10QSB

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 June 30, 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)

Issuer's telephone number:  (0086) 10-58693011

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 June 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 unaudited 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 June 30, 2006

Table of Contents

		Page No.
	Cautionary Statement and Risk Factors that May Affect Future Results	4
PART I
ITEM 1.	Selected Financial Statements
	Balance Sheet – June 30, 2006 (unaudited)	5
	Statements of Operations – Three and Six Months Ended June 30, 2006 and 2005 (unaudited)	6
	Statements of Cash Flows – Three and Six Months Ended June 30, 2006 and 2005 (unaudited)	7
	Notes to Financial Statements (unaudited)	8 – 16
ITEM 2.	Management’s Discussion and Analysis and Plan of Operation	17
ITEM 3.	Controls and Procedures	20
PART II
ITEM 1.	Legal Proceedings	22
ITEM 2.	Changes in Securities	22
ITEM 3.	Defaults Upon Senior Securities	22
ITEM 4.	Submission of Matters to a Vote of Security Holders	22
ITEM 5.	Other Information	22
ITEM 6.	Exhibits and Reports on Form 8-K	22
	Signatures	23

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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

(UNAUDITED)

	June 30, 2006		December 31, 2005
ASSETS
Current assets
Cash and cash equivalents	$	90,109	$	273,367
Trade receivables, net		1,497,077		1,906,004
Other receivables		81,840		275,138
Vendor deposits		898,232		178,262
Prepaid expenses		2,530		29,813
Inventories		2,212,259		1,906,756
Total current assets		4,782,047		4,569,340
Property, plant and equipment, net		175,199		120,538
Related party receivables		32,025		41,721
Investment in unconsolidated subsidiaries		60,369		78,335
Intangibles, net		150,960		162,674
Total assets	$	5,200,600	$	4,972,608
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Trade payables	$	1,116,748	$	882,609
Related party payables		234,444		259,788
Accrued liabilities		56,582		41,356
Other payables		98,786		84,167
Notes payable		707,005		675,324
Taxes payable		18,595		41,271
Customer deposits		77,399		202,964
Accrued employee benefits		65,483		49,928
Accrued dividends on preferred stock		49,000		7,000
Total current liabilities		2,424,042		2,244,407
Series A Convertible preferred stock, net of subscription receivable of $360,793;      par value $.001; liquidation preference $.70 per share; 5,000,000 shares authorized;       2,000,000 shares issued and outstanding		1,039,207		998,935
Total Liabilities		3,463,249		3,243,342
Minority interest		11,538		12,837
Stockholders' equity
Common stock: par value $.001; 25,000,000 shares authorized;         9,298,823 shares issued and outstanding		9,299		9299
Additional paid in capital		1,079,908		1,079,908
Retained earnings		577,547		573,699
Accumulated other comprehensive income		59,059		53,523
Total stockholders' equity		1,725,813		1,716,429
Total liabilities and stockholders' equity	$	5,200,600	$	4,972,608

See notes to unaudited consolidated financial statements.

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SHINECO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	Three months ended						Six months ended
	June 30,						June 30,
	2006			2005			2006			2005
				Restated						Restated
Revenues
Sales revenues	$	435,040		$	295,251		$	879,088		$	827,724
Cost of goods sold		150,314			150,908			322,882			376,741
Gross profit		284,726			144,343			556,206			450,983
Operating expenses
Other selling expenses		49,441			40,750			82,467			66,359
Other general and administrative expenses		205,174			190,241			367,549			343,669
Total operating expenses		254,615			230,991			450,016			410,028
Net operating income		30,111			(86,648	)		106,190			40,955
Interest expense		(30,966	)		(6,893	)		(50,489	)		(29,354	)
Income (loss)on equity  investments		(10,423	)		--			(12,713	)		--
Other		1,538			316			(81	)		551
Total other income (expense)		(39,851	)		(6,577	)		(63,283	)		(28,803	)
Income before taxes and minority interest		(9,740	)		(93,225	)		42,907			12,152
Provision for income taxes		--			--			--			(1,007	)
Income before minority interest		(9,740	)		(93,225	)		42,907			11,145
Minority interest in loss (income) of subsidiaries		1,783			975			2,941			975
Income from continuing operations		(7,957	)		(92,250	)		45,848			12,120
Income(loss) from operations of disposed subsidiaries		--			2,380			--			2,455
Net income(loss) from discontinued operations		--			2,380			--			2,455
Net income (Loss)	$	(7,957	)	$	(89,870	)	$	45,848		$	14,575
Foreign currency translation adjustment		2,725			--			5,536			--
Comprehensive income (Loss)	$	(5,232	)	$	(89,870	)	$	51,384		$	14,575
Basic earnings (loss) per common share:
From continuing operations	$	(0.00	)	$	(0.01	)	$	0.00		$	0.00
From discontinued operations	$	--		$	--		$	--		$	--
From net income	$	(0.00	)	$	(0.01	)	$	0.00		$	0.00
Diluted earnings (loss) per common share:
From continuing operations	$	(0.00	)	$	(0.01	)	$	0.00		$	0.00
From discontinued operations	$	--		$	--		$	--		$	--
From net income	$	(0.00	)	$	(0.01	)	$	0.00		$	0.00
Denominator for basic earnings per share		9,298,823			9,298,823			9,298,823			9,298,823
Denominator for diluted earnings per share		9,298,823			9,300,160			9,298,823			9,300,160

See notes to unaudited consolidated financial statements.

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SHINECO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

(UNAUDITED)

	Six months ended June 30,
	2006			2005
				Restated
Cash flows from operating activities:
Net income	$	45,848		$	14,575
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		20,875			23,317
Minority interest		(1,642	)		(975	)
Changes in operating assets and liabilities:
Trade receivables		408,927			25,756
Other receivables		154,125			-86,656
Vendor deposits		(719,970	)		33,621
Prepaid expenses		27,283			(30,955	)
Inventories		(305,503	)		(90,863	)
Trade payables		234,109			(13,362	)
Accrued liabilities		15,226			67,915
Other payables		13,320			1,148,326
Taxes payable		(22,676	)		(69,842	)
Customer deposits		(125,565	)		(208,759	)
Accrued employee benefits		15,555			--
Net cash used in operations		(240,088	)		812,098
Cash flows from investing activities:
Purchase of property and equipment		(5,011	)		(6,933	)
Related party receivable		9,696			--
Net cash used in investing activities		4,685			(6,933	)
Cash flows from financing activities:
Related party payables		(25,344	)		79,046
Repayments on short-term notes payable		--			(588,201	)
Proceeds from short term loans		31,681			(314,009	)
Proceeds from sale of preferred stock		40,272			--
Net cash provided by financing activities		46,609			(823,164	)
Effect of rate changes on cash		5,536			--
Decrease in cash and cash equivalents		(183,258	)		(17,999	)
Cash and cash equivalents, beginning of period		273,367			64,272
Cash and cash equivalents, end of period	$	90,109		$	46,273
Supplemental disclosures of cash flow information:
Cash paid for interest	$	70,799		$	29,354
Cash paid for income taxes	$	--		$	65,658
Supplemental disclosures of non-cash investing and financing activities:
Preferred stock dividends accrued, but not paid	$	42,000		$	--
Office furnishings	$	56,250		$	--

See notes to unaudited 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 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.

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.

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SHINECO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 $143,788 and $86,226 at June 30, 2006 and December 31, 2005, respectively. Bad debt expense recognized during the first half year of 2006 and whole year of 2005 was $ 57,562 and $ 79,540, respectively.

OTHER RECEIVABLES

Other receivables consist primarily of advances made to third parties. The balances due to the Company were $ 81,480 and $ 275,138 at June 30, 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 $2,212,259 and $ 1,906,756 at June 30, 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

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.

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SHINECO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

EARNINGS PER SHARE

Basic earnings per common share ("EPS") is 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 June 30, 2006 there were no exercisable conversion rights attached to the preferred stock.

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SHINECO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Six months ended June 30,
	2006			2005
NUMERATOR FOR BASIC AND DILUTED EPS
Income from continuing operations		45,848			12,120
Accrued dividend on Series A Preferred stock		(42,000	)		--
Income from continuing operations available to common shareholders		3,848			12,120
Income (loss) from discontinued operations		--			2,455
Net income to common stockholders	$	3,848		$	14,575
DENOMINATOR FOR BASIC EPS
Weighted average shares of common stock outstanding		9,298,823			9,298,823
EPS - Basic from continuing operations	$	0.00		$	0.00
EPS - Basic from discontinued operations	$	--		$	0.00
EPS - Basic	$	0.00		$	0.00
DENOMINATOR FOR FULLY DILUTED EPS
Weighted average shares of common stock outstanding		9,298,823			9,298,823
Exercisable warrants		--			1,337
Series A Preferred stock conversion rights		--			--
Weighted average common shares and warrants outstanding		9,298,823			9,300,160
EPS - Fully diluted from continuing operations	$	0.00		$	0.00
EPS - Fully diluted from discontinued operations	$	--		$	0.00
EPS - Fully diluted	$	0.00		$	0.00

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 $360,793. 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.

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SHINECO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 June 30, 2006 and December 31, 2005 are $32,025 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 June 30, 2006 and December 31, 2005 are $234,444 and $259,788, respectively.

6.   PROPERTY, PLANT AND EQUIPMENT

The balances of Property, plant and equipment net were $ 175,199 and $120,538 at June 30, 2006 and December 31, 2005, respectively.

	June 30, 2006		December 31,2005
Machinery and equipment	$	28,146	$	27,270
Vehicles		54,140		52,455
Office equipment		79,021		74,010
Office furnishings		56,250		-
Subtotal		217,557		153,735
Less: accumulated depreciation		42,358		33,197
Net property and equipment	$	175,199	$	120,538

Depreciation expense was $ 9,161 and $ 7,662 for years ending June 30, 2006 and whole year of, 2005, respectively.

7.   INVESTMENTS

During 2005 and 2006, the Company acquired equity interests in six 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.

Name	Date Acquired	Ownership			Initial Investment		Share of Income/Loss			Date Withdrawal	Investment Withdrawal		06/30/06 Investment
Jinan	11/25/2005		25.00	%	$	48,825	$	(13,142	)				$	35,683
Changchun	10/26/2005		25.00	%		13,567		1,547						15,114
Yantai	10/26/2005		25.00	%		22,091		(12,222	)	6/2/2006		9,869		-
Liaoyang	12/31/2005		25.00	%		4,707		(1,514	)					3,193
Xuzhou	7/26/2005		15.00	%		3,609		(1,326	)					2,283
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			6/2/2006		2,491		--
Qiqihaer	1/4/2006		19.00	%		7,107		(3,274	)					3,833
Totals					$	106,597	$	(33,868	)		$	12,360	$	60,369

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SHINECO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 June 30, 2006 and December 31, 2005 is $41,235 and $29,908 respectively. Amortization expense recognized during the first half year of 2006 and the whole year of 2005 is $11,327 and $12,488, respectively.

9.   CUSTOMER DEPOSITS

Customer deposits at June 30, 2006 consist of $77,399 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 June 30, 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.

- 13 -

SHINECO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 addresses 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.

In June 2006, the FASB ratified the consensus reached by the EITF on EITF Issue No. 06-2, “Accounting for Sabbatical Leave and Other Similar Benefits Pursuant to FASB Statement No. 43, Accounting for Compensated Absences” (or “EITF 06-2”). EITF 06-2 states that if all the conditions of paragraph 6 of FASB 43 are met, compensation costs for sabbatical and other similar benefit arrangements should be accrued over the requisite service period. Paragraph 6 of FASB 43 states that a liability should be accrued for employees’ future absences if the following are met: (a) the employer’s obligation is attributable to employees’ services already rendered; (b) the obligation relates to rights that vest or accumulate; (c) payment of the compensation is probable; and (d) the amount can be reasonably estimated. EITF 06-2 is effective for fiscal years beginning after December 15, 2006. We do not expect the adoption of this statement to have a material impact on our consolidated results of operations and financial condition.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109” (FIN 48). This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. We are currently evaluating the impact of FIN 48 on our consolidated results of operations and financial condition.

14.  RESTATEMENT

Subsequent to the issuance of the June 30, 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.

- 14 -

SHINECO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Three months ended June 30, 2005						Six months ended June 30, 2005
	Restated			Original			Restated			Original
Revenues
Sales revenues	$	295,251		$	459,126		$	827,724		$	1,256,514
Cost of goods sold		150,908			261,656			376,741			602,287
Gross profit		144,343			197,470			450,983			654,227
Operating expenses
Other selling expenses		40,750			108,008			66,359			267,148
Other general and administrative expenses		190,241			168,122			343,669			332,729
Total operating expenses		230,991			276,130			410,028			599,877
Operating income		(86,648	)		(78,660	)		40,955			54,350
Other income (expense)
Interest expense		(6,893	)		(6,893	)		(29,354	)		(29,354	)
Other		316			316			551			551
Total other income (expense)		(6,577	)		(6,577	)		(28,803	)		(28,803	)
Income before taxes and minority interest		(93,225	)		(85,237	)		12,152			25,547
Provision for income taxes		--			--			1,007			1,007
Income before minority interest		(93,225	)		(85,237	)		11,145			24,540
Minority interest in (income)/loss of subsidiaries		975			837			975			975
Income from continuing operations		(92,250	)		(84,400	)		12,120			25,515
Income (loss) from operations of disposed subsidiaries		2,380			--			2,455			--
Net income (loss) from discontinued operations		2,380			--			2,455			--
Net income	$	(89,870	)	$	(84,400	)	$	14,575		$	25,515
Foreign currency translation adjustment		--			--			--			--
Comprehensive income	$	(89,870	)	$	(84,400	)	$	14,575		$	25,515
Basic earnings (loss) per common share:
From continuing operations	$	(0.01	)	$	(0.01	)	$	0.00		$	0.00
From discontinued operations	$	0.00		$	--		$	0.00		$	--
From net income	$	(0.01	)	$	(0.01	)	$	0.00		$	0.00
Diluted earnings (loss) per common share:
From continuing operations	$	(0.01	)	$	(0.01	)	$	0.00		$	0.00
From discontinued operations	$	0.00		$	--		$	0.00		$	--
From net income	$	(0.01	)	$	(0.01	)	$	0.00		$	0.00
Denominator for basic earnings per share		9,298,823			9,298,823			9,298,823			9,298,823
Denominator for diluted earnings per share		9,300,160			9,300,160			9,300,160			9,300,160

- 15 -

SHINECO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Six months ended June 30, 2005
	Restated			Original
	2005			2005
Cash flows from operating activities:
Net income	$	14,575		$	25,515
Adjustments to reconcile net income to net cash used in operations:
Depreciation and amortization		23,317			12,377
Minority interest		(975	)		(975	)
Changes in operating assets and liabilities:
Trade receivables		25,756			25,756
Other receivables		(86,656	)		(86,656	)
Vendor deposits		33,621			33,621
Prepaid expenses		(30,955	)		(30,955	)
Inventories		(90,863	)		(90,863	)
Trade payables		(13,362	)		(13,362	)
Accrued liabilities		67,915			67,915
Other payables		1,148,326			1,148,326
Taxes payable		(69,842	)		(69,842	)
Customer deposits		(208,759	)		(208,759	)
Net cash used in operations		812,098			812,098
Cash flows from investing activities:
Purchase of property and equipment		(6,933	)		(6,933	)
Net cash used in investing activities		(6,933	)		(6,933	)
Cash flows from financing activities:
Related party payables		79,046			79,046
Repayments on short-term notes payable		(588,201	)		(588,201	)
Proceeds from sale of preferred stock		--			--
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		(17,999	)		(17,999	)
Cash and cash equivalents, beginning of period		64,272			64,272
Cash and cash equivalents, end of period	$	46,273		$	46,273
Supplemental disclosures of cash flow information:
Cash paid for interest	$	29,354		$	29,354
Cash paid for income taxes	$	65,658		$	65,658
Supplemental disclosures of non-cash investing and financing activities:
Stock issued for services	$	--		$	--
Inventory and intangibles acquired in business combination	$	--		$	--

- 16 -

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 Six Months Ended June 30, 2006 Compared to June 30, 2005

Our operating results are presented on a consolidated basis for the six-month period ended June 30, 2006, as compared to the same period ended June 30, 2005. The operating results presented in our consolidated financial statements reflect the Company’s wholesale revenue from its manufacturing subsidiaries to our regional distributors.

Revenue

Our revenues from our wholesale operations for the six-month periods ended June 30, 2006 and 2005 were $879,088 and $827,724 respectively, representing an increase of approximately 6.2 % as compared to the same period in the previous year. Our operating revenues derive mainly from the sale of our healthcare products. Those increases were mainly attributable to increased market demand.

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

- 17 -

Gross Profit and Gross Margin

Our gross profit for the six months ended June 30, 2006 was $556,206, an increase of 23.3% compared to the same period in 2005, in which our gross profit was $450,983. Our gross margin on sales of our products was 63.3% for the six months ended June 30, 2006 as compared to 54.5% for the period ended June 30, 2005. Our gross margin increased by 16.1% in the 2006 six-month period as compared to the same period in 2005. The increase was due to our increased sales revenue, aided by a decrease in the cost of goods sold.

Expenses

Our total operating expenses were $450,016 for the six-month period ended June 30, 2006, an increase of 9.8% compared with total operating expenses of $410,028 for the six-month period ended June 30, 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 $45,848 for the six months ended June 30, 2006 as compared to $14,575 for the six months ended June 30 of the prior year. Our net income increased by 215%, from 1.8% for the six months ended June 30, 2005 to 5.2% for the six months ended June 30, 2006. This increase was attributable mainly to the increase in gross sales revenues as well as decreased cost of goods sold, offset by increases in other selling expense, other general and administrative expense, interest expense, and loss on equity investments.

Comprehensive Income

Our consolidated comprehensive income for the six months ended June 30, 2006 was $51,384, an increase of 252% from $14,575 for the six months ended June 30, 2005. The difference between our comprehensive income and net income for the six months ended June 30, 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 $5,536 for the six months ended June 30, 2006.

Liquidity and Sources of Capital

At June 30, 2006, our cash and cash equivalents were $90,109. As of June 30, 2006, the Company had inventories of $2,212,259, total current assets of $4,782,047, total current liabilities of $2,424,042 and working capital of $2,358,005, reflecting a current ratio of 2.0 and quick ratio of 1.06, compared to a current ratio of 2.0 and a quick ratio of 1.19 as of December 31, 2005. Our current ratio and quick ratio as of June 30, 2006 were essentially stable compared to those of December 31, 2005.  Our working capital of $2,358,005 as of June 30, 2006 reflected a 1.4 % increase over $2,324,933 as of December 31, 2005.

We generally finance our operations from two sources: cash flow from trade receivables, and operations. Our total shareholders’ equity was $1,725,813 as of June 30, 2006, as compared to $1,716,429 as of December 31, 2005, an increase of $9,384 or 0.5%.

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

- 18 -

As of June 30, 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.

Results of Operations for Three Months Ended June 30, 2006 Compared to June 30, 2005

Our operating results are also presented on a consolidated basis for the three-month period ended June 30, 2006, as compared to the same period ended June 30, 2005. The operating results presented in our consolidated financial statements reflect the Company’s wholesale revenue from its manufacturing subsidiaries to our regional distributors.

Revenue

Our revenues from our wholesale operations for the three-month periods ended June 30, 2006 and 2005 were $435,040 and $295,251 respectively, representing an increase of approximately 47.3 % as compared to the same period in the previous year. Our operating revenues derive mainly from the sale of our healthcare products. Those increases were mainly attributable to increased market demand.

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

Gross Profit and Gross Margin

Our gross profit for the three months ended June 30, 2006 was $284,726, an increase of 97.3% compared to the same period in 2005, in which our gross profit was $144,343. Our gross margin on sales of our products was 65.4% for the three months ended June 30, 2006 as compared to 48.9% for the period ended June 30, 2005. Our gross margin increased by 33.7% in the 2006 three-month period as compared to the same period in 2005. The increase was due to our increased sales revenue, aided by a decrease in the cost of goods sold.

Expenses

Our total operating expenses were $254,615 for the three-month period ended June 30, 2006, an increase of 10.2% compared with total operating expenses of $230,991 for the three-month period ended June 30, 2005. The increase was mainly caused by increases in other selling expenses and other general and administrative expenses.

Net Loss

Our consolidated net loss was $7,957 for the three months ended June 30, 2006 as compared to a consolidated net loss of $89,870 for the three months ended June 30 of the prior year. Our net loss decreased by 94.1%, from a net loss of 30.4% for the three months ended June 30, 2005 to a net loss of only 1.8% for the three months ended June 30, 2006. This decreased net loss was attributable mainly to the increase in gross sales revenues as well as decreased cost of goods sold, offset by increases in other selling expense, other general and administrative expense, interest expense, and loss on equity investments.

- 19 -

Comprehensive Loss

Our consolidated comprehensive loss for the three months ended June 30, 2006 was $5,232, a decreased loss of 94.2% from $89,870 for the three months ended June 30, 2005. The difference between our comprehensive loss and net loss for the three months ended June 30, 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 $2,725 for the three months ended June 30, 2006.

Liquidity and Sources of Capital

At June 30, 2006, our cash and cash equivalents were $90,109. As of June 30, 2006, the Company had inventories of $2,212,259, total current assets of $4,782,047, total current liabilities of $2,424,042 and working capital of $2,358,005, reflecting a current ratio of 2.0 and quick ratio of 1.06, compared to a current ratio of 2.0 and a quick ratio of 1.19 as of December 31, 2005. Our current ratio and quick ratio as of June 30, 2006 were essentially stable compared to those of December 31, 2005.  Our working capital of $2,358,005 as of June 30, 2006 reflected a 1.4 % increase over $2,324,933 as of December 31, 2005.

We generally finance our operations from two sources: cash flow from trade receivables, and operations. Our total shareholders’ equity was $1,725,813 as of June 30, 2006, as compared to $1,716,429 as of December 31, 2005, an increase of $9,384 or 0.5%.

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

As of June 30, 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 June 30, 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 June 30, 2006, 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.

- 20 -

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.

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 June 30, 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.

- 21 -

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 June 30, 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 no reports on Form 8-K during this quarter.

- 22 -

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 8, 2007

SHINECO, INC.

/s/ Yuying Zhang

By: Yuying Zhang

Chairman, CEO, and Principal Executive Officer

 /s/ Dan Liu

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.

/s/ Yuying Zhang

By: Yuying Zhang

Director, CEO, and President

 /s/ Dan Liu

By: Dan Liu

Director, CFO

 /s/ Weixing Yin

By: Weixing Yin

Director

 /s/ Shuangpeng Tian

By: Shuangpeng Tian

Director

/s/ Xiaoguang Zhang

By: Xiaoguang Zhang

Director

- 23 -

EX-31.1

EXHIBIT 31.1

Certification

I, Yuying Zhang, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of Shineco, Inc.

2.   Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.   The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(c) and 15d-(e)) for the registrant and have:

a)   Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)   Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of June 30, 2006, based on such evaluation.

5.   The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)   all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.   The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: June 8, 2007

/s/ Yuying Zhang

Yuying Zhang

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification

I, Dan Liu, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB/A of Shineco, Inc.

2.   Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.   The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(c) and 15d-(e)) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures as of March 31, 2006, based on such evaluation.

5.   The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.   The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: June 5, 2007

/s/ Dan Liu

Dan Liu

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

STATEMENT REQUIRED BY 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-QSB/A of Shineco, Inc. (the "Company") for the quarter ended March 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Yuying Zhang, Chief Executive Officer, and Dan Liu, Chief Financial Officer of the Company, certify that:

·   the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

·   information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Yuying Zhang

Yuying Zhang

Director, President and Chief Executive Officer

June 5, 2007

/s/ Dan Liu

Dan Liu

Chief Financial Officer

June 5, 2007

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.