Item 1. Description of Business
Organization
Flurida Group, Inc. is a Nevada corporation formed on December 19, 2006, with registered address at 502 East John Street, Carson City, NV 89706. Flurida Group, Inc. transacts its business in the U.S. as Flurida Group USA, Inc. located in the State of Illinois and has principal office at 22 W. Washington St., Suite 1500, Chicago, IL 60602, USA. Our telephone number is 630.778.6991.
Flurida Group leased a center at 24412 S Main Street, Carson, CA 90745.
Flurida Group transacted its business into the state of Texas on December 11, 2014, and has its operating office located at 45-D Butterfield Circle, El Paso, TX 79906.
Business
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 and stoves and damper. Besides those products, every year we consistently develop and research the new products, for example recently developed high efficiency-motor, crush motor and module now in mass production as well as automatic ice maker for Haier now in production and electronic ice maker for GE we plan to start production in 2015.
These parts 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 established on March 18, 2008. Chuzhou Fuda is located in Chuzhou City, Anhui Province, China. The plant space is around 530,000 sq. ft. with 62 molding machine up to 800 metric ton and 20 assembly lines for appliance components and assemblies.
We sell the following main 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.
·
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.
·
High-efficiency motor: Flurida started developing high-efficiency motor since 2010. Through numerous tests and improvements, our customers have verified that our new model performs as we stated it would. We have finished trial production in the 1st quarter of 2014, and already started mass production in 2nd quarter; the efficiency of a high-efficiency motor triples the motor’s efficiency compared with regular motors. It can be used, for example, for defrosting in refrigerators.
·
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.
·
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.
·
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.
·
High-efficiency Stove: a wood-fuel metal stove which has higher combustion efficiency, lower fuel consumption, and lower pollution than the average rocket stoves on the market. Those stoves sold to users in under-developed countries to save them time in cooking and money in fuel while reducing CO2 emission and deforestation.
·
Automatic icemaker for Haier: We have started mass production of the automatic icemaker for Haier USA in 2014.
·
Electronic icemaker for GE: After 3 years of product development, the design of electronic icemaker model is finalized and approved by GE. We will start mass production of the electronic icemaker model for GE in 2015.
For the fiscal year ended December 31, 2014, the Company had total net revenue of $43,056,292. For the fiscal year ended December 31, 2013, the Company had total net revenue of $ 25,259,161.
Our Supplier
The Company’s purchase is primarily from supplier, Chuzhou Fuda Mechanical & Electronics Co., Ltd (“ChuZhouFuDa”), which is related and managed by shareholder and 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 100,000sq. ft. with 18 molding machine up to 800 metric ton and 6 assemblies 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. Specifically, Flurida’s inventory value is equal to the purchase price or actual cost of the parts purchased from Chuzhou Fuda, 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.
Flurida Group also purchased the products from suppliers, Qingdao Fubida Electronics Co., Ltd. It is also related and managed by shareholder and director Jianfeng Ding, and 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. 14 units injection molding machine up to 600 metric tons.
Customers
We sell our product to refrigerator manufacturers such as Electrolux North America, Electrolux Italy, Electrolux Hungary, Electrolux Sweden, Electrolux Australia, Stanco Metal Products Inc, Haier America Research and Development Co, and The Paradigm Project; and the Company also sold products to our suppliers Chu Zhou Fu Da.
Markets
We sell our products in United States, Mexico, China, Europe, Brazil, Australia, and South America.
Marketing
Our products will be sold directly by our officers, directors and employees to customers and potential customers. We will locate these customers primarily by personal contacts or referrals.
Our Competition and Our Market Position
Competition within the appliance parts industry is intense. We will compete with both large scale state-owned enterprises and smaller scale private companies. In addition, we also face competition from international appliance parts resellers. Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do.
Our major competitor in ice maker market is Nidec Servo Corp (formal Japan Servo Co., Ltd.) and Nidec Sankyo Corp. Nidec Servo and Nidec Sankyo are both headquartered in Japan. Nidec Servo produces the aluminum tray icemaker. Nidec Sankyo produces twisted icemaker.
Our major competitors in motors for refrigerators or freezers are AO Smith in USA market, EBM in Germany, MES in Switzerland for Europe market, and Hua Yi Co., Ltd. in China market.
We compete with these and other suppliers based upon:
(1)
Our larger and more focused design group.
(2)
We offer a wider range of products.
(3)
Our products are cost effective, but with highest quality control standard, all passed the ISO 9000 and UL; VDE certification.
(4)
We sell in a broader market throughout the world while our most competitors’ products are only sold in regional markets.
In January, 2014, in accordance with the laws of the People’s Republic of China (“PRC”) on Joint Ventures Using Chinese and Foreign Investment (the “Joint Venture Law”) and other relevant laws and regulations of PRC, Procon China, LLC, a Nevada limited liability company, and Flurida Group Inc., a Nevada corporation, entered into a Joint Venture Contract (referred to herein as this “Agreement”), for a Chinese Foreign Joint Venture (the “Joint Venture”) in the City of Chuzhou, Anhi Province of PRC. The name of the Joint Venture is Flurida-Procon Communications Technology Co., Ltd. The business of the Joint Venture is to be the development and manufacture of global positioning system (“GPS”) tracking devices and providing real-time vehicle tracking and data management services for insurance companies, banks, logistics companies and government agencies. As of the date of this Report, the Joint Venture has generated no revenues, and we are still determining how to proceed under this Joint Venture and may ultimately decide to terminate our involvement if we cannot reach mutual agreement on how to move forward.
Research and Development
We have incurred research and development expenses in the 2014 for the total of $ 149,244.
Our Intellectual Property
We have no intellectual property.
Our Employees
We have the following number of full time employees:
Clerical
-
Operations
-
Administrative
-
Management
-
Engineers
-
Sales
-
We have no part time employees. We have no collective bargaining agreement with our employees. We consider our relationship with our employees to be excellent.
Additional Information
We are a public company and file annual, quarterly and special reports and other information with the SEC. We are not required to, and do not intend to, deliver an annual report to security holders. You may read and copy any document we file at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. Our filings are also available, at no charge, to the public at http://www.sec.gov.
Item 2.
Item 2. Description of Property
We rent the following property:
Flurida Group USA, Inc.
Address: is located at 22 W. Washington St., Suite 1500, Chicago, IL 60602.
·
Name of Landlord: Regus Group
·
Term of Lease: September 1 2014, to September 30, 2015
·
Monthly Rental: $219
·
Adequate for current needs: √ Yes
Flurida Group USA, Warehouse Location
·
Address: 24412 S Main ST, Carson, CA 90745
·
Name of Land Lord: Suf Management Inc
·
Term of Lease: September 1, 2013 to August 31, 2015
·
Monthly Rent: $3,938
·
Square Feet: Approximately 5,168 square feet
·
Adequate for current needs: Yes
Flurida Group USA, Operating Office
·
Address: 45-D Butterfield Circle, El Paso, TX 79906
·
Name of Land Lord: North American Manufacturing Service Inc
·
Term of Lease: December 2, 2014 to November 30, 2015
·
Monthly Rent: $1,000
·
Adequate for current needs: Yes
We do not intend to renovate, improve, or develop properties. We are not subject to competitive conditions for property and currently have no property to insure. We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages. Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities.
Item 3.
Item 3. Legal Proceedings
We are not a party to any material legal proceedings nor are we aware of any circumstance that may reasonably lead any third party to initiate material legal proceedings against us.
Item 4.
Item 4. Mine Safety Disclosures
None
PART II
Item 5.
Item 5. Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities
Trading History
Our common stock is quoted on the Over-The-Counter Bulletin Board under the symbol “FLUG.”
Bid Information*
_______________
* The quotation do not reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
Dividends
We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon then existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects and other factors that the Board of Directors considers relevant.
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
●
we would not be able to pay our debts as they become due in the usual course of business; or
●
our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution, unless otherwise permitted under our articles of incorporation.
Securities Authorized for Issuance Under Equity Compensation Plans
At December 31, 2014, we have one compensation plan in place, entitled 2009 Stock Incentive Plan. This plan was approved by our Board of Directors on July 10, 2009.
Item 6.
Item 6. Selected Consolidated Financial Data
Not required.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results 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-K.
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 and stoves and damper. Besides those products, every year we consistently develop and research the new products, for example recently developed high efficiency-motor, crush motor and module now in mass production as well as automatic ice maker for Haier now in production and electronic ice maker for GE we plan to start production in 2015.
These parts 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 established on March 18, 2008. Chuzhou Fuda is located in Chuzhou City, Anhui Province, China. The plant space is around 530,000 sq. ft. with 62 molding machine up to 800 metric ton and 20 assembly lines for appliance components and assemblies.
We sell the following main 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.
·
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.
·
High-efficiency motor: Flurida started developing high-efficiency motor since 2010. Through numerous tests and improvements, our customers have verified that our new model performs as we stated it would. We have finished trial production in the 1st quarter of 2014, and already started mass production in 2nd quarter; the efficiency of a high-efficiency motor triples the motor’s efficiency compared with regular motors. It can be used, for example, for defrosting in refrigerators.
·
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.
·
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.
·
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.
·
High-efficiency Stove: a wood-fuel metal stove which has higher combustion efficiency, lower fuel consumption, and lower pollution than the average rocket stoves on the market. Those stoves sold to users in under-developed countries to save them time in cooking and money in fuel while reducing CO2 emission and deforestation.
·
Automatic icemaker for Haier: We have started mass production of the automatic icemaker for Haier USA in 2014.
·
Electronic icemaker for GE: After 3 years of product development, the design of electronic icemaker model is finalized and approved by GE. We will start mass production of the electronic icemaker model for GE in 2015.
We are an “emerging growth company” (“EGC”) that is exempt from certain financial disclosure and governance requirements for up to five years as defined in the Jumpstart Our Business Startups Act (“the JOBS Act”), that eases restrictions on the sale of securities; and increases the number of shareholders a company must have before becoming subject to the U.S. Securities and Exchange Commission’s (SEC’s) reporting and disclosure rules (See “Emerging Growth Companies” section above). We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
Results of Operations
For the fiscal year ended December 31, 2014 vs. December 31, 2013.
Revenue
For the fiscal year ended December 31, 2013, the Company had net total revenue of $ 25,259,161 to the Company’s Europe, North and South America customers.
For the fiscal year ended December 31, 2014, the Company had net total revenue of $ 43,056,292, which was increased nearly 70% than the fiscal year ended December 31, 2013 total revenue of $25,259,161. This increase was because all main customer sales went up due to improved economic situation worldwide, plus new product module assembly, ice maker, and wire harness sales, and high efficiency motor sales started in 2013 third quarter and continued through the quarter ended December 31, 2014 and are still continuing.
For the period January 1 to December 31, 2014, the Company sold icemakers, high efficiency motor, module assembly, wire harness, motors, thermostats, related refrigerator appliance, and stoves to North America, which included Electrolux USA, Haier America Research & Development Co, Stanco Metal Products, Exact Replacement Parts,General Electric Company, others America corporation, and The Paradigm Project , for total sales of $ 34,288,814. The icemakers, assembly, motors, and related parts were manufactured and supplied by ChuZhou FuDa Mechanical and Electronics Co., Ltd; all the icemakers, motors, assembly, and related parts were shipped out at FOB shipping point Nanjing, China. The stoves were manufactured and supplied by Qing Dao Fu Da, and were shipped out at FOB shipping point at Qingdao, China.
For the year ended December 31, 2014, the Company sold ice bin assembly, components, and appliance parts to Electrolux -Australia for $ 494,902. The components were manufactured and supplied by Chu Zhou Fu Da Mechanical and Electronics; all the icemakers and components were shipped out at FOB shipping point Nanjing, China.
The Company sold motors and other parts to Electrolux - Do Brasil for $747,209. 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 December 31, 2014, the Company sold motors, DAC boxes, deflector, and related refrigerator appliance to Europe, which included Electrolux Italy, Electrolux Hungry, Electrolux Sweden, and Gotene Plast AB, for total sales of $ 1,972,148. 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 $ 2,199. The icemakers and parts were manufactured and supplied by Chu Zhou Fuda; all the icemakers were shipped out at FOB shipping point Nanjing, China.
For the period of January 1 to December 31, 2014, 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 sold Rocker Switch, the key parts for icemakers, to 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 dampers from Nidec Sankyo Corporation, and then sold to ChuZhouFuDa. Flurida Group, Inc. adds averaged 5% - 10% margin based on the cost of purchase, then sold to them, so, $ 5,894,393 were sold and invoiced to ChuZhouFuDa for the fiscal year ended December 31, 2014.
In summary, for the period of January 1 to December 31, 2014, the Company incurred the total gross sales of $ 43,399,665. And the Company had sales return and allowance of $ 343,373, so, a total of $ 43,056,292 net sales were recorded.
In both fiscal year period ended December 31, 2014 and 2013 sales, more than 80% of total revenues were generated through Electrolux controlled subsidiaries in various countries. Electrolux Group operated its each subsidiary independently in each country, and all the sales orders and sales contracts were negotiated and signed independently. Accordingly, we believe that lack of one or a few subsidiaries of Electrolux sales order may have effect on our overall sales revenue, but the effects were slightly reduced in 2014 vs 2013. We signed long-term distribution agreement with various Electrolux subsidiaries, the risk of loss the contracts with Electrolux is significantly low.
Cost of Revenue
Our Costs of Goods Sold, as we expected will 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.
At the period ended December 31, 2013, the Company had ending inventory $ 3,818,684 that was majority purchased from ChuZhou FuDa.
From the period January 1 to December 30, 2014, Flurida Group, Inc. purchased Stoves and parts from Qingdao FuDa Electronic at total cost of $ 99,027 for FOB shipping point at Qingdao, China.
The Company purchased Icemakers, motors, high efficiency motor,wire harness, dac boxes, deflectors, ice bin, frame assembly, and other related appliance parts from ChuZhou FuDa, meanwhile, ChuZhouFuDa provided tooling and new product testing service to the company at total cost of $ 35,796,398 for the fiscal year 2014.
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 $ 5,598,623 in the period of January 1 to December 31, 2014.
Fulu industries (HK), Ltd provided tooling services and sold icemakers and module assembly to the Company at a cost of $ 2,788,742 for the fiscal year ended December 31, 2014.
For the fiscal year ended December 31, 2014, the Company had total purchase of $ 44,282,790.
At the year ended December 31, 2014, the company had total ending inventory at a value $ 8,167,484.
For the period of January 1 to December 31, 2014, the company had freight cost and related purchase expense of $ 48,857 and purchase return of $ 36,247.
Therefore, in the fiscal year ended December 31, 2014, the Company incurred a total cost of goods sold of $ 39,946,598 which was increased 71 % comparing to the fiscal year ended December 31, 2013 cost of goods sold of $ 23,270,498. The increase of cost of goods sold was due to the sales increase, increasing Chinese Yuan’s currency exchange rate, labor costs, and raw materials.
The cost of goods sold in the Statements of Operations includes costs of products purchased from suppliers, tooling cost, shipping costs or freight in costs for the products shipping FOB port China, warehouse costs, and other costs if any directly related to the products inspection, duty and custom taxes of products, internal transfer costs if any. The selling, general and administrative expense includes operation expense such as travel, professional, office rent, telephone, certification fees, wages and salaries for management and administrative employees, and other expense related to operation. There was no allocation of portion of any selling, general and administrative expense to the cost of goods sold.
Our gross margin may not be comparable to those of other entities, since some other entities may include all or allocate portion of the costs related to their distribution network into cost of goods sold.
Expense
Our operation expenses consist of selling, general and administrative expenses, and research & development expenses, and depreciation expenses:
Started from June 2014, Flurida Group had salaries for officers Jianfeng Ding, Yaru Huang, and Ying Zhong for $350,000, $86,520, $86,520. 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 $ 823,769 for the fiscal year ended December 31, 2014. For maintaining and operating the business, the Company expensed a total of $ 91,264 commission and consulting fee. In order to increasing the sales in Europe and North America, the Company expensed $ 66,476 certification fees on the products we sold or exported in the period of January 1 to December 31, 2014. Due to the raise of sale volume and customers, the Company had travel expenses of $ 233,486, $ 130,627 service expenses, and had equipment and research development expenses of $149,244.
We expect selling, general, and administrative expenses to increase in future periods as we initiate a number of marketing and promotional activities.
Income Taxes
We are subject to income taxes in the U.S. and, as the result of increased revenue, we incurred income tax expense of $ 522,310 and $259,014 for the fiscal year ended December 31, 2014 and 2013 respectively. As of December 31, 2014, the company had income taxes payable of $177,998.
Net Income (Loss)
We had a net income of $ 611,597 and $328,177 for fiscal year ended December 31, 2014 and 2013 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 shareholder and 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. There was no written supply agreement signed between the Company and Chuzhou Fuda. However, Chuzhou Fuda committed to the Company for the quantity and quality of products the Company ordered.
On June 2008, the company signed a consigned inventory agreement with an US company, Electrolux Home Products DE Mexico and Anderson, S.A.DEC.V (Electrolux).
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 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
________________
*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 fiscal year ended December 31, 2014 comparing to fiscal year ended December 31, 2013, due to the overall increase of the cash and cash equivalents, accounts receivable and inventory; and, the Company’s current ratio was decreased as December 31, 2014 comparing to 2013 due to the increase of the accounts receivable and accounts payable.
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. 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 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.
Our activities for generating cash flows were operating activities in 2014 and 2013. The Company entered into a promissory note secured renewal loan agreement (“Loan Agreement”) in the principal amount of $ 4,000,000 with East West Bank located in El Monte, CA. The maturity date of the Note was extended to July 10, 2014 with 4% annual interest rate. On July 16, 2014, the loan was extended from July 10, 2014 to July 31, 2015. The principal amount of the Note is increased to $ 6,000,000. The maximum aggregate amount that may be outstanding under all sub-limits (items 1 through 4) shall be the lesser of $ 6,000,000 or 80% of eligible accounts receivable and 50% of book inventory. The loan is secured by all company inventories, accounts, equipment and general intangibles and certain other assets of the Company. The interest rate is Wall Street Journal Prime plus a margin of 0.75%. The maturity date is July 31, 2015.
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)
$2,000,000 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.
The outstanding loan amount on the prior Loan Agreement in effect was $ 800,000 as of December 31, 2014.
The management will continue to improve our current business on marketing, customer services and general administrative activities effectiveness; we still continually focus on developing our new products electronic ice maker.
We set up a R&D center at our California location. The primary function of an R&D group is to discover and create new knowledge about scientific and technological topics for the purpose of uncovering and enabling development of valuable new products, processes, and services. We are working on various products but none are fully developed and ready to market and we cannot assure you that any of the products we are working on will ever be fully developed or that we will be able to market or sell them in the future.
Specifically, the management still believes that within the operating activities, the efforts of collecting accounts receivables and making payments of accounts payables still are the primary factors for the changes of cash flows in the year 2014 and will continue in later years.
The Company had cash and cash equivalents of $1,825,148 at December 31, 2014 and $ 2,828,774 of working capital and $1,116,298 at December 31, 2013 and $ 2,114,879 of working capital.
The total debt of $12,837,128 for December 31, 2014 included total of $ 11,256,059 account payable, which was included $ 8,806,738 for Chu Zhou Fu Da, $ 2,692 for Qingdao FuDa, $ 1,921,016 for Fulu Industries(HK),Ltd, $ 296,677 for US suppliers, $ 178,251 for salary and payroll tax payable, $ 50,685 for all other account payable, $ 177,998 income tax liabilities, and $ 303,071 unearned revenue $ 800,000 loan from the Bank, and $ 300,000 Other Payable.
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. Besides, as of December 31, 2014, the cash and cash equivalent balance was $1,825,148, 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 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not required.
Item 8.
Item 8. Financial Statements
FLURIDA GROUP, INC.
Audited Financial Statements
As of December 31, 2014 and 2013
Independent Registered Public Accounting Firm’s Auditor’s Report on the Consolidated Financial Statements
Board of Directors and Shareholders of Flurida Group, Inc.
We have audited the accompanying consolidated balance sheets of Flurida Group, Inc as of December 31, 2014 and 2013, and the related consolidated statements of operation, shareholders’ equity, and cash flows for year ended December 31, 2014 and 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Flurida Group, Inc. and Subsidiary Companies as of December 31, 2014, and 2013, and the results of its operations and their cash flows for the year ended December 31, 2014 and 2013 in conformity with accounting principles generally accepted in the United States of America.
/s/ Enterprise CPAs, Ltd.
Enterprise CPAs, Ltd.
Chicago, IL
March 31, 2015
FLURIDA GROUP, INC.
CONSOLIDATED BALANCE SHEETS
FLURIDA GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATION
FLURIDA GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
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 center at 24412 S Main Street, Carson, CA 90745.
Flurida Group Inc transacted its business into the state of Texas on December 11, 2014, and has its operating office located at 45-D Butterfield Circle, El Paso, TX 79906.
The Company’s main business includes sourcing, distribution and marketing of appliance components and assemblies in Asia, Europe, North and South America. In additionally, the Company also sells thermostat, stoves, LED display and other electronic components.
These parts are manufactured in China most 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
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.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
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 year 2014, the Company purchased $ 17,617 Furniture and equipment, and $ 1,870 Computer and data process equipment.
As of December 31, 2014, the company has furniture, Computer and data processing equipment, and equipment at a purchase cost of $ 173,774, and $ 95,455 of accumulated depreciation expense was recorded.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
Account Receivable
As of December 31, 2014, the company had a total of $ 3,060,759 account receivable from it major customers, which included $ 1,217,709 of ChuZhou Fuda, $ 1,300,819 of Electrolux North America, $ 462,025 Electrolux Europe and its subsidiaries, $ 36,925 of Haier America Research & Develpment Co., and $ 37,792 other America corporations.
Short-Term Investment
As of December 31, 2014, there was short-term investment of $2,618,000 to hedge the euro and US dollar exchange rate fluctuation.
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 Payable
The Company incurred accounts payable including professional fees, purchases, payroll and payroll tax liability, and other service fee payables.
As of December 31, 2014, the company had a total of $ 11,256,059 account payable, which was included $ 8,806,738 for Chu Zhou Fu Da, $ 2,692 for Qingdao FuDa, $ 1,921,016 for Fulu Industries(HK),Ltd, $ 296,677 for US suppliers, $ 178,251 for salary and payroll tax payable, and $ 50,685 for all other account payable.
Income Tax Payable
For the period of January 1 to December 31, 2014 and 2013, the Company incurred income tax expense of $ 522,310 and $ 259,014 respectively. As of December 31, 2014, the income taxes payable of the Company was $ 177,998.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loans from Bank
The Company entered into a promissory note secured renewal business loan agreement in the principal amount of $ 4,000,000 with East West Bank located in El Monte, CA. And the maturity date of the Note is from July 10, 2012 to July 10, 2014 with 4% annual interest rate. On July 16, 2014, the loan was extended from July 10, 2014 to July 31, 2015. The principal amount of the Note is increased to $ 6,000,000. The maximum aggregate amount that may be outstanding under all sub-limits (items 1 through 4) shall be the lesser of $ 6,000,000 or 80% of eligible accounts receivable and 50% of book inventory. The loan is secured by all company inventories, account receivable, and other assets of the Company.
The Company may only 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)
·
$ 6,000,000 for Clean Advance of up to maturity of the line
·
$ 2,000,000 for FX Pre-Settlement Risk allowing customer to purchase forward contracts to hedge against FX current risk.
The note is 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 25th day of each month commending with the first month after the date of advance. The outstanding principal balance of this note together with all accrued and unpaid interest and all other amount due hereunder, shall be due and payable on July 10, 2015.
As of December 31, 2014, the Company has outstanding loan balance of $ 800,000 from East West Bank.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
Inventory
The inventory was valued at cost of purchase from suppliers.
On June, 2008, Flurida Group, Inc signed consigned inventory agreements with Electrolux Home Products De Mexico, S.A. DEC.V., and Electrolux Home Products at Anderson, South Carolina (Electrolux), 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 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.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventory (Continued)
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 maintain a storage location within Electrolux’s Italia site for consigned inventory. And 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.
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.
Products not drawn from the consignment stock within 30 days of delivery shall be deemed to be withdrawn on the 31st 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.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventory (Continued)
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.
As of December 31, 2014, there were 23,709 icemakers, 38,720 pieces module assembly, 37,032 pieces wire harness, and 36,976 pieces motor in Electrolux Juarez warehouse as of consignment inventory. Also, there were 197,933 pieces motors, and 77112 icemakers in Electrolux Anderson warehouse as of consignment inventory. There were 31,248 pieces Dac boxes and 24,176 pieces deflector in Electrolux Italy warehouse as of consignment inventory. There were 17,280 pieces Dac boxes and 7,488 pieces deflector in Electrolux Hungary warehouse as of consignment inventory. And, there were 5,602 pieces dispenser assembly, 2,565 pieces crusher motors, 3,872 pieces frame assembly, and 4,416 pieces ice bins in Electrolux Austria warehouse as of consignment inventory.
The company have 52,896 pieces Icemakers, 48,384 pieces module assembly, 37,152 wire harness, and 85,968 pieces motors been shipped out at FOB shipping point Nanjing, China to Electrolux Juarez warehouse. The company also have 276,912 pieces Motor and 15,288 pieces icemakers been shipped out at FOB shipping point Nanjing, China to Electrolux Anderson warehouse. The company also have 13,440 pieces motor, 19,296 pieces Dac boxes, and 20,448 pieces deflectors been shipped out at FOB shipping point Nanjing, China to Electrolux Hungary warehouse. The company also have 25,920 pieces Dac boxes, and 30,000 pieces deflectors been shipped out at FOB shipping point Nanjing, China to Electrolux Italy warehouse. The company also have 2,048 pieces frame assembly, 3,105 pieces crusher motors, and 3,202 pieces dispenser assembly been shipped out at FOB shipping point Nanjing, China to Electrolux Austria warehouse. Those purchases haven’t considered as a sale or a consignment inventory at the period ended December 31, 2014. However, it’s the in transit inventories of Flurida Group, Inc.
Electrolux Mexico had returned 1,936 pieces icemakers and 6,048 pieces wire harness to the Company, which was stored at El Paso warehouse as inventory of Flurida Group as of December 31, 2014.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventory (Continued)
Electrolux Anderson had returned 12,264 pieces icemakers that was stored at the El Paso warehouse of Company as inventory as of December 31, 2014, and resale them on January 2015.
Moreover, the Company had purchased $ 49,795 thermostat and parts from their US supplier, and had not shipped and sold back to their China suppliers yet.
As a result, as of December 31, 2014, the company had total inventory at a value $ 8,167,484.
Revenues Recognition
Revenues include sales of appliance parts in North America, Austria, 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 year ended December 31, 2014, the Company had total net revenue of $ 43,056,292.
For the period January 1 to December 31, 2014, the Company sold icemakers, high efficiency motor, module assembly, wire harness, motors, thermostats, related refrigerator appliance, and stoves to North America, which included Electrolux USA, Haier America Research & Development Co, Stanco Metal Products, Exact Replacement Parts,General Electric Company, others America corporation, and The Paradigm Project , for total sales of $ 34,288,814. The icemakers, assembly, motors, and related parts were manufactured and supplied by ChuZhou FuDa Mechanical and Electronics Co., Ltd; all the icemakers, motors, assembly, and related parts were shipped out at FOB shipping point Nanjing, China. The stoves were manufactured and supplied by Qing Dao Fu Da, and were shipped out at FOB shipping point at Qingdao, China.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenues Recognition (Continued)
For the year ended December 31, 2014, the Company sold components and appliance parts to Electrolux -Australia for $ 494,902. The components were manufactured and supplied by Chu Zhou Fu Da Mechanical and Electronics; all the icemakers and components were shipped out at FOB shipping point Nanjing, China.
The Company sold Motors and other parts to Electrolux - Do Brasil for $747,209. 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 December 31, 2014, the Company sold motors, DAC Boxes, Deflector, and related refrigerator appliance to Europe, which included Electrolux Italy, Electrolux Hungry, Electrolux Sweden, and Gotene Plast AB, for total sales of $ 1,972,148. 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 $ 2,199. The icemakers and parts were manufactured and supplied by Chu Zhou Fuda; all the icemakers were shipped out at FOB shipping point Nanjing, China.
For the period of January 1 to December 31, 2014, 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 sold Rocker Switch, the key parts for icemakers, to 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 dampers from Nidec Sankyo Corporation, and then sold to ChuZhouFuDa. Flurida Group, Inc. adds averaged 5% - 10% margin based on the cost of purchase, then sold to them, so, $ 5,894,393 were sold and invoiced to ChuZhouFuDa for the fiscal year ended December 31, 2014.
In summary, for the period of January 1 to December 31, 2014, the Company incurred the total gross sales of $ 43,399,665. And the Company had sales return and allowance of $ 343,373, so, a total of $ 43,056,292 net sales were recorded. The cost of goods sold is discussed in details in Note C, Related Party Transactions.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 year ended December 31, 2014 and 2013, the Company had total operating expenses of $ 1,936,328 and $ 1,374,459 respectively, which include the research and development expense of $ 149,244 and $ 21,993, and depreciation expenses of $ 32,218 and $ 25,924, and selling, general and administrative expense of $ 1,754,866 and $ 1,326,543. Detail was showed on Exhibit A.
Professional Fee
Professional fees are consist of accounting and auditing fee, legal fee, commission and consulting expenses, SEC filing fee, and other professional expenses. The total professional fees were $ 161,730 and $ 147,803 for the fiscal year ended December 31, 2014 and 2013 respectively.
Research and Development Expense
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 electronic controlled icemaker, main wire harnesses for controlling the functions of refrigerator products, and D/C motor technology. In the fiscal year, the Company has launched production of the high efficiency motors for evaporator fan assemblies.
Research and development center is working on the development of the vegetable dryer system. The Company have developed the own new finished product which called 3 in 1 ice and water dispenser, and it marketed and distributed under the Flurida Group brand name.
The Company had total research and development expense of $ 149,244 and $ 21,993 for fiscal year ended December 31, 2014 and 2013 respectively.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Payroll Expense
Started from June 2014, Flurida Group stayed the salaries amount of officers Jianfeng Ding, Yaru Huang, and Ying Zhong for $350,000, $86,520, $ 86,520.
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 for the fiscal year ended December 31, 2014 and 2013 were listed as follows:
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.
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.
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
Common Shares Issued to Executive and Non-Executive Officers and Directors
As of December 31, 2014, total 29,162,760 shares were issued to officers and directors. Please see the table below for details:
___________________
·
Based on total outstanding issued shares as of December 31, 2014: 39,290,827.
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, Chuzhou Fuda Mechanical & Electronics Co., Ltd (“ChuZhouFuDa”), which is related and managed by shareholder and 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 100,000sq. ft. with 62 molding machine up to 800 metric ton and 20 assemblies 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. Specifically, Flurida’s inventory value is equal to the purchase price or actual cost of the parts purchased from Chuzhou Fuda, 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.
Flurida Group also purchased the products from suppliers, Qingdao Fubida Electronics Co., Ltd. (“Qingdao FuDa”). It is also related and managed by shareholder and director Jianfeng Ding, and established in 2003 specializing in home appliance control components and subassemblies manufacturing, and located in Qingdao City, Shandong Province, China.
At the period ended December 31, 2013, the Company had ending inventory $ 3,818,684 that was majority purchased from ChuZhou FuDa.
From the period January 1 to December 30, 2014, Flurida Group, Inc. purchased Stoves and parts from Qingdao FuDa Electronic at total cost of $ 99,027 for FOB shipping point at Qingdao, China.
The Company purchased Icemakers, motors, high efficiency motor,wire harness, dac boxes, deflectors, ice bin, frame assembly, and other related appliance parts from ChuZhou FuDa, meanwhile, ChuZhouFuDa provided tooling and new product testing service to the company at total cost of $ 35,796,398 for the fiscal year 2014.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE C - RELATED PARTY TRANSACTIONS (Continued)
Cost of Goods Sold (Continued)
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 $ 5,598,623 in the period of January 1 to December 31, 2014.
Fulu industries (HK), Ltd provided tooling services and sold icemakers and module assembly to the Company at a cost of $ 2,788,742 for the fiscal year ended December 31, 2014.
For the fiscal year ended December 31, 2014, the Company had total purchase of $ 44,282,790.
At the year ended December 31, 2014, the company had total ending inventory at a value $ 8,167,484.
For the period of January 1 to December 31, 2014, the company had freight cost and related purchase expense of $ 48,857 and purchase return of $ 36,247.
Therefore, in the fiscal year ended December 31, 2014, the Company incurred a total cost of goods sold of $ 39,946,598.
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.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE D - SHAREHOLDERS’ EQUITY (Continued)
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 period of January to December 2013.
There were no new shares issued during the period of January to December 2014
Therefore, as of December 31, 2014 total shares issued and outstanding are 39,290,827.
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. 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.
FLURIDA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE E - GOING CONCERN (Continued)
However, for the fiscal year ended December 31, 2014, the Company generated significant sales revenue of $ 43,056,292. Electrolux and its subsidiaries are operated independently in various countries, the management assess that it is unlikely if Electrolux and its subsidiary discontinue the purchase in near future due to the Company secured a purchase order in next three years with Electrolux and its subsidiaries. In addition, the going concern may be mitigated due to the close relationship between the Company and it’s suppliers. The Company’s purchase is primarily from supplier, Chuzhou Fuda Mechanical & Electronics Co., Ltd (“ChuZhouFuDa”), which is closely related and directly managed by shareholder and director Jianfeng Ding. Besides, as of December 31, 2014, the cash and cash equivalent balance was $1,825,148, 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 is significantly low or none.
Exhibit A
Item 9.
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosures
None
Item 9A.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2014. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2014, the Company’s disclosure controls and procedures were not effective. This conclusion by the Company’s Chief Executive Officer and Chief Financial Officer does not relate to reporting periods after December 31, 2014.
Management’s Report on Internal Control Over Financial Reporting
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2014 based on the framework stated by the Committee of Sponsoring Organizations of the Treadway Commission. Furthermore, due to our financial situation, we will be implementing further internal controls as we become operative so as to fully comply with the standards set by the Committee of Sponsoring Organizations of the Treadway Commission.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Based on its evaluation as of December 31, 2014, our management concluded that our internal controls over financial reporting were not effective as of December 31, 2014. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness relates to the following:
1. Accounting and Finance Personnel Weaknesses - Our current accounting staff is relatively small and we do not have the required infrastructure of meeting the higher demands of being a U.S. public company. This material weakness also relates to a lack of personnel with expertise in preparing financial statements in accordance with U.S. GAAP, in addition to the small size of the staff.
2. Lack of Internal Audit Function - We lack sufficient resources to perform the internal audit function.
In order to mitigate these material weaknesses to the fullest extent possible, all work of the CFO is reviewed by the CEO. All unexpected results are investigated. At any time, if it appears that any control can be implemented to continue to mitigate such weaknesses, it will be immediately implemented. The Company continues to study the implementation of additional internal controls over accounting and financial reporting.
This annual report does not include an attestation report of the Company s registered public accounting firm regarding internal control over financial reporting. Management s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
No change in the Company’s internal control over financial reporting occurred during the quarter ended December 31, 2014, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B.
Item 9B. Other Information
None.
PART III
Item 10.
Item 10. Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act
Directors and Officers
The board of directors elects our executive officers annually. A majority vote of the directors who are in office is required to fill vacancies. Each director shall be elected for the term of one year, and until his successor is elected and qualified, or until his earlier resignation or removal. Our directors and executive officers are as follows:
Ding, Jianfeng. Jianfeng Ding joined us in December 19, 2006 Chairman of Board of Directors, Chief Executive Officer. From September 1998 to December 2006, he was President of Flurida Industries (Hong Kong) Co., Ltd., a Hong Kong corporation doing business of distribution of appliance parts. In 1981, he graduated from Hang Zhou Electronic Technical University majoring in mechanical engineering. From 1985-1989, he studied at Xi’an Electronic Science University on Application of Computer Science. As a member of the board, Mr. Ding contributes his knowledge of the company and a deep understanding of all aspects of our business, products and markets, as well substantial experience developing corporate strategy, assessing emerging industry trends, and business operations.
Huang, Yaru. Yaru Huang joined us in December 19, 2006 as Chief Financial Officer and Chief Accounting Officer. From September 1998 to December 2006, she was vice-president of Flurida Industries (Hong Kong) Co., Ltd., a Hong Kong corporation doing business of distribution of appliance parts. In June 2002, she received a Master of Business Administration Degree at Keller Graduate School of Management, from DeVry University. In September 1990, she received a degree of Bachelor of Science from Lanzhou Enginerring Institute of Survey and Design, Railway Ministry in Lanzhou. As a member of the board, Ms. Huang contributes his financial expertise based on his significant industry and financial experience.
Ying Zhong joined us as director and Vice President in Oct/2007. From Jan/2004 to Sep/2007, she was Vice President, New Business Development of Flurida Industries (Hong Kong) Ltd., which manufactures and distributes household appliance components. From Feb/2003 to Dec/2003, she was Manager, Chicago Office of Flurida Industries (Hong Kong) Ltd., which manufactures and distributes household appliance components. From Sep/1995 to Aug/2001, she was Operational Assistant Manager of Young’s Engineering Shanghai Office, which provides Mechanical and Electrical Engineering service to construction industry. In Sep/2001, she received a Master Degree of Business Administration from University of Illinois at Chicago. In July/1993, she received a Bachelor Degree of Law from Hua Qiao University. As a member of the board, Ms. Zhong contributes significant industry-specific experience and expertise on our products and services.
Family Relationships
Jianfeng Ding and Yaru Huang are husband and wife.
Legal Proceedings
No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:
·
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time,
·
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses),
·
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities,
·
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
·
Having any government agency, administrative agency, or administrative court impose an administrative finding, order, decree, or sanction against them as a result of their involvement in any type of business, securities, or banking activity.
·
Being the subject of a pending administrative proceeding related to their involvement in any type of business, securities, or banking activity.
·
Having any administrative proceeding been threatened against you related to their involvement in any type of business, securities, or banking activity.
Code of Ethics
We do not currently have a Code of Ethics applicable to our principal executive, financial or accounting officer.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors and executive officers, and persons who beneficially own more than 10% of a registered class of the Company's equity securities, to file reports of beneficial ownership and changes in beneficial ownership of the Company's securities with the SEC on Forms 3 (Initial Statement of Beneficial Ownership), 4 (Statement of Changes of Beneficial Ownership of Securities) and 5 (Annual Statement of Beneficial Ownership of Securities). Directors, executive officers and beneficial owners of more than 10% of the Company's Common Stock are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms that they file. Our directors and executive officers have filed such reports as required.
Item 11.
Item 11. Executive Compensation
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by, or paid to our Principal Executive Officer, our two most highly compensated executive officers other than our PEO who occupied such position at the end of our latest fiscal year and up to two additional executive officers who would have been included in the table below except for the fact that they were not executive officers at the end of our latest fiscal year, by us, or by any third party where the purpose of a transaction was to furnish compensation, for all services rendered in all capacities to us or our subsidiary for the latest two fiscal years ended December 31, 2014, and December 31, 2013.
Executive Compensation
Compensation Agreements
We have the following oral compensation agreements:
Mr. Jianfeng Ding, Chairman, CEO, and President:
Main responsibilities of the position are as follows:
1.
Board Administration and Support - Supports operations and administration of Board by advising and informing Board members, interfacing between Board and staff, and supporting Board's evaluation of chief executive.
2.
Program, Product and Service Delivery - Oversees design, marketing, promotion, delivery and quality of programs, products and services
3.
Financial, Tax, Risk and Facilities Management - Recommends investment activities, issue quarterly and annual reports for Board approval and prudently manages organization's resources within those guidelines according to current laws and regulations
4.
Human Resource Management - Effectively manages the human resources of the organization according to authorized personnel policies and procedures that fully conform to current laws and regulations
5.
Community and Public Relations - Assures the organization and its mission, programs, products and services are consistently presented in strong, positive image to relevant shareholders.
6.
Raising capitals - Oversees capital raising planning and implementation, including identifying resource requirements, establishing strategies to approach investors, submitting proposals and administrating capital raise records and documentation.
Employment period is three years from December 2006 to December 2009. Annual salary will be $150,000 starting to pay at January, 2009. The salaries accrued from December 2006 and December 2008 will be waived by Jianfeng Ding. Accordingly, there is no salary payment for Jianfeng Ding in 2006, 2007, and 2008, respectively. The employment was renewed in January 2010 for another three years with annual salary of $200,000 in 2010 and 2011, 2012. Also employment was renewed in January 2014 for another three years with annual salary of $350,000 in 2014.
Ms. Yaru Huang, CFO
Main responsibilities of the position are as follows:
1.
Oversee the corporate finance in accordance with the General Accepted Accounting Principles of the United States, General Principles of Corporate Finance, and Financial Management System developed by the company.
2.
Implement the directives of the CEO and the Board of Directors in the following financial areas: allocation of all the corporate capital and management of the company’s capital or other investments.
3.
Develop corporate financial plan, control auditing analysis, raise capitals legally, make use of the corporate assets effectively, and make every efforts to increase the corporate economic benefits.
4.
Supervise and manage the finances of the subsidiaries of the company. Employment period is three years from December 2006 to December 2009. Annual salary will be $60,000 starting to pay at January, 2009.
The salaries accrued from December 2006 to December 2008 will be waived by Yaru Huang. Accordingly, there is no salary payment for Yaru Huang in 2006, 2007, and 2008, respectively.
Employment period was three years from December 2006 to December 2009. Annual salary will be $60,000 starting to pay at January, 2009. The employment was renewed in January 2010 for another three years with annual salary of $70,000 in 2010, $80,000 in 2011 and 2012. Also the employment was renewed in January 2014 for another three years with annual salary of $83,667 in 2014.
Ying Zhong, Vice President, Business Development
Main responsibility of the position are as follows:
1.
Assist CEO to develop new products and new businesses in different markets
2.
Handle detail operation of the existing businesses with clients in US, Europe, Australia, South America, which include order process, customer service, etc.
3.
Manage and assist agents in Europe, Mexico and China to develop and maintain the businesses in these markets.
Employment period was three years from October 2007 to October 2009. Annual salary will be $60,000 starting to pay at April 2009. The salaries accrued from October 2007 to December 2008 will be waived by Ying Zhong. Accordingly, there is no salary payment for Ying Zhong in 2007, and 2008, respectively. The employment was renewed in January 2010 for another three years with annual salary of $70,000 in 2010 and $80,000 in 2011, and 2012. Also the employment was renewed in January 2014 for another three years with annual salary $83,667 in 2014.
Compensation Committee Interlocks and Insider Participation
We have no compensation committee (or other board committee performing equivalent functions). The board of directors will make decisions for the compensation of executive officers. Currently, there are three directors: Jianfeng Ding, Yaru Huang, Ying Zhong are also executive officers and shareholders with more than 5% of issued common stocks. During the last completed fiscal year, there are no other individuals participated in deliberations of the registrant’s board of directors concerning executive officer compensation.
Outstanding Equity Awards At Fiscal Year-End
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END December 31, 2014
No option awards, unexercised options, unvested stock awards or equity incentive plan awards were granted to our named executive officers during fiscal year ended at December 31, 2014.
Director Compensation
The following table summarizes the compensation paid to Flurida Group's directors for the fiscal year ended December 31, 2014:
No director was paid in any form of compensation for acting as a Director as of December 31, 2014. See Executive Compensation table above for salaries paid to these Directors for their role as officers.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following tables set forth the ownership, as of the date of this prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control.
The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. The business address of the shareholders is 22 W. Washington St., Suite 1500, Chicago, IL 60602.
__________________
[1] Owned 13,498,880 shares in the name of Jianfeng Ding and 13,498,880 shares in the name of Yaru Huang, husband and wife.
This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 39,290,827 shares of common stock outstanding as of December 31, 2014.
Securities authorized for issuance under equity compensation plans
5,000,000 shares of Common Stock.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The Company’s purchase is primarily from supplier, Chuzhou Fuda Mechanical & Electronics Co., Ltd (“ChuZhouFuDa”), which is related and managed by shareholder and director Jianfeng Ding.
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. Specifically, Flurida’s inventory value is equal to the purchase price or actual cost of the parts purchased from Chuzhou Fuda, 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.
Flurida Group also purchased the products from suppliers, Qingdao Fubida Electronics Co., Ltd. (“Qingdao FuDa”). It is also related and managed by shareholder and director Jianfeng Ding, and established in 2003 specializing in home appliance control components and subassemblies manufacturing, and located in Qingdao City, Shandong Province, China.
At the period ended December 31, 2013, the Company had ending inventory $ 3,818,684 that was majority purchased from ChuZhou FuDa.
From the period January 1 to December 30, 2014, Flurida Group, Inc. purchased Stoves and parts from Qingdao FuDa Electronic at total cost of $ 99,027 for FOB shipping point at Qingdao, China.
The Company purchased Icemakers, motors, high efficiency motor,wire harness, dac boxes, deflectors, ice bin, frame assembly, and other related appliance parts from ChuZhou FuDa, meanwhile, ChuZhouFuDa provided tooling and new product testing service to the company at total cost of $ 35,796,398 for the fiscal year 2014.
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 $ 5,598,623 in the period of January 1 to December 31, 2014.
Director Independence
Our board of directors has determined that we do not have a board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.
Item 14.
Item 14. Principal Accountant Fees and Services
Enterprise CPA was our independent auditors for the fiscal years ended December 31, 2014 and 2013.
The following table shows the fees paid or accrued by us for the audit and other services provided by our auditor for fiscal 2014 and 2013.
As defined by the SEC, (i) “audit fees” are fees for professional services rendered by our principal accountant for the audit of our annual financial statements and review of financial statements included in our Form 10-K, or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years; (ii) “audit-related fees” are fees for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “audit fees;” (iii) “tax fees” are fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax planning; and (iv) “all other fees” are fees for products and services provided by our principal accountant, other than the services reported under “audit fees,” “audit-related fees,” and “tax fees.”
Under applicable SEC rules, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent auditors in order to ensure that they do not impair the auditors’ independence. The SEC’s rules specify the types of non-audit services that an independent auditor may not provide to its audit client and establish the Audit Committee’s responsibility for administration of the engagement of the independent auditors. Until such time as we have an Audit Committee in place, the Board of Directors will pre-approve the audit and non-audit services performed by the independent auditors.
Consistent with the SEC’s rules, the Audit Committee Charter requires that the Audit Committee review and pre-approve all audit services and permitted non-audit services provided by the independent auditors to us or any of our subsidiaries. The Audit Committee may delegate pre-approval authority to a member of the Audit Committee and if it does, the decisions of that member must be presented to the full Audit Committee at its next scheduled meeting.
Item 15.
Item 15. Exhibits
_______________
* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly 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
March 31, 2015
/s/ Jianfeng Ding
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed 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
March 31, 2015
/s/ Yaru Hang
Yaru Hang
Principal Financial Officer and Principal Accounting Officer
March 31, 2015
/s/ Ying Zhong
Ying Zhong
Director
March 31, 2015
EXHIBIT INDEX
__________________
* 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.