Fortune Valley Treasures, Inc. 10-K

Item 1. Business Company Background Fortune Valley Treasures, Inc. (“FVTI” or the “Company”) , formerly Crypto-Services, Inc. (“CRYT”), 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 worldwide online. On July 22, 2015, the Company filed an amendment to its Articles of Incorporation with the Nevada Secretary of State changing its name from Crypto-Services, Inc. to Fortune Valley Treasures, Inc. As previously reported in a Current Report on Form 8-K filed on December 14, 2016, we entered into a Sale and Purchase Agreement (the “Original Agreement”) with DaXingHuaShang Investment Group Limited (“DIGL”) and its shareholders, Mr. Yumin Lin, Gaosheng Group Co., Ltd. and China Kaipeng Group Co., Ltd. to acquire 100% of the shares and assets of DIGL, a company incorporated under the laws of the Republic of Seychelles. Pursuant to the Original Agreement, FVTI had agreed to issue Three Hundred Million (300,000,000) shares of common stock of FVTI to the existing stockholders of DIGL to acquire 100% of the shares of DIGL. On December 14, 2016, in anticipation of the reverse merger between the Company and DIGL, Shen Xinlong resigned from the position of President, Secretary and Treasurer but remained on the Board as a Director. Additionally, the Company announced the appointment of Mr. Yumin Lin to the Board of Directors, and as President, Secretary and Treasurer. On April 11, 2018, the Company entered into a termination agreement (“Termination Agreement”) with DIGL, terminating the Original Agreement and all transactions contemplated under the Original Agreement. On April 11, 2018, the Company entered into a Share Exchange Agreement (the “Agreement”) to acquire 100% of the outstanding equity securities of DIGL. Pursuant to the Agreement, the Company agreed to issue 300 million (300,000,000) shares of common stock, par value $0.001 of the Company to the existing stockholders of DIGL to acquire 100% outstanding equity securities of DIGL (the “Share Exchange”). The Share Exchange closed on April 19, 2018 Immediately following the Share Exchange, the business of DIGL became our business. DIGL is engaged in the business of retail and wholesale of imported wine products in China. We now own all of the issued and outstanding shares of DIGL, which owns all of the equity capital of DaXingHuaShang Investment (Hong Kong) Limited, Qianhai DaXingHuaShang Investment (Shenzhen) Co. Ltd., and Dongguan City France Vin Tout Ltd. On March 1, 2019, we executed a Sale and Purchase Agreement (the “SP Agreement”) to acquire 100% of the shares and assets of Jiujiu Group Stock Co., Ltd. (“JJGS”), a company incorporated under the laws of the Republic of Seychelles. The transaction contemplated in the SP Agreement was closed on March 1, 2019. Pursuant to the SP Agreement, the Company has issued one hundred (100) shares of the Company’s common stock to JJGS to acquire 100% of the shares and assets of JJGS for a cost of US$150 reflecting the value of the rights, titles and interests in the business assets and all attendant or related assets of JJGS. Both parties agreed that this share issuance by the Company represents payment in full of US$150. Upon Closing, JJGS became the Company’s wholly owned subsidiary. We now own all of the issued and outstanding shares of JJGS, which owns all of the equity capital of Jiujiu (HK) Industry Ltd. and Jiujiu (Shenzhen) Industry Ltd. Currently, JJGS , Jiujiu (HK) Industry Ltd. and Jiujiu (Shenzhen) Industry Ltd. do not have any operations or active business, nor do they have any assets. Currently, we are engaged in the retail and wholesale wine product business in Dongguan City, Guangdong Province. Our office is located at No.10 of Tuanjie 2nd Road, Beice, Humen, Dongguan, 518000, China. Our telephone number is: + (86) 76982268999 4 We offer a variety of wines such as dry red wine, dry white wine, rosé wine, and sweet wine. Currently we sell about 40 different brands of wine, most of which are imported from France and Spain. Below is a list of the most popular products we are selling— Name Photo Origin Alcohol content Le Petit Tour France 13% Los Beceux Spain 12% Sorlada Spain 12% 5 Lapso Chile 13% Saint Martin France 12.5% Seguelongue France 13% Saint Emilion France 13% 6 We have put significant efforts in developing and promoting our brand name in different regions of China. We adopt two sales models– wholesales to distributors and bulk sales to customers. We diversify our portfolio of distributors to maximize our sales turnover and profits in general. Our distributors include stores, wine shops, regional non-exclusive agents and regional exclusive agents. There are 151 regional exclusive agents and regional non-exclusive agents authorized to sell our products throughout China. For regional exclusive agents, our company grants them exclusive distribution rights in certain geographical territory. For non-exclusive agents, we serve as their supplier and they purchase our products at a higher price than the regional exclusive agents do. After seven years of development, we have cultivated business relationships and achieved recognitions with different organizations over the years, which has improved our business and management efficacy. Specifically, we have been collaborating with Shenzhen Institute of Tsinghua University since 2011, who has been helping us develop innovative management model, operating model and franchising model. Our Company has been a member of Guangdong Provincial Liquor Industry Association since 2011 and was awarded “Excellent Marketing Agency of the Year” in 2012. Our store is located in Humen Town, Dongguan City. It is a six-floor building containing a total floor area of 1200 square meters. We use the first floor exclusively for displaying our sample products. We use the remaining five floors as our Company’s conference room, offices and storage. Our friendly and knowledgeable staff members on the first floor strive to cultivate long-term relationships with customers, helping them make informed purchase decisions. Business Plan Our business plan is to extend our market shares through acquiring quality wine producers and wine importers. Through such business plan, we believe: (i) we can increase our customer base and obtain more wine supply channels; (ii) such acquisitions will help us obtain more skilled employees and business connections in the Chinese wine industry. We consider following factors when evaluating quality acquisition targets: (i) the costs involved in an acquisition; (ii) the financial performance of the target; (iii) the reputation of the target in the wine industry; (iv) the target’s existing customer base; (v) the target’s suppliers; (vi) the expertise and experience of the target’s employees; and (vii) the wine cellar management and inventory condition of the target. Our management believes that successful acquisitions will bring synergies to our business and enhance our shareholders’ value. Government Regulations We operate our business in China under a legal regime consisting of the National People’s Congress, which is the country’s highest legislative body, the State Council, which is the highest authority of the executive branch of the PRC central government, and several ministries and agencies under its authority, including the Ministry of Industry and Information Technology, State Administration For Industry & Commerce, State Administration of Taxation and their respective local offices. This section summarizes the principal PRC regulations related to our business. 7 Type Name Effective Date Content President Order 21 of 2015 Food Safety Law 2015/10/01 The Food Safety Law is the foundational law and the most important food safety law for alcoholic products in China. A great majority of wine regulations are drafted in conformity to the requirements of this law. AQSIQ Order 144 of 2011 Measures for Administration of Imported/Exported Food Safety 2012/3/1 This rule oversees the safety of imported and exported food. CFDA Order 16 of 2015 Measures for Administration of Food Production Licensing 2015/10/01 This rule requires all food producers in China to procure a production license. AQSIQ Order 27 of 2012 Administrative Provisions on Inspections and Supervisions of Labeling of Imported/Exported Pre-packaged Foods 2012/6/1 This rule provides guidelines that governs all pre-packaged foods. AQSIQ Order 55 of 2012 Administrative Provisions on Filing of Importers and Exporters of Imported Foods 2012/10/1 This rule provides the guidelines for imported food inspection procedures, including investigation of food importers and exporters, tracking of the source and flow of imported foods and handling of imported food safety inspections. AQSIQ Order 55 of 2012 Administrative Provisions on Recording of Import and Marketing of Imported Foods 2012/10/1 This rule governs the domestic circulation of imported food. Measures for Administration of Imported Alcohol in Domestic Market 1997/9/9 This rule governs the administrative procedure involved in regulating imported alcohol in Chinese market, promulgated by a variety of Chinese agencies such as the State Economic and Trade Commission, the State Administration for Industry and Commerce, and the Customs General Administration. AQSIQ Notice on Dec 23 2004 Rules for Inspection on Production Licensing of Wines and Fruit Wines 2005/1/1 This is a rule setting up the inspection procedures on production licensing of wines and fruit wines. AQSIQ Order 78 of 2005 Geographical Indication Product Protection Regulation 2005/7/15 This is a regulation that protects China’s geographical indication products. It regulates the use of geographical indication product names and trademarks while safeguarding the quality of geographical indication products. Intellectual Property Protection of our intellectual property is a strategic priority for our business. We rely primarily on a combination of trademark and trade secret laws to establish and protect our proprietary rights. We do not rely on third-party licenses of intellectual property for use in our business. We currently have two registered trademarks in China. Our current Chinese trademarks will expire in 2022. Trademark Number Issue Date Expiration Date* Trademark Title 9680266 2012.08.21 2022.08.20 法蓝图 9680456 2006.03.14 2022.08.20 Employees As of April 2, 2019, the Company has 18 full time employees. All employment contracts comply with PRC law. The Company believes its relationship with its employees is good. 8 WHERE YOU CAN FIND MORE INFORMATION The registrant is subject to the requirements of the Exchange Act, and files reports, proxy statements and other information with the SEC. You may read and copy these reports, proxy statements and other information at the public reference room maintained by the SEC at its Public Reference Room, located at 100 F Street, N.E. Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling the SEC at (800) SEC-0330. In addition, we are required to file electronic versions of those materials with the SEC through the SEC’s EDGAR system. The SEC also maintains a website at http://www.sec.gov, which contains reports, proxy statements and other information regarding registrants that file electronically with the SEC. Item 1a. Risk Factors Not required from a smaller reporting company. Item 1b. Unresolved Staff Comments Not applicable.