FLURIDA GROUP INC - FORM 10-Q - December 14, 2017

Attached files

file	filename
EX-32.2 - CERTIFICATION - FLURIDA GROUP INC	flug_ex322.htm
EX-32.1 - CERTIFICATION - FLURIDA GROUP INC	flug_ex321.htm
EX-31.2 - CERTIFICATION - FLURIDA GROUP INC	flug_ex312.htm
EX-31.1 - CERTIFICATION - FLURIDA GROUP INC	flug_ex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _______ to _______

Commission file number 333-151200

FLURIDA GROUP, INC.

(Exact name of registrant as specified in its charter)

Nevada

3469

26-0688130

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(IRS I.D.)

11220 Rojas Suite C-3

El Paso, TX

79935

(Address of principal executive offices)

(Zip Code)

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.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller Reporting Company	x

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 March 31, 2017 there were 38,387,227 shares issued and outstanding of the registrant’s common stock.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis or Plan of Operation.	3
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	11
Item 4.	Controls and Procedures.	11

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings.	12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	12
Item 3.	Defaults Upon Senior Securities	12
Item 4.	Mine Safety Disclosures.	12
Item 5.	Other Information.	12
Item 6.	Exhibits.	13

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

FLURIDA GROUP, INC.

Financial Statements

(Unaudited)

As of March 31, 2017 and 2016

F-1

Table of Contents

Balance Sheets		F-3

Statement of Operation		F-4

Shareholders’ Equity		F-5

Cash Flow Statement		F-6

Notes to Financial Statements		F-7

F-2

Table of Contents

FLURIDA GROUP, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	March 31		December 31
	2017		2016
ASSETS
Current assets:
Cash and cash equivalents	$	11,971,007	$	12,592,938
Accounts receivable, net		3,847,876		5,394,314
Inventory		309,611		300,825
Total Current Assets		16,128,494		18,288,077

Property, plant and equipment, net		118,910		117,981

Other assets:
Security deposit		6,264		6,264
Total Other Assets		6,264		6,264

TOTAL ASSETS	$	16,253,668	$	18,412,322

LIABILITIES & EQUITY
Current liabilities:
Account payable	$	9,152,813	$	10,801,143
Income taxes payable		716,476		546,667
Unearned revenue		50,796		31,406
Total current liabilities		9,920,085		11,379,216

Other Current Liabilities:
Loan from the Bank		-		1,000,000
Other payable		-
Total Other Current Liabilities		-		1,000,000

Total Liabilities	$	9,920,085	$	12,379,216

Stockholders’ Equity:
Common stock, $0.001 par value; 200,000,000 shares authorized; 38,387,227 shares issued and outstanding.	$	38,387	$	38,387
Additional paid-in capital		890,777		890,777
Retained earnings		5,221,732		5,051,215
Accumulated other comprehensive Income (loss)		182,687		52,727

Total stockholders’ equity	$	6,333,583	$	6,033,106

TOTAL LIABILITIES & EQUITY	$	16,253,668	$	18,412,322

See accompanying notes to consolidated financial statements.

F-3

Table of Contents

FLURIDA GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	March 31, 2017		March 31, 2016
	Unaudited		Unaudited
Revenues:	$	10,215,496	$	9,405,730
Cost of Goods Sold		9,185,157		8,384,777
Gross Profit		1,104,339		1,020,953
Operating expenses:
Research and development		883		1,232

Selling, general and administrative expenses		678,331		550,989

Depreciation and amortization expenses		7,388		9,025
Total Operating Expenses		686,602		561,246

Operating Income		343,737		459,707

Investment income, net		4,416		5,259
Interest expense, net
Income before taxes		348,153		464,966
Income tax expense		177,636		161,423
Net income	$	170,517	$	303,543

Net Income per common share-Basic	$	0.01	$	0.01
Net Income per common share-Diluted	$	0.01	$	0.01

Other comprehensive Income (Loss), net of tax:
Foreign currency translation adjustments		129,960		(5,845	)
Total other comprehensive Income (Loss)	$	129,960	$	(5,845	)
Comprehensive Income (Loss)	$	300,477	$	297,698

See accompanying notes to consolidated financial statements.

F-4

Table of Contents

FLURIDA GROUP, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY

FOR THE PERIOD ENDED MARCH 31, 2017

(UNAUDITED)

Additional

Accumulated Other

Total

Common Stock

Paid-in

Retained

Comprehensive

Stockholders’

Shares

Amount

Capital

Earnings

Income (Loss)

Equity

Balance, December 31, 2014

39,290,827

39,291

1,251,313

1,482,938

139,815

2,913,357

Adjustment for Exchange rate changes

(396,505

)

(396,505

)

Net Income for the year ended December 31, 2015

2,102,022

Balance, December 31, 2015

39,290,827

39,291

1,251,313

3,584,960

(256,690

)

4,618,874

Adjustment for Exchange rate changes

309,417

Cancelled common stock from 25 Shareholders @ 0.40 per share on October 19, 2016

(903,600

)

(904

)

(360,536

)

(361,440

)

Net Income for the period ended December 31, 2016

1,466,255

Balance, December 31, 2016

38,387,227

38,387

890,777

5,051,215

52,727

6,033,106

Adjustment for Exchange rate changes

129,960

Net Income for the period ended March 31, 2017

170,517

Balance, March 31, 2017

38,387,227

38,387

890,777

5,221,732

182,687

6,333,583

See accompanying notes to consolidated financial statements.

F-5

Table of Contents

FLURIDA GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31, 2017			March 31, 2016
	Unaudited			Unaudited
Operating Activities:
Net Income	$	170,517		$	303,543
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense		7,388			9,025
Changes in operating assets and liabilities
Increase in inventory		(8,786	)		(152,670	)
Decrease in account receivable		1,546,438			1,317,500
Increase (decrease) in unearned revenue		19,390			(77,648	)
Increase (decrease) in income tax payable		169,809			(188,577	)
Increase (decrease) in account payable		(1,648,330	)		4,283,965
Net cash provided by operating activities		256,426			5,495,138
Investing Activities:
Investment instrument		-			299,600
Purchase of property		(8,317	)		(20,266	)
Net cash provided by (used in) investing activities		(8,317	)		279,334
Financing Activities:
Proceeds from issuance of common stock		-			-
Repayment of Loan from the Bank		(1,000,000	)		(299,600	)
Net cash used in financing activities		(1,000,000	)		(299,600	)

Effect of Exchange Rate on Cash		129,960			(5,845	)
Net increase (decrease) in cash and cash equivalents		(621,931	)		5,469,027
Cash and cash equivalents at beginning of the period		12,592,938			8,615,550
Cash and cash equivalents at end of the period	$	11,971,007		$	14,084,577

Suppemental Cash Flow Dislcosures:
Cash paid for interest	$	-		$	-
Cash paid for taxes	$	-		$	350,000

See accompanying notes to consolidated financial statements.

F-6

Table of Contents

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A- BUSINESS DESCRIPTION

Flurida Group, Inc. (the “Company”), incorporated under the laws of Nevada on December 19, 2006, with registered address at 1955 Baring Blvd, Sparks, NV 89434. The Company has its operating office located at 11220 Rolas Suite C3, El Paso, TX 79935.

Flurida Group leased a research and development center at 24412 S Main Street, Carson, CA 90745.

Flurida Group Inc also has branch located at Naperville, IL 60564.

Flurida Group Inc has a wholly owned subsidiary Flurida Appliance, Inc, a Nevada corporation to sell Flurida Group designed appliances manufactured in China by Chuzhou Fuda Mechanical & Electronics Co., Ltd. Flurida Appliance has its main operating office located at 11220 Rolas Suite C3, El Paso, TX 79935.

The Company’s main business includes sourcing, distribution and marketing of appliance components and assemblies in Asia, Europe, Australia, North and South America. Those products include ice maker; icemaker dispenser; high efficiency motor, module, crush motor and wire harness, and commercial vegetable dryer. In additionally, the company also launched their own brand of finished products called the ice and water dispenser system which is took place in two locations: Los Angeles CA and El Paso TX.

These parts are manufactured in China by Chuzhou Fuda Mechanical & Electronics Co., Ltd (“ChuZhou Fuda”). ChuZhou Fuda was an appliance components and sub-assemblies manufacturer established on March 18, 2008 and located in Chuzhou City, Anhui Province, China.

NOTE B – SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Consolidated Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission (the SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2016.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year 2018 or any future period.

F-7

Table of Contents

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE B – SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect certain amounts reported in the financial statements and disclosures. Accordingly, actual results could differ from those estimates.

Basis of accounting

The financial statements reflect the assets, revenues and expenditures of the Company on the accrued basis of accounting.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

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 monthly average exchange rate. Statement of operations amounts were translated to U.S. dollars using the first date 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.

F-8

Table of Contents

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE B – SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property, Plant, and Equipment Depreciation

Property, plant, and equipment are stated at cost. Depreciation is being provided principally by straight line methods over the estimated useful lives of the assets. Expenditures for maintenance and repairs, which do not improve or extend the expected useful lives of the assets, are expensed to operations while major repairs are capitalized.

The equipment were recorded as fixed asset to depreciate over 7 years and the electronic data processing equipment and furniture were recorded as fixed asset to depreciate over 5 years with straight line method.

For the fiscal quarter ended March 31 2017, the Company purchased $ 8,317 Furniture and equipment.

As of March 31, 2017, the company has furniture, Computer and data processing equipment, and equipment at a purchase cost of $ 279,515, and $ 160,605 of accumulated depreciation expense was recorded.

Concentration of credit risk

The Company maintains its cash in bank accounts which, at times, may exceed the federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

Basic and Diluted Net Loss Per Common Share

Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. Diluted earnings per share assume that any dilutive convertible securities outstanding were converted, with related preferred stock dividend requirements and outstanding common shares adjusted accordingly. It also assumes that outstanding common shares were increased by shares issuable upon exercise of those stock options for which market price exceeds the exercise price, less shares which could have been purchased by us with the related proceeds. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive.

The Company only issued one type of shares, i.e., common shares only. There are no other types securities were issued. Accordingly, the diluted and basics net loss per common share are the same.

F-9

Table of Contents

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Security Deposit

The Company started having an office in California State from September 2010, which is located at 24412 S Main ST, STE 105, Carson CA 90745. Flurida Group USA Inc made $ 6,264 security deposit for leasing the property.

Account Receivable

As of March 31, 2017, the company had a total of $ 3,847,876 account receivable from it major customers, which included $ 362,876 of ChuZhou Fuda, $ 3,020,116 of Electrolux North America, $ 255,979 Electrolux Europe and its other subsidiaries, and $ 208,935 other America corporations.

Loans from Bank

The Company maintains a promissory note secured renewal business loan agreement in the principal amount of $ 5,000,000 with East West Bank located in El Monte, CA, which is renewable annually and was due to mature September 30, 2017. On October 5, 2017, the loan was extended from September 30, 2017 to September 30, 2018.

The maximum aggregate amount that was to 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 was secured by all company inventories, account receivable, and other assets of the Company.

Effective August 25, 2015, the interest rate on the Notes was amended and restated as “Variable Interest Rate”. Interest in this Note was computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.

F-10

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FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans from Bank (Continued)

The Company was only to draw up to:

	·	$ 3,000,000 for issuance of Sight Letters of Credit (LC)

	·	$ 3,000,000 for issuance of Standby Letters of Credit (SBLC)

	·	$ 5,000,000 for Clean Advance of up to maturity of the line

	·	$ 4,000,000 for FX Pre-Settlement Risk allowing customer to purchase forward contracts to hedge against FX current risk.

	·	Up to $250,000 for ACH origination services by delivering to Lender a duly executed ACH application on Lender’s standard form, provided, however, the total amount of the ACH processing reserves imposed by Lender in connection with ACH origination services requested by Borrower shall not exceed, and availability under the Loan shall be reduced by, the ACH Sublimit.

The note was allowed to issue letter of credit up to 120 days past loan maturity.

Interest accrued on amounts advanced shall be due and payable on the 25^th 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, was due and payable on March 31, 2017. On January 5, 2017, the remaining $ 1,000,000 outstanding on the loan was repaid in full.

Account Payable

The Company incurred accounts payable including professional fees, purchases, payroll and payroll tax liability, and other service fee payables.

As of March 31, 2017, the company had a total of $ 9,152,813 account payable, which was included $ 7,413,294 for Chu Zhou Fu Da, $ 1,491,855 for Fulu Finance Management Limited, $ 152,763 for US suppliers, $ 36,068 for salary and payroll tax payable, and $ 58,833 for all other account payable.

F-11

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FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Tax Payable

For the fiscal quarter ended March 31, 2017 and 2016, the Company incurred income tax expense of $ 177,636 and $ 161,423 respectively. As of March 31, 2017, the income taxes payable of the Company was $ 716,476.

Inventory

The inventory was valued at cost of purchase from suppliers.

On July, 2012, Flurida Group, Inc signed deposit inventory agreements with Electrolux Italia S.p.A., which was effective in January 2013. Under the term of the agreements, the supplier, Flurida Group, Inc, agreed to produce, to maintain the transit the customized products per Electrolux’s specification. Electrolux maintains a storage location within Electrolux’s Italia site for consigned inventory. Flurida Group, Inc is facilitated to use of Electrolux’s storage site located at Treviso, Italy to deposit the products to selling Electrolux; Electrolux will provide labor resources for receipt, stock up, and pulls of consigned products. Flurida Group, Inc. retains title and ownership of products while in transit to Electrolux’s site and while stored in the consigned inventory location. Title and ownership will pass to Electrolux when they withdraw products from the consigned inventory location. Upon withdrawal, Electrolux will pay for it under the 60 days payment term stated in the Frame Agreement. Products residing in the consigned inventory for 30 days with no activity due to non communicated demand change will no longer qualify for consignment, and will be considered as withdrawn product after 30 days. Accordingly, title passage and invoicing shall occur on such product per the term. Effective October, 2016. There was no more consignment inventory for Electrolux Italia.

On June 25, 2013, Flurida Group, Inc signed consignment inventory agreements with Electrolux Hungary S.p.A., which was effective in September 2013. Under the term of the agreements, the supplier, Flurida Group, Inc, agreed to produce, to maintain the transit the customized products per Electrolux’s specification. Electrolux maintain a storage location within Electrolux’s Hungary site for consigned inventory. Electrolux is responsible, at its own cost, for the suitable storage and administration of the consignment stock. Flurida Group, Inc. retains title and ownership of products while in transit to Electrolux’s site and while stored in the consigned inventory location. Title and ownership will pass to Electrolux when they withdraw products from the consigned inventory location.

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FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Inventory (Continued)

Products not drawn from the consignment stock within 30 days of delivery shall be deemed to be withdrawn on the 31^st day after delivery to the warehouse. Accordingly, title passage and invoicing shall occur on such product per the term.

On July, 2013, Flurida Group, Inc. entered into a managed inventory program agreement with Electrolux Australia, which was effective in September 2013.

Under the term of the agreements, the supplier, Flurida Group, Inc, agreed to produce, to maintain and transit the customized products per Electrolux’s specification. Electrolux has appointed a third party to manage its warehousing (“Distribution Centre”) who will maintain and operate the inventories. Flurida Group, Inc., retains title and ownership of products while in transit and while stored in Distribution Centre. Title and ownership will pass to Electrolux when they withdraw products from the Distribution Centre. Upon withdrawal, Electrolux will pay for it under the 90 days payment term stated in the Purchase Agreement. Effective November, 2016, there was no more consignment inventory for Electrolux Australia.

Starting January 2016, the Company uses Derby Industries LLC to store the consignment inventory for General Electric Company (GE). Derby Industries LLC, doing business as Derby Supply Chain Solutions, located in Building 6 at General Electric Company Appliance Park in KY, USA. Flurida Group is paid for the warehousing service of the storage of the products. Derby charges the Company monthly for the use of the square footage; meanwhile, provide inbound receipt of goods with proper documentation, on pallets, in containers or boxes; receipt and execution of daily outbound orders to GE; daily transaction and inventory status information available on Derby industries, LLC website.

As of March 31, 2017, there were 13,440 pieces motor in Electrolux Hungary warehouse. There were also 10,928 pieces icemaker, and 35,560 pieces motors stored in the warehouse, Derby Industries LLC, as of consignment inventory.

Moreover, Flurida Appliance had total of 39 pieces ice water dispenser in Carson center and 97 pieces ice water dispenser El Paso warehouse.

As a result, as of March 31, 2017, the Company had total inventory at a value $ 309,611.

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FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition

Revenues include sales of appliance parts in North America, Australia, South America, Europe, and Asia.

Revenues are recognized from product sales upon shipment, which is the point in time when risk of loss is transferred to the customer, net of estimated returns and allowances.

For the fiscal quarter ended March 31, 2017, the Company had total net revenue of $ 10,215,496.

For the period January 1 to March 31, 2017, 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, and others America corporation, for total sales of $ 9,451,237. 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 South America, which included Electrolux – Do Brasil and CTI S.A , for total of $ 145,226. 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 January 1 to March 31, 2017, the Company sold motors, DAC Boxes, Deflector, and related refrigerator appliance to Europe, which included Electrolux Hungry and Electrolux Italy, for total sales of $49,014. 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 $ 159,151. The icemakers and parts were manufactured and supplied by Chu Zhou Fuda; all the icemakers were shipped out at FOB shipping point Nanjing, China.

F-14

Table of Contents

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition (Continued)

For the period of January 1 to March 31, 2017, 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, $ 430,800 were sold and invoiced to ChuZhouFuDa for the fiscal quarter ended March 31, 2017.

In summary, for the period of January 1 to March 31, 2017, the Company recognized total gross sales of $ 10,235,429, had sales return and allowance and sales discount of $ 19,933, so a total of $ 10,215,496 in net sales were recorded. The cost of goods sold is discussed in details in Note C, Related Party Transactions.

Comprehensive Income

The company’s comprehensive income is comprised of net income, unrealized gains and losses on marketable securities classified foreign currency translation adjustments, and unrealized gains and losses on derivative financial instruments related to foreign currency hedging. Due to the floating of the foreign currency hedging, the Company incurred a foreign currency translation income of $ 129,960 for the fiscal quarter ended March 31, 2017.

Operating Expenses

Operating Expenses includes research and development expense, all selling, general and administrative expenses, and depreciation expense for Flurida Group Inc. For the fiscal quarter ended March 31, 2017 and 2016, the Company had total operating expenses of $ 686,602 and $ 561,246 respectively, which include the research and development expense of $ 883 and $ 1,232, and depreciation expense of $ 7,388 and $ 9,025, and selling, general and administrative expenses of $ 678,331 and $ 550,989. Detail was showed on Exhibit A.

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FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Professional Fees

Professional fees consist of accounting and auditing fee, legal fee, commission and consulting expenses, SEC filing fee, and other professional expenses. The total professional fees were $ 52,265 and $ 33,649 for the fiscal quarter ended March 31, 2017 and 2016 respectively.

Payroll Expenses

Starting from January 2017, Flurida Group stayed the salaries amount of officers Jianfeng Ding, Yaru Huang, and Ying Zhong for $450,000, $90,000, $ 90,000.

The Social Security tax and Medicare tax were paid by both employer and employees in USA; employees also withheld portion of Federal and State tax calculate by each individual’s status. All of the tax was submitted to Internal Revenue Service and local government at a semiweekly basis.

The total payroll expenses were $ 245,362 and $ 260,211 for the fiscal quarter ended March 31, 2017 and 2016 respectively.

Research and Development Expenses

The primary function of the research and development center at Flurida Group Inc. is to discover and create 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 product such as compact electronic icemaker; high capacity Icemaker; synchronous motor and print circuit board assembly for motor. Also we continually develop our brand finished product called counter top ice water dispenser.

The Company had total research and development expense of $ 883 and $ 1,232 for fiscal quarter ended March 31, 2017 and 2016 respectively.

Income Tax

Income taxes are provided for tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for differences between the bases of assets and liabilities for financial statement and income tax purposes. The differences in asset and liability bases relate primarily to organization and start-up costs (use of different methods and periods to calculate deduction). Deferred taxes are also recognized for operating losses and tax credits that are available to offset future income taxes. The deferred tax assets and/or liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. The components of the deferred tax asset and liability are classified as current and concurrent based on their characteristics. Valuation allowances are provided for deferred tax assets based on management’s projection of the sufficiency of future taxable income to realize the assets.

F-16

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FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued revised guidance on the recognition of revenue from contracts with customers. The guidance is designed to create greater comparability for financial statement users across industries and jurisdictions. The guidance also requires enhanced disclosures. The guidance was originally effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. In July 2015, the FASB decided to delay the effective date of the new revenue guidance by one year to fiscal years, and interim periods within those years, beginning after December 15, 2017. Entities will be permitted to adopt the new revenue standard early, but not before the original effective date. The guidance permits the use of either a full retrospective or modified retrospective transition method. We are continuing to evaluate the impact that the new guidance will have on our consolidated financial statements, as well as which transition method we will use. We will adopt the new guidance in 2018.

In February 2016, the FASB issued guidance that amends accounting for leases. Under the new guidance, a lessee will recognize assets and liabilities for most leases but will recognize expenses similar to current lease accounting. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The new guidance must be adopted using a modified retrospective transition, and provides for certain practical expedients. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements.

Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.

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FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE C – RELATED PARTY TRANSACTIONS

Common Shares Issued to Executive and Non-Executive Officers and Directors

As of March 31, 2017, total 29,162,760 shares were issued to officers and directors. Please see the table below for details:

Name	Total Shares		Total Amount		Percentage
Fenglan Li		165,000		15,750		0.43	%
Ying Zhong		2,000,000		200,000		5.21	%
Jianfeng Ding & Yaru Huang		26,997,760		323,998		70.33	%
Total		29,162,760	$	539,748		75.97	%

Based on total outstanding issued shares as of March 31, 2017: 38,387,227.

Cost of Goods Sold

The Company’s purchases are primarily from the supplier Chuzhou Fuda Mechanical & Electronics Co., Ltd (“ChuZhouFuDa”), which is related and managed by director Jianfeng Ding.

ChuZhouFuda is an appliance components and sub-assemblies manufacturer established on March 18, 2008. Chuzhou Fuda is located in Chuzhou City, Anhui Province, China. The plant space is around 600,000 sqt with 62 molding machine up to 800 metric ton and 20 assembly lines for appliance components and assemblies. Chuzhou Fuda, as a Chinese local manufacturer, will record their manufacturing costs and inventories based on the Chinese accounting regulations rulings. But, when Flurida Group, Inc. purchases the parts from Chuzhou Fuda, Flurida Group will record the actual costs paid to Chuzhou Fuda as the costs for inventory of Flurida Group, Inc. There is no any relationship for Chuzhou Fuda’s manufacturing historic costs with Flurida Group’s inventory value.

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FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE C – RELATED PARTY TRANSACTIONS (Continued)

Cost of Goods Sold (Continued)

Specifically, Flurida’s inventory value is equal to the purchase price or actual cost parts of the parts purchased from Chuzhou Fuda, and the purchase price of the will be fair market price. Flurida Group, Inc. will adopt the first-in and first-out inventory system according to generally accepted accounting principles in USA.

At the period ended December 31, 2016, the Company had ending inventory $300,825 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 $ 7,580,221 for the fiscal quarter ended March 31, 2017.

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 $ 374,334 in the period of January 1 to March 31, 2017.

The Company purchase module assembly and vegetable dryer from Fulu industries (HK), Ltd at a cost of $ 986,663 for the fiscal quarter ended March 31, 2017.

For the fiscal quarter ended March 31, 2017, the Company had total purchases of $ 8,941,218.

At the quarter ended March 31, 2017, the company had total ending inventory at a value $ 309,611.

For the period of January 1 to March 31, 2017, the company had freight and warehouse cost of $ 21,075, and tooling expenses of $ 231,650.

Therefore, in the fiscal quarter ended March 31, 2017, the Company incurred a total cost of goods sold of $ 9,185,157.

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FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE D – SHAREHOLDERS’ EQUITY

During the year ended December 31, 2008, Flurida Group, Inc has issued total 11,699,067 new shares on April 15, 2008, including 11,649,067 shares issued to loan holders who converted all the loans to common shares. At the year ended December 31, 2008, Flurida Group, Inc. incurred net loss of $ (194,079).

Therefore, the total stockholders’ equity balance at December 31, 2008 was $ 1,075,377.

On April 15, 2008, 50,000 shares issued to Williams Law Group at $ 0.10, for the legal service value of $5,000. On April 1, 2008, seven non-affiliated loan holders asked for repayment of their loans in the aggregate amount of $ 25,066 plus the total interest cost of $624.72, which was paid on the same date, April 1, 2008; meantime, seven additional lenders loaned an aggregate amount of $ 9,926.

On April 15, 2008, total loan amount of $1,164,906 was converted to common shares at price of $0.10 per share, for the total shares of 11,649,067 shares, which were issued to the loans holders.

There were no new shares issued during the period ending December 31, 2009, 2010, and 2011.

On November 1, 2012, 300,000 shares were issued to Williams Law Group at $ 0.10, for the legal service value of $30,000.

There were no new shares issued during the year of 2013, 2014, and 2015.

On October 19, 2016, the Company bought back 903,600 shares from 25 shareholders at $ 0.40, for a value of $361,440; the shares were cancelled as of December 31, 2016.

There were no new shares issued during the period of January to March 2017.

Therefore, as of March 31, 2017 total shares issued and outstanding are 38,387,227.

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FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE E –GOING CONCERN

The Company’s significant customers are Electrolux and its subsidiaries located in various countries. Because of the concentration of the customers and Company’s heavily reliance on the Electrolux and its subsidiaries, the Company’s customer concentration may raise doubt about its ability to continue as a going concern for one year from the issuance of these financial statements. 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.

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Exhibit A

	Three Months Ended		Three Month Ended
	March 31, 2017		March 31, 2016
Operating expenses
Administration Expense		538		2,531
Automobile Expense		1,364		3,606
Bank Service Charges		95,812		59,348
Business Registration & Permits		1,329		-
Certification		9,287		4,668
Computer and Internet Expenses		-		4,398
Depreciation Expenses		7,388		9,025
Fuel charge		4,654		2,188
Gift and Promotion		26,831		2,403
Industry Show		-		24,957
Insurance Expense		59,633		2,721
Meals and Entertainment		17,093		26,971
Office Supplies		7,281		11,502
Parking Fee		192		240
Payroll Expenses		245,362		260,211
Penalty and Fine Expense		1,169		-
Postage and Shipping		1,234		2,237
Professional Fees		52,265		33,649
Rent Expense		29,259		22,539
Repair and Maintenance		-		6,012
Research and Development Expense		883		1,232
Service Cost		6,029		400
Telephone Expense		4,953		8,435
Travel Expense		112,570		71,281
Utilities		1,476		692
Total Operating Expenses		686,602		561,246

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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 continually sell our own brand of the ice water dispenser system in the U.S Market. The condenser motor is still on the testing process; the sale of our twist flex icemaker has commenced, and we are waiting the customer’s further instruction; The oven circulation fan is in the field test phase and wire harnesses for ovens are in the final approval process. 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.

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

	·	High-efficiency motor: Currently our largest selling product. The high-efficiency motor runs at 1/3 the wattage of a shaded pole motor thus making a more energy efficient product assisting our customers in meeting the US energy consumption standards for appliances.

	·	Automatic Refrigerator Build-in Icemaker and Electronic Icemaker: The automatic refrigerator build-in icemaker and Electronic Icemaker is designed for household refrigeration products, such as refrigerator, under-counter refrigerator, freezer to make the ice cubes automatically.

	·	Refrigerator Through-Door Ice Water System: Refrigeration Through-Door Ice Water System is the system that stores the ice cubes harvested from the icemaker, delivered and dispensed the ice, crushed ice or water to the refrigerator door through the electronic control system at the front of the refrigerator door. The through-door ice water system normally includes the following assemblies: ice bucket assembly, motor rail assembly, module assembly, facade assembly, housing assembly. The ice bucket assembly and the motor rail assembly can be located in the freezer, in the refrigerator door and or sealed chamber in the refrigerator. The module assembly, facade assembly and housing assembly vary according to the specific design from each client.

	·	Wire harness: includes wires, connectors and terminals which electrically connects our products to the customers’ products.

	·	Motor and Motor Assembly for Refrigerator or Freezers: The shade pole motor and motor assembly is a key part for refrigerators or freezers. Flurida Group Inc’s motor part is designed and specified for the refrigerators or freezers made by Electrolux, an US company with headquarters in Charlotte, NC. Flurida also supplies the motors and motor assemblies to Electrolux Europe facilities in Italy and Hungary.

	·	Ice Crush motor: Ice crush motor is the gear box motor to drive the auger and push the ice in the bucket to blades for ice crush purpose. The product is used for automatic ice crushing on built-in Ice Water Dispensing systems.

Module: Module is a dispensing module for refrigerator. It is a complete automatic ice making and dispensing system that can dispense cubed ice, crushed ice and water. Module is located in the door of a refrigerator; when press the water or ice paddles, the seal will open to dispensing water or ice cubes.

	·	Damper: A damper controls the rate of airflow from freezer into the refrigerator section. These dampers are being sold to users in China to build refrigerators.

	·	Commercial Vegetable dryer: Targeting the restaurant and hospitality industries, started mass production.

	·	Ice and Water Dispensers: Flurida Group awarded to its new, wholly-owned subsidiary Flurida Appliance, Inc. the right to sell Flurida Group designed appliances called Ice and Water Dispensers manufactured in China by Chuzhou Fuda Mechanical & Electronics Co., Ltd. Flurida Appliances has the right to sell these products throughout the whole world except China. Flurida Appliance started to sell at U.S market, then at some undetermined date in the future possibly in Canada, South American, then Europe. We work together with a water machine company called Cristal Mountain Inc to sell our brand ice water dispenser in US and Canada market. We signed an exclusive sell agent agreement with Crystal Mountain Inc in March 2017

For reasons set forth below, for the fiscal quarter ended March 31, 2017, the Company had total net revenue of $ 10,215,496. For the fiscal quarter ended March 31, 2016, the Company had total net revenue of $ 9,405,730.

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.

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Results of Operations

For the fiscal quarter ended March 31, 2017 vs. March 31, 2016.

Revenue

For the fiscal quarter ended March 31, 2017, the Company had net total revenue of $ 10,215,496 to the Company’s Europe, North and South America customers, and Asia, which was increased 9% more than the fiscal quarter ended March 31, 2016 total net revenue of $ 9,405,730.

The Company sold Motors and other parts to South America, Which included Electrolux – Do Brasil and CTI S.A , for total of $ 145,226. The motors were manufactured and supplied by ChuZhou FuDa Mechanical and Electronics Co., Ltd, and were shipped out at FOB shipping point Nanjing, China.

In summary, for the period of January 1 to March 31, 2017, the Company recognized the total gross sales of $ 10,235,429. And the Company had sales return and allowance and sales discount of $ 19,933, so, a total of $ 10,215,496 net sales were recorded.

We are as of yet unable to predict the effect of the current economic situation in China will have upon our business.

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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, 2016, the Company had ending inventory $300,825 that was majority purchased from ChuZhou FuDa.

The Company purchase module assembly and vegetable dryer from Fulu industries (HK), Ltd at a cost of $ 986,663 for the fiscal quarter ended March 31, 2017.

For the fiscal quarter ended March 31, 2017, the Company had total purchase of $ 8,941,218.

At the quarter ended March 31, 2017, the company had total ending inventory at a value $ 309,611.

For the period of January 1 to March 31, 2017, the company had freight and warehouse cost of $ 21,075, and tooling expenses of $ 231,650.

Therefore, in the fiscal quarter ended March 31, 2017, the Company incurred a total cost of goods sold of $ 9,185,157 was increased 10% compared to the fiscal quarter ended March 31, 2016 cost of goods sold of $ 8,384,777. The increase of cost of goods sold was due to the sales increase.

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.

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Expense

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

	Three Months Ended		Three Months Ended
	March 31, 2017		March 31, 2016
Operating expenses
Administration Expense		538		2,531
Automobile Expense		1,364		3,606
Bank Service Charges		95,812		59,348
Business Registration & Permits		1,329		-
Certification		9,287		4,668
Computer and Internet Expenses		-		4,398
Depreciation Expenses		7,388		9,025
Fuel charge		4,654		2,188
Gift and Promotion		26,831		2,403
Industry Show		-		24,957
Insurance Expense		59,633		2,721
Meals and Entertainment		17,093		26,971
Office Supplies		7,281		11,502
Parking Fee		192		240
Payroll Expenses		245,362		260,211
Penalty & Fine Expense		1,169		-
Postage and Shipping		1,234		2,237
Professional Fees		52,265		33,649
Rent Expense		29,259		22,539
Repair and Maintenance		-		6,012
Research and Development Expense		883		1,232
Service Cost		6,029		400
Telephone Expense		4,953		8,435
Travel Expense		112,570		71,281
Utilities		1,476		692
Total Operating Expenses		686,602		561,246

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Income Taxes

We are subject to income taxes in the U.S. and we incurred income tax expense of $ 177,636 and $ 161,423 for the fiscal quarter ended March 31, 2017 and 2016 respectively. As of March 31, 2017, the Company had income taxes payable of $ 716,476.

Net Income (Loss)

For the reasons set forth above, we had a net income of $ 300,477 and $ 297,698 for fiscal quarter ended March 31, 2017 and 2016 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 July, 2012, the Company signed a deposit inventory agreement with Electrolux Italia S.p.A., which was effective in January 2013.

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

On July, 2013, Flurida Group, Inc. entered into a managed inventory program agreement with Electrolux Australia, 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.

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Liquidity and Capital Resources

	At March 31		At December 31
	2017		2016

Current Ratio		1.63		1.48
Cash	$	11,971,007	$	12,592,938
Working Capital	$	6,208,409	$	6,908,861
Total Assets	$	16,253,668	$	18,412,322
Total Liabilities	$	9,920,085	$	12,379,216

Total Equity	$	6,333,583	$	6,033,106

Total Debt/Equity		1.57		2.05

___________

*	Current Ratio = Current Assets / Current Liabilities
**	Working Capital = Current Assets - Current Liabilities
***	Total Debt / Equity = Total Liabilities / Total Shareholders’ Equity.

The Company’s overall working capital was increased in the quarter ended March 31, 2017 comparing to year ended December 31, 2016, due to the overall decrease of account receivable, the Company’s current ratio was also increased due to the decrease of account receivable 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 2016. 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 $5,000,000 with East West Bank located in El Monte, CA. On September 25, 2017, the loan was extended from September 27, 2017 to September 30, 2018. The principal amount of the Note is $5,000,000. The maximum aggregate amount that may be outstanding under all sub-limits (items 1 through 4) shall be of $5,000,000. The maximum aggregate amount that may be outstanding under all sub-limits (items 3 through 4) shall be of $5,000,000. The loan is secured by all company inventories, account receivable, and other assets of the Company.

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The Company may only draw up to:

	(1)	$3,000,000 on Sight Letters of Credit with maximum expiration date of 90 days from issuance,

	(2)	$3,000,000 on Standby Letters of Credit with maximum expiration date of one year from issuance,

	(3)	$6,000,000 on Clean Advance for up to maturity date of the line, and

	(4)	$4,000,000 for FX [Foreign Exchange] pre settlement risk allowing the Company to purchase forward contracts to hedge against FX risk.

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, is due and payable on September 30, 2018. Nothing was outstanding on this loan at March 31, 2017.

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. 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 2017 and will continue in later years.

The Company had cash and cash equivalents of $ 11,971,007 at March 31, 2017 and $ 6,208,409 working capital, and $ 12,592,938 at December 31, 2016 and $ 6,908,861 of working capital.

The total debt of $ 9,920,085 for March 31, 2017 included total of $ 9,152,813 account payable, which was included $ 7,413,294 for Chu Zhou Fu Da, $ 1,491,855 for Fulu Finance Management Limited, $ 152,763 for US suppliers, $ 36,068 for salary and payroll tax payable, and $ 58,833 for all other account payable, $ 716,476 income tax liabilities, and $ 50,796 unearned revenue.

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 March 31, 2017, the cash and cash equivalent balance was $ 11,971,007 and account receivable was $ 3,847,876, 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.

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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 March 31, 2017 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 March 31, 2017, 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.

Deregistration of our Securities under the 1934 Act by filing a Form 15

We deregistered of our Securities under the 1934 Act by filing a Form 15 on August 14, 2017. Accordingly, we will not be filing any further reports on Form 10-K, 10-Q, 8-K and other reports which we were formerly required to file after this filing on Form 10-Q.

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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 March 31, 2017.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

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Item 6. Exhibits.

(a) Exhibits.

Exhibit No.		Document Description

31.1		CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.

31.2		CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.

32.1 *		CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002.

32.2 *		CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002.

Exhibit 101		Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.**

101.INS		XBRL Instance Document**

101.SCH		XBRL Taxonomy Extension Schema Document**

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document**

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document**

101.LAB		XBRL Taxonomy Extension Label Linkbase Document**

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document**

______________

* 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.

	Flurida Group, Inc.,
	a Nevada corporation

December 13, 2017	By:	/s/ Jianfeng Ding
		Jianfeng Ding
		Principal Executive Officer

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.

SIGNATURE	NAME	TITLE	DATE

/s/ Jianfeng Ding	Jianfeng Ding	Principal Executive Officer and Director	December 13, 2017

/s/ Yaru Huang	Yaru Huang	Principal Financial Officer and Principal	December 13, 2017
		Accounting Officer

EXHIBIT INDEX

Exhibit No.		Document Description

31.1		CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.

31.2		CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.

32.1 *		CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002.

32.2 *		CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002.

Exhibit 101		Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.**

101.INS		XBRL Instance Document**

101.SCH		XBRL Taxonomy Extension Schema Document**

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document**

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document**

101.LAB		XBRL Taxonomy Extension Label Linkbase Document**

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document**

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FLURIDA GROUP INC - FORM 10-Q - December 14, 2017

Attached files

FLURIDA GROUP INC Reports