SHINECO, INC. — Capital/Financing Update 2021

Aug 23, 2021

8-K 1 form8-k.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 23, 2021 (August 19, 2021)

SHINECO, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-37776	52-2175898
(State
or other jurisdiction of incorporation)	(Commission File
Number)	(IRS
Employer Identification No.)

| Room 1001, Building T5, DaZu Square, Daxing District, Beijing,

People’s Republic of China	100176
(Address
of principal executive offices)	(Zip
Code)

Registrant’s telephone number, including area code: (+86) 10-87227366

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- | | ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |

Securities registered pursuant to Section 12(b) of the Act:

| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | Common Stock | TYHT | The NASDAQ Stock Market LLC |

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§ 240.12b–2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 1.01. Entry into a Material Definitive Agreement.

On August 19, 2021, Shineco, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Agreement”) pursuant to which the Company issued an unsecured convertible promissory note with a one-year maturity (the “Note”) to an institutional accredited investor Streeterville Capital, LLC (“Investor”). The Note has the original principal amount of $10,520,000.00 and Investor gave consideration of $10 million, reflecting original issue discount of $500,000 and Investor’s legal fee of $20,000. The Company anticipates using the proceeds for general working capital purposes.

Interest accrues on the outstanding balance of the Note at 6% per annum. Upon the occurrence of an Event of Default, interest accrues at the lesser of 22% per annum or the maximum rate permitted by applicable law. In addition, upon any Event of Default, the Investor may accelerate the outstanding balance payable under the Note, which will increase automatically upon such acceleration by 15% or 5%, depending on the nature of the Event of Default.

Pursuant to the terms of the Agreement and the Note, the Company must obtain Investor’s consent for certain fundamental transactions such as consolidation, merger, disposition of substantial assets, change of control, reorganization or recapitalization. Any occurrence of a fundamental transaction without Investor’s prior written consent will be deemed an Event of Default.

Investor may redeem all or any part the outstanding balance of the Note, at any time after six months from the issue date upon three trading days’ notice, in cash or converting into shares of the Company’s Common Stock at a price equal to 80% multiplied by the lowest daily VWAP during the fifteen (15) trading days immediately preceding the applicable redemption conversion, subject to certain adjustments and ownership limitations specified in the Note. The Note provides for liquidated damages upon failure to comply with any of the terms or provisions of the Note. The Company may prepay the outstanding balance of the Note in cash equal to 120% multiplied by the portion of the outstanding balance the Company elects to prepay.

The Company relied on the exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933 in connection with the issuance and sale of the Note and underlying shares of Common Stock. The underlying shares of Common Stock in connection with the issuance and sale of the Note may be issued pursuant to the Company’s effective shelf registration statement. The Company agreed, within ten days of the issuance and sale of the Note, to file with the Securities and Exchange Commission a prospectus supplement pursuant to Rule 424(b) of the Securities Act registering at least $10,000,000.00 in Common Stock for the benefit of Investor.

The foregoing description is qualified in its entirety by reference to the full text of the Note and the Agreement, a copy of each of which is filed as Exhibit 4.1 and Exhibit 10.1 hereto, and each of which is incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information in Item 1.01 is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

| Exhibit

Number	Exhibit
4.1	Convertible
Promissory Note dated August 19, 2021
10.1	Securities
Purchase Agreement between Shineco, Inc. and Streeterville Capital, LLC dated August 19,
2021

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

| /s/

Yuying Zhang
Yuying
Zhang
Chairman

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