The information contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on April 26, 2021 (the "Form 10-K") and presumes that readers have access to, and will have read, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

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





Overview

Fortune Valley Treasures, Inc. (the "Company," "we," "our" or "us") was incorporated in the State of Nevada on March 21, 2014. We were initially incorporated to offer users with up-to-date information on digital currencies. We engage in the food supply chain through a service platform. Through various acquisitions of high-quality upstream and downstream companies in the industry, the Company creates a complete industrial chain to reduce costs and enhance competitiveness. The company mainly focuses on online and offline sales targeting regional wholesalers, retailers, supermarkets and major food and beverage ("F&B") chains.

During the period ended March 31, 2021, the Company conducted its business in one revenue stream: product sales - wine, water and oil and other F&B products.





Results of Operations

Three Months Ended March 31, 2021 and 2020





                                                 Three Months Ended March 31,
                                                    2021                2020            Change
Revenue                                        $     1,644,160       $    22,051     $  1,622,109
Cost of revenue                                        729,743            14,426          715,317
Gross profit                                           914,417             7,625          906,792

Operating expense                                     (509,131 )        (110,861 )       (398,270 )
Other income                                               196               786             (590 )
Other expense                                           (3,553 )            (118 )         (3,435 )
Income taxes                                           (66,355 )               -          (66,355 )
Net income (loss)                              $       335,574       $  (102,568 )   $    438,142
Net income attributable to noncontrolling
interests                                               30,320                 -           30,320
Net income (loss) attributable to Fortune
Valley Treasures, Inc.                         $       305,254       $  (102,568 )   $   407,822




Revenue

Revenue was $1,644,160 for three months ended March 31, 2021, reflecting an increase of $1,622,109 from $22,051 for the three months ended March 31, 2020. The reason for the increase was the Company added its water and oil business department, which increased our sales volume.





Cost of Revenue

Cost of revenue was $729,743 for the three months ended March 31, 2021, reflecting an increase of $715,317 from $14,426 for the three months ended March 31, 2020. The increase in cost of revenue was due to the increase of our revenue.





Gross Profit

Gross profit was $914,417 and $7,625 for the three months ended March 31, 2021 and 2020, respectively, reflecting an increase of $906,792. The increase of gross profit was due to the addition of the revenue from our water and oil business, where gross profit was higher.





Operating Expenses

Operating expense was $509,131 for the three months ended March 31, 2021, reflecting an increase of $398,270 from $110,861 for the three months ended March 31, 2020, due to the increase in professional service fees and general administrative costs in connection with the business of delivering and distributing of drinking water in China.





Net Income (loss)

For the three months ended March 31, 2021 and 2020, net income (loss) was $335,574 and ($102,568), respectively. The increase in net income was a result of the factors described above.

Net income attributable to noncontrolling interests

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

For the three months ended March 31, 2021 and 2020, the Company recorded net income attributable to a noncontrolling interest of $30,320 and $0, respectively.





  18

Liquidity and Capital Resources





Working Capital



                             March 31,       December 31,
                               2021              2020           Change
Total current assets        $ 4,478,051     $    4,231,054     $ 246,997
Total current liabilities     2,040,512          1,996,446        44,066
Working capital               2,437,539          2,234,608       202,931

As of March 31, 2021, we had working capital of $2,437,539 as compared to working capital of $2,234,608 as of December 31, 2020. We had total current assets of $4,478,051 consisting of cash on hand of $964,335, Inventory - wine and water of $126,772, prepayments and other current assets of $2,109,783 and accounts receivables of $1,181,889 compared to total current assets of $4,231,054 as of December 31, 2020. The decrease was mainly due to the decrease in accounts receivable from customers and advance to related parties. We had current liabilities of $2,040,512 consisting of accounts payable of $141,087, customer advances $795,293, income tax payable $112,730, due to related parties $823,826 and accrued liabilities of $82,375.

Our cash balance at March 31, 2021 increased to $964,335 as compared to $249,837 at December 31, 2020. We estimate the Company currently has sufficient cash available to meet its anticipated working capital for the next twelve months, without raising additional capital. The Company is continuing to look for different financing opportunities in order to increase sufficient working capital and improve liquidity.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. During the three months ended March 31, 2021, the Company incurred a net income of $335,574 and used cash in operations of $508,778 and at March 31, 2021, the Company had a working capital of $2,437,539. The Company's independent registered public accounting firm expressed in its report on the Company's financial statement for the year ended December 31, 2020 a substantial doubt about the Company's ability to continue as a going concern. Based on the Company's effort in improving its operation and the significant working capital generated as of March 31, 2021, the management believes that the substantial doubt has been alleviated.

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

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