Joway Health Industries Group Inc

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

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.

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, 2019. 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.

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.

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 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.