| ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 On
March 1, 2019, the Company entered into a sale and purchase agreement (the “SP Agreement”) to acquire 100% of the shares
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 5 100 150 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 China and a wholly-owned subsidiary of FVTI (“QHDX”), to acquire 90 243,134 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 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. Basis
of presentation The
accompanying unaudited condensed consolidated financial statements as of September 30, 2022 and for the three and nine months ended September
30, 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. Basis
of consolidation The
unaudited 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 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 unaudited condensed consolidated statements
of operations. As
of September 30, 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 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
City Fu Yi Beverage Ltd (“FYBL”) November
12, 2020 Xixingdao Drinking
water distribution and delivery PRC
Dongguan
City Fu Xi Drinking Water Company Ltd (“FXWL”) March
17, 2021 Xixingdao Sales
of agriculture products, household electric appliances and plastic products PRC
Dongguan
City Fu Jia Drinking Water Company Ltd (“FJWL”) March
29, 2021 Xixingdao Sales
of agriculture products, household electric appliances and food PRC
Dongguan
City Fu Sheng Drinking Water Company Ltd (“FSWL”) March
29, 2021 Xixingdao Sales
of agriculture products, household electric appliances and food PRC
Shenzhen
Fu Jin Trading Technology Company Ltd (“FJSTL”) June
7, 2021 Xixingdao Trading
of primary agricultural products, household appliances and plastic products PRC
Dongguan
City Fu Li Trading Ltd (“FLTL”) September
10, 2021 Xixingdao Sales
of agriculture products, household electric appliances 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, machinery, plastic products, and investment holding PRC
Dongguan
City Fu Zhi Gu Trading Ltd (“FZGTL”) September
9, 2022 FVTL Sales
of pre-packaged food, office equipment, electronic product and consultancy service PRC
Dongguan
City Chang Fu Trading Ltd (“CFTL”) September
9, 2022 FVTL Sales
of pre-packaged food, office equipment, electronic product and consultancy service PRC
Dongguan
City La Tong Trading Ltd (“LTTL”) August
8, 2022 FVTL Sales
of pre-packaged food, office equipment, electronic product and consultancy service PRC
Dongguan
City Kai Fu Trading Ltd (“KFTL”) September
8, 2022 FVTL Sales
of pre-packaged food, office equipment, electronic product and consultancy service PRC Use
of 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
going concern, allowance of doubtful accounts, allowance of deferred tax asset, implicit interest rate of operating leases, 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. Foreign
currency 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
assets and liabilities at exchange rates in effect at the end of each period
● Nonmonetary
assets and liabilities at historical rates
● Revenue
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
and liabilities at the rate of exchange in effect at the balance sheet date
● Equities
at the historical rate
● Revenue
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
As of and for the nine months ended September 30,
2022 2021
Period-end RMB:US$1 exchange rate 0.14053 0.15512
Period-average RMB:US$1 exchange rate 0.15174 0.15452 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 U.S. dollars at the rates used in translation. Impairment
of 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 nine months ended September 30, 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 nine months ended September 30, 2022 and 2021, the Company did no Revenue
recognition 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) with a customer;
2. Identify
the performance obligations in the contract;
3. Determine
the transaction price;
4. Allocate
the transaction price to the performance obligations in the contract; and
5. Recognize
revenue when (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, oil and water purifier 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. The
following table provides information about disaggregated revenue based on revenue by product types: SCHEDULE OF DISAGGREGATION REVENUE
Three months ended Nine months ended
2022 2021 2022 2021
Sales of wine $ 1,582,829 $ 639,635 $ 3,416,775 $ 2,036,423
Sales of water 1,005,738 1,099,586 2,343,830 2,827,732
Sales of oil - 14 - 217,131
Sales of water purifier 245,581 220,861 641,129 348,314
Others 81,155 45,294 111,838 45,294
Total $ 2,915,303 $ 2,005,390 $ 6,513,572 $ 5,474,894 Contract
liabilities 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 September 30,
2022 and December 31, 2021, the Company had customer advances of $ 176,213 382,518 322,084 Related
party transaction 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. |
