Fortune Valley Treasures(FVTI) - 2023 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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 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) 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 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 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 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 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][14][15] - 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] - 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] 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 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 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 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 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] NOTE 6 – INTANGIBLE ASSETS, NET 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] NOTE 7 - RELATED PARTY TRANSACTIONS 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] NOTE 8 - INCOME TAXES 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] - Chinese mainland subsidiaries qualify as small-profit enterprises, applying preferential corporate income tax rates of 2.5% or 5%[128] NOTE 9 - OPERATING LEASES 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] NOTE 10 – BANK AND OTHER BORROWINGS 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] - 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] - 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] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 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] - 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][15] Results of Operations 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][4] - Increased operating expenses are mainly attributable to higher professional service fees and credit loss expenses[16][17] - 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] Liquidity and Capital Resources 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] - 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] - Cash inflow from financing activities primarily resulted from $141,967 in net proceeds from revolving credit facilities[174] Critical Accounting Policies and Estimates 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] - There were no significant changes to critical accounting policies during the period[175] Off-Balance Sheet Arrangements 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] Related Party Transactions 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] - 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] - 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] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 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] ITEM 4. CONTROLS AND PROCEDURES 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 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] Management's Report on Internal Control over Financial Reporting 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] - A material weakness in internal control is the lack of adequate procedures for identifying, approving, and reviewing related party transactions[168] - 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][199] Changes in Internal Control over Financial Reporting 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] PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 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] ITEM 1A. RISK FACTORS This item is not applicable to smaller reporting companies - This item is not applicable to smaller reporting companies[188] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 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] ITEM 3. DEFAULTS UPON SENIOR SECURITIES There were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities during the reporting period[191] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable - This item is not applicable[193] ITEM 5. OTHER INFORMATION There is no other information to disclose for the reporting period - There is no other information to disclose for the reporting period[195] ITEM 6. EXHIBITS 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] 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]