10-Q - FVTI - Equibles

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

FORM

10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Forthe Quarterly Period Ended ### March 31, 2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For

the transition period from _________ to _________

Commission

File Number 001-38308

FortuneValley Treasures, Inc.

(Exact name of registrant issuer as specified in its charter)

Nevada	32-0439333
(State<br> or other jurisdiction of<br><br> <br>incorporation<br> or organization)	(I.R.S.<br> Employer<br><br> <br>Identification<br> No.)

B1601Dongfang Yinxiang Building,

No.139 Liansheng Road, Humen Town

Dongguan,Guangdong, China 523000

(Address of principal executive offices, including zip code)

Registrant’s phone number, including area code (86) 769-85729133

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common stock, par value $0.001 per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As

of May 16, 2022, there were 15,655,038 shares, par value $0.001, of the registrant’s common stock outstanding.

TABLE

OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION	3
ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:	3
	Condensed Consolidated Balance Sheets as of March 31, 2022 (Unaudited) and December 31, 2021	3
	Condensed<br> Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2022 and 2021<br> (Unaudited)	4
	Condensed<br> Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021 (Unaudited)	5
	Condensed<br> Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (Unaudited)	6
	Notes<br> to Condensed Consolidated Financial Statements for the Three Months Ended March 31, 2022 and 2021 (Unaudited)	7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	22
ITEM 4.	CONTROLS AND PROCEDURES	22
PART II	OTHER INFORMATION	25
ITEM 1	LEGAL PROCEEDINGS	25
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	25
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	25
ITEM 4	MINE SAFETY DISCLOSURES	25
ITEM 5	OTHER INFORMATION	25
ITEM 6	EXHIBITS	25
SIGNATURES		26

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PART

I - FINANCIAL INFORMATION

Item1. Condensed Consolidated Financial Statements.

FORTUNE

VALLEY TREASURES, INC.

CONDENSED

CONSOLIDATED BALANCE SHEETS

AS

OF MARCH 31, 2022 AND DECEMBER 31, 2021

			December 31, <br><br>2021

Assets
Current assets
Cash and cash equivalents	150,613		$	123,163
Accounts receivable (including 19,044 and 43,477 from related parties as of March 31, 2022 and December 31, 2021, respectively)	1,881,892			2,662,168
Inventories	148,004			81,073
Prepayments and other current assets (including 1,731,874<br> and 1,813,904 to related parties as of March<br> 31, 2022 and December 31, 2021, respectively)	2,628,902			2,176,713
Due from related party	26,255			26,364
Total current assets	4,835,666			5,069,481
Non-current assets
Deposits paid (including 1,778,143 and 1,596,075 to related parties as of March 31, 2022 and December 31, 2021, respectively)	2,639,012			2,306,160
Property and equipment, net	128,224			140,394
Operating lease right-of-use assets	341,900			385,896
Operating lease right-of-use assets, related parties	93,923			98,626
Intangible assets, net	2,074,630			2,281,790
Goodwill	1,409,390			1,406,289
Total Assets	11,522,745		$	11,688,636
Liabilities and Stockholders’ Equity
Current liabilities
Operating lease obligations – current	124,023		$	133,586
Operating lease obligations, related parties - current	18,130			22,666
Accounts payable (including 29,181<br> and 17,789 to related parties as<br> of March 31, 2022 and December 31, 2021, respectively)	165,432			239,492
Accrued liabilities	158,961			128,343
Bank and other borrowings - current	95,815			101,207
Income tax payable	-			25,726
Customer advances	351,412			382,518
Due to related parties	491,016			683,981
Total current liabilities	1,404,789			1,717,519
Non-current liabilities
Operating lease obligations– non-current	216,053			240,611
Operating lease obligations, related parties– non-current	73,519			77,934
Bank and other borrowings	177,351			188,218
Total Liabilities	1,871,712			2,224,282
Stockholders’ Equity
Common stock (150,000,000 shares<br>authorized, 15,655,038 shares issued<br>and outstanding as of March 31, 2022 and December 31, 2021)	15,655			15,655
Additional paid in capital	11,061,233			11,061,233
Accumulated deficit and statutory reserves	(2,413,005	)		(2,561,681	)
Accumulated other comprehensive income	553,277			544,305
Total Fortune Valley Treasures, Inc. stockholders’ equity	9,217,160			9,059,512
Noncontrolling interests	433,873			404,842
Total Stockholders’ Equity	9,651,033			9,464,354
Total Liabilities and Stockholders’ Equity	11,522,745		$	11,688,636

All values are in US Dollars.

See

accompanying notes to the unaudited condensed consolidated financial statements.

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FORTUNE

VALLEY TREASURES, INC.

CONDENSED

CONSOLIDATED STATEMENTS OF OPERATIONS

AND

COMPREHENSIVE INCOME

FOR

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(Unaudited)

			2021

			2021
Net Revenues (including 725<br> and 268,978 from related<br> parties for the three months ended March 31, 2022 and 2021, respectively)	1,261,810		$	1,644,160
Cost of revenues (including 136,912 and 130,600 from related parties for the three months<br> ended March 31, 2022 and 2021, respectively)	518,462			729,743
Gross profit	743,348			914,417
Operating expenses:
Selling and distribution expenses	18,155			27,554
General and administrative expenses	527,286			481,577
Operating income	197,907			405,286
Other income (expense):
Other income	6,207			31
Interest income	77			165
Interest expense	(5,825	)		(3,553	)
Other income (expense), net	459			(3,357	)
Income before income tax	198,366			401,929
Income tax expense	22,407			66,355
Net income	175,959		$	335,574
Less: Net income attributable to noncontrolling interests	27,283			30,320
Net income attributable to Fortune Valley Treasures, Inc.	148,676			305,254
Other comprehensive income (loss):
Foreign currency translation income (loss)	10,720			(6,670	)
Total comprehensive income	186,679			328,904
Less: comprehensive income attributable to noncontrolling interests	29,031			29,717
Comprehensive income attributable to Fortune Valley Treasures,<br> Inc.	157,648		$	299,187
Earnings per share
Basic and diluted earnings per share*	0.01		$	0.02
Basic and diluted weighted average shares outstanding*	15,655,038			15,655,038

All values are in US Dollars.

*	Given effect of the<br> Reverse Stock Split, see Note 10

See

accompanying notes to the unaudited condensed consolidated financial statements.

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FORTUNE

VALLEY TREASURES, INC.

CONDENSED

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(Unaudited)

	Number of<br><br> <br>shares		Amount		Paid-in<br><br> <br>Capital		Comprehensive<br><br> <br>Income		Statutory Reserves			controlling<br><br> <br>Interests		Stockholders’<br><br> <br>Equity
Three months ended March 31, 2022
	Common Stock				Additional		Accumulated<br><br> <br>Other		Accumulated Deficit and			Non		Total
	Number of<br><br> <br>shares		Amount		Paid-in<br><br> <br>Capital		Comprehensive<br><br> <br>Income		Statutory Reserves			controlling<br><br> <br>Interests		Stockholders’<br><br> <br>Equity
Balance as of December 31, 2021		15,655,038	$	15,655	$	11,061,233	$	544,305	$	(2,561,681	)	$	404,842	$	9,464,354
Net income		-		-		-		-		148,676			27,283		175,959
Foreign currency translation adjustment		-		-		-		8,972		-			1,748		10,720
Balance as of March 31, 2022		15,655,038	$	15,655	$	11,061,233	$	553,277	$	(2,413,005	)	$	433,873	$	9,651,033
	Number<br> of<br><br> <br>shares		Amount		Paid-in<br><br> <br>Capital*		Comprehensive<br><br> <br>Income			Accumulated<br><br> <br>Deficit			controlling<br><br> <br>Interests			Stockholders’<br><br> <br>Equity
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Three months ended March 31, 2021
	Common Stock*				Additional		Accumulated<br><br> <br>Other			AccumulatedDeficit and			Non			Total
	Number of<br><br> <br>shares		Amount		Paid-in<br><br> <br>Capital*		Comprehensive<br><br> <br>Income			Statutory<br><br> Reserves			controlling<br><br> <br>Interests			Stockholders’<br><br> <br>Equity
Balance as of December 31, 2020*		15,655,038	$	15,655	$	11,061,233	$	300,265		$	(4,341,417	)	$	195,915		$	7,231,651
Net income		-		-		-		-			305,254			30,320			335,574
Foreign currency translation adjustment		-		-		-		(6,067	)		-			(603	)		(6,670	)
Balance as of March 31, 2021*		15,655,038	$	15,655	$	11,061,233	$	294,198		$	(4,036,163	)	$	225,632		$	7,560,555
*	Given effect of the Reverse Stock Split, see Note 10
---	---

See

accompanying notes to the unaudited condensed consolidated financial statements.

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FORTUNE

VALLEY TREASURES, INC.

CONDENSED

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(Unaudited)

	2022			2021
	Three months ended March 31,
	2022			2021
Cash flows from operating activities
Net income	$	175,959		$	335,574
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization expense		224,423			201,529
Non-cash lease expense		49,712			26,524
Changes in operating assets and liabilities
Accounts receivable		785,262			1,290,704
Inventories		(66,676	)		17,444
Prepayments and other current assets		(446,876	)		(1,745,883	)
Due from related parties		167			-
Deposits paid		(327,389	)		(316,736	)
Accounts payable		(74,504	)		(110,697	)
Due to related parties		(112,717	)		-
Customer advances		(31,914	)		219,610
Accrued liabilities		27,819			(181,722	)
Income tax payable		(25,754	)		(209,976	)
Operating lease obligations		(44,070	)		(35,149	)
Net cash provided by (used in) operating activities		133,442			(508,778	)
Cash flows from investing activities
Repayment of advance to related parties		-			2,674,247
Advance to related parties		-			(1,841,767	)
Purchase of intangible asset		-			(23,444	)
Net cash provided by investing activities		-			809,036
Cash flows from financing activities
Borrowings from related parties		-			814,808
Borrowings from and repayments to bank loans, net		-			(38,560	)
Repayments to related parties		(78,761	)		(371,843	)
Repayments to a third party		(16,877	)		-
Net cash provided by (used in) financing activities		(95,638	)		404,405
Effect of exchange rate changes on cash and cash equivalents		(10,354	)		9,835
Net changes in cash and cash equivalents		27,450			714,498
Cash and cash equivalents–beginning of the period		123,163			249,837
Cash and cash equivalents–end of the period	$	150,613		$	964,335
Supplementary cash flow information:
Interest paid	$	5,825		$	3,553
Income taxes paid	$	64,784		$	295,965
Non-cash investing and financing activities
Expenses paid by related parties on behalf of the Company	$	-		$	14,487
Remeasurement of operating lease obligation and right-of-use asset due to lease termination	$	-		$	40,813

See

accompanying notes to the unaudited condensed consolidated financial statements.

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FORTUNE

VALLEY TREASURES, INC.

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(Unaudited)

NOTE

1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fortune Valley Treasures, Inc. (formerly Crypto-Services, Inc.) (“FVTI” or the “Company”) was incorporated in the State of Nevada on March 21, 2014. The Company’s current primary business operations of wholesale distribution and retail sales of alcoholic beverages of wine and distilled liquors, and drinking water distribution and delivery are conducted through its subsidiaries in the People’s Republic of China (“PRC”).

On

April 11, 2018, the Company entered into a share exchange agreement by and among DaXingHuaShang Investment Group Limited (“DIGLS”) and its shareholders: 1.) Yumin Lin, 2.) Gaosheng Group Co., Ltd. and 3.) China Kaipeng Group Co., Ltd whereby the Company newly issued 15,000,000 shares (given effect of the Reserve Stock Split, see Note 10) of its common stock in exchange for all the outstanding shares in DIGLS. This transaction has been accounted for as a reverse takeover transaction and a recapitalization of the Company whereby the Company, the legal acquirer, is the accounting acquiree, and DIGLS, the legal acquiree, is the accounting acquirer; accordingly, the Company’s historical statement of stockholders’ equity has been retroactively restated to the first period presented.

On

March 1, 2019, the Company entered into a sale and purchase agreement (the “SP Agreement”) to acquire 100% of the equity interest of Jiujiu Group Stock Co., Ltd. (“JJGS”), a company incorporated under the laws of the Republic of Seychelles. The transaction closed on March 1, 2019. Pursuant to the SP Agreement, the Company issued 100 shares of its common stock to JJGS to acquire 100% of the shares of JJGS for a cost of $150. After the closing, JJGS became the Company’s wholly owned subsidiary. JJGS owns all of the equity interest of Jiujiu (HK) Industry Limited (“JJHK”) and Jiujiu (Shenzhen) Industry Co., Ltd. (“JJSZ”). JJGS, JJHK and JJSZ did not have any material assets or liabilities as of December 31, 2019, and they did not have any substantial operations or active business during the year ended December 31, 2019.

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On June 22, 2020, the Company entered into a sale and purchase agreement along with Qianhai DaXingHuaShang Investment (Shenzhen) Co., Ltd., a company incorporated in the PRC and a wholly-owned subsidiary of FVTI (“QHDX”), to acquire 90

%

of the equity interest of Dongguan Xixingdao Technology Co., Ltd. (“Xixingdao”), a company incorporated in the PRC, in exchange for 243,134 shares (given effect of the Reserve Stock Split, see Note 10) of the Company’s common stock. The Company obtained the control of Xixingdao on August 31, 2020, the shares were issued on December 28, 2020. Xixingdao became the Company’s subsidiary since August 31, 2020.

On

January 6, 2021, FVTI, JJGS, Valley Holding Limited (“Valley Holdings”) and Angel International Investment Holdings Limited (the “Valley Holdings Seller”) signed a termination agreement, pursuant to which the parties mutually agreed to terminate the original equity interest transfer agreement signed on March 16, 2020. On the same date, FVTI, DILHK, Valley Holdings and the Valley Holdings Seller entered into a new equity interest transfer agreement, pursuant to which DILHK agreed to purchase 70% of Valley Holdings’ equity interest (the “Valley Holdings Equity Transfer”) from the Valley Holdings seller in consideration of FVTI’s common shares valued at $12 million (subject to adjustments in the event Valley Holdings’ net income is more than HK$5 million (approximately US$0.6 million) or less than HK$3 million (approximately US$0.4 million) for the fiscal year ended December 31, 2020). As of the date of this filing, the closing of the Valley Holdings Equity Transfer has not occurred.

On February 28, 2021, FVTI, QHDX and the original shareholders of Foshan BaiTaFeng Beverage Development Co., Ltd. (“BTF”) signed a termination agreement, pursuant to which the parties mutually agreed to terminate the original equity interest transfer agreement signed on December 31, 2019 (“BTF Agreement”). The BTF Agreement was terminated effective February 28, 2021 and the parties have no further rights or obligations under the BTF Agreement. The parties further agreed to waive their rights to any claims that may arise under the BTF Agreement. As of the date of the termination agreement, no equity interest of BTF had been transferred to QHDX.

Basisof presentation

The accompanying unaudited condensed consolidated financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) that permit reduced disclosure for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. In the opinion of management, all adjustments consisting of normal recurring entries considered necessary for a fair presentation have been included. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. The condensed consolidated balance sheet information as of December 31, 2021 was derived from the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2021, filed with the SEC on April 1, 2022 (the “report”). These unaudited condensed consolidated financial statements should be read in conjunction with the report.

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Basisof consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated. The results of subsidiaries acquired during the respective periods are included in the condensed consolidated statements of operations from the effective date of acquisition or up to the effective date of disposal, as appropriate. The portion of the income or loss applicable to noncontrolling interests in subsidiaries is reflected in the condensed consolidated statements of operations.

As of March 31, 2022, details of the Company’s major subsidiaries were as follows:

SCHEDULE OF ENTITIES AND ITS SUBSIDIARIES

Entity Name	Date of Incorporation	Parent Entity	Nature of Operation	Place of Incorporation
DIGLS	July 4, 2016	FVTI	Investment holding	Republic of Seychelles
DILHK	June 22, 2016	DIGLS	Investment holding	Hong Kong, PRC
QHDX	November 3, 2016	DILHK	Investment holding	PRC
FVTL	May 31, 2011	QHDX	Trading of food and platform	PRC
JJGS	August 17, 2017	FVTI	Investment holding	Republic of Seychelles
JJHK	August 24, 2017	JJGS	Investment holding	Hong Kong, PRC
JJSZ	November 16, 2018	JJHK	Trading of food	PRC
Xixingdao	August 28, 2019	QHDX	Drinking water distribution and delivery	PRC
Dongguan City Fu La Tu Trade Ltd (“FLTT”)	September 27, 2020	FVTL	Trading of alcoholic beverages	PRC
Dongguan City Fu Xin Gu Trade Ltd (“FXGT”)	December 2, 2020	FVTL	Trading of alcoholic beverages	PRC
Dongguan City Fu Xin Technology Ltd (“FXTL”)	November 12, 2020	Xixingdao	Drinking water distribution and delivery	PRC
Dongguan City Fu Guan Healthy Industry Technology Ltd<br> (“FGHL”)	December 21, 2020	Xixingdao	Drinking water distribution and delivery	PRC
Dongguan City Fu Jing Technology Ltd (“FJTL”)	November 17, 2020	Xixingdao	Drinking water distribution and delivery	PRC
Dongguan City Fu Xiang Technology Ltd (“FGTL”)	November 16, 2020	Xixingdao	Drinking water distribution and delivery	PRC
Dongguan City Fu Ji Food & Beverage Ltd (“FJFL”)	November 9, 2020	Xixingdao	Drinking water distribution and delivery	PRC
Dongguan City Fu Lai Food Ltd (“FLFL”)	September 27, 2020	Xixingdao	Drinking water distribution and delivery	PRC
Dongguan<br> City Fu Yi Beverage Ltd (“FYBL”)	November 12, 2020	Xixingdao	Drinking water distribution and delivery	PRC
Dongguan City Fu Tai Food Trade Ltd (“FTFL”)	October 23, 2020	Xixingdao	Drinking water distribution and delivery	PRC
Dongguan<br> City Fu Jia Drinking Water Ltd (“FJWL”)	March 29, 2021	Xixingdao	Sales of agriculture products, household electric appliances<br> and food	PRC
Dongguan<br> City Fu Sheng Drinking Water Ltd (“FSWL”)	March 29, 2021	Xixingdao	Sales of agriculture products, household electric appliances<br> and food	PRC
Dongguan<br> City Fu Xi Drinking Water Ltd (“FXWL”)	March 17, 2021	Xixingdao	Sales of agriculture products, household electric appliances<br> and plastic products	PRC
Shenzhen City Fu Jin Trading Technology Ltd (“FJSTL”)	June 7, 2021	Xixingdao	Sales of agriculture products, household electric appliances,<br> plastic products and software development	PRC
Dongguan City Fu Li Trading Ltd (“FLTL”)	September 10, 2021	Xixingdao	Sales of agriculture products, household electric appliances<br> and plastic products	PRC
Guangdong Fu Gu Supply Chain Group Ltd (“FGGC”)	September 13, 2021	QHDX	Supply chain service, sales of food and health products,<br> machinery, plastic products, and investment holding	PRC

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Useof estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates include certain assumptions related to allowance of doubtful accounts, allowance of deferred tax asset, useful lives and impairment of long-lived assets, and impairment of goodwill. Actual results may differ from these estimates.

Reclassification

Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position.

Foreigncurrency translation and re-measurement

The Company translates its foreign operations to the U.S. dollar in accordance with ASC 830, “Foreign Currency Matters”.

The reporting currency for the Company and its subsidiaries is the U.S. dollar. The Company, DIGLS, DILHK, JJGS and JJHK’s functional currency is the U.S. dollar; QHDX, JJSZ and their subsidiaries which are incorporated in PRC use the Chinese Renminbi (“RMB”) as their functional currency.

The Company’s subsidiaries, whose records are not maintained in that company’s functional currency, re-measure their records into their functional currency as follows:

●	Monetary<br> assets and liabilities at exchange rates in effect at the end of each period
●	Nonmonetary<br> assets and liabilities at historical rates
●	Revenue<br> and expense items at the average rate of exchange prevailing during the period

Gains and losses from these re-measurements were not significant and have been included in the Company’s results of operations.

The Company’s subsidiaries, whose functional currency is not the U.S. dollar, translate their records into the U.S. dollar as follows:

●	Assets<br> and liabilities at the rate of exchange in effect at the balance sheet date
●	Equities<br> at the historical rate
●	Revenue<br> and expense items at the average rate of exchange prevailing during the period

Translation of amounts from the local currencies of the Company into US$ has been made at the following exchange rates for the respective periods:

SCHEDULE OF FOREIGN CURRENCY EXCHANGE RATE TRANSLATION

	2022	2021

	2022	2021
Period-end RMB:US1 exchange rate	0.15770	0.15261
Period-average RMB:US1 exchange rate	0.15752	0.15424

All values are in US Dollars.

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 US dollars at the rates used in translation.

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Impairmentof long-lived assets other than goodwill

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Impairment may be the result of becoming obsolete from a change in the industry or new technologies. Impairment is present if the carrying amount of an asset is less than its undiscounted cash flows to be generated.

If an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

The Company did not recognize any impairment of long-lived assets during the three months ended March 31, 2022 and 2021.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. In accordance with FASB ASC Topic 350, “Intangibles-Goodwill and Others”, goodwill is subject to at least an annual assessment for impairment or more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis. The Company would recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit.

During the three months ended March 31, 2022 and 2021, the Company did not record any impairment of goodwill.

Revenuerecognition

The Company follows the guidance of ASC 606, revenue from contracts with customers is recognized using the following five steps:

1.	Identify the contract(s)<br> with a customer;
2.	Identify the performance<br> obligations in the contract;
3.	Determine the transaction<br> price;
4.	Allocate the transaction<br> price to the performance obligations in the contract; and
5.	Recognize revenue when<br> (or as) the entity satisfies a performance obligation.

Under Topic 606, revenues are recognized when the promised products have been confirmed of delivery or services have been transferred to the consumers in amounts that reflect the consideration the customer expects to be entitled to in exchange for those services. The Company presents value added taxes (“VAT”) as reductions of revenues. The Company recognizes revenues net of value added taxes (“VAT”) and relevant charges.

We generate revenue primarily from the sales of wine, water and oil directly to agents, wholesalers and end users. We recognize product revenue at a point in time when the control of the products has been transferred to customers. The transfer of control is considered complete when products have been picked up by or delivered to our customers. We account for shipping and handling fees as a fulfillment cost.

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The following table provides information about disaggregated revenue based on revenue by product types:

SCHEDULE OF DISAGGREGATION REVENUE

	2022		2021
	Three months ended <br>31 March,
	2022		2021
Sales of wine	$	630,462	$	779,220
Sales of water		529,444		700,495
Sales of oil		-		135,997
Others		101,904		28,448
Total	$	1,261,810	$	1,644,160

Contractliabilities

Contract

liabilities consist mainly of customer advances. On certain occasions, the Company may receive prepayments from downstream retailers or wholesales customers for wines, water and other products prior to them taking possession of the Company’s products. The Company records these receipts as customer advances until the control of the products has been transferred the customers. As of March 31, 2022 and December 31, 2021, the Company had customer advances of $351,412

and $382,518

,

respectively. During the three months ended March 31, 2022, the Company recognized $272,551 of customer advances in the opening balance.

Relatedparty transactions

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

NOTE

2 - ACCOUNTS RECEIVABLE, NET

Accounts receivable consisted of the following as of March 31, 2022 and December 31, 2021:

SCHEDULE OF ACCOUNTS RECEIVABLE

	March 31 <br><br>2022		December 31, <br><br>2021
Accounts receivable (including $19,044 and $43,477 from related parties as of March 31, 2022 and December 31, 2021, respectively)	$	1,881,892	$	2,662,168
Less: Allowance for doubtful accounts		-		-
Accounts receivable, net	$	1,881,892	$	2,662,168

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NOTE

3 – PREPAYMENTS AND OTHER CURRENT ASSETS

Prepayments and other current assets consisted of the following as of March 31, 2022 and December 31, 2021:

SCHEDULE OF PREPAYMENTS AND OTHER CURRENT ASSETS

	March 31 <br>2022		December 31, <br> 2021
Prepayments (including $1,731,874 and 1,813,904 to related parties as of March 31, 2022 and December 31, 2021, respectively)	$	2,604,463	$	2,169,095
Other current assets		24,439		7,618
Prepayments and other receivables	$	2,628,902	$	2,176,713

Balance of prepayments represented the advanced payments to suppliers including related party suppliers.

NOTE

4 – PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following as of March 31, 2022 and December 31, 2021:

SCHEDULE OF PROPERTY AND EQUIPMENT

	March 31, <br>2022			December 31, <br> 2021
Office equipment	$	116,736		$	113,995
Leasehold improvement		129,424			126,386
Property and equipment		246,160			240,381
Less: Accumulated depreciation		(117,936	)		(99,987	)
Property and equipment, net	$	128,224		$	140,394

Depreciation

expense, which was included in general and administrative expenses, for the three months ended March 31, 2022 and 2021 was $12,466

and $4,950

, respectively.

NOTE

5 – INTANGIBLE ASSETS

Intangible assets and related accumulated amortization were as follows:

SCHEDULE OF INTANGIBLE ASSETS

	March 31, <br>2022			December 31, <br> 2021
Distributor channel	$	3,396,880		$	3,389,404
Others		22,348			22,299
Total intangible assets		3,419,228			3,411,703
Less: Accumulated amortization		(1,344,598	)		(1,129,913	)
Total	$	2,074,630		$	2,281,790

Amortization

expense for the three months ended March 31, 2022 and 2021 was $211,957

and $196,579

, respectively, included in cost of revenues and general and administrative expenses.

As of March 31, 2022, the future estimated amortization costs for intangible assets are as follows:

SCHEDULE OF FUTURE AMORTIZATION EXPENSES FOR DISTRIBUTION CHANNELS

Year ending December 31,
2022 (remaining)	$	636,705
2023		849,220
2024		588,705
Thereafter		-
Total	$	2,074,630

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NOTE

6- RELATED PARTY TRANSACTIONS

Amounts due from related parties as of March 31, 2022 and December 31, 2021 are as follows:

SCHEDULE OF AMOUNT DUE FROM AND DUE TO RELATED PARTIES

		March 31, <br>2022		December 31, <br>2021
Mr. Deqin Ke	Manager of a subsidiary	$	-	$	26,364
Mr. Yuwen Li	Vice President		26,255		-
Due from related parties		$	26,255	$	26,364

Amounts due to related parties as of March 31, 2022 and December 31, 2021 are as follows:

		March 31, <br>2022		December 31, <br>2021
Mr. Yumin Lin	President, Chief Executive Officer, Secretary, Director	$	300,114	$	344,218
Ms. Xiulan Zhou	Manager of a subsidiary		1,160		1,157
Mr. Huagen Li	Manager of a subsidiary		2,523		2,518
Mr. Guodong Jia	Manager of a subsidiary		946		944
Mr. Minghua Cheng	Former director and majority shareholder		78,851		157,353
Mr. Hongwei Ye	Manager of a subsidiary, Shareholder		17		17
Mr. Anping Chen	Manager of a subsidiary		8,516		6,924
Mr. Jiangwei Jia	Manager of a subsidiary		-		787
Ms. Xiuyun Wang	Manager of a subsidiary		-		6,020
Mr. Yuwen Li	Vice President		-		70,745
Shenzhen DaXingHuaShang Industry Development Ltd.	Mr. Yumin Lin is the supervisor of Shenzhen DaXingHuaShang Industry Development Ltd.		94,620		93,298
Mr. Deqin Ke	Manager of a subsidiary		789		-
Mr. Zhihua Liao	Manager of a subsidiary		325		-
Ms. Chunxiang Zhang	Manager of a subsidiary		1,577		-
Mr. Xue Meng	Manager of a subsidiary		789		-
Ms. Shuqin Chen	Manager of a subsidiary		789		-
Due to related parties		$	491,016	$	683,981

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Revenues

generated from related parties during the three months ended March 31, 2022 and 2021 are as follows:

SCHEDULE OF REVENUE GENERATED FROM RELATED PARTIES

		2022		2021
		For<br> the three months ended March 31,
		2022		2021
Mr. Kaihong Lin	Chief Financial Officer and Treasurer	$	241	$	51
Mr. Yumin Lin	President, Chief Executive Officer, Secretary, Director		222		109
Mr. Zihao Ye	Manager of a subsidiary		262		76
Mr. Naiyong Luo	Manager of a subsidiary		-		5,115
Mr. Hongwei Ye	Manager of a subsidiary, Shareholder		-		5,922
Dongguan Zhengui Reality Co., Ltd.	Mr. Naiyong Luo, a manager of a subsidiary, is the controlling shareholder<br> of Dongguan Zhengui Reality Co., Ltd.		-		132,099
Dongguan Huanhai Trading Co., Ltd.	Mr. Weihong Ye, a manager of a subsidiary, is the controlling shareholder<br> of Dongguan Huanhai Trading Co., Ltd.		-		13,781
Guangdong Yuexin Jiaotong Construction Co., Ltd.	Mr. Naiyong Luo, a manager of a subsidiary, is the controlling shareholder<br> of Guangdong Yuexin Jiaotong Construction Co., Ltd.		-		98,643
Dongguan Tailai Trading Co., Ltd.	Significantly influenced by the Company		-		13,182
Revenues generated from<br> related parties		$	725	$	268,978

Cost of revenues from related parties during the three months ended March 31, 2022 and 2021 is as follows:

SCHEDULE OF COST REVENUES FROM RELATED PARTIES

		2022		2021
		For the three months ended March 31,
		2022		2021
Dongguan Baxi Food Distribution Co., Ltd.	Significantly influenced by the Company	$	8,178	$	31,424
Dongguan Dalingshan Xinwenhua Drinking Water Store	Significantly influenced by the Company		14,648		19,307
Dongguan Pengqin Drinking Water Co., Ltd.	Significantly influenced by the Company		9,555		16,283
Dongguan Dengqinghu Drinking Water Store	Significantly influenced by the Company		1,082		6,472
Dongguan Tailai Trading Co., Ltd.	Significantly influenced by the Company		9,736		14,615
Dongguan Anxiang Technology Co., Ltd.	Significantly influenced by the Company		46,721		35,826
Guangdong Jiaduonuo Shengshi Trading Co., Ltd.	Significantly influenced by the Company		39,765		3,157
Dongguan Dalingshan Runxin Drinking Water Store	Significantly influenced by the Company		7,227		3,516
Cost of revenues from<br> related parties		$	136,912	$	130,600

Purchases from related parties during the three months ended March 31, 2022 and 2021 are as follows:

SCHEDULE

OF PURCHASES FROM RELATED PARTIES

		2022		2021
		For the three months ended March 31,
		2022		2021
Dongguan Baxi Food Distribution Co., Ltd.	Significantly influenced by the Company	$	8,178	$	31,424
Dongguan Dalingshan Xinwenhua Drinking Water Store	Significantly influenced by the Company		14,648		18,319
Dongguan Pengqin Drinking Water Co., Ltd.	Significantly influenced by the Company		9,555		15,450
Dongguan Dengqinghu Drinking Water Store	Significantly influenced by the Company		1,082		6,141
Dongguan Tailai Trading Co., Ltd.	Significantly influenced by the Company		9,736		13,868
Dongguan Anxiang Technology Co., Ltd.	Significantly influenced by the Company		46,721		33,993
Guangdong Jiaduonuo Shengshi Trading Co., Ltd.	Significantly influenced by the Company		39,765		2,996
Dongguan Dalingshan Runxin Drinking Water Store	Significantly influenced by the Company		7,227		3,336
Purchase from related<br> party		$	136,912	$	125,527

Due from related parties mainly consists of funds advanced to related parties as borrowings or funds advanced to pay off the Company’s expenses. The balances are unsecured, non-interest bearing.

Due to related parties mainly consists of borrowings for working capital purpose, the balances are unsecured, non-interest bearing and due on demand.

In addition, during the three months ended March 31, 2022 and 2021, these related parties paid expenses on the Company’s behalf in an amount of nil

and $14,487

, respectively.

Mr. Yuwen Li, the Vice President of the Company, authorized the Company to use trademarks that were owned by him for ten years from October 5, 2019 to October 4, 2029 at no cost.

Also see Note 2, 3 and 8 for more transactions with related parties.

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NOTE

7 - INCOME TAXES

UnitedStates of America

The Company is registered in the State of Nevada and is subject to United States of America tax law. The U.S federal income tax rate is 21%.

Seychelles

Under the current laws of the Seychelles, DIGLS and JJGS are registered as an international business company which governed by the International Business Companies Act of Seychelles and there is no income tax charged in Seychelles.

HongKong

From

year of assessment of 2018/2019 onwards, Hong Kong profit tax rates are 8.25

%

on assessable profits up to HK$2,000,000

(approximately $289,855

,

approximately $426,627, from January 1, 2022 to December 31, 2024. The qualifications of small-scale and low-profit enterprises were examined annually by the Tax Bureau. All of the Company’s PRC subsidiaries met the criteria of small-scale and low-profit enterprises.

Thecomponents of the income tax provision are as follows:

SCHEDULE OF COMPONENTS OF INCOME TAX PROVISION

	Three Months Ended <br> March 31, 2022		Three Months Ended <br> March 31, 2021
Current:
– United States of America	$	-	$	43,096
– Seychelles		-		-
– Hong Kong		-		-
– The PRC		22,407		23,259
Current income tax expense		22,407		23,259
Deferred
– United States of America		-		-
– Seychelles		-		-
– Hong Kong		-		-
– The PRC		-		-
Deferred income tax expense		-		-
Total	$	22,407	$	66,355

The

effective tax rate was 11.3 %

and 16.5

% for the three months ended March 31, 2022 and 2021, respectively.

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NOTE

8 - OPERATING LEASES

As of March 31, 2022, the Company has seventeen separate operating lease agreements for three office spaces, one warehouse and thirteen stores in PRC with remaining lease terms of from 6 months to 61 months.

Two of the leases described above were entered with related parties. The operating lease entered with Ms. Qingmei Lin, a related party, is for the premises in Dongguan City, PRC. The agreement covers the period from January 1, 2019 to April 30, 2027 with the monthly rent expense of RMB10,000 (approximately $1,450). The operating lease agreement entered with Mr. Hongwei Ye, another related party, is for the premises in Dongguan City, PRC. The agreement covers the period from September 27, 2020 to September 30, 2023 with the monthly rent expense of RMB960 (approximately $139).

The Company terminated an operating lease agreement

with a subsidiary of Shenzhen DaXingHuaShang Industry Development Ltd., a related party, for the premise in Shenzhen City, PRC on February 28, 2021. The monthly rent expense for this lease was RMB30,000 (approximately $4,349).

The components of lease expense and supplemental cash flow information related to leases for the three months ended March 31, 2022 and 2021 are as follows:

SCHEDULE OF COMPONENTS OF LEASE EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION

	2022		2021
	For<br> the three months ended<br><br><br><br>March 31,
Operating lease cost (included in general and administrative expenses in the Company’s<br> condensed consolidated statements of operations)	2022		2021
Related parties	$	4,726	$	18,490
Non-related parties		37,773		18,200
Other information for the three months ended	March<br> 31, 2022			March<br> 31, 2021
---	---	---	---	---	---	---
Cash paid for amounts included in the measurement of lease obligations	$	51,477		$	41,336
Weighted average remaining lease term (in years)		3.66			3.77
Weighted average discount rate		3.23	%		3.23	%

Maturities of the Company’s lease obligations as of March 31, 2022 are as follows:

SCHEDULE OF MATURITIES OF LEASE OBLIGATIONS

Year ending December 31,
2022 (remaining)	$	121,292
2023		114,117
2024		86,720
2025		82,664
2026		46,528
Thereafter		6,308
Total lease payment		457,629
Less: Imputed interest		(25,905	)
Operating lease obligations	$	431,724

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NOTE

9 – BANK AND OTHER BORROWINGS

In August 2020, the Company obtained a revolving credit line in the principal amount of RMB910,000 (approximately $139,000) from China Construction Bank, which bears interest at the base Loan Prime Rate of 3.85% plus 0.4%. The credit line is guaranteed by Xiulan Zhou, a related party, and pledged by her property. The maturity date is on July 21, 2023.

In December 2020, the Company obtained a loan in the principal amount of RMB750,000 (approximately $115,000) from Huaneng Guicheng Trust Co., Ltd, a financial institution in PRC, which bears interest at the base Loan Prime Rate of 3.85% plus 8.75%. The credit line is guaranteed by Yumin Lin. The maturity date is on December 21, 2022.

In November 2021, the Company obtained a bank loan in the principal amount of RMB500,000 (approximately $79,000) from Shenzhen Qianhai Webank Co., Ltd. (“WeBank”), which bears interest at 3.6%. The maturity date is on December 11, 2021. On December 11, 2021, the Company and WeBank agreed to extend the maturity date of the loan to December 21, 2023 and increase the principal amount to RMB500,750 (approximately $79,000) reflecting the accrued interest. The loan is guaranteed by Yumin Lin and bears interest at 10.71%.

The balance of the loans borrowed as of March 31, 2022 and December 31, 2021 were as follows:

SCHEDULE OF BALANCE OF LOAN BORROWED UNDER CREDIT LINES

	March<br> 31, 2022		December<br> 31, 2021
Loan<br> from a trust in PRC	$	50,690	$	67,438
China Construction Bank		143,508		143,192
WeBank		78,968		78,795
Aggregate outstanding principal balances	$	273,166	$	289,425
Less: current portion		95,815		101,207
Non-current portion	$	177,351	$	188,218

The

total interest expense was $5,825

and $3,553

for the three months ended March 31, 2022 and 2021, respectively.

NOTE

10 – COMMON STOCK

Effective on October 21, 2021, the Company has approved a reverse stock split of the Company’s authorized and issued and outstanding shares of common stock, par value $0.001 per share, at a ratio of 1-for-20 (the “Reverse Stock Split”). As a result of the Reverse Stock Split, the Company’s authorized shares of common stock became 150,000,000 shares. As of March 31, 2021, and immediately prior to the Reverse Stock Split, there were 313,098,220 shares of common stock issued and outstanding. As a result of the Reverse Stock Split, the Company has 15,655,038 shares of common stock issued and outstanding. The par value remains unchanged at $0.001 per share, which resulted in a reclassification of capital from par value to additional paid-in capital in excess of par value. All share and per share amount in the accompanying financial statement for the prior period have been retroactively adjusted to reflect the Reverse Stock Split.

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Item2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Theinformation contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the yearended December 31, 2021 filed with the Securities and Exchange Commission on April 1, 2022 (the “Form 10-K”)and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also shouldbe read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

Thefollowing discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of thePrivate Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation,“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guaranteedof future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-lookingstatements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. Westrongly encourage investors to carefully read the factors described in our Form 10-K in the section entitled “Risk Factors”for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements.We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following shouldalso be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.

Overview

Fortune Valley Treasures, Inc. (the “Company,” “we,” “our” or “us”) was incorporated in the State of Nevada on March 21, 2014. We were initially incorporated to offer users with up-to-date information on digital currencies. The Company, as a holding company, does not conduct substantial business operations. We, through our operating subsidiaries, engage in the food supply chain operations and management via a service platform. Through various acquisitions of high-quality upstream and downstream companies in the industry, the Company seeks to create a complete industrial chain to reduce costs and enhance competitiveness. The Company mainly focuses on online and offline sales targeting regional wholesalers, retailers, supermarkets and major food and beverage (“F&B”) chains.

During the three months ended March 31, 2022, the Company conducted its business in one revenue stream: product sales – wine, water and other F&B products.

Resultsof Operations

ThreeMonths Ended March 31, 2022 and 2021

	Three Months Ended March 31,
	2022			2021			Change
Net revenues	$	1,261,810		$	1,644,160		$	(382,350	)
Cost of revenues		(518,462	)		(729,743	)		211,281
Gross profit		743,348			914,417			(171,069	)
Operating expense		(545,441	)		(509,131	)		(36,310	)
Interest income		77			165			(88	)
Other income		6,207			31			6,176
Interest expense		(5,825	)		(3,553	)		(2,272	)
Income taxes		(22,407	)		(66,355	)		43,948
Net income		175,959			335,574			(159,615	)
Net income attributable to noncontrolling interests		27,283			30,320			(3,037	)
Net income attributable to Fortune Valley Treasures, Inc.	$	148,676		$	305,254		$	(156,578	)

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Net Revenues

Revenue was $1,261,810 for three months ended March 31, 2022, reflecting a decrease of $382,350 from $1,644,160 for the three months ended March 31, 2021 as the Company did not generated any revenues from sales of oil during the three months ended March 31, 2022. The Company adjusted its product mix and stopped selling oil from this quarter due to low profits.

Costof Revenues

Cost of revenue was $518,462 for the three months ended March 31, 2022, reflecting a decrease of $211,281 from $729,743 for the three months ended March 31, 2021. The cost of revenues fluctuated in line with our net revenues.

GrossProfit

Gross profit was $743,348 and $914,417 for the three months ended March 31, 2022 and 2021, respectively, reflecting a decrease of 171,069, which was mainly attributable to the quarantine requirement imposed by the local government in response to the sporadic outbreaks of new COVID-19 variants in Dongguan City during the three months ended March 31, 2022.

OperatingExpenses

Operating expense was $545,441 for the three months ended March 31, 2022, reflecting an increase of $36,310, from $509,131 for the three months ended March 31, 2021 due to the increase in professional service fees and employee salary.

NetIncome

For the three months ended March 31, 2022, net income was $175,959, compared to net income of $335,574 for the three months ended March 31, 2021.

Netincome attributable to noncontrolling interests

The Company records net income attributable to noncontrolling interests in the condensed consolidated statements of operations for any noncontrolling interests of consolidated subsidiaries.

For the three months ended March 31, 2022 and 2021, the Company recorded net income attributable to noncontrolling interests of $27,283 and $30,320, respectively.

Liquidity and Capital Resources

WorkingCapital

	March 31,		December 31,
	2022		2021		Change
Total current assets	$	4,835,666	$	5,069,481	$	(233,815	)
Total current liabilities		1,404,789		1,717,519		(312,730	)
Working capital	$	3,430,877	$	3,351,962	$	78,915

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As of March 31, 2022, we had working capital of $3,430,877, as compared to working capital of $3,351,962 as of December 31, 2021. We had total current assets of $4,835,666, consisting of cash and cash equivalents of $150,613, inventories of $148,004, prepayments and other current assets of $2,628,902, accounts receivable of $1,881,892 and amount due from related party of $26,255, compared to total current assets of $5,069,481 as of December 31, 2021. The decrease was mainly due to the decrease in accounts receivable and offset by the increase in prepayments and other current assets. We had current liabilities of $1,404,789, consisting of operating lease obligations $142,153, accounts payable of $165,432, customer advances $351,412, due to related parties of $491,016, current portion of bank and other borrowings of $95,815 and accrued liabilities of $158,961.

Our cash and cash equivalents balance at March 31, 2022 increased to $150,613, as compared to $123,163 at December 31, 2021. We estimate the Company currently has sufficient cash available to meet its anticipated working capital for the next twelve months, without raising additional capital. The Company is continuing to look for different financing opportunities in order to increase sufficient working capital and improve liquidity.

Despite the increased working capital of the Company, no assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its shareholders, in the case of equity financing.

CashFlows

	Three Months Ended March 31,
	2022			2021			Change
Cash Flows provided by (used in) Operating Activities	$	133,442		$	(508,778	)	$	642,220
Cash Flows provided by Investing Activities		-			809,036			(809,036	)
Cash Flows provided by (used in) Financing Activities		(95,638	)		404,405			(500,043	)
Effect of change rate changes in cash and cash equivalents		(10,354	)		9,835			(20,189	)
Net Changes in Cash During<br> the Period	$	27,450		$	714,498		$	(687,048	)

CashFlow from Operating Activities

Net cash provided by operating activities for the three months ended March 31, 2022 was $133,442, as compared to the amount of $508,778 used in operating activities for the three months ended March 31, 2021, reflecting an increase of $642,220, which was mainly resulted from net income of $175,959, depreciation and amortization expense of $224,423, decrease in accounts receivable of $785,262, and offset by increase in the prepayments and other current assets of $446,876, increase in deposits paid to vendors of $327,389 and decrease in due to related parties in $112,717.

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CashFlow from Investing Activities

Net cash used in investing activities was nil for the three months ended March 31, 2022, compared to net cash provided by investing activities of $809,036 for the three months ended March 31, 2021.

CashFlow from Financing Activities

Net cash used in financing activities was $95,638 for the three months ended March 31, 2022, compared to net cash provided by financing activities of $404,405 for the three months ended March 31, 2021. The decrease in net cash provided by financing activities was mainly due to the decrease in borrowings from related parties and offset by the decrease in repayments to related parties.

CriticalAccounting Policy

In the ordinary course of business, we make a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements in conformity with U.S. generally accepted accounting principles. We base our estimates on historical experience, when available, and on other various assumptions that are believed to be reasonable under the circumstances. Actual results could differ significantly from those estimates under different assumptions and conditions.

RevenueRecognition

The Company follows the guidance of ASC 606, revenue from contracts with customers is recognized using the following five steps:

1.	Identify<br> the contract(s) with a customer;
2.	Identify<br> the performance obligations in the contract;
3.	Determine<br> the transaction price;
4.	Allocate<br> the transaction price to the performance obligations in the contract; and
5.	Recognize<br> revenue when (or as) the entity satisfies a performance obligation.

Off-BalanceSheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

RelatedParty Transactions

As of March 31, 2022 and December 31, 2021, the Company had accounts receivable from related parties in amounts of $19,044 and $43,477, prepayments to related parties in the amounts of $1,731,874 and $1,813,904, deposits to related parties in the amounts of $1,778,143 and $1,596,075, and accounts payable to related parties in amounts of $29,181 and $17,789, respectively.

As of March 31, 2022 and December 31, 2021, the Company had outstanding receivables due from its related parties in the amounts of $26,255 and $26,364, respectively, which mainly consisted of funds advanced to related parties as borrowings or funds advances to pay off the Company’s expenses. The balances were unsecured and non-interest bearing.

As of March 31, 2022 and December 31, 2021, the Company had outstanding payables due to its related parties in the amounts of $491,016 and $683,981, respectively, which mainly consisted of borrowings for working capital purpose. The balances were unsecured, non-interest bearing and due on demand.

During the three months ended March 31, 2022 and 2021, the Company’s related parties paid expenses on behalf of the Company in the amounts of nil and $14,487, respectively.

During the three months ended March 31, 2022 and 2021, the Company sold products to its related parties in the amounts of $725 and $268,978, respectively, purchased goods from its related parties in the amounts of $136,912 and $125,527, and incurred cost of revenues from related parties in the amounts of $136,912 and $130,600, respectively.

During the three months ended March 31, 2022 and 2021, the rental expenses to related parties were $4,726 and $18,490, respectively.

Our related parties are primarily those persons who can significantly influence based on our common business relationships. Refer to Note 6 to the unaudited condensed consolidated financial statements for additional details regarding the related party transactions.

Item3. Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide the information under this item.

Item4. Controls and Procedures.

Evaluationof Disclosure Controls and Procedures

We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of March 31, 2022, that our disclosure controls and procedures were not effective.

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The matter involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board was lack of well-established procedures to identify, approve and review related party transactions.

Management’sReport on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the board of directors (the “Board”), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and includes those policies and procedures that:

●	Apply to the maintenance<br> of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
●	Provide reasonable assurance<br> that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts<br> and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;<br> and
●	Provide reasonable assurance<br> regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could<br> have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

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We carried out an assessment, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our internal controls over financial reporting, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of March 31, 2022. Management based the assessment on criteria for effective internal control over financial reporting described in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Based on this assessment, management has concluded that as of March 31, 2022, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

●	We have increased our personnel<br> resources and technical accounting expertise within the accounting function and intend to hire one or more additional personnel for<br> the function due to turnover.
●	We will create a position<br> to segregate duties consistent with control objectives.
●	We plan to prepare written<br> policies and procedures for operating, accounting and financial reporting to establish a formal process to close our books monthly<br> on an accrual basis and account for all transactions, including equity and debt transactions.
●	We<br> plan to test our updated controls and remediate our deficiencies in the year 2022.

Changesin Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the period covered by this Report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART

II — OTHER INFORMATION

Item1. Legal Proceedings.

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholder are an adverse party or has a material interest adverse to us.

Item1A. Risk Factors.

Not applicable to a smaller reporting company

Item2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item3. Defaults Upon Senior Securities.

None.

Item4. Mine Safety Disclosures.

Not applicable.

Item5. Other Information.

None.

Item6. Exhibits

Exhibit No.	Description
31.1	Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer
31.2	Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial officer
32.1	Section 1350 Certification of principal executive officer
32.2	Section 1350 Certification of principal financial officer and principal accounting officer
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase<br> Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase<br> Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase<br> Document
104	Cover Page Interactive Data File (embedded within the<br> Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Fortune Valley Treasures, Inc.
Date:<br> May 16, 2022	By:	/s/ Yumin Lin
		Yumin Lin
		President and Chief Executive Officer
		(Principal Executive Officer)
Date:<br> May 16, 2022	By:	/s/ Kaihong Lin
		Kaihong Lin
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

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EXHIBIT31.1

CERTIFICATION

I, Yumin Lin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fortune Valley Treasures, Inc. (the “Company”) for the period ended March 31, 2022;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed<br> such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,<br> to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others<br> within those entities, particularly during the period in which this report is being prepared;
b.	Designed<br> such internal control over financial reporting or caused such internal control to be designed under our supervision, to provide reasonable<br> assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance<br> with generally accepted accounting principles.
c.	Evaluated<br> the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about<br> the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;<br> and
d.	Disclosed<br> in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s<br> most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,<br> or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All<br> significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are<br> reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;<br> and
b.	Any<br> fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s<br> internal control over financial reporting.
Date:<br> May 16, 2022
---	---	---
	By:	/s/ Yumin Lin
	Name:	Yumin<br> Lin
	Title:	Chief<br> Executive Officer, President and Secretary<br><br> (Principal Executive Officer)

EXHIBIT31.2

CERTIFICATION

I, Kaihong Lin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fortune Valley Treasures, Inc. (the “Company”) for the quarter ended March 31, 2022;

a.	Designed<br> such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,<br> to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others<br> within those entities, particularly during the period in which this report is being prepared;
b.	Designed<br> such internal control over financial reporting or caused such internal control to be designed under our supervision, to provide reasonable<br> assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance<br> with generally accepted accounting principles.
c.	Evaluated<br> the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about<br> the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;<br> and
d.	Disclosed<br> in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s<br> most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,<br> or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

a.	All<br> significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are<br> reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;<br> and
b.	Any<br> fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s<br> internal control over financial reporting
Date:<br> May 16, 2022
---	---	---
	By:	/s/ Kaihong Lin
	Name:	Kaihong<br> Lin
	Title:	Chief<br> Financial Officer and Treasurer<br><br> <br>(Principal<br> Financial and Accounting Officer)

EXHIBIT32.1

CERTIFICATIONPURSUANT TO

18U.S.C. SECTION 1350,

ASADOPTED PURSUANT TO

SECTION906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Fortune Valley Treasures, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:<br> May 16, 2022
	By:	/s/ Yumin Lin
	Name:	Yumin<br> Lin
	Title:	Chief<br> Executive Officer, President and Secretary<br><br> <br>(Principal<br> Executive Officer)

EXHIBIT32.2

CERTIFICATIONPURSUANT TO

18U.S.C. SECTION 1350,

ASADOPTED PURSUANT TO

SECTION906 OF THE SARBANES-OXLEY ACT OF 2002

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date:<br> May 16, 2022
	By:	/s/ Kaihong Lin
	Name:	Kaihong<br> Lin
	Title:	Chief<br> Financial Officer and Treasurer
		(Principal<br> Financial and Accounting Officer)