| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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,
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, 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
the entity. 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'
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 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 resulting transaction adjustments are recorded as a component of stockholders' equity. Gains and losses from foreign
currency transactions are included in net income.
For the six months ended For the year ended
2020 2019 2019
Period ended RMB: USD Exchange rate 7.0795 6.86557 6.9762
Average RMB: USD Exchange rate 7.0319 6.78392 6.8985 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
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 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. 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. 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; and
● 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. ASC 825-10 "Financial Instruments"
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. Cash 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. The
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
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 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 Advances to suppliers represent the cash
paid in advance for inventory items or construction in progress. The advance payments are meant to ensure preferential pricing
and delivery. The amounts advanced under such arrangements totaled $87,146 and $62,674 as of June 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. Estimated useful lives are as follows:
Building 20 years
Operating Equipment 10 years
Office furniture and equipment 3 or 5 years
Vehicles 10 years 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
use rights. All land located in the PRC is owned by the government and cannot be sold to any individual or company. The land use
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 Long-lived assets of the Company are reviewed
annually as to whether their carrying value has become impaired, pursuant to the guidelines established in FASB ASC 360. The Company
considers assets to be impaired if the carrying value exceeds the future projected cash flows from the related operations. The
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
and 2019. 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
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
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. Contract costs consist primarily of materials and labor costs. The construction period of a Wellness House generally
does not exceed five days. Shipping Costs 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. Income Taxes 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
assets. 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
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 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
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 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
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. 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. The guidance
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.
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 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. 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.
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 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. 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
statements. |
