Fortune Valley Treasures(FVTI) - 2020 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the company's financial statements and related disclosures for the period ended March 31, 2020 Financial Statements The company's financial statements for the period ended March 31, 2020, show a significant increase in total assets to $292,184, but also a rise in total liabilities to $1,148,038, resulting in a larger stockholders' deficit of $855,854 Condensed Consolidated Balance Sheets As of March 31, 2020, the company's total assets increased to $292,184 from $193,037 at year-end 2019, driven by increases in cash and plant & equipment Condensed Consolidated Balance Sheet Highlights (USD) | Balance Sheet Item | March 31, 2020 (Unaudited) | December 31, 2019 | | :--- | :--- | :--- | | Total Current Assets | $131,794 | $73,970 | | Total Assets | $292,184 | $193,037 | | Total Current Liabilities | $1,054,804 | $855,352 | | Total Liabilities | $1,148,038 | $953,541 | | Total Stockholders' Deficit | ($855,854) | ($760,504) | Condensed Consolidated Statements of Operations and Comprehensive Loss For the three months ended March 31, 2020, the company reported a net loss of $102,568, a significant increase from the $32,928 net loss in the same period of 2019 Statement of Operations Highlights (USD) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net Revenues | $22,051 | $42,020 | | Gross Profit | $7,625 | $13,112 | | Operating Loss | ($103,236) | ($34,127) | | Net Loss | ($102,568) | ($32,928) | | Comprehensive Loss | ($95,350) | ($36,421) | | Basic and Diluted Loss Per Share | ($0.00) | ($0.00) | Condensed Consolidated Statements of Cash Flows For the three months ended March 31, 2020, net cash provided by operating activities was $25,276, a reversal from the $31,338 used in the prior-year period, mainly due to a large increase in accounts and other payables Cash Flow Summary (USD) | Cash Flow Activity | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $25,276 | ($31,338) | | Net Cash from Investing Activities | ($50,550) | $0 | | Net Cash from Financing Activities | $56,590 | $159,116 | | Net Increase in Cash | $31,316 | $127,778 | Notes to Financial Statements The notes detail the company's business as a wholesale and retail distributor of alcoholic beverages in the PRC, outlining acquisitions, going concern risks, and related party financing - The company is engaged in the wholesale and retail of alcoholic beverages in the People's Republic of China (PRC)[16] - The company has entered into agreements to acquire controlling stakes in several companies to expand its portfolio, including Makaweng (wine & spirits), BTF (bottled water), and Valley Holdings (food wholesale)[22][25][32] - There is substantial doubt about the company's ability to continue as a going concern due to a net loss of $100,745 and a working capital deficit of approximately $904,345 as of March 31, 2020[79] - The company has significant related party transactions, with outstanding payables of $852,831 to its Chairman, Yumin Lin, and his wife as of March 31, 2020, primarily for working capital advances and rent[87][88] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the significant decline in revenue for Q1 2020 to the adverse impact of the COVID-19 pandemic, which reduced customer demand for its non-essential luxury goods - The COVID-19 pandemic has adversely affected the company's business, results of operations, and financial condition due to quarantines, travel restrictions, and temporary business closures in China[99] - Specific impacts from COVID-19 include a one-month office closure, operational and supply chain disruptions, and reduced customer demand for products[100][101] Q1 2020 vs Q1 2019 Performance (USD) | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Revenue | $22,051 | $42,020 | ($19,969) | | Gross Profit | $7,625 | $13,112 | ($5,487) | | Operating Expense | $110,861 | $47,239 | $63,622 | | Comprehensive Loss | ($95,350) | ($36,421) | ($59,109) | - The decrease in revenue was caused by a general decline in customer orders due to the COVID-19 outbreak, as the company's products are considered non-essential luxury goods[104] - Operating expenses increased by $61,799 primarily due to higher professional service fees and administrative costs related to proposed acquisitions of BTF and Valley Holdings[107] Quantitative and Qualitative Disclosures About Market Risk The company is not required to provide quantitative and qualitative disclosures about market risk because it qualifies as a "smaller reporting company" under SEC regulations - As a "smaller reporting company," the company is exempt from providing disclosures about market risk under Item 305(e) of Regulation S-K[116] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2020, due to identified weaknesses - Management concluded that disclosure controls and procedures were not effective as of March 31, 2020[118] - Identified weaknesses in controls include the lack of an audit committee financial expert and a lack of accounting personnel with technical knowledge of SEC rules[118][119] - The company plans to hire additional accounting staff and engage a pre-audit firm to remediate the control weaknesses[118] PART II - OTHER INFORMATION This section covers other required disclosures, including legal proceedings, risk factors, and exhibits Legal Proceedings The company is not currently a party to any legal proceedings that would have a material adverse effect on its business, financial condition, or operations - The company is not presently a party to any material legal proceedings[121] Risk Factors This section is not applicable as the company is a smaller reporting company - Disclosure of risk factors is not applicable for a smaller reporting company[122] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities[122] Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[122] Other Information There is no other information to report for this period - No other information was disclosed[122] Exhibits The report lists several exhibits filed, including Articles of Incorporation, Bylaws, an Equity Interest Transfer Agreement, CEO/CFO certifications, and XBRL data files - Exhibits filed with the report include corporate governance documents, material agreements, officer certifications, and interactive data files[120][122]