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Item 1. Financial Statements

2020-11-16 compared with 2020-08-14 · 886 added, 1004 removed, 284 unchanged (87% of the section changed)

Financial Statements.

In the opinion of

management, the accompanying unaudited condensed consolidated financial statements included in this Form 10-Q reflect all adjustments

(consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented.

The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL

Condensed Consolidated Balance Sheets as of June 30, 2020 (Unaudited) and December 31, 2019

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three and the Six Months Ended June 30, 2020 and 2019 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019 (Unaudited)

Notes to Unaudited Condensed Consolidated Financial Statements

the opinion of management, the accompanying unaudited condensed consolidated financial statements included in this Form 10-Q reflect

all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations

for the periods presented.

The results of operations for the periods presented are not necessarily indicative of the results to

be expected for the full year.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets

as of September 30, 2020 (Unaudited) and December 31, 2019

Condensed Consolidated

Statements of Operations and Comprehensive (Loss) Income for the Three and the Nine Months Ended September 30, 2020 and 2019 (Unaudited)

Condensed Consolidated

Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (Unaudited)

Notes to Unaudited

Condensed Consolidated Financial Statements

JOWAY HEALTH INDUSTRIES GROUP INC.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

CURRENT ASSETS:

7 unchanged sentences

Total other assets

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

4 unchanged sentences

Total current liabilities

STOCKHOLDERS’

STOCKHOLDERS' EQUITY:

Preferred stock - par value $0.001;

3 unchanged sentences

200,000,000 shares authorized;

20,054,000 shares issued and outstanding at June 30, 2020 and December 31, 2019

20,054,000 shares issued and outstanding at September 30, 2020 and December 31, 2019

Additional paid-in-capital

2 unchanged sentences

Accumulated other comprehensive income

Total stockholders’

Total liabilities and stockholders’

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

Total stockholders' equity

Total liabilities and stockholders' equity

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements

JOWAY HEALTH INDUSTRIES GROUP INC.

3 unchanged sentences

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

COST OF REVENUES

12 unchanged sentences

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements

JOWAY HEALTH INDUSTRIES GROUP INC.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH

Six months ended

Nine months ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net loss to net cash used in operating activities

Loss on sale of assets

Changes in operating assets and liabilities:

21 unchanged sentences

Interest paid

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

JOWAY HEALTH INDUSTRIES GROUP INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTE 1 –

The unaudited condensed consolidated

financial statements include the financial statements of Joway Health Industries Group Inc.

(referred to herein as “Joway

Health”), its subsidiaries, and variable interest entities (“VIEs”) where Joway Health is deemed the primary

Joway Health, its subsidiaries and VIEs are collectively referred to herein as the “Company”, “we”

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements

HEALTH INDUSTRIES GROUP INC.

TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

unaudited condensed consolidated financial statements include the financial statements of Joway Health Industries Group Inc.

to herein as “Joway Health”), its subsidiaries, and variable interest entities (“VIEs”) where Joway Health

is deemed the primary beneficiary.

Joway Health, its subsidiaries and VIEs are collectively referred to herein as the “Company”,

“we”

and “us”.

Joway Health (formerly G2 Ventures, Inc.)

was originally incorporated under the laws of the State of Texas on March 21, 2003.

On September 21, 2010, Joway Health entered

into a Share Exchange Agreement (the “Share Exchange”) with the sole stockholder of Dynamic Elite International Limited.

As a result of the Share Exchange, Dynamic Elite became a wholly-owned subsidiary of Joway Health and the stockholders of Dynamic

Elite acquired approximately 76.08% of the issued and outstanding stock of Joway Health.

The share exchange transaction resulted

in the shareholders of Dynamic Elite acquiring a majority voting interest in Joway Health.

Generally accepted accounting principles

in the United States of America require that the company whose shareholders retain the majority interest in the combined business

be treated as the acquirer for accounting purposes.

The reverse acquisition process utilizes the capital structure of Joway Health

and the assets and liabilities of Dynamic Elite recorded at historical cost.

On December 22, 2010, Joway Health changed its jurisdiction

of incorporation from the State of Texas to the State of Nevada.

Dynamic Elite International Limited (referred

to herein as “Dynamic Elite”) was incorporated under the laws of the British Virgin Islands on June 2, 2010 as a limited

liability company (a BVI company).

Dynamic Elite engages in manufacturing and distributing tourmaline products in China.

owned subsidiary, Tianjin Junhe Management Consulting Co., Ltd.

was incorporated on September 15, 2010 in Tianjin, People’s

Republic of China (“PRC”).

Other than the equity interest in Junhe Consulting, Dynamic Elite does not own any assets

or conduct any operations.

Tianjin Junhe Management Consulting Co.,

(referred to herein as “Junhe Consulting”) conducts its business through Tianjin Joway Shengshi Group Co., Ltd.

Health (formerly G2 Ventures, Inc.) was originally incorporated under the laws of the State of Texas on March 21, 2003.

21, 2010, Joway Health entered into a Share Exchange Agreement (the “Share Exchange”) with the sole stockholder of

Dynamic Elite International Limited.

As a result of the Share Exchange, Dynamic Elite became a wholly-owned subsidiary of Joway

Health and the stockholders of Dynamic Elite acquired approximately 76.08% of the issued and outstanding stock of Joway Health.

The share exchange transaction resulted in the shareholders of Dynamic Elite acquiring a majority voting interest in Joway Health.

Generally accepted accounting principles in the United States of America require that the company whose shareholders retain the

majority interest in the combined business be treated as the acquirer for accounting purposes.

The reverse acquisition process

utilizes the capital structure of Joway Health and the assets and liabilities of Dynamic Elite recorded at historical cost.

December 22, 2010, Joway Health changed its jurisdiction of incorporation from the State of Texas to the State of Nevada.

Elite International Limited (referred to herein as “Dynamic Elite”) was incorporated under the laws of the British

Virgin Islands on June 2, 2010 as a limited liability company (a BVI company).

Dynamic Elite engages in manufacturing and distributing

tourmaline products in China.

Its wholly owned subsidiary, Tianjin Junhe Management Consulting Co., Ltd.

was incorporated on September

15, 2010 in Tianjin, People’s Republic of China (“PRC”).

Other than the equity interest in Junhe Consulting,

Dynamic Elite does not own any assets or conduct any operations.

Junhe Management Consulting Co., Ltd.

(referred to herein as “Junhe Consulting”) conducts its business through Tianjin

Joway Shengshi Group Co., Ltd.

that is consolidated as a variable interest entity.

Tianjin Joway Shengshi Group Co., Ltd.

Joway Shengshi Group Co., Ltd.

(referred to herein as “Joway Shengshi”) was incorporated in PRC on May 17, 2007.

Joway Shengshi is currently owned

99% by Jinghe Zhang, the Company’s current CEO and President and 1% by Song Baogang.

Joway Shengshi engages in manufacturing

and distributing tourmaline products in China.

Shenyang Joway Electronic Technology Co., Ltd., Tianjin Joway Decoration Engineering

and Tianjin Oriental Shengtang Trading Import & Export Trading Co., Ltd are subsidiaries of Joway Shengshi.

Shenyang Joway Electronic Technology Co.,

(referred to herein as “Joway Technology”) was originally named Liaoning Joway Technology Engineering Co., Ltd.

Shengshi is currently owned 99% by Jinghe Zhang, the Company’s current CEO and President and 1% by Song Baogang.

Joway Shengshi

engages in manufacturing and distributing tourmaline products in China.

Shenyang Joway Electronic Technology Co., Ltd., Tianjin

Joway Decoration Engineering Co., Ltd.

and Tianjin Oriental Shengtang Trading Import & Export Trading Co., Ltd are subsidiaries

of Joway Shengshi.

Joway Electronic Technology Co., Ltd.

(referred to herein as “Joway Technology”) was originally named Liaoning Joway

Technology Engineering Co., Ltd.

which was incorporated on March 28, 2007 in PRC.

The name was changed on June 22, 2011.

It engages in the distribution of Tourmaline

Activated Water Machines and Tourmaline Wellness Houses.

Prior to July 25, 2010, Joway Shengshi owned 90.91% of Joway Technology.

Joway Shengshi entered into a share acquisition agreement with Jingyun Chen, another stockholder of Joway Technology on July 25,

2010 to acquire the remaining 9.09% of the share of Joway Technology.

As a result of the share acquisition, Joway Technology became

a wholly-owned subsidiary of Joway Shengshi.

Tianjin Joway Decoration Engineering Co.,

(referred to herein as “Joway Decoration”) was incorporated on April 22, 2009 in PRC.

It engages in the distribution

of Tourmaline Activated Water Machines, Tourmaline Wellness House for family use and Tourmaline Wellness House materials.

to July 9, 2010, Joway Shengshi owned 90% of Joway Decoration.

Joway Shengshi entered into a share acquisition agreement with Jingyun

Chen, another stockholder of Joway Decoration on July 9, 2010 to acquire the remaining 10% of the shares of Joway Decoration.

a result of the share acquisition, Joway Decoration became a wholly-owned subsidiary of Joway Shengshi.

Jingyun Chen is currently

the General Manager of Joway Decoration.

Tianjin Oriental Shengtang Import &

Export Trading Co., Ltd (referred to herein as “Shengtang Trading”) was incorporated on September 18, 2009 in the PRC.

in the distribution of Tourmaline Activated Water Machines and Tourmaline Wellness Houses.

Prior to July 25, 2010, Joway Shengshi

owned 90.91% of Joway Technology.

Joway Shengshi entered into a share acquisition agreement with Jingyun Chen, another stockholder

of Joway Technology on July 25, 2010 to acquire the remaining 9.09% of the share of Joway Technology.

As a result of the share

acquisition, Joway Technology became a wholly-owned subsidiary of Joway Shengshi.

Joway Decoration Engineering Co., Ltd.

(referred to herein as “Joway Decoration”) was incorporated on April 22, 2009

It engages in the distribution of Tourmaline Activated Water Machines, Tourmaline Wellness House for family use and Tourmaline

Wellness House materials.

Prior to July 9, 2010, Joway Shengshi owned 90% of Joway Decoration.

Joway Shengshi entered into a share

acquisition agreement with Jingyun Chen, another stockholder of Joway Decoration on July 9, 2010 to acquire the remaining 10%

of the shares of Joway Decoration.

As a result of the share acquisition, Joway Decoration became a wholly-owned subsidiary of

Joway Shengshi.

Jingyun Chen is currently the General Manager of Joway Decoration.

Oriental Shengtang Import & Export Trading Co., Ltd (referred to herein as “Shengtang Trading”) was incorporated

on September 18, 2009 in the PRC.

It engages in purchasing raw materials which it sells to other companies of the group.

Prior to July 28, 2010, Joway Shengshi owned

95% of Shengtang Trading.

Joway Shengshi entered into a share acquisition agreement with Wang Aiying, another stockholder of Shengtang

Trading on July 28, 2010 to acquire the remaining 5% of the shares of Shengtang Trading.

As a result of the share acquisition,

Shengtang Trading became a wholly-owned subsidiary of Joway Shengshi.

The following table lists the Company and

its subsidiaries:

Domicile and Date of Incorporation

Paid in Capital

Percentage of Effective Ownership

Principal Activities

Joway Health Industries Group Inc.

March 21, 2003,

to July 28, 2010, Joway Shengshi owned 95% of Shengtang Trading.

Joway Shengshi entered into a share acquisition agreement with

Wang Aiying, another stockholder of Shengtang Trading on July 28, 2010 to acquire the remaining 5% of the shares of Shengtang

As a result of the share acquisition, Shengtang Trading became a wholly-owned subsidiary of Joway Shengshi.

following table lists the Company and its subsidiaries:

and Date of Incorporation

of Effective Ownership

Health Industries Group Inc.

owned by Crystal Globe Limited

13.2%owned by other institutional and individual

Dynamic Elite International Limited

June 2, 2010,

British Virgin Islands

by other institutional and individual investors

Elite International Limited

Virgin Islands

owned by Joway Health Industries Group Inc.

Tianjin Junhe Management Consulting Co., Ltd.

September 15, 2010, PRC

Junhe Management Consulting Co., Ltd.

15, 2010, PRC

owned by Dynamic Elite International Limited

Tianjin Joway Shengshi Group Co., Ltd.

May 17, 2007, PRC

USD 7,216,140.72

99% owned by Jinghe Zhang, and 1% owned by Baogang Song

Production and

distribution of Healthcare Knit Goods and

Daily Healthcare and Personal Care products

Shenyang Joway Electronic Technology Co., Ltd.

March 28, 2007, PRC

USD 142,072.97

Joway Shengshi Group Co., Ltd.

17, 2007, PRC

99% owned by Jinghe

Zhang, and 1% owned by Baogang Song

of Healthcare Knit Goods and Daily Healthcare and Personal Care products

Joway Electronic Technology Co., Ltd.

28, 2007, PRC

owned by Tianjin Joway Shengshi Group Co., Ltd

Distribution of Tourmaline Activated Water Machine and construction of Tourmaline Wellness House

Tianjin Joway Decoration Engineering Co., Ltd.

April 22, 2009, PRC

USD 292,367.74

of Tourmaline Activated Water Machine and construction of Tourmaline Wellness House

Joway Decoration Engineering Co., Ltd.

22, 2009, PRC

owned by Tianjin Joway Shengshi Group Co., Ltd

Distribution of Wellness House for family use and Activated Water Machine and construction of Tourmaline Wellness House

Tianjin Oriental Shengtang Import & Export Trading Co., Ltd.

September 18, 2009, PRC

USD 292,463.75

of Wellness House for family use and Activated Water Machine and construction of Tourmaline Wellness House

Oriental Shengtang Import & Export Trading Co., Ltd.

18, 2009, PRC

owned by Tianjin Joway Shengshi Group Co., Ltd

Distribution of tourmaline products

On September 16, 2010, prior to the share

exchange, Junhe Consulting entered into a series of contractual agreements (the “Contractual Agreements”) with Joway

Shengshi and Joway Shengshi’s owners.

The following is a brief description of the Contractual Agreements entered into between

Junhe Consulting and Joway Shengshi or Joway Shengshi’s owners:

of tourmaline products

September 16, 2010, prior to the share exchange, Junhe Consulting entered into a series of contractual agreements (the “Contractual

Agreements”) with Joway Shengshi and Joway Shengshi’s owners.

The following is a brief description of the Contractual

Agreements entered into between Junhe Consulting and Joway Shengshi or Joway Shengshi’s owners：

Consulting Services Agreement.

Pursuant to the consulting services agreement between Junhe Consulting and Joway Shengshi, Junhe Consulting has the right to advise,

consult, manage and operate Joway Shengshi, and collect and own all of the net profits of the Operating Entities.

Pursuant to the consulting services agreement between Junhe Consulting and Joway Shengshi,

Junhe Consulting has the right to advise, consult, manage and operate Joway Shengshi, and collect and own all of the net profits

of the Operating Entities.

Operating Agreement.

operating agreement between Junhe Consulting and Joway Shengshi, Junhe Consulting has the right to recommend director candidates

and appoint the senior executives of Joway Shengshi, approve any transactions that may materially affect the assets, liabilities,

rights or operations of Joway Shengshi, and guarantee the contractual performance by Joway Shengshi of any agreements with third

parties, in exchange for a pledge by Joway Shengshi of its accounts receivable and assets.

Under the operating agreement between Junhe Consulting and Joway Shengshi, Junhe Consulting has the

right to recommend director candidates and appoint the senior executives of Joway Shengshi, approve any transactions that may

materially affect the assets, liabilities, rights or operations of Joway Shengshi, and guarantee the contractual performance by

Joway Shengshi of any agreements with third parties, in exchange for a pledge by Joway Shengshi of its accounts receivable and

Voting Rights Proxy Agreement.

Under the voting rights proxy agreement between Joway Shengshi’s owners and Junhe Consulting, the owners of Joway Shengshi

have vested their collective voting control over Joway Shengshi to Junhe Consulting and will only transfer their respective equity

interests in Joway Shengshi to Junhe Consulting or its designee.

Under the voting rights proxy agreement between Joway Shengshi’s owners and Junhe

Consulting, the owners of Joway Shengshi have vested their collective voting control over Joway Shengshi to Junhe Consulting and

will only transfer their respective equity interests in Joway Shengshi to Junhe Consulting or its designee.

Option Agreement.

Under the option

agreement between Joway Shengshi’s owners and Junhe Consulting, the owners of Joway Shengshi have granted Junhe Consulting

the irrevocable right and option to acquire all of their equity interests in Joway Shengshi.

Under the option agreement between Joway Shengshi’s owners and Junhe Consulting, the owners of

Joway Shengshi have granted Junhe Consulting the irrevocable right and option to acquire all of their equity interests in Joway

Equity Pledge Agreement.

the equity pledge agreement between Joway Shengshi’s owners and Junhe Consulting, the owners of Joway Shengshi have pledged

all of their rights, titles and interests in Joway Shengshi to Junhe Consulting to guarantee Joway Shengshi’s performance

of its obligations under the Consulting Services Agreement.

As a result of the Contractual Agreements,

Joway Shengshi is effectively a variable interest entity of Junhe Consulting.

Accordingly, the Company through its wholly-owned

subsidiary Junhe Consulting, consolidates Joway Shengshi’s results of operation, assets and liabilities in its financial

In connection with the Share Exchange and

as consideration for entering into the VIE Agreements, Jinghe Zhang and Baogang Song, the shareholders of Joway Shengshi (the “Grantees”),

entered into a Call Option Agreement, dated July 20, 2010 with Lionel Evan Liu (the “Grantor”), the sole shareholder

of Crystal Globe (the controlling shareholder of Dynamic Elite), a British Virgin Islands company (the “Call Option Agreement”),

pursuant to which the Grantees had the right to purchase up to 100% of the shares of Crystal Globe (the “Call Option”)

at an exercise price of $2.00 per share (the “Exercise Price”) for a period of five years.

The Call Option vested as

to 34% of the shares of Crystal Globe on April 2, 2011 and as to 33% on each of April 2, 2012 and 2013 (the respective “Call

Option Effective Date”).

On March 28, 2015, the Grantor and Grantees amended the Call Option Agreement, to (i) reduce the

Exercise Price to $0.00 per share and (ii) extend the Grantees’

rights to exercise their call option within ten years from

the respective Option Effective Date.

On November 13, 2016, Jinghe Zhang exercised

the Call Option as to 99% of the shares of Crystal Globe and Baogang Song exercised his Call Option as to 1% of the shares of Crystal

As a result of exercising the Call Option, Jinghe Zhang became the controlling shareholder of Crystal Globe and in turn,

the controlling shareholder of the Company.

On November 20, 2016, Baogang Song transferred 1% of the shares of Crystal Globe to

Jinghe Zhang.

Consequently, Jinghe Zhang controls 17,408,000 shares, or 86.8%, of the issued and outstanding shares of the Company’s

common stock.

On May 15, 2019, Joway Shengshi’s

100% owned subsidiary, Joway Decoration, declared and distributed a one-time dividends of RMB 6.29 million or $927,192.54.

dividend was used to offset a loan between Joway Shengshi and Joway Decoration.

NOTE 2 –

SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated

financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America

(“US GAAP”).

Accordingly, they do not include all of the information and the footnotes required by generally accepted

accounting principles for complete financial statements.

The Company’s functional currency is the Chinese Renminbi (“RMB”);

however, the accompanying unaudited condensed consolidated financial statements have been translated and presented in United States

Dollars (“USD”).

All significant inter-company transactions and balances have been eliminated.

The consolidated financial

statements include all adjustments that, in the opinion of management, are necessary to make the financial statements not misleading.

Operating results for the six month period

ended June 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31,

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s

form 10-K for the fiscal year ended December 31, 2019 which was filed on March 31, 2020.

Use of Estimates

The preparation of the consolidated financial

statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of

assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements

and the reported amounts of revenues and expenses during the reporting periods.

Management makes these estimates using the best

information available at the time the estimates are made.

Actual results could differ from those estimates.

Basis of Consolidation

The accompanying consolidated financial

statements include the Company and its wholly owned subsidiaries and controlled VIEs.

All significant inter-company accounts and

transactions have been eliminated in the consolidation.

Pursuant to Accounting Standards Codification

Topic 810 “Consolidation”

(“ASC 810”), the Company is required to include in its consolidated financial

statements the financial statements of its variable interest entities (“VIEs”).

ASC 810 requires a VIE to be consolidated

by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the

VIE’s residual returns.

VIEs are those entities in which a company, through contractual arrangements, bears the risk of,

and enjoys the rewards normally associated with ownership of the entity, and therefore the company is the primary beneficiary of

Based on the various Contractual Agreements,

the Company is able to exercise control over the VIEs, and to obtain the full economic benefits.

The terms of the exclusive option

agreement are currently exercisable and legally enforceable under PRC laws and regulations.

The minimum amount of consideration

permitted by the applicable PRC law to exercise the option does not represent a financial barrier or disincentive for the Company

to exercise its rights under the exclusive option agreement.

A simple majority vote of the Company’s board of directors is

required to pass a resolution to exercise its rights under the exclusive option agreement, for which consent of the shareholder

of VIEs is not required.

Therefore, this gives the Company the power to direct the activities that most significantly impact VIEs’

Under the equity pledge agreement between Joway Shengshi’s owners and Junhe Consulting,

the owners of Joway Shengshi have pledged all of their rights, titles and interests in Joway Shengshi to Junhe Consulting to guarantee

Joway Shengshi’s performance of its obligations under the Consulting Services Agreement.

a result of the Contractual Agreements, Joway Shengshi is effectively a variable interest entity of Junhe Consulting.

the Company through its wholly-owned subsidiary Junhe Consulting, consolidates Joway Shengshi’s results of operation, assets

and liabilities in its financial statements.

connection with the Share Exchange and as consideration for entering into the VIE Agreements, Jingshe Zhang and Baogang Song,

the shareholders of Joway Shengshi (the “Grantees”), entered into a Call Option Agreement, dated July 20,2010 with

Lionel Evan Liu (the “Grantor”), the sole shareholder of Crystal Globe Limited (the controlling shareholder of Dynamic

Elite), a British Virgin Islands company (“CGL”) (the “Call Option Agreement”), pursuant to which the

Grantees had the right to purchase up to 100% of the shares of CGL (the “Call Option”) at an exercise price of $2.00

per share (the “Exercise Price”) for a period of five years.

The Call Option vested as to 34% of the shares of CGL

on April 2, 2011 and as to 33% on each of April 2, 2012 and 2013 (the respective “Call Option Effective Date”).

March 28, 2015, the Grantor and Grantees amended the Call Option Agreement, to (i) reduce the Exercise Price to $0.00 per share

and (ii) extend the Grantees’

rights to exercise their call option within ten years from the respective Option Effective

November 13, 2016, Jinghe Zhang exercised his Call Option as to 99% of the shares of CGL and Baogang Song exercised his Call Option

as to 1% of the shares of CGL.

As a result of exercising his Call Option, Jinghe Zhang became the controlling shareholder of CGL

and in turn, the controlling shareholder of the Company.

Jinghe Zhang now controls 17,233,920 shares, or 85.9%, of the issued

and outstanding shares of the Company’s common stock.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles

generally accepted in the United States of America (“US GAAP”).

Accordingly, they do not include all of the information

and the footnotes required by generally accepted accounting principles for complete financial statements.

The Company’s

functional currency is the Chinese Renminbi (“RMB”);

however, the accompanying unaudited condensed consolidated financial

statements have been translated and presented in United States Dollars (“USD”).

All significant inter-company transactions

and balances have been eliminated.

The consolidated financial statements include all adjustments that, in the opinion of management,

are necessary to make the financial statements not misleading.

results for the nine month period ended September 30, 2020 are not necessarily indicative of the results that may be expected

for the fiscal year ending December 31, 2020.

The accompanying unaudited condensed consolidated financial statements should be

read in conjunction with the Company’s form 10-K for the fiscal year ended December 31, 2019 which was filed on March 31,

preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of

the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

makes these estimates using the best information available at the time the estimates are made.

Actual results could differ from

those estimates.

of Consolidation

accompanying consolidated financial statements include the Company and its wholly owned subsidiaries and controlled VIEs.

significant inter-company accounts and transactions have been eliminated in the consolidation.

to Accounting Standards Codification Topic 810 “Consolidation”

(“ASC 810”), the Company is required to

include in its consolidated financial statements the financial statements of its variable interest entities (“VIEs”).

ASC 810 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE

or is entitled to receive a majority of the VIE’s residual returns.

VIEs are those entities in which a company, through

contractual arrangements, bears the risk of, and enjoys the rewards normally associated with ownership of the entity, and therefore

the company is the primary beneficiary of the entity.

on the various Contractual Agreements, the Company is able to exercise control over the VIEs, and to obtain the full economic

The terms of the exclusive option agreement are currently exercisable and legally enforceable under PRC laws and regulations.

The minimum amount of consideration permitted by the applicable PRC law to exercise the option does not represent a financial

barrier or disincentive for the Company to exercise its rights under the exclusive option agreement.

A simple majority vote of

the Company’s board of directors is required to pass a resolution to exercise its rights under the exclusive option agreement,

for which consent of the shareholder of VIEs is not required.

Therefore, this gives the Company the power to direct the activities

that most significantly impact VIEs’

economic performance.

The Company’s ability to exercise effective control, together with the consulting service agreements

and the equity pledge agreements, give the Company the rights to receive substantially all of the economic benefits from VIEs in

consideration for the services provided by its wholly owned subsidiaries in China.

Accordingly, as the primary beneficiary of VIEs

and in accordance with U.S.

GAAP, Joway Shengshi, Joway Technology, Joway Decoration, and Shengtang Trading, as VIEs of Junhe Consulting,

has been consolidated in the Company’s financial statements.

Sales from Joway Shengshi, Joway Technology, Joway Decoration,

and Shengtang Trading are included in the Company’s total sales, their incomes or losses from operations are consolidated

with the Company’s, and the Company’s net income or loss includes net income or loss from Joway Shengshi, Joway Technology,

Joway Decoration, and Shengtang Trading.

Foreign Currency Translation

The accompanying consolidated financial

statements are presented in USD.

The Company’s ability to exercise effective control, together

with the consulting service agreements and the equity pledge agreements, give the Company the rights to receive substantially

all of the economic benefits from VIEs in consideration for the services provided by its wholly owned subsidiaries in China.

as the primary beneficiary of VIEs and in accordance with U.S.

GAAP, Joway Shengshi, Joway Technology, Joway Decoration, and Shengtang

Trading, as VIEs of Junhe Consulting, has been consolidated in the Company’s financial statements.

Sales from Joway Shengshi,

Joway Technology, Joway Decoration, and Shengtang Trading are included in the Company’s total sales, their incomes or losses

from operations are consolidated with the Company’s, and the Company’s net income or loss includes net income or loss

from Joway Shengshi, Joway Technology, Joway Decoration, and Shengtang Trading.

Currency Translation

accompanying consolidated financial statements are presented in USD.

The functional currency of the Company is RMB.

The consolidated financial statements are translated

into United States dollars from RMB at period-end exchange rates as to assets and liabilities and average exchange rates as to

revenues and expenses.

Equity accounts are translated at their historical exchange rates when the equity transactions occurred.

The consolidated

financial statements are translated into United States dollars from RMB at period-end exchange rates as to assets and liabilities

and average exchange rates as to revenues and expenses.

Equity accounts are translated at their historical exchange rates when

the equity transactions occurred.

The resulting transaction adjustments are recorded as a component of stockholders’

Gains and losses from foreign

currency transactions are included in net income.

For the six months ended

For the year ended

Gains and losses from foreign currency transactions are included in net income.

the nine months ended

September 30,

ended December 31,

Period ended RMB:

1 unchanged sentence

USD Exchange rate

The RMB is not freely convertible into

foreign currency and all foreign exchange transactions must take place through authorized institutions.

No representation is made

that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.

Foreign currency translation adjustments

have been reported as comprehensive income (loss) in the consolidated financial statements and totaled $1,436 and $(90,110) for

the three months ended June 30, 2020 and 2019, respectively, and $(42,691) and $13,670 for the six months ended June 30, 2020 and

2019, respectively.

Other Comprehensive Income

Other comprehensive income is defined as

the change in equity during the period from transactions and other events, excluding the changes resulting from investments by

owners and distributions to owners, and is not included in the computation of income tax expense or benefit.

Accumulated other

comprehensive income represents the accumulated balance of foreign currency translation adjustments.

Concentrations of Credit Risk

The Company’s operations are carried

out in the PRC.

Accordingly, the Company’s business, financial condition and results of operations may be influenced by the

political, economic and legal environment in the PRC, and by the general state of the PRC’s economy.

The Company’s

operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North

The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations,

anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

instruments which potentially subject the Company to concentrations of credit risk consist principally of cash.

Substantially all

of the Company’s cash is maintained with state-owned banks within the PRC, and no deposits are covered by insurance.

Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

Fair Value of Financial Instruments

Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“ASC”) 820 establishes a three-tier fair value hierarchy, which prioritizes the

inputs used in measuring fair value as follows:

Level 1—defined as observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable;

Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The carrying amounts reported in the balance

sheets for cash, accounts receivable, other receivable, accounts payable, other payable, and amounts due from related parties generally

approximate their fair market values based on the short-term maturity of these instruments.

RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions.

No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.

currency translation adjustments have been reported as comprehensive income (loss) in the consolidated financial statements and

totalled $103,625 and $(105,948) for the three months ended September 30, 2020 and 2019, respectively, and $60,934 and $(92,278)

for the nine months ended September 30, 2020 and 2019, respectively.

Comprehensive Income

comprehensive income is defined as the change in equity during the period from transactions and other events, excluding the changes

resulting from investments by owners and distributions to owners, and is not included in the computation of income tax expense

Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments.

Concentrations

of Credit Risk

Company's operations are carried out in the PRC.

Accordingly, the Company's business, financial condition and results of operations

may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC's economy.

The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with

companies in North America.

The Company's results may be adversely affected by changes in governmental policies with respect to

laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation,

among other things.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally

Substantially all of the Company’s cash is maintained with state-owned banks within the PRC, and no deposits are

covered by insurance.

The Company has not experienced any losses in such accounts and believes it is not exposed to any risks

on its cash in bank accounts.

Value of Financial Instruments

Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 establishes a three-tier

fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

1—defined as observable inputs such as quoted prices in active markets for identical assets or liabilities;

2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable;

3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its

own assumptions.

carrying amounts reported in the balance sheets for cash, accounts receivable, other receivable, accounts payable, other payable,

and amounts due from related parties generally approximate their fair market values based on the short-term maturity of these

ASC 825-10 “Financial Instruments”

allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option).

fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs.

the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings

at each subsequent reporting date.

The Company did not elect to apply the fair value option to any outstanding instruments.

For financial reporting purposes, the Company

considers all highly liquid financial instruments with an original maturity of three months or less to be cash equivalents.

Company had no cash equivalents at any point during the period of the financial statements presented.

Balances at financial institutions

or state-owned banks within the PRC are not covered by insurance.

The Company has not experienced any losses in such accounts and

believes it is not exposed to any significant risks on its cash in bank accounts.

Accounts Receivable

Accounts receivable are presented net of

an allowance for doubtful accounts.

The Company maintains allowances for doubtful accounts for estimated losses.

On a periodic

basis, the Company reviews the composition of the accounts receivable and analyzes historical bad debts, customer concentrations,

customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these

allows entities to voluntarily choose to measure certain financial

assets and liabilities at fair value (fair value option).

The fair value option may be elected on an instrument-by-instrument

basis and is irrevocable, unless a new election date occurs.

If the fair value option is elected for an instrument, unrealized

gains and losses for that instrument should be reported in earnings at each subsequent reporting date.

The Company did not elect

to apply the fair value option to any outstanding instruments.

financial reporting purposes, the Company considers all highly liquid financial instruments with an original maturity of three

months or less to be cash equivalents.

The Company had no cash equivalents at any point during the period of the financial statements

Balances at financial institutions or state-owned banks within the PRC are not covered by insurance.

The Company has

not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.

receivable are presented net of an allowance for doubtful accounts.

The Company maintains allowances for doubtful accounts for

estimated losses.

On a periodic basis, the Company reviews the composition of the accounts receivable and analyzes historical

bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns

to evaluate the adequacy of these allowances.

Accounts are written off after exhaustive efforts at collection.

As of June 30, 2020 and December 31, 2019, based on

a review of its outstanding balances, the Company allowance $2,553 and $2,591 for doubtful accounts, respectively.

Inventories are stated at the lower of

cost, as determined by the specific identification method on contract level (for each individual contract, inventories cost flow

are determined by weighted-average method), or the net realizable value, which is determined on selling prices less any further

costs expected to be incurred for completion and disposal.

The Company regularly evaluates the composition of its inventories to

identify slow-moving and obsolete inventories to determine whether a valuation allowance is required.

As of June 30, 2020 and December

31, 2019, the Company recorded $105,435 and $106,997 for inventory valuation allowance, respectively.

Advances to Suppliers

As of September

30, 2020 and December 31, 2019, the Company allowance $2,654 and $2,591 for doubtful accounts, respectively.

are stated at the lower of cost, as determined by the specific identification method on contract level (for each individual contract,

inventories cost flow are determined by weighted-average method), or the net realizable value, which is determined on selling

prices less any further costs expected to be incurred for completion and disposal.

The Company regularly evaluates the composition

of its inventories to identify slow-moving and obsolete inventories to determine whether a valuation allowance is required.

of September 30, 2020 and December 31, 2019, the Company recorded $109,606 and $106,997 for inventory valuation allowance, respectively.

Advances to suppliers represent the cash

2 unchanged sentences

and delivery.

The amounts advanced under such arrangements totaled $87,146 and $62,674 as of June 30, 2020 and December 31, 2019,

The amounts advanced under such arrangements totalled $57,179 and $62,674 as of September 30, 2020 and December 31,

2019, respectively.

Property, Plant, and Equipment

Property, plant and equipment are stated

at cost less accumulated depreciation, and include expenditures that substantially increase the useful lives of existing assets.

Depreciation is computed using the straight-line

method over the estimated useful lives of the assets.

Plant, and Equipment

plant and equipment are stated at cost less accumulated depreciation, and include expenditures that substantially increase the

useful lives of existing assets.

is computed using the straight-line method over the estimated useful lives of the assets.

Estimated useful lives are as follows:

1 unchanged sentence

Office furniture and equipment

The cost and related accumulated depreciation

of assets sold or otherwise retired are eliminated from the accounts, and any gain or loss is included in the consolidated statements

of operations.

Maintenance, repairs and minor renewals are charged directly to expenses as incurred.

Significant renewals and betterment

to buildings and equipment are capitalized.

Leasehold improvements are depreciated over the lesser of the useful life or the life

of the lease.

Intangible Assets

Intangible assets mainly consist of land

All land located in the PRC is owned by the government and cannot be sold to any individual or company.

rights granted to the Company are being amortized using the straight-line method over the lease term of 50 years.

Other intangible

assets are software programs that are amortized over their estimated useful life of 10 years.

Impairment of Long-lived Assets

cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts, and any gain or

loss is included in the consolidated statements of operations.

Maintenance, repairs and minor renewals are charged directly to

expenses as incurred.

Significant renewals and betterment to buildings and equipment are capitalized.

Leasehold improvements are

depreciated over the lesser of the useful life or the life of the lease.

assets mainly consist of land use rights.

All land located in the PRC is owned by the government and cannot be sold to any individual

The land use rights granted to the Company are being amortized using the straight-line method over the lease term

Other intangible assets are software programs that are amortized over their estimated useful life of 10 years.

of Long-lived Assets

Long-lived assets of the Company are reviewed

1 unchanged sentence

considers assets to be impaired if the carrying value exceeds the future projected cash flows from the related operations.

Company also re-evaluates the periods of depreciation and amortization to determine whether subsequent events and circumstances

warrant revised estimates of useful lives.

The Company did not record any impairment loss for the six months ended June 30, 2020

Revenue Recognition

The Company recognizes revenue when persuasive

evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable

and collectability is reasonably assured.

With respect to sales of product to both

franchisee and non-franchisee customers, the Company prepares product shipments upon the receipt of a customer’s purchase

Sales prices are based on fixed price lists that are different depending on whether the price list is for a franchisee customer

or for non-franchisee customers.

Company also reviewed the periods of depreciation and amortization to determine whether subsequent events and circumstances warrant

revised estimates of useful lives.

The Company did not record any impairment loss for the nine months ended September 30, 2020

Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered,

the purchase price is fixed or determinable and collectability is reasonably assured.

respect to sales of product to both franchisee and non-franchisee customers, the Company prepares product shipments upon the receipt

of a customer’s purchase order.

Sales prices are based on fixed price lists that are different depending on whether the

price list is for a franchisee customer or for non-franchisee customers.

The Company recognizes revenue when the product is shipped.

The Company does not sell product

to any customers with a right of return as defined in ASC 605-15-25-4.

Sales are presented net of value added tax (“VAT”).

For Tourmaline Wellness House sales, the

Company recognizes revenue under the completed contract method.

Customers contact the Company with requests to construct a Wellness

The Company and the customer enter into a contract, at which time the customer pays a deposit of at least one-half of the

A contract is considered completed when all significant costs have been incurred and the project has been accepted

by the customer.

The contracts have a place for the customer to sign indicating their acceptance of the completed Wellness House.

The Company does not sell product to any customers with a right of return.

Sales are presented net of value added tax (VAT).

Tourmaline Wellness House sales, the Company recognizes revenue under the completed contract method.

Customers contact the Company

with requests to construct a Wellness House.

The Company and the customer enter into a contract, at which time the customer pays

a deposit of at least one-half of the sales price.

A contract is considered completed when all significant costs have been incurred

and the project has been accepted by the customer.

The contracts have a place for the customer to sign indicating their acceptance

of the completed Wellness House.

At this time the customer will also pay any remaining balance on the contract.

The Company recognizes the full contract revenue

at this point.

The Company recognizes

the full contract revenue at this point.

Contract costs consist primarily of materials and labor costs.

The construction period of a Wellness House generally

does not exceed five days.

Shipping Costs

The construction period

of a Wellness House generally does not exceed five days.

Shipping costs are included in selling

expenses and totaled $11,189 and $11,575 for the three months ended June 30, 2020 and 2019, respectively, and $15,078 and $28,971

for the six months ended June 30, 2020 and 2019, respectively.

The Company is governed by the Income Tax

Law and associated legislations of the PRC.

The Company accounts for income taxes in accordance with FASB ASC 740 “Income

Taxes”, which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for

the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns.

ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax

Realization of deferred tax assets is dependent upon future earnings, if any, of which the timing and amount are uncertain.

According to ASC 740, the evaluation of

a tax position is a two-step process.

The first step is to determine whether it is more likely than not that a tax position will

be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that

The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of

benefit to be recognized in the financial statements.

A tax position is measured at the largest amount of benefit that is greater

than 50% likelihood of being realized upon ultimate settlement.

Tax positions that previously failed to meet the more-likely-than-not

recognition threshold should be recognized in the first subsequent period in which the threshold is met.

Previously recognized

tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting

period in which the threshold is no longer met.

ASC 740 also provides guidance on de-recognition, classification, interest and

penalties, accounting in interim periods, disclosures, and transition.

Basic and Diluted Earnings per Share

The Company reports earnings per share

in accordance with FASB ASC 260 “Earnings per share”.

The Company’s basic earnings per share are computed using

the weighted average number of shares outstanding for the periods presented.

Diluted earnings per share are computed based on the

assumption that any dilutive options or warrants were converted or exercised.

Dilution is computed by applying the treasury stock

Under this method, the Company’s outstanding stock warrants are assumed to be exercised, and funds thus obtained

were assumed to be used to purchase common stock at the average market price during the period.

There were no dilutive instruments

outstanding during the six months periods ended June 30, 2020 and 2019.

Segment Information

The Company follows FASB ASC 280-Segment

Reporting, which requires that companies disclose segment data based on how management makes decision about allocating resources

to segments and evaluating their performance.

For the six months ended June 30, 2020

and the year ended December 31, 2019, management has determined that the Company is operating in three reportable business segments,

(1) Healthcare Knit Goods Series, (2) Daily Healthcare and Personal Care Series, and (3) Wellness House and Activated Water Machine

The Company’s reportable segments are strategic business units that offer different products.

They are managed separately

based on the fundamental differences in their operations.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued a new

standard to simplify the accounting for income taxes.

The guidance eliminates certain exceptions related to the approach for intraperiod

tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities

for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries.

also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting

for transactions that result in a step-up in the tax basis of goodwill.

We believe that adoption of this new standard will not

have material impact in our consolidated financial statements, including accounting policies, processes, and systems.

In January 2017, the FASB issued ASU No.

expenses and totalled $6,926 and $11,942 for the three months ended September 30, 2020 and 2019, respectively, and $22,004 and

$40,913 for the nine months ended September 30, 2020 and 2019, respectively.

Company is governed by the Income Tax Law and associated legislations of the PRC.

The Company accounts for income taxes in accordance

with FASB ASC 740 “Income Taxes”, which is an asset and liability approach that requires the recognition of deferred

tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial

statements or tax returns.

ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood

of realization of deferred tax assets.

Realization of deferred tax assets is dependent upon future earnings, if any, of which

the timing and amount are uncertain.

to ASC 740, the evaluation of a tax position is a two-step process.

The first step is to determine whether it is more likely than

not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based

on the technical merits of that position.

The second step is to measure a tax position that meets the more-likely-than-not threshold

to determine the amount of benefit to be recognized in the financial statements.

A tax position is measured at the largest amount

of benefit that is greater than 50% likelihood of being realized upon ultimate settlement.

Tax positions that previously failed

to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold

Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the

first subsequent financial reporting period in which the threshold is no longer met.

ASC 740 also provides guidance on de-recognition,

classification, interest and penalties, accounting in interim periods, disclosures, and transition.

and Diluted Earnings per Share

Company reports earnings per share in accordance with FASB ASC 260 “Earnings per share”.

The Company’s basic

earnings per share are computed using the weighted average number of shares outstanding for the periods presented.

Diluted earnings

per share are computed based on the assumption that any dilutive options or warrants were converted or exercised.

computed by applying the treasury stock method.

Under this method, the Company’s outstanding stock warrants are assumed

to be exercised, and funds thus obtained were assumed to be used to purchase common stock at the average market price during the

There were no dilutive instruments outstanding during the nine month periods ended September 30, 2020 and 2019.

Company follows FASB ASC 280-Segment Reporting, which requires that companies disclose segment data based on how management makes

decision about allocating resources to segments and evaluating their performance.

the nine months ended September 30, 2020 and the year ended December 31, 2019, management has determined that the Company is operating

in three reportable business segments, (1) Healthcare Knit Goods Series, (2) Daily Healthcare and Personal Care Series, and (3)

Wellness House and Activated Water Machine Series.

The Company's reportable segments are strategic business units that offer different

They are managed separately based on the fundamental differences in their operations.

Issued Accounting Pronouncements

January 2017, the FASB issued ASU No.

2017-04, Simplifying the Test for Goodwill Impairment.

The guidance removes Step 2 of the goodwill impairment test, which requires

a hypothetical purchase price allocation.

A goodwill impairment will now be the amount by which a reporting unit’s carrying

value exceeds its fair value, not to exceed the carrying amount of goodwill.

The guidance should be adopted on a prospective basis

for the annual or any interim goodwill impairment tests beginning after December 15, 2019.

Early adoption is permitted for interim

or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The guidance removes Step 2 of the

goodwill impairment test, which requires a hypothetical purchase price allocation.

A goodwill impairment will now be the amount

by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15,

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1,

The Company adopted the standard in 2019.

Adoption of the standard did not have a significant impact on the Company’s consolidated statement of earnings in 2019.

In June 2018, the FASB issued ASU 2018-07,

“Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting,”

which simplifies the

accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments

to nonemployees with the requirements for share-based payments granted to employees.

ASU 2018-07 becomes effective for the Company

on January 1, 2019.

Adoption of the standard did not have a significant impact on the Company’s

consolidated statement of earnings in 2019.

June 2018, the FASB issued ASU 2018-07, “Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment

Accounting,”

which simplifies the accounting for share-based payments granted to nonemployees for goods and services and

aligns most of the guidance on such payments to nonemployees with the requirements for share-based payments granted to employees.

ASU 2018-07 becomes effective for the Company on January 1, 2019.

Early adoption is permitted.

The Company adopted the standard in 2019.

Adoption of the standard did not have

a significant impact on the Company’s consolidated statement of earnings in 2019.

In February 2016, the FASB issued ASU No.

The Company adopted the standard

Adoption of the standard did not have a significant impact on the Company’s consolidated statement of earnings

February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842).

The standard outlined a comprehensive lease accounting model that superseded the previous lease guidance

and required lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms greater

than 12 months.

The guidance also changed the definition of a lease and expanded the disclosure requirements of lease arrangements.

The standard outlined a comprehensive lease accounting model

that superseded the previous lease guidance and required lessees to recognize lease liabilities and corresponding right-of-use

assets for all leases with lease terms greater than 12 months.

The guidance also changed the definition of a lease and expanded

the disclosure requirements of lease arrangements.

The Company adopted the standard on December 15, 2019.

Adoption of the standard did not have a significant impact on the Company’s

consolidated statement of earnings in 2019.

In June 2016, the FASB issued ASU No.

Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets

held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

This replaces

the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15,

Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning

after December 15, 2018.

Adoption of the standard

did not have a significant impact on the Company’s consolidated statement of earnings in 2019.

June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure

all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions,

and reasonable and supportable forecasts.

This replaces the existing incurred loss model and is applicable to the measurement

of credit losses on financial assets measured at amortized cost.

This guidance is effective for fiscal years, and interim periods

within those fiscal years, beginning after December 15, 2019.

Early application will be permitted for all entities for fiscal

years, and interim periods within those fiscal years, beginning after December 15, 2018.

The Company adopted the standard in 2019.

Adoption of the standard did not have a significant impact on

the Company’s consolidated statement of earnings in 2019.

Other recent accounting pronouncements

issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC

did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial

GOING CONCERN

The accompanying unaudited condensed

financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity

of operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the accompanying

unaudited condensed financial statements, the Company has an accumulated deficit of approximately $5,800,000 and a working capital

deficit of approximately $1,189,000 at June 30, 2020.

In addition, the Company continues to generate operating losses and negative

cash flows from operations.

This raises substantial doubt about the Company’s ability to continue as a going concern.

ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going

Management intends to provide the Company with additional loans as needed.

Management feels these actions provide the

opportunity for the Company to continue as a going concern.

Adoption of the standard did not have a significant impact on the Company’s consolidated statement of earnings in 2019.

recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified

Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present

or future consolidated financial statements.

ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:

receivable consisted of the following:

September 30,

Accounts receivable

1 unchanged sentence

Accounts receivable, net

As of June 30, 2020 and December

31, 2019, the Company allowance $2,553 and $2,591 for doubtful accounts, respectively.

Inventories consisted of the following:

of the periods presented, the Company allowance $2,654 and $2,591 for doubtful accounts, respectively.

consisted of the following:

September 30,

Raw materials

3 unchanged sentences

Inventory, net

Low value consumables represent low priced

and easily worn articles and are amortized on equal-split amortization method.

Pursuant to this method, half value of the low value

consumable should be amortized once used and the remaining half value should be amortized when disposed of.

As of June 30, 2020 and December 31, 2019,

the Company recognized $105,435 and $106,997, respectively, as a reserve for impairment loss from inventory.

NOTE 6 –

PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

value consumables represent low priced and easily worn articles and are amortized on equal-split amortization method.

to this method, half value of the low value consumable should be amortized once used and the remaining half value should be amortized

when disposed of.

of September 30, 2020 and December 31, 2019, the Company recognized $109,606 and $106,997, respectively, as a reserve for impairment

loss from inventory.

PROPERTY, PLANT AND EQUIPMENT

plant and equipment consisted of the following:

September 30,

Operating Equipment

2 unchanged sentences

Property, plant and equipment, net

Depreciation expense for the three months

ended June 30, 2020 and 2019 amounted to $97,107 and $102,432, respectively, and for the six months ended June 30, 2020 and 2019

amounted to $196,237 and $208,149, respectively.

NOTE 7 –

Intangible assets consisted of the following:

expense for the three months ended September 30, 2020 and 2019 amounted to $95,847 and $99,916, respectively, and for the nine

months ended September 30, 2020 and 2019 amounted to $292,084 and $308,065, respectively.

INTANGIBLE ASSETS

assets consisted of the following:

September 30,

Land use rights

2 unchanged sentences

Intangible assets, net

Amortization expense of intangible assets

for the three months ended June 30, 2020 and 2019 was $2,963 and $4,804, respectively, and for the six months ended June 30, 2020

and 2019 amounted to $7,134 and $9,672, respectively.

The estimated amortization expense for

the next five years is as follows:

Estimated amortization expense for

the year ending December 31,

NOTE 8 –

PARTY TRANSACTIONS

Payables due to related parties

consist of the following:

expense of intangible assets for the three months ended September 30, 2020 and 2019 was $2,993 and $4,687, respectively, and for

the nine months ended September 30, 2020 and 2019 amounted to $10,127 and $14,359, respectively.

estimated amortization expense for the next five years is as follows:

Estimated amortization expense for the year ending December

RELATED PARTY TRANSACTIONS

due to related parties consist of the following:

September 30,

with Shenyang Joway

Joway Industrial Development Co., Ltd.

(“Shenyang Joway”) was formed in 2005

in Shenyang, China by Mr.

Jinghe Zhang and three other individuals.

Zhang holds more

than 50% of the equity in Shenyang Joway.

Shenyang Joway was in the business of marketing

and distributing clothing and related products to other companies.

Through 2009 Shenyang

Joway had ceased operations, although it still existed as a legal entity.

Shenyang Joway

was cancelled in 2019.

(“Shenyang Joway”) was formed in 2005 in Shenyang, China by Mr.

and three other individuals.

Zhang holds more than 50% of the equity in Shenyang Joway.

Shenyang Joway was in the business

of marketing and distributing clothing and related products to other companies.

Through 2009 Shenyang Joway had ceased operations,

although it still existed as a legal entity.

Shenyang Joway was cancelled in 2019.

May 7, 2007, the Company’s subsidiary Joway Shengshi entered into an agreement

9 unchanged sentences

and Joway Technology, which was paid off by 2019.

For the six months ended June 30, 2020

For the nine months ended September

30, 2020 and 2019, the Company repaid $0 and $118,458 of these advances, respectively.

30, 2020, the total unpaid principal balance due Shenyang Joway for advances was $0.

Transactions with Jinghe Zhang

As of September 30, 2020, the total unpaid principal balance due Shenyang Joway for advances

with Jinghe Zhang

December 1, 2009, the Company, through its subsidiary Joway Shengshi, entered into a

5 unchanged sentences

the expiration dates of the patents.

● On May 10, 2007, Joway Shengshi entered into a cash advance

agreement with Jinghe Zhang, the Company’s President, Chief Executive Officer and director.

Pursuant to the agreement, Jinghe

Zhang agreed to advance operating capital to Joway Shengshi.

The advances are interest free, unsecured, and have no specified repayment

The agreement is valid throughout Joway Shengshi’s term of operation.

During the period beginning May 17, 2007 (inception

of Joway Shengshi) through June 30, 2020, Joway Shengshi received cash advances in the aggregate principal amount of $6,367,759

May 10, 2007, Joway Shengshi entered into a cash advance agreement with Jinghe Zhang,

the Company’s President, Chief Executive Officer and director.

Pursuant to the

agreement, Jinghe Zhang agreed to advance operating capital to Joway Shengshi.

are interest free, unsecured, and have no specified repayment terms.

The agreement is

valid throughout Joway Shengshi’s term of operation.

the period beginning May 17, 2007 (inception of Joway Shengshi) through September 30,

2019, Joway Shengshi received cash advances in the aggregate principal amount of $6,548,144

from Jinghe Zhang of which $4,632,811 has been repaid.

For the six months ended June 30, 2020 and 2019, the Company received $254,433

and $663,356 of these advances, respectively.

As of June 30, 2020, the total unpaid principal balance due Jinghe Zhang for advances

For the nine months ended September

30, 2020 and 2019, the Company received $434,818 and $700,766 of these advances, respectively.

As of September 30, 2020, the total unpaid principal balance due Jinghe Zhang for advances

was $1,915,333.

The amounts owed to related parties are

non-interest bearing and have no specified repayment terms.

NOTE 9 –

The Company operations in the People’s

Republic of China are subject to the Income Tax Law of the People’s Republic of China.

Pursuant to the PRC Income Tax Laws,

the Company is subject to the Enterprise Income Tax (“EIT”) which is generally a statutory rate of 25% beginning January

2008, on income as reported in its statutory financial statements after appropriate tax adjustments.

The table below summarizes the differences

between the PRC statutory federal rate and the Company’s effective tax rate:

For the six months ended

amounts owed to related parties are non-interest bearing and have no specified repayment terms.

Company operations in the People’s Republic of China are subject to the Income Tax Law of the People’s Republic of

Pursuant to the PRC Income Tax Laws, the Company is subject to the Enterprise Income Tax (“EIT”) which is generally

a statutory rate of 25% beginning January 2008, on income as reported in its statutory financial statements after appropriate

tax adjustments.

table below summarizes the differences between the PRC statutory federal rate and the Company’s effective tax rate:

For the nine months ended September 30,

Tax computed at China statutory rates

1 unchanged sentence

Effective rate

NOTE 10 –

Pursuant to the laws and regulations of

the PRC, annual income of the Company’s subsidiaries is required to be partly allocated to the statutory reserves funds after

the payment of the PRC income taxes.

The allocation to the statutory reserves funds should be at least 10% of income after tax

until the reserves reaches 50% of the entities’

STATUTORY RESERVES

to the laws and regulations of the PRC, annual income of the Company’s subsidiaries is required to be partly allocated to

the statutory reserves funds after the payment of the PRC income taxes.

The allocation to the statutory reserves funds should

be at least 10% of income after tax until the reserves reaches 50% of the entities’

registered capital or members’

The reserve funds are not transferable

to the Company in the form of cash dividends, loans or advances.

Thus the reserve funds are not available for distribution except

in liquidation.

As of June 30, 2020, the Company had allocated $354,052 to statutory reserves.

In 2020 and 2019, the Company operated

in three reportable business segments:

(1) Healthcare Knit Goods Series, (2) Daily Healthcare and Personal Care Series and (3)

Wellness House and Activated Water Machine Series.

The Company's reportable segments are strategic business units that offer different

The reserve funds are not transferable to the Company in the form of cash dividends, loans or advances.

Thus the reserve

funds are not available for distribution except in liquidation.

As of September 30, 2020, the Company had allocated $354,052 to

statutory reserves.

2020 and 2019, the Company operated in three reportable business segments:

(1) Healthcare Knit Goods Series, (2) Daily Healthcare

and Personal Care Series and (3) Wellness House and Activated Water Machine Series.

The Company's reportable segments are strategic

business units that offer different products.

They are managed separately based on the fundamental differences in their operations.

Information with respect to these

reportable business segments is as follows:

For the three months ended June 30, 2020

Information with respect to these reportable business segments is as follows:

the three months ended September 30, 2020

Loss from operations

Depreciation and amortization

Healthcare Knit Goods Series

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Unallocated Assets

For the three months ended June 30, 2019

the three months ended September 30, 2019

Loss from operations

Depreciation and amortization

Healthcare Knit Goods Series

3 unchanged sentences

Other Loss, net

Income tax benefits

Unallocated Assets

For the six months ended June 30, 2020

the nine months ended September 30, 2020

Loss from operations

Depreciation and amortization

Healthcare Knit Goods Series

5 unchanged sentences

Unallocated Assets

For the six months ended June 30, 2019

the nine months ended September 30, 2019

Loss from operations

Depreciation and amortization

Healthcare Knit Goods Series

3 unchanged sentences

Other Loss, net

Income tax benefits

Unallocated Assets

NOTE 12 - FRANCHISE REVENUES

11 - FRANCHISE REVENUES

The Company enters into franchising agreements

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for terms of three years and are renewable at the mutual agreement of both parties.

The franchising agreements are cancelable at

the Company’s discretion if franchisees violate the terms of the agreements.

The following is a breakdown of revenue

between franchise and non-franchise customers:

For the three months ended

For the six months ended

The franchising agreements are cancellable

at the Company’s discretion if franchisees violate the terms of the agreements.

following is a breakdown of revenue between franchise and non-franchise customers:

For the three months ended September 30,

For the nine months ended September 30,

Sales to franchise customers

Sales to non-franchise customers

Management’s Discussion

and Analysis of Financial Condition and Results of Operation.

The following discussion and analysis

should be read in conjunction with the consolidated financial statements and notes thereto included in Item 1 of this Quarterly

Report on Form 10-Q and with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained

in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2020.

FORWARD-LOOKING STATEMENTS:

Certain statements made in this report

may constitute “forward-looking statements on our current expectations and projections about future events.”

forward-looking statements involve known or unknown risks, uncertainties, and other factors that may cause our actual results,

performance, or achievements to be materially different from any future results, performance or achievements expressed or implied

by the forward-looking statements.

In some cases you can identify forward-looking statements by some words such as “may,”

Management’s Discussion and Analysis of Financial Condition and Results of Operation.

following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto included

in Item 1 of this Quarterly Report on Form 10-Q and with Management’s Discussion and Analysis of Financial Condition and

Results of Operations contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31,

FORWARD-LOOKING

statements made in this report may constitute “forward-looking statements on our current expectations and projections about

future events.”

These forward-looking statements involve known or unknown risks, uncertainties, and other factors that may

cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements

expressed or implied by the forward-looking statements.

In some cases you can identify forward-looking statements by some words

such as “may,”

“should,”

8 unchanged sentences

and similar expressions.

These statements are based on our

current beliefs, expectations, and assumptions, and are subject to a number of risks and uncertainties.

Although we believe that

the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity,

performance or achievements.

These forward-looking statements are made as of the date of this report, and we assume no obligation

to update these forward-looking statements whether as a result of new information, future events, or otherwise, other than as required

In light of these assumptions, risks, and uncertainties, the forward-looking events discussed in this report might not

occur and actual results and events may vary significantly from those discussed in the forward-looking statements.

We develop, manufacture, market, distribute,

and sell products, including knit goods, daily healthcare and personal care products, and wellness house and activated water machine

products, that are coated, embedded or filled with tourmaline.

Most of our products, such as clothing, bedding, and mattresses

are purchased as finished products which we then coat and/or infuse with liquid or granular tourmaline using one or more of our

manufacturing techniques.

We conduct all of our operations in Tianjin City, China and distribute most of our products to more than

200 franchisees in China.

These statements

are based on our current beliefs, expectations, and assumptions, and are subject to a number of risks and uncertainties.

we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results,

levels of activity, performance or achievements.

These forward-looking statements are made as of the date of this report, and

we assume no obligation to update these forward-looking statements whether as a result of new information, future events, or otherwise,

other than as required by law.

In light of these assumptions, risks, and uncertainties, the forward-looking events discussed in

this report might not occur and actual results and events may vary significantly from those discussed in the forward-looking statements.

develop, manufacture, market, distribute, and sell products, including knit goods, daily healthcare and personal care products,

and wellness house and activated water machine products, that are coated, embedded or filled with tourmaline.

Most of our products,

such as clothing, bedding, and mattresses are purchased as finished products which we then coat and/or infuse with liquid or granular

tourmaline using one or more of our manufacturing techniques.

We conduct all of our operations in Tianjin City, China and distribute

most of our products to more than 100 franchisees in China.

Our franchisees, in turn, sell the products to their customers.

All of our revenues to date have been

generated by sales to customers located in the PRC.

Beginning in 2009, we began to develop

a franchise network to distribute our healthcare knit goods, daily healthcare products and personal care products.

Through these

franchisees, we were able to significantly increase sales of our healthcare knit goods segment and daily healthcare and personal

care segment.

In 2010, we began distributing our wellness house and activated water machine products through our franchise network.

We are a holding company with no material

operations of our own.

All of our operations are conducted through Joway Shengshi and its three subsidiaries, Joway Technology,

Joway Decoration and Shengtang Trading.

Joway Shengshi engages in the manufacture and distribution of tourmaline health-related

products such as knit goods, and daily healthcare and personal care products.

Joway Technology and Joway Decoration engage in the

manufacture and distribution of activated water machines and wellness houses.

We utilize our Shengtang Trading subsidiary to purchase

raw materials, which are then sold to Joway Shengshi and Joway Decoration.

As a holding company, our ability to pay

dividends and other cash distributions to our shareholders depends in part upon dividends and other distributions paid to us by

our PRC subsidiaries.

The amount of dividends paid by our PRC subsidiaries to us primarily depends on the service fees paid to

our PRC subsidiaries from Joway Shengshi and its subsidiaries, and, to a lesser degree, our PRC subsidiaries’

of our revenues to date have been generated by sales to customers located in the PRC.

in 2009, we began to develop a franchise network to distribute our healthcare knit goods, daily healthcare products and personal

care products.

Through these franchisees, we were able to significantly increase sales of our healthcare knit goods segment and

daily healthcare and personal care segment.

In 2010, we began distributing our wellness house and activated water machine products

through our franchise network.

are a holding company with no material operations of our own.

All of our operations are conducted through Joway Shengshi and its

three subsidiaries, Joway Technology, Joway Decoration and Shengtang Trading.

Joway Shengshi engages in the manufacture and distribution

of tourmaline health-related products such as knit goods, and daily healthcare and personal care products.

Joway Technology and

Joway Decoration engage in the manufacture and distribution of activated water machines and wellness houses.

We utilize our Shengtang

Trading subsidiary to purchase raw materials, which are then sold to Joway Shengshi and Joway Decoration.

a holding company, our ability to pay dividends and other cash distributions to our shareholders depends in part upon dividends

and other distributions paid to us by our PRC subsidiaries.

The amount of dividends paid by our PRC subsidiaries to us primarily

depends on the service fees paid to our PRC subsidiaries from Joway Shengshi and its subsidiaries, and, to a lesser degree, our

PRC subsidiaries’

retained earnings.

Conducting our operations through contractual arrangements with Joway Shengshi and its subsidiaries has a risk that we may lose

the power to direct the activities that most significantly affect the economic performance of Joway Shengshi and its subsidiaries,

which may result in our being unable to consolidate their financial results with our results and may impair our access to their

cash flow from operations and thereby reduce our liquidity.

Description of Selected Income Statement

We generate revenue from

sales of our Healthcare Knit goods Series, Daily Healthcare and Personal Care Series and Wellness House and Activated Water Machine

Cost of goods sold.

of goods sold consists of costs directly attributable to production, including the cost of raw materials, salaries for staff engaged

in production activity, electricity, depreciation, packing materials, and related expenses.

Operating expenses.

total operating expenses consist of sales and marketing expenses and general and administrative expenses.

Sales and marketing expenses

consist primarily of salaries and traveling expenses of our marketing department employees, transportation expenses, and advertising

General and administrative expenses consist primarily of salaries of our administrative department employees, payroll

taxes and benefits, general office expenses and depreciation.

Other (expense) income.

(expense) income consists primarily of interest income, investment income and bank service fee.

Income taxes.

According to the revised

Enterprise Income Tax Law effective as of January 1, 2008, the income tax rate of our PRC subsidiaries is generally 25%.

Health Industries Group Inc.

was established under the laws of the State of Nevada and is subject to U.S.

federal income tax and

Nevada annual reporting requirements.

Results of Operations

The following table sets forth certain

information regarding our results of operations.

For the three months ended

For the six months ended

Conducting our operations through contractual arrangements with Joway Shengshi and

its subsidiaries has a risk that we may lose the power to direct the activities that most significantly affect the economic performance

of Joway Shengshi and its subsidiaries, which may result in our being unable to consolidate their financial results with our results

and may impair our access to their cash flow from operations and thereby reduce our liquidity.

of Selected Income Statement Items

We generate revenue from sales of our Healthcare Knit goods Series, Daily Healthcare and Personal Care Series and Wellness

House and Activated Water Machine Series.

of goods sold.

Cost of goods sold consists of costs directly attributable to production, including the cost of raw materials,

salaries for staff engaged in production activity, electricity, depreciation, packing materials, and related expenses.

Our total operating expenses consist of sales and marketing expenses and general and administrative expenses.

and marketing expenses consist primarily of salaries and traveling expenses of our marketing department employees, transportation

expenses, and advertising expenses.

General and administrative expenses consist primarily of salaries of our administrative department

employees, payroll taxes and benefits, general office expenses and depreciation.

Our other expense consists primarily of interest income, investment income and bank service fee.

According to the revised Enterprise Income Tax Law effective as of January 1, 2008, the income tax rate of our PRC

subsidiaries is generally 25%.

Joway Health Industries Group Inc.

was established under the laws of the State of Nevada and is

subject to U.S.

federal income tax and Nevada annual reporting requirements.

of Operations

following table sets forth certain information regarding our results of operations.

For the three months ended September 30,

For the nine months ended September 30,

COST OF REVENUES

1 unchanged sentence

LOSS FROM OPERATIONS

OTHER EXPENSE, NET

OTHER INCOME (EXPENSE), NET

LOSS BEFORE INCOME TAXES

INCOME TAX BENEFITS

Business Segments

In 2020 and 2019, we operated in three

reportable business segments:

(1) Healthcare Knit Goods, (2) Daily Healthcare and Personal Care Products and (3) Wellness House

and Activated Water Machine Products.

The following table sets forth the contributions of each reportable business segment in dollars

and as a percent of revenue:

For the three months ended June 30, 2020

Wellness House

and Activated

Water Machine

2020 and 2019, we operated in three reportable business segments:

(1) Healthcare Knit Goods, (2) Daily Healthcare and Personal

Care Products and (3) Wellness House and Activated Water Machine Products.

The following table sets forth the contributions of

each reportable business segment in dollars and as a percent of revenue:

the three months ended September 30, 2020

Healthcare Knit Goods Series

Daily Healthcare and Personal Care Series

Wellness House and Activated Water Machine Series

COST OF REVENUES

1 unchanged sentence

LOSS FROM OPERATIONS

For the three months ended June 30, 2019

Wellness House

and Activated

Water Machine

the three months ended September 30, 2019

Healthcare Knit Goods Series

Daily Healthcare and Personal Care Series

Wellness House and Activated Water Machine Series

COST OF REVENUES

1 unchanged sentence

LOSS FROM OPERATIONS

For the six months ended June 30, 2020

Wellness House

and Activated

Water Machine

the nine months ended September 30, 2020

Healthcare Knit Goods Series

Daily Healthcare and Personal Care Series

Wellness House and Activated Water Machine Series

COST OF REVENUES

1 unchanged sentence

LOSS FROM OPERATIONS

For the six months ended June 30, 2019

Wellness House

and Activated

Water Machine

the nine months ended September 30, 2019

Healthcare Knit Goods Series

Daily Healthcare and Personal Care Series

Wellness House and Activated Water Machine Series

COST OF REVENUES

1 unchanged sentence

LOSS FROM OPERATIONS

For The Three Months Ended June 30,

2020 Compared to June 30, 2019

For the three months ended

June 30, 2020, revenue was $67,902 compared to $171,379 for the three months ended June 30, 2019, a decrease of $103,477 or 60.4%.

In 2020, the impact of COVID-19 on the Chinese economy seriously affected our business with implementation of restrictions at business

operations and city lockdowns.

Revenue from healthcare knit goods segment

decreased by $11,495 or 72.6% to $4,346 for the three months ended June 30, 2020 from $15,841 for the three months ended June 30,

This decrease was mainly due to the decrease in sales of our mattress products.

Our mattress products are our best-selling

products and were most affected by market fluctuations and stop working orders implemented by cities under the lockdown period

as COVID-19 swept China.

Revenue from daily healthcare and personal

care products decreased by $25,892 or 50.2% to $25,685 for the three months ended June 30, 2020 from $51,577 for the three months

ended June 30, 2019.

This was primarily due to the decrease in sales of most of our daily healthcare and personal care products

affected by industry downturn and almost of all cities under lockdown as COVID-19 swept China.

Revenue from wellness houses and activated

water machines decreased by $66,090 or 63.6% to $37,871 for the three months ended June 30, 2020 from $103,961 for the three months

ended June 30, 2019.

This decrease was mainly due to the decrease in the construction of our wellness house.

Cost of Goods Sold.

For the three

months ended June 30, 2020, cost of goods sold was $37,729 compared to $82,759 for the three months ended June 30, 2019, a decrease

of $45,030 or 54.4%.

This decrease was mainly due to the decrease in sales.

Cost of goods sold for healthcare knit

goods segment decreased to $2,091 for the three months ended June 30, 2020 from $4,523 for the three months ended June 30, 2019,

The Three Months Ended September 30, 2020 Compared to September 30, 2019

For the three months ended September 30, 2020, revenue was $77,289 compared to $158,516 for the three months ended September

30, 2019, a decrease of $81,227 or 51.2%.

This decrease was mainly due to the decrease in sales.

Cost of goods sold for the daily healthcare

and personal care segment decreased to $13,151 for the three months ended June 30, 2020 from $23,556 for the three months ended

June 30, 2019, a decrease of $10,405 or 44.2%.

This decrease was mainly due to the decrease in sales.

Cost of goods sold for our wellness house

and activated water machine segment decreased to $22,487 for the three months ended June 30, 2020 from $54,680 for the three months

ended June 30, 2019, a decrease of $32,193 or 58.9%.

This decrease was mainly due to the decrease in sales.

Gross profit.

Our gross profit

decreased by $58,447 or 66% to $30,173 for the three months ended June 30, 2020, compared to $88,620 for the three months ended

June 30, 2019.

This decrease was mainly due to the decrease in sales.

Our gross margin decreased from 51.7% for the three months

ended June 30, 2019 to 44.4% for the three months ended June 30, 2020.

This decrease was mainly due to our healthcare knit goods

Gross profit for the healthcare knit goods

segment decreased by $9,063 or 80.1% to $2,255 for the three months ended June 30, 2020 compared to $11,318 for the three months

ended June 30, 2019.

This decrease was mainly due to the decrease in sales.

The gross margins of healthcare knit goods segment

decreased from 71.4% for the three months ended June 30, 2019 to 51.9% for the three months ended June 30, 2020.

It was mainly

due to the increased proportion of products with higher gross margin.

Gross profit of daily healthcare and personal

care segment decreased by $15,487 or 55.3% to $12,534 for the three months ended June 30, 2020, compared to $28,021 for the three

months ended June 30, 2019.

This decrease was mainly due to the decrease in sales.

The gross margin of daily healthcare and personal

care segment decreased from 54.3% for the three months ended June 30, 2019 to 48.8% for the three months ended June 30, 2020.

Gross profit of the wellness house and

activated water machine segments decreased by $33,897 or 68.8% to $15,384 for the three months ended June 30, 2020, compared to

$49,281 for the three months ended June 30, 2019.

This decrease was mainly due to the decrease in sales.

The gross margin of our

wellness house and activated water machine segments decreased from 47.4% for the three months ended June 30, 2019 to 40.6% for

the three months ended June 30, 2020.

Operating expenses.

Our total operating

expenses consist of sales and marketing expenses and general and administrative expenses.

Our total operating expenses decreased

by $134,102 or 37.1%, from $361,087 for the three months ended June 30, 2019 to $226,985 for the three months ended June 30, 2020.

This decrease was mainly due to the decrease in travel expense and salary.

Operating expenses for healthcare knit goods segment

decreased by $8,004 or 35.5% to $14,528 for the three months ended June 30, 2020 from $22,532 for the three months ended June 30,

Operating expenses for daily healthcare and personal care segment decreased by $29,531 or 25.6% to $85,861 for the three

months ended June 30, 2020 from $115,392 for the three months ended June 30, 2019.

Operating expenses for our wellness house and

activated water machine segment decreased by $96,567 or 43.3% to $126,596 for the three months ended June 30, 2020 from $223,163

for the three months ended June 30, 2019.

Loss from operations.

of the foregoing, our loss from operations was $196,812 for the three months ended June 30, 2020, compared to $272,467 for the

three months ended June 30, 2019.

This was mainly due to the decrease in operating expenses.

Income taxes.

Our income taxes were

$0 for the three months ended June 30, 2020 and 2019, separately.

For the three months ended

June 30, 2020, our net loss was $197,097 compared to $272,550 for the three months ended June 30, 2019.

This was mainly due to

the decrease in operating expenses.

For the six months Ended June 30, 2020

Compared to June 30, 2019

For the six months ended

June 30, 2020, revenue was $82,118 compared to $310,250 for the six months ended June 30, 2019, a decrease of $228,132 or 73.5%.

This decrease was mainly due to the downturn of the health care industry in China affected by COVID-19.

Revenue from healthcare knit goods segment

decreased by $40,634, or 86.1% to $6,553 for the six months ended June 30, 2020 from $47,187 for the six months ended June 30,

This decrease was mainly due to the decrease in sales of our mattress products.

Our mattress products are our best-selling

products and were most affected by market fluctuations.

Revenue from daily healthcare and personal

care products decreased by $51,233 or 62.6% to $30,662 for the six months ended June 30, 2020 from $81,895 for the six months ended

June 30, 2019.

This was primarily due to the decrease in sales of most of our daily healthcare and personal care products affected

by industry downturn.

Revenue from wellness houses and activated

water machines decreased by $136,265 or 75.2% to $44,903 for the six months ended June 30, 2020 from $181,168 for the six months

ended June 30, 2019.

This decrease was mainly due to the decrease in the construction of our wellness house.

Cost of Goods Sold.

months ended June 30, 2020, cost of goods sold was $45,751 compared to $152,163 for the six months ended June 30, 2019, a decrease

of $106,412, or 69.9%.

In 2020, the impact of COVID-19 on the Chinese economy seriously affected our business

with implementation of restrictions at business operations and city lockdowns.

from healthcare knit goods segment increased by $885 or 6.1% to $15,431 for the three months ended September 30, 2020 from $14,546

for the three months ended September 30, 2019.

This increase was mainly due to the increase in sales of our mattress products.

from daily healthcare and personal care products decreased by $60,940 or 82% to $13,373 for the three months ended September 30,

2020 from $74,313 for the three months ended September 30, 2019.

This was primarily due to the decrease in sales of most of our

daily healthcare and personal care products affected by industry downturn and almost of all cities under lockdown as COVID-19

from wellness houses and activated water machines decreased by $21,172 or 30.4% to $48,485 for the three months ended September

30, 2020 from $69,657 for the three months ended September 30, 2019.

This decrease was mainly due to the decrease in sales of

our wellness house.

of Goods Sold.

For the three months ended September 30, 2020, cost of goods sold was $37,517 compared to $69,709 for the three

months ended September 30, 2019, a decrease of $32,192 or 46.2%.

This decrease was mainly due to the decrease in sales.

Cost of goods sold for healthcare knit

goods segment decreased to $3,113 for the six months ended June 30, 2020 from $23,507 for the six months ended June 30, 2019, a

decrease of $20,394 or 86.8%.

of goods sold for healthcare knit goods segment decreased to $2,897 for the three months ended September 30, 2020 from $4,800

for the three months ended September 30, 2019, a decrease of $1,903 or 39.6%.

This decrease was due to the decrease in cost of

our mattress products.

of goods sold for the daily healthcare and personal care segment decreased to $11,461 for the three months ended September 30,

2020 from $29,910 for the three months ended September 30, 2019, a decrease of $18,449 or 61.7%.

This decrease was due to the

decrease in sales.

of goods sold for our wellness house and activated water machine segment decreased to $23,159 for the three months ended September

30, 2020 from $34,999 for the three months ended September 30, 2019, a decrease of $11,840 or 33.8%.

This decrease was mainly

due to the decrease in sales.

Our gross profit decreased by $49,035 or 55.2% to $39,772 for the three months ended September 30, 2020, compared

to $88,807 for the three months ended September 30, 2019.

This decrease was mainly due to the decrease in sales.

Cost of goods sold for the daily healthcare

and personal care segment decreased to $15,464 for the six months ended June 30, 2020 from $38,405 for the six months ended June

Our gross margin

slightly decreased slightly from 56% for the three months ended September 30, 2019 to 51.5% for the three months ended September

profit for the healthcare knit goods segment increased by $2,788 or 28.6% to $12,534 for the three months ended September 30,

2020 compared to $9,746 for the three months ended September 30, 2019.

The gross margins of healthcare knit goods segment increased

from 67% for the three months ended September 30, 2019 to 81.2% for the three months ended September 30, 2020.

This increase was

mainly due to the less discounts on the healthcare knit goods to our franchisees during the third quarter of 2020.

profit of daily healthcare and personal care segment decreased by $42,491 or 95.7% to $1,912 for the three months ended September

30, 2020, compared to $44,403 for the three months ended September 30, 2019.

This decrease was mainly due to the decreased sales.

The gross margin of daily healthcare and personal care segment decreased from 59.8% for the three months ended September 30, 2019

to 14.3% for the three months ended September 30, 2020.

This decrease was mainly due to the more discounts on the daily healthcare

and personal care products to our franchisees during the third quarter of 2020.

profit of the wellness house and activated water machine segments decreased by $9,332 or 26.9% to $25,326 for the three months

ended September 30, 2020, compared to $34,658 for the three months ended September 30, 2019.

This decrease was mainly due to the

decrease in gross profit from our wellness houses.

The gross margin of our wellness house and activated water machine segments

increased slightly from 49.8% for the three months ended September 30, 2019 to 52.2% for the three months ended September 30,

Our total operating expenses consist of sales and marketing expenses and general and administrative expenses.

total operating expenses decreased by $43,045 or 15.5%, from $277,434 for the three months ended September 30, 2019 to $234,389

for the three months ended September 30, 2020.

This decrease was mainly due to the decrease of salary.

Operating expenses for

healthcare knit goods segment increased by $22,961 or 113.7% to $43,156 for the three months ended September 30, 2020 from $20,195

for the three months ended September 30, 2019.

Operating expenses for daily healthcare and personal care segment decreased by

$131,658 or 89% to $16,275 for the three months ended September 30, 2020 from $147,933 for the three months ended September 30,

Operating expenses for our wellness house and activated water machine segment increased by $65,652 or 60.1% to $174,958

for the three months ended September 30, 2020 from $109,306 for the three months ended September 30, 2019.

from operations.

As a result of the foregoing, our loss from operations was $194,617 for the three months ended September

30, 2020, compared to $188,627 for the three months ended September 30, 2019, an increase of $5,990.

The increased loss was mainly

due to the decrease in sales.

Our income tax expenses did not incur for the three months ended September 30, 2020 and 2019.

For the three months ended September 30, 2020, our net loss was $194,694 compared to $260,262 for the three months ended

September 30, 2019.

The decreased loss was mainly due to decrease in other expenses.

the Nine Months Ended September 30, 2020 Compared to September 30, 2018

For the nine months ended September 30, 2020, revenue was $159,407 compared to $468,766 for the nine months ended September

30, 2019, a decrease of $309,359 or 66%.

This decrease was mainly due to the downturn of the health care industry in China affected

from healthcare knit goods segment decreased by $39,749, or 64.4% to $21,984 for the nine months ended September 30, 2020 from

$61,733 for the nine months ended September 30, 2019.

This decrease was mainly due to the decrease in sales of our mattress products.

Our mattress products are our best-selling products and were most affected by market fluctuations.

from daily healthcare and personal care products decreased by $112,173 or 71.8% to $44,035 for the nine months ended September

30, 2020 from $156,208 for the nine months ended September 30, 2019.

This was primarily due to the decrease in sales of most of

our daily healthcare and personal care products affected by industry downturn affected by COVID-19.

from wellness houses and activated water machines decreased by $157,437 or 62.8% to $93,388 for the nine months ended September

30, 2020 from $250,825 for the nine months ended September 30, 2019.

This decrease was mainly due to the decrease of our wellness

of Goods Sold.

For the nine months ended September 30, 2020, cost of goods sold was $83,268 compared to $221,872 for the nine

months ended September 30, 2019, a decrease of $138,604, or 62.5%.

This decrease was mainly due to the decrease in sales.

Cost of goods sold for our wellness house

and activated water machine segment decreased to $27,174 for the six months ended June 30, 2020 from $90,251 for the six months

ended June 30, 2019, a decrease of $63,077 or 69.9%.

This decrease was due to the decrease in the cost of our wellness house as

a result of the decrease in sales.

Gross profit.

Our gross profit decreased

by $121,720 or 77% to $36,367 for the six months ended June 30, 2020, compared to $158,087 for the six months ended June 30, 2019.

of goods sold for healthcare knit goods segment decreased to $6,010 for the nine months ended September 30, 2020 from $28,307

for the nine months ended September 30, 2019, a decrease of $22,297 or 78.8%.

This decrease was mainly due to the decrease in

the cost of our mattress products, as a result of decrease in sales.

of goods sold for the daily healthcare and personal care segment decreased to $26,925 for the nine months ended September 30,

2020 from $68,315 for the nine months ended September 30, 2019, a decrease of $41,390 or 60.6%.

This decrease was mainly due to

the decrease in sales.

of goods sold for our wellness house and activated water machine segment decreased to $50,333 for the nine months ended September

30, 2020 from $125,250 for the nine months ended September 30, 2019, a decrease of $74,917 or 59.8%.

This decrease was mainly

due to the decrease in sales.

Our gross profit decreased by $170,755 or 69.2% to $76,139 for the nine months ended September 30, 2020, compared

to $246,894 for the nine months ended September 30, 2019.

This decrease was due to the decrease in sales.

In addition, our gross margin decreased from 51% for the six months ended June

30, 2019 to 44.3% for the six months ended June 30, 2020.

This decrease was mainly due to our wellness house and activated water

machine segment.

Gross profit for the healthcare knit goods

segment decreased by $20,240 or 85.5% to $3,440 for the six months ended June 30, 2020 compared to $23,680 for the six months ended

June 30, 2019.

Our gross margin decreased

slightly from 52.7% for the nine months ended September 30, 2019 to 47.8% for the nine months ended September 30, 2020.

profit for the healthcare knit goods segment decreased by $17,452 or 52.2% to $15,974 for the nine months ended September 30,

2020 compared to $33,426 for the nine months ended September 30, 2019.

This decrease was mainly due to the decrease in sales.

The gross margins of healthcare knit goods segment increased

slightly from 50.2% for the six months ended June 30, 2019 to 52.5% for the six months ended June 30, 2020.

Gross profit of daily healthcare and personal

care segment decreased by $28,292 or 65.1% to $15,198 for the six months ended June 30, 2020, compared to $43,490 for the six months

ended June 30, 2019.

This decrease was primarily due to the decrease in sales.

Our gross margin of daily healthcare and personal

care segment decreased from 53.1% for the six months ended June 30, 2019 to 49.6% for the six months ended June 30, 2020.

Gross profit of the wellness house and

activated water machine segment decreased by $73,188 or 80.5% to $17,729 for the six months ended June 30, 2020, compared to $90,917

for the six months ended June 30, 2019.

This decrease was mainly due to the decrease in gross profit of construction of wellness

The gross margin of our wellness house and activated water machine segments decreased from 50.2% for the six months ended

June 30, 2019 to 39.5% for the six months ended June 30, 2020.

It was mainly due to that there was no gross profit from the wellness

house construction, which has higher gross margin, for the first quarter of 2020.

Operating expenses.

Our total operating

expenses consist of sales and marketing expenses and general and administrative expenses.

Our total operating expenses decreased

by $231,158, or 28.9%, from $800,943 for the six months ended June 30, 2019 to $569,785 for the six months ended June 30, 2020.

This decrease was mainly due to the decreased travel expenses and salary.

Operating expenses for healthcare knit goods segment

decreased by $54,071 or 44.4% to $67,748 for the six months ended June 30, 2020 from $121,819 for the six months ended June 30,

Operating expenses for daily healthcare and personal care segment decreased by $5,548 or 2.6% to $205,873 for the six months

ended June 30, 2020 from $211,421 for the six months ended June 30, 2019.

Operating expenses for our wellness house and activated

water machine segment decreased by $171,539 or 36.7% to $296,164 for the six months ended June 30, 2020 from $467,703 for the six

months ended June 30, 2019.

Loss from operations.

of the foregoing, our loss from operations was $533,418 for the six months ended June 30, 2020, compared to a loss from operations

of $642,856 for the six months ended June 30, 2019, a decrease of $109,438.

This decrease of loss was mainly due to the decrease

in operating expenses.

Income taxes.

Our income taxes were

$0 for the six months ended June 30, 2020 and 2019, separately.

Our net loss was $534,526

for the six months ended June 30, 2020, compared to a net loss of $644,047 for the six months ended June 30, 2019.

This decrease

of net loss was mainly due to the decrease in operating expenses.

The gross margins of healthcare knit goods segment increased from 54.1% for the nine months ended September 30, 2019 to 72.7%

for the nine months ended September 30, 2020.

It was mainly due to the less discounts on the healthcare knit goods to our franchisees

during the third quarter of 2020.

profit of daily healthcare and personal care segment decreased by $70,783 or 80.5% to $17,110 for the nine months ended September

30, 2020, compared to $87,893 for the nine months ended September 30, 2019.

This decrease was primarily due to the decrease in

Our gross margin of daily healthcare and personal care segment decreased from 56.3% for the nine months ended September

30, 2019 to 38.9% for the nine months ended September 30, 2020.

It was mainly due to the more discounts on the daily healthcare

and personal care products to our franchisees during the third quarter of 2020.

profit of the wellness house and activated water machine segments decreased by $82,520 or 65.7% to $43,055 for the nine months

ended September 30, 2020, compared to $125,575 for the nine months ended September 30, 2019.

This decrease was mainly due to the

decrease in sales.

The gross margin of our wellness house and activated water machine segments decreased slightly from 50.1% for

the nine months ended September 30, 2019 to 46.1% for the nine months ended September 30, 2020.

Our total operating expenses consist of sales and marketing expenses and general and administrative expenses.

total operating expenses decreased by $274,203 or 25.4%, from $1,078,377 for the nine months ended September 30, 2019 to $804,174

for the nine months ended September 30, 2020.

This decrease was mainly due to the decrease of travel expenses and salary.

expenses for healthcare knit goods segment decreased by $31,110 or 21.9% to $110,904 for the nine months ended September 30, 2020

from $142,014 for the nine months ended September 30, 2019.

Operating expenses for daily healthcare and personal care segment

decreased by $137,206 or 38.2% to $222,148 for the nine months ended September 30, 2020 from $359,354 for the nine months ended

September 30, 2019.

Operating expenses for our wellness house and activated water machine segment decreased by $105,887 or 18.4%

to $471,122 for the nine months ended September 30, 2020 from $577,009 for the nine months ended September 30, 2019.

from operations.

As a result of the foregoing, our loss from operations was $728,035 for the nine months ended September 30,

2020, compared to $831,483 for the nine months ended September 30, 2019, a decrease of $103,448.

The decreased loss from operations

was mainly due to the decrease in operating expenses.

Our income tax expenses did not incur for the nine months ended September 30, 2020 and 2019.

Our net loss was $729,220 for the nine months ended September 30, 2020, compared to $904,309 for the nine months ended

September 30, 2019.

The decreased loss was mainly due to the decrease in operating expenses.

We enter into franchise agreements to develop

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are generally for terms of three years and are renewable at the mutual agreement of both parties.

The Agreements are cancelable

The Agreements are cancellable

at our discretion if franchisees violate the terms of the agreements.

The following is a breakdown of revenue

between franchise and non-franchise customers:

For the three months ended

For the six months ended

following is a breakdown of revenue between franchise and non-franchise customers:

For the three months ended September 30,

For the nine months ended September 30,

Sales to franchise customers

Sales to non-franchise customers

Liquidity and Capital Resources

Our cash at the beginning of the six months

ended June 30, 2020 was $48,631 and decreased to $99,979 by the end of June 30, 2020, a decrease of $51,348.

and Capital Resources

cash at December 31, 2019 was $99,979 and decreased to $86,236 at September 30, 2020, a decrease of $13,743.

This decrease was

mainly due to our deteriorated operating results.

On June 30, 2020, we had net working capital of $(1,188,597), a decrease of $321,272

from $(867,325) on December 31, 2019.

Our cash flow information summary is as

For the six months ended

On September 30, 2020, we had negative working capital of $1,318,644, a decrease

of $451,319 from $867,325 on December 31, 2019.

cash flow information summary is as follows:

For the nine months ended September 30,

Net cash provided by (used in)：

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Financing activities

Net Cash Used in Operating Activities

Net cash used in operating activities was

$315,088 for the six months ended June 30, 2020, compared to $468,508 for the six months ended June 30, 2019.

For the six months ended June 30, 2020,

cash was mainly used to cover our loss of $534,526, which was primarily offset by an add-back of $196,237 of depreciation for non-cash

For the six months ended June 30, 2019,

cash was mainly used to cover our loss of $644,047, which was primarily offset by an add-back of $208,149 of depreciation for non-cash

Net Cash Used In Investing Activities

Net cash used in investing activities was

$0 for the six months ended June 30, 2020, compared to $89,235 for the six months ended June 30, 2019.

For the six months ended

June 30, 2020 and 2019, respectively, we expended $0 and $89,235 on purchase of advanced production equipment and office equipment.

Net Cash Provided By Financing Activities

For the six months ended June 30, 2020,

$254,433 of cash was provided by financing activities, compared to $544,898 for the six months ended June 30, 2019.

On May 10, 2007, Joway Shengshi entered

into a cash advance agreement with Jinghe Zhang, the Company’s President, Chief Executive Officer and director.

to the agreement, Jinghe Zhang agreed to advance operating capital to Joway Shengshi.

The advances are interest free, unsecured,

and have no specified repayment terms.

The agreement is valid throughout Joway Shengshi’s term of operation.

During the period

beginning May 17, 2007 (inception of Joway Shengshi) through June 30, 2020, Joway Shengshi received cash advances in the aggregate

principal amount of $6,367,759 from Jinghe Zhang of which $4,632,811 has been repaid.

For the six months ended June 30, 2020 and

2019, the Company received $254,433 and $663,356 of these advances, respectively.

STATUTORY RESERVES

Pursuant to the laws and regulations of

the PRC, our PRC subsidiaries are required to allocate a portion of their after-tax income to statutory reserves funds.

statutory reserves allocation is 10% of after-tax income until the reserves reach 50% of the entities’

registered capital

or members’

The reserve funds are not transferable to us in the form of cash dividends, loans or advances.

the reserve funds are not available for distribution except in liquidation.

As of June 30, 2020, we had allocated $354,052 to statutory

Off Balance Sheet Items

Under SEC regulations, we are required

to disclose off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial

condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures

or capital resources that are material to investors.

An off-balance sheet arrangement means a transaction, agreement or contractual

arrangement to which any entity that is not consolidated with us is a party, under which we have:

Cash Used in Operating Activities

cash used in operating activities was $427,565 for the nine months ended September 30, 2020, compared to $536,344 for the nine

months ended September 30, 2019.

This decrease was primarily due to a decrease of $175,089 in net loss.

the nine months ended September 30, 2020, cash was mainly used to cover the loss of $729,220, which was primarily offset by an

add-back of depreciation of $292,084 and amortization of $10,127.

the nine months ended September 30, 2019, cash was mainly used to cover the loss of $904,309, which was primarily offset by an

add-back of depreciation of $308,065 and amortization of $14,359.

Cash Used in Investing Activities

cash used in investing activities was $0 for the nine months ended September 30, 2020, compared to $89,219 for the nine months

ended September 30, 2019.

the nine months ended September 30, 2019, we expended $89,219 on purchase of an advanced production equipment and office equipment.

Cash Provided by Financing Activities

the nine months ended September 30, 2020, $434,818 of cash was provided by financing activities, compared to $582,308 for the

nine months ended September 30, 2019.

The cash was provided by and used to repay advances from Jinghe Zhang and Shenyang Joway.

May 7, 2007, our operating subsidiary, Joway Shengshi entered into an agreement with Shenyang Joway pursuant to which Joway Shengshi

and Shenyang Joway agreed to provide each other with interest-free, unsecured advances for working capital.

On May 10, 2007, our

subsidiary, Joway Technology and Shenyang Joway entered into an agreement pursuant to which Joway Technology and Shenyang Joway

agreed to provide each other with interest-free, unsecured advances for working capital.

Pursuant to these agreements, Shenyang

Joway advanced an aggregate of $912,645 to Joway Shengshi and Joway Technology through December 31, 2010.

We repaid $0 and $118,458

of these advances for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, the total unpaid

principal balance due Shenyang Joway for advances was $0.

Shenyang Joway was cancelled in 2019.

May 10, 2007, our operating subsidiaries, Joway Shengshi entered into a cash advance agreement with Jinghe Zhang, our President,

Chief Executive Officer and director.

Pursuant to the agreements, Jinghe Zhang agreed to advance operating capital to Joway Shengshi.

These advances are interest free, unsecured and are repayable upon demand.

During the period beginning May 17, 2007 (inception

of Joway Shengshi) through June 30, 2019, Joway Shengshi received cash advances in the aggregate principal amount of $6,548,144

from Jinghe Zhang of which $4,632,811 has been repaid.

For the nine months ended September 30, 2020 and 2019, the Company received

$434,818 and $700,766 of these advances, respectively.

As of September 30, 2020, the total unpaid principal balance due Jinghe

Zhang for advances was $1,915,333.

to the laws and regulations of the PRC, the Company’s PRC subsidiaries are required to allocate a portion of their after-tax

income to statutory reserves funds.

The minimum statutory reserves allocation is 10% of after-tax income until the reserves reach

50% of the entities’

registered capital or members’

The reserve funds are not transferable to the Company

in the form of cash dividends, loans or advances.

Thus, the reserve funds are not available for distribution except in liquidation.

As of September 30, 2020, the Company had allocated $354,052 to statutory reserves.

Balance Sheet Items

SEC regulations, we are required to disclose off-balance sheet arrangements that have or are reasonably likely to have a current

or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations,

liquidity, capital expenditures or capital resources that are material to investors.

An off-balance sheet arrangement means a

transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which

obligation under certain guarantee contracts,

5 unchanged sentences

market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us.

We do not have any off-balance sheet arrangements

that we are required to disclose pursuant to these regulations.

In the ordinary course of business, we enter into operating lease

commitments, purchase commitments and other contractual obligations.

These transactions are recognized in our financial statements

in accordance with generally accepted accounting principles in the United States.

Critical Accounting Policies

Management’s discussion and analysis

of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared

in accordance with accounting principles generally accepted in the United States.

Our financial statements reflect the selection

and application of accounting policies which require management to make significant estimates and judgments.

Management bases its

estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations.

In the ordinary

course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations.

These transactions

are recognized in our financial statements in accordance with generally accepted accounting principles in the United States.

Accounting Policies

Management’s

discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements,

which have been prepared in accordance with accounting principles generally accepted in the United States.

Our financial statements

reflect the selection and application of accounting policies which require management to make significant estimates and judgments.

Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under

the circumstances.

Actual results may differ from these estimates under different assumptions or conditions.

We believe that the following reflect

the more critical accounting policies that currently affect our financial condition and results of operations.

Basis of Consolidation

The accompanying consolidated financial

statements include Joway Health and its wholly owned subsidiaries and controlled VIEs.

All significant inter-company accounts and

transactions have been eliminated in the consolidation.

Pursuant to Accounting Standards Codification

Topic 810 “Consolidation”

(“ASC 810”), the Company is required to include in its consolidated financial

statements the financial statements of its variable interest entities (“VIEs”).

ASC 810 requires a VIE to be consolidated

by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the

VIE’s residual returns.

VIEs are those entities in which a company, through contractual arrangements, bears the risk of,

and enjoys the rewards normally associated with ownership of the entity, and therefore the company is the primary beneficiary of

Based on the various Contractual Agreements,

we believe we are able to exercise control over the VIEs, and to obtain the full economic benefits.

We believe that the terms of

the exclusive option agreement are currently exercisable and legally enforceable under PRC laws and regulations.

We also believe

that the minimum amount of consideration permitted by the applicable PRC law to exercise the option does not represent a financial

barrier or disincentive for us to exercise our rights under the exclusive option agreement.

A simple majority vote of our board

of directors is required to pass a resolution to exercise our rights under the exclusive option agreement, for which consent of

the shareholder of VIEs is not required.

Therefore, we believe this gives us the power to direct the activities that most significantly

impact VIEs’

We believe that the

following reflect the more critical accounting policies that currently affect our financial condition and results of operations.

of Consolidation

accompanying consolidated financial statements include Joway Health and its wholly owned subsidiaries and controlled VIEs.

significant inter-company accounts and transactions have been eliminated in the consolidation.

to Accounting Standards Codification Topic 810 “Consolidation”

(“ASC 810”), the Company is required to

include in its consolidated financial statements the financial statements of its variable interest entities (“VIEs”).

ASC 810 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE

or is entitled to receive a majority of the VIE’s residual returns.

VIEs are those entities in which a company, through

contractual arrangements, bears the risk of, and enjoys the rewards normally associated with ownership of the entity, and therefore

the company is the primary beneficiary of the entity.

on the various Contractual Agreements, we believe we are able to exercise control over the VIEs, and to obtain the full economic

We believe that the terms of the exclusive option agreement are currently exercisable and legally enforceable under

PRC laws and regulations.

We also believe that the minimum amount of consideration permitted by the applicable PRC law to exercise

the option does not represent a financial barrier or disincentive for us to exercise our rights under the exclusive option agreement.

A simple majority vote of our board of directors is required to pass a resolution to exercise our rights under the exclusive option

agreement, for which consent of the shareholder of VIEs is not required.

Therefore, we believe this gives us the power to direct

the activities that most significantly impact VIEs’

economic performance.

T We believe that our ability to exercise effective control, together with the consulting

service agreements and the equity pledge agreements, give us the rights to receive substantially all of the economic benefits from

VIEs in consideration for the services provided by its wholly owned subsidiaries in China.

Accordingly, as the primary beneficiary

of VIEs and in accordance with U.S.

GAAP, Joway Shengshi, Joway Technology, Joway Decoration, and Shengtang Trading, as VIEs of

Junhe Consulting, has been consolidated in the Company’s financial statements.

Sales from Joway Shengshi, Joway Technology,

Joway Decoration, and Shengtang Trading are included in our total sales, their incomes or losses from operations are consolidated

with ours, and our net income or loss includes net income or loss from Joway Shengshi, Joway Technology, Joway Decoration, and

Shengtang Trading.

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement

exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is

reasonably assured.

With respect to sales of product to both

franchisee and non-franchisee customers, we prepare product shipment upon the receipt of a customer’s purchase order.

prices are based on fixed price lists that are different depending on whether the price list is for franchisee customers or for

non-franchisee customers.

T We believe that our ability to exercise effective

control, together with the consulting service agreements and the equity pledge agreements, give us the rights to receive substantially

all of the economic benefits from VIEs in consideration for the services provided by its wholly owned subsidiaries in China.

as the primary beneficiary of VIEs and in accordance with U.S.

GAAP, Joway Shengshi, Joway Technology, Joway Decoration, and Shengtang

Trading, as VIEs of Junhe Consulting, has been consolidated in the Company’s financial statements.

Sales from Joway Shengshi,

Joway Technology, Joway Decoration, and Shengtang Trading are included in our total sales, their incomes or losses from operations

are consolidated with ours, and our net income or loss includes net income or loss from Joway Shengshi, Joway Technology, Joway

Decoration, and Shengtang Trading.

recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the

purchase price is fixed or determinable and collectability is reasonably assured.

respect to sales of product to both franchisee and non-franchisee customers, we prepare product shipment upon the receipt of a

customer’s purchase order.

Sales prices are based on fixed price lists that are different depending on whether the price

list is for franchisee customers or for non-franchisee customers.

We recognize revenue when the product is shipped.

We do not sell product to any customers with a right

of return as defined in ASC 605-15-25-4.

sell product to any customers with a right of return.

Sales are presented net of value added tax (VAT).

We recognize revenue on the sale of our

wellness houses under the completed contract method.

At the time when we enter into a contract with a customer to build a wellness

house, the customer pays a deposit of at least one-half of the sales price.

We consider the contract to be completed when all significant

costs have been incurred and the customer accepts the project in writing by signing in the appropriate place on the contract.

this time the customer will also pay any remaining balance on the contract.

We recognize the full contract revenue at this point.

recognize revenue on the sale of our wellness houses under the completed contract method.

At the time when we enter into a contract

with a customer to build a wellness house, the customer pays a deposit of at least one-half of the sales price.

We consider the

contract to be completed when all significant costs have been incurred and the customer accepts the project in writing by signing

in the appropriate place on the contract.

At this time the customer will also pay any remaining balance on the contract.

the full contract revenue at this point.

Contract costs consist primarily of materials and labor costs.

The construction period of a wellness house generally does not exceed

Accounts Receivable

Accounts receivable are carried at net

realizable value.

The construction period

of a wellness house generally does not exceed five days.

receivable are carried at net realizable value.

We provide reserves for potential credit losses on accounts receivable.

Management reviews the composition of

the accounts receivable and analyzes historical bad debts, customer concentrations, customers’

credit worthiness, current

economic trends, and changes in customer’s payment patterns to evaluate the adequacy of these reserves.

Inventories are stated at the lower of

cost, as determined by the specific identification method on contract level (for each individual contract, inventories cost flow

is determined by weighted-average method), or the net realizable value, which is determined on selling prices less any further

costs expected to be incurred for completion and disposal.

Management regularly evaluates the composition of its inventories to

identify slow-moving and obsolete inventories to determine whether a valuation allowance is required.

Property, Plant, and Equipment

Property, plant and equipment are stated

at cost less accumulated depreciation, and include expenditures that substantially increase the useful lives of existing assets.

Depreciation is computed using the straight-line

method over the estimated useful lives of the assets.

reviews the composition of the accounts receivable and analyzes historical bad debts, customer concentrations, customers’

credit worthiness, current economic trends, and changes in customer’s payment patterns to evaluate the adequacy of these

are stated at the lower of cost, as determined by the specific identification method on contract level (for each individual contract,

inventories cost flow is determined by weighted-average method), or the net realizable value, which is determined on selling prices

less any further costs expected to be incurred for completion and disposal.

Management regularly evaluates the composition of

its inventories to identify slow-moving and obsolete inventories to determine whether a valuation allowance is required.

Plant, and Equipment

plant and equipment are stated at cost less accumulated depreciation, and include expenditures that substantially increase the

useful lives of existing assets.

is computed using the straight-line method over the estimated useful lives of the assets.

Estimated useful lives are as follows:

1 unchanged sentence

Office furniture and equipment

The cost and related accumulated depreciation

of assets sold or otherwise retired are eliminated from the accounts, and any gain or loss is included in the consolidated statements

of income and other comprehensive income.

Maintenance, repairs and minor renewals are charged directly to expenses as incurred.

cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts, and any gain or

loss is included in the consolidated statements of income and other comprehensive income.

Maintenance, repairs and minor renewals

are charged directly to expenses as incurred.

Significant renewals and betterment to buildings and equipment are capitalized.

Leasehold improvements are depreciated over the

lesser of the useful life or the life of the lease.

Recent Accounting Pronouncements

We do not anticipate that the adoption

of recently issued accounting pronouncements to have a material effect on our condensed consolidated financial statements.

Quantitative and Qualitative Disclosures about

Not applicable.

Leasehold improvements are depreciated over the lesser of the useful life or the life of the lease.

Accounting Pronouncements

do not anticipate that the adoption of recently issued accounting pronouncements to have a material effect on our condensed consolidated

financial statements.

Quantitative and Qualitative Disclosures about Market Risk.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements