Investment

12 Months Ended

Dec. 31, 2013

Note 12

– INVESTMENTS

Long-Term Investment:

On August 28, 2011, Joway Shengshi and Tianjin Hezhi Pharmaceutical Co., Ltd. (referred to herein as “Tianjin Hezhi”) , one of our major suppliers accounting for 21.4% and 3.9% of our purchases in 2013 and 2012 or $133,830 and $47,763 for 2013 and 2012, respectively, entered a cooperative contract, pursuant to which Joway Shengshi and Tianjin Hezhi established a new company named Tianjin Joway Hezhi Pharmaceutical Co., Ltd. (referred to herein as “Joway Hezhi”) with registered capital of RMB 20,000,000. Joway Hezhi was incorporated on October 21, 2011 with initial registered capital of RMB5, 000,000. It engages in the production and distribution of Chinese-Western preparations, health food, healthcare products, medical instruments and plain food. On October 11, 2011, Joway Shengshi contributed $245,339 or RMB 1,500,000 and owned 30% of Joway Hezhi. As of December 31, 2013, Joway Hezhi was still in the early preparatory period and has no operations.

Short-Term Investment:

At December 31, 2012, the Company had a short-term wealth-management certificate of $1,266,604 with Industrial and Commercial Bank of China. This is classified as a level 2 investment within the fair value hierarchy. During the year of 2013, this short-term investment of $1,266,604 were redeemed in full and returned to the Company. As of December 31, 2013 and 2012, the balances of short- term investment were $0 and $1,266,604, respectively.

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

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