| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America (“US GAAP”). Prior to the consummation of the
Merger as of December 31, 2020, the Company’s functional currency is the Chinese Renminbi (“RMB”); however, the accompanying
financial statements have been translated and presented in United States Dollars (“USD”). All significant inter-company transactions
and balances have been eliminated. The financial statements include all adjustments that, in the opinion of management, are necessary
to make the financial statements not misleading. After
the consummation of the Merger as of December 31, 2020, the Company’s functional currency is USD. Use
of Estimates The preparation of the financial statements is in conformity with generally
accepted accounting principles in the United States of America, which require 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 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. Reclassification Certain
prior year balances were reclassified to conform to the current year’s presentation with consideration of reflecting all of the
Company’s subsidiaries and VIEs as discontinued operations. None of these reclassifications had an impact on reported financial
position or cash flows for any of the periods presented. Basis
of Consolidation For the periods prior to the consummation of the Merger as of December
31, 2020, the Company consolidated financial statements including Dynamic Elite, its former wholly owned subsidiaries, and controlled
VIEs. The financial statements of Dynamic Elite and controlled VIEs were included as part of the Company’s discontinued component.
All significant inter-company accounts and transactions have been eliminated in the consolidation. Foreign
Currency Translation The accompanying financial statements are presented in USD. The functional
currency of the Company is RMB for the periods prior to the consummation of the Merger as of December 31, 2020. The financial statements
are translated into USD 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.
December 31,
2020
Year ended RMB: USD Exchange rate 6.5249
Average yearly RMB: USD Exchange rate 6.8976 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. For the years ended December 31, 2021 and 2020 foreign currency translation
adjustments of $0 and $165,413, have been reported as other comprehensive loss in the financial statements. After the consummation of
the Merger as of December 31, 2020, the Company’s functional currency is USD. 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. Other comprehensive income 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 Prior
to the consummation of the Merger as of December 31, 2020, the Company’s operations were carried out in the PRC. Accordingly,
the Company’s business, financial condition, and results of operations were 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 were 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 and trade accounts receivable. As
a result of the consummation of the Merger, as of December 31, 2020, the Company became a shell company, as that term is defined in Rule
12b-2 of the Exchange Act of 1934, as amended (the “Exchange Act”). Going forward, our main business operations consist of
seeking a business combination with a private entity whose business would present an opportunity for its shareholders. Fair
Value of Financial Instruments Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 (formerly Statement of Financial
Accounting Standard (“SFAS”) No. 157 Fair Value Measurements) establishes a three-tier fair value hierarchy, which prioritizes
the inputs used in measuring fair value as the following:
● 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. Revenue
Recognition The
Company recognizes revenue when control of promised goods or services is transferred to the company’s customers, in an amount that
reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Prior
to the Merger Agreement, with respect to sales of product to both franchisee and non-franchisee customers, the Company transfers control,
invoices the customer and recognizes revenue upon shipment to the customer. 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. Sales, value add and other taxes collected
concurrent with revenue-producing activities are excluded from revenue. After
the consummation of the Merger as of December 31, 2020, the Company did not report any revenue for the year ended December 31, 2021. Income
Taxes The
Company accounts for income taxes in accordance with FASB ASC 740 “Income Taxes” (formerly SFAS No. 109 Accounting for
Income Taxes) 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 years ended December 31, 2021 and 2020. Recently
Issued Accounting Pronouncements In
December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”),
which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general
principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective
for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The
Company adopted the standard in 2021. Adoption of the standard did not have a significant impact on the Company’s statement of
earnings in 2021. Other accounting standards that have been issued or proposed by the
FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on
the Company’s financial statements upon adoption. Deconsolidation On November 20, 2020, Joway Health entered into
a Merger Agreement (the “Merger Agreement”) with Dynamic Elite International Limited, a British Virgin Islands company and
a wholly-owned subsidiary of the Company (“Dynamic Elite”), Crystal Globe Limited, a British Virgin Islands company (“Crystal
Globe”) and Joway Merger Subsidiary Limited, a British Virgin Islands company and a wholly-owned subsidiary of Crystal Globe (“Merger
Sub”). The Merger Agreement provides that, upon the terms and subject to the satisfaction or waiver of the conditions set forth
therein, Merger Sub will be merged with and into Dynamic Elite (the “Merger”), with Dynamic Elite continuing as the surviving
corporation as a wholly-owned subsidiary of Crystal Globe. Crystal Globe, as the majority shareholder holding
approximately 86.81% of the Company, is also the sole shareholder of Dynamic Elite after the Merger. Mr. Jinghe Zhang, as the President,
Chief Executive Officer, Chairman and Director, and the majority beneficial owner of the Company, also serves as sole shareholder and
executive director of Crystal Globe. As a result, the Company and Dynamic Elite are under common control of Crystal Globe and Mr. Jinghe
Zhang. Pursuant
to the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”) and as a result of the Merger,
the ordinary shares of common stock of Dynamic Elite issued and outstanding immediately prior to the Effective Time, all of which are
held by the Company, will be cancelled and extinguished. In accordance with the Merger Agreement, Crystal Globe has offered a cash consideration
of $0.045 per share for outstanding shares of Joway Health’s common stock (the “Merger Consideration”). As of November
20, 2020, Joway Health reported 20,054,000 shares of common stock outstanding. As a result, Joway Health recognized a loss of $1,340,795
from this transaction. In
January 2021, Joway Health 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 Joway Health’s common stock. Since the remaining 17,408,000 shares
of Joway Health’s common stock is owned by Crystal Globe, the $0.045 per share payment for the 17,408,000 shares is offset. The
following is a reconciliation of the deconsolidation:
Amount
Selling price $ 902,430
Disposed assets and liabilities:
Cash 79,446
Current assets 1,133,812
Fixed assets 3,194,533
Intangible assets 465,007
Liabilities (1,977,822 )
Accumulated other comprehensive income (651,751 )
2,243,225
Loss from disposal of discontinued component, net of income tax $ (1,340,795 ) |
