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, 2012
 
o  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.

22 West Washington St, Suit 1500
Chicago, IL
 
60602
(Address of principal executive offices)
 
(Zip Code)

Issuer’s telephone number:  630-778-6991

 
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 o

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 o

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
 
o
 
Accelerated filer
 
o
Non-accelerated filer
 
o
 
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 o No x

As of May 8, 2012 there were 38,990,827 shares issued and outstanding of the registrant’s common stock.
 


 
1

 
 
TABLE OF CONTENTS
 
PART I — FINANCIAL INFORMATION
3
Item 2.   Management’s Discussion and Analysis or Plan of Operation.
26
Item 3.  Quantitative and Qualitative Disclosure about Market Risk
31
Item 4.  Controls and Procedures.
31
PART II — OTHER INFORMATION
32
Item 1.  Legal Proceedings.
32
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.
32
Item 3.  Defaults Upon Senior Securities
32
Item 4. (Removed and Reserved).
32
Item 5.  Other Information.
32
Item 6.  Exhibits.
32
 
 
 
 
 
 
 
2

 
 
PART I — FINANCIAL INFORMATION
 




FLURIDA GROUP, INC.





Financial Statements
(Unaudited)

As of March 31, 2012 and 2011







 
3

 

Table of Contents
 

Consolidated Balance Sheets
5
   
Consolidated Statement of Operation
6
   
Consolidated Shareholders Equity
7
   
Consolidated Statement of Cash Flows
8
   
Notes to Unaudited Consolidated Financial Statements
9






 
4

 
 
FLURIDA GROUP, INC.
           
CONSOLIDATED BALANCE SHEETS
           
   
March 31
   
December 31
 
   
2012
   
2011
 
ASSETS
 
( Unaudited)
       
Current assets:
           
Cash and cash equivalents
  $ 1,380,868     $ 741,230  
Accounts receivable, net
    1,063,270       766,318  
Inventory
    1,973,218       1,803,674  
Total Current Assets
  $ 4,417,356     $ 3,311,222  
                 
Property, plant and equipment, net
  $ 80,344     $ 77,737  
                 
Other assets:
               
Loan to supplier
  $ 224,602     $ 224,602  
Accrued interest receivable
    5,615       2,808  
Security deposit
    6,264       6,264  
Total Other Assets
  $ 236,481     $ 233,674  
                 
TOTAL ASSETS
  $ 4,734,181     $ 3,622,633  
LIABILITIES & EQUITY
               
Current liabilities:
               
Account payable
  $ 2,893,614     $ 1,952,256  
Income taxes payable
    -       -  
Unearned revenue
    148,716       10,635  
Total current liabilities
  $ 3,042,330     $ 1,962,891  
                 
Stockholders' Equity:
               
Common stock, $0.001 par value;
               
200,000,000 shares authorized;
               
38,990,827 shares issued and outstanding.
  $ 38,991     $ 38,991  
                 
Paid-in capital
    1,221,613       1,221,613  
                 
Retained earnings
    421,872       388,073  
                 
Accumulated other comprehensive Income
    9,375       11,065  
                 
Total stockholders' equity
  $ 1,691,851     $ 1,659,742  
                 
TOTAL LIABILITIES & EQUITY
  $ 4,734,181     $ 3,622,633  

 
5

 
 
FLURIDA GROUP, INC.
           
CONSOLIDATED STATEMENT OF OPERATION
           
   
Three Months Ended
 
   
March 31, 2012
   
March 31, 2011
 
   
Unaudited
   
Unaudited
 
Revenues:
  $ 3,342,405     $ 3,019,787  
Cost of Goods Sold
  $ 2,980,597     $ 2,677,747  
Gross Profit
  $ 361,808     $ 342,040  
Operating expenses:
               
Research and development
    7,488       -  
                 
Selling, general and administrative expenses
    288,347       230,109  
                 
Depreciation and amortization expenses
    4,911       3,584  
Total Operating Expenses
  $ 300,746     $ 233,693  
                 
Operating Income
  $ 61,062     $ 108,347  
                 
Investment income, net
  $ 2,959     $ 3,861  
Interest expense, net
    2,222       -  
Income before taxes
  $ 61,799     $ 112,208  
Income tax expense
    28,000       53,350  
Net income
  $ 33,799     $ 58,858  
                 
Net Income per common share-Basics
  $ 0.00     $ 0.00  
Net Income per common share-Diluted
  $ 0.00     $ 0.00  
                 
Other comprehensive Income(Loss), net of tax:
               
Foreign currency translation adjustments
    (1,690 )     10,057  
Total other comprehensive Income(Loss)
  $ (1,690 )   $ 10,057  
Comprehensive Income (Loss)
  $ 32,109     $ 68,915  

 
6

 
 
FLURIDA GROUP, INC.
 
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 
FOR THE PERIOD ENDED MARCH 31, 2012
   
(Unaudited)
                         
                                     
               
Additional
         
Accumulated Other
   
Total
 
   
Common Stock
   
Paid-in
   
Retained
   
Comprehensive
   
Stockholders'
 
   
Shares
   
Amount
   
Capital
   
Earnings
   
Income (Loss)
   
Equity
 
Balance, December 31, 2009
    38,990,827     $ 38,991     $ 1,221,613     $ (23,633 )   $ 48,979     $ 1,285,950  
                                                 
Adjustment for Exchange
                                               
   rate changes
                                  $ (43,456 )   $ (43,456 )
                                                 
Net Income for the year
                                               
  ended December 31, 2010
                          $ 211,205             $ 211,205  
Balance, December 31, 2010
    38,990,827     $ 38,991     $ 1,221,613     $ 187,572     $ 5,523     $ 1,453,699  
                                                 
Adjustment for Exchange
                                               
   rate changes
                                  $ 5,542     $ 5,542  
                                                 
Net Income for the year
                                               
  ended December 31, 2011
                          $ 200,501             $ 200,501  
Balance, December 31, 2011
    38,990,827     $ 38,991     $ 1,221,613     $ 388,073     $ 11,065     $ 1,659,742  
                                                 
Adjustment for Exchange
                                               
   rate changes
                                  $ (1,690 )   $ (1,690 )
                                                 
Net Income for the period
                                               
  ended March 31, 2012
                          $ 33,799             $ 33,799  
Balance, March 31, 2012
    38,990,827     $ 38,991     $ 1,221,613     $ 421,872     $ 9,375     $ 1,691,851  

 
7

 
 
FLURIDA GROUP, INC.
           
CONSOLIDATED STATEMENT OF CASH FLOWS
           
   
Three Months Ended
 
   
March 31, 2012
   
March 31, 2011
 
Operating Activities:
 
Unaudited
   
Unaudited
 
Net Income
  $ 33,799     $ 58,858  
Adjustments to reconcile net income to net cash
               
provided by operating activities:
               
Depreciation expense
    4,911       3,584  
Inventory
    (169,544 )     132,363  
Account receivable
    (296,952 )     243,000  
Accrued interest receivable
    (2,807 )     (3,782 )
Unearned revenue
    138,081       -  
Increase in income tax payable
    -       9,043  
Increase in account payable
    941,358       (740,398 )
Net cash provided by operating activities
  $ 648,846     $ (297,332 )
Investing Activities:
               
Purchase Property
    (7,518 )     (21,472 )
Net cash provided by investing activities
  $ (7,518 )   $ (21,472 )
Financing Activities:
               
Proceeds from issuance of common stock
    -       -  
Proceeds from loan from shareholders
    -       -  
Net cash provided by financing activities
  $ -     $ -  
Effect of  Exchange Rate on Cash
  $ (1,690 )   $ 10,057  
Net increase (decrease) in cash and cash equivalents
  $ 639,638     $ (308,747 )
Cash and cash equivalents at beginning of the period
  $ 741,230     $ 992,825  
Cash and cash equivalents at end of the period
  $ 1,380,868     $ 684,078  

 
8

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A- BUSINESS DESCRIPTION

Flurida Group, Inc. (the “Company”), incorporated under the laws of Nevada on December 19, 2006, with registered address at 502 East John Street, Carson City, NV 89706.  Flurida Group, Inc. operates its business in USA as Flurida Group USA, Inc., the Company’s wholly owned branch located in the State of Illinois and has principle office at 22 West Washington ST, Suite 1500, Chicago, IL 60602.
Flurida Group leased a warehouse at 24412 S Main Street, Carson, CA 90745.

Flurida Group Inc closed its subsidiary Flurida Group European S.R.L (“Flurida European”) in July 2011.

The company closed its Flurida Qingdao China office in July, 2009.

The Company’s main business includes sourcing, distribution and marketing of appliance parts in Asia, Europe, North and South America.

These parts are manufactured in China by Zhong Nan Fu Rui Mechanical Electronics Manufacturing Co., Ltd. (“Zhong Nan Fu Rui”).  It was established in 2005 specializing in home appliance components and subassemblies manufacturing, and located in Qingdao City, Shandong Province, China.  On September 18, 2007, Flurida Group, Inc. signed a long-term distribution agreement with Zhong Nan Fu Rui Mechanical Electronics Manufacturing Co., Ltd.  Zhong Nan Fu Rui is a Chinese manufacturing company owned 100% by Mr. Jianfeng Ding, the founder of the Company.


NOTE B – SIGNIFICANT ACCOUNTING POLICIES

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.
 
 
9

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B – SIGNIFICANT ACCOUNTING POLICIES (Continue)

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of Flurida Group USA and Flurida Group European S.R.L. All significant intercompany balances and transactions have been eliminated in consolidation.

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.

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.

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 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.

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.
 
 
10

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period of January to March 31, 2012, the Company purchased $ 7,518 Furniture and equipments.

As of March 31, 2012, the company has furniture, Computer and data processing equipments, and equipments at a purchase cost of $ 101,610, and $ 21,266 of accumulated depreciation expense was recorded.

Account Receivable

As of March 31, 2012, the company had a total of $ 1,063,270 account receivable from it major customers. Detail showed as below.

   
3/31/2012
 
Chuzhou FuDa
  $ 38,539  
Electrolux- Australia
  $ 321,883  
Electrolux-Anderson-US
  $ 124,162  
Electrolux-Mexico
  $ 41,425  
Electrolux-Major Appliance
  $ 31,845  
Electrolux - Sweden
  $ 3,319  
Electrolux Italy
  $ 118,105  
Electrolux Hungary
  $ 219,952  
General Electric Company
  $ 46,976  
Master Precision Global LLC(MPG)
  $ 41,520  
New Allied Electronics
  $ 596  
Shamrock
  $ 7,800  
Stanco Metal Products Inc
  $ 63,625  
ZhongNanFuRui
  $ 3,522  
TOTAL Account Receivable
  $ 1,063,270  

 
11

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accrued Interest Receivable

In October 1, 2011, the company entered a loan agreement of $224,602 with its main supplier Zhong Nan Fu Rui Mechanical electronics Co., Ltd at interest rate of 5.00%, term October 1, 2011 to October 1, 2013.  As of March 31, 2012, total of $ 5,615 accrued interest receivable with interest rate at 5.00% was incurred.

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, 2012, the company had a total of $ 2,893,614 account payable, which was included $ 110,551 for Zhong Nan Fu Rui, $ 2,500,526 for Chu Zhou Fu Da, $ 111,417 for Qiongdao Fu Bi Da, $ 32,625 for Shang Hai Fu Lu International Trading, and $ 35,226 for US suppliers, $ 68,502 for salary and payroll tax payable, and $ 34,767 for all other account payable.

Basics 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.
 
 
12

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Tax Payable

For the period of January 1 to March 31, 2012 and 2011, the Company incurred income tax expense of $ 28,000 and $ 53,350 respectively.  As of March 31, 2012, the income taxes payable of the Company was $ 0.
 
 
Inventory

The inventory was valued at cost of purchase from suppliers.

On June, 2008, Flurida Group, Inc signed a consigned inventory agreement with Electrolux Home Products De Mexico, S.A. DEC.V. (Electrolux).  Under the term of the agreement, 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 Juarez site for consigned inventory. And Flurida Group, Inc is facilitated to use of Electrolux’s storage location at such site to the sale of products to 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 payment term stated in the purchasing order correspond with the withdraw products. Products residing in the consigned inventory for 90 days with no activity due to non communicated demand change will no longer qualify for consignment, and will be considered as withdrawn product after 90 days. Accordingly, title passage and invoicing shall occur on such product per the term.
 
As of March 31, 2012, the company had total of 22,134 Icemakers and 639,575 pieces motors ending inventory at a value $ 1,973,218.

 
13

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenues Recognition

Revenues include sales of appliance parts in Asia, Europe, and North America.
 
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, 2012, the Company had total net revenue of $ 3,342,405.

For the period January1 to March 31, 2012, the Company sold icemakers and motors to, Electrolux USA, located at Charlotte NC for sales of $ 2,326,650. The motors were manufactured and supplied by Zhong Nan Fu Rui; all the motors were shipped out at FOB shipping point Qingdao, China.  And the icemakers were manufactured and supplied by ChuZhou FuDa Mechanical & Electronics Co., Ltd; all the icemakers were shipped out at FOB shipping point Nanjing, China.

The company also sold motors, to Stanco Metal Products for $ 77,259; the motors were manufactured and supplied by Zhong Nan Fu Rui, and all of those parts were shipped out at FOB shipping point at Qingdao, China.

The Company also sold Motors to Electrolux –ST. Cloud for $ 5,470. The motors were manufactured and supplied by Zhong Nan Fu Rui. and shipped out at FOB shipping point at Qingdao, China.

For the three months ended March 31, 2012, the Company sold icemakers, components, and tooling service to Electrolux –Australia for $ 366,421. The icemakers were manufactured and supplied by Chu Zhou Fu Da Mechanical & Electronics; all the icemakers were shipped out at FOB shipping point Nanjing, China.

The Company sold DAC Boxes, Deflector, push buttons, Magnets, Motors and other related parts to Electrolux –Italy for total $ 118,105. The DAC Boxes, Magnets, Motors and other related parts were manufactured and supplied by Zhong Nan Fu Rui, and Qingdao Fu Bi Da; all the DAC Boxes magnets, and motors were shipped out at FOB shipping point Qingdao, China.

 
14

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenues Recognition (Continued)

The Company also sold DAC Boxes, Magnets, Motors, and other related parts to Electrolux – Hungry for total $252.430. The DAC Boxes, magnets and Motors were manufactured and supplied by Zhong Nan Fu Rui, and Qingdao Fu Bi Da respectively; all the DAC Boxes magnet, and motors were shipped out at FOB shipping point Qingdao, China.

The Company also sold DAC Boxes to Electrolux –Sweden for $ 3,319. The DAC Box were manufactured and supplied by Qingdao Fu Bi Da; all the DAC Boxes were shipped out at FOB shipping point Qingdao, China.

The company sold Motors, icemakers, and some related refrigerator appliance parts to North Carolina Electrolux Major Appliances, Inc for $53,634. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.

The company sold thermostats and icemakers to an US company, Exact Replacement Parts for $ 31,800. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.

For the period of January to March 31, 2012, the Company sold thermostats and other related key parts for icemakers and motors, to Zhong Nan Fu Rui and ChuZhouFuDa. The parts were used for the icemakers and motors. Flurida Group purchased the parts from Wako Electronics, Inc., an US Company located at Louisville, KY 40299.  Flurida Group also sold Rocker Switch, the key parts for icemakers, to Zhong Nan Fu Rui and ChuZhouFuDa.  The parts, Rocker Switch, were used for the icemakers .The Company purchased the parts, Rocker Switch, from CW Industries, an US Company located at Southampton, PA; and also Flurida Group purchased some other related key parts from corporate America, and then sold to Zhong Nan Fu Rui and ChuZhouFuDa. Flurida Group, Inc. adds averaged 5% - 10% margin based on the cost of purchase, then sold to them, so, $ 2,880 and $ 38,539 were sold and invoiced to Zhong Nan Fu Rui and ChuZhouFuDa respectively in the fiscal quarter of 2012.

The company also sold parts and other related services to General Electric Company for $ 29,293.

 
15

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenues Recognition (Continued)

The company sold icemakers to an US company, Domestic LLC for $ 34,113. And the icemakers were manufactured and supplied by ChuZhou FuDa Mechanical & Electronics Co., Ltd; all the icemakers were shipped out at FOB shipping point Nanjing, China.

The Company also had components and other tooling and service income of $ 20,596 from corporate America.

In summary, for the period of January 1 to March 31, 2012, the Company incurred the total gross sales of $ 3,360,509. And the Company had sales discount and return of $ 18,104, so, a total of $ 3,342,405 net sales were recorded. The cost of goods sold is discussed in details in Note C, Related Party Transactions.

Operating Expense

Operating Expenses includes research and development expense, all selling, general and administrative expenses, and depreciation expenses for Flurida Group Inc.  For the fiscal quarter ended March 31, 2012 and 2011, the Company had total operating expenses of $300,746 and $ 233,693 respectively, which include the research and development expense of $ 7,488 and $ 0, and depreciation expenses of $ 4,911 and $ 3,584, and selling, general and administrative expense of $ 288,347 and $ 230,109. Detail was showed on Exhibit A.


Payroll Expense

Started from January 2012, Flurida Group stayed the salaries amount of officers Jianfeng Ding, Yaru Huang, and Ying Zhong for $350,000, $80,000, $ 80,000. 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.

 
 
16

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Payroll Expense (Continue)

The total payroll expenses for the fiscal quarter ended March 31, 2012 and 2011 were listed as follows:

   
Three Months Ended
 
   
March 31, 2012
   
March 31, 2011
 
Payroll Expense - ER
           
Federal Unemployment Tax
    392.00       -  
State Unemployment Tax
    1,532.75       1,057.85  
US Medicare Tax - ER
    2,684.57       1,960.52  
US Social Security Tax -ER
    11,478.82       8,382.93  
Payroll Expense - ER - Other
    279.08       -  
Total Payroll Expense - ER
    16,367.22       11,401.30  
Payroll Expenses - EE
               
Federal Tax Withholding
    31,723.89       22,737.94  
State Tax Withholding
    11,578.29       8,518.71  
US Medicare Tax -EE
    2,684.57       1,960.52  
US Net Salaries paymnet - EE
    131,541.49       96,248.64  
US Social Security Tax - EE
    7,775.98       5,678.75  
Total Payroll Expenses - EE
    185,304.22       135,144.56  
                 
Total Payroll Expenses
    201,671.44       146,545.86  

Professional Fee

Professional fees are consist of accounting and auditing fee, legal fee, commission and consulting expenses, SEC filling fee, and other professional expenses. The total professional fees were $ 5,804 and $12,856 for the fiscal quarter ended March 31, 2012 and 2011 respectively.

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.

 
17

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

Business Combinations —The new guidance on business combinations retains the underlying concepts of the previously issued standard in that the acquirer of a business is required to account for the business combination at fair value. As with previous guidance, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair values are recorded as goodwill. The new pronouncement results in some changes to the method of applying the acquisition method of accounting for business combinations in a number of significant aspects. Under the new guidance, all acquisition costs are expensed as incurred and in-process research and development costs are recorded at fair value as an indefinite-lived intangible asset. Prior to the adoption, in-process research and development costs were immediately expensed and acquisition costs were capitalized. Further, the new guidance generally requires restructuring charges associated with a business combination to be expensed subsequent to the acquisition date.

Fair Value Measurements and Disclosures — The pronouncements define fair value, establish guidelines for measuring fair value, and expand disclosures regarding fair value measurements.

Derivative Instruments and Hedging Activities — The pronouncement requires additional disclosures about the objectives of derivative instruments and hedging activities, the method of accounting for such instruments, and a tabular disclosure of the effects of such instruments and related hedged items on Financial Statements. The pronouncement does not change the accounting treatment for derivative instruments.

Variable Interest Entities and Transfers of Financial Assets and Extinguishments of Liabilities — The pronouncement on transfers of financial assets and extinguishments of liabilities removes the concept of a qualifying special-purpose entity and removes the exception from applying variable interest entity accounting to qualifying special-purpose entities. The new guidance on variable interest entities requires an entity to perform an ongoing analysis to determine whether the entity’s variable interest or interests give it a controlling financial interest in a variable interest entity. The pronouncements are effective for fiscal years beginning after November 15, 2009.
 
Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.
 
 
18

 
 
 FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

 
NOTE C – RELATED PARTY TRANSACTIONS

As of March 31, 2012, total 29,277,760 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
0.42%
Fuling Li
 115,000
10,750
0.29%
Ying Zhong
  2,000,000
200,000
5.13%
Jianfeng Ding & Yaru
     
Huang
26,997,760
323,998
69.24%
Total
29,277,760
$550,498
75.08%
 
·      Based on total issued shares as of December 31, 2009: 38,990,827.
·      Total outstanding issued shares as of March 31, 2012: 38,990,827

 
19

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE C – RELATED PARTY TRANSACTIONS (Continued)

Cost of Goods Sold

The Company’s purchase is primarily from supplier, Zhong Nan Fu Rui Mechanical Electronics Manufacturing Co., Ltd., owned 100% by the founder of the Company, Jianfeng Ding.  Due to Jianfeng Ding, and Yaru Huang, husband and wife, combined hold 69.24% issued common shares for Flurida Group, Inc., the two entities, Flurida Group, Inc., and Zhong Nan Fu Rui Mechanical Electronics Manufacturing Co., Ltd., are under conmmon control according to EITF 02-5.
 
The products the Company will sell are manufactured in China by Zhong Nan Fu Rui Mechanical Electronics Manufacturing Co., Ltd. (“Zhong Nan Fu Rui”).  It was established in 2005 specializing in home appliance components and subassemblies manufacturing, and located in Qingdao City, Shandong Province, China.  On September 18, 2007, amended June 25, 2008 and further amended on August 4, 2008, Flurida Group, Inc. signed a five year distribution agreement with Zhong Nan Fu Rui Mechanical Electronics Manufacturing Co., Ltd.  Zhong Nan Fu Rui is a Chinese manufacturing company owned 100% by Mr. Jianfeng Ding, our president.  Under the terms of the agreement Zhong Nan Fu Rui authorizes Flurida to be its exclusive sales agent for the ice making product lines, including icemaker and ice water dispensing systems all over the world. The ice making product lines shall include the products that Zhong Nan Fu Rui developed before the agreement signed and the products that will be developed solely by Zhong Nan Fu Rui during the term of the agreement. Zhong Nan Fu Rui is the exclusive supplier of the products we sell.  Although the distribution agreement requires that the purchase price we will pay for these products will be comparable to what the Flurida would have paid a non-related party in market price, Mr. Ding may face a conflict in calculating the price the products are sold to Flurida and the determining amount of products the Flurida purchase.  However, because Mr. Ding has a fiduciary duty to Flurida and the shareholders, he has indicated that he will assure strict adherence to this provision of the agreement and will not require Flurida to purchase a quantity of products in excess of that which Flurida can reasonably afford or reasonably expect to sell in within two to three months of our purchase of the products.

The management of Flurida Group, Inc. believes that the purchase price for the parts from Zhong Nan Fu Rui will be market price.  Flurida Group, Inc. and Zhong Nan Fu Rui are two totally separated entities, i.e., Flurida Group, Inc. is a USA corporation and will fully comply with USA regulations and USA general accepted

 
20

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE C – RELATED PARTY TRANSACTIONS (Continued)

Cost of Goods Sold (Continued)

accounting principles; Zhong Nan Fu Rui is a Chinese company and it will comply with Chinese legal systems.

Flurida Group, Inc. and Zhong Nan Fu Rui will operate independently.  Zhong Nan Fu Rui, 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 Zhong Nan Fu Rui, Flurida Group will record the actual costs paid to Zhong Nan Fu Rui as the costs for inventory of Flurida Group, Inc.  There is no any relationship for Zhong Nan Fu Rui’s manufacturing historic costs with Flurida Group’s inventory value.  Specifically, Flurida’s inventory value is equal to the purchase price or actual cost of the parts purchased from Zhong Nan Fu Rui, and the purchase price of the parts 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.

The management of Zhong Nan Fu Rui disclosed to Flurida Group, Inc. that, Zhong Nan Fu Rui adopted the cost plus pricing policies with market adjustment, negotiable with customers.  Zhong Nan Fu Rui adopted the cost plus system for all the products for all customers including the product, icemakers exclusively distributed by Flurida Group, Inc.  Specifically, the selling price is determined by total actual manufacturing cost of direct manufacturing materials (parts), direct manufacturing labor, and allocated manufacturing overhead cost, plus 5-10% of total manufacturing cost.  Zhong Nan Fu Rui’s minimum gross profit margin is 5%.

Flurida Group also purchased the products from suppliers, Qingdao Fubida Electronics Co., Ltd, Shanghai Fulu International Trading Co., Ltd, and Chuzhou Fuda Mechanical and Electronics Co., Ltd on purchase orders basis.

Qingdao Fubida Electronics Co., Ltd, owned 100% indirectly by Jianfeng Ding and Yaru Huang, husband and wife. Qingdao Fubida Electronics Co., Ltd is a manufacturing company, and it was established in 2003 specializing in home appliance control components and subassemblies manufacturing, and located in Qingdao City, Shandong Province, China. The plant space is around 70,000 sq ft. 14units injection molding machine up to 600 metric tons.

 
21

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE C – RELATED PARTY TRANSACTIONS (Continued)

Cost of Goods Sold ( Continued)

Shanghai Fulu International Trading Co., Ltd. a trading company established in 2007, located at Shanghai, China, 100% owned indirectly by Jianfeng Ding and Yaru Huang.

Chuzhou Fuda Mechanical & Electronics Co., Ltd. owned 100% indirectly by Jianfeng Ding and Yaru Huang, husband and wife 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 100,000sq. ft. with 18 molding machine up to 800 metric ton and 6 assemblies lines for appliance components and assemblies.

At the year ended December 31, 2011, the Company had ending inventory $1,803,674 that was purchased from Zhong Nan Fu Rui and ChuZhou FuDa.

From the period January 1 to March 31, 2012, Flurida Group, Inc. purchased Motors and parts from Zhong Nan Fu Rui at total cost of $ 139,980 for FOB shipping point at Qingdao, China.

Flurida Group, Inc. also purchased Motors, Deflectors, Icemakers, Magnets, Dac boxes, and other related parts from Qingdao Fubida Electronics Co., Ltd. at total cost of $ 112,607 for FOB shipping point at Qingdao, China.

The Company purchased Icemakers and parts from ChuZhou FuDa at total cost of $ 2,798,350 for FOB shipping point at Nanjing, China.

In addition, Flurida Group, Inc. purchased Magnets, Icemakers, Timers and related parts from Shanghai Fulu International Trading Co., Ltd., at total cost of $16,210 for FOB shipping point at Shanghai, China.

To manufacture the related refrigerator appliance parts, Zhong Nan Fu Rui and 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 $ 79,463 in the fiscal quarter 2012.

For the fiscal quarter ended March 31, 2012, the Company had total purchase of $ 3,146,610.

 
22

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE C – RELATED PARTY TRANSACTIONS (Continued)

Cost of Goods Sold (Continued)

At the periods ended March 31, 2012, the company had total of 22,134 Icemakers and 639,575 pieces motors ending inventory at a value $ 1,973,218.

For the period of January 1 to March 31, 2012, the company had freight cost and other related cost of $ 3531.

Therefore, in the fiscal quarter ended March 31, 2012, the Company incurred a total cost of good sold of $ 2,980,597.

Loan to Supplier

At October 1st 2011, Flurida Group, Inc entered into a loan agreement of $224,602 with the company’s primary supplier, Zhong Nan Fu Rui. The outstanding balance bears interest at 5.00%, pursuant to a written agreement, for the term from October 1st 2011 to October 1st 2013.


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.

 
23

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE D – SHAREHOLDERS’ EQUITY (Continue)

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

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

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

Therefore, as of March 31, 2012 total shares issued and outstanding are 38,990,827.


NOTE E – GOING CONCERN

The Company’s operating history and financial resources 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.  In the fiscal quarter ended March 31, 2012, the Company generated sales revenue of $ 3,342,405.  The Company’s most concentrated customer is Electrolux located in various countries.  If Electrolux discontinue the purchase which may be very unlikely in near future, the Company may face the ability to continue as a going concern.  However, due to the close relationship between the Company and it’s suppliers, Zhong Nan Fu Rui and Qingdao Fubida Electronics Co., which are 100% owned by the founder, Jianfeng Ding.  Zhong Nan Fu Rui and Qingdao Fubida Electronics Co.’s current customers can be served by the Company for the same quality of products and services.  Besides, as of March 31, 2012, the cash and cash equivalent balance was $ 1,380,868, 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.

 
24

 
 
Exhibit A

   
Three Months Ended
   
Three Months Ended
 
   
March 31, 2012
   
March 31, 2011
 
Operating expenses
           
Administration Expense
    550       1,507  
Bank Service Charges
    766       594  
Certification
    28,106       20,858  
Computer and Internet Expenses
    593       232  
Depreciation Expenses
    4,911       3,584  
Fuel charge
    305       481  
Gift and Promotion
    1,577       -  
Meals and Entertainment
    2,985       8,184  
Office Supplies
    1,761       6,882  
Parking Fee
    12       192  
Payroll Expense - ER
    16,367       11,401  
Payroll Expenses - EE
    185,304       135,145  
Postage and Shipping
    2,260       499  
Professional Fees
               
Auditing Factory
    2,170       2,463  
Commission and Consulting Fee
    -       10,168  
Legal Fee
    3,279          
Transfer Agent Service
    355       225  
Total Professional Fees
    5,804       12,856  
Rent Expense
    12,932       8,877  
Repair and Maintenance
    750       -  
Research and Development Expense
    7,488       -  
Service Cost
    220       1,236  
Telephone Expense
    2,081       2,228  
Travel Expense
               
Airfare
    15,194       10,724  
Car Rental
    530       1,572  
Hotel Expense
    9,683       5,210  
Local Transportation
    -       317  
Travel Expense - Other
    -       590  
Total Travel Expense
    25,406       18,413  
Utilities
    567       524  
Total Operating Expense
    300,746       233,693  
 
 
25

 
 
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

Our business is the sale of appliance parts in Asia, Europe, Australia, North and South America.  The main products that we sell to these markets are icemakers, motors, ice water dispensing system, and appliance assemblies.

These parts are manufactured in China by Zhong Nan Fu Rui Mechanical Electronics Manufacturing Co., Ltd. (“Zhong Nan Fu Rui”)

Zhong Nan Fu Rui was established in 2005 specializing in home appliance components and subassemblies manufacturing, and located in Qingdao City, Shandong Province, China.  On September 18, 2007, amended June 25, 2008 and further amended on August 4, 2008, Flurida Group, Inc. signed a long-term distribution agreement with Zhong Nan Fu Rui Mechanical Electronics Manufacturing Co., Ltd.  Zhong Nan Fu Rui is a Chinese manufacturing company owned 100% by Mr. Jianfeng Ding, our president.

Flurida Group also purchased the products from suppliers, Qingdao Fubida Electronics Co., Ltd, Shanghai Fulu International Trading Co., Ltd, and Chuzhou Fuda Mechanical and Electronics Co., Ltd on purchase orders basis.

Qingdao Fubida Electronics Co., Ltd, owned 100% indirectly by Jianfeng Ding and Yaru Huang, husband and wife. Qingdao Fubida Electronics Co., Ltd is a manufacturing company, and it was established in 2003 specializing in home appliance control components and subassemblies manufacturing, and located in Qingdao City, Shandong Province, China. The plant space is around 70,000 sq ft. 14units injection molding machine up to 600 metric tons.

Shanghai Fulu International Trading Co., Ltd. a trading company established in 2007, located at Shanghai, China, 100% owned indirectly by Jianfeng Ding and Yaru Huang.

Chuzhou Fuda  Mechanical & Electronics Co., Ltd. owned 100% indirectly by Jianfeng Ding and Yaru Huang, husband and wife 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 100,000sq. ft. with 18 molding machine up to 800 metric ton and 6 assemblies lines for appliance components and assemblies.

We sell the following types of appliance parts:

 
Automatic Refrigerator Build-in Icemaker: The automatic refrigerator build-in 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.
 
 
26

 

 
 
Shade Pole 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 headquarter in Charlotte, NC. Flurida also supplies the motors and motor assemblies to Electrolux Europe facilities in Italy and Hungary.

Results of Operations

For the fiscal quarters ended March 31, 2012 vs. March 31, 2011.

Revenue

For the fiscal quarter ended March 31, 2012 and 2011, the Company had total revenues of $ 3,342,405 and $ 3,019,787 respectively.  This is an increase of 11%.

For the period January1 to March 31, 2012, the Company sold icemakers and motors to, Electrolux USA, located at Charlotte NC for sales of $ 2,326,650. The motors were manufactured and supplied by Zhong Nan Fu Rui; all the motors were shipped out at FOB shipping point Qingdao, China.  And the icemakers were manufactured and supplied by ChuZhou FuDa Mechanical & Electronics Co., Ltd; all the icemakers were shipped out at FOB shipping point Nanjing, China.

The company also sold motors, to Stanco Metal Products for $ 77,259; the motors were manufactured and supplied by Zhong Nan Fu Rui, and all of those parts were shipped out at FOB shipping point at Qingdao, China.

The Company also sold Motors to Electrolux –ST. Cloud for $ 5,470. The motors were manufactured and supplied by Zhong Nan Fu Rui and shipped out at FOB shipping point at Qingdao, China.

For the three months ended March 31, 2012, the Company sold icemakers, components, and tooling service to Electrolux –Australia for $ 366,421. The icemakers were manufactured and supplied by Chu Zhou Fu Da Mechanical & Electronics; all the icemakers were shipped out at FOB shipping point Nanjing, China.

The Company sold DAC Boxes, Deflector, push buttons, Magnets, Motors and other related parts to Electrolux –Italy for total $ 118,105. The DAC Boxes, Magnets, Motors and other related parts were manufactured and supplied by Zhong Nan Fu Rui, and Qingdao Fu Bi Da; all the DAC Boxes magnets, and motors were shipped out at FOB shipping point Qingdao, China.

The Company also sold DAC Boxes, Magnets, Motors, and other related parts to Electrolux – Hungry for total $252.430. The DAC Boxes, magnets and Motors were manufactured and supplied by Zhong Nan Fu Rui, and Qingdao Fu Bi Da respectively; all the DAC Boxes magnet, and motors were shipped out at FOB shipping point Qingdao, China.

The Company also sold DAC Boxes to Electrolux –Sweden for $ 3,319. The DAC Box were manufactured and supplied by Qingdao Fu Bi Da; all the DAC Boxes were shipped out at FOB shipping point Qingdao, China.

The company sold Motors, icemakers, and some related refrigerator appliance parts to North Carolina Electrolux Major Appliances, Inc for $53,634. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.

The company sold thermostats and icemakers to an US company, Exact Replacement Parts for $ 31,800. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.

For the period of January to March 31, 2012, the Company sold thermostats and other related key parts for icemakers and motors, to Zhong Nan Fu Rui and ChuZhouFuDa. The parts were used for the icemakers and motors. Flurida Group purchased the parts from Wako Electronics, Inc., an US Company located at Louisville, KY 40299.  Flurida Group also sold Rocker Switch, the key parts for icemakers, to Zhong Nan Fu Rui and ChuZhouFuDa.  The parts, Rocker Switch, were used for the icemakers .The Company purchased the parts, Rocker Switch, from CW Industries, an US Company located at Southampton, PA; and also Flurida Group purchased some other related key parts from corporate America, and then sold to Zhong Nan Fu Rui and ChuZhouFuDa. Flurida Group, Inc. adds averaged 5% - 10% margin based on the cost of purchase, then sold to them, so, $ 2,880 and $ 38,539 were sold and invoiced to Zhong Nan Fu Rui and ChuZhouFuDa respectively in the fiscal quarter of 2012.
 
 
27

 

The company also sold parts and other related services to General Electric Company for $ 29,293.

The company sold icemakers to an US company, Domestic LLC for $ 34,113. And the icemakers were manufactured and supplied by ChuZhou FuDa Mechanical & Electronics Co., Ltd; all the icemakers were shipped out at FOB shipping point Nanjing, China.

The Company also had components and other tooling and service income of $ 20,596 from corporate America.

In summary, for the period of January 1 to March 31, 2012, the Company incurred the total gross sales of $ 3,360,509. And the Company had sales discount and return of $ 18,104, so, a total of $ 3,342,405 revenues were recorded.

Cost of Revenue

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

For the fiscal quarter ended March 31, 2012, the Company incurred a total cost of goods sold of $ 2,980,597 compared to $ 2,677,747 for the three months period ended March 31, 2011.  This is an increase of 11%.  The reasons for this increase are primarily due to the sales increases.

From the period January 1 to March 31, 2012, Flurida Group, Inc. purchased Motors and parts from Zhong Nan Fu Rui at total cost of $ 139,980 for FOB shipping point at Qingdao, China.

Flurida Group, Inc. also purchased Motors, Deflectors, Icemakers, Magnets, Dac boxes, and other related parts from Qingdao Fubida Electronics Co., Ltd. at total cost of $ 112,607 for FOB shipping point at Qingdao, China.

The Company purchased Icemakers and parts from ChuZhou FuDa at total cost of $ 2,798,350 for FOB shipping point at Nanjing, China.

In addition, Flurida Group, Inc. purchased Magnets, Icemakers, Timers and related parts from Shanghai Fulu International Trading Co., Ltd., at total cost of $16,210 for FOB shipping point at Shanghai, China.

To manufacture the related refrigerator appliance parts, Zhong Nan Fu Rui and 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 $ 79,463 in the fiscal quarter 2012.

For the period of January 1 to March 31, 2012, the Company had total purchase of $ 3,146,610.

For the period of January 1 to March 31, 2012, the company had freight cost and other related cost of $ 3531.

At the year ended December 31, 2011, the Company had ending inventory $1,803,674 that was purchased from Zhong Nan Fu Rui and ChuZhou FuDa.

At the periods ended March 31, 2012, the company had total of 22,134 pieces Icemakers and 639,575 pieces motors ending inventory at a value $ 1,973,218.

Therefore, at the fiscal quarter ended March 31, 2012, the Company incurred a total cost of good sold of $ 2,980,597.

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, 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 operating Expenses include research and development expense, all selling, general and administrative expenses, and depreciation expenses.
 
 
28

 

   
Three Months Ended
   
Three Months Ended
 
   
March 31, 2012
   
March 31, 2011
 
Operating expenses
           
Administration Expense
    550       1,507  
Bank Service Charges
    766       594  
Certification
    28,106       20,858  
Computer and Internet Expenses
    593       232  
Depreciation Expenses
    4,911       3,584  
Fuel charge
    305       481  
Gift and Promotion
    1,577       -  
Meals and Entertainment
    2,985       8,184  
Office Supplies
    1,761       6,882  
Parking Fee
    12       192  
Payroll Expense - ER
    16,367       11,401  
Payroll Expenses - EE
    185,304       135,145  
Postage and Shipping
    2,260       499  
Professional Fees
               
Auditing Factory
    2,170       2,463  
Commission and Consulting Fee
    -       10,168  
Legal Fee
    3,279          
Transfer Agent Service
    355       225  
Total Professional Fees
    5,804       12,856  
Rent Expense
    12,932       8,877  
Repair and Maintenance
    750       -  
Research and Development Expense
    7,488       -  
Service Cost
    220       1,236  
Telephone Expense
    2,081       2,228  
Travel Expense
               
Airfare
    15,194       10,724  
Car Rental
    530       1,572  
Hotel Expense
    9,683       5,210  
Local Transportation
    -       317  
Travel Expense - Other
    -       590  
Total Travel Expense
    25,406       18,413  
Utilities
    567       524  
Total Operating Expense
    300,746       233,693  


Started from January l, 2011, Flurida Group’s salaries amount of officers Jianfeng Ding, Yaru Huang, and Ying Zhong were $350,000, $80,000, $ 80,000, respectively. 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. And Flurida Group USA hired employees to taking care of the office, research and development, and marketing activities, therefore, the Company incurred a total payroll expense of $201,671 for the quarter end March 31, 2012.  For maintaining and operating the business, the Company expensed a total of $ 5,804 professional fee, which was included the accounting fee, commission and consulting fee for enlarge sales volume, and other professional expenses. In order to increasing the sales in Europe and North America, the Company expensed $ 28,106 certification fees on the products we sold or exported. Due to the raise of sale volume and customers, the Company had travel expenses of $ 25,406; and the Company incurred $ 7,488 research and development expenses for the fiscal quarter ended March 31, 2012.

We expect selling, general, and administrative expenses to increase in future periods as we initiate a number of marketing and promotional activities.
 
 
29

 

Income Taxes

We are subject to income taxes in the U.S., while the subsidiary in Italy is subject to the income tax laws of Italy. We incurred income tax expense of $ 28,000 and 53,350 for the quarter ended March 31, 2012 and 2011 respectively. As of March 31, 2012, the company had income taxes payable of $ 0.

Net Income

For the reasons set forth above, we had a net income of $ 33,799 and $ 58,858 for the three months period ended March 31, 2012 and 2011 respectively.

Commitments and Contingencies

The Company has signed a long-term distribution agreement with Zhong Nan Fu Rui Mechanical Electronics Manufacturing Co., Ltd.  Zhong Nan Fu Rui is a Chinese manufacturing company owned 100% by Mr. Jianfeng Ding, also the founder of Flurida Group, Inc.  Also, On September 2008, the company signed a consigned inventory agreement with an US company, Electrolux Home Products DE Mexico, S.A.DEC.V (Electrolux).

Foreign Currency Translation

The Company has determined the United States dollars to be its functional currency; and European Euro to be its functional currency for our Italian subsidiary.  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 historic rate, i.e., the rate at 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.

Liquidity and Capital Resources

   
At March 31
   
At March 31
   
At December 31
 
   
2012
   
2011
   
2011
 
                   
Current Ratio*
    1.56       1.51       1.85  
Cash
  $ 1,380,868     $ 684,078     $ 741,230  
Working Capital**
  $ 1,375,026     $ 1,141,611     $ 1,348,331  
Total Assets
  $ 4,734,181     $ 4,505,577     $ 3,622,633  
Total Liabilities
  $ 3,042,330     $ 2,982,963     $ 1,962,891  
                         
Total Equity
  $ 1,691,851     $ 1,526,829     $ 1,659,742  
                         
Total Debt/Equity***
    1.80       1.95       1.18  


*Curent 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 to $1,375,026 in the period ended March 31, 2012 from $1,141,611 in the period ended March 31, 2011, due to the increase of the cash balance and inventory.

Currently the Company has a sales agreement with Electrolux, such agreement require the Company to supply the motors, ice makers, and other parts based on Electrolux’s needs.  The management projected that the needs for our Company’s products shall be stable with slight increase worldwide.  However, due to the consignment arrangement with Electrolux, the Company would keep certain level of consignment inventory to meet the Electrolux’s requirements.  In addition, due to the consignment terms with Electrolux, the sales would be recognized when the Electrolux withdraw the products or the consignment inventory at Electrolux’s warehouse for 60 days.  In our due course of business dealing with Electrolux’s consignment sales, all the sales incurred in the period January to March 2012 were for the products withdrew before the 75 days terms, i.e., the products might be considered as sales automatically based on the consignment terms.  After the products withdrew by Electrolux, the Company may receive the payment in 7 days with discount through DB Supplier Finance.
 
 
30

 

 Our activities for generating cash flows were operating activities in 2012 and 2011. There were no financing activities incurred for the fiscal quarter ended March 31, 2012, and 2011. The management will continue to improve our current business on marketing, customer services and general administrative activities effectiveness, also we focus on develop our new products such as electronic ice maker; high efficiency; and LED products.

The Company had cash and cash equivalents of $ 1,380,868 at March 31, 2012 and $ 1,375,026 of working capital, and cash and cash equivalents of $ 684,078 at March 31, 2011 and $ 1,141,611 of working capital.

The total debt of $ 3,042,330 for March 31, 2012 included account payable of $ 110,551 for Zhong Nan Fu Rui, $ 2,500,526 for Chu Zhou Fu Da, $ 111,417 for Qiongdao Fu Bi Da, $ 32,625 for Shang Hai Fu Lu International Trading, and $ 35,226 for US suppliers, $ 68,502 for salary and payroll tax payable, $ 34,767 for all other account payable, and $ 148,716 unearned revenue.

The total debt of $ 2,982,963 for March 31, 2011 that is included the amount of $ 2,892,249 accounts payable, $ 88,350 income tax payable, and $ 2,364 unearned revenue.
   
The Company’s operating history and financial resources may raise doubt about its ability to continue as a going concern.  If the Company is unable to generate significant revenue or secure financing, then the Company may be required to cease or curtail its operations.  In the fiscal quarter ended March 31, 2012, the Company generated sales revenue of $ 3,342,405.  The Company’s most concentrated customer is Electrolux located in various countries.  If Electrolux discontinue the purchase which management believes is unlikely in near future, the Company may face the ability to continue as a going concern.  However, due to the close relationship between the Company and its suppliers, Zhong Nan Fu Rui and Qingdao Fubida Electronics Co., which are 100% owned by the founder, Jianfeng Ding, Zhong Nan Fu Rui and Qingdao Fubida Electronics Co.’s current customers can be served by the Company for the same quality of products and services.  Besides, as of March 31, 2012, the cash and cash equivalent balance was $ 1,380,868, 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 April 1, 2008.  All remaining loan holders converted their loans to common shares on April 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, 2012 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, 2012, our disclosure controls and procedures are not effective.
 
 
31

 

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 fiscal quarter 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.

The Registrant did not sell any unregistered securities during the three months ended March 31, 2012.
 
(b)                 Use of Proceeds.
 
The Registrant did not sell any unregistered securities during the three months ended March 31, 2012.

Item 3.  Defaults Upon Senior Securities
 
None.

Item 4. (Removed and Reserved).
 
 
Item 5.  Other Information.
 
Not applicable.
 

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
 
 
32

 
 
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.
 
 
33

 
 
 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

Title  
 
Name  
 
Date
 
   Signature
 
Principal Executive Officer  
 
Jianfeng Ding  
 
May 9, 2012
 
/s/ Jianfeng Ding
 

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
 
May 9, 2012
/s/ Yaru Hang
 
Yaru Hang
 
Principal Financial Officer and Principal Accounting Officer
 
May 9, 2012

 

 
 
 
 
34

 

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**
 
      
 
                                             
*  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.