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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, 2024

 

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 000-55555

 

Fortune Valley Treasures, Inc.

(Exact name of registrant issuer as specified in its charter)

 

Nevada   32-0439333
(State or other jurisdiction
of incorporation or organization)
 

(I.R.S. Employer

Identification No.)

 

16th Floor, Building 2, A+Building

No. 139 Liansheng Road, Humen Town

Dongguan City, Guangdong Province, China 523000

(Address of principal executive offices, including zip code)

 

(86) 769-85729133

(Registrant’s phone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act: Common stock, par value $0.001 per share

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer   Accelerated filer
  Non-accelerated filer   Smaller reporting company
        Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes ☐ No

 

As of May 17, 2024, there were 15,655,038 shares, par value $0.001, of the registrant’s common stock outstanding.

 

 

 

 
 

 

TABLE OF CONTENTS

 

    Page
     
PART I FINANCIAL INFORMATION 3
     
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: 3
     
  Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023 3
     
  Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 4
     
  Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 5
     
  Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 6
     
  Notes to Condensed Consolidated Financial Statements for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 7
     
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 21
     
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 24
     
ITEM 4. CONTROLS AND PROCEDURES 24
     
PART II OTHER INFORMATION 26
     
ITEM 1 LEGAL PROCEEDINGS 26
     
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 26
     
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 26
     
ITEM 4 MINE SAFETY DISCLOSURES 26
     
ITEM 5 OTHER INFORMATION 26
     
ITEM 6 EXHIBITS 26
     
SIGNATURES 27

 

2
 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements.

 

FORTUNE VALLEY TREASURES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2024 AND DECEMBER 31, 2023

 

  

March 31, 2024

  

December 31, 2023

 
   (Unaudited)     
Assets          
Current assets          
Cash and cash equivalents  $16,785   $288,255 
Accounts receivable, net (including $42,956 and $61,113 from related parties as of March 31, 2024 and December 31, 2023, respectively)   2,528,983    3,118,892 
Inventories   25,146    32,587 
Prepayments and other current assets, net (including $873,085 and $941,978 to related parties as of March 31, 2024 and December 31, 2023, respectively)   1,527,126    1,643,455 
Total current assets   4,098,040    5,083,189 
           
Non-current assets          
Deposits paid, net (including $527,304 and $536,450 to related parties as of March 31, 2024 and December 31, 2023, respectively)   603,716    618,456 
Property and equipment, net   74,124    83,706 
Operating lease right-of-use assets   215,959    248,626 
Operating lease right-of-use assets, related parties   58,984    63,553 
           
Intangible assets, net   97,776    151,639 
Total Assets  $5,148,599   $6,249,169 
           
Liabilities and Stockholders’ Equity          
Current liabilities          
Operating lease obligations – current  $82,185   $119,633 
Operating lease obligations, related parties - current   16,832    16,986 
           
Accounts payable (including $194,550 and $162,310 to related parties as of March 31, 2024 and December 31, 2023, respectively)   495,227    583,887 
Accrued liabilities   671,722    627,457 
Bank and other borrowings - current   424,604    458,023 
Income tax payable   -    1,453 
Customer advances   1,350,606    1,364,260 
Due to related parties   779,660    680,226 
Total current liabilities   3,820,836    3,851,925 
           
Non-current liabilities          
Operating lease obligations – non-current   123,821    153,487 
Operating lease obligations, related parties – non-current   35,921    40,877 
Bank and other borrowings   247,594    212,042 
Total Liabilities   4,228,172    4,258,331 
           
Stockholders’ Equity          
Common stock, 150,000,000 shares authorized, 15,655,038 shares issued and outstanding as of March 31, 2024 and December 31, 2023   15,655    15,655 
Additional paid-in capital   11,061,233    11,061,233 
Accumulated deficit and statutory reserves   (9,550,550)   (8,551,019)
Accumulated other comprehensive loss   (475,414)   (406,190)
Total Fortune Valley Treasures, Inc. stockholders’ equity   1,050,924    2,119,679 
Noncontrolling interests   (130,497)   (128,841)
Total Stockholders’ Equity   920,427    1,990,838 
           
Total Liabilities and Stockholders’ Equity  $5,148,599   $6,249,169 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

3
 

 

FORTUNE VALLEY TREASURES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Unaudited)

 

       
  

Three months ended

March 31,

 
   2024   2023 
         
Net revenues (including $3,844 and $26,750 from related parties for the three months ended March 31, 2024 and 2023, respectively)  $267,822   $1,635,289 
           
Cost of revenues (including $87,912 and $228,982 from related parties for the three months ended March 31, 2024 and 2023, respectively)   212,889    677,367 
Gross profit   54,933    957,922 
           
Operating expenses:          
Selling and distribution expenses   12,597    13,242 
General and administrative expenses   1,035,277    951,395 
           
Operating loss   (992,941)   (6,715)
           
Other income (expense):          
Other income   2,994    1,774 
Interest income   30    31 
Interest expense   (10,844)   (9,292)
Other expense, net   (7,820)   (7,487)
           
Loss before income tax   (1,000,761)   (14,202)
           
Income tax expense   319    74,974 
           
Net loss  $(1,001,080)  $(89,176)
Less: Net loss attributable to noncontrolling interests   (1,549)   (357)
Net loss attributable to Fortune Valley Treasures, Inc.   (999,531)   (88,819)
           
Other comprehensive income (loss):          
Foreign currency translation gain (loss)   (69,331)   45,472 
           
Total comprehensive loss   (1,070,411)   (43,704)
Less: Comprehensive loss attributable to noncontrolling interests   (1,656)   (175)
Comprehensive loss attributable to Fortune Valley Treasures, Inc.  $(1,068,755)  $(43,529)
           
Earnings (loss) per share          
Basic and diluted earnings (loss) per share  $(0.06)  $(0.01)
Basic and diluted weighted average shares outstanding  $15,655,038   $15,655,038 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

4
 

 

FORTUNE VALLEY TREASURES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Unaudited)

 

  

Number

of shares

                   
   Common Stock   Additional   Accumulated
Other
   Accumulated
Deficit and
   Non   Total 
  

Number

of shares

   Amount   Paid-in
Capital
   Comprehensive
Loss
   Statutory
Reserves
   controlling
Interests
   Stockholders’
Equity
 
Balance as of December 31, 2023   15,655,038   $15,655   $11,061,233   $(406,190)  $(8,551,019)  $(128,841)  $   1,990,838 
Net loss   -    -    -    -    (999,531)   (1,549)   (1,001,080)
Foreign currency translation adjustment   -    -    -    (69,224)   -    (107)   (69,331)
Balance as of March 31, 2024   15,655,038   $15,655   $11,061,233   $(475,414)  $(9,550,550)  $(130,497)  $920,427 

 

   Common Stock   Additional   Accumulated
Other
   Accumulated
Deficit and
   Non   Total 
   Number of shares   Amount   Paid-in
Capital
   Comprehensive
Income (Loss)
   Statutory
Reserves
   controlling
Interests
   Stockholders’
Equity
 
Balance as of December 31, 2022   15,655,038   $15,655   $11,061,233   $(180,826)  $(4,504,404)  $108,251   $   6,499,909 
Net income   -    -    -    -    (88,819)   (357)   (89,176)
Foreign currency translation adjustment   -    -    -    45,290    -    182    45,472 
Balance as of March 31, 2023   15,655,038   $15,655   $11,061,233   $(135,536)  $(4,593,223)  $108,076   $6,456,205 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

5
 

 

FORTUNE VALLEY TREASURES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Unaudited)

 

       
   Three months ended March 31, 
   2024   2023 
Cash flows from operating activities          
Net loss  $(1,001,080)  $(89,176)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:          
Depreciation and amortization expense   58,560    64,294 
Non-cash lease expense   32,120    34,833 
Allowance for credit losses   

645,054

    276,769 
Loss on disposal of intangible asset   -    1,526 
Changes in operating assets and liabilities          
Accounts receivable, net   (104,830)   (546,350)
Inventories   6,930    64,778 
Prepayments and other current assets, net   88,878    (53,733)
Deposits paid, net   4,220    (11,881)
Accounts payable   (79,216)   23,682 
Due to related parties   65,293    12,199 
Customer advances   9,675   517 
Accrued liabilities   52,682    95,903 
Income tax payable   (1,438)   (6,716)
Operating lease obligations   (67,014)   (41,550)
Net cash used in operating activities   (290,166)   (174,905)
           
Cash flows from investing activities          
Acquisition of intangible asset   -    (702)
Net cash provided by (used in) investing activities   -    (702)
           
Cash flows from financing activities          
Borrowings from and repayments to revolving credit lines, net   -    67,963 
Borrowings from bank loans   75,278    - 
Repayments of bank loans   (96,347)   (27,062)
Borrowings from and repayments to third party, net   40,410    (9,884)
Net cash provided by financing activities   19,341    31,017 
           
Effect of exchange rate changes on cash and cash equivalents   (645)   (909)
Net changes in cash and cash equivalents   (271,470)   (145,499)
Cash and cash equivalents–beginning of the period   288,255    165,685 
           
Cash and cash equivalents–end of the period  $16,785   $20,186 
           
Supplementary cash flow information:          
Interest paid  $10,884   $9,292 
Income taxes paid  $2,234   $121,883 
           
Non-cash investing and financing activities          
Operating lease right-of-use assets obtained in exchange for operating lease obligations  $-   $25,185 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

6
 

 

FORTUNE VALLEY TREASURES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Unaudited)

 

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 shares of its common stock in exchange for all the outstanding shares in DIGLS. This transaction has been accounted for as a reverse takeover transaction and a recapitalization of the Company whereby the Company, the legal acquirer, is the accounting acquiree, and DIGLS, the legal acquiree, is the accounting acquirer; accordingly, the Company’s historical statement of stockholders’ equity has been retroactively restated to the first period presented.

 

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 shares of its common stock to JJGS to acquire 100% of the shares of JJGS for a cost of $150. After the closing, JJGS became the Company’s wholly owned subsidiary. JJGS owns all of the equity interest of Jiujiu (HK) Industry Limited (“JJHK”) and Jiujiu (Shenzhen) Industry Co., Ltd. (“JJSZ”). JJGS, JJHK and JJSZ did not have any material assets or liabilities as of December 31, 2019, and they did not have any substantial operations or active business during the year ended December 31, 2019.

 

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% of the shares of Dongguan Xixingdao Technology Co., Ltd. (“Xixingdao”), a company incorporated in the PRC, from certain shareholders of Xixingdao in exchange for 243,134 shares of the Company’s common stock. The Company obtained the control of Xixingdao on August 31, 2020, the shares were issued on December 28, 2020. Xixingdao became the Company’s subsidiary since August 31, 2020.

 

Basis of presentation

 

The accompanying unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, 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, 2023 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, 2023, filed with the SEC on April 15, 2024 (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.

 

7
 

 

As of March 31, 2024, details of the Company’s major subsidiaries were as follows:

 

Entity Name  

Date of

Incorporation

 

Parent

Entity

  % Owned by FVTI    

Nature of

Operation

 

Place of

Incorporation

DIGLS   July 4, 2016   FVTI     100 %   Investment holding   Republic of Seychelles
DILHK   June 22, 2016   DIGLS     100 %   Investment holding   Hong Kong, PRC
QHDX   November 3, 2016   DILHK     100 %   Investment holding   PRC
FVTL   May 31, 2011   QHDX     100 %   Trading of food and platform   PRC
JJGS   August 17, 2017   FVTI     100 %   Investment holding   Republic of Seychelles
JJHK   August 24, 2017   JJGS     100 %   Investment holding   Hong Kong, PRC
JJSZ   November 16, 2018   JJHK     100 %   Trading of food   PRC
Xixingdao   August 28, 2019   QHDX     100 %   Drinking water distribution and delivery   PRC
Dongguan City Fu La Tu Trade Ltd (“FLTT”)   September 27, 2020   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Xin Gu Trade Ltd (“FXGT”)   December 2, 2020   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Xin Technology Ltd (“FXTL”)   November 12, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Guan Healthy Industry Technology Ltd (“FGHL”)   December 21, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Jing Technology Ltd (“FJTL”)   November 17, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Xiang Technology Ltd (“FGTL”)   November 16, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Ji Food & Beverage Ltd (“FJFL”)   November 9, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Lai Food Ltd (“FLFL”)   September 27, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Yi Beverage Ltd (“FYBL”)   November 12, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Xi Drinking Water Company Ltd (“FXWL”)   March 17, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of alcoholic beverages and water purifier   PRC
Dongguan City Fu Jia Drinking Water Company Ltd (“FJWL”)   March 29, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Dongguan City Fu Sheng Drinking Water Company Ltd (“FSWL”)   March 29, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Shenzhen Fu Jin Trading Technology Company Ltd (“FJSTL”)   June 7, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Dongguan City Fu Li Trading Ltd (“FLTL”)   September 10, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Guangdong Fu Gu Supply Chain Group Ltd (“FGGC”)   September 13, 2021   QHDX     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Zhi Gu Trading Ltd (“FZGTL”)   September 9, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Chang Fu Trading Ltd (“CFTL”)   September 9, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City La Tong Trading Ltd (“LTTL”)   August 8, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Kai Fu Trading Ltd (“KFTL”)   September 8, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC

 

8
 

 

Going concern

 

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and fulfillment of obligations in the normal course of business. The realization of assets and fulfillment of obligations in the normal course of business is dependent on, among other things, the Company’s ability to generate sufficient cash flows from operations, and the Company’s ability to arrange adequate financing arrangements. As of March 31, 2024, the Company had a working capital of $277,204, including cash and cash equivalents of $16,785, and accumulated deficit and statutory reserves of $9,550,550. For the three months ended March 31, 2024, the Company incurred net loss of $1,001,080 and had net cash outflows of $290,166 from operating activities.

 

The Company requires additional capital within the next six months to fund the continued operations of the Company. In order to support the Company’s operations, the Company plans to take actions to increase revenues and cash inflows by promoting product sales, expanding customer base and making additional efforts in accounts receivable collections, in addition to seeking bank borrowings and fundings from shareholders. If the Company is unable to obtain additional equity or debt financing as required, the business operations and prospects of the Company may suffer.

 

Use of estimates

 

The preparation of financial statements in conformity with U.S. 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 credit losses, allowance of deferred tax asset and uncertain tax position, 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.

 

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.

 

9
 

 

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:

 

   2024   2023 
   As of and for the
three months ended March 31,
 
   2024   2023 
Period-end RMB:US$1 exchange rate   0.13850    0.14558 
Period-average RMB:US$1 exchange rate   0.13940    0.14616 

 

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 three months ended March 31, 2024 and 2023.

 

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 three months ended March 31, 2024 and 2023, the Company did not record any impairment of goodwill.

 

10
 

 

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 liquor, water, water purifier and other products directly to agents, wholesalers and end users, with majority of sales transactions were conducted offline. 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:

 

   2024   2023 
   Three months ended
March 31,
 
   2024   2023 
Sales of liquor  $70,244   $903,720 
Sales of water   

92,379

    419,620 
Sales of water purifier   58,888    253,123 
Others   

46,311

    58,826 
Total  $267,822   $1,635,289 

 

Contract liabilities

 

Contract liabilities consist mainly of customer advances. On certain occasions, the Company may receive prepayments from downstream retailers or wholesales customers for liquors, 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 March 31, 2024 and December 31, 2023, the Company had customer advances of $1,350,606 and $1,364,260, respectively. During the three months ended March 31, 2024, the Company recognized $39,076 of customer advances in the opening balance.

 

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.

 

Recently adopted accounting pronouncements

 

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 was further amended in November 2020 by ASU No. 2020-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). As a result, ASC Topic 326, Financial Instruments – Credit Losses is effective for smaller reporting companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2016-13 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

 

11
 

 

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, “Revenue from Contracts with Customers”. This ASU is expected to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2021-08 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

 

NOTE 2 – ACCOUNTS RECEIVABLE, NET

 

Accounts receivable consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Accounts receivable (including $72,923 and $70,710 from related parties as of March 31, 2024 and December 31, 2023, respectively)  $4,859,495   $4,837,852 
Less: Doubtful allowance (including $29,967 and $2,602 from related parties as of March 31, 2024 and December 31, 2023, respectively)   (2,330,512)   (1,718,960)
Accounts receivable, net  $2,528,983   $3,118,892 

 

Allowance for doubtful accounts movement is as follows:

 

   March 31, 2024   December 31, 2023 
Beginning balance  $1,718,960   $- 
Additions to allowance   

645,054

    1,726,142 
Foreign currency translation adjustment   (33,502)   (7,182)
Ending balance  $2,330,512   $1,718,960 

 

NOTE 3 – PREPAYMENTS AND OTHER CURRENT ASSETS, NET

 

Prepayments and other current assets consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Prepayments (including $2,669,677 and $2,769,741 to related parties as of March 31, 2024 and December 31, 2023, respectively)  $3,838,888   $3,995,750 
Other current assets   

2,708

    2,330 
Total prepayments and other current assets   3,841,596    3,998,080 
Less: Allowance for doubtful accounts (including $1,796,952 and $1,827,763 to related parties as of March 31, 2024 and December 31, 2023, respectively)   (2,314,470)   (2,354,625)
Prepayments and other current assets, net  $1,527,126   $1,643,455 

 

Balance of prepayments represented the advanced payments to suppliers including related party suppliers.

 

12
 

 

Allowance for doubtful accounts movement is as follows:

 

   March 31, 2024   December 31, 2023 
Beginning balance  $2,354,625   $1,247,580 
Additions to allowance   -    1,169,058 
Foreign currency translation adjustment   (40,155)   (62,013)
Ending balance  $2,314,470   $2,354,625 

 

NOTE 4 – DEPOSITS PAID, NET

 

Deposits paid consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Deposits paid (including $1,569,824 and $1,597,060 to related parties as of March 31, 2024 and December 31, 2023, respectively)  $2,268,987   $2,312,622 
Less: Allowance for doubtful accounts (including $1,042,522 and $1,060,610 to related parties as of March 31, 2024 and December 31, 2023, respectively)   (1,665,271)   (1,694,166)
Deposits paid, net  $603,716   $618,456 

 

Allowance for doubtful accounts movement is as follows:

 

   March 31, 2024   December 31, 2023 
Beginning balance  $1,694,166   $1,244,350 
Additions to allowance   -    484,800 
Foreign currency translation adjustment   (28,895)   (34,984)
Ending balance  $1,665,271   $1,694,166 

 

NOTE 5 – PROPERTY AND EQUIPMENT, NET

 

Property and equipment consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Office equipment (including $9,009 and $nil to the disposal of office equipment as of March 31, 2024 and December 31, 2023, respectively)  $95,402   $106,225 
Leasehold improvement   112,543    114,495 
Vehicle   31,841    32,393 
Property and equipment   239,786    253,113 
Less: Accumulated depreciation (including $9,009 and $nil to the written back disposal of office equipment as of March 31, 2024 and December 31, 2023, respectively)   (165,662)   (169,407)
Property and equipment, net  $74,124   $83,706 

 

Depreciation expense, which was included in general and administrative expenses, for the three months ended March 31, 2024 and 2023 was $8,207 and $10,183, respectively.

 

13
 

 

Written back depreciation expense, which was included in general and administrative expenses, for the three months ended March 31, 2024 and 2023 was $9,069 and $nil, respectively.

 

No gain or loss was recorded for the disposal as the property and equipment was fully depreciated with zero residual value upon disposal and no proceeds were received.

 

NOTE 6 – INTANGIBLE ASSETS, NET

 

Intangible assets and related accumulated amortization were as follows:

 

SCHEDULE OF INTANGIBLE ASSETS

   March 31, 2024   December 31, 2023 
Distribution channel  $2,983,268   $3,035,029 
Others   24,998    25,601 
Total intangible assets   3,008,266    3,060,630 
Less: Accumulated amortization   (1,999,859)   (1,982,560)
Less: Accumulated impairment   (910,631)   (926,431)
Intangible assets, net  $97,776   $151,639 

 

Amortization expense for the three months ended March 31, 2024 and 2023 was $50,353 and $54,111, respectively, included in cost of revenues and general and administrative expenses.

 

As of March 31, 2024, the future estimated amortization costs for intangible assets are as follows:

 

SCHEDULE OF FUTURE AMORTIZATION EXPENSES FOR DISTRIBUTION CHANNELS

Year ending December 31,     
2024 (remaining)  $86,849 
2025   5,000 
2026   5,000 
2027   927 
2028   - 
Total  $97,776 

 

NOTE 7 - RELATED PARTY TRANSACTIONS

 

Amounts due to related parties as of March 31, 2024 and December 31, 2023 are as follows:

 

SCHEDULE OF AMOUNT DUE FROM AND DUE TO RELATED PARTIES 

      March 31, 2024   December 31, 2023 
Mr. Yumin Lin  President, Chief Executive Officer, Secretary, Director and majority shareholder  $376,542   $341,831 
Ms. Xiulan Zhou  Manager of a subsidiary, Mr. Yumin Lin’s wife   2,481    2,118 
Mr. Huagen Li  Manager of a subsidiary   2,216    2,254 
Mr. Guodong Jia  Manager of a subsidiary   9,787    7,479 
Mr. Hongwei Ye  Manager of a subsidiary, Shareholder   15    15 
Mr. Anping Chen  Manager of a subsidiary   18,426    12,798 
Mr. Jiangwei Jia  Manager of a subsidiary   17,495    10,449 
Mr. Yuwen Li  Vice President   133,956    122,327 
Ms. Lihua Li  Manager of a subsidiary   17,590    14,907 
Shenzhen DaXingHuaShang Industrial Group Ltd. (fka Shenzhen DaXingHuaShang Industry Development Ltd.)  Mr. Yumin Lin is the supervisor of Shenzhen DaXingHuaShang Industrial Group Ltd.   83,099    84,541 
Ms. Chunxiang Zhang  Manager of a subsidiary   17,108    6,810 
Mr. Meng Xue  Manager of a subsidiary   8,064    8,204 
Ms. Shuqin Chen  Manager of a subsidiary   19,488    18,171 
Mr. Zhipeng Zuo  Manager of a subsidiary   27,253    10,103 
Mr. Aisheng Zhang  Manager of a subsidiary   34,652    28,751 
Mr. Zhihua Liao  Manager of a subsidiary   11,405    9,468 
Ms. Xiuyun Wang  Manager of a subsidiary   83    - 
      $779,660   $680,226 

 

14
 

 

Revenues generated from related parties during the three months ended March 31, 2024 and 2023 are as follows:

 

SCHEDULE OF REVENUE GENERATED FROM RELATED PARTIES

      2024   2023 
      Three months ended March 31, 
      2024   2023 
Mr. Kaihong Lin  Chief Financial Officer and Treasurer  $-   $146 
Ms. Xiulan Zhou  Manager of a subsidiary, Mr. Yumin Lin’s wife   -    14 
Guangdong Yuexin Jiaotong Construction Co., Ltd.  Mr. Naiyong Luo, a manager of a subsidiary, is the controlling shareholder of Guangdong Yuexin Jiaotong Construction Co., Ltd.   903    8,383 
Dongguan Humen Shuiyan Drinking Water Store  Ms. Shuiyan Li, a shareholder of the Company, is the controlling shareholder of Dongguan Humen Shuiyan Drinking Water Store   2,460    18,207 
Dongguan Zhengui Industry Ltd.  Significantly influenced by the Company   903    - 
 Revenues generated from related parties      $3,844   $26,750 

 

Cost of revenues from related parties during the three months ended March 31, 2024 and 2023 is as follows:

 

SCHEDULE OF COST OF REVENUES FROM RELATED PARTIES

      2024   2023 
      Three months ended March 31, 
      2024   2023 
Dongguan Baxi Food Distribution Co., Ltd.  Significantly influenced by the Company  $

25,781

   $32,883 
Dongguan Dalingshan Xinwenhua Drinking Water Store  Significantly influenced by the Company   

3,991

    13,743 
Dongguan Pengqin Drinking Water Co., Ltd.  Significantly influenced by the Company   

2,825

    17,186 
Dongguan Dengqinghu Drinking Water Store  Significantly influenced by the Company   -    1,388 
Dongguan Tailai Trading Co., Ltd.  Significantly influenced by the Company   

14,306

    31,470 
Dongguan Anxiang Technology Co., Ltd.  Significantly influenced by the Company   

12,951

    35,989 
Guangdong Jiaduonuo Shengshi Trading Co., Ltd.  Significantly influenced by the Company   

4,798

    68,214 
Dongguan Dalingshan Runxin Drinking Water Store  Significantly influenced by the Company   

770

    9,450 
Dongguan City Yijia Trading Co., Ltd.  Mr. Yongming Li, a shareholder of the Company, is the controlling shareholder of Dongguan City Yijia Trading Co., Ltd.   

22,490

    18,659 
Cost of revenues from related parties     $

87,912

   $228,982 

 

15
 

 

Purchases from related parties during the three months ended March 31, 2024 and 2023 are as follows:

 

SCHEDULE OF PURCHASES FROM RELATED PARTIES

      2024   2023 
      Three months ended March 31, 
      2024   2023 
Dongguan Baxi Food Distribution Co., Ltd.  Significantly influenced by the Company  $

25,503

   $36,365 
Dongguan Dalingshan Xinwenhua Drinking Water Store  Significantly influenced by the Company   

3,969

    15,198 
Dongguan Pengqin Drinking Water Co., Ltd.  Significantly influenced by the Company   

2,810

    19,005 
Dongguan Dengqinghu Drinking Water Store  Significantly influenced by the Company   -    1,535 
Dongguan Tailai Trading Co., Ltd.  Significantly influenced by the Company   

14,306

    34,802 
Dongguan Anxiang Technology Co., Ltd.  Significantly influenced by the Company   

12,951

    35,989 
Guangdong Jiaduonuo Shengshi Trading Co., Ltd.  Significantly influenced by the Company   

4,798

    68,215 
Dongguan Dalingshan Runxin Drinking Water Store  Significantly influenced by the Company   

758

    10,451 
Dongguan City Yijia Trading Co., Ltd.  Mr. Yongming Li, a shareholder of the Company, is the controlling shareholder of Dongguan City Yijia Trading Co., Ltd.   

22,491

    18,660 
 Purchase from related party      $

87,586

   $240,220 

 

Due to related parties mainly consists of borrowings for working capital purpose, the balances are unsecured, non-interest bearing and due on demand.

 

Mr. Yuwen Li, the Vice President of the Company, authorized the Company to use trademarks that were owned by him for ten years from October 5, 2019 to October 4, 2029 at no cost.

 

Also see Note 2, 3, 4, 9 and 10 for more transactions with related parties.

 

16
 

 

NOTE 8 - INCOME TAXES

 

United States of America

 

The Company is registered in the State of Nevada and is subject to United States of America tax law. The U.S. federal income tax rate is 21%.

 

Seychelles

 

Under the current laws of the Seychelles, DIGLS and JJGS are registered as an international business company governed by the International Business Companies Act of Seychelles and there is no income tax charged in Seychelles.

 

Hong Kong

 

From year of assessment of 2018/2019 onwards, Hong Kong profit tax rates are 8.25% on assessable profits up to HK$2,000,000 (approximately $255,112), and 16.5% on any part of assessable profits over HK$2,000,000. For the three months ended March 31, 2024 and 2023, the Company did not have any assessable profits arising in or derived from Hong Kong, therefore no provision for Hong Kong profits tax was made in the periods reported.

 

The PRC

 

The Company’s subsidiaries are incorporated in the PRC, and are subject to the PRC Enterprise Income Tax Laws (“EIT Laws”) with the statutory income tax rate of 25% with the following exceptions.

 

On April 2, 2021, the State Taxation Administration issued the notice of the Ministry of Finance and the State Administration of Taxation (“MOF and SAT”) [2021] No.12 to provide an enterprise income tax rate of 2.5% on small-scale and low-profit enterprises whose annual taxable income is less than RMB1,000,000, approximately $142,209, from January 1, 2021 to December 31, 2022. MOF and SAT [2022] No.13 also provides an enterprise income tax rate of 5% on small-scale and low-profit enterprises whose annual taxable income is more than RMB1,000,000, approximately $139,404, but less than RMB3,000,000, approximately $418,212, from January 1, 2022 to December 31, 2024. The qualifications of small-scale and low-profit enterprises were examined annually by the Tax Bureau. All of the Company’s PRC subsidiaries met the criteria of small-scale and low-profit enterprises, except for Xixingdao, FVT Supply Chain and FLTT.

 

The components of the income tax provision are as follows:

 

SCHEDULE OF COMPONENTS OF INCOME TAX PROVISION

   2024   2023 
   Three months ended March 31, 
   2024   2023 
Current:        
– United States of America  $-   $41,444 
– Seychelles   -    - 
– Hong Kong   -    - 
– The PRC   319    33,530 
Current income tax expense          
Deferred          
– United States of America   -    - 
– Seychelles   -    - 
– Hong Kong   -    - 
– The PRC   -    - 
 Deferred income tax expense          
Total  $319   $74,974 

 

The effective tax rate was 18% and -527.9% for the three months ended March 31, 2024 and 2023, respectively.

 

17
 

 

NOTE 9 - OPERATING LEASES

 

As of March 31, 2024, the Company has twenty-one separate operating lease agreements for three office spaces, one warehouse and seventeen stores in PRC with remaining lease terms of from 3 month to 39 months.

 

Two of the leases described above were entered with related parties. The operating lease entered with Ms. Qingmei Lin, a related party, is for the premises in Dongguan City, PRC. The agreement covers the period from January 1, 2019 to April 30, 2027 with the monthly rent expense of RMB10,000 (approximately $1,394). The operating lease agreement entered with Mr. Hongwei Ye, another related party, is for the premises in Dongguan City, PRC. The agreement covers the period from October 1, 2023 to September 30, 2026 with the monthly rent expense of RMB960 (approximately $134).

 

The components of lease expense and supplemental cash flow information related to leases for the three months ended March 31, 2024 and 2023 are as follows:

 

   2024   2023 
Operating lease cost (included in general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations)  Three months ended March 31, 
   2024   2023 
         
Related parties  $5,047   $4,806 
Non-related parties   52,469    33,284 
Total  $57,516   $38,090 

 

Other information for the three months ended  March 31, 2024   March 31, 2023 
Cash paid for amounts included in the measurement of lease obligations  $71,727   $42,179 
Weighted average remaining lease term (in years)   2.35    2.91 
Weighted average discount rate   3.23%   3.23%

 

Maturities of the Company’s lease obligations as of March 31, 2024 are as follows:

 

Year ending December 31,     
2024 (remaining)  $116,363 
2025   129,074 
2026   48,566 
2027   5,540 
2028   - 
Total lease payment   299,543 
Less: Imputed interest   (40,784)
Operating lease obligations  $258,759 

 

18
 

 

NOTE 10 – BANK AND OTHER BORROWINGS

 

In May 2022, the Company obtained a loan in the principal amount of RMB161,000 (approximately $24,000 when borrowed) from Huaneng Guicheng Trust Co., Ltd. (“Huaneng Guicheng”), which bears interest at 11.34%. The loan is guaranteed by Yumin Lin. The maturity date is on May 21, 2024.

 

In May 2022, the Company obtained a bank loan in the principal amount of RMB69,000 (approximately $10,000 when borrowed) from WeBank, which bears interest at 11.34%. The loan is guaranteed by Yumin Lin. The maturity date is on May 21, 2024.

 

In July 2022, the Company obtained two loans in the principal amount of RMB99,000 (approximately $15,000 when borrowed) and RMB231,000 (approximately $34,000 when borrowed) from WeBank and Guangdong Nanyue Bank Co., Ltd. (“Nanyue Bank”), respectively, which bear interest at 14.4%. The loans are guaranteed by Kaihong Lin. The maturity date is on July 8, 2024.

 

In July 2022, the Company obtained two loans in the principal amount of RMB153,000 (approximately $23,000 when borrowed) and RMB357,000 (approximately $53,000 when borrowed) from WeBank and Nanyue Bank, respectively, which bear interest at 14.4%. The loans are guaranteed by Falan Zhou, a manager of subsidiaries. The maturity date is on July 13, 2024.

 

In July 2022, the Company obtained a loan in the principal amount of RMB380,000 (approximately $57,000 when borrowed) from Huaneng Guicheng, which bears interest at 12.6%. The loan is guaranteed by Yumin Lin. The maturity date is on July 21, 2024.

 

In February 2023, the Company obtained a revolving credit line in the principal amount of RMB465,000 (approximately $68,000 when borrowed) from China Construction Bank, which bears interest at 4.00%. The loan is guaranteed by Shuqin Chen, a related party. The maturity date is on February 11, 2024. As of March 31, 2024, the Company had repaid this bank loan in full to China Construction Bank.

 

In April 2023, the Company obtained two bank loans in the principal amount of RMB224,000 (approximately $31,000 when borrowed) and RMB96,000 (approximately $13,000 when borrowed) from Bank of Ningbo and WeBank, respectively, which bear interest at 12.24%. The loans are guaranteed by Falan Zhou, a manager of subsidiaries. The maturity date is on April 7, 2025.

 

In April 2023, the Company obtained a mortgage loan in the principal amount of RMB195,415 (approximately $27,000 when borrowed) from WeBank, which bears interest at 6.54%. The loan is pledged with a vehicle of the Company. The maturity date is on April 10, 2028.

 

In May 2023, the Company obtained a revolving credit line in the principal amount of RMB1,050,000 (approximately $146,000 when borrowed), with Yumin Lin as a co-borrower, from China Construction Bank, which bears interest at 4.20%. The maturity date is on May 26, 2024.

 

In July 2023, the Company obtained two bank loans in the principal amount of RMB57,000 (approximately $8,000 when borrowed) and RMB133,000 (approximately $18,000 when borrowed) from WeBank and Nanyue Bank, respectively, which bear interest at 10.44%. The loans are guaranteed by Falan Zhou, a manager of subsidiaries. The maturity date is on July 13, 2025.

 

In July 2023, the Company obtained a revolving credit line in the principal amount of RMB1,040,000 (approximately $143,000 when borrowed) from China Construction Bank, which bears interest at 3.70%. The credit line is guaranteed by Xiulan Zhou, a related party, and pledged with her property. The maturity date is on July 17, 2026.

 

In July 2023, the Company obtained a revolving credit line in the principal amount of RMB817,000 (approximately $114,000 when borrowed), with Yumin Lin as a co-borrower from China Construction Bank, which bears interest at 3.85%. The maturity date is on July 22, 2024.

 

19
 

 

In November 2023, the Company obtained a bank loan in the principal amount of RMB440,000 (approximately $62,000 when borrowed) from WeBank, which bears interest at 7.92%. The loan is guaranteed by Jianglong Xiong. The maturity date is on November 16, 2025.

 

In January 2024, the Company obtained a bank loan, in the principal amount of RMB390,000 (approximately $544,000 when borrowed) from from Huaneng Guicheng Trust Co., Ltd. (“Huaneng Guicheng”), which bears interest at 17.64%. The loan is guaranteed by Yumin Lin. The maturity date is on January 21, 2016.

 

In February 2024, the Company obtained two bank loans, both in the principal amount of RMB270,000 (approximately $38,000 when borrowed) from WeBank, which bears interest at 7.92%. The loans are both guaranteed by Jianglong Xiong. The maturity dates are both on February 22, 2026.

 

The balance of the loans borrowed as of March 31, 2024 and December 31, 2023 were as follows:

 

   March 31, 2024   December 31, 2023 
Loans from a trust in PRC  $60,143   $20,343 
China Construction Bank   402,617    475,121 
Guangdong Nanyue Bank   13,573    24,164 
WeBank   179,060    129,396 
Bank of Ningbo   16,805    21,041 
Aggregate outstanding principal balances   672,198    670,065 
Less: current portion   424,604    458,023 
Non-current portion  $247,594   $212,042 

 

The total interest expense was $10,844 and $9,292 for the three months ended March 31, 2024 and 2023, respectively.

 

Future minimum loan payments as of March 31, 2024 are as follows:

 

Year ending December 31,     
2024 (remaining)  $393,386 
2025   113,770 
2026   158,152 
2027   4,980 
Thereafter   1,910 
Total  $672,198 

 

 

20
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

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, 2023 filed with the Securities and Exchange Commission on April 15, 2024 (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 operations and management 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 three months ended March 31, 2024 and 2023, the Company conducted its business in one revenue stream: product sales – liquor, water, water purifier and other F&B products.

 

Results of Operations

 

Three months ended March 31, 2024 and 2023

 

   Three months ended March 31,     
   2024   2023   Change 
Net revenues  $267,822   $1,635,289   $(1,367,467)
Cost of revenues   (212,889)   (677,367)   (464,478)
Gross profit   54,933    957,922    (902,989)
Operating expense   (1,047,874)   (964,637)   83,237
Other income   2,994    1,774    1,220 
Interest income   30    31    (1)
Interest expense   (10,844)   (9,292)   (1,552)
Income taxes expense   (319)   (74,974)   74,655 
Net loss   (1,001,080)   (89,176)   (910,904)
Net loss attributable to noncontrolling interests   (1,549)   (357)   (1,192)
Net loss attributable to Fortune Valley Treasures, Inc.  $(999,531)  $(88,819)  $(910,712)

 

Net Revenues

 

Net revenues were $267,822 for the three months ended March 31, 2024, reflecting a decrease of $1,367,467, or 84%, from $1,635,289 for the three months ended March 31, 2023. The decrease in net revenues was mainly due to the lower product sales volume than the same period of the prior year and to a lesser extent, the lower unit sales prices of wine products. The decrease in product sales was resulted from a decline in market demand resulting from the sluggish economic environment and slow recovery in China’s economy as compared to the same period of the prior year. And in order to attract new customers, the Company has lowered the unit sales prices of wine products beginning in April 2023.

 

21
 

 

Cost of Revenues

 

Cost of revenues was $212,889 for the three months ended March 31, 2024, reflecting a decrease of $464,478, or 69%, from $677,367 for the three months ended March 31, 2023. The decrease in cost of revenues was mainly due to the lower product sales volume in line with our net revenues decrease and to a lesser extent, the lower unit sales prices of wine products, which led to a lesser decrease in cost of revenues comparing to net revenues.

 

Gross Profit

 

Gross profit was $54,933 and $957,922 for the three months ended March 31, 2024 and 2023, respectively, reflecting a decrease of $902,989, or 94%. The decrease in gross profit was mainly due to the decrease in the net revenues.

 

Operating Expenses

 

Operating expenses were $1,047,874 for the three months ended March 31, 2024, reflecting an increase of $83,237, or 9%, from $964,637 for the three months ended March 31, 2023. The increase in operating expenses was mainly due to the allowance of credit loss for accounts receivable.

 

Net Loss

 

For the three months ended March 31, 2024, our net loss was $1,001,080, compared to the net loss of $89,176 for the three months ended March 31, 2023. The increase in net loss was a result of the factors described above.

 

Net Loss Attributable to Noncontrolling Interests

 

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

 

For the three months ended March 31, 2024 and 2023, the Company recorded the net loss attributable to noncontrolling interests of $1,549 and $357, respectively.

 

Liquidity and Capital Resources

 

Working Capital

 

   March 31, 2024   December 31, 2023   Change 
Total current assets  $4,098,040   $5,083,189   $(985,149)
Total current liabilities   3,820,836    3,851,925    (31,089)
Working capital  $277,204   $1,231,264   $(954,060)

 

As of March 31, 2024, we had working capital of $277,204, as compared to working capital of $1,231,264 as of December 31, 2023. We had total current assets of $4,098,040, consisting of cash and cash equivalents of $16,785, inventories of $25,146, prepayments and other current assets of $1,527,126, accounts receivable of $2,528,983 compared to total current assets of $5,083,189 as of December 31, 2023. The decrease in total current assets was mainly due to the decrease in accounts receivable, prepayments and other current assets, and cash and cash equivalents. We had current liabilities of $3,820,836, consisting of operating lease obligations - current of $99,017, accounts payable of $495,227, accrued liabilities of $671,722, bank and other borrowing - current of $424,604, customer advances of $1,350,606 and due to related parties of $779,660. The decrease in total current liabilities was mainly due to the decrease in the accounts payable and customer advances.

 

22
 

 

Our cash and cash equivalents balance decreased to $16,785 as of March 31, 2024, from $288,255 as of December 31, 2023. We estimate the Company currently has insufficient working capital to support its daily operations for the next twelve months, without raising additional capital. The Company is continuing to look for different financing opportunities in order to increase working capital and improve liquidity, including bank borrowings and additional fundings from major shareholders. We intend to commence new promotion plans to increase product sales and expand customer base and make additional efforts in accounts receivable collections. If we are unable to generate sufficient profits from operations or obtain additional equity or debt financing as required, there could be substantial uncertainty regarding our ability to continue as a going concern.

 

No assurance can be given that any future financing 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, 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.

 

Cash Flows

 

   Three months ended March 31,     
   2024   2023   Change 
Cash Flows used in Operating Activities  $(290,166)  $(174,905)  $(115,261)
Cash Flows used in Investing Activities   -    (702)   702 
Cash Flows provided by Financing Activities   19,341    31,017    (11,676)
Effect of exchange rate changes   (645)   (909)   264 
Net Changes in Cash and Cash Equivalents  $(271,470)  $(145,499)  $(125,971)

 

Cash Flow from Operating Activities

 

Net cash used in operating activities for the three months ended March 31, 2024 was $290,166, as compared to the amount of $174,905 provided by operating activities for the three months ended March 31, 2023, reflecting an increase of $115,261 in cash outflows. Such increase was mainly resulted from the allowance of credit loss for accounts receivables.

 

Cash Flow from Investing Activities

 

Net cash used in investing activities was $nil for the three months ended March 31, 2024, compared to net cash used in investing activities of $702 for the three months ended March 31, 2023. Such decrease was mainly resulted from no purchase of property and equipment in 2024.

 

Cash Flow from Financing Activities

 

Net cash provided by financing activities was $19,341 for the three months ended March 31, 2024, compared to net cash provided by financing activities of $31,017 for the three months ended March 31, 2023. Such decrease was mainly resulted from the higher repayment to bank loan during the periods ended March 31, 2024 than 2023.

 

Critical Accounting Policies and Estimates

 

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States. The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported and disclosed in our financial statements and the accompanying notes. Actual results could differ materially from these estimates under different assumptions or conditions. We identified no critical accounting estimates in the current period.

 

As described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, we consider our critical accounting policies to be those related to revenue recognition, allowance of doubtful accounts and impairment of intangible assets and goodwill. There have been no material changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

 

23
 

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

 

Related Party Transactions 

 

As of March 31, 2024 and December 31, 2023, the Company had accounts receivable from related parties in the amounts of $42,956 and $61,113, prepayments to related parties in the amounts of $873,085 and $941,978, deposits to related parties in the amounts of $527,304 and $536,450, and accounts payable to related parties in amounts of $194,550 and $162,310, respectively.

 

As of March 31, 2024 and December 31, 2023, the Company had outstanding payables due to its related parties in the amounts of $779,660 and $680,226, respectively, which mainly consisted of borrowings for working capital purpose. The balances were unsecured, non-interest bearing and due on demand.

 

During the three months ended March 31, 2024 and 2023, the Company sold products to its related parties in the amounts of $3,844 and $26,750, respectively, purchased goods from its related parties in the amounts of $87,586 and $240,220, and incurred the costs of revenues from related parties in the amounts of $87,912 and $228,982, respectively.

 

During the three months ended March 31, 2024 and 2023, the rental expenses to related parties were $5,047 and $4,806, respectively.

 

Our related parties are primarily those who are significantly influenced by the Company based on our common business relationships. Refer to Note 7 to the unaudited condensed consolidated financial statements for additional details regarding the related party transactions.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

As a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide the information under this item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of March 31, 2024, that our disclosure controls and procedures were not effective.

 

The matters involving internal controls and procedures that our management considered to be material weakness under the standards of the Public Company Accounting Oversight Board was lack of well-established procedures to identify, approve and review related party transactions.

 

24
 

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the board of directors (the “Board”), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States (“GAAP”) and includes those policies and procedures that:

 

  Apply to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
     
  Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
     
  Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

 

We carried out an assessment, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our internal controls over financial reporting, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of March 31, 2024. Management based the assessment on criteria for effective internal control over financial reporting described in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Based on this assessment, management has concluded that as of March 31, 2024, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

 

  We have increased our personnel resources and technical accounting expertise within the accounting function and intend to hire one or more additional personnel for the function due to turnover.
     
  We plan to test our updated controls and remediate our deficiencies at the end of 2024.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal controls over financial reporting that occurred during the period covered by this Report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

25
 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholder are an adverse party or has a material interest adverse to us.

 

Item 1A. Risk Factors.

 

Not applicable to a smaller reporting company

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits

 

Exhibit No.   Description
31.1   Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer
31.2   Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial officer
32.1   Section 1350 Certification of principal executive officer
32.2   Section 1350 Certification of principal financial officer and principal accounting officer
101.INS   Inline XBRL Instance Document
101.SCH   Inline XBRL Taxonomy Extension Schema Document
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

26
 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Fortune Valley Treasures, Inc.
     
Date: May 20, 2024 By: /s/ Yumin Lin
    Yumin Lin
    President and Chief Executive Officer
    (Principal Executive Officer)
     
Date: May 20, 2024 By: /s/ Kaihong Lin
    Kaihong Lin
    Chief Financial Officer and Treasurer
    (Principal Financial and Accounting Officer)

 

27

 

EXHIBIT 31.1

 

CERTIFICATION

 

I, Yumin Lin, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Fortune Valley Treasures, Inc. (the “Company”) for the quarter ended March 31, 2024;

 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b. Designed such internal control over financial reporting or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
     
  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 20, 2024    
  By: /s/ Yumin Lin
  Name: Yumin Lin
  Title: Chief Executive Officer and President
(Principal Executive Officer)

 

 

 

 

EXHIBIT 31.2

 

CERTIFICATION

 

I, Kaihong Lin, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Fortune Valley Treasures, Inc. (the “Company”) for the quarter ended March 31, 2024;

 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b. Designed such internal control over financial reporting or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
     
  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting

 

Date: May 20, 2024    
  By: /s/ Kaihong Lin
  Name: Kaihong Lin
  Title:

Chief Financial Officer and Treasurer

(Principal Financial and Accounting Officer)

 

 

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Fortune Valley Treasures, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: May 20, 2024    
  By: /s/ Yumin Lin
  Name: Yumin Lin
  Title:

Chief Executive Officer and President

(Principal Executive Officer)

 

 

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Fortune Valley Treasures, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: May 20, 2024    
  By: /s/ Kaihong Lin
  Name: Kaihong Lin
  Title: Chief Financial Officer and Treasurer
    (Principal Financial and Accounting Officer)

 

 

 

v3.24.1.1.u2
Cover - shares
3 Months Ended
Mar. 31, 2024
May 17, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Mar. 31, 2024  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --12-31  
Entity File Number 000-55555  
Entity Registrant Name Fortune Valley Treasures, Inc.  
Entity Central Index Key 0001626745  
Entity Tax Identification Number 32-0439333  
Entity Incorporation, State or Country Code NV  
Entity Address, Address Line One 16th Floor, Building 2, A+Building  
Entity Address, Address Line Two No. 139 Liansheng Road, Humen Town  
Entity Address, Address Line Three Dongguan City  
Entity Address, City or Town Guangdong Province  
Entity Address, Country CN  
Entity Address, Postal Zip Code 523000  
City Area Code (86)  
Local Phone Number 769-85729133  
Title of 12(g) Security Common stock, par value $0.001 per share  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   15,655,038
v3.24.1.1.u2
Condensed Consolidated Balance Sheets - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Current assets    
Cash and cash equivalents $ 16,785 $ 288,255
Accounts receivable, net (including $42,956 and $61,113 from related parties as of March 31, 2024 and December 31, 2023, respectively) 2,528,983 3,118,892
Inventories 25,146 32,587
Prepayments and other current assets, net (including $873,085 and $941,978 to related parties as of March 31, 2024 and December 31, 2023, respectively) 1,527,126 1,643,455
Total current assets 4,098,040 5,083,189
Non-current assets    
Deposits paid, net (including $527,304 and $536,450 to related parties as of March 31, 2024 and December 31, 2023, respectively) 603,716 618,456
Property and equipment, net 74,124 83,706
Intangible assets, net 97,776 151,639
Total Assets 5,148,599 6,249,169
Current liabilities    
Accounts payable (including $194,550 and $162,310 to related parties as of March 31, 2024 and December 31, 2023, respectively) 495,227 583,887
Accrued liabilities 671,722 627,457
Bank and other borrowings - current 424,604 458,023
Income tax payable 1,453
Customer advances 1,350,606 1,364,260
Total current liabilities 3,820,836 3,851,925
Non-current liabilities    
Bank and other borrowings 247,594 212,042
Total Liabilities 4,228,172 4,258,331
Stockholders’ Equity    
Common stock, 150,000,000 shares authorized, 15,655,038 shares issued and outstanding as of March 31, 2024 and December 31, 2023 15,655 15,655
Additional paid-in capital 11,061,233 11,061,233
Accumulated deficit and statutory reserves (9,550,550) (8,551,019)
Accumulated other comprehensive loss (475,414) (406,190)
Total Fortune Valley Treasures, Inc. stockholders’ equity 1,050,924 2,119,679
Noncontrolling interests (130,497) (128,841)
Total Stockholders’ Equity 920,427 1,990,838
Total Liabilities and Stockholders’ Equity 5,148,599 6,249,169
Nonrelated Party [Member]    
Non-current assets    
Operating lease right-of-use assets 215,959 248,626
Current liabilities    
Operating lease obligations 82,185 119,633
Non-current liabilities    
Operating lease obligations 123,821 153,487
Related Party [Member]    
Non-current assets    
Operating lease right-of-use assets 58,984 63,553
Current liabilities    
Operating lease obligations 16,832 16,986
Due to related parties 779,660 680,226
Non-current liabilities    
Operating lease obligations $ 35,921 $ 40,877
v3.24.1.1.u2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Defined Benefit Plan Disclosure [Line Items]    
Deposit paid, related parties $ 527,304 $ 536,450
Common stock, shares authorized 150,000,000 150,000,000
Common stock, shares issued 15,655,038 15,655,038
Common stock, shares outstanding 15,655,038 15,655,038
Related Party [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Accounts receivable $ 42,956 $ 61,113
Prepayments and other current assets, net 873,085 941,978
Accounts payable $ 194,550 $ 162,310
v3.24.1.1.u2
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Income Statement [Abstract]    
Net revenues (including $3,844 and $26,750 from related parties for the three months ended March 31, 2024 and 2023, respectively) $ 267,822 $ 1,635,289
Cost of revenues (including $87,912 and $228,982 from related parties for the three months ended March 31, 2024 and 2023, respectively) 212,889 677,367
Gross profit 54,933 957,922
Operating expenses:    
Selling and distribution expenses 12,597 13,242
General and administrative expenses 1,035,277 951,395
Operating loss (992,941) (6,715)
Other income (expense):    
Other income 2,994 1,774
Interest income 30 31
Interest expense (10,844) (9,292)
Other expense, net (7,820) (7,487)
Loss before income tax (1,000,761) (14,202)
Income tax expense 319 74,974
Net loss (1,001,080) (89,176)
Less: Net loss attributable to noncontrolling interests (1,549) (357)
Net loss attributable to Fortune Valley Treasures, Inc. (999,531) (88,819)
Other comprehensive income (loss):    
Foreign currency translation gain (loss) (69,331) 45,472
Total comprehensive loss (1,070,411) (43,704)
Less: Comprehensive loss attributable to noncontrolling interests (1,656) (175)
Comprehensive loss attributable to Fortune Valley Treasures, Inc. $ (1,068,755) $ (43,529)
Earnings (loss) per share    
Basic earnings (loss) per share $ (0.06) $ (0.01)
Diluted earnings (loss) per share $ (0.06) $ (0.01)
Basic weighted average shares outstanding 15,655,038 15,655,038
Diluted weighted average shares outstanding 15,655,038 15,655,038
v3.24.1.1.u2
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (Parenthetical) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Defined Benefit Plan Disclosure [Line Items]    
Revenue from related parties $ 267,822 $ 1,635,289
Cost of revenue from related parties 87,912 228,982
Related Party [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Revenue from related parties $ 3,844 $ 26,750
v3.24.1.1.u2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
AOCI Attributable to Parent [Member]
Retained Earnings [Member]
Noncontrolling Interest [Member]
Total
Balance at Dec. 31, 2022 $ 15,655 $ 11,061,233 $ (180,826) $ (4,504,404) $ 108,251 $ 6,499,909
Balance, shares at Dec. 31, 2022 15,655,038          
Net income (loss) (88,819) (357) (89,176)
Foreign currency translation adjustment 45,290 182 45,472
Balance at Mar. 31, 2023 $ 15,655 11,061,233 (135,536) (4,593,223) 108,076 6,456,205
Balance, shares at Mar. 31, 2023 15,655,038          
Balance at Dec. 31, 2023 $ 15,655 11,061,233 (406,190) (8,551,019) (128,841) 1,990,838
Balance, shares at Dec. 31, 2023 15,655,038          
Net income (loss) (999,531) (1,549) (1,001,080)
Foreign currency translation adjustment (69,224) (107) (69,331)
Balance at Mar. 31, 2024 $ 15,655 $ 11,061,233 $ (475,414) $ (9,550,550) $ (130,497) $ 920,427
Balance, shares at Mar. 31, 2024 15,655,038          
v3.24.1.1.u2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Cash flows from operating activities    
Net loss $ (1,001,080) $ (89,176)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:    
Depreciation and amortization expense 58,560 64,294
Non-cash lease expense 32,120 34,833
Allowance for credit losses 645,054 276,769
Loss on disposal of intangible asset 1,526
Changes in operating assets and liabilities    
Accounts receivable, net (104,830) (546,350)
Inventories 6,930 64,778
Prepayments and other current assets, net 88,878 (53,733)
Deposits paid, net 4,220 (11,881)
Accounts payable (79,216) 23,682
Due to related parties 65,293 12,199
Customer advances 9,675 517
Accrued liabilities 52,682 95,903
Income tax payable (1,438) (6,716)
Operating lease obligations (67,014) (41,550)
Net cash used in operating activities (290,166) (174,905)
Cash flows from investing activities    
Acquisition of intangible asset (702)
Net cash provided by (used in) investing activities (702)
Cash flows from financing activities    
Borrowings from and repayments to revolving credit lines, net 67,963
Borrowings from bank loans 75,278
Repayments of bank loans (96,347) (27,062)
Borrowings from and repayments to third party, net 40,410 (9,884)
Net cash provided by financing activities 19,341 31,017
Effect of exchange rate changes on cash and cash equivalents (645) (909)
Net changes in cash and cash equivalents (271,470) (145,499)
Cash and cash equivalents–beginning of the period 288,255 165,685
Cash and cash equivalents–end of the period 16,785 20,186
Supplementary cash flow information:    
Interest paid 10,884 9,292
Income taxes paid 2,234 121,883
Non-cash investing and financing activities    
Operating lease right-of-use assets obtained in exchange for operating lease obligations $ 25,185
v3.24.1.1.u2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
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 shares of its common stock in exchange for all the outstanding shares in DIGLS. This transaction has been accounted for as a reverse takeover transaction and a recapitalization of the Company whereby the Company, the legal acquirer, is the accounting acquiree, and DIGLS, the legal acquiree, is the accounting acquirer; accordingly, the Company’s historical statement of stockholders’ equity has been retroactively restated to the first period presented.

 

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 shares of its common stock to JJGS to acquire 100% of the shares of JJGS for a cost of $150. After the closing, JJGS became the Company’s wholly owned subsidiary. JJGS owns all of the equity interest of Jiujiu (HK) Industry Limited (“JJHK”) and Jiujiu (Shenzhen) Industry Co., Ltd. (“JJSZ”). JJGS, JJHK and JJSZ did not have any material assets or liabilities as of December 31, 2019, and they did not have any substantial operations or active business during the year ended December 31, 2019.

 

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% of the shares of Dongguan Xixingdao Technology Co., Ltd. (“Xixingdao”), a company incorporated in the PRC, from certain shareholders of Xixingdao in exchange for 243,134 shares of the Company’s common stock. The Company obtained the control of Xixingdao on August 31, 2020, the shares were issued on December 28, 2020. Xixingdao became the Company’s subsidiary since August 31, 2020.

 

Basis of presentation

 

The accompanying unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, 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, 2023 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, 2023, filed with the SEC on April 15, 2024 (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 March 31, 2024, details of the Company’s major subsidiaries were as follows:

 

Entity Name  

Date of

Incorporation

 

Parent

Entity

  % Owned by FVTI    

Nature of

Operation

 

Place of

Incorporation

DIGLS   July 4, 2016   FVTI     100 %   Investment holding   Republic of Seychelles
DILHK   June 22, 2016   DIGLS     100 %   Investment holding   Hong Kong, PRC
QHDX   November 3, 2016   DILHK     100 %   Investment holding   PRC
FVTL   May 31, 2011   QHDX     100 %   Trading of food and platform   PRC
JJGS   August 17, 2017   FVTI     100 %   Investment holding   Republic of Seychelles
JJHK   August 24, 2017   JJGS     100 %   Investment holding   Hong Kong, PRC
JJSZ   November 16, 2018   JJHK     100 %   Trading of food   PRC
Xixingdao   August 28, 2019   QHDX     100 %   Drinking water distribution and delivery   PRC
Dongguan City Fu La Tu Trade Ltd (“FLTT”)   September 27, 2020   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Xin Gu Trade Ltd (“FXGT”)   December 2, 2020   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Xin Technology Ltd (“FXTL”)   November 12, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Guan Healthy Industry Technology Ltd (“FGHL”)   December 21, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Jing Technology Ltd (“FJTL”)   November 17, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Xiang Technology Ltd (“FGTL”)   November 16, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Ji Food & Beverage Ltd (“FJFL”)   November 9, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Lai Food Ltd (“FLFL”)   September 27, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Yi Beverage Ltd (“FYBL”)   November 12, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Xi Drinking Water Company Ltd (“FXWL”)   March 17, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of alcoholic beverages and water purifier   PRC
Dongguan City Fu Jia Drinking Water Company Ltd (“FJWL”)   March 29, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Dongguan City Fu Sheng Drinking Water Company Ltd (“FSWL”)   March 29, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Shenzhen Fu Jin Trading Technology Company Ltd (“FJSTL”)   June 7, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Dongguan City Fu Li Trading Ltd (“FLTL”)   September 10, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Guangdong Fu Gu Supply Chain Group Ltd (“FGGC”)   September 13, 2021   QHDX     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Zhi Gu Trading Ltd (“FZGTL”)   September 9, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Chang Fu Trading Ltd (“CFTL”)   September 9, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City La Tong Trading Ltd (“LTTL”)   August 8, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Kai Fu Trading Ltd (“KFTL”)   September 8, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC

 

 

Going concern

 

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and fulfillment of obligations in the normal course of business. The realization of assets and fulfillment of obligations in the normal course of business is dependent on, among other things, the Company’s ability to generate sufficient cash flows from operations, and the Company’s ability to arrange adequate financing arrangements. As of March 31, 2024, the Company had a working capital of $277,204, including cash and cash equivalents of $16,785, and accumulated deficit and statutory reserves of $9,550,550. For the three months ended March 31, 2024, the Company incurred net loss of $1,001,080 and had net cash outflows of $290,166 from operating activities.

 

The Company requires additional capital within the next six months to fund the continued operations of the Company. In order to support the Company’s operations, the Company plans to take actions to increase revenues and cash inflows by promoting product sales, expanding customer base and making additional efforts in accounts receivable collections, in addition to seeking bank borrowings and fundings from shareholders. If the Company is unable to obtain additional equity or debt financing as required, the business operations and prospects of the Company may suffer.

 

Use of estimates

 

The preparation of financial statements in conformity with U.S. 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 credit losses, allowance of deferred tax asset and uncertain tax position, 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.

 

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:

 

   2024   2023 
   As of and for the
three months ended March 31,
 
   2024   2023 
Period-end RMB:US$1 exchange rate   0.13850    0.14558 
Period-average RMB:US$1 exchange rate   0.13940    0.14616 

 

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 three months ended March 31, 2024 and 2023.

 

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 three months ended March 31, 2024 and 2023, the Company did not record any impairment of goodwill.

 

 

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 liquor, water, water purifier and other products directly to agents, wholesalers and end users, with majority of sales transactions were conducted offline. 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:

 

   2024   2023 
   Three months ended
March 31,
 
   2024   2023 
Sales of liquor  $70,244   $903,720 
Sales of water   

92,379

    419,620 
Sales of water purifier   58,888    253,123 
Others   

46,311

    58,826 
Total  $267,822   $1,635,289 

 

Contract liabilities

 

Contract liabilities consist mainly of customer advances. On certain occasions, the Company may receive prepayments from downstream retailers or wholesales customers for liquors, 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 March 31, 2024 and December 31, 2023, the Company had customer advances of $1,350,606 and $1,364,260, respectively. During the three months ended March 31, 2024, the Company recognized $39,076 of customer advances in the opening balance.

 

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.

 

Recently adopted accounting pronouncements

 

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 was further amended in November 2020 by ASU No. 2020-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). As a result, ASC Topic 326, Financial Instruments – Credit Losses is effective for smaller reporting companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2016-13 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

 

 

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, “Revenue from Contracts with Customers”. This ASU is expected to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2021-08 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

 

v3.24.1.1.u2
ACCOUNTS RECEIVABLE, NET
3 Months Ended
Mar. 31, 2024
Credit Loss [Abstract]  
ACCOUNTS RECEIVABLE, NET

NOTE 2 – ACCOUNTS RECEIVABLE, NET

 

Accounts receivable consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Accounts receivable (including $72,923 and $70,710 from related parties as of March 31, 2024 and December 31, 2023, respectively)  $4,859,495   $4,837,852 
Less: Doubtful allowance (including $29,967 and $2,602 from related parties as of March 31, 2024 and December 31, 2023, respectively)   (2,330,512)   (1,718,960)
Accounts receivable, net  $2,528,983   $3,118,892 

 

Allowance for doubtful accounts movement is as follows:

 

   March 31, 2024   December 31, 2023 
Beginning balance  $1,718,960   $- 
Additions to allowance   

645,054

    1,726,142 
Foreign currency translation adjustment   (33,502)   (7,182)
Ending balance  $2,330,512   $1,718,960 

 

v3.24.1.1.u2
PREPAYMENTS AND OTHER CURRENT ASSETS, NET
3 Months Ended
Mar. 31, 2024
Prepayments And Other Current Assets Net  
PREPAYMENTS AND OTHER CURRENT ASSETS, NET

NOTE 3 – PREPAYMENTS AND OTHER CURRENT ASSETS, NET

 

Prepayments and other current assets consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Prepayments (including $2,669,677 and $2,769,741 to related parties as of March 31, 2024 and December 31, 2023, respectively)  $3,838,888   $3,995,750 
Other current assets   

2,708

    2,330 
Total prepayments and other current assets   3,841,596    3,998,080 
Less: Allowance for doubtful accounts (including $1,796,952 and $1,827,763 to related parties as of March 31, 2024 and December 31, 2023, respectively)   (2,314,470)   (2,354,625)
Prepayments and other current assets, net  $1,527,126   $1,643,455 

 

Balance of prepayments represented the advanced payments to suppliers including related party suppliers.

 

 

Allowance for doubtful accounts movement is as follows:

 

   March 31, 2024   December 31, 2023 
Beginning balance  $2,354,625   $1,247,580 
Additions to allowance   -    1,169,058 
Foreign currency translation adjustment   (40,155)   (62,013)
Ending balance  $2,314,470   $2,354,625 

 

v3.24.1.1.u2
DEPOSITS PAID, NET
3 Months Ended
Mar. 31, 2024
Deposits Paid Net  
DEPOSITS PAID, NET

NOTE 4 – DEPOSITS PAID, NET

 

Deposits paid consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Deposits paid (including $1,569,824 and $1,597,060 to related parties as of March 31, 2024 and December 31, 2023, respectively)  $2,268,987   $2,312,622 
Less: Allowance for doubtful accounts (including $1,042,522 and $1,060,610 to related parties as of March 31, 2024 and December 31, 2023, respectively)   (1,665,271)   (1,694,166)
Deposits paid, net  $603,716   $618,456 

 

Allowance for doubtful accounts movement is as follows:

 

   March 31, 2024   December 31, 2023 
Beginning balance  $1,694,166   $1,244,350 
Additions to allowance   -    484,800 
Foreign currency translation adjustment   (28,895)   (34,984)
Ending balance  $1,665,271   $1,694,166 

 

v3.24.1.1.u2
PROPERTY AND EQUIPMENT, NET
3 Months Ended
Mar. 31, 2024
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT, NET

NOTE 5 – PROPERTY AND EQUIPMENT, NET

 

Property and equipment consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Office equipment (including $9,009 and $nil to the disposal of office equipment as of March 31, 2024 and December 31, 2023, respectively)  $95,402   $106,225 
Leasehold improvement   112,543    114,495 
Vehicle   31,841    32,393 
Property and equipment   239,786    253,113 
Less: Accumulated depreciation (including $9,009 and $nil to the written back disposal of office equipment as of March 31, 2024 and December 31, 2023, respectively)   (165,662)   (169,407)
Property and equipment, net  $74,124   $83,706 

 

Depreciation expense, which was included in general and administrative expenses, for the three months ended March 31, 2024 and 2023 was $8,207 and $10,183, respectively.

 

 

Written back depreciation expense, which was included in general and administrative expenses, for the three months ended March 31, 2024 and 2023 was $9,069 and $nil, respectively.

 

No gain or loss was recorded for the disposal as the property and equipment was fully depreciated with zero residual value upon disposal and no proceeds were received.

 

v3.24.1.1.u2
INTANGIBLE ASSETS, NET
3 Months Ended
Mar. 31, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS, NET

NOTE 6 – INTANGIBLE ASSETS, NET

 

Intangible assets and related accumulated amortization were as follows:

 

SCHEDULE OF INTANGIBLE ASSETS

   March 31, 2024   December 31, 2023 
Distribution channel  $2,983,268   $3,035,029 
Others   24,998    25,601 
Total intangible assets   3,008,266    3,060,630 
Less: Accumulated amortization   (1,999,859)   (1,982,560)
Less: Accumulated impairment   (910,631)   (926,431)
Intangible assets, net  $97,776   $151,639 

 

Amortization expense for the three months ended March 31, 2024 and 2023 was $50,353 and $54,111, respectively, included in cost of revenues and general and administrative expenses.

 

As of March 31, 2024, the future estimated amortization costs for intangible assets are as follows:

 

SCHEDULE OF FUTURE AMORTIZATION EXPENSES FOR DISTRIBUTION CHANNELS

Year ending December 31,     
2024 (remaining)  $86,849 
2025   5,000 
2026   5,000 
2027   927 
2028   - 
Total  $97,776 

 

v3.24.1.1.u2
RELATED PARTY TRANSACTIONS
3 Months Ended
Mar. 31, 2024
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 7 - RELATED PARTY TRANSACTIONS

 

Amounts due to related parties as of March 31, 2024 and December 31, 2023 are as follows:

 

SCHEDULE OF AMOUNT DUE FROM AND DUE TO RELATED PARTIES 

      March 31, 2024   December 31, 2023 
Mr. Yumin Lin  President, Chief Executive Officer, Secretary, Director and majority shareholder  $376,542   $341,831 
Ms. Xiulan Zhou  Manager of a subsidiary, Mr. Yumin Lin’s wife   2,481    2,118 
Mr. Huagen Li  Manager of a subsidiary   2,216    2,254 
Mr. Guodong Jia  Manager of a subsidiary   9,787    7,479 
Mr. Hongwei Ye  Manager of a subsidiary, Shareholder   15    15 
Mr. Anping Chen  Manager of a subsidiary   18,426    12,798 
Mr. Jiangwei Jia  Manager of a subsidiary   17,495    10,449 
Mr. Yuwen Li  Vice President   133,956    122,327 
Ms. Lihua Li  Manager of a subsidiary   17,590    14,907 
Shenzhen DaXingHuaShang Industrial Group Ltd. (fka Shenzhen DaXingHuaShang Industry Development Ltd.)  Mr. Yumin Lin is the supervisor of Shenzhen DaXingHuaShang Industrial Group Ltd.   83,099    84,541 
Ms. Chunxiang Zhang  Manager of a subsidiary   17,108    6,810 
Mr. Meng Xue  Manager of a subsidiary   8,064    8,204 
Ms. Shuqin Chen  Manager of a subsidiary   19,488    18,171 
Mr. Zhipeng Zuo  Manager of a subsidiary   27,253    10,103 
Mr. Aisheng Zhang  Manager of a subsidiary   34,652    28,751 
Mr. Zhihua Liao  Manager of a subsidiary   11,405    9,468 
Ms. Xiuyun Wang  Manager of a subsidiary   83    - 
      $779,660   $680,226 

 

 

Revenues generated from related parties during the three months ended March 31, 2024 and 2023 are as follows:

 

SCHEDULE OF REVENUE GENERATED FROM RELATED PARTIES

      2024   2023 
      Three months ended March 31, 
      2024   2023 
Mr. Kaihong Lin  Chief Financial Officer and Treasurer  $-   $146 
Ms. Xiulan Zhou  Manager of a subsidiary, Mr. Yumin Lin’s wife   -    14 
Guangdong Yuexin Jiaotong Construction Co., Ltd.  Mr. Naiyong Luo, a manager of a subsidiary, is the controlling shareholder of Guangdong Yuexin Jiaotong Construction Co., Ltd.   903    8,383 
Dongguan Humen Shuiyan Drinking Water Store  Ms. Shuiyan Li, a shareholder of the Company, is the controlling shareholder of Dongguan Humen Shuiyan Drinking Water Store   2,460    18,207 
Dongguan Zhengui Industry Ltd.  Significantly influenced by the Company   903    - 
 Revenues generated from related parties      $3,844   $26,750 

 

Cost of revenues from related parties during the three months ended March 31, 2024 and 2023 is as follows:

 

SCHEDULE OF COST OF REVENUES FROM RELATED PARTIES

      2024   2023 
      Three months ended March 31, 
      2024   2023 
Dongguan Baxi Food Distribution Co., Ltd.  Significantly influenced by the Company  $

25,781

   $32,883 
Dongguan Dalingshan Xinwenhua Drinking Water Store  Significantly influenced by the Company   

3,991

    13,743 
Dongguan Pengqin Drinking Water Co., Ltd.  Significantly influenced by the Company   

2,825

    17,186 
Dongguan Dengqinghu Drinking Water Store  Significantly influenced by the Company   -    1,388 
Dongguan Tailai Trading Co., Ltd.  Significantly influenced by the Company   

14,306

    31,470 
Dongguan Anxiang Technology Co., Ltd.  Significantly influenced by the Company   

12,951

    35,989 
Guangdong Jiaduonuo Shengshi Trading Co., Ltd.  Significantly influenced by the Company   

4,798

    68,214 
Dongguan Dalingshan Runxin Drinking Water Store  Significantly influenced by the Company   

770

    9,450 
Dongguan City Yijia Trading Co., Ltd.  Mr. Yongming Li, a shareholder of the Company, is the controlling shareholder of Dongguan City Yijia Trading Co., Ltd.   

22,490

    18,659 
Cost of revenues from related parties     $

87,912

   $228,982 

 

 

Purchases from related parties during the three months ended March 31, 2024 and 2023 are as follows:

 

SCHEDULE OF PURCHASES FROM RELATED PARTIES

      2024   2023 
      Three months ended March 31, 
      2024   2023 
Dongguan Baxi Food Distribution Co., Ltd.  Significantly influenced by the Company  $

25,503

   $36,365 
Dongguan Dalingshan Xinwenhua Drinking Water Store  Significantly influenced by the Company   

3,969

    15,198 
Dongguan Pengqin Drinking Water Co., Ltd.  Significantly influenced by the Company   

2,810

    19,005 
Dongguan Dengqinghu Drinking Water Store  Significantly influenced by the Company   -    1,535 
Dongguan Tailai Trading Co., Ltd.  Significantly influenced by the Company   

14,306

    34,802 
Dongguan Anxiang Technology Co., Ltd.  Significantly influenced by the Company   

12,951

    35,989 
Guangdong Jiaduonuo Shengshi Trading Co., Ltd.  Significantly influenced by the Company   

4,798

    68,215 
Dongguan Dalingshan Runxin Drinking Water Store  Significantly influenced by the Company   

758

    10,451 
Dongguan City Yijia Trading Co., Ltd.  Mr. Yongming Li, a shareholder of the Company, is the controlling shareholder of Dongguan City Yijia Trading Co., Ltd.   

22,491

    18,660 
 Purchase from related party      $

87,586

   $240,220 

 

Due to related parties mainly consists of borrowings for working capital purpose, the balances are unsecured, non-interest bearing and due on demand.

 

Mr. Yuwen Li, the Vice President of the Company, authorized the Company to use trademarks that were owned by him for ten years from October 5, 2019 to October 4, 2029 at no cost.

 

Also see Note 2, 3, 4, 9 and 10 for more transactions with related parties.

 

 

v3.24.1.1.u2
INCOME TAXES
3 Months Ended
Mar. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 8 - INCOME TAXES

 

United States of America

 

The Company is registered in the State of Nevada and is subject to United States of America tax law. The U.S. federal income tax rate is 21%.

 

Seychelles

 

Under the current laws of the Seychelles, DIGLS and JJGS are registered as an international business company governed by the International Business Companies Act of Seychelles and there is no income tax charged in Seychelles.

 

Hong Kong

 

From year of assessment of 2018/2019 onwards, Hong Kong profit tax rates are 8.25% on assessable profits up to HK$2,000,000 (approximately $255,112), and 16.5% on any part of assessable profits over HK$2,000,000. For the three months ended March 31, 2024 and 2023, the Company did not have any assessable profits arising in or derived from Hong Kong, therefore no provision for Hong Kong profits tax was made in the periods reported.

 

The PRC

 

The Company’s subsidiaries are incorporated in the PRC, and are subject to the PRC Enterprise Income Tax Laws (“EIT Laws”) with the statutory income tax rate of 25% with the following exceptions.

 

On April 2, 2021, the State Taxation Administration issued the notice of the Ministry of Finance and the State Administration of Taxation (“MOF and SAT”) [2021] No.12 to provide an enterprise income tax rate of 2.5% on small-scale and low-profit enterprises whose annual taxable income is less than RMB1,000,000, approximately $142,209, from January 1, 2021 to December 31, 2022. MOF and SAT [2022] No.13 also provides an enterprise income tax rate of 5% on small-scale and low-profit enterprises whose annual taxable income is more than RMB1,000,000, approximately $139,404, but less than RMB3,000,000, approximately $418,212, from January 1, 2022 to December 31, 2024. The qualifications of small-scale and low-profit enterprises were examined annually by the Tax Bureau. All of the Company’s PRC subsidiaries met the criteria of small-scale and low-profit enterprises, except for Xixingdao, FVT Supply Chain and FLTT.

 

The components of the income tax provision are as follows:

 

SCHEDULE OF COMPONENTS OF INCOME TAX PROVISION

   2024   2023 
   Three months ended March 31, 
   2024   2023 
Current:        
– United States of America  $-   $41,444 
– Seychelles   -    - 
– Hong Kong   -    - 
– The PRC   319    33,530 
Current income tax expense          
Deferred          
– United States of America   -    - 
– Seychelles   -    - 
– Hong Kong   -    - 
– The PRC   -    - 
 Deferred income tax expense          
Total  $319   $74,974 

 

The effective tax rate was 18% and -527.9% for the three months ended March 31, 2024 and 2023, respectively.

 

 

v3.24.1.1.u2
OPERATING LEASES
3 Months Ended
Mar. 31, 2024
Operating Leases  
OPERATING LEASES

NOTE 9 - OPERATING LEASES

 

As of March 31, 2024, the Company has twenty-one separate operating lease agreements for three office spaces, one warehouse and seventeen stores in PRC with remaining lease terms of from 3 month to 39 months.

 

Two of the leases described above were entered with related parties. The operating lease entered with Ms. Qingmei Lin, a related party, is for the premises in Dongguan City, PRC. The agreement covers the period from January 1, 2019 to April 30, 2027 with the monthly rent expense of RMB10,000 (approximately $1,394). The operating lease agreement entered with Mr. Hongwei Ye, another related party, is for the premises in Dongguan City, PRC. The agreement covers the period from October 1, 2023 to September 30, 2026 with the monthly rent expense of RMB960 (approximately $134).

 

The components of lease expense and supplemental cash flow information related to leases for the three months ended March 31, 2024 and 2023 are as follows:

 

   2024   2023 
Operating lease cost (included in general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations)  Three months ended March 31, 
   2024   2023 
         
Related parties  $5,047   $4,806 
Non-related parties   52,469    33,284 
Total  $57,516   $38,090 

 

Other information for the three months ended  March 31, 2024   March 31, 2023 
Cash paid for amounts included in the measurement of lease obligations  $71,727   $42,179 
Weighted average remaining lease term (in years)   2.35    2.91 
Weighted average discount rate   3.23%   3.23%

 

Maturities of the Company’s lease obligations as of March 31, 2024 are as follows:

 

Year ending December 31,     
2024 (remaining)  $116,363 
2025   129,074 
2026   48,566 
2027   5,540 
2028   - 
Total lease payment   299,543 
Less: Imputed interest   (40,784)
Operating lease obligations  $258,759 

 

 

v3.24.1.1.u2
BANK AND OTHER BORROWINGS
3 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
BANK AND OTHER BORROWINGS

NOTE 10 – BANK AND OTHER BORROWINGS

 

In May 2022, the Company obtained a loan in the principal amount of RMB161,000 (approximately $24,000 when borrowed) from Huaneng Guicheng Trust Co., Ltd. (“Huaneng Guicheng”), which bears interest at 11.34%. The loan is guaranteed by Yumin Lin. The maturity date is on May 21, 2024.

 

In May 2022, the Company obtained a bank loan in the principal amount of RMB69,000 (approximately $10,000 when borrowed) from WeBank, which bears interest at 11.34%. The loan is guaranteed by Yumin Lin. The maturity date is on May 21, 2024.

 

In July 2022, the Company obtained two loans in the principal amount of RMB99,000 (approximately $15,000 when borrowed) and RMB231,000 (approximately $34,000 when borrowed) from WeBank and Guangdong Nanyue Bank Co., Ltd. (“Nanyue Bank”), respectively, which bear interest at 14.4%. The loans are guaranteed by Kaihong Lin. The maturity date is on July 8, 2024.

 

In July 2022, the Company obtained two loans in the principal amount of RMB153,000 (approximately $23,000 when borrowed) and RMB357,000 (approximately $53,000 when borrowed) from WeBank and Nanyue Bank, respectively, which bear interest at 14.4%. The loans are guaranteed by Falan Zhou, a manager of subsidiaries. The maturity date is on July 13, 2024.

 

In July 2022, the Company obtained a loan in the principal amount of RMB380,000 (approximately $57,000 when borrowed) from Huaneng Guicheng, which bears interest at 12.6%. The loan is guaranteed by Yumin Lin. The maturity date is on July 21, 2024.

 

In February 2023, the Company obtained a revolving credit line in the principal amount of RMB465,000 (approximately $68,000 when borrowed) from China Construction Bank, which bears interest at 4.00%. The loan is guaranteed by Shuqin Chen, a related party. The maturity date is on February 11, 2024. As of March 31, 2024, the Company had repaid this bank loan in full to China Construction Bank.

 

In April 2023, the Company obtained two bank loans in the principal amount of RMB224,000 (approximately $31,000 when borrowed) and RMB96,000 (approximately $13,000 when borrowed) from Bank of Ningbo and WeBank, respectively, which bear interest at 12.24%. The loans are guaranteed by Falan Zhou, a manager of subsidiaries. The maturity date is on April 7, 2025.

 

In April 2023, the Company obtained a mortgage loan in the principal amount of RMB195,415 (approximately $27,000 when borrowed) from WeBank, which bears interest at 6.54%. The loan is pledged with a vehicle of the Company. The maturity date is on April 10, 2028.

 

In May 2023, the Company obtained a revolving credit line in the principal amount of RMB1,050,000 (approximately $146,000 when borrowed), with Yumin Lin as a co-borrower, from China Construction Bank, which bears interest at 4.20%. The maturity date is on May 26, 2024.

 

In July 2023, the Company obtained two bank loans in the principal amount of RMB57,000 (approximately $8,000 when borrowed) and RMB133,000 (approximately $18,000 when borrowed) from WeBank and Nanyue Bank, respectively, which bear interest at 10.44%. The loans are guaranteed by Falan Zhou, a manager of subsidiaries. The maturity date is on July 13, 2025.

 

In July 2023, the Company obtained a revolving credit line in the principal amount of RMB1,040,000 (approximately $143,000 when borrowed) from China Construction Bank, which bears interest at 3.70%. The credit line is guaranteed by Xiulan Zhou, a related party, and pledged with her property. The maturity date is on July 17, 2026.

 

In July 2023, the Company obtained a revolving credit line in the principal amount of RMB817,000 (approximately $114,000 when borrowed), with Yumin Lin as a co-borrower from China Construction Bank, which bears interest at 3.85%. The maturity date is on July 22, 2024.

 

 

In November 2023, the Company obtained a bank loan in the principal amount of RMB440,000 (approximately $62,000 when borrowed) from WeBank, which bears interest at 7.92%. The loan is guaranteed by Jianglong Xiong. The maturity date is on November 16, 2025.

 

In January 2024, the Company obtained a bank loan, in the principal amount of RMB390,000 (approximately $544,000 when borrowed) from from Huaneng Guicheng Trust Co., Ltd. (“Huaneng Guicheng”), which bears interest at 17.64%. The loan is guaranteed by Yumin Lin. The maturity date is on January 21, 2016.

 

In February 2024, the Company obtained two bank loans, both in the principal amount of RMB270,000 (approximately $38,000 when borrowed) from WeBank, which bears interest at 7.92%. The loans are both guaranteed by Jianglong Xiong. The maturity dates are both on February 22, 2026.

 

The balance of the loans borrowed as of March 31, 2024 and December 31, 2023 were as follows:

 

   March 31, 2024   December 31, 2023 
Loans from a trust in PRC  $60,143   $20,343 
China Construction Bank   402,617    475,121 
Guangdong Nanyue Bank   13,573    24,164 
WeBank   179,060    129,396 
Bank of Ningbo   16,805    21,041 
Aggregate outstanding principal balances   672,198    670,065 
Less: current portion   424,604    458,023 
Non-current portion  $247,594   $212,042 

 

The total interest expense was $10,844 and $9,292 for the three months ended March 31, 2024 and 2023, respectively.

 

Future minimum loan payments as of March 31, 2024 are as follows:

 

Year ending December 31,     
2024 (remaining)  $393,386 
2025   113,770 
2026   158,152 
2027   4,980 
Thereafter   1,910 
Total  $672,198 

 

v3.24.1.1.u2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Basis of presentation

Basis of presentation

 

The accompanying unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, 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, 2023 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, 2023, filed with the SEC on April 15, 2024 (the “report”). These unaudited condensed consolidated financial statements should be read in conjunction with the report.

 

Basis of consolidation

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 March 31, 2024, details of the Company’s major subsidiaries were as follows:

 

Entity Name  

Date of

Incorporation

 

Parent

Entity

  % Owned by FVTI    

Nature of

Operation

 

Place of

Incorporation

DIGLS   July 4, 2016   FVTI     100 %   Investment holding   Republic of Seychelles
DILHK   June 22, 2016   DIGLS     100 %   Investment holding   Hong Kong, PRC
QHDX   November 3, 2016   DILHK     100 %   Investment holding   PRC
FVTL   May 31, 2011   QHDX     100 %   Trading of food and platform   PRC
JJGS   August 17, 2017   FVTI     100 %   Investment holding   Republic of Seychelles
JJHK   August 24, 2017   JJGS     100 %   Investment holding   Hong Kong, PRC
JJSZ   November 16, 2018   JJHK     100 %   Trading of food   PRC
Xixingdao   August 28, 2019   QHDX     100 %   Drinking water distribution and delivery   PRC
Dongguan City Fu La Tu Trade Ltd (“FLTT”)   September 27, 2020   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Xin Gu Trade Ltd (“FXGT”)   December 2, 2020   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Xin Technology Ltd (“FXTL”)   November 12, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Guan Healthy Industry Technology Ltd (“FGHL”)   December 21, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Jing Technology Ltd (“FJTL”)   November 17, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Xiang Technology Ltd (“FGTL”)   November 16, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Ji Food & Beverage Ltd (“FJFL”)   November 9, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Lai Food Ltd (“FLFL”)   September 27, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Yi Beverage Ltd (“FYBL”)   November 12, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Xi Drinking Water Company Ltd (“FXWL”)   March 17, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of alcoholic beverages and water purifier   PRC
Dongguan City Fu Jia Drinking Water Company Ltd (“FJWL”)   March 29, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Dongguan City Fu Sheng Drinking Water Company Ltd (“FSWL”)   March 29, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Shenzhen Fu Jin Trading Technology Company Ltd (“FJSTL”)   June 7, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Dongguan City Fu Li Trading Ltd (“FLTL”)   September 10, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Guangdong Fu Gu Supply Chain Group Ltd (“FGGC”)   September 13, 2021   QHDX     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Zhi Gu Trading Ltd (“FZGTL”)   September 9, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Chang Fu Trading Ltd (“CFTL”)   September 9, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City La Tong Trading Ltd (“LTTL”)   August 8, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Kai Fu Trading Ltd (“KFTL”)   September 8, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC

 

 

Going concern

Going concern

 

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and fulfillment of obligations in the normal course of business. The realization of assets and fulfillment of obligations in the normal course of business is dependent on, among other things, the Company’s ability to generate sufficient cash flows from operations, and the Company’s ability to arrange adequate financing arrangements. As of March 31, 2024, the Company had a working capital of $277,204, including cash and cash equivalents of $16,785, and accumulated deficit and statutory reserves of $9,550,550. For the three months ended March 31, 2024, the Company incurred net loss of $1,001,080 and had net cash outflows of $290,166 from operating activities.

 

The Company requires additional capital within the next six months to fund the continued operations of the Company. In order to support the Company’s operations, the Company plans to take actions to increase revenues and cash inflows by promoting product sales, expanding customer base and making additional efforts in accounts receivable collections, in addition to seeking bank borrowings and fundings from shareholders. If the Company is unable to obtain additional equity or debt financing as required, the business operations and prospects of the Company may suffer.

 

Use of estimates

Use of estimates

 

The preparation of financial statements in conformity with U.S. 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 credit losses, allowance of deferred tax asset and uncertain tax position, 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.

 

Foreign currency translation and re-measurement

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:

 

   2024   2023 
   As of and for the
three months ended March 31,
 
   2024   2023 
Period-end RMB:US$1 exchange rate   0.13850    0.14558 
Period-average RMB:US$1 exchange rate   0.13940    0.14616 

 

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

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 three months ended March 31, 2024 and 2023.

 

Goodwill

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 three months ended March 31, 2024 and 2023, the Company did not record any impairment of goodwill.

 

 

Revenue recognition

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 liquor, water, water purifier and other products directly to agents, wholesalers and end users, with majority of sales transactions were conducted offline. 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:

 

   2024   2023 
   Three months ended
March 31,
 
   2024   2023 
Sales of liquor  $70,244   $903,720 
Sales of water   

92,379

    419,620 
Sales of water purifier   58,888    253,123 
Others   

46,311

    58,826 
Total  $267,822   $1,635,289 

 

Contract liabilities

Contract liabilities

 

Contract liabilities consist mainly of customer advances. On certain occasions, the Company may receive prepayments from downstream retailers or wholesales customers for liquors, 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 March 31, 2024 and December 31, 2023, the Company had customer advances of $1,350,606 and $1,364,260, respectively. During the three months ended March 31, 2024, the Company recognized $39,076 of customer advances in the opening balance.

 

Related party transaction

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.

 

Recently adopted accounting pronouncements

Recently adopted accounting pronouncements

 

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 was further amended in November 2020 by ASU No. 2020-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). As a result, ASC Topic 326, Financial Instruments – Credit Losses is effective for smaller reporting companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2016-13 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

 

 

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, “Revenue from Contracts with Customers”. This ASU is expected to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2021-08 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

v3.24.1.1.u2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
SCHEDULE OF ENTITIES AND ITS SUBSIDIARIES

As of March 31, 2024, details of the Company’s major subsidiaries were as follows:

 

Entity Name  

Date of

Incorporation

 

Parent

Entity

  % Owned by FVTI    

Nature of

Operation

 

Place of

Incorporation

DIGLS   July 4, 2016   FVTI     100 %   Investment holding   Republic of Seychelles
DILHK   June 22, 2016   DIGLS     100 %   Investment holding   Hong Kong, PRC
QHDX   November 3, 2016   DILHK     100 %   Investment holding   PRC
FVTL   May 31, 2011   QHDX     100 %   Trading of food and platform   PRC
JJGS   August 17, 2017   FVTI     100 %   Investment holding   Republic of Seychelles
JJHK   August 24, 2017   JJGS     100 %   Investment holding   Hong Kong, PRC
JJSZ   November 16, 2018   JJHK     100 %   Trading of food   PRC
Xixingdao   August 28, 2019   QHDX     100 %   Drinking water distribution and delivery   PRC
Dongguan City Fu La Tu Trade Ltd (“FLTT”)   September 27, 2020   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Xin Gu Trade Ltd (“FXGT”)   December 2, 2020   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Xin Technology Ltd (“FXTL”)   November 12, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Guan Healthy Industry Technology Ltd (“FGHL”)   December 21, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Jing Technology Ltd (“FJTL”)   November 17, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Xiang Technology Ltd (“FGTL”)   November 16, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Ji Food & Beverage Ltd (“FJFL”)   November 9, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Lai Food Ltd (“FLFL”)   September 27, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Yi Beverage Ltd (“FYBL”)   November 12, 2020   Xixingdao     90 %   Drinking water distribution and delivery   PRC
Dongguan City Fu Xi Drinking Water Company Ltd (“FXWL”)   March 17, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of alcoholic beverages and water purifier   PRC
Dongguan City Fu Jia Drinking Water Company Ltd (“FJWL”)   March 29, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Dongguan City Fu Sheng Drinking Water Company Ltd (“FSWL”)   March 29, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Shenzhen Fu Jin Trading Technology Company Ltd (“FJSTL”)   June 7, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Dongguan City Fu Li Trading Ltd (“FLTL”)   September 10, 2021   Xixingdao     90 %   Drinking water distribution and delivery, sales of water purifier   PRC
Guangdong Fu Gu Supply Chain Group Ltd (“FGGC”)   September 13, 2021   QHDX     100 %   Trading of alcoholic beverages   PRC
Dongguan City Fu Zhi Gu Trading Ltd (“FZGTL”)   September 9, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Chang Fu Trading Ltd (“CFTL”)   September 9, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City La Tong Trading Ltd (“LTTL”)   August 8, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
Dongguan City Kai Fu Trading Ltd (“KFTL”)   September 8, 2022   FVTL     100 %   Trading of alcoholic beverages   PRC
SCHEDULE OF FOREIGN CURRENCY EXCHANGE RATE TRANSLATION

Translation of amounts from the local currencies of the Company into US$ has been made at the following exchange rates for the respective periods:

 

   2024   2023 
   As of and for the
three months ended March 31,
 
   2024   2023 
Period-end RMB:US$1 exchange rate   0.13850    0.14558 
Period-average RMB:US$1 exchange rate   0.13940    0.14616 
SCHEDULE OF DISAGGREGATION REVENUE

The following table provides information about disaggregated revenue based on revenue by product types:

 

   2024   2023 
   Three months ended
March 31,
 
   2024   2023 
Sales of liquor  $70,244   $903,720 
Sales of water   

92,379

    419,620 
Sales of water purifier   58,888    253,123 
Others   

46,311

    58,826 
Total  $267,822   $1,635,289 
v3.24.1.1.u2
ACCOUNTS RECEIVABLE, NET (Tables)
3 Months Ended
Mar. 31, 2024
Credit Loss [Abstract]  
SCHEDULE OF ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Accounts receivable (including $72,923 and $70,710 from related parties as of March 31, 2024 and December 31, 2023, respectively)  $4,859,495   $4,837,852 
Less: Doubtful allowance (including $29,967 and $2,602 from related parties as of March 31, 2024 and December 31, 2023, respectively)   (2,330,512)   (1,718,960)
Accounts receivable, net  $2,528,983   $3,118,892 
SCHEDULE OF ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE

Allowance for doubtful accounts movement is as follows:

 

   March 31, 2024   December 31, 2023 
Beginning balance  $1,718,960   $- 
Additions to allowance   

645,054

    1,726,142 
Foreign currency translation adjustment   (33,502)   (7,182)
Ending balance  $2,330,512   $1,718,960 
v3.24.1.1.u2
PREPAYMENTS AND OTHER CURRENT ASSETS, NET (Tables)
3 Months Ended
Mar. 31, 2024
Prepayments And Other Current Assets Net  
SCHEDULE OF PREPAYMENT AND OTHER CURRENT ASSETS

Prepayments and other current assets consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Prepayments (including $2,669,677 and $2,769,741 to related parties as of March 31, 2024 and December 31, 2023, respectively)  $3,838,888   $3,995,750 
Other current assets   

2,708

    2,330 
Total prepayments and other current assets   3,841,596    3,998,080 
Less: Allowance for doubtful accounts (including $1,796,952 and $1,827,763 to related parties as of March 31, 2024 and December 31, 2023, respectively)   (2,314,470)   (2,354,625)
Prepayments and other current assets, net  $1,527,126   $1,643,455 
SCHEDULE OF ALLOWANCE FOR DOUBTFUL ACCOUNTS

Allowance for doubtful accounts movement is as follows:

 

   March 31, 2024   December 31, 2023 
Beginning balance  $2,354,625   $1,247,580 
Additions to allowance   -    1,169,058 
Foreign currency translation adjustment   (40,155)   (62,013)
Ending balance  $2,314,470   $2,354,625 
v3.24.1.1.u2
DEPOSITS PAID, NET (Tables)
3 Months Ended
Mar. 31, 2024
Deposits Paid Net  
SCHEDULE OF DEPOSITS PAID

Deposits paid consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Deposits paid (including $1,569,824 and $1,597,060 to related parties as of March 31, 2024 and December 31, 2023, respectively)  $2,268,987   $2,312,622 
Less: Allowance for doubtful accounts (including $1,042,522 and $1,060,610 to related parties as of March 31, 2024 and December 31, 2023, respectively)   (1,665,271)   (1,694,166)
Deposits paid, net  $603,716   $618,456 
SCHEDULE OF ALLOWANCE FOR DOUBTFUL ACCOUNTS OF DEPOSITS PAID

Allowance for doubtful accounts movement is as follows:

 

   March 31, 2024   December 31, 2023 
Beginning balance  $1,694,166   $1,244,350 
Additions to allowance   -    484,800 
Foreign currency translation adjustment   (28,895)   (34,984)
Ending balance  $1,665,271   $1,694,166 
v3.24.1.1.u2
PROPERTY AND EQUIPMENT, NET (Tables)
3 Months Ended
Mar. 31, 2024
Property, Plant and Equipment [Abstract]  
SCHEDULE OF PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Office equipment (including $9,009 and $nil to the disposal of office equipment as of March 31, 2024 and December 31, 2023, respectively)  $95,402   $106,225 
Leasehold improvement   112,543    114,495 
Vehicle   31,841    32,393 
Property and equipment   239,786    253,113 
Less: Accumulated depreciation (including $9,009 and $nil to the written back disposal of office equipment as of March 31, 2024 and December 31, 2023, respectively)   (165,662)   (169,407)
Property and equipment, net  $74,124   $83,706 
v3.24.1.1.u2
INTANGIBLE ASSETS, NET (Tables)
3 Months Ended
Mar. 31, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
SCHEDULE OF INTANGIBLE ASSETS

Intangible assets and related accumulated amortization were as follows:

 

SCHEDULE OF INTANGIBLE ASSETS

   March 31, 2024   December 31, 2023 
Distribution channel  $2,983,268   $3,035,029 
Others   24,998    25,601 
Total intangible assets   3,008,266    3,060,630 
Less: Accumulated amortization   (1,999,859)   (1,982,560)
Less: Accumulated impairment   (910,631)   (926,431)
Intangible assets, net  $97,776   $151,639 
SCHEDULE OF FUTURE AMORTIZATION EXPENSES FOR DISTRIBUTION CHANNELS

As of March 31, 2024, the future estimated amortization costs for intangible assets are as follows:

 

SCHEDULE OF FUTURE AMORTIZATION EXPENSES FOR DISTRIBUTION CHANNELS

Year ending December 31,     
2024 (remaining)  $86,849 
2025   5,000 
2026   5,000 
2027   927 
2028   - 
Total  $97,776 
v3.24.1.1.u2
RELATED PARTY TRANSACTIONS (Tables)
3 Months Ended
Mar. 31, 2024
Related Party Transactions [Abstract]  
SCHEDULE OF AMOUNT DUE FROM AND DUE TO RELATED PARTIES

Amounts due to related parties as of March 31, 2024 and December 31, 2023 are as follows:

 

SCHEDULE OF AMOUNT DUE FROM AND DUE TO RELATED PARTIES 

      March 31, 2024   December 31, 2023 
Mr. Yumin Lin  President, Chief Executive Officer, Secretary, Director and majority shareholder  $376,542   $341,831 
Ms. Xiulan Zhou  Manager of a subsidiary, Mr. Yumin Lin’s wife   2,481    2,118 
Mr. Huagen Li  Manager of a subsidiary   2,216    2,254 
Mr. Guodong Jia  Manager of a subsidiary   9,787    7,479 
Mr. Hongwei Ye  Manager of a subsidiary, Shareholder   15    15 
Mr. Anping Chen  Manager of a subsidiary   18,426    12,798 
Mr. Jiangwei Jia  Manager of a subsidiary   17,495    10,449 
Mr. Yuwen Li  Vice President   133,956    122,327 
Ms. Lihua Li  Manager of a subsidiary   17,590    14,907 
Shenzhen DaXingHuaShang Industrial Group Ltd. (fka Shenzhen DaXingHuaShang Industry Development Ltd.)  Mr. Yumin Lin is the supervisor of Shenzhen DaXingHuaShang Industrial Group Ltd.   83,099    84,541 
Ms. Chunxiang Zhang  Manager of a subsidiary   17,108    6,810 
Mr. Meng Xue  Manager of a subsidiary   8,064    8,204 
Ms. Shuqin Chen  Manager of a subsidiary   19,488    18,171 
Mr. Zhipeng Zuo  Manager of a subsidiary   27,253    10,103 
Mr. Aisheng Zhang  Manager of a subsidiary   34,652    28,751 
Mr. Zhihua Liao  Manager of a subsidiary   11,405    9,468 
Ms. Xiuyun Wang  Manager of a subsidiary   83    - 
      $779,660   $680,226 
SCHEDULE OF REVENUE GENERATED FROM RELATED PARTIES

Revenues generated from related parties during the three months ended March 31, 2024 and 2023 are as follows:

 

SCHEDULE OF REVENUE GENERATED FROM RELATED PARTIES

      2024   2023 
      Three months ended March 31, 
      2024   2023 
Mr. Kaihong Lin  Chief Financial Officer and Treasurer  $-   $146 
Ms. Xiulan Zhou  Manager of a subsidiary, Mr. Yumin Lin’s wife   -    14 
Guangdong Yuexin Jiaotong Construction Co., Ltd.  Mr. Naiyong Luo, a manager of a subsidiary, is the controlling shareholder of Guangdong Yuexin Jiaotong Construction Co., Ltd.   903    8,383 
Dongguan Humen Shuiyan Drinking Water Store  Ms. Shuiyan Li, a shareholder of the Company, is the controlling shareholder of Dongguan Humen Shuiyan Drinking Water Store   2,460    18,207 
Dongguan Zhengui Industry Ltd.  Significantly influenced by the Company   903    - 
 Revenues generated from related parties      $3,844   $26,750 
SCHEDULE OF COST OF REVENUES FROM RELATED PARTIES

Cost of revenues from related parties during the three months ended March 31, 2024 and 2023 is as follows:

 

SCHEDULE OF COST OF REVENUES FROM RELATED PARTIES

      2024   2023 
      Three months ended March 31, 
      2024   2023 
Dongguan Baxi Food Distribution Co., Ltd.  Significantly influenced by the Company  $

25,781

   $32,883 
Dongguan Dalingshan Xinwenhua Drinking Water Store  Significantly influenced by the Company   

3,991

    13,743 
Dongguan Pengqin Drinking Water Co., Ltd.  Significantly influenced by the Company   

2,825

    17,186 
Dongguan Dengqinghu Drinking Water Store  Significantly influenced by the Company   -    1,388 
Dongguan Tailai Trading Co., Ltd.  Significantly influenced by the Company   

14,306

    31,470 
Dongguan Anxiang Technology Co., Ltd.  Significantly influenced by the Company   

12,951

    35,989 
Guangdong Jiaduonuo Shengshi Trading Co., Ltd.  Significantly influenced by the Company   

4,798

    68,214 
Dongguan Dalingshan Runxin Drinking Water Store  Significantly influenced by the Company   

770

    9,450 
Dongguan City Yijia Trading Co., Ltd.  Mr. Yongming Li, a shareholder of the Company, is the controlling shareholder of Dongguan City Yijia Trading Co., Ltd.   

22,490

    18,659 
Cost of revenues from related parties     $

87,912

   $228,982 
SCHEDULE OF PURCHASES FROM RELATED PARTIES

Purchases from related parties during the three months ended March 31, 2024 and 2023 are as follows:

 

SCHEDULE OF PURCHASES FROM RELATED PARTIES

      2024   2023 
      Three months ended March 31, 
      2024   2023 
Dongguan Baxi Food Distribution Co., Ltd.  Significantly influenced by the Company  $

25,503

   $36,365 
Dongguan Dalingshan Xinwenhua Drinking Water Store  Significantly influenced by the Company   

3,969

    15,198 
Dongguan Pengqin Drinking Water Co., Ltd.  Significantly influenced by the Company   

2,810

    19,005 
Dongguan Dengqinghu Drinking Water Store  Significantly influenced by the Company   -    1,535 
Dongguan Tailai Trading Co., Ltd.  Significantly influenced by the Company   

14,306

    34,802 
Dongguan Anxiang Technology Co., Ltd.  Significantly influenced by the Company   

12,951

    35,989 
Guangdong Jiaduonuo Shengshi Trading Co., Ltd.  Significantly influenced by the Company   

4,798

    68,215 
Dongguan Dalingshan Runxin Drinking Water Store  Significantly influenced by the Company   

758

    10,451 
Dongguan City Yijia Trading Co., Ltd.  Mr. Yongming Li, a shareholder of the Company, is the controlling shareholder of Dongguan City Yijia Trading Co., Ltd.   

22,491

    18,660 
 Purchase from related party      $

87,586

   $240,220 
v3.24.1.1.u2
INCOME TAXES (Tables)
3 Months Ended
Mar. 31, 2024
Income Tax Disclosure [Abstract]  
SCHEDULE OF COMPONENTS OF INCOME TAX PROVISION

The components of the income tax provision are as follows:

 

SCHEDULE OF COMPONENTS OF INCOME TAX PROVISION

   2024   2023 
   Three months ended March 31, 
   2024   2023 
Current:        
– United States of America  $-   $41,444 
– Seychelles   -    - 
– Hong Kong   -    - 
– The PRC   319    33,530 
Current income tax expense          
Deferred          
– United States of America   -    - 
– Seychelles   -    - 
– Hong Kong   -    - 
– The PRC   -    - 
 Deferred income tax expense          
Total  $319   $74,974 
v3.24.1.1.u2
OPERATING LEASES (Tables)
3 Months Ended
Mar. 31, 2024
Operating Leases  
SCHEDULE OF COMPONENTS OF LEASE EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION

The components of lease expense and supplemental cash flow information related to leases for the three months ended March 31, 2024 and 2023 are as follows:

 

   2024   2023 
Operating lease cost (included in general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations)  Three months ended March 31, 
   2024   2023 
         
Related parties  $5,047   $4,806 
Non-related parties   52,469    33,284 
Total  $57,516   $38,090 

 

Other information for the three months ended  March 31, 2024   March 31, 2023 
Cash paid for amounts included in the measurement of lease obligations  $71,727   $42,179 
Weighted average remaining lease term (in years)   2.35    2.91 
Weighted average discount rate   3.23%   3.23%
SCHEDULE OF MATURITIES OF LEASE OBLIGATIONS

Maturities of the Company’s lease obligations as of March 31, 2024 are as follows:

 

Year ending December 31,     
2024 (remaining)  $116,363 
2025   129,074 
2026   48,566 
2027   5,540 
2028   - 
Total lease payment   299,543 
Less: Imputed interest   (40,784)
Operating lease obligations  $258,759 
v3.24.1.1.u2
BANK AND OTHER BORROWINGS (Tables)
3 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
SCHEDULE OF BALANCE OF LOAN BORROWED UNDER CREDIT LINES

The balance of the loans borrowed as of March 31, 2024 and December 31, 2023 were as follows:

 

   March 31, 2024   December 31, 2023 
Loans from a trust in PRC  $60,143   $20,343 
China Construction Bank   402,617    475,121 
Guangdong Nanyue Bank   13,573    24,164 
WeBank   179,060    129,396 
Bank of Ningbo   16,805    21,041 
Aggregate outstanding principal balances   672,198    670,065 
Less: current portion   424,604    458,023 
Non-current portion  $247,594   $212,042 
SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

Future minimum loan payments as of March 31, 2024 are as follows:

 

Year ending December 31,     
2024 (remaining)  $393,386 
2025   113,770 
2026   158,152 
2027   4,980 
Thereafter   1,910 
Total  $672,198 
v3.24.1.1.u2
SCHEDULE OF ENTITIES AND ITS SUBSIDIARIES (Details)
3 Months Ended
Mar. 31, 2024
DIGLS [Member]  
Entity Name DIGLS
Entity incorporation date Jul. 04, 2016
Ownership percentage by parent 100.00%
Nature of operation Investment holding
Country of incorporation Republic of Seychelles
DILHK [Member]  
Entity Name DILHK
Entity incorporation date Jun. 22, 2016
Ownership percentage by parent 100.00%
Nature of operation Investment holding
Country of incorporation Hong Kong, PRC
QHDX [Member]  
Entity Name QHDX
Entity incorporation date Nov. 03, 2016
Ownership percentage by parent 100.00%
Nature of operation Investment holding
Country of incorporation PRC
FVTL [Member]  
Entity Name FVTL
Entity incorporation date May 31, 2011
Ownership percentage by parent 100.00%
Nature of operation Trading of food and platform
Country of incorporation PRC
JJGS [Member]  
Entity Name JJGS
Entity incorporation date Aug. 17, 2017
Ownership percentage by parent 100.00%
Nature of operation Investment holding
Country of incorporation Republic of Seychelles
JJHK [Member]  
Entity Name JJHK
Entity incorporation date Aug. 24, 2017
Ownership percentage by parent 100.00%
Nature of operation Investment holding
Country of incorporation Hong Kong, PRC
JJSZ [Member]  
Entity Name JJSZ
Entity incorporation date Nov. 16, 2018
Ownership percentage by parent 100.00%
Nature of operation Trading of food
Country of incorporation PRC
Xixingdao [Member]  
Entity Name Xixingdao
Entity incorporation date Aug. 28, 2019
Ownership percentage by parent 100.00%
Nature of operation Drinking water distribution and delivery
Country of incorporation PRC
FLTT [Member]  
Entity Name Dongguan City Fu La Tu Trade Ltd (“FLTT”)
Entity incorporation date Sep. 27, 2020
Ownership percentage by parent 100.00%
Nature of operation Trading of alcoholic beverages
Country of incorporation PRC
FXGT [Member]  
Entity Name Dongguan City Fu Xin Gu Trade Ltd (“FXGT”)
Entity incorporation date Dec. 02, 2020
Ownership percentage by parent 100.00%
Nature of operation Trading of alcoholic beverages
Country of incorporation PRC
FXTL [Member]  
Entity Name Dongguan City Fu Xin Technology Ltd (“FXTL”)
Entity incorporation date Nov. 12, 2020
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery
Country of incorporation PRC
FGHL [Member]  
Entity Name Dongguan City Fu Guan Healthy Industry Technology Ltd (“FGHL”)
Entity incorporation date Dec. 21, 2020
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery
Country of incorporation PRC
FJTL [Member]  
Entity Name Dongguan City Fu Jing Technology Ltd (“FJTL”)
Entity incorporation date Nov. 17, 2020
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery
Country of incorporation PRC
FGTL [Member]  
Entity Name Dongguan City Fu Xiang Technology Ltd (“FGTL”)
Entity incorporation date Nov. 16, 2020
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery
Country of incorporation PRC
FJFL [Member]  
Entity Name Dongguan City Fu Ji Food & Beverage Ltd (“FJFL”)
Entity incorporation date Nov. 09, 2020
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery
Country of incorporation PRC
FLFL [Member]  
Entity Name Dongguan City Fu Lai Food Ltd (“FLFL”)
Entity incorporation date Sep. 27, 2020
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery
Country of incorporation PRC
FYBL [Member]  
Entity Name Dongguan City Fu Yi Beverage Ltd (“FYBL”)
Entity incorporation date Nov. 12, 2020
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery
Country of incorporation PRC
FXWL [Member]  
Entity Name Dongguan City Fu Xi Drinking Water Company Ltd (“FXWL”)
Entity incorporation date Mar. 17, 2021
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery, sales of alcoholic beverages and water purifier
Country of incorporation PRC
FJWL [Member]  
Entity Name Dongguan City Fu Jia Drinking Water Company Ltd (“FJWL”)
Entity incorporation date Mar. 29, 2021
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery, sales of water purifier
Country of incorporation PRC
FSWL [Member]  
Entity Name Dongguan City Fu Sheng Drinking Water Company Ltd (“FSWL”)
Entity incorporation date Mar. 29, 2021
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery, sales of water purifier
Country of incorporation PRC
FJSTL [Member]  
Entity Name Shenzhen Fu Jin Trading Technology Company Ltd (“FJSTL”)
Entity incorporation date Jun. 07, 2021
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery, sales of water purifier
Country of incorporation PRC
FLTL [Member]  
Entity Name Dongguan City Fu Li Trading Ltd (“FLTL”)
Entity incorporation date Sep. 10, 2021
Ownership percentage by parent 90.00%
Nature of operation Drinking water distribution and delivery, sales of water purifier
Country of incorporation PRC
FGGC [Member]  
Entity Name Guangdong Fu Gu Supply Chain Group Ltd (“FGGC”)
Entity incorporation date Sep. 13, 2021
Ownership percentage by parent 100.00%
Nature of operation Trading of alcoholic beverages
Country of incorporation PRC
FZGTL [Member]  
Entity Name Dongguan City Fu Zhi Gu Trading Ltd (“FZGTL”)
Entity incorporation date Sep. 09, 2022
Ownership percentage by parent 100.00%
Nature of operation Trading of alcoholic beverages
Country of incorporation PRC
CFTL [Member]  
Entity Name Dongguan City Chang Fu Trading Ltd (“CFTL”)
Entity incorporation date Sep. 09, 2022
Ownership percentage by parent 100.00%
Nature of operation Trading of alcoholic beverages
Country of incorporation PRC
LTTL [Member]  
Entity Name Dongguan City La Tong Trading Ltd (“LTTL”)
Entity incorporation date Aug. 08, 2022
Ownership percentage by parent 100.00%
Nature of operation Trading of alcoholic beverages
Country of incorporation PRC
KFTL [Member]  
Entity Name Dongguan City Kai Fu Trading Ltd (“KFTL”)
Entity incorporation date Sep. 08, 2022
Ownership percentage by parent 100.00%
Nature of operation Trading of alcoholic beverages
Country of incorporation PRC
v3.24.1.1.u2
SCHEDULE OF FOREIGN CURRENCY EXCHANGE RATE TRANSLATION (Details)
Mar. 31, 2024
Mar. 31, 2023
Period End R M B [Member]    
Offsetting Assets [Line Items]    
Period-average RMB:US$1 exchange rate 0.13850 0.14558
Period Average R M B [Member]    
Offsetting Assets [Line Items]    
Period-average RMB:US$1 exchange rate 0.13940 0.14616
v3.24.1.1.u2
SCHEDULE OF DISAGGREGATION REVENUE (Details) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Product Information [Line Items]    
Total $ 267,822 $ 1,635,289
Sales Of Liquor [Member]    
Product Information [Line Items]    
Total 70,244 903,720
Sales Of Water [Member]    
Product Information [Line Items]    
Total 92,379 419,620
Sales Of Water Purifier [Member]    
Product Information [Line Items]    
Total 58,888 253,123
Others [Member]    
Product Information [Line Items]    
Total $ 46,311 $ 58,826
v3.24.1.1.u2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
3 Months Ended
Jun. 22, 2020
Mar. 01, 2019
Apr. 11, 2018
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Working capital       $ 277,204    
Cash and cash equivalents at carrying value       16,785   $ 288,255
Retained earnings accumulated deficit       9,550,550   8,551,019
Net loss       1,001,080 $ 89,176  
Net cash provided by used in operating activities       290,166 $ 174,905  
Contract with customer advance       1,350,606   $ 1,364,260
Amount of customer advances in opening balance       $ 39,076    
Share Exchange Agreement [Member] | DaXingHuaShang Investment Group Limited [Member]            
Number of shares exchanged     15,000,000      
Sale and Purchase Agreement [Member] | Jiujiu Group Stock Co., Ltd [Member]            
Number of shares exchanged   5        
Ownership percentage   100.00%        
Value shares issued in exchange   $ 150        
Xixingdao Agreement [Member] | QHDX [Member]            
Number of shares exchanged 243,134          
Ownership percentage 90.00%          
v3.24.1.1.u2
SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Credit Loss [Abstract]    
Accounts receivable (including $72,923 and $70,710 from related parties as of March 31, 2024 and December 31, 2023, respectively) $ 4,859,495 $ 4,837,852
Less: Doubtful allowance (including $29,967 and $2,602 from related parties as of March 31, 2024 and December 31, 2023, respectively) (2,330,512) (1,718,960)
Accounts receivable, net $ 2,528,983 $ 3,118,892
v3.24.1.1.u2
SCHEDULE OF ACCOUNTS RECEIVABLE (Details) (Parenthetical) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Defined Benefit Plan Disclosure [Line Items]    
Accounts receivable $ 4,859,495 $ 4,837,852
Doubtful allowance 2,330,512 1,718,960
Related Party [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Accounts receivable 72,923 70,710
Doubtful allowance $ 29,967 $ 2,602
v3.24.1.1.u2
SCHEDULE OF ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Credit Loss [Abstract]    
Beginning balance $ 1,718,960
Additions to allowance 645,054 1,726,142
Foreign currency translation adjustment (33,502) (7,182)
Ending balance $ 2,330,512 $ 1,718,960
v3.24.1.1.u2
SCHEDULE OF PREPAYMENT AND OTHER CURRENT ASSETS (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Dec. 31, 2022
Prepayments And Other Current Assets Net      
Prepayments (including $2,669,677 and $2,769,741 to related parties as of March 31, 2024 and December 31, 2023, respectively) $ 3,838,888 $ 3,995,750  
Other current assets 2,708 2,330  
Total prepayments and other current assets 3,841,596 3,998,080  
Less: Allowance for doubtful accounts (including $1,796,952 and $1,827,763 to related parties as of March 31, 2024 and December 31, 2023, respectively) (2,314,470) (2,354,625) $ (1,247,580)
Prepayments and other current assets, net $ 1,527,126 $ 1,643,455  
v3.24.1.1.u2
SCHEDULE OF PREPAYMENT AND OTHER CURRENT ASSETS (Details) (Parenthetical) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Dec. 31, 2022
Defined Benefit Plan Disclosure [Line Items]      
Prepayments to related parties $ 3,838,888 $ 3,995,750  
Allowance for doubtful accounts 2,314,470 2,354,625 $ 1,247,580
Related Party [Member]      
Defined Benefit Plan Disclosure [Line Items]      
Prepayments to related parties 2,669,677 2,769,741  
Allowance for doubtful accounts $ 1,796,952 $ 1,827,763  
v3.24.1.1.u2
SCHEDULE OF ALLOWANCE FOR DOUBTFUL ACCOUNTS (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Prepayments And Other Current Assets Net    
Beginning balance $ 2,354,625 $ 1,247,580
Additions to allowance 1,169,058
Foreign currency translation adjustment (40,155) (62,013)
Ending balance $ 2,314,470 $ 2,354,625
v3.24.1.1.u2
SCHEDULE OF DEPOSITS PAID (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Dec. 31, 2022
Deposits Paid Net      
Deposits paid (including $1,569,824 and $1,597,060 to related parties as of March 31, 2024 and December 31, 2023, respectively) $ 2,268,987 $ 2,312,622  
Less: Allowance for doubtful accounts (including $1,042,522 and $1,060,610 to related parties as of March 31, 2024 and December 31, 2023, respectively) (1,665,271) (1,694,166) $ (1,244,350)
Deposits paid, net $ 603,716 $ 618,456  
v3.24.1.1.u2
SCHEDULE OF DEPOSITS PAID (Details) (Parenthetical) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Dec. 31, 2022
Defined Benefit Plan Disclosure [Line Items]      
Deposits paid $ 2,268,987 $ 2,312,622  
Deposits paid allowance for doubtful accounts 1,665,271 1,694,166 $ 1,244,350
Related Party [Member]      
Defined Benefit Plan Disclosure [Line Items]      
Deposits paid 1,569,824 1,597,060  
Deposits paid allowance for doubtful accounts $ 1,042,522 $ 1,060,610  
v3.24.1.1.u2
SCHEDULE OF ALLOWANCE FOR DOUBTFUL ACCOUNTS OF DEPOSITS PAID (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Deposits Paid Net    
Beginning balance $ 1,694,166 $ 1,244,350
Additions to allowance 484,800
Foreign currency translation adjustment (28,895) (34,984)
Ending balance $ 1,665,271 $ 1,694,166
v3.24.1.1.u2
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Property, Plant and Equipment [Line Items]    
Property and equipment $ 239,786 $ 253,113
Disposal of office equipment 9,009
Less: Accumulated depreciation (including $9,009 and $nil to the written back disposal of office equipment as of March 31, 2024 and December 31, 2023, respectively) (165,662) (169,407)
Property and equipment, net 74,124 83,706
Office Equipment [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment 95,402 106,225
Disposal of office equipment 9,009
Leasehold Improvements [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment 112,543 114,495
Vehicles [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment $ 31,841 $ 32,393
v3.24.1.1.u2
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Impaired Assets to be Disposed of by Method Other than Sale [Line Items]    
Depreciation expense $ 8,207 $ 10,183
General and Administrative Expense [Member]    
Impaired Assets to be Disposed of by Method Other than Sale [Line Items]    
Depreciation expense $ 9,069
v3.24.1.1.u2
SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]    
Total intangible assets $ 3,008,266 $ 3,060,630
Less: Accumulated amortization (1,999,859) (1,982,560)
Less: Accumulated impairment (910,631) (926,431)
Intangible assets, net 97,776 151,639
Distribution Channel [Member]    
Finite-Lived Intangible Assets [Line Items]    
Total intangible assets 2,983,268 3,035,029
Other Intangible Assets [Member]    
Finite-Lived Intangible Assets [Line Items]    
Total intangible assets $ 24,998 $ 25,601
v3.24.1.1.u2
SCHEDULE OF FUTURE AMORTIZATION EXPENSES FOR DISTRIBUTION CHANNELS (Details)
Mar. 31, 2024
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
2024 (remaining) $ 86,849
2025 5,000
2026 5,000
2027 927
2028
Total $ 97,776
v3.24.1.1.u2
INTANGIBLE ASSETS, NET (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]    
Amortization expenses $ 50,353 $ 54,111
v3.24.1.1.u2
SCHEDULE OF AMOUNT DUE FROM AND DUE TO RELATED PARTIES (Details) - Related Party [Member] - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Related Party Transaction [Line Items]    
Due to related parties $ 779,660 $ 680,226
President, Chief Executive Officer, Secretary, Director and Majority shareholder [Member] | Mr Yumin Lin [Member]    
Related Party Transaction [Line Items]    
Due to related parties 376,542 341,831
Manager of a Subsidiary, Mr. Yumin Lin’s Wife [Member] | Ms. Xiulan Zhou [Member]    
Related Party Transaction [Line Items]    
Due to related parties 2,481 2,118
Manager of a Subsidiary [Member] | Mr. Huagen Li [Member]    
Related Party Transaction [Line Items]    
Due to related parties 2,216 2,254
Manager of a Subsidiary [Member] | Mr. Guodong Jia [Member]    
Related Party Transaction [Line Items]    
Due to related parties 9,787 7,479
Manager of a Subsidiary [Member] | Mr. Anping Chen [Member]    
Related Party Transaction [Line Items]    
Due to related parties 18,426 12,798
Manager of a Subsidiary [Member] | Mr. Jiangwei Jia [Member]    
Related Party Transaction [Line Items]    
Due to related parties 17,495 10,449
Manager of a Subsidiary [Member] | Ms. Lihua Li [Member]    
Related Party Transaction [Line Items]    
Due to related parties 17,590 14,907
Manager of a Subsidiary [Member] | Ms. Chunxiang Zhang [Member]    
Related Party Transaction [Line Items]    
Due to related parties 17,108 6,810
Manager of a Subsidiary [Member] | Mr. Meng Xue [Member]    
Related Party Transaction [Line Items]    
Due to related parties 8,064 8,204
Manager of a Subsidiary [Member] | Ms. Shuqin Chen [Member]    
Related Party Transaction [Line Items]    
Due to related parties 19,488 18,171
Manager of a Subsidiary [Member] | Mr. Zhipeng Zuo [Member]    
Related Party Transaction [Line Items]    
Due to related parties 27,253 10,103
Manager of a Subsidiary [Member] | Mr. Aisheng Zhang [Member]    
Related Party Transaction [Line Items]    
Due to related parties 34,652 28,751
Manager of a Subsidiary [Member] | Mr. Zhihua Liao [Member]    
Related Party Transaction [Line Items]    
Due to related parties 11,405 9,468
Manager of a Subsidiary [Member] | Xiuyun Wang [Member]    
Related Party Transaction [Line Items]    
Due to related parties 83
Manager of a Subsidiary, Shareholder [Member] | Mr. Hongwei Ye [Member]    
Related Party Transaction [Line Items]    
Due to related parties 15 15
Vice President [Member] | Mr. Yuwen Li [Member]    
Related Party Transaction [Line Items]    
Due to related parties 133,956 122,327
Mr. Yumin Lin is the Supervisor of Shenzhen DaXingHuaShang Industry Development Ltd [Member] | Shenzhen Da Xing Hua Shang Industry Development Ltd [Member]    
Related Party Transaction [Line Items]    
Due to related parties $ 83,099 $ 84,541
v3.24.1.1.u2
SCHEDULE OF REVENUE GENERATED FROM RELATED PARTIES (Details) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Related Party Transaction [Line Items]    
 Revenues generated from related parties $ 3,844 $ 26,750
Mr Naiyong Luo A Manager [Member] | Related Party [Member] | Guangdong Yuexin Jiaotong Construction Co Ltd [Member]    
Related Party Transaction [Line Items]    
 Revenues generated from related parties 903 8,383
Mr Kaihong Lin [Member] | Chief Financial Officer And Treasurer [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
 Revenues generated from related parties 146
Xiu Lan Zhou [Member] | Manager of a Subsidiary, Mr. Yumin Lin’s Wife [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
 Revenues generated from related parties 14
Dongguan Humen Shuiyan Drinking Water [Member] | Shuiyan Li [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
 Revenues generated from related parties 2,460 18,207
Dongguan Zhengui Industry Ltd [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
 Revenues generated from related parties $ 903
v3.24.1.1.u2
SCHEDULE OF COST OF REVENUES FROM RELATED PARTIES (Details) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Related Party Transaction [Line Items]    
Cost of revenues from related parties $ 212,889 $ 677,367
Related Party [Member]    
Related Party Transaction [Line Items]    
Cost of revenues from related parties 87,912 228,982
Dongguan Baxi Food Distribution Co Ltd [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
Cost of revenues from related parties 25,781 32,883
Dongguan Dalingshan Xinwenhua Drinking Water Store [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
Cost of revenues from related parties 3,991 13,743
Dongguan Pengqin Drinking Water Co Ltd [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
Cost of revenues from related parties 2,825 17,186
Dongguan Dengqinghu Drinking Water Store [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
Cost of revenues from related parties 1,388
Dongguan Tailai Trading Co Ltd [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
Cost of revenues from related parties 14,306 31,470
Dongguan Anxiang Technology Co Ltd [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
Cost of revenues from related parties 12,951 35,989
Guangdong Jiaduonuo Shengshi Trading Co Ltd [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
Cost of revenues from related parties 4,798 68,214
Dongguan Dalingshan Runxin Drinking Water Store [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
Cost of revenues from related parties 770 9,450
Dongguan City Yijia Trading Co Ltd [Member] | Related Party [Member]    
Related Party Transaction [Line Items]    
Cost of revenues from related parties $ 22,490 $ 18,659
v3.24.1.1.u2
SCHEDULE OF PURCHASES FROM RELATED PARTIES (Details) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
 Purchase from related party $ 87,586 $ 240,220
Dongguan Baxi Food Distribution Co Ltd [Member]    
 Purchase from related party 25,503 36,365
Dongguan Dalingshan Xinwenhua Drinking Water Store [Member]    
 Purchase from related party 3,969 15,198
Dongguan Pengqin Drinking Water Co Ltd [Member]    
 Purchase from related party 2,810 19,005
Dongguan Dengqinghu Drinking Water Store [Member]    
 Purchase from related party 1,535
Dongguan Tailai Trading Co Ltd [Member]    
 Purchase from related party 14,306 34,802
Dongguan Anxiang Technology Co Ltd [Member]    
 Purchase from related party 12,951 35,989
Guangdong Jiaduonuo Shengshi Trading Co Ltd [Member]    
 Purchase from related party 4,798 68,215
Dongguan Dalingshan Runxin Drinking Water Store [Member]    
 Purchase from related party 758 10,451
Dongguan City Yijia Trading Co Ltd [Member]    
 Purchase from related party $ 22,491 $ 18,660
v3.24.1.1.u2
SCHEDULE OF COMPONENTS OF INCOME TAX PROVISION (Details) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Effective Income Tax Rate Reconciliation [Line Items]    
Total $ 319 $ 74,974
UNITED STATES    
Effective Income Tax Rate Reconciliation [Line Items]    
Current income tax expense 41,444
 Deferred income tax expense
Seychelle [Member]    
Effective Income Tax Rate Reconciliation [Line Items]    
Current income tax expense
 Deferred income tax expense
HONG KONG    
Effective Income Tax Rate Reconciliation [Line Items]    
Current income tax expense
 Deferred income tax expense
CHINA    
Effective Income Tax Rate Reconciliation [Line Items]    
Current income tax expense 319 33,530
 Deferred income tax expense
v3.24.1.1.u2
INCOME TAXES (Details Narrative)
3 Months Ended
Mar. 31, 2024
USD ($)
Mar. 31, 2024
HKD ($)
Mar. 31, 2023
Effective Income Tax Rate Reconciliation [Line Items]      
U.S federal income tax rate 21.00% 21.00%  
Effective income tax rate reconciliation, foreign income tax rate differential, percent 18.00% 18.00% (527.90%)
Effective income tax percentage 25.00% 25.00%  
CHINA      
Effective Income Tax Rate Reconciliation [Line Items]      
Income tax examination, description On April 2, 2021, the State Taxation Administration issued the notice of the Ministry of Finance and the State Administration of Taxation (“MOF and SAT”) [2021] No.12 to provide an enterprise income tax rate of 2.5% on small-scale and low-profit enterprises whose annual taxable income is less than RMB1,000,000, approximately $142,209, from January 1, 2021 to December 31, 2022. MOF and SAT [2022] No.13 also provides an enterprise income tax rate of 5% on small-scale and low-profit enterprises whose annual taxable income is more than RMB1,000,000, approximately $139,404, but less than RMB3,000,000, approximately $418,212, from January 1, 2022 to December 31, 2024. The qualifications of small-scale and low-profit enterprises were examined annually by the Tax Bureau. All of the Company’s PRC subsidiaries met the criteria of small-scale and low-profit enterprises, except for Xixingdao, FVT Supply Chain and FLTT On April 2, 2021, the State Taxation Administration issued the notice of the Ministry of Finance and the State Administration of Taxation (“MOF and SAT”) [2021] No.12 to provide an enterprise income tax rate of 2.5% on small-scale and low-profit enterprises whose annual taxable income is less than RMB1,000,000, approximately $142,209, from January 1, 2021 to December 31, 2022. MOF and SAT [2022] No.13 also provides an enterprise income tax rate of 5% on small-scale and low-profit enterprises whose annual taxable income is more than RMB1,000,000, approximately $139,404, but less than RMB3,000,000, approximately $418,212, from January 1, 2022 to December 31, 2024. The qualifications of small-scale and low-profit enterprises were examined annually by the Tax Bureau. All of the Company’s PRC subsidiaries met the criteria of small-scale and low-profit enterprises, except for Xixingdao, FVT Supply Chain and FLTT  
Up To HK$2,000,000 [Member] | Inland Revenue, Hong Kong [Member]      
Effective Income Tax Rate Reconciliation [Line Items]      
Effective income tax rate reconciliation, foreign income tax rate differential, percent 8.25% 8.25%  
Income tax assessable profit $ 255,112 $ 2,000,000  
Over HK$2,000,000 [Member] | Inland Revenue, Hong Kong [Member]      
Effective Income Tax Rate Reconciliation [Line Items]      
Effective income tax rate reconciliation, foreign income tax rate differential, percent 16.50% 16.50%  
Income tax assessable profit   $ 2,000,000  
v3.24.1.1.u2
SCHEDULE OF COMPONENTS OF LEASE EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Defined Benefit Plan Disclosure [Line Items]    
Total $ 57,516 $ 38,090
Cash paid for amounts included in the measurement of lease obligations $ 71,727 $ 42,179
Weighted average remaining lease term (in years) 2 years 4 months 6 days 2 years 10 months 28 days
Operating lease, weighted average discount rate, percent 3.23% 3.23%
Related Party [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Total $ 5,047 $ 4,806
Nonrelated Party [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Total $ 52,469 $ 33,284
v3.24.1.1.u2
SCHEDULE OF MATURITIES OF LEASE OBLIGATIONS (Details)
Mar. 31, 2024
USD ($)
Operating Leases  
2024 (remaining) $ 116,363
2025 129,074
2026 48,566
2027 5,540
2028
Total lease payment 299,543
Less: Imputed interest (40,784)
Operating lease obligations $ 258,759
v3.24.1.1.u2
OPERATING LEASES (Details Narrative)
3 Months Ended
Mar. 31, 2024
USD ($)
Mar. 31, 2024
CNY (¥)
Operating lease description the Company has twenty-one separate operating lease agreements for three office spaces, one warehouse and seventeen stores in PRC with remaining lease terms of from 3 month to 39 months the Company has twenty-one separate operating lease agreements for three office spaces, one warehouse and seventeen stores in PRC with remaining lease terms of from 3 month to 39 months
Qingmei Lin [Member] | Operating Lease Agreement [Member]    
Operating lease description The agreement covers the period from January 1, 2019 to April 30, 2027 The agreement covers the period from January 1, 2019 to April 30, 2027
Payments for rent $ 1,394 ¥ 10,000
Mr. Hongwei Ye [Member] | Operating Lease Agreement [Member]    
Payments for rent $ 134 ¥ 960
v3.24.1.1.u2
SCHEDULE OF BALANCE OF LOAN BORROWED UNDER CREDIT LINES (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Line of Credit Facility [Line Items]    
Aggregate outstanding principal balances $ 672,198 $ 670,065
Less: current portion 424,604 458,023
Non-current portion 247,594 212,042
Bank Loan From The Trust In P R C [Member]    
Line of Credit Facility [Line Items]    
Aggregate outstanding principal balances 60,143 20,343
China Construction Bank [Member]    
Line of Credit Facility [Line Items]    
Aggregate outstanding principal balances 402,617 475,121
Guangdong Nanyue Bank [Member]    
Line of Credit Facility [Line Items]    
Aggregate outstanding principal balances 13,573 24,164
WeBank [Member]    
Line of Credit Facility [Line Items]    
Aggregate outstanding principal balances 179,060 129,396
Bank of Ningbo [Member]    
Line of Credit Facility [Line Items]    
Aggregate outstanding principal balances $ 16,805 $ 21,041
v3.24.1.1.u2
SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Debt Disclosure [Abstract]    
2024 (remaining) $ 393,386  
2025 113,770  
2026 158,152  
2027 4,980  
Thereafter 1,910  
Total $ 672,198 $ 670,065
v3.24.1.1.u2
BANK AND OTHER BORROWINGS (Details Narrative)
1 Months Ended 2 Months Ended 3 Months Ended
Feb. 29, 2024
USD ($)
Jan. 31, 2024
USD ($)
Nov. 30, 2023
USD ($)
Jul. 31, 2023
USD ($)
May 31, 2023
USD ($)
Apr. 30, 2023
USD ($)
Feb. 28, 2023
USD ($)
Jul. 31, 2022
USD ($)
May 31, 2022
USD ($)
Feb. 29, 2024
USD ($)
Mar. 31, 2024
USD ($)
Mar. 31, 2023
USD ($)
Feb. 29, 2024
CNY (¥)
Jan. 31, 2024
CNY (¥)
Nov. 30, 2023
CNY (¥)
Jul. 31, 2023
CNY (¥)
May 31, 2023
CNY (¥)
Apr. 30, 2023
CNY (¥)
Feb. 28, 2023
CNY (¥)
Jul. 31, 2022
CNY (¥)
May 31, 2022
CNY (¥)
Line of Credit Facility [Line Items]                                          
Interest expense                     $ 10,844 $ 9,292                  
China Construction Bank [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount         $ 146,000   $ 68,000   $ 24,000               ¥ 1,050,000   ¥ 465,000   ¥ 161,000
Interest rate         4.20%   4.00%                            
Maturity date         May 26, 2024   Feb. 11, 2024                            
Huaneng Guicheng Trust Co Ltd [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount   $ 544,000                       ¥ 390,000              
Interest rate   17.64% 7.92%           11.34%                        
Maturity date   Jan. 21, 2016             May 21, 2024                        
WeBank [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount $ 38,000   $ 62,000 $ 8,000   $ 13,000     $ 10,000 $ 38,000     ¥ 270,000   ¥ 440,000 ¥ 57,000   ¥ 96,000     ¥ 69,000
Interest rate                   7.92%                      
Maturity date Feb. 22, 2026   Nov. 16, 2025           May 21, 2024                        
WeBank One [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount               $ 15,000                       ¥ 99,000  
Guangdong Nanyue Bank [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount               $ 34,000                       231,000  
WeBank and Guangdong Nanyue Bank Co Ltd. [Member]                                          
Line of Credit Facility [Line Items]                                          
Interest rate               14.40%                          
Maturity date               Jul. 08, 2024                          
WeBank Two [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount               $ 23,000                       153,000  
Nanyue Bank [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount       $ 18,000       $ 53,000               133,000       357,000  
WeBank and Nanyue Bank [Member]                                          
Line of Credit Facility [Line Items]                                          
Interest rate       10.44%       14.40%                          
Maturity date       Jul. 13, 2025       Jul. 13, 2024                          
Huaneng Guicheng [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount               $ 57,000                       ¥ 380,000  
Interest rate               12.60%                          
Maturity date               Jul. 21, 2024                          
Bank of Ningbo [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount           $ 31,000                       224,000      
Bank of Ningbo and WeBank [Member]                                          
Line of Credit Facility [Line Items]                                          
Interest rate           12.24%                              
Maturity date           Apr. 07, 2025                              
Car Loan WeBank [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount           $ 27,000                       ¥ 195,415      
Interest rate           6.54%                              
Maturity date           Apr. 10, 2028                              
China Construction Bank Loan One [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount       $ 143,000                       1,040,000          
Interest rate       3.70%                                  
Maturity date       Jul. 17, 2026                                  
China Construction Bank Loan Two [Member]                                          
Line of Credit Facility [Line Items]                                          
Principal amount       $ 114,000                       ¥ 817,000          
Interest rate       3.85%                                  
Maturity date       Jul. 22, 2024                                  

Fortune Valley Treasures (PK) (USOTC:FVTI)
과거 데이터 주식 차트
부터 5월(5) 2024 으로 6월(6) 2024 Fortune Valley Treasures (PK) 차트를 더 보려면 여기를 클릭.
Fortune Valley Treasures (PK) (USOTC:FVTI)
과거 데이터 주식 차트
부터 6월(6) 2023 으로 6월(6) 2024 Fortune Valley Treasures (PK) 차트를 더 보려면 여기를 클릭.