percentage is less than 20% and significant control is evidenced by significant intercompany sales transactions. Investments where the ownership percentage is less than 20% and significant control is not evident are accounted for at cost. The following table reflects certain information about the Company’s investments in unconsolidated subsidiaries.

	Date				Initial		Share of			Date	03/31/06
Name	Acquired	Ownership			Investment		Income/Loss			Withdrawal	Investment
Jinan	11/25/2005		25.00	%	$	48,825	$	(10,250	)		$	38,575
Changchun	10/26/2005		25.00	%		13,567		7,943				21,510
Yantai	10/26/2005		25.00	%		22,091		(12,222	)			9,869
Liaoyang	12/31/2005		25.00	%		4,707		(2,814	)			1,893
Xuzhou	7/26/2005		15.00	%		3,609		(785	)			2,824
Huaian	7/26/2005		15.00	%		3,937		(3,937	)	1/4/2006		--
Shenyang	9/26/2005		15.00	%		263	N/A					263
Shenzhen	12/31/2005		15.00	%		2,491	N/A					2,491
Qiqihaer	1/4/2006		19.00	%		4,241		(1,380	)			2,861
Totals					$	103,731	$	(23,445	)		$	80,286

8.           INTANGIBLES

Intangibles consist primarily of manufacturing patent rights, acquired in the business combination with Tianjin as well as a purchased trademark. They are determined to have a finite life of 10 years and are being amortized straight line over that period. Accumulated amortization at March 31, 2006 and December 31, 2005 is $35,765 and $29,908 respectively. Amortization expense recognized during the first quarter of 2006 and whole year of 2005 is $5,857 and $7,018, respectively.

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9.           CUSTOMER DEPOSITS

Customer deposits at March 31, 2006 consist of $207,228 in prepayments to the Company for merchandise that had not yet shipped. The Company will recognize the deposits as revenue as customers take delivery of the goods, in compliance with its revenue recognition policy.

10.           COMMITMENTS

The Company leases factory and office space under non-cancelable leases. Future minimum lease payments are reflected in the following table:

2006	$	44,521
2007		59,362
2008		44,521
2009		--
2010		--
Totals	$	148,404

11.           CONTINGENCIES

The Company has not, historically, carried any property or casualty insurance. No amounts have been accrued for any liability that could arise from the lack of insurance. Management feels the chances of such an obligation arising are remote.

12. STOCK WARRANTS

Pursuant to the Stock Purchase Agreement executed in conjunction with the reverse merger of the Company and Beijing Tenet Jove, a warrant for 5% of the outstanding stock of the Company was issued to the selling stockholders, exercisable at par value, and expiring on December 12, 2005. None of these warrants was outstanding at March 31, 2006.

13.           NEW ACCOUNTING PRONOUNCEMENTS

In February 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments – an amendment of FASB Statements No. 133 and 140”. The statement permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips are not subject to the requirements of Statement 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. The Statement is effective for financial instruments acquired or issued after the beginning of the first fiscal year that begins after September 15, 2006. The Company is currently evaluating whether the Statement will have any impact on its financial statements.

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In February 2006, the FASB issued Staff Position No. FAS 123(R)-4, “Classification of Options and Similar Instruments Issued as Employee Compensation That Allow for Cash Settlement upon the Occurrence of a Contingent Event”. This position address the classification of options and similar instruments issued as employee compensation that allow for cash settlement upon the occurrence of a contingent event, amending paragraphs 32 and A229 of SFAS No. 123 (revised 2004), “Share-Based Payment”. As the Company has not traditionally paid employee compensation through the issuance of equity securities, no impact is expected on its financial statements.

In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets—an amendment of FASB Statement No. 140” (SFAS 156). This Statement amends SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” with respect to the accounting for separately recognized servicing assets and servicing liabilities. The impact of adopting SFAS 156 was not material to our consolidated results of operations and financial condition.

14.           RESTATEMENT

Subsequent to the issuance of the March 31, 2005 financial statements, management reevaluated its presentation relate to trademark right. The result of the restatement is that trademark right on the other receivable should be adjustment to intangible. The company now has made corrections and amortization.

Also subsequent to the issuance of the financial statements, management reevaluated its presentation of discontinued operations. The operations of discontinued subsidiaries were previously reported as continuing operations. Management has determined that since the operations and cash flows of the discontinued subsidiaries have been eliminated from the ongoing operations of the Company and the Company will have no significant continuing involvement in their operations, the operations of those subsidiaries should have been included in discontinued operations rather than in continuing operations.

Accordingly, consolidated balance sheets, statement of operations and statements of cash flows have been revised as follows:

	Three months ended March 31,
	Restated			Original
	2005			2005
Revenues
Sales revenues	$	532,474		$	797,388
Cost of goods sold		225,834			340,631
Gross profit		306,640			456,757
Operating expenses
Other selling expenses		25,609			159,140
Other general and administrative expenses		153,428			164,607
Total operating expenses		179,037			323,747
Operating income		127,603			133,010
Other income (expense)
Interest expense		(22,461	)		(22,461	)
Income (loss) on equity investments		--			--
Other		235			235
Total other income (expense)		(22,226	)		(22,226	)
Income before taxes and minority interest		105,377			110,784
Provision for income taxes		1,007			1,007
Income before minority interest		104,370			109,777
Minority interest in (income)/loss of subsidiaries		--			--
Income from continuing operations		104,370			109,777
Income (loss) from operations of disposed subsidiaries		75			138
Loss (gain) on disposal of subsidiaries		--			--
Net income (loss) from discontinued operations		75			138
Net income	$	104,445		$	109,915
Foreign currency translation adjustment		--			--
Comprehensive income	$	104,445		$	109,915
Basic earnings (loss) per common share:
From continuing operations	$	0.01		$	0.01
From discontinued operations	$	0.00		$	0.00
From net income	$	0.01		$	0.01
Diluted earnings (loss) per common share:
From continuing operations	$	0.01		$	0.01
From discontinued operations	$	0.00		$	0.00
From net income	$	0.01		$	0.01
Denominator for basic earnings per share		9,298,823			9,298,823
Denominator for diluted earnings per share		9,300,160			9,300,160

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	Three months ended March 31,
	Restated			Original
	2005			2005
Cash flows from operating activities:
Net income	$	104,445		$	109,915
Adjustments to reconcile net income to net cash used in operations:
Depreciation and amortization		11,333			5,863
Minority interest		(138	)		(138	)
Changes in operating assets and liabilities:
Trade receivables		44,691			44,691
Other receivables		(143,612	)		(143,612	)
Vendor deposits		(69,011	)		(69,011	)
Prepaid expenses		24,275			24,275
Inventories		(117,289	)		(117,289	)
Trade payables		(13,667	)		(13,667	)
Accrued liabilities		64,949			64,949
Other payables		1,019,333			1,019,333
Taxes payable		(64,651	)		(64,651	)
Customer deposits		(36,862	)		(36,862	)
Accrued employee benefits		--			--
Net cash used in operations		823,796			823,796
Cash flows from investing activities:
Related party receivables		--			--
Purchase of property and equipment		(5,870	)		(5,870	)
Net cash used in investing activities		(5,870	)		(5,870	)
Cash flows from financing activities:
Related party payables		79,046			79,046
Repayments on short-term notes payable		(588,201	)		(588,201	)
Proceeds from short term loans		(314,009	)		(314,009	)
Net cash provided by financing activities		(823,164	)		(823,164	)
Effect of rate changes on cash		--			--
Increase in cash and cash equivalents		(5,238	)		(5,238	)
Cash and cash equivalents, beginning of period		64,272			64,272
Cash and cash equivalents, end of period	$	59,034		$	59,034
Supplemental disclosures of cash flow information:
Cash paid for interest	$	22,461		$	22,461
Cash paid for income taxes	$	66,658		$	66,658
Supplemental disclosures of non-cash investing and financing activities:
Stock issued for services	$	--		$	--
Inventory and intangibles acquired in business combination	$	--		$	--

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ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-QSB.

BUSINESS OVERVIEW

Shineco, Inc. (“the Company,” or “we”) was incorporated under Delaware state law on August 20, 1997. On December 30, 2004, the Company acquired all of the issued and outstanding shares of Beijing Tenet-Jove Technological Development Corp., Ltd. (“Tenet-Jove”), a People’s Republic of China company, in exchange for restricted shares of the Company’s common stock, and the sole operating business of the Company became that of its subsidiary, Tenet-Jove. On June 9, 2005, the Company changed its name to Shineco, Inc.

Our Tenet-Jove subsidiary was organized under the laws of the People’s Republic of China in 2003 and is headquartered in Beijing.

In August, 2006, Beijing Tenet-Jove successfully acquired business certificates from China’s Ministry of Commerce, The State Administration of Foreign Exchange, The Beijing Administration For Industry & Commerce, The Beijing Municipal Office, and The State Administration of Taxation. It has therefore completed the legal process of acquisition under both Chinese and US law.

Tenet-Jove currently develops, manufactures and distributes textiles and health supplements derived from a native Chinese plant known in Chinese as “Luobuma” (scientific name: Apocynum venetum). We currently market and distribute our Apocynum products in China’s growing economy through our national marketing network. Our Apocynum products are specialized textile and health supplement products designed to incorporate traditional Eastern medicines with modern scientific methods. Our products are predicated on centuries-old traditions of Eastern herbal remedies derived from the Apocynum venetum raw material. These remedies have been carefully documented in Li Shizhen’s famous Compendium of Materia Medica (Chinese: Bencao Gangmu), which dates back to 1578 A.D., during the Ming Dynasty.

We do not manufacture, distribute, or sell any of our products in the United States or Canada.

Results of Operations for Quarter Ended March 31, 2006 Compared to March 31, 2005

The Company's selling, general and administrative expenses for the year ended March 31, 2006, were $189,931 and for the year ended March 31, 2005, were $173,567.

Our operating results are presented on a consolidated basis for the three months ended March 31, 2006, as compared to the same period ended March 31, 2005. The operating results presented in our consolidated financial statements only reflect the Company’s wholesale revenue from its manufacturing subsidiaries to our regional distributors and master franchisees.

Revenue

Our revenues from our wholesale operations for the three months ended March 31, 2006 and 2005 were $444,048 and $532,474 respectively, representing a decrease of approximately 16.6% from the same period in the previous year. Our operating revenues derive mainly from the sale of our healthcare products. Those decreases were mainly attributable to market manager’s adjustment.

We believe that revenues will increase in the next several quarters as a result of planned expansion of production and anticipated increased sales.

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Gross Profit Margin

Our gross margin on sales of our products was 61.14% at March 31, 2006 as compared to 57.59% at March 31, 2005. Our gross margin slightly increased in the 2006 period as compared to the previous period in 2005. The increase was mainly due to the slight decrease in the cost of goods sold.

Expenses

Our total operating expenses were $195,401 at March 31, 2006, an increase of 9% compared with total operating expenses of $179,037 at March 31, 2005. The increase was mainly caused by increases in other selling expenses and other general and administrative expenses.

Net Income

Our consolidated net income was $53,805 for the quarterly period ended March 31, 2006 as compared to $104,370 at March 31 of the prior year. The net income rate decreased 7.5 % from 19.6% in March 2005 to 12.1% in March 2006. This decrease was attributable to the increase in other selling expenses and other general and administrative expenses.

Comprehensive Income

Our consolidated comprehensive income for the period ended March 31, 2006 was $56,616, a decrease of 46% from $104,445 at March 31, 2005. The difference between comprehensive income and net income in March 2006 was attributable to the foreign currency translation adjustment. As the exchange rate from US dollars to RMB changed during 2006, the foreign currency translation adjustment was $2,811 as of March 31, 2006.

Liquidity and Sources of Capital

At March 31, 2006, our cash and cash equivalents were $87,443. As of March 31, 2006, the Company had inventories of $2,013,707, total current assets of $4,609,050, total current liabilities of $2,278,337 and working capital of $2,330,713, reflecting a current ratio of 2.0 and quick ratio of 1.14, compared to a current ratio of 2.0 and a quick ratio of 1.19 as of March 31, 2005. Our current ratio and quick ratio as of March 31, 2006 were essentially stable compared to those of March 31, 2005.  Our working capital of $2,330,713 as of March 31, 2006 reflected a 0.2 % increase over $2,324,933 as of March 31, 2005.

We generally finance our operations from two sources: cash flow from trade receivables, and operations. Our total shareholders’ equity was $1,752,045 as of March 31, 2006, as compared to $1,716,429 as of December 31, 2005, an increase of $35,616 or 2%.

We anticipate that our working capital resources are adequate to fund anticipated costs and expenses for the year ending December 31, 2006.

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As of March 31, 2006, our cash and bank balances were mainly denominated in Renminbi (“RMB”) and United States dollars (“US$”) while our bank borrowings were mainly denominated in RMB.  Our revenue and expenses, assets and liabilities are mainly denominated in RMB and US$. Since the exchange fluctuations amongst these currencies are low, we believe there is no significant exchange risk.

Management believes the Company's working capital is currently sufficient for the Company to implement its business plan and that its income from current operations will be sufficient for its liquidity needs.

ITEM 3.   CONTROLS AND PROCEDURES

Quarterly Evaluation of Controls. As of March 31, 2006, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures ("Disclosure Controls"). This evaluation (“Evaluation”) was performed by our Chairman and Chief Executive Officer, Mr. Yuying Zhang, who is the principal executive officer of our Company (known as “CEO”), and our Chief Financial Officer, Dan Liu, who is our principal financial officer (“CFO”). In addition, we have discussed these matters with our securities counsel. In this section, we present the conclusions of our CEO and CFO based on their Evaluation as of December 31, 2005, with respect to the effectiveness of our Disclosure Controls.

CEO and CFO Certifications. Attached to this quarterly report, as Exhibits 31.1 through 31.2, are certain certifications of the CEO and CFO, which are required in accordance with the Exchange Act and the Commission's rules implementing such section (the "Rule 13a-14(a)/15d-14(a) Certifications"). This section of the quarterly report contains the information concerning the Evaluation referred to in the Rule 13a-14(a)/15d-14(a) Certifications. This information should be read in conjunction with the Rule 13a-14(a)/15d-14(a) Certifications for a more complete understanding of the topic presented.

Disclosure Controls. When we refer to Disclosure Controls in this document, we mean controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The Disclosure Controls to which we refer do not necessarily include internal controls over financial reporting, as defined by Exchange Act Rule 13a-15(f) and 15d-15(f). We have not yet conducted a separate evaluation of our internal controls over financial reporting, because we are not required by law to do so according to SEC Release no. 33-8760, until our first fiscal year ending after December 15, 2007. We intend to comply with such reporting and evaluation at that time and all times thereafter.

Limitations on the Effectiveness of Controls. Our management does not expect that our Disclosure Controls will prevent all error and all fraud. A control system, no matter how well developed and operated, can provide only reasonable, but not absolute, assurance that the objectives of the Disclosure Controls are met. Further, the design of the Disclosure Controls must reflect the fact that there are resource constraints, and the benefits of Disclosure Controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of Disclosure Controls can provide absolute assurance that all Disclosure Control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, Disclosure Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the Disclosure Controls. The design of a system of Disclosure Controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions. Over time, Disclosure Controls may become inadequate because of changes in conditions, or because the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective system of Disclosure Controls, misstatements due to error or fraud may occur and not be detected, or may be detected later than expected.

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Scope of the Evaluation. The CEO and CFO's evaluation of our Disclosure Controls included a review of the controls' (i) objectives, (ii) design, (iii) implementation, and (iv) the effect of the controls on the information generated for use in this quarterly report. In the course of the Evaluation, the CEO and CFO sought to identify data errors, control problems, acts of fraud, and they sought to confirm that appropriate corrective action, including process improvements, was being undertaken. This type of evaluation is done on a quarterly basis so that the conclusions concerning the effectiveness of our Disclosure Controls can be reported in our quarterly reports on Form 10-QSB and annual reports on Form 10-KSB. The overall goals of these various evaluation activities are to monitor our Disclosure Controls, and to make modifications if and as necessary. Our intent in this regard is that the Disclosure Controls will be maintained as dynamic systems that change (including improvements and corrections) as conditions warrant.

Conclusions. Based upon the Evaluation, our CEO and CFO have concluded that, as of March 31, 2006, our Disclosure Controls are effective at that reasonable assurance level to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported to management, including the CEO and CFO, within the time periods specified in the Commission's rules and forms, and that our Disclosure Controls are effective at that assurance level to provide reasonable assurance that our financial statements are fairly presented in conformity with accounting principles generally accepted in the United States. Additionally, there has been no change in our Disclosure Controls that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to affect, our Disclosure Controls.

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PART II

ITEM 1.    LEGAL PROCEEDINGS

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.

No director, officer or affiliate of the Company, and no owner of record or beneficial owner of more than 5 percent of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

ITEM 2.    CHANGES IN SECURITIES

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the security holders of the Company during the period ended March 31, 2006.

ITEM 5.    OTHER INFORMATION

None.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a)           The Exhibits listed below are filed as part of this Quarterly Report.

Exhibit No.

31.1                      Certification Under Section 302 of the Sarbanes-Oxley Act of 2002

31.2                      Certification Under Section 302 of the Sarbanes-Oxley Act of 2002

32.1                      Certification Under Section 906 of the Sarbanes-Oxley Act of 2002

(b) We filed a report on Form 8-K on January 6, 2006 indicating that our accounting firm had changed its name from Child, Sullivan & Company to Child, Van Wagoner & Bradshaw, PLLC, and at the same time it changed its organizational form from a corporation to a professional limited liability company. As this change in name and organization constituted a change in the legal entity conducting the audit of our company, we disclosed this change in our accountant.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: June 5, 2007

SHINECO, INC.

________________________

By: Yuying Zhang

Chairman, CEO, and Principal Executive Officer

________________________

By: Dan Liu

CFO and Principal Accounting Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: Yuying Zhang,

Director, CEO and President

By: Dan Liu,

Director, CFO

By: Weixing Yin, Diector

By: Shuangpeng Tian, Director

By: Xiaoguang Zhang, Director

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