Shineco, Inc. Announces Entering into a Securities Purchase Agreement with Gross Proceeds of $7.0 Million

Rhea-AI Summary

On June 24, 2024, Shineco (NASDAQ: SISI), a provider of diagnostic medical products and devices, announced it entered into a Securities Purchase Agreement (SPA) with non-U.S. investors. The agreement, signed on June 20, 2024, involves issuing up to 1,400,000 shares of common stock at $5.00 per share in a private placement, generating gross proceeds of approximately $7 million before expenses. The investors include a former related party purchasing 1,000,000 shares, a management member buying 200,000 shares, and an individual investor also acquiring 200,000 shares. The transaction is expected to close by July 31, 2024, with proceeds aimed at working capital and corporate purposes. The shares will be issued under Regulation S, exempting them from U.S. Securities Act registration requirements.

Positive

• Gross proceeds of $7 million are expected from the private placement.
• The new capital will support Shineco's strategic growth and corporate initiatives.

Negative

• The issuance of 1,400,000 new shares may lead to shareholder dilution.

Insights

Financial Analyst

The announcement of Shineco entering into a Securities Purchase Agreement (SPA) with non-U.S. investors for gross proceeds of $7 million is quite significant. The move indicates a strategic effort to bolster the company's capital base, which is important for its ongoing and future projects. For a company operating in the medical diagnostics sector, such liquidity infusions are essential for innovation, research and market expansion.

From a financial standpoint, the offering price of $5.00 per share is a critical element. Investors should note that this pricing reflects the company's current valuation and market perception. The fact that the Purchasers include former related parties and a management member purchasing significant shares also suggests a vote of confidence in the company's future prospects.

However, the use of proceeds for 'working capital and general corporate purposes' is a bit broad. Investors would benefit from more detailed information on specific strategic initiatives or projects that these funds will support. Transparency in fund allocation could further enhance investor confidence.

In the short-term, the influx of capital will likely ease any liquidity constraints and potentially provide a cushion for operational expenditures. In the long-term, how effectively Shineco leverages this capital for growth and innovation will be pivotal. A point of caution is the dilution of existing shareholders' equity, as the issuance of 1.4 million new shares could impact the stock's market value depending on how the market reacts to the dilution.

Market Research Analyst

The private placement financing transaction involving Shineco and non-U.S. investors is a noteworthy event in the medical diagnostics industry. Such financial moves are often indicators of a company's strategic direction and market positioning. The gross proceeds of $7 million signify a substantial capital raise, especially for a company in this sector where funding for R&D and product development is critical.

The involvement of diverse types of investors, including a former related party, a management member and an individual investor, highlights varied confidence levels in Shineco's market strategy. This blend of investors might imply a solid alignment with Shineco's strategic goals and could positively influence market perception.

Industry-specific terms like 'private placement' and 'Regulation S' indicate that the shares were not offered to the public but to specific accredited investors, often leading to faster capital raises with potentially less regulatory scrutiny compared to public offerings. This method also suggests a targeted approach to capital raising, which can be advantageous in maintaining a focused investor base.

Given the broader trends in the medical diagnostics industry, where innovation and rapid technological advancements are pivotal, securing such funding can provide Shineco with a competitive edge. However, it's important for investors to monitor how efficiently the company utilizes these funds to drive growth and innovation to justify the dilution of shares.

BEIJING, June 24, 2024 (GLOBE NEWSWIRE) -- Shineco, Inc. (“Shineco” or the “Company”; NASDAQ: SISI), a provider of innovative diagnostic medical products and related medical devices, announced today that on June 20, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with certain non-U.S. investors (each individually, a “Purchaser,” and collectively, the “Purchasers”). Pursuant to the SPA, the Company will issue up to 1,400,000 shares of its common stock (the “Shares”) to the Purchasers in a private placement financing transaction (the “Offering”) at an offering price of $5.00 per share. The gross proceeds of the Offering are expected to be approximately $7,000,000, before the deduction of customary expenses. The Purchasers are a former related party of the Company, who agreed to purchase 1,000,000 shares of common stock, a management member of the Company, who agreed to purchase 200,000 shares of common stock, and an individual investor who agreed to purchase 200,000 shares of common stock. The Offering is expected to close, and the Shares are expected to be issued, on or about July 31, 2024.

The Company plans to use the proceeds from this offering for working capital and general corporate purposes, further bolstering the execution of its strategic initiatives.

The Shares described above were offered in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Regulation S promulgated thereunder, and may not be offered or sold in the United States, except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

Ms. Jennifer Zhan, CEO of Shineco, said, “We are pleased to enter into the SPA with the Purchasers as the new capital will support our strategic growth plan that was developed to capitalize upon opportunities across the medical and healthcare landscape. The financing also demonstrates the confidence of management and investors in our corporate strategy, business development and growth prospects. Our operational, financing and investment strategy has but one goal: to create long-term value for our shareholders.”

About Shineco, Inc.

Shineco Inc. (“Shineco” or the “Company”) aims to ‘care for a healthy life and improve the quality of life’, by providing safe, efficient and high-quality health and medical products and services to society. Shineco, operating through subsidiaries, has researched and developed 33 vitro diagnostic reagents and related medical devices to date, and the Company also produces and sells healthy and nutritious foods. For more information about Shineco, please visit www.biosisi.com/.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “could”, “intend”, “expect”, “plan”, “budget”, “forecast”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “evaluating” or similar words. Forward-looking statements should not be relied upon because they are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Examples of forward-looking statements include, among others, statements we make regarding the innovativeness and market position of our products and services, our competitive strengths, and our expectation that the healthy meals replacement joint venture will be a competitive products in its field. You are cautioned not to rely on any forward-looking statements. Actual results may differ materially from historical results or those indicated by the forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with the Company’s ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the ability to obtain all necessary regulatory approvals in the jurisdictions where it intends to market and sell its products the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulations, economic conditions, the impact of the COVID-19 pandemic, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Shineco encourages you to review other factors that may affect its future results in its filings with the Securities and Exchange Commission. The forward-looking statements in this press release are based only on information currently available to us and speak only as of the date of this press release, and Shineco assumes no obligation to update any forward-looking statements except as required by the applicable rules and regulations.

For more information, please contact:

Shineco,Inc.
secretary@shineco.tech
Mobile: +86-010-68130220

Precept Investor Relations LLC
David J. Rudnick
david.rudnick@preceptir.com
Mobile: +1-646-694-8538

FAQ

What is the value of the securities purchase agreement announced by Shineco?

The securities purchase agreement announced by Shineco is valued at $7 million.

When did Shineco enter into the Securities Purchase Agreement?

Shineco entered into the Securities Purchase Agreement on June 20, 2024.

How many shares will Shineco issue in the private placement?

Shineco will issue up to 1,400,000 shares in the private placement.

At what price are the Shineco shares being offered in the private placement?

Shineco shares are being offered at $5.00 per share in the private placement.

What is the stock symbol for Shineco in the recent securities purchase agreement?

The stock symbol for Shineco in the recent securities purchase agreement is SISI.

Who are the investors participating in Shineco's securities purchase agreement?

The investors include a former related party, a management member, and an individual investor.

When is the Shineco private placement expected to close?

The Shineco private placement is expected to close on or about July 31, 2024.

What will Shineco use the proceeds from the private placement for?

Shineco plans to use the proceeds for working capital and general corporate purposes.

Under which regulation is Shineco offering the new shares?

Shineco is offering the new shares under Regulation S, exempting them from U.S. Securities Act registration requirements.