What changed in this filing

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Item 1. Business

2020-05-14 compared with 2019-04-02 · 221 added, 132 removed, 41 unchanged (90% of the section changed)

Valley Treasures, Inc.

(“FVTI”

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.

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.

have been engaged in the retail and wholesale distribution of a wide spectrum of food and beverage products in Guangdong, China

In addition, we are actively seeking quality target companies in the food, beverage and alcohol industries for mergers

and acquisition for further development of our company.

History and Structure

Valley Treasures, Inc., formerly Crypto-Services, Inc., 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.

July 22, 2015, we filed an amendment to its Articles of Incorporation with the Nevada Secretary of State to change our name from

Crypto-Services, Inc.

to Fortune Valley Treasures, Inc.

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.

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

Yumin Lin to the Board of Directors, and as President, Secretary and Treasurer.

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.

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

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.

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.

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

we are engaged in the retail and wholesale wine product business in Dongguan City, Guangdong Province.

office is located at No.10 of Tuanjie 2nd Road, Beice, Humen, Dongguan, 518000, China.

Our telephone number is:

offer a variety of wines such as dry red wine, dry white wine, rosé

wine, and sweet wine.

sell about 40 different brands of wine, most of which are imported from France and Spain.

a list of the most popular products we are selling—

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

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

For non-exclusive agents, we serve as their supplier and they purchase our products at a higher price than the

regional exclusive agents do.

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”

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.

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.

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

(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.

December 14, 2016, we entered into a sale and purchase agreement (the “Original Agreement”) with DaXingHuaShang Investment

Group Limited, a company incorporated under the laws of the Republic of Seychelles (“DIGLS”), and its shareholders.

DIGLS is engaged in the business of retail and wholesale of imported wine products in China and owns all of the equity capital

of DaXingHuaShang Investment (Hong Kong) Limited (“DILHK”), Qianhai DaXingHuaShang Investment (Shenzhen) Co., Ltd.

(“QHDX”) and Dongguan City France Vin Tout Ltd.

(“FVTL”).

Pursuant to the Original Agreement, we agreed

to issue 300,000,000 shares of our common stock to the stockholders of DIGLS in exchange for 100% of the shares of DIGLS.

11, 2018, we entered into a termination agreement with DIGLS, terminating the Original Agreement and all transactions contemplated

under the Original Agreement.

On April 6, 2018, we entered into a share exchange agreement by and among DIGLS, and each of the

shareholders of DIGLS, pursuant to which we issued 300,000,000 shares of common stock in exchange for 100% of the issued shares

The share exchange closed on April 19, 2018 and DIGLS became our wholly-owned subsidiary.

March 1, 2019, we 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, in exchange

for 100 shares of our common stock and closed the acquisition of JJGS on March 1, 2019.

After the closing, JJGS became the Company’s

wholly owned subsidiary.

JJGS owns all of the equity interests of Jiujiu (HK) Industry Limited (“JJHK”) and Jiujiu

(Shenzhen) Industry Co., Ltd.

(“JJSZ”).

None of JJGS, JJHK and JJSZ have any operations or active business, nor do

they have any assets.

following diagram illustrates our corporate structure as of the date of this Annual Report.

(COVID-19) Update

there is an ongoing outbreak of a novel strain of coronavirus (COVID-19) first identified in China and has since spread rapidly

The pandemic has resulted in quarantines, travel restrictions, and the temporary closure of stores and business facilities

globally for the past few months.

In March 2020, the World Health Organization declared the COVID-19 as a pandemic.

rapidly expanding nature of the COVID-19 pandemic, and because substantially all of our business operations and our workforce

are concentrated in China, our business, results of operations and financial condition have been and will continue to be adversely

Potential impact to our results of operations will also depend on future developments and new information that may emerge

regarding the duration and severity of the COVID-19 and the actions taken by government authorities and other entities to contain

the COVID-19 or mitigate its impact, almost all of which are beyond our control.

impacts of COVID-19 on our business, financial condition, and results of operations include, but are not limited to, the following:

temporally closed our offices to adhere to the policy for approximately one month from late January 2020, as required by relevant PRC regulatory

Our offices are slowly reopening pursuant to local guidelines.

In the first quarter of 2020, the COVID-19 outbreak

has caused disruptions in our operations and supply chains, which have resulted in delays in the shipment of products to certain

of our customers.

large number of our employees have been or are in mandatory self-quarantine and the entire business operations of the Company

has been restricted since January 2020.

customers have been negatively impacted by the outbreak, which reduced the demand of our products.

As a result, our revenue

and income may be negatively impacted in 2020.

situation may worsen if the COVID-19 pandemic continues.

We will continue to closely monitor our collections throughout 2020.

prolonged disruption or any further unforeseen delay in our operations and supply chains could continue to result in delays in

the shipment of products to our customers, increased costs and reduced revenue.

cannot foresee whether the outbreak of COVID-19 will be effectively contained, nor can we predict the severity and duration of

If the outbreak of COVID-19 is not effectively and timely controlled, our business operations and financial condition

may be materially and adversely affected as a result of the deteriorating market outlook, the slowdown in regional and national

economic growth, weakened liquidity and financial condition of our customers or other factors that we cannot foresee.

factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainties

in the regions where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely

impact our business, financial condition and results of operations.

business plan is to extend our market shares through acquiring quality businesses in the food, beverage and alcohol industries,

in order to increase our customer base and supply channels, as well as to acquire more skilled employees and business connections

in the industries.

In the past year, the Company has acquired and is in the process of acquiring a few companies in those industries.

consider the following factors when evaluating quality acquisition targets:

(i) costs involved in an acquisition;

(ii) financial

performance of target;

(iii) the reputation of the target in its industry;

(iv) target’s existing customer base;

(v) target’s

supplier network;

(vi) the expertise and experience of target’s management and employees;

and (vii) the inventory condition

management believes that successful acquisitions will bring synergies to our business and enhance our shareholders’

July 13, 2019, the Company and QHDX entered into an equity interest transfer agreement, which was later amended on September 12,

2019 (“Makaweng Agreement”), with Xingwen Wang, a shareholder and legal representative of Yunnan Makaweng Wine &

Spirits Co., Ltd.

(“Makaweng”), a PRC limited liability company engaged in the business of distribution of wine and

Pursuant to the Makaweng Agreement, QHDX purchased 51% of Makaweng’s equity interests from Xingwen Wang in exchange

for shares of our common stock (“Makaweng Issuable Shares”), the number of which is determined according to the following

of Makaweng Issuable Shares = A x 51% x 20 x B ÷

the purpose of the foregoing formula:

= Audited net annual profit of Makaweng in fiscal year 2020.

= The daily average middle exchange rate of U.S.

Dollars to Chinese Yuan published by the State Administration of Foreign Exchange

of the People’s Republic of China on December 31, 2020.

= The closing price of our common stock on December 31, 2020.

Wang has agreed not to transfer the Makaweng Issuable Shares for at least three years after delivery of the Makaweng Issuable

Shares (the “Delivery”).

He may only transfer up to 30% of his FVTI common stock during the fourth year after the

Delivery and cumulatively no more than 60% of his common stock during the fifth year after the Delivery.

51% of equity interest of Makaweng was transferred to QHDX and the registration of such transfer with local government authorities

was completed on August 28, 2019.

December 30, 2019, the Company, along with QHDX, entered into an equity interest transfer agreement (the “BTF Agreement”)

with shareholders (the “BTF Original Shareholders”) of Foshan BaiTaFeng Beverage Development Co., Ltd.

(“BTF”),

who collectively owned 100% equity interest of BTF, a limited liability company engaged in the business of bottling and distributing

of drinking water in China.

to the BTF Agreement, QHDX agreed to purchase 80% of BTF’s equity interest (the “BTF Equity Transfer”) from

Chunbin Li, the legal representative and one of the BTF Original Shareholders of BTF (the “BTF Seller”), in exchange

for shares of our common stock (“BTF Issuable Shares”).

The completion of the registration of the BTF Equity Transfer

with local government authorities (the “BTF Closing”) is subject to satisfaction of all the closing conditions (unless

waived), including but not limited to, the approval of the BTF Equity Transfer by BTF shareholders, completion of due diligence

review of BTF to the satisfaction of QHDX, waiver from the BTF Original Shareholders to the right of first refusal to purchase

the equity interest subject to the BTF Equity Transfer.

It is agreed that the BTF Closing shall be conducted prior to the completion

of an initial draft of the audited financial statements of BTF.

to the BTF Agreement, the total number of BTF Issuable Shares will be determined according to the following formula:

of BTF Issuable Shares = X x 80% x 15 ÷

3.02 ÷

the purpose of the foregoing formula:

= Net profit of BTF during the period from October 1, 2019 to September 30, 2020.

= 7:1, which is the exchange rate of U.S.

Dollars to Chinese Yuan mutually agreed by the parties.

to the BTF Agreement, we will issue the BTF Issuable Shares to the BTF Seller within 30 business days after September 30, 2020

pursuant to a separate subscription agreement to be entered into by the Company and the BTF Seller or his designee.

and the BTF Original Shareholders have agreed to achieve certain operation objectives of BTF, including a net profit of RMB 9

million (approximately $1.29 million) for the period from October 1, 2019 to September 30, 2020 and a net profit of RMB 3 million

(approximately $0.14 million) for the fiscal year ended December 31, 2019.

Pursuant to the BTF Agreement, as long as the BTF Seller

continues to serve as the general manager and legal representative of BTF, the BTF Original Shareholders and BTF shall ensure

BTF achieves an increase in annual net profit of no less than 10% during each year of the five years after September 30, 2020.

to the BTF Agreement, BTF will establish a board of directors consisting of three individuals, two of which will be designated

by QHDX and one by the BTF Original Shareholders, and appoint a person designated by the BTF Original Shareholders as general

To ensure the continuous operations of BTF, the parties agreed that BTF will retain its existing employees and all the

management members of BTF shall sign employment agreements and non-compete agreements with BTF.

The parties further agreed that

BTF will not make any profit distribution within three years after the execution of the BTF Agreement.

Any subsequent share transfer

or share pledge of QHDX’s equity interest in BTF is subject to the prior written consent of the BTF Original Shareholders.

In the event of a late payment of the consideration by QHDX or any delay in the registration of the BTF Equity Transfer with local

government caused by the BTF Seller, a daily penalty of 0.05% of the outstanding payment is assessed.

Holdings Acquisition

March 16, 2020, the Company, along with JJGS, entered into an equity interest transfer agreement (the “Valley Holdings Agreement”)

with Valley Holdings Limited (“Valley Holdings”), a Hong Kong company, and Angel International Investment Holdings

Limited (the “Valley Holdings Seller”), a 70% shareholder of Valley Holdings.

Valley Holdings owns approximately 88.44%

of the equity interest of Valley Foods Holdings (Guangzhou) Co., Ltd.

(“Valley Food”), which is a limited liability

company incorporated in China and engaged in the business of food wholesale and production and sale of food additives in China.

to the Valley Holdings Agreement, JJGS agreed to purchase 70% of Valley Holdings’

equity interest (the “Valley Holdings

Equity Transfer”) from the Valley Holdings Seller in consideration of shares of FVTI’s common stock (“Valley

Holdings Issuable Shares”) valued at $14 million (subject to adjustments in the event of Valley Holdings failing to meet

a net profit of HK$5 million (approximately US$0.6 million) for the fiscal year ended December 31, 2019).

According to the Valley

Holdings Agreement, the total number of Valley Holdings Issuable Shares will be determined based on the closing price of FVTI’s

common stock as of the business day immediately preceding the date of the Valley Holdings Closing (as defined below).

As of the date of this Annual Report, the

closing of the Valley Holdings Equity Transfer (the “Valley Holdings Closing”) has not occurred.

Holdings Closing is subject to certain conditions, including, but not limited to, (a) completion of due diligence review of Valley

Holdings and its subsidiaries to the satisfaction of JJGS, (b) completion of the initial draft of the audited consolidated financial

statements of Valley Holdings for the fiscal year ended December 31, 2019, (c) execution of non-competition agreements and confidentiality

agreements with the senior management members of Valley Holdings and its subsidiaries, and (d) assignment to Valley Holdings all

of the intellectual properties related to the operations of Valley Holdings and its subsidiaries.

to the Valley Holdings Agreement, FVTI will issue the Valley Holdings Issuable Shares to the Valley Holdings Seller within 30

business days after the later of the Valley Holdings Closing and the issuance of audit report of Valley Holdings for the fiscal

year ended December 31, 2019, pursuant to a separate subscription agreement to be entered into by FVTI and the Valley Holdings

Seller or its designee.

ensure the continuous operations of Valley Holdings and its subsidiaries, the parties agreed that Valley Holdings and its subsidiaries

will retain their existing employees and will enter into non-competition and employment agreements with all the management members

of Valley Holdings and its subsidiaries.

The parties further agreed that Valley Holdings will not make any profit distribution

within three years after the execution of the Valley Holdings Agreement.

JJGS or the Valley Holdings Seller may terminate Valley

Holdings Agreement in writing in the event that any closing condition is not met before April 30, 2020.

sell 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.

have put significant efforts in developing and promoting our brand name in different regions of China.

Our products are mainly

sold to retailers, such as wine shops, convenient stores and supermarkets.

The selling price varies by quantities of products

each retailer orders from us.

have cultivated business relationships and achieved recognitions with different organizations over the years, which have 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.

We have been a

member of Guangdong Provincial Liquor Industry Association since 2011.

retail store is located in Humen Town, Dongguan City.

It is a six-floor building with a total floor area of 1,200 square meters.

We use the first floor exclusively for sample products display.

We use the remaining five floors as the Company’s conference

room, offices and storage.

operate our business in China under a legal regime consisting of the National People’s Congress, which is the country’s

7 unchanged sentences

of wine regulations are drafted in conformity to the requirements of this law.

on December 29, 2018

Order 144 of 2011

for Administration of Imported/Exported Food Safety

rule oversees the safety of imported and exported food.

This rule oversees the safety of imported and exported food.

on 11/23/2018

Order 16 of 2015

1 unchanged sentence

rule requires all food producers in China to procure a production license.

by the State Administration for Market Regulation Order 24 in 2020

Order 27 of 2012

Administrative

Provisions on Inspections and Supervisions of Labeling of Imported/Exported Pre-packaged Foods

Provisions on Inspections and Supervisions of Labelling of Imported/Exported Pre-packaged

rule provides guidelines that governs all pre-packaged foods.

6 unchanged sentences

Order 55 of 2012

Administrative

Provisions on Recording of Import and Marketing of Imported Foods

rule governs the domestic circulation of imported food.

for Administration of Imported Alcohol in Domestic Market

2 unchanged sentences

the Customs General Administration

Notice on Dec 23 2004

on October 1, 2019

Notice on December 23, 2004

for Inspection on Production Licensing of Wines and Fruit Wines

8 unchanged sentences

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.

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.

YOU CAN FIND MORE INFORMATION

registrant is subject to the requirements of the Exchange Act, and files reports, proxy statements and other information with

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.

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.

Not required from a smaller reporting

currently have three registered trademarks in China.

of May 13, 2020, the Company had 10 employees, all of which were on a full-time basis.

The following table sets forth the

number of our full-time employees categorized by function as of May 13, 2020:

and Marketing

and Engineering

and Administrative

of our employees are based in the cities of Shenzhen and Dongguan, where our operations are located.

required by PRC regulations, we participate in various government statutory employee benefit plans, including social insurance

funds, namely a pension contribution plan, a medical insurance plan, an unemployment insurance plan,·

a work-related injury

insurance plan and a maternity insurance plan and a housing provident fund.

We are required under PRC law to make contributions

to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum

amount specified by the local government from time to time.

We have not made adequate employee benefit payments, and may be required

to make up the contributions for these plans as well as to pay late fees and fines.

enter into standard labor and confidentiality agreements with each of our employees.

We believe that we maintain a good working

relationship with our employees, and we have not experienced any major labor disputes.

a smaller reporting company, we are not required to provide the information required by this item.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business