UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended September 30, 2016

For the transition period from _______ to _______

Commission file number 333-151200

Issuer's telephone number: (800) 433-9938

N/A

(Former name, former address and former three months, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 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  x

As of November 1, 2016 there were 39,290,827 shares issued and outstanding of the registrant's common stock.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

FLURIDA GROUP, INC.

Financial Statements

(Unaudited)

As of September 30, 2016 and 2015

Table of Contents 

Item 2. Management's Discussion and Analysis or Plan of Operation.

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form 10-Q.

Our Management's Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview

The Company's main business includes sourcing, distribution and marketing of appliance components and assemblies in Asia, Europe, North and South America. Those products include icemakers; motors; ice and water dispensing systems; high efficiency motors; crushed motors; commercial vegetable dryer; control modules and established ourselves as a viable supplier of complex cables and harness for the appliance industry. We launched our own brand of finished products called the ice water dispenser system. The product launch sites took place in two locations: Los Angeles CA and El Paso We have completed the design for the condenser motor; a twist flex icemaker; oven circulation fan and wire harnesses for ovens. We have received technical approval for condenser motors from the potential customer and we are still working on life testing. Hopefully, we will receive a trial order in six months. We also received a small order for oven harnesses from our customer. The twist tray icemaker and the oven fan are being tested by our customers. Our focus is to provide our customers with innovative products and solutions thus securing our position as a valued supplier.

These products are manufactured in China by Chuzhou Fuda Mechanical & Electronics Co., Ltd ("ChuZhou Fuda"). Chuzhou Fuda Mechanical & Electronics Co., Ltd., which is related and managed by shareholder and director Jianfeng Ding, is an appliance components and sub-assemblies manufacturer.

We sell the following main types of appliance parts and finished products:

For the reasons set forth below, we had a net income of $ 655,993 and $ 1,362,086 for six months ended September 30, 2016 and 2015 respectively.

We are an "emerging growth company" ("EGC") that is exempt from certain financial disclosure and governance requirements for up to five years as defined in the Jumpstart Our Business Startups Act ("the JOBS Act"), that eases restrictions on the sale of securities; and increases the number of shareholders a company must have before becoming subject to the U.S. Securities and Exchange Commission's (SEC's) reporting and disclosure rules (See "Emerging Growth Companies" section above). We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

Results of Operations

For the fiscal quarter ended September 30, 2016 vs. September 30, 2015.

Revenue

For the fiscal quarter ended September 30, 2016, the Company had net total revenue of $ 10,055,716 to the Company's Europe, North and South America customers, and Asia, which was decreased 49% more than the fiscal quarter ended September 30, 2015 total net revenue of $ 17,741,604. This decrease was because most of customers' sales went down worldwide.

For the period July 1 to September 30, 2016, the Company sold icemakers, high efficiency motor, module assembly, wire harness, motors, thermostats, ice and water dispenser, vegetable dryer, and other related refrigerator appliance to North America, which included Electrolux North America, General Electric Company, Exact Replacement Parts, HKF Industries Inc, and others America corporation, for total sales of $ 9,388,371.

The icemakers, assembly, motors, wire harness, vegetable dryer, ice and water dispenser, and related parts were manufactured and supplied by ChuZhou FuDa Mechanical and Electronics Co., Ltd; all the icemakers, motors, assembly, wire harness, vegetable dryer, ice and water dispenser, and related parts were shipped out at FOB shipping point Nanjing, China.

The Company sold Motors and other parts to Electrolux – Do Brasil for $ 125,946. The motors were manufactured and supplied by ChuZhou FuDa Mechanical and Electronics Co., Ltd, and were shipped out at FOB shipping point Nanjing, China.

For the period July 1 to September 30, 2016, the Company sold motors, DAC Boxes, Deflector, and related refrigerator appliance to Europe, which included Electrolux Hungry, and Gotene Plast AB, for total sales of $89,914. The DAC Boxes, Deflector, Motors, and other related parts were manufactured and supplied by Chu Zhou Fuda; all the DAC Boxes magnets, and motors were shipped out at FOB shipping point Nanjing, China.

The Company also sold icemakers and related parts to Asia for $ 103,301. The icemakers and parts were manufactured and supplied by Chu Zhou Fuda; all the icemakers were shipped out at FOB shipping point Nanjing, China.

For the period of July 1 to September 30, 2016, the Company sold thermostats and other related key parts for icemakers and motors, and sold dampers to ChuZhouFuDa. Flurida Group purchased some of the parts from Wako Electronics, Inc., an US Company located at Louisville, KY 40299. Flurida Group also purchased dampers from ITW Motion, an US company located in Illinois, and then sold to ChuZhouFuDa. Flurida Group, Inc. addsaveraged 5% - 10% margin based on the cost of purchase, then sold to them, so, $ 385,687 were sold and invoiced to ChuZhouFuDa for the fiscal quarter ended September 30, 2016.

In summary, for the period of July 1 to September 30, 2016, the Company incurred the total gross sales of $ 10,093,219. And the Company had sales return and allowance and sales discount of $ 37,503, so, a total of $ 10,055,716 net sales were recorded.

Cost of Revenue

Our Costs of Goods Sold, as we expected increased slightly due to increasing labor and raw materials costs. We anticipate this trend to continue and may adjust our unit price upward to reduce the impact of rising costs.

At the period ended June 30, 2016, the Company had ending inventory $ 428,503 that was majority purchased from ChuZhou FuDa.

The Company purchased Icemakers, motors, high efficiency motor, wire harness, dac boxes, deflectors, icemaker dispenser, ice and water dispenser, and other related appliance parts from ChuZhou FuDa, at total cost of $ 7,051,107 for the fiscal quarter ended September 30, 2016.

To manufacture the related refrigerator appliance parts, Chu Zhou Fu Da needs key parts made in USA, which were purchased through Flurida Group, Inc. in USA. The costs of purchasing the parts were $ 342,474 in the period of July 1 to September 30, 2016.

The Company purchase module assembly and vegetable dryer from Fulu industries (HK), Ltd at a cost of $ 1,232,818 for the fiscal quarter ended September 30, 2016.

For the fiscal quarter ended September 30, 2016, the Company had total purchase of $ 8,626,399.

At the quarter ended September 30, 2016, the company had total ending inventory at a value $ 239,854.

For the period of July 1 to September 30, 2016, the company had freight and warehouse cost of $ 16,600, purchase related expense of 4,690, and $ 100 purchase return and discount.

Therefore, in the fiscal quarter ended September 30, 2016, the Company incurred a total cost of goods sold of $ 8,836,237 was decreased 45% compared to the fiscal quarter ended September 30, 2015 cost of goods sold of $ 15,941,706. The decrease of cost of goods sold was due to the sales decrease. In addition, R&D expenses decreased as most of the work at the R&D Center was supporting the development of the already designed new projects. Travel increased as we had to travel to China and elsewhere to meet manufacturers and potential customers for our new products.

The cost of goods sold in the Statements of Operations includes costs of products purchased from suppliers, shipping costs or freight in costs for the products shipping FOB port China, warehouse costs, and other costs if any directly related to the products inspection, duty and custom taxes of products, internal transfer costs if any. The selling, general and administrative expense includes operation expense such as travel, professional, office rent, telephone, certification fees, wages and salaries for management and administrative employees, and other expense related to operation. There was no allocation of portion of any selling, general and administrative expense to the cost of goods sold.

Our gross margin may not be comparable to those of other entities, since some other entities may include all or allocate portion of the costs related to their distribution network into cost of goods sold.

Expense

Our operation expenses consist of selling, general and administrative expenses, and research & development expenses, and depreciation expenses:

Income Taxes

We are subject to income taxes in the U.S. and we incurred income tax expense of $ 242,270 and $ 300,205 for the fiscal quarter ended September 30, 2016 and 2015 respectively. As of September 30, 2016, the Company had income taxes payable of $ 496,667.

Net Income (Loss)

For the reasons set forth above, we had a net income of $ 467,828 and $ 682,675 for fiscal quarter ended September 30, 2016 and 2015 respectively.

For the nine months ended September 30, 2016 vs. September 30, 2015.

Revenue

For the nine months ended September 30, 2016, the Company had net total revenue of $ 29,167,152 to the Company's Europe, North and South America customers, and Asia, which was decreased 46% more than the nine months ended September 30, 2015 total net revenue of $ 54,042,584. This decrease was because most of customers' sales went down worldwide.

For the period January 1 to September 30, 2016, the Company sold icemakers, high efficiency motor, module assembly, wire harness, motors, thermostats, ice and water dispenser, vegetable dryer, and other related refrigerator appliance to North America, which included Electrolux North America, Haier America Research & Development Co, Exact Replacement Parts, and others America corporation, for total sales of $ 26,796,645. The icemakers, assembly, motors, wire harness, vegetable dryer, ice and water dispenser, and related parts were manufactured and supplied by ChuZhou FuDa Mechanical and Electronics Co., Ltd; all the icemakers, motors, assembly, wire harness, vegetable dryer, ice and water dispenser, and related parts were shipped out at FOB shipping port Nanjing, China.

For the nine months ended September 30, 2016, the Company sold components and appliance parts to Electrolux –Australia for $ 206,784. The components were manufactured and supplied by Chu Zhou Fu Da Mechanical and Electronics; all the icemakers and components were shipped out at FOB shipping port Nanjing, China.

The Company sold Motors and other parts to Electrolux – Do Brasil for $ 440,697. The motors were manufactured and supplied by ChuZhou FuDa Mechanical and Electronics Co., Ltd, and were shipped out at FOB shipping port Nanjing, China.

For the period January 1 to September 30, 2016, the Company sold motors,DAC Boxes, Deflector, and related refrigerator appliance to Europe, which included Electrolux Hungry, Electrolux Sweden, and Gotene Plast AB, for total sales of $ 328,654. The DAC Boxes, Deflector, Motors, and other related parts were manufactured and supplied by Chu Zhou Fuda; all the DAC Boxes magnets, and motors were shipped out at FOB shipping port Nanjing, China.

The Company also sold icemakers and related parts to Asia for $ 159,067. The icemakers and parts were manufactured and supplied by Chu Zhou Fuda; all the icemakers were shipped out at FOB shipping point Nanjing, China.

For the period of January 1 to September 30, 2016, the Company sold thermostats and other related key parts for icemakers and motors, and sold dampers to ChuZhouFuDa. Flurida Group purchased some of the parts from Wako Electronics, Inc., an US Company located at Louisville, KY 40299. Flurida Group also purchased dampers from ITW Motion, an US company located in Illinois, and then sold to ChuZhouFuDa. Flurida Group, Inc. adds averaged 5% - 10% margin based on the cost of purchase, then sold to them, so, $ 1,287,190 were sold and invoiced to ChuZhouFuDa for the nine months ended September 30, 2016.

In summary, for the period of January 1 to September 30, 2016, the Company incurred the total gross sales of $ 29,219,037. And the Company had sales return and allowance and sales discount of $ 51,885, so, a total of $ 29,167,152 net sales were recorded.

Cost of Revenue

Our Costs of Goods Sold, as we expected increased slightly due to increasing labor and raw materials costs. We anticipate this trend to continue and may adjust our unit price upward to reduce the impact of rising costs.

At the period ended December 31, 2015, the Company had ending inventory $ 222,195 that was majority purchased from ChuZhou FuDa.

The Company purchased Icemakers, motors, high efficiency motor, wire harness, dac boxes, deflectors, icemaker dispenser, ice and water dispenser, and other related appliance parts from ChuZhou FuDa, at total cost of $ 21,426,338 for the nine months ended September 30, 2016.

To manufacture the related refrigerator appliance parts, Chu Zhou Fu Da needs key parts made in USA, which were purchased through Flurida Group, Inc. in USA. The costs of purchasing the parts were $ 1,158,221 in the period of January 1 to September 30, 2016.

The Company purchase module assembly and vegetable dryer from Fulu industries (HK), Ltd at a cost of $ 3,131,811 for the nine months ended September 30, 2016.

For the nine months ended September 30, 2016, the Company had total purchase of $ 25,716,370.

At the quarter ended September 30, 2016, the company had total ending inventory at a value $ 239,854.

For the period of January 1 to September 30, 2016, the company had freight and warehouse cost of $ 61,287, and purchase return and discount of $ 9,100, and the related purchase expense of $ 4,690.

Therefore, in the nine months ended September 30, 2016, the Company incurred a total cost of goods sold of $ 25,755,589 was decreased 48% compared to the nine months ended September 30, 2015 cost of goods sold of $ 49,495,643. The decrease of cost of goods sold was due to the sales decrease. In addition, R&D expenses decreased as most of the work at the R&D Center was supporting the development of the already designed new projects.  

The cost of goods sold in the Statements of Operations includes costs of products purchased from suppliers, shipping costs or freight in costs for the products shipping FOB port China, warehouse costs, and other costs if any directly related to the products inspection, duty and custom taxes of products, internal transfer costs if any. The selling, general and administrative expense includes operation expense such as travel, professional, office rent, telephone, certification fees, wages and salaries for management and administrative employees, and other expense related to operation. There was no allocation of portion of any selling, general and administrative expense to the cost of goods sold.

Our gross margin may not be comparable to those of other entities, since some other entities may include all or allocate portion of the costs related to their distribution network into cost of goods sold.

Expense

Our operation expenses consist of selling, general and administrative expenses, and research & development expenses, and depreciation expenses:

Income Taxes

We are subject to income taxes in the U.S. and we incurred income tax expense of $ 679,270 and $ 801,820 for the nine months ended September 30, 2016 and 2015 respectively. As of September 30, 2016, the Company had income taxes payable of $ 496,667.

Net Income (Loss)

For the reasons set forth above, we had a net income of $ 1,123,821 and $ 2,044,761 for nine months ended September 30, 2016 and 2015 respectively.

Commitments and Contingencies

The Company's purchase is primarily from supplier, Chuzhou Fuda Mechanical & Electronics Co., Ltd ("ChuZhouFuDa"), which is related and managed by director Jianfeng Ding. Chuzhou Fuda is an appliance components and sub-assemblies manufacturer established on March 18, 2008. Chuzhou Fuda is located in Chuzhou City, Anhui Province, China. There was no written supply agreement signed between the Company and Chuzhou Fuda. However, Chuzhou Fuda committed to the Company for the quantity and quality of products the Company ordered.

On June 25, 2013, the Company signed a consignment inventory agreement with Electrolux Hungary S.p.A., which was effective in September 2013.

Foreign Currency Translation

The Company has determined the United States dollars to be its functional currency for Flurida Group USA and European Euro to be its functional currency in European business. Assets and liabilities were translated to U.S. dollars at the period-end exchange rate. Statement of operations amounts were translated to U.S. dollars using the average rate of each month during the year. Gains and losses resulting from translating foreign currency financial statements are accumulated in other comprehensive income (loss), a separate component of shareholders' equity.

Liquidity and Capital Resources

______________  

The Company's overall working capital was increased in the quarter ended September 30, 2016 comparing to year ended December 31, 2015, due to the decrease of current liability, the Company's current ratio was also increased due to the decrease of liability as well.

The Electrolux agreements require the Company to supply the motors, ice makers, and other parts based on Electrolux's needs. The payment terms for Electrolux North America customers, which constitute more than 50% of our revenues, were changed from a consignment basis to FOB China port in early 2015. Therefore, we don't have inventory related Electrolux North America customers. The other businesses with Electrolux in Europe still are on a consignment basis.

The Company entered into a promissory note secured renewal business loan agreement in the principal amount of $ 6,000,000 with East West Bank located in El Monte, CA. And the maturity date of the Note is from July 10, 2014 to July 31, 2015. On September 25, 2015, the loan was extended from September 30, 2015 to September 30, 2016. On October 4, 2016, the loan was extended from September 30, 2016 to September 30, 2017. The principal amount of the Note is decreased to $ 5,000,000. The maximum aggregate amount that may be outstanding under all sub-limits (items 1 through 4) shall be the lesser of $ 5,000,000 or 80% of eligible accounts receivable less than 90 days from invoice date and 50% of inventory. The loan is secured by all company inventories, account receivable, and other assets of the Company.

The Company may only draw up to:

The remaining terms of the original loan are unchanged.

Interest accrued on amounts advanced shall be due and payable on the 25th day of each month commending with the first month after the date of advance. The outstanding principal balance of this note together with all accrued and unpaid interest and all other amount due hereunder, shall be due and payable on December 31, 2016. Nothing was outstanding on this loan at September 30, 2016.

The management will continue to focus on improving our current business on marketing, customer services and general administrative activities effectiveness. The Company will continue efforts at a R&D center at our California location and R&D expenses could increase in future years as we again start developing more new products. The primary function of the Company's Research and Development Center is to identify and research new knowledge about scientific and technological topics in order to develop valuable products, processes and services for our customers. The Company has continually developed the new products at our Center, including a new condenser motor; a twist flex icemaker; oven circulation fan and wire harnesses for ovens. We are currently working on the development of these new products at our Center, although we cannot predict when, if ever, we will launch these products.

Specifically, the management still believes that within the operating activities, the efforts of collecting accounts receivables and making payments of accounts payables still were the primary factors for the changes of cash flows in 2016 and will continue in later years.

The Company had cash and cash equivalents of $ 6,363,385 at September 30, 2016 and $ 5,981,390 working capital and $ 8,615,550 at December 31, 2015 and $ 4,546,538 of working capital.

The total debt of $ 6,599,733 for September 30, 2016 included total of $ 2,578,707 for Chu Zhou Fu Da, $ 1,934,896 for Fulu Finance Management Limited, $ 133,589 for US suppliers, $ 1,203 for salary and payroll tax payable, and $ 50,747 for all other account payable, $ 496,667 income tax liabilities, and $ 603,924 unearned revenue, and $ 800,000 loan from Bank.

Our independent auditor has indicated that our customer concentration may raise doubt about its ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty and if the Company is unable to generate significant revenue or secure financing, then the Company may be required to cease or curtail its operations. However, due to the close relationship between the Company and its supplier, Chuzhou Fu Da, which is closely related and directly managed by shareholder and director Jianfeng Ding, Further, as of September 30, 2016, the cash and cash equivalent balance was $ 6,363,385 and account receivable was $ 5,977,884, such that the management believes that the revenues will be generated and its cash flows will be maintained to cover its operational costs and the risk of going concern in long term is significantly low.

Interest Rate Risk

We do not have significant interest rate risk, as our debt obligations (i.e., notes payables to shareholders which can be converted to common stocks). The annual interest rate of notes payable is 8%, and the interest expense would be accrued if the notes were not converted to common shares, and the notes holders request the Company for repayment of principles plus the interest. Seven non-affiliated loan holders asked the Company for repayment of notes plus interest on July 1, 2008. All remaining loan holders converted their loans to common shares on July 15, 2008.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company has established disclosure controls and procedures to ensure that information required to be disclosed in this quarterly report on Form 10-Q was properly recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. The Company's controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers to allow timely decisions regarding required disclosure.

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) at September 30, 2016 based on the evaluation of these controls and procedures required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Exchange Act. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, at September 30, 2016, our disclosure controls and procedures are not effective.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company's internal control over financial reporting that occurred during the Company's last three-month period that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

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

(a) Unregistered Sales of Equity Securities.

(b) Use of Proceeds.

The Registrant did not sell or otherwise issue any unregistered securities during the three months ended September 30, 2016.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

(a) Exhibits.

______________

* This exhibit shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

EXHIBIT INDEX