Revenue and Profit - Net revenues for the three months ended June 30, 2024 were $247,061, a decrease of $1,025,536 (81%) compared to $1,272,597 for the same period in 2023[80] - Net revenues for the six months ended June 30, 2024 were $514,883, a decrease of $2,393,003 (82%) compared to $2,907,886 for the same period in 2023[81] - Gross profit for the three months ended June 30, 2024 was $44,276, a decrease of $575,523 (93%) compared to $619,799 for the same period in 2023[83] - Gross profit for the six months ended June 30, 2024 was $99,209, a decrease of $1,478,512 (94%) compared to $1,577,721 for the same period in 2023[83] Net Loss - Net loss for the three months ended June 30, 2024 was $777,723, compared to a net loss of $444,829 for the same period in 2023[84] - Net loss for the six months ended June 30, 2024 was $1,778,803, compared to a net loss of $534,005 for the same period in 2023[84] Cash Flow and Working Capital - Cash and cash equivalents decreased to $7,410 as of June 30, 2024 from $288,255 as of December 31, 2023[88] - Net cash used in operating activities for the six months ended June 30, 2024 was $274,805, compared to $85,816 provided by operating activities for the same period in 2023[90] - Net cash used in financing activities for the six months ended June 30, 2024 was $130, compared to $42,802 provided by financing activities for the same period in 2023[92] - The company estimates it has insufficient working capital to support daily operations for the next twelve months without raising additional capital[88] Accounting Policies and Off-Balance Sheet Arrangements - No material changes to critical accounting policies related to revenue recognition, allowance of doubtful accounts, and impairment of intangible assets and goodwill[94] - No off-balance sheet arrangements that materially affect financial condition, revenues, or expenses[96] Related Party Transactions - Accounts receivable from related parties as of June 30, 2024: $33,043, and December 31, 2023: $61,113[97] - Prepayments to related parties as of June 30, 2024: $806,932, and December 31, 2023: $941,978[97] - Deposits to related parties as of June 30, 2024: $523,886, and December 31, 2023: $536,450[97] - Accounts payable to related parties as of June 30, 2024: $187,954, and December 31, 2023: $162,310[97] - Outstanding payables due to related parties as of June 30, 2024: $1,015,727, and December 31, 2023: $680,226[97] - Products sold to related parties during six months ended June 30, 2024: $9,751, and June 30, 2023: $69,598[98] - Goods purchased from related parties during six months ended June 30, 2024: $167,351, and June 30, 2023: $374,686[98] - Rental expenses to related parties during six months ended June 30, 2024: $8,918, and June 30, 2023: $9,501[98]

Commission File Number 000-55555 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2024 Fortune Valley Treasures, Inc. (Exact name of registrant issuer as specified in its charter) | --- | --- | |----- ...

6000 7% 5608.755 6.28% 5234.918 5421.857 6% 5000 4550.909 4821.062 4590.202 359.2 960.3564101.618 5% 40% .03 4000 4% 3.919 3000 3.45 .57 3% 3.57 2000 2% 1000 1% 0.86% 0 0% 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E Market Size(billion in RMB) Y-O-Y Growth(%) Copyright @ Cevsn Inc. www.cevsn.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 For the fiscal year ended December 31, 2023 FORTUNE VALLEY TREASURES, INC. (Exact name of registrant as specified in its charter) ☒ ...

[PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the company's unaudited condensed consolidated financial statements as of September 30, 2023, including balance sheets, statements of operations and comprehensive income (loss), statements of changes in stockholders' equity, and cash flow statements, along with detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets and stockholders' equity decreased from December 31, 2022, primarily due to reduced current assets from lower receivables, prepayments, and cash, while current liabilities increased Condensed Consolidated Balance Sheets | Indicator | September 30, 2023 (Unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and Cash Equivalents | $13,276 | $165,685 | | Accounts Receivable, Net | $4,303,366 | $4,797,564 | | Inventories | $59,239 | $148,925 | | Prepayments and Other Current Assets, Net | $1,367,548 | $1,758,917 | | **Total Current Assets** | **$5,743,429** | **$6,871,091** | | Deposits Paid, Net | $605,609 | $1,121,302 | | Property and Equipment, Net | $104,225 | $97,890 | | Operating Lease Right-of-Use Assets | $229,526 | $297,232 | | Intangible Assets, Net | $198,806 | $370,926 | | Goodwill | $431,323 | $454,201 | | **Total Assets** | **$7,373,846** | **$9,287,942** | | **Liabilities** | | | | Operating Lease Liabilities – Current | $98,336 | $110,201 | | Accounts Payable | $683,967 | $688,822 | | Accrued Liabilities | $625,189 | $502,389 | | Bank and Other Borrowings – Current | $451,119 | $422,653 | | Customer Advances | $71,315 | $139,334 | | Amounts Due to Related Parties | $723,488 | $565,675 | | **Total Current Liabilities** | **$2,671,621** | **$2,484,582** | | Operating Lease Liabilities – Non-Current | $138,263 | $189,957 | | Bank and Other Borrowings – Non-Current | $188,326 | $58,438 | | **Total Liabilities** | **$3,039,215** | **$2,788,033** | | **Stockholders' Equity** | | | | Total Equity Attributable to Fortune Valley Treasures, Inc. Stockholders | $4,443,122 | $6,391,658 | | Non-Controlling Interests | ($108,491) | $108,251 | | **Total Stockholders' Equity** | **$4,334,631** | **$6,499,909** | | **Total Liabilities and Stockholders' Equity** | **$7,373,846** | **$9,287,942** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) For the three and nine months ended September 30, 2023, net revenue and gross profit significantly declined, resulting in a net loss compared to net income in the prior year, driven by increased operating expenses from professional services and credit losses Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | Indicator | Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $909,719 | $2,915,303 | $3,817,605 | $6,513,572 | | Cost of Revenue | $593,294 | $1,400,522 | $1,923,459 | $3,018,507 | | Gross Profit | $316,425 | $1,514,781 | $1,894,146 | $3,495,065 | | Operating Expenses | $1,538,265 | $487,640 | $3,543,490 | $1,396,667 | | Operating Income (Loss) | ($1,221,840) | $1,027,141 | ($1,649,344) | $2,098,398 | | Net Income (Loss) | ($1,222,744) | $910,735 | ($1,756,749) | $1,875,677 | | Net Income (Loss) Attributable to Fortune Valley Treasures, Inc. | ($1,108,659) | $855,804 | ($1,584,303) | $1,752,213 | | Basic and Diluted Earnings (Loss) Per Share | ($0.07) | $0.05 | ($0.10) | $0.11 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) As of September 30, 2023, total stockholders' equity decreased to **$4,334,631**, primarily due to the current period's net loss and increased accumulated other comprehensive loss from foreign currency translation adjustments Condensed Consolidated Statements of Changes in Stockholders' Equity | Indicator | December 31, 2022 | September 30, 2023 | | :--- | :--- | :--- | | Common Shares | 15,655,038 | 15,655,038 | | Common Stock | $15,655 | $15,655 | | Additional Paid-in Capital | $11,061,233 | $11,061,233 | | Accumulated Deficit and Statutory Reserves | ($4,504,404) | ($6,088,707) | | Accumulated Other Comprehensive Loss | ($180,826) | ($545,059) | | Non-Controlling Interests | $108,251 | ($108,491) | | **Total Stockholders' Equity** | **$6,499,909** | **$4,334,631** | | Net Loss (Nine Months Ended September 30, 2023) | - | ($1,222,744) | | Foreign Currency Translation Adjustment (Nine Months Ended September 30, 2023) | - | ($31,568) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, the company reported net cash outflow of **$272,944** from operating activities, **$5,488** from investing activities, and net cash inflow of **$161,335** from financing activities, with cash and cash equivalents significantly reduced to **$13,276** at period-end Condensed Consolidated Statements of Cash Flows | Indicator | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | ($272,944) | $48,444 | | Net Cash Used in Investing Activities | ($5,488) | $0 | | Net Cash Provided by Financing Activities | $161,335 | $108,002 | | Effect of Exchange Rate Changes | ($35,312) | ($40,166) | | Net Change in Cash and Cash Equivalents | ($152,409) | $116,280 | | Cash and Cash Equivalents at End of Period | $13,276 | $239,443 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the company's financial statements, covering key financial information such as organization, significant accounting policies, accounts receivable, prepayments, deposits, property and equipment, intangible assets, related party transactions, income taxes, operating leases, and bank and other borrowings [NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%201%20-%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The company, established in 2014, primarily distributes wine, spirits, and drinking water through its Chinese subsidiaries, with financial statements prepared under U.S. GAAP and facing going concern risks - The company's primary business involves wholesale and retail distribution of alcoholic beverages, drinking water, and other food and beverage products through its Chinese subsidiaries[34](index=34&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) - The company faces going concern risks, with working capital of **$3,071,808**, cash and cash equivalents of **$13,276**, an accumulated deficit of **$6,088,707**, and **$272,944** in cash outflows from operating activities as of September 30, 2023[85](index=85&type=chunk) - Revenue is primarily derived from sales of alcoholic beverages, water, water purifiers, and other products, recognized using the five-step method under ASC 606 when control transfers to the customer[95](index=95&type=chunk) Revenue by Product Type (For the Nine Months Ended September 30) | Product Type | Three Months 2023 | Three Months 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Alcoholic Beverage Sales | $664,492 | $1,582,829 | $2,447,164 | $3,416,775 | | Water Sales | $160,260 | $1,005,738 | $793,462 | $2,343,830 | | Water Purifier Sales | $62,016 | $245,581 | $429,853 | $641,129 | | Other | $22,951 | $81,155 | $147,126 | $111,838 | | **Total** | **$909,719** | **$2,915,303** | **$3,817,605** | **$6,513,572** | [NOTE 2 – ACCOUNTS RECEIVABLE, NET](index=18&type=section&id=NOTE%202%20%E2%80%93%20ACCOUNTS%20RECEIVABLE,%20NET) As of September 30, 2023, net accounts receivable decreased to **$4,303,366** from **$4,797,564** at December 31, 2022, with the allowance for doubtful accounts increasing from zero to **$517,244** Accounts Receivable, Net (As of September 30) | Indicator | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Gross Accounts Receivable | $4,820,610 | $4,797,564 | | Less: Allowance for Doubtful Accounts | ($517,244) | $0 | | **Accounts Receivable, Net** | **$4,303,366** | **$4,797,564** | Changes in Allowance for Doubtful Accounts (As of September 30) | Indicator | September 30, 2023 | | :--- | :--- | | Beginning Balance | $0 | | Additions | $535,862 | | Foreign Currency Translation Adjustment | ($18,618) | | **Ending Balance** | **$517,244** | [NOTE 3 – PREPAYMENTS AND OTHER CURRENT ASSETS, NET](index=18&type=section&id=NOTE%203%20%E2%80%93%20PREPAYMENTS%20AND%20OTHER%20CURRENT%20ASSETS,%20NET) As of September 30, 2023, net prepayments and other current assets decreased to **$1,367,548** from **$1,758,917** at December 31, 2022, with the allowance for doubtful accounts increasing from **$1,247,580** to **$2,296,889** Prepayments and Other Current Assets, Net (As of September 30) | Indicator | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Gross Prepayments | $3,657,518 | $3,001,866 | | Other Current Assets | $6,919 | $4,631 | | Less: Allowance for Doubtful Accounts | ($2,296,889) | ($1,247,580) | | **Prepayments and Other Current Assets, Net** | **$1,367,548** | **$1,758,917** | Changes in Allowance for Doubtful Accounts for Prepayments (As of September 30) | Indicator | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Beginning Balance | $1,247,580 | $0 | | Additions | $1,152,172 | $1,284,005 | | Foreign Currency Translation Adjustment | ($102,863) | ($36,425) | | **Ending Balance** | **$2,296,889** | **$1,247,580** | [NOTE 4 – DEPOSITS PAID, NET](index=18&type=section&id=NOTE%204%20%E2%80%93%20DEPOSITS%20PAID,%20NET) As of September 30, 2023, net deposits paid decreased to **$605,609** from **$1,121,302** at December 31, 2022, with the allowance for doubtful accounts increasing from **$1,244,350** to **$1,652,625** Deposits Paid, Net (As of September 30) | Indicator | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Gross Deposits Paid | $2,258,234 | $2,365,652 | | Less: Allowance for Doubtful Accounts | ($1,652,625) | ($1,244,350) | | **Deposits Paid, Net** | **$605,609** | **$1,121,302** | Changes in Allowance for Doubtful Accounts for Deposits Paid (As of September 30) | Indicator | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Beginning Balance | $1,244,350 | $0 | | Additions | $487,894 | $1,280,681 | | Foreign Currency Translation Adjustment | ($79,619) | ($36,331) | | **Ending Balance** | **$1,652,625** | **$1,244,350** | [NOTE 5 – PROPERTY AND EQUIPMENT, NET](index=20&type=section&id=NOTE%205%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT,%20NET) As of September 30, 2023, net property and equipment was **$104,225**, slightly higher than **$97,890** at December 31, 2022, with new vehicle assets added and depreciation expense of **$26,168** for the period Property and Equipment, Net (As of September 30) | Indicator | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Office Equipment | $116,520 | $116,520 | | Leasehold Improvements | $126,386 | $126,386 | | Vehicles | $31,599 | $0 | | Total Property and Equipment | $274,505 | $242,906 | | Less: Accumulated Depreciation | ($170,280) | ($145,016) | | **Property and Equipment, Net** | **$104,225** | **$97,890** | - Depreciation expense for the nine months ended September 30, 2023, was **$26,168**, recognized in general and administrative expenses[140](index=140&type=chunk) [NOTE 6 – INTANGIBLE ASSETS, NET](index=20&type=section&id=NOTE%206%20%E2%80%93%20INTANGIBLE%20ASSETS,%20NET) As of September 30, 2023, net intangible assets decreased to **$198,806** from **$370,926** at December 31, 2022, primarily due to distribution channels, with amortization expense of **$157,641** for the period Intangible Assets, Net (As of September 30) | Indicator | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Distribution Channels | $2,960,608 | $3,117,635 | | Other | $25,138 | $27,809 | | Total Intangible Assets | $2,985,746 | $3,145,444 | | Less: Accumulated Amortization | ($1,883,226) | ($1,822,875) | | Less: Accumulated Impairment | ($903,714) | ($951,643) | | **Intangible Assets, Net** | **$198,806** | **$370,926** | Future Amortization Expense for Intangible Assets (As of September 30, 2023) | Year | Amount | | :--- | :--- | | 2023 (Remaining) | $50,886 | | 2024 | $136,911 | | 2025 | $4,962 | | 2026 | $4,962 | | 2027 | $1,085 | | **Total** | **$198,806** | - Amortization expense for the nine months ended September 30, 2023, was **$157,641**, recognized in cost of revenue and general and administrative expenses[120](index=120&type=chunk) [NOTE 7 - RELATED PARTY TRANSACTIONS](index=20&type=section&id=NOTE%207%20-%20RELATED%20PARTY%20TRANSACTIONS) The company engages in various related party transactions, including receivables, prepayments, deposits, payables, sales, purchases, and leases, with **$723,488** in amounts due to related parties as of September 30, 2023, primarily unsecured, interest-free, and on-demand working capital borrowings Amounts Due to Related Parties (As of September 30) | Related Party | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Mr. Yumin Lin | $454,645 | $389,051 | | Ms. Xiulan Zhou | $1,670 | $508 | | Mr. Yuwen Li | $100,416 | $64,924 | | Shenzhen Daxing Huashang Industrial Group Co., Ltd. | $82,468 | $86,842 | | **Total** | **$723,488** | **$565,675** | Related Party Revenue (For the Nine Months Ended September 30) | Related Party | 2023 | 2022 | | :--- | :--- | :--- | | Directors, Officers, and Subsidiary Managers | $87,168 | $120,632 | Related Party Purchases (For the Nine Months Ended September 30) | Related Party | 2023 | 2022 | | :--- | :--- | :--- | | Dongguan Baxi Food Distribution Co., Ltd. | $83,891 | $27,916 | | Dongguan Dalingshan New Culture Drinking Water Store | $27,658 | $78,474 | | Dongguan Pengqin Drinking Water Co., Ltd. | $24,481 | $63,429 | | Dongguan Yijia Trading Co., Ltd. | $89,535 | $297,370 | | **Total** | **$493,096** | **$763,663** | - As of September 30, 2023, the company had **$69,746** in accounts receivable from related parties, **$966,676** in prepayments to related parties, **$523,296** in deposits paid to related parties, and **$124,987** in accounts payable to related parties[177](index=177&type=chunk) [NOTE 8 - INCOME TAXES](index=24&type=section&id=NOTE%208%20-%20INCOME%20TAXES) The company and its subsidiaries face varying income tax rates across jurisdictions, with total income tax expense of **$94,596** and an effective tax rate of **-5.7%** for the nine months ended September 30, 2023, compared to **10.2%** in 2022, with Chinese mainland subsidiaries applying preferential small-profit enterprise tax rates Income Tax Components (For the Nine Months Ended September 30) | Region | 2023 | 2022 | | :--- | :--- | :--- | | United States | $31,761 | $105,074 | | Chinese Mainland | $62,835 | $107,200 | | **Total** | **$94,596** | **$212,274** | - For the nine months ended September 30, 2023, the effective tax rate was **-5.7%**, compared to **10.2%** in the same period of 2022[129](index=129&type=chunk) - Chinese mainland subsidiaries qualify as small-profit enterprises, applying preferential corporate income tax rates of **2.5%** or **5%**[128](index=128&type=chunk) [NOTE 9 - OPERATING LEASES](index=25&type=section&id=NOTE%209%20-%20OPERATING%20LEASES) The company holds 21 operating lease agreements in the PRC for office, warehouse, and retail spaces, with total operating lease liabilities of **$288,459** as of September 30, 2023, including related party leases, and total lease costs of **$111,334** for the nine months ended September 30, 2023 Lease Obligation Maturities (As of September 30, 2023) | Year | Amount | | :--- | :--- | | 2023 (Remaining) | $27,008 | | 2024 | $118,512 | | 2025 | $105,405 | | 2026 | $47,012 | | 2027 | $5,498 | | **Total Lease Payments** | **$303,435** | | Less: Imputed Interest | ($14,976) | | **Operating Lease Obligations** | **$288,459** | Lease Expense and Cash Flow Information (For the Nine Months Ended September 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Related Party Operating Lease Cost | $14,046 | $16,132 | | Non-Related Party Operating Lease Cost | $97,288 | $109,050 | | **Total Operating Lease Cost** | **$111,334** | **$125,182** | | Cash Paid for Lease Obligations | $116,743 | $110,768 | | Weighted-Average Remaining Lease Term (Years) | 2.61 | 3.31 | | Weighted-Average Discount Rate | 3.23% | 3.23% | - The company has two operating lease agreements with related parties, one of which has been extended until September 30, 2026[131](index=131&type=chunk) [NOTE 10 – BANK AND OTHER BORROWINGS](index=25&type=section&id=NOTE%2010%20%E2%80%93%20BANK%20AND%20OTHER%20BORROWINGS) The company utilizes revolving credit facilities and bank loans from various institutions for working capital and operations, with total principal outstanding of **$639,445** as of September 30, 2023, of which **$451,119** is current, and total interest expense of **$28,546** for the period Borrowing Balances (As of September 30) | Borrowing Source | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | China Trust Borrowings | $29,139 | $60,049 | | China Construction Bank | $463,471 | $276,447 | | WeBank | $70,508 | $77,220 | | Guangdong Nanyue Bank | $51,954 | $67,375 | | Bank of Ningbo | $24,373 | $0 | | **Total Principal Outstanding** | **$639,445** | **$481,091** | | Less: Current Portion | ($451,119) | ($422,653) | | **Non-Current Portion** | **$188,326** | **$58,438** | Future Minimum Loan Payments (As of September 30, 2023) | Year | Amount | | :--- | :--- | | 2023 (Remaining) | $44,254 | | 2024 | $418,306 | | 2025 | $21,406 | | 2026 | $148,317 | | 2027 | $5,372 | | Thereafter | $1,790 | | **Total** | **$639,445** | - Total interest expense for the nine months ended September 30, 2023, was **$28,546**, an increase from **$21,077** in the same period of 2022[9](index=9&type=chunk) - In July 2023, the company obtained a **$114,000** revolving credit facility from China Construction Bank at **3.85%** interest, co-borrowed by Yumin Lin[8](index=8&type=chunk) - In July 2023, the company obtained a **$143,000** revolving credit facility from China Construction Bank at **3.70%** interest, guaranteed by related party Xiulan Zhou and secured by her property[18](index=18&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=28&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section discusses the company's financial condition and results of operations for the three and nine months ended September 30, 2023, analyzing changes in revenue, costs, profit, operating expenses, liquidity, and capital resources, alongside an overview of its business and key accounting policies [Overview](index=28&type=section&id=Overview) Fortune Valley Treasures, Inc. (FVTI), established in 2014, transitioned from digital currency information to food supply chain operations and management, focusing on online and offline sales of alcoholic beverages, water, water purifiers, and other food and beverage products - The company, established in 2014, initially provided digital currency information and now primarily engages in food supply chain operations and management[14](index=14&type=chunk) - The company builds a complete industry chain through upstream and downstream acquisitions to reduce costs and enhance competitiveness, primarily selling alcoholic beverages, water, water purifiers, and other food and beverage products through online and offline channels[14](index=14&type=chunk)[15](index=15&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) For the three and nine months ended September 30, 2023, net revenue and gross profit significantly declined, leading to a net loss from reduced sales volumes and lower wine prices, while operating expenses substantially increased due to professional service and credit loss fees Summary of Results of Operations (For the Nine Months Ended September 30) | Indicator | Three Months 2023 | Three Months 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $909,719 | $2,915,303 | $3,817,605 | $6,513,572 | | Net Revenue Year-over-Year Change | -69% | - | -41% | - | | Cost of Revenue | $593,294 | $1,400,522 | $1,923,459 | $3,018,507 | | Cost of Revenue Year-over-Year Change | -58% | - | -36% | - | | Gross Profit | $316,425 | $1,514,781 | $1,894,146 | $3,495,065 | | Gross Profit Year-over-Year Change | -79% | - | -46% | - | | Operating Expenses | $1,538,265 | $487,640 | $3,543,490 | $1,396,667 | | Operating Expenses Year-over-Year Change | +215% | - | +154% | - | | Net Income (Loss) | ($1,222,744) | $910,735 | ($1,756,749) | $1,875,677 | | Net Income (Loss) Year-over-Year Change | Shift from Income to Loss | - | Shift from Income to Loss | - | - The decline in net revenue is primarily due to reduced product sales from weak market demand and slow economic recovery in China, alongside lower unit prices for wine products to attract new customers[3](index=3&type=chunk)[4](index=4&type=chunk) - Increased operating expenses are mainly attributable to higher professional service fees and credit loss expenses[16](index=16&type=chunk)[17](index=17&type=chunk) - Net loss attributable to non-controlling interests was **$114,085** (three months) and **$172,446** (nine months), compared to net income in the prior year period[161](index=161&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2023, working capital was **$3,071,808**, a decrease of **$1,314,701** from December 31, 2022, with cash and cash equivalents falling to **$13,276**, and net cash outflows of **$272,944** from operations, **$5,488** from investing, and net inflows of **$161,335** from financing, though the company anticipates sufficient working capital for the next twelve months while seeking additional funding Working Capital (As of September 30) | Indicator | September 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | $5,743,429 | $6,871,091 | ($1,127,662) | | Total Current Liabilities | $2,671,621 | $2,484,582 | $187,039 | | **Working Capital** | **$3,071,808** | **$4,386,509** | **($1,314,701)** | Summary of Cash Flows (For the Nine Months Ended September 30) | Indicator | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | ($272,944) | $48,444 | ($321,388) | | Net Cash Used in Investing Activities | ($5,488) | $0 | ($5,488) | | Net Cash Provided by Financing Activities | $161,355 | $108,002 | $53,353 | | Effect of Exchange Rate Changes | ($35,312) | ($40,166) | $4,854 | | **Net Change in Cash and Cash Equivalents** | **($152,409)** | **$116,280** | **($268,689)** | - As of September 30, 2023, cash and cash equivalents decreased to **$13,276** from **$165,685** as of December 31, 2022[163](index=163&type=chunk) - Cash outflow from operating activities was primarily due to net loss and an increase in prepayments and other current assets, partially offset by credit loss provisions[165](index=165&type=chunk) - Cash inflow from financing activities primarily resulted from **$141,967** in net proceeds from revolving credit facilities[174](index=174&type=chunk) [Critical Accounting Policies and Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies include revenue recognition, allowance for doubtful accounts, and impairment of intangible assets and goodwill, with no significant changes during the period - Key accounting policies include revenue recognition, allowance for doubtful accounts, and impairment of intangible assets and goodwill[175](index=175&type=chunk) - There were no significant changes to critical accounting policies during the period[175](index=175&type=chunk) [Off-Balance Sheet Arrangements](index=33&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no off-balance sheet arrangements materially impacting its financial condition, results of operations, liquidity, or capital resources - The company has no off-balance sheet arrangements that have a material effect on its financial condition, results of operations, liquidity, or capital resources[176](index=176&type=chunk) [Related Party Transactions](index=33&type=section&id=Related%20Party%20Transactions) The company engages in various related party transactions, including receivables, prepayments, deposits, payables, sales, purchases, and leases, with **$723,488** in amounts due to related parties as of September 30, 2023, primarily unsecured, interest-free, and on-demand working capital borrowings - As of September 30, 2023, the company had **$69,746** in accounts receivable from related parties, **$966,676** in prepayments to related parties, **$523,296** in deposits paid to related parties, and **$124,987** in accounts payable to related parties[177](index=177&type=chunk) - As of September 30, 2023, amounts due to related parties totaled **$723,488**, primarily consisting of unsecured, interest-free, and on-demand working capital borrowings[178](index=178&type=chunk) - For the nine months ended September 30, 2023, the company sold **$87,168** in products to related parties, purchased **$497,964** in goods from related parties, incurred **$493,096** in cost of revenue from related parties, and paid **$14,046** in related party lease expenses[179](index=179&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=33&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a "smaller reporting company," the company is not required to provide information for this item - As a "smaller reporting company," the company is not required to provide quantitative and qualitative disclosures about market risk[181](index=181&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=33&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management assessed that as of September 30, 2023, the company's disclosure controls and procedures and internal control over financial reporting were ineffective, primarily due to inadequate procedures for identifying, approving, and reviewing related party transactions, with plans to remediate these material weaknesses by increasing personnel and testing updated controls [Evaluation of Disclosure Controls and Procedures](index=33&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management assessed that as of September 30, 2023, the company's disclosure controls and procedures were ineffective - As of September 30, 2023, the company's disclosure controls and procedures were deemed ineffective[182](index=182&type=chunk) [Management's Report on Internal Control over Financial Reporting](index=35&type=section&id=Management's%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) Management assessed that as of September 30, 2023, the company's internal control over financial reporting was ineffective due to a material weakness in identifying, approving, and reviewing related party transactions, with plans to remediate through increased accounting staff and testing updated controls - As of September 30, 2023, the company's internal control over financial reporting was deemed ineffective[199](index=199&type=chunk) - A material weakness in internal control is the lack of adequate procedures for identifying, approving, and reviewing related party transactions[168](index=168&type=chunk) - The company plans to increase accounting staff and technical accounting expertise, and will test updated control measures by the end of 2023 to remediate deficiencies[185](index=185&type=chunk)[199](index=199&type=chunk) [Changes in Internal Control over Financial Reporting](index=35&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no material changes in internal control over financial reporting during the reporting period - There were no material changes in internal control over financial reporting during the period[200](index=200&type=chunk) [PART II OTHER INFORMATION](index=36&type=section&id=PART%20II%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=36&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company currently has no material, active, or pending legal proceedings, nor is it a plaintiff in any significant litigation - The company has no material, active, or pending legal proceedings[187](index=187&type=chunk) [ITEM 1A. RISK FACTORS](index=36&type=section&id=ITEM%201A.%20RISK%20FACTORS) This item is not applicable to smaller reporting companies - This item is not applicable to smaller reporting companies[188](index=188&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=36&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities or use of proceeds during the reporting period - There were no unregistered sales of equity securities or use of proceeds during the reporting period[189](index=189&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=36&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities during the reporting period[191](index=191&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=36&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable - This item is not applicable[193](index=193&type=chunk) [ITEM 5. OTHER INFORMATION](index=36&type=section&id=ITEM%205.%20OTHER%20INFORMATION) There is no other information to disclose for the reporting period - There is no other information to disclose for the reporting period[195](index=195&type=chunk) [ITEM 6. EXHIBITS](index=36&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the report, including executive certifications and XBRL documents - Exhibits include executive certifications (Rule 13(a)-14(a)/15(d)-14(a) Certification, Section 1350 Certification) and Inline XBRL documents[196](index=196&type=chunk) [SIGNATURES](index=37&type=section&id=SIGNATURES) This report was signed by Yumin Lin, President and Chief Executive Officer, and Kaihong Lin, Chief Financial Officer and Treasurer of Fortune Valley Treasures, Inc. on November 13, 2023 - The report was signed by Yumin Lin, President and Chief Executive Officer, and Kaihong Lin, Chief Financial Officer and Treasurer, on November 13, 2023[198](index=198&type=chunk)

Related Party Transactions As of June 30, 2023 and December 31, 2022, the Company had accounts receivable from related parties in the amounts of $72,372 and $146,087, prepayments to related parties in the amounts of $1,162,622 and $1,102,861, deposits to related parties in the amounts of $573,584 and $758,445, and accounts payable to related parties in amounts of $107,454 and $80,426, respectively. During the six months ended June 30, 2023 and 2022, the Company sold products to its related parties in the am ...

NOTE 9 – BANK AND OTHER BORROWINGS In November 2021, the Company obtained a bank loan in the principal amount of RMB500,000 (approximately $79,000 when borrowed) 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 when borrowed) reflecting the accrued inte ...

Regulatory Risks - The company faces risks from changing consumer trends and preferences, which could significantly harm customer relationships and product sales if not addressed timely [71]. - The company has not received any inquiries or sanctions from PRC government authorities regarding recent regulatory changes affecting overseas listings [81]. - The PRC Data Security Law imposes strict data security obligations, with potential fines of up to RMB10 million for violations, impacting operational compliance [81]. - Regulatory changes in China may affect the company's ability to conduct mergers and acquisitions, particularly in sensitive sectors [81]. - The Overseas Listing Rules, effective March 31, 2023, require China-based companies to file with the CSRC within three business days after initial applications for overseas offerings [83]. - A fine between RMB 1 million and RMB 10 million may be imposed for failing to fulfill filing requirements under the Overseas Listing Rules [83]. - The company has not received notifications from anti-monopoly authorities and believes it is in compliance with PRC anti-monopoly laws [84]. - The Holding Foreign Companies Accountable Act requires the SEC to prohibit trading of securities if the PCAOB cannot inspect the auditor for three consecutive years [85]. - The PCAOB has determined it cannot inspect registered public accounting firms in mainland China or Hong Kong due to local authority restrictions [85]. - The company is subject to the Foreign Corrupt Practices Act, which prohibits improper payments to foreign officials, creating potential risks in its operations in the PRC [86]. - Future regulations concerning offshore investments may be subject to interpretation and could impact the company's operations [90]. - The evolving regulatory environment in China poses risks to the company's business model and could result in operational challenges [110]. - The PRC government has significant oversight over business operations, and any new regulations could materially change the company's operations and the value of its securities [112]. - Recent guidance from the Chinese government may influence foreign investment and capital raising for companies operating in China, potentially affecting the company's operations [112]. - The company may face administrative penalties for violations of SAFE Circulars, which could limit its ability to fund and expand its business in China [88]. - The company is required to comply with filing procedures with the CSRC for its listing application on the Nasdaq Capital Market [235]. Financial Performance - The company reported a net loss of $2,156,679 in 2022 compared to a net income of $1,963,469 in 2021 [108]. - Cash provided by operating activities was $6,927 in 2022, a significant improvement from a cash used of $457,142 in 2021 [108]. - The total stockholders' equity as of December 31, 2022, was $6,499,909, down from $9,464,354 in 2021 [107]. - The company incurred an impairment loss on intangible assets of $979,428 in 2022 [108]. - The company’s growth strategy includes stringent cost controls and adequate liquidity management to support operational demands [106]. - The company has a history of operating losses, which could adversely affect its ability to continue as a going concern [229]. - The company reported material weaknesses in internal controls over financial reporting as of December 31, 2022 [161]. - The company has not made any cash transfers, capital contributions, or loans to its subsidiaries as of the report date [228]. - The company’s PRC subsidiaries intend to retain all earnings to fund their operations and business expansions, with no dividends anticipated for the foreseeable future [228]. - The company does not anticipate paying cash dividends in the foreseeable future, focusing on retaining earnings for operations and expansions [123]. Operational Challenges - Supply chain efficiency is critical, as issues like food spoilage or contamination could negatively impact sales and operational results [74]. - The company relies on key suppliers for product sourcing, and disruptions could affect business continuity [75]. - Maintaining brand reputation is essential; product quality issues could lead to consumer distrust and impact profitability [76]. - The company may face challenges in attracting and retaining qualified personnel, which could adversely affect operational efficiency and results [76]. - Cybersecurity risks remain a concern, as data breaches could materially impact reputation and financial performance [77]. - The company has not received any inquiries from governmental authorities regarding monopolistic agreements or dominant market positions [235]. - The company operates in a highly competitive food and beverage industry, facing risks related to supply chain issues and changing consumer preferences [229]. - The company has faced significant disruptions due to COVID-19, impacting its operations and financial condition in 2020 and 2021 [246]. Corporate Governance - The company is classified as a smaller reporting company under NASDAQ rules, requiring at least 50% of the board to be independent directors [139]. - The board of directors has determined that all directors, including Bulin Wang, Chaoping Chen, Bin Lin, Anthony S. Chan, Ramesh Ruben Louis, and Jianwei Lin, are independent according to NASDAQ standards [141]. - The company has established a corporate governance and nominating committee to oversee governance principles and evaluate director independence [143]. - The board of directors is required to hold meetings at least quarterly to ensure compliance with corporate governance matters [139]. Market and Growth Strategy - The company aims to expand its market presence through strategic acquisitions and partnerships within the food and beverage sector [198]. - The company has engaged in various acquisitions to create a complete industrial chain, enhancing competitiveness and reducing costs [198]. - The company plans to extend its market share through acquisitions in the food and beverage industries to increase its customer base and supply channels [247]. - The company has achieved substantial sales through key customer channels, establishing stable cooperative relations with large enterprises [231]. - Future growth strategies include expanding market penetration through technology-driven e-commerce platforms and services [231]. - The company operates through its PRC subsidiaries, focusing on a food and beverage supply chain in Guangdong province, China, with a mission to improve people's lives by offering safe and quality foods [231]. Currency and Taxation - The company faces restrictions on the remittance of foreign currency from its PRC subsidiaries, which may limit its ability to pay dividends or fund operations outside of China [118]. - The PRC government imposes controls on the convertibility of RMB into foreign currencies, which may restrict the company's ability to satisfy foreign currency demands [118]. - FVTI does not believe it meets the conditions to be classified as a "resident enterprise" for PRC tax purposes, which could result in a 25% enterprise income tax on worldwide taxable income if determined otherwise [117]. - Dividends from PRC subsidiaries would qualify as "tax-exempt income" under the EIT Law, but a potential 10% withholding tax could apply to dividends paid to non-PRC stockholders if classified as a "resident enterprise" [117]. Shareholder Information - Mr. Yumin Lin, the CEO, beneficially owns 41.53% of the outstanding shares of common stock, while former Director Mr. Minghua Cheng owns 44.4%, collectively allowing them significant influence over corporate matters [151]. - The company has not adopted an equity compensation plan, and no options or convertible securities have been granted outside of an approved plan [102]. - The company anticipates that its stock may be considered a "penny stock" if trading prices fall below $5.00, which would impose additional restrictions on trading [97]. - The company has not issued any cash dividends on its common stock in the foreseeable future, indicating a focus on reinvestment [255].

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 For the Quarterly Period Ended September 30, 2022 or ☐ 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 Fortune Valley Treasures, Inc. (Exact name of registrant issuer as specified in its charter) Nevada 32-043933 ...

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 For the Quarterly Period Ended June 30, 2022 or ☐ 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 Fortune Valley Treasures, Inc. (Exact name of registrant issuer as specified in its charter) | --- | --- | |------ ...

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 For the Quarterly Period Ended March 31, 2022 or ☐ 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 Fortune Valley Treasures, Inc. (Exact name of registrant issuer as specified in its charter) Nevada 32-0439333 (S ...