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, 2021 filed with the Securities and Exchange Commission on April 1, 2022 (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 six months ended June 30, 2022, the Company conducted its business in one revenue stream: product sales - wine, water, water purifier and other F&B products.





Results of Operations

Three Months Ended June 30, 2022 and 2021





                                             Three Months Ended June 30,
                                               2022                2021            Change
Net revenues                              $     2,336,459      $  1,825,344     $    511,115
Cost of revenues                               (1,099,523 )        (797,524 )       (301,999 )
Gross profit                                    1,236,936         1,027,820          209,116

Operating expense                                (363,586 )        (469,476 )        105,890
Other income                                        2,011               738            1,273
Other expense                                      (4,864 )          (5,934 )          1,070
Income taxes                                      (81,514 )         (96,267 )         14,753
Net income                                        788,983           456,881          332,102
Net income attributable to
noncontrolling interests                           41,250            42,406           (1,156 )
Net income attributable to Fortune
Valley Treasures, Inc.                    $       747,733      $    414,475     $    333,258

Six Months Ended June 30, 2022 and 2021





                                            Six Months Ended June 30,
                                              2022              2021            Change
Net revenues                              $   3,598,269     $  3,469,504     $    128,765
Cost of revenues                             (1,617,985 )     (1,527,267 )        (90,718 )
Gross profit                                  1,980,284        1,942,237           38,047

Operating expense                              (909,027 )       (978,607 )         69,580
Other income                                      8,295              934            7,361
Other expense                                   (10,689 )         (9,487 )         (1,202 )
Income taxes                                   (103,921 )       (162,622 )         58,701
Net income                                      964,942          792,455          172,487
Net income attributable to
noncontrolling interests                         68,533           72,726           (4,193 )
Net income attributable to Fortune
Valley Treasures, Inc.                    $     896,409     $    719,729     $    176,680




17






Net Revenues

Net revenues were $2,336,459 for three months ended June 30, 2022, reflecting an increase of $511,115, or 28.00%, from $1,825,344 for the three months ended June 30, 2021. The reason for the increase was the Company launched a new distribution channel via a WeChat App.

Net revenues were $3,598,269 for six months ended June 30, 2022, reflecting an increase of $128,765, or 3.71%, from $3,469,504 for six months ended June 30, 2021. The reason for the slight increase was the market was getting revived from COVID-19.





Cost of Revenues

Cost of revenues was $1,099,523 for the three months ended June 30, 2022, reflecting an increase of $301,999, or 37.87%, from $797,524 for the three months ended June 30, 2021. The increase in cost of revenues was due to the increase in product sales in line with the increase in our net revenues.

Cost of revenues was $1,617,985 for the six months ended June 30, 2022, reflecting an increase of $90,718, or 5.94%, from $1,527,267 for the six months ended June 30, 2021. The increase in cost of revenues was in line with the increase in our net revenues.





Gross Profit

Gross profit was $1,236,936 and $1,027,820 for the three months ended June 30, 2022 and 2021, respectively, reflecting an increase of $209,116, or 20.35 %. The increase in gross profit was due to the addition of the net revenues.

Gross profit was $1,980,284 and $1,942,237 for the six months ended June 30, 2022 and 2021, respectively, reflecting an increase of $38,047, or 1.96%. The increase in gross profit was due to the addition of the net revenues.





Operating Expenses

Operating expense was $363,586 for the three months ended June 30, 2022, reflecting a decrease of $105,890, or 22.55%, from $469,476 for the three months ended June 30, 2021, due to the decrease in professional service fees.

Operating expense was $909,027 for the six months ended June 30, 2022, reflecting a decrease of $69,580, or 7.11%, from $978,607 for the six months ended June 30, 2021, due to the decrease in professional service fees.





Net Income

For the three months ended June 30, 2022, net income was $788,983, compared to net income $456,881 for the three months ended June 30, 2021. The increase in net income was a result of the factors described above.

For the six months ended June 30, 2022, net income was $964,942, compared to net income $792,455 for the six months ended June 30, 2021. The increase in net income was a result of the factors described above.

Net income attributable to noncontrolling interests

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

For the three months ended June 30, 2022 and 2021, the Company recorded net income attributable to noncontrolling interests of $41,250 and $42,406, respectively.

For the six months ended June 30, 2022 and 2021, the Company recorded net income attributable to noncontrolling interests of $68,533 and $72,726, respectively.





18

Liquidity and Capital Resources





Working Capital



                             June 30, 2022       December 31, 2021        Change
Total current assets        $     5,367,079     $         5,069,481     $  297,598
Total current liabilities         1,452,816               1,717,519       (264,703 )
Working capital             $     3,914,263     $         3,351,962     $  562,301

As of June 30, 2022, we had working capital of $3,914,263, as compared to working capital of $3,351,962 as of December 31, 2021. We had total current assets of $5,367,079, consisting of cash and cash equivalents of $85,326, inventories of $139,533, prepayments and other current assets of $2,437,318, and accounts receivable of $2,704,902, compared to total current assets of $5,069,481 as of December 31, 2021. The increase was mainly due to the increase in accounts receivable and prepayments and other current assets, offset by the decrease in cash and cash equivalents and due from a related party. We had current liabilities of $1,452,816, consisting of operating lease obligations of $124,513, accounts payable of $191,000, accrued liabilities of $138,589, bank and other borrowing $208,012, customer advances $255,980, income tax payable $43,101 and due to related parties of $491,621. The decrease was mainly due to the repayment of account payable, decrease in customer advances during the period, repayment to related parties, offset by the increase in bank and other borrowings.

Our cash and cash equivalents balance at June 30, 2022 decreased to $85,326, as compared to $123,163 at December 31, 2021. We estimate the Company currently has sufficient cash available to meet its anticipated working capital for the next twelve months, without raising additional capital. The Company is continuing to look for different financing opportunities in order to increase sufficient working capital and improve liquidity.

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

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