ORGANIZATION | Note 1 – ORGANIZATION The 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 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. 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. Tianjin 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. (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 Co., Ltd. and Tianjin Oriental Shengtang Trading Import & Export Trading Co., Ltd. are subsidiaries of Joway Shengshi. Shenyang 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 the construction of 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., Ltd. (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 Room 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. Tianjin 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. On November 20, 2020, Joway Health entered into a Merger Agreement (the “Merger Agreement”) with one of its related parties, Crystal Globe Limited, a British Virgin Islands company (“Crystal Globe”), for the sale of Joway Health’s 100% equity interest in Dynamic Elite, Dynamic Elite’s subsidiaries, and Dynamic Elite’s VIEs for a purchase price of $0.045 per share for the Company’s outstanding common stock. As of November 20, 2020, the Company reported 20,054,000 shares of common stock outstanding. Crystal Globe is the major shareholder of Joway Health and holding 86.8% of Joway Health’s outstanding common stock. The Merger Agreement provides that, upon the terms and subject to the satisfaction or waiver of the conditions set forth therein, all of Joway Health’s subsidiaries and VIEs, including Dynamic Elite, will be transferred to Crystal Globe and its subsidiaries. The special committee of the Board of Directors of the Company unanimously approved the Merger Agreement and the transaction was completed on December 31, 2020. Mr. Jinghe Zhang, as the President, Chief Executive Officer, Chairman and Director, and the majority beneficial owner of Joway Health, also serves as sole shareholder and executive director of Crystal Globe. As a result, Joway Health and Dynamic Elite are under common control of Crystal Globe and Mr. Jinghe Zhang. In January 2021, the Company had received $119,070 from Crystal Globe and distributed proportionately to the Company’s minority shareholders, other than Crystal Globe, which represents 2,646,000 shares of the Company’s common stock. Since the remaining 17,408,000 shares of our common stock is owned by Crystal Globe, the $0.045 per share payment for the 17,408,000 shares is offset. The following table lists the Company and its subsidiaries prior to the Merger Agreement: Name Domicile and Date of Incorporation Paid in Capital Percentage of Effective Ownership Principal Activities Joway Health Industries Group Inc. March 21, 2003, Nevada USD 20,054 86. 8% owned by Crystal Globe Limited 13.2% owned by other institutional and individual investors Investment Holding Dynamic Elite International Limited June 2, 2010, British Virgin Islands USD 10,000 100% owned by Joway Health Industries Group Inc. Investment Holding Tianjin Junhe Management Consulting Co., Ltd. September 15, 2010, PRC USD 20,000 100% owned by Dynamic Elite International Limited Advisory 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 142,072.97 100% 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 292,367.74 100% 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 292,463.75 100% owned by Tianjin Joway Shengshi Group Co., Ltd. Distribution of tourmaline products On September 16, 2010, prior to the Merger Agreement, 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 between Junhe Consulting and Joway Shengshi or Joway Shengshi’s owners: 1. Consulting Services Agreement. 2. Operating Agreement. 3. Voting Rights Proxy Agreement. 4. Option Agreement. 5. Equity Pledge 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 statements. However, upon the Merger Agreement was completed on December 31, 2020, Joway Health does not have any subsidiary or VIEs. Joway Health consolidated Joway Shengshi’s results of operations as discontinued operations in its financial statements for the period prior to the Merger Agreement. 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 Globe. 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 December 31, 2020, upon the Company completed the Merger Agreement with Crystal Globe, Joway Health becomes a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Going forward, the Company intends to seek, investigate and, if such investigation warrants, engage in a business combination with a private entity whose business presents an opportunity for the Company’s stockholders. |