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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)
 
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2011
 
OR
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____________ to _____________

Commission file number 333-151200

FLURIDA GROUP, INC.
 
((Exact name of registrant as specified in its charter)

Nevada
 
3469
 
26-0688130
         
(State or other jurisdiction of
incorporation or organization)
 
(Primary Standard
Industrial Classification
Code Number)
 
IRS I.D.

22 W. Washington St., Suite 1500
Chicago, IL
 
60602
(Address of principal executive offices)
 
(Zip Code)

Issuer’s telephone number:  630-778-6991
Securities registered pursuant to Section 12(b) of the Act: None
 
Securities registered pursuant to Section 12(g) of the Act: None
Common stock, par value $0. 001 per share
(Title of class)
 

 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o     No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No x
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x     No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive  Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x     No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer o
Accelerated filer o
   
Non-accelerated filer o
Smaller reporting company x
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)  Yes o     No x

 
The aggregate market value of the Registrant’s Common Stock held by non-affiliates of the Registrant (based upon the closing price of the Registrant’s Common Stock as of June 30, 2011 was approximately $779,034 (based on 6,491,947 shares of common stock outstanding held by non-affiliates on such date, $0.12  per share).  Shares of the Registrant’s Common Stock held by each executive officer and director and by each entity or person that, to the Registrant’s knowledge, owned 5% or more of the Registrant’s outstanding Common Stock as of June 30, 2011 have been excluded in that such persons may be deemed to be affiliates of the Registrant.  This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of outstanding shares of Registrant’s Common Stock, $0.001 par value, was 38,990,827 shares as of March 31, 2012.
 


 
 

 
 
TABLE OF CONTENTS

PART I
 
Item 1.  Description of Business
4
Item 2.  Description of Property
8
Item 3.  Legal Proceedings
8
Item 4.  Submission of Matters to a Vote of Security Holders
8
Item 5.  Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities
9
Item 6. Selected Consolidated Financial Data
10
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
10
Item 7A.  Quantitative and Qualitative Disclosures About Market Risk
18
Item 8.  Financial Statements
19
Item 9.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosures
44
Item 9A.  Controls and Procedures
44
Item 9B.  Other Information
45
Item 10.  Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act
46
Item 11. Executive Compensation
48
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
51
Item 13.  Certain Relationships and Related Transactions, and Director Independence.
51
Item 14. Principal Accountant Fees and Services
54
Item 15. Exhibits
55
 
 
 
 
 
 
 
2

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
 
This Annual Report on Form 10-K, the other reports, statements, and information that we have previously filed or that we may subsequently file with the Securities and Exchange Commission, or SEC, and public announcements that we have previously made or may subsequently make include, may include, incorporate by reference or may incorporate by reference certain statements that may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to enjoy the benefits of that act. Unless the context is otherwise, the forward-looking statements included or incorporated by reference in this Form 10-K and those reports, statements, information and announcements address activities, events or developments that Flurida Group, Inc. (hereinafter referred to as “we,” “us,” “our,” “our Company” or “Flurida Group”) expects or anticipates, will or may occur in the future. Any statements in this document about expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “will continue,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” and similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties, which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this document. All forward-looking statements concerning economic conditions, rates of growth, rates of income or values as may be included in this document are based on information available to us on the dates noted, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results may differ materially from those in such forward-looking statements due to fluctuations in interest rates, inflation, government regulations, economic conditions and competitive product and pricing pressures in the geographic and business areas in which we conduct operations, including our plans, objectives, expectations and intentions and other factors discussed elsewhere in this Report.
 
Certain risk factors could materially and adversely affect our business, financial conditions and results of operations and cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, and you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and we do not undertake any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. The risks and uncertainties we currently face are not the only ones we face. New factors emerge from time to time, and it is not possible for us to predict which will arise. There may be additional risks not presently known to us or that we currently believe are immaterial to our business. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, you may lose all or part of your investment.
 
The industry and market data contained in this report are based either on our management’s own estimates or, where indicated, independent industry publications, reports by governmental agencies or market research firms or other published independent sources and, in each case, are believed by our management to be reasonable estimates. However, industry and market data is subject to change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey of market shares. We have not independently verified market and industry data from third-party sources. In addition, consumption patterns and customer preferences can and do change. As a result, you should be aware that market share, ranking and other similar data set forth herein, and estimates and beliefs based on such data, may not be verifiable or reliable.
 
 
3

 
 
PART I
 
Item 1.  Description of Business
 
General

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.

Besides USA operation, Flurida Group, Inc. also established one representative office in China and one subsidiary in Europe:

Flurida Group Qingdao Office. (“Flurida Qingdao”): Flurida Group Qingdao Office is registered on December 10, 2007.  It is a representative office on behalf of Flurida Group, Inc. to conduct the business of trading services, distribution, and marketing of the appliance parts in China. The Flurida Group Qingdao Office is located at Room 301, Unit 1, Yulong Building, 19 Miaoling Road, Qingdao, China 266061.  The company closed its Flurida Qingdao China office in July, 2009.

Flurida Group European S.R.L (“Flurida European”): Flurida Group European S.R.L. was established on December 28, 2007 and is 100% owned by Flurida Group, Inc.  Flurida European is in the business of trading services, distribution, and marketing of the appliance parts in Europe.  The Flurida European office was closed in July 2011

Flurida Group leased a warehouse at 24412 S Main Street, Carson, CA 90745 on September 1, 2010.

Business

Our business is the sale of appliance parts in Asia, Europe, Australia, North and South America.

Our Products

We sell the following types of appliance parts:

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

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

 
·
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 with headquarters in Charlotte NC.  Flurida also supplies the motors and motor assemblies to Electrolux Europe facilities in Italy and Hungary.

For the fiscal year ended December 31, 2011, the Company had total net revenue of $ 13,780,374.

For the period January1 to December 31, 2011, the Company sold icemakers and motors to, Electrolux USA, located at Charlotte NC for sales of $ 10,022,371. The motors were manufactured and supplied by Zhong Nan Fu Rui; all the motors were shipped out at FOB shipping point Qingdao, China.  And the icemakers were manufactured and supplied by ChuZhou FuDa Mechanical & Electronics Co., Ltd; all the icemakers were shipped out at FOB shipping point Nanjing, China.
 
 
4

 
 
The Company sold motors to another US company, Master Precision Global (MPG), a sub-assembler to Electrolux, for $ 461,056. The motors were manufactured and supplied by Zhong Nan Fu Rui, and shipped out at FOB shipping point at Qingdao, China.

The company also sold motors, to Stanco Metal Products for $40,902; the motors were manufactured and supplied by Zhong Nan Fu Rui, and all of those parts were shipped out at FOB shipping point at Qingdao, China.

The Company also sold Motors to Electrolux –ST. Cloud for $ 244,775. The motors were manufactured and supplied by Zhong Nan Fu Rui. and shipped out at FOB shipping point at Qingdao, China.
 
For the fiscal year ended December 31, 2011, the Company sold icemakers, components, and tooling service to Electrolux –Australia for $ 519,428. The icemakers were manufactured and supplied by Chu Zhou Fu Da Mechanical & Electronics; all the icemakers were shipped out at FOB shipping point Nanjing, China.
The Company also sold DAC Boxes to Electrolux –Sweden for $ 36,107. The DAC Box were manufactured and supplied by Qingdao Fu Bi Da; all the DAC Boxes were shipped out at FOB shipping point Qingdao, China.

The Company sold DAC Boxes, Deflector, push buttons, Magnets, Motors and other related parts to Electrolux –Italy for total $ 580,527. The DAC Boxes, Magnets, Motors and other related parts were manufactured and supplied by Zhong Nan Fu Rui, and Qingdao Fu Bi Da; all the DAC Boxes magnets, and motors were shipped out at FOB shipping point Qingdao, China.

The Company also sold DAC Boxes, Magnets, Motors, and other related parts to Electrolux – Hungry for total $ 900,806. The DAC Boxes, magnets and Motors were manufactured and supplied by Zhong Nan Fu Rui, and Qingdao Fu Bi Da respectively; all the DAC Boxes magnet, and motors were shipped out at FOB shipping point Qingdao, China.

The Company sold Motors and other parts to Electrolux – Do Brasil for $ 6,828. The motors were manufactured and supplied by Zhong Nan Fu Rui. and shipped out at FOB shipping point at Qingdao, China.

The company sold Motors, icemakers, and some related refrigerator appliance parts to North Carolina Electrolux Major Appliances, Inc for $ 299,927. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.

The company sold Thermosatl and icemakers to an US company, Exact Peplacement Parts for $ 45,797. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.

The company also sold Thermostat to an US company, JC Technology Industries Inc for $ 600. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.
 
For the period of January to December 2011, the Company sold thermostats and other related key parts for icemakers and motors, to Zhong Nan Fu Rui. The parts were used for the icemakers and motors. Flurida Group purchased the parts from Wako Electronics, Inc., an US Company located at Louisville, KY 40299.  Flurida Group also sold Rocker Switch, the key parts for icemakers, to Zhong Nan Fu Rui.  The parts, Rocker Switch, were used for the icemakers .The Company purchased the parts, Rocker Switch, from CW Industries, an US Company located at Southampton, PA; and also Flurida Group purchased some other related key parts from corporate America, and then sold to Zhong Nan Fu Rui. Flurida Group, Inc. adds averaged 5% - 10% margin based on the cost of purchase, then sold to them, so, $ 440,556 were sold and invoiced to Zhong Nan Fu Rui in the year of 2011.

The Company also sold parts and other related service to General Electric Company for $ 197,560.
 
The Company also had other tooling and service income of $ 11,825.

In summary, for the period of January 1 to December 31, 2011, the Company incurred the total gross sales of $ 13,809,066. And the Company had sales discount and return of $ 28,692, so, a total of $ 13,780,374 net sales were recorded.

 
5

 
 
Our Supplier

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

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

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

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

Chuzhou Fuda  Mechanical & Electronics Co., Ltd. owned 100% indirectly by Jianfeng Ding and Yaru Huang, husband and wife is an appliance components and sub-assemblies manufacturer established on March 18, 2008. Chuzhou Fuda is located in Chuzhou City, Anhui Province, China. The plant space is around 100,000sq. ft. with 18 molding machine up to 800 metric ton and 6 assemblies lines for appliance components and assemblies.

At the year ended December 31, 2010, the Company had ending inventory $1,533,220 that was purchased from Zhong Nan Fu Rui and ChuZhou FuDa.

For the fiscal year ended December 31, 2011, the Company had total purchase of $ 12,641,713.
At the periods ended of December 31, 2011, the company had total of 29,106 Icemakers and 535,680 pieces motors inventory at a value $ 1,803,674.

For the period of January 1 to December 31, 2011, the company had freight cost of $ 27,460 and other cost of $ 1,431.

Therefore, in the fiscal year ended December 31, 2011, the Company incurred a total cost of good sold of $ 12,400,149.

Customers

We sell our product to refrigerator manufacturers such as Electrolux North America, Electrolux Italy, Electrolux Hungary, Electrolux Sweden, Electrolux Australia, Master Precision Global LLC, Stanco Metal Products Inc.
 
 
6

 
 
Markets

We sell our products in United States, Mexico, China, Europe, and Australia.

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.

Research and Development
 
We have incurred research and development expenses in the 2011 for the total of $15,191.16.

Our Intellectual Property
 
We have no intellectual property.
 
 
7

 
 
Our Employees
 
We have the following number of full time employees:

Clerical –  0
Operations – 3
Administrative – 1
Management – 3
Engineers - 3
Sales – 1

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.  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 2010, to Sep 30, 2012
 
·
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: 24412 S Main Street, LLC
 
·
Term of Lease: September 1, 2010 to August 31, 2012
 
·
Monthly Rent: $ 3,876
 
·
Square Feet: Approximately 5,168 square feet
 
·
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.  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.       Submission of Matters to a Vote of Security Holders
 
None

 
8

 
 
PART II
 
Item 5.  Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities
 
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
Trading History

Our common stock is quoted on the Over-The-Counter Bulletin Board under the symbol “FLUG.”
 
Bid Information*

Financial Quarter Ended
 
High Bid
   
Low Bid
 
December 31, 2011
 
$
0.15
   
$
0.10
 
September 30, 2011
 
$
0.15
   
$
0.10
 
June 30, 2011
 
$
0.15
   
$
0.10
 
March 31, 2011
 
$
0.15
   
$
0.10
 
December 31, 2010
 
$
0.51
   
$
0.10
 
September 30, 2010
 
$
0.51
   
$
0.10
 
June 30, 2010
 
$
0.51
   
$
0.10
 
March 31, 2010
 
$
0.51
   
$
0.10
 

* 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. Each holder of our Series A preferred stock is entitled to a 10% per annum cumulative dividend.
 
 
9

 
 
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, 2011, 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.

Number of 
Securities to
be issued under
Plan
 
Weighted-Average
exercise price of
outstanding options
   
Number of securities
remaining available 
for
further issuance
 
5,000,000
 
$
0.60
     
5,000,000
 
 
 Item 6. Selected Consolidated Financial Data
 
Not required.
 
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation


Overview

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

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

Zhong Nan Fu Rui was established in 2005 specializing in home appliance components and subassemblies manufacturing, and located in Qingdao City, Shandong Province, China.  On September 18, 2007, amended June 25, 2008 and further amended on August 4, 2008, Flurida Group, Inc. signed a long-term distribution agreement with Zhong Nan Fu Rui Mechanical Electronics Manufacturing Co., Ltd.  Zhong Nan Fu Rui is a Chinese manufacturing company owned 100% by Mr. Jianfeng Ding, our president.
 
 
10

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

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

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

Chuzhou Fuda  Mechanical & Electronics Co., Ltd. owned 100% indirectly by Jianfeng Ding and Yaru Huang, husband and wife is an appliance components and sub-assemblies manufacturer established on March 18, 2008. Chuzhou Fuda is located in Chuzhou City, Anhui Province, China. The plant space is around 100,000sq. ft. with 18 molding machine up to 800 metric ton and 6 assemblies lines for appliance components and assemblies.

We sell the following types of appliance parts:

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

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

 
·
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.
 
 
11

 
 
Results of Operations

For the fiscal years ended December 31, 2011 vs. December 31, 2010.


Revenue

For the fiscal year ended December 31, 2010, the Company had net total revenue of $11,208,925 to the Company’s Europe, North and South America customers.

For the fiscal year ended December 31, 2011, the Company had net total revenue of $13,780,374, which was increased nearly 23% than the year 2010 total revenue of $ 11,208,925.

For the year ended December 31, 2011, the Company sold icemakers and motors to, Electrolux USA, located at Charlotte NC for sales of $ 10,022,371. The motors were manufactured and supplied by Zhong Nan Fu Rui; all the motors were shipped out at FOB shipping point Qingdao, China.  And the icemakers were manufactured and supplied by ChuZhou FuDa Mechanical & Electronics Co., Ltd; all the icemakers were shipped out at FOB shipping point Nanjing, China.

The Company sold motors to another US company, Master Precision Global (MPG), a sub-assembler to Electrolux, for $ 461,056. The motors were manufactured and supplied by Zhong Nan Fu Rui, and shipped out at FOB shipping point at Qingdao, China.

The company also sold motors, to Stanco Metal Products for $40,902; the motors were manufactured and supplied by Zhong Nan Fu Rui, and all of those parts were shipped out at FOB shipping point at Qingdao, China.

The Company also sold Motors to Electrolux –ST. Cloud for $ 244,775. The motors were manufactured and supplied by Zhong Nan Fu Rui. and shipped out at FOB shipping point at Qingdao, China.

For the fiscal year ended December 31, 2011, the Company sold icemakers, components, and tooling service to Electrolux –Australia for $ 519,428. The icemakers were manufactured and supplied by Chu Zhou Fu Da Mechanical & Electronics; all the icemakers were shipped out at FOB shipping point Nanjing, China.
The Company also sold DAC Boxes to Electrolux –Sweden for $ 36,107. The DAC Box were manufactured and supplied by Qingdao Fu Bi Da; all the DAC Boxes were shipped out at FOB shipping point Qingdao, China.

The Company sold DAC Boxes, Deflector, push buttons, Magnets, Motors and other related parts to Electrolux –Italy for total $ 580,527. The DAC Boxes, Magnets, Motors and other related parts were manufactured and supplied by Zhong Nan Fu Rui, and Qingdao Fu Bi Da; all the DAC Boxes magnets, and motors were shipped out at FOB shipping point Qingdao, China.

The Company also sold DAC Boxes, Magnets, Motors, and other related parts to Electrolux – Hungry for total $ 900,806. The DAC Boxes, magnets and Motors were manufactured and supplied by Zhong Nan Fu Rui, and Qingdao Fu Bi Da respectively; all the DAC Boxes magnet, and motors were shipped out at FOB shipping point Qingdao, China.

The Company sold Motors and other parts to Electrolux – Do Brasil for $ 6,828. The motors were manufactured and supplied by Zhong Nan Fu Rui. and shipped out at FOB shipping point at Qingdao, China.

The company sold Motors, icemakers, and some related refrigerator appliance parts to North Carolina Electrolux Major Appliances, Inc for $ 299,927. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.

The company sold Thermosatl and icemakers to an US company, Exact Peplacement Parts for $ 45,797. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.

The company also sold Thermostat to an US company, JC Technology Industries Inc for $ 600. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.
For the period of January to December 2011, the Company sold thermostats and other related key parts for icemakers and motors, to Zhong Nan Fu Rui. The parts were used for the icemakers and motors. Flurida Group purchased the parts from Wako Electronics, Inc., an US Company located at Louisville, KY 40299.  Flurida Group also sold Rocker Switch, the key parts for icemakers, to Zhong Nan Fu Rui.  The parts, Rocker Switch, were used for the icemakers .The Company purchased the parts, Rocker Switch, from CW Industries, an US Company located at Southampton, PA; and also Flurida Group purchased some other related key parts from corporate America, and then sold to Zhong Nan Fu Rui. Flurida Group, Inc. adds averaged 5% - 10% margin based on the cost of purchase, then sold to them, so, $ 440,556 were sold and invoiced to Zhong Nan Fu Rui in the year of 2011.

 
12

 
 
The Company also sold parts and other related service to General Electric Company for $ 197,560.
 
The Company also had other tooling and service income of $ 11,825.
 
   
Jan - Dec 2011
   
Jan - Dec 2010
 
Electrolux- Australia
    519,428.13       150,909.60  
Electrolux-Anderson-US
    7,430,392.01       5,047,293.19  
Electrolux-Mexico
    2,591,979.36       2,365,774.58  
Eelectrolux Major Appliance
    299,926.84       135,973.38  
Eelectrolux Do Brasil
    6,828.00       0.00  
Electrolux - St. Cloud
    244,774.66       78,288.19  
Electrolux - Sweden
    36,107.37       17,998.27  
Electrolux Italy
    580,527.26       654,751.69  
Eletrolux Hungry
    900,806.51       829,465.00  
Key Tronic Corporation WA
    0.00       21,170.00  
JC TEC INDUSTRIES INC
    600.00       1,920.00  
MASTER PRECIDION GLOBAL LLC(MPG)
    461,056.18       702,777.60  
QINGDAO FLURIDA FLECTRONIC CO.,LTD
    0.00       487.25  
Stanco Metal Products Inc
    40,901.76       680,417.92  
ZhongNanFuRui
    440,555.64       434,358.88  
Electrolux Brasil
    0.00       11,429.89  
Electrolux-Belgium
    0.00       4,921.48  
Chuzhou FuDa
    0.00       3,322.20  
Exact Replacement Parts
    45,797.50       0.00  
DEL VISIONARIES
    1,350.00       8,668.50  
Bio Watch (Thailand)
    0.00       2,558.00  
Domestic LLC
    2,674.75       0.00  
General Electric Company
    197,559.63       0.00  
Shamrock
    7,800.00       0.00  
OEM
    0.00       63,702.00  
TOTAL
    13,809,065.60       11,216,187.62  

In summary, for the period of January 1 to December 31, 2011, the Company incurred the total gross sales of $ 13,809,066. And the Company had sales discount and return of $ 28,692, so, a total of $ 13,780,374 net sales were recorded, comparing with the $ 11,208,925 for the year 2010, increase of 23%.

 
13

 
 
In both 2011 and 2010 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 2011 vs 2010.  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.

For the fiscal year ended December 31, 2010, the Company incurred a total cost of good sold of $9,985,444, for the purchases of parts, motor, and icemakers for the total sales of $ 11,208,925.

At the year ended December 31, 2010, the Company had ending inventory $1,533,220 that was purchased from Zhong Nan Fu Rui and ChuZhou FuDa.

From the year ended December 31, 2011, Flurida Group, Inc. purchased Motors and parts from Zhong Nan Fu Rui at total cost of $ 9,106,575 for FOB shipping point at Qingdao, China.

Flurida Group, Inc. also purchased Motors, Deflectors, Icemakers, Magnets, Dac boxes, and other related parts from Qingdao Fubida Electronics Co., Ltd. at total cost of $ 946,212 for FOB shipping point at Qingdao, China.

The Company purchased Icemakers and parts from ChuZhou FuDa at total cost of $ 2,100,901 for FOB shipping point at Nanjing, China.

In addition, Flurida Group, Inc. purchased Magnets, Icemakers, Timers and related parts from Shanghai Fulu International Trading Co., Ltd., at total cost of $116,135 for FOB shipping point at Shanghai, China.

To manufacture the related refrigerator appliance parts, Zhong Nan Fu Rui and Qingdao Fubida Electronics Co., needs key parts made in USA, which were purchased through Flurida Group, Inc. in USA.  The costs of purchasing the parts were $ 371,889 in year 2011.

In summary, for the period of January to December 31, 2011, the Company had total purchase of $ 12,641,713.

At the periods ended of December 31, 2011, the company had total of 29,106 Icemakers and 535,680 pieces motors inventory at a value $ 1,803,674.

For the period of January 1 to December 31, 2011, the company had freight cost of $ 27,460 and other service cost of $ 1,431.

Therefore, in the fiscal year ended December 31, 2011, the Company incurred a total cost of good sold of  $ 12,400,149 which was increased nearly 24 % comparing to the year 2010 cost of goods sold of $ 9,985,444.  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, 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.
 
 
14

 
 
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:
 
Operating Expense
           
   
Year Ended
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2011
   
2010
 
Administration Expense
    2,071       9,091  
Bad Debt Expense
    5,895       14,393  
Bank Service Charges
    4,449       1,869  
Business operation tax
    -       579  
Business Registration
    1,513       1,387  
Certification Fee
    73,832       68,234  
Computer and Internet Expenses
    1,100       1,637  
Credit card Finance Charge
    60       235  
Depreciation and amortization expenses
    14,965       1,389  
Dues and Subscriptions
    -       292  
Flurida Europe Operating Expense
    -       3,951  
Fuel charge
    883       871  
Gift and Promotion
    5,048       6,983  
Industry Show
    -       100  
Insurance Expense
    945       1,012  
Meals and Entertainment
    14,293       6,191  
Office Supplies
    12,920       8,030  
Parking fee
    376       237  
Payroll Europe
    -       -  
Payroll Expense - ER
    33,452       29,036  
Payroll Expenses - EE
    585,978       463,057  
Penalty & Fine Expenses
    218       -  
Postage & Shipping
    6,035       4,791  
Professional Fees
    95,009       157,985  
Rent Expense
    52,075       30,443  
Repairs and Maintenance
    6,104       1,529  
Research and development Expense
    15,191       -  
Service Cost
    4,406       -  
Telephone Expense
    9,284       7,454  
Travel Expense
               
air agent fee
    789       1,023  
Airfare
    58,332       45,136  
Car Rental
    3,872       2,863  
Hotel Expense
    27,954       19,976  
Local Transportation
    1,511       1,649  
Travel Expense - Other
    1,134       5,556  
Total Travel Expense
    93,592       76,202  
Utilities
    1,142       2,434  
Total Expense
  $ 1,040,836     $ 899,410  
 
 
15

 
 
Starting from January 2010, Flurida Group had salaries for officers Jianfeng Ding, Yaru Huang, and Ying Zhong for $200,000, $70,000, and $ 70,000, and had a bonus of $ 50,000, $ 10,000, and $ 10,000 at year end respectively. And Flurida Group USA hired two employees to taking care of the office and marketing activities, therefore, the Company incurred a total payroll expense of $492,093 for the year end December 31, 2010.  For maintaining and operating the business, the Company expensed a total of $ 157,985 professional fee, which included the accounting and auditing service, commission and consulting fee for enlarge sales volume, SEC filling fee and other professional expenses. In order to increasing the sales in Europe and North America, the Company expensed $ 68,234 certification fees on the products we sold or exported in the period of January 1 to December 31, 2010. Due to the raise of sale volume and customers, the Company had travel expenses of $ 76,202.

Started from January 2011, Flurida Group had salaries for officers Jianfeng Ding, Yaru Huang, and Ying Zhong for $350,000, $80,000, $ 80,000. And Flurida Group USA hired employees to taking care of the office, research and development, and marketing activities, therefore, the Company incurred a total payroll expense of $ 619,430 for the year end December 31, 2011.  For maintaining and operating the business, the Company expensed a total of $95,009 professional fee, which included the accounting and auditing service, commission and consulting fee for enlarge sales volume, SEC filling fee and other professional expenses. In order to increasing the sales in Europe and North America, the Company expensed $ 73,832 certification fees on the products we sold or exported in the period of January 1 to December 31, 2011. Due to the raise of sale volume and customers, the Company had travel expenses of $ 93,592. We have set up a Research & Development Center at LA location in 2011 and had equipment and research development expenses of $15,191.

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., while the subsidiary in Italy is subject to the income tax laws of Italy. We incurred income tax expense of $ 153,641 and $128,556 for the year ended December 31, 2011 and 2010 respectively. As of December 31, 2011, the company had income taxes payable of $ 0.

Net Income (Loss)

We had a net income of $ 200,501 and $211,205 for the year ended December 31, 2011 and 2010 respectively. 

Commitments and Contingencies

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

Foreign Currency Translation

The Company has determined the United States dollars to be its functional currency for Flurida Group USA; People’s Republic of China Chinese Yuan Renminbi to be its functional currency in Flurida Qingdao office; and European Euro to be its functional currency for our Italian subsidiary.  Assets and liabilities were translated to U.S. dollars at the period-end exchange rate.  The exchange rate of issuance of common stocks to shareholders was used as one U.S. dollar to 6.83 Chinese Yuan (RMB).  Statement of operations amounts were translated to U.S. dollars using the historic rate, i.e., the rate at first date of each month during the year.  Gains and losses resulting from translating foreign currency financial statements are accumulated in other comprehensive income (loss), a separate component of shareholders’ equity.
 
 
16

 
 
Liquidity and Capital Resources

   
At December 31
   
At December 31
 
   
2011
   
2010
 
             
Current Ratio
    1.85       1.39  
Cash
  $ 741,230     $ 992,825  
Woking Capital
  $ 1,348,331     $ 1,094,366  
Total Assets
  $ 3,622,633     $ 5,168,018  
Total Liabilities
  $ 1,962,891     $ 3,714,319  
                 
Total Equity
  $ 1,659,742     $ 1,453,699  
                 
Total Debt/Equity
    1.18       2.56  


*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 2011 comparing to the year 2010, due to the overall increase of the cash flow, decrease of accounts receivable, and decrease of the accounts payable; also, the Company’s current ratio was increased in 2011 comparing to the year 2010 due to the decrease of the accounts receivable.

Currently the Company has a sales agreement with Electrolux, such agreement require the Company to supply the motors, ice makers, and other parts based on Electrolux’s needs.  The management projected that the needs for our Company’s products shall be stable with slight increase worldwide.  However, due to the consignment arrangement with Electrolux, the Company would keep certain level of consignment inventory to meet the Electrolux’s requirements.  In addition, due to the consignment terms with Electrolux, the sales would be recognized when the Electrolux withdraw the products or the consignment inventory at Electrolux’s warehouse for 60 days.  In our due course of business dealing with Electrolux’s consignment sales, all the sales incurred in 2011 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 Fincance,
 
 
17

 
 
Our activities for generating cash flows were operating activities in 2011 and 2010. There were no investing and financing activities incurred for the year 2011, and 2010. The management will continue to improve our current business on marketing. customer services  and general administrative activities effectiveness, also  we focus on develop our new products such as electronic ice maker and high efficiency  LED products . We predict those products will be ready in the market later in 2012 .

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 2011 or later.
 
The Company had cash and cash equivalents of $ 741,230 at December 31, 2011 and $1,348,331 of working capital and $992,825 at December 31, 2010 and $ 1,094,366 of working capital.

The total debt of $ 1,962,891 for December 31, 2011 included total of $ 1,217,635 for Zhong Nan Fu Rui, $ 434,976 for Chu Zhou Fu Da, $ 134,061 for Qiongdao Fu Bi Da, $ 32,625 for Shang Hai Fu Lu International Trading, and $ 57,135 for US suppliers, $ 54,872 for salary and payroll tax payable, and $ 20,952 for all other account payable ,and $ 10,635 unearned revenue.

The total debt of $3,714,319 for December 31, 2010 included total of $3,632,648 accounts payable for Zhong Nan Fu Rui $2,850,573, for Chu Zhou FuDa $308,898, for Qiongdao Fu Bi Da $315,643, for Shang Hai Fu Lu International Trading $32,625, and $39,835 for US suppliers; as well as $75,943 for salary and payroll tax payable, $79,307 for income tax payable, and $9,131 for all other account payable.
     
Our independent auditor has indicated that our lack of operating history and financial resources raise substantial 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 it’s supplier, Zhong Nan Fu Rui, which is 100% owned by the founder, Jianfeng Ding, Zhong Nan Fu Rui’s current customers can be served by the Company for the same quality of products and services. Besides, as of December 31, 2011, the cash and cash equivalent balance was $ 741,230 , 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.  Quantitative and Qualitative Disclosures About Market Risk
 
Not required.
 
 
18

 
 
Item 8.  Financial Statements
 

 



FLURIDA GROUP, INC.
 




Audited Financial Statements

As of December 31, 2011 and 2010




 
 
 
19

 
 
Table of Contents



Independent Auditor’s Report on the Consolidated Financial Statements
21
   
Balance Sheets
22
   
Statement of Operation
23
   
Shareholders Equity
24
   
Cash Flow Statement
25
   
Notes to Financial Statements
26






 
20

 
 
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. and Subsidiary Companies as of December 31, 2011 and 2010, and the related consolidated statements of operation, shareholders’ equity, and cash flows for year ended December 31, 2011 and 2010.  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, 2011, and 2010, and the results of its operations and their cash flows for the year ended December 31, 2011 and 2010 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note F, the Company’s operating history and its 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.


/s/ Enterprise CPAs, Ltd.

Enterprise CPAs, Ltd.
Chicago, IL

March 15, 2012

 
21

 

FLURIDA GROUP, INC.
 
CONSOLIDATED BALANCE SHEETS
 
   
December 31
   
December 31
 
   
2011
   
2010
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
  $ 741,230     $ 992,825  
Accounts receivable, net
    766,318       2,282,640  
Inventory
    1,803,674       1,533,220  
Total Current Assets
  $ 3,311,222     $ 4,808,685  
                 
Property, plant and equipment, net
  $ 77,737     $ 46,138  
                 
Other assets:
               
Loan to supplier
  $ 224,602     $ 284,626  
Accrued interest receivable
    2,808       22,305  
Security deposit
    6,264       6,264  
Total Other Assets
  $ 233,674     $ 313,195  
                 
TOTAL ASSETS
  $ 3,622,633     $ 5,168,018  
LIABILITIES & EQUITY
               
Current liabilities:
               
Account payable
  $ 1,952,256     $ 3,632,648  
Income taxes payable
    -       79,307  
Unearned revenue
    10,635       2,364  
Total current liabilities
  $ 1,962,891     $ 3,714,319  
                 
Stockholders' Equity:
               
Common stock, $0.001 par value;
               
200,000,000 shares authorized;
               
38,990,827 shares issued and outstanding.
  $ 38,991     $ 38,991  
                 
Paid-in capital
    1,221,613       1,221,613  
                 
Retained earnings
    388,073       187,572  
                 
Accumulated other comprehensive Income
    11,065       5,523  
                 
Total stockholders' equity
  $ 1,659,742     $ 1,453,699  
                 
TOTAL LIABILITIES & EQUITY
  $ 3,622,633     $ 5,168,018  

 
22

 
 
FLURIDA GROUP, INC.
 
CONSOLIDATED STATEMENT OF OPERATION
 
   
Year Ended
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2011
   
2010
 
Revenues:
  $ 13,780,374     $ 11,208,925  
Cost of Goods Sold
  $ 12,400,149     $ 9,985,444  
Gross Profit
  $ 1,380,225     $ 1,223,481  
Operating expenses:
               
Research and development
    15,191       -  
                 
Selling, general and administrative expenses
    1,010,680       898,021  
                 
Depreciation and amortization expenses
    14,965       1,389  
Total Operating Expenses
    1,040,836       899,410  
                 
Operating Income
  $ 339,389     $ 324,071  
                 
Investment income, net
  $ 14,753     $ 15,692  
Interest Expense, net
    -       2  
Income before taxes
  $ 354,142     $ 339,761  
Income tax expense
    153,641       128,556  
Net Income
  $ 200,501     $ 211,205  
                 
Net Income (Loss) per common share-Basics
  $ 0.01     $ 0.01  
Net Income (Loss) per common share-Diluted
  $ 0.01     $ 0.01  
                 
Other comprehensive Income(Loss), net of tax:
               
Foreign currency translation adjustments
    5,542       (43,456 )
Total other comprehensive Income(Loss)
  $ 5,542     $ (43,456 )
Comprehensive Income (Loss)
  $ 206,043     $ 167,749  

 
23

 

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

 
24

 
 
FLURIDA GROUP, INC.
 
CONSOLIDATED STATEMENT OF CASH FLOWS
 
             
   
Year Ended
   
Year Ended
 
   
December 31
   
December 31
 
   
2011
   
2010
 
Operating Activities:
           
Net Income
  $ 200,501     $ 211,205  
                 
Adjustments to reconcile net income to net cash
               
provided by operating activities:
               
Depreciation Expense
    14,965       1,389  
Inventory
    (270,454 )     (279,351 )
Security Deposit
    -       (6,264 )
Decrease in accrued interest receivable
    19,497       (14,916 )
Decrease in account receivable
    1,516,322       (1,406,265 )
Decrease in account payable
    (1,680,392 )     1,802,571  
Decrease in income tax payable
    (79,307 )     79,307  
Increase in Unearned Income
    8,271       2,364  
Decrease in credit card payable
    -       (656 )
Net cash provided by operating activities
  $ (270,597 )   $ 389,384  
                 
Investing Activities:
               
Purchase Property
    (46,564 )     (47,527 )
Net cash provided by investing activities
  $ (46,564 )   $ (47,527 )
                 
Financing Activities:
               
Proceeds from issuance of common stock
    -       -  
Loan to supplier
    60,024       (6,535 )
Net cash provided by financing activities
  $ 60,024     $ (6,535 )
                 
Effect of  Exchange Rate on Cash
  $ 5,542     $ (43,456 )
Net increase (decrease) in cash and cash equivalents
  $ (251,595 )   $ 291,866  
Cash and cash equivalents at beginning of the period
  $ 992,825     $ 700,959  
Cash and cash equivalents at end of period
  $ 741,230     $ 992,825  

 
25

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A- BUSINESS DESCRIPTION

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

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

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

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

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


NOTE B – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

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

Basis of accounting

The financial statements reflect the assets, revenues and expenditures of the Company on the accrued basis of accounting.
 
 
26

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B – SIGNIFICANT ACCOUNTING POLICIES (Continue)

Principles of Consolidation

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

Cash and Cash Equivalents

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

Concentration of credit risk

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

Foreign Currency Translation

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

Security Deposit

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

 
27

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Property, Plant, and Equipment Depreciation

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

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

In the fiscal year 2011, the Company purchased $ 6,057 computers and data processing equipments, and purchased $ 40,507 Furniture and equipments.

As of December 31, 2011, the company has furniture, Computer and data processing equipments, and equipments at a cost of $ 94,092, and $ 16,355 of accumulated depreciation expense was recorded.

Account Receivable

As of December 31, 2011, and 2010, the company had a total of $ 766,318 and $2,282,640 account receivable respectively from it major customers. Detail showed as below.

   
12/31/2011
   
12/31/2010
 
Chuzhou FuDa
  $ -     $ 3,322  
Electrolux- Australia
  $ 198,147     $ 73,363  
Electrolux-Anderson-US
  $ -     $ 639,988  
Electrolux-Mexico
  $ -     $ 390,555  
Eelectrolux Major Appliance
  $ 72,828     $ 84,089  
Electrolux - Sweden
  $ -     $ 7,589  
Electrolux Italy
  $ 24,550     $ 124,768  
Electrolux Hungary
  $ 114,230     $ 264,569  
General Electric Company
  $ 17,683     $ -  
Electrolux ST.Cloud
  $ 81,596     $ 76,931  
Stanco Metal Products Inc
  $ -     $ 264,177  
Master Precidion Global LLC(MPG)
  $ 75,455     $ 117,936  
Qingdao Fubida
  $ -     $ 487  
SHAMROCK
  $ 7,800     $ -  
ZhongNanFuRui
  $ 174,030     $ 234,866  
TOTAL
  $ 766,318     $ 2,282,640  

 
28

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accrued Interest Receivable

In October 1st, 2011, the Company received $ 33,650 interest receivable that accrued from Zhong Nan Fu Rui as of September 30, 2011; at the meantime, Zhong Nan Fu Rui returned $ 60,024 to the Company.  In October 1, 2011, the company entered a new loan agreement of $224,602 with its main supplier Zhong Nan Fu Rui Mechanical electronics Co., Ltd at interest rate of 5.00%, term October 1, 2011 to October 1, 2013.  As of December 31, 2011, total of $ 2,808 accrued interest receivable with interest rate at 5.00% was incurred.

Account Payable

As of December 31, 2011, and 2010, the company had a total of $ 1,952,256 and $ 3,632,648 account payable respectively. The Company incurred accounts payable including professional fees, purchases, payroll and payroll tax liability, and other service fee payables.

As of December 31, 2011, the company has account payable of $ 1,952,256, which included $ 1,217,635 for Zhong Nan Fu Rui, $ 434,976 for Chu Zhou Fu Da, $ 134,061 for Qiongdao Fu Bi Da, $ 32,625 for Shang Hai Fu Lu International Trading, and $ 57,135 for US suppliers, $ 54,872 for salary and payroll tax payable, and $ 20,952 for all other account payable.

Income Tax Payable

The Company filed corporate tax return Form 1120 to Internal Revenue Service and IL 1120 to the State of Illinois.  There is no income tax for the State of Nevada.  Flurida Group European will report income tax return to Italy government. For the period of January 1 to December 31, 2011, the Company incurred income tax expense of $ 153,641, including federal tax of $ 118,141 and state tax of $ 35,500.  As of December 31, 2011, the income taxes payable of the Company was $ 0.
 
 
29

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Inventory

The inventory was valued at cost of purchase from suppliers.

On June, 2008, Flurida Group, Inc signed a consigned inventory agreement with Electrolux Home Products De Mexico, S.A. DEC.V. (Electrolux).  Under the term of the agreement, the supplier, Flurida Group, Inc, agreed to produce, to maintain the transit the customized products per Electrolux’s specification. Electrolux maintain a storage location within Electrolux’s Juarez site for consigned inventory. And Flurida Group, Inc is facilitated to use of Electrolux’s storage location at such site to the sale of products to Electrolux; Electrolux will provide labor resources for receipt, stock up, and pulls of consigned products. Flurida Group, Inc., retains title and ownership of products while in transit to Electrolux’s site and while stored in the consigned inventory location. Title and ownership will pass to Electrolux when they withdraw products from the consigned inventory location. Upon withdrawal, Electrolux will pay for it under the payment term stated in the purchasing order correspond with the withdraw products. Products residing in the consigned inventory for 90 days with no activity due to non communicated demand change will no longer qualify for consignment, and will be considered as withdrawn product after 90 days. Accordingly, title passage and invoicing shall occur on such product per the term.
 
As of December 31, 2011, there were 18,837 icemakers and 61,992 pieces motor in Electrolux Juarez warehouse as of consignment inventory. Also, there were 322,488 pieces motor and 2,499 icemakers in Electrolux Anderson warehouse as of consignment inventory.

The company also had 7,770 Icemakers been shipped out at FOB shipping point Qingdao, China to Electrolux Juarez warehouse. The company also had 151,200 pieces Motor been shipped out at FOB shipping point Qingdao, China to Electrolux Anderson warehouse. Those purchases haven’t considered as a sale or a consignment inventory at the period ended December 31, 2011. Therefore, it’s the inventory of Flurida Group, Inc.

As a result, the company had total of 29,106 Icemakers and 535,680 pieces motors inventory at a value $ 1,803,674 as of December 31, 2011.
 
 
30

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenues Recognition

Revenues include sales of appliance parts in Asia, Europe, and North America.
 
Revenues are recognized from product sales upon shipment, which is the point in time when risk of loss is transferred to the customer, net of estimated returns and allowances.
 
For the fiscal year ended December 31, 2011, the Company had total net revenue of $ 13,780,374.

For the period January1 to December 31, 2011, the Company sold icemakers and motors to, Electrolux USA, located at Charlotte NC for sales of $ 10,022,371. The motors were manufactured and supplied by Zhong Nan Fu Rui; all the motors were shipped out at FOB shipping point Qingdao, China.  And the icemakers were manufactured and supplied by ChuZhou FuDa Mechanical & Electronics Co., Ltd; all the icemakers were shipped out at FOB shipping point Nanjing, China.

The Company sold motors to another US company, Master Precision Global (MPG), a sub-assembler to Electrolux, for $ 461,056. The motors were manufactured and supplied by Zhong Nan Fu Rui, and shipped out at FOB shipping point at Qingdao, China.

The company also sold motors, to Stanco Metal Products for $40,902; the motors were manufactured and supplied by Zhong Nan Fu Rui, and all of those parts were shipped out at FOB shipping point at Qingdao, China.

The Company also sold Motors to Electrolux –ST. Cloud for $ 244,775. The motors were manufactured and supplied by Zhong Nan Fu Rui. and shipped out at FOB shipping point at Qingdao, China.

For the fiscal year ended December 31, 2011, the Company sold icemakers, components, and tooling service to Electrolux –Australia for $ 519,428. The icemakers were manufactured and supplied by Chu Zhou Fu Da Mechanical & Electronics; all the icemakers were shipped out at FOB shipping point Nanjing, China.
 
 
31

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenues Recognition (Continued)

The Company also sold DAC Boxes to Electrolux –Sweden for $ 36,107. The DAC Box were manufactured and supplied by Qingdao Fu Bi Da; all the DAC Boxes were shipped out at FOB shipping point Qingdao, China.

The Company sold DAC Boxes, Deflector, push buttons, Magnets, Motors and other related parts to Electrolux –Italy for total $ 580,527. The DAC Boxes, Magnets, Motors and other related parts were manufactured and supplied by Zhong Nan Fu Rui, and Qingdao Fu Bi Da; all the DAC Boxes magnets, and motors were shipped out at FOB shipping point Qingdao, China.

The Company also sold DAC Boxes, Magnets, Motors, and other related parts to Electrolux – Hungry for total $ 900,806. The DAC Boxes, magnets and Motors were manufactured and supplied by Zhong Nan Fu Rui, and Qingdao Fu Bi Da respectively; all the DAC Boxes magnet, and motors were shipped out at FOB shipping point Qingdao, China.

The Company sold Motors and other parts to Electrolux – Do Brasil for $ 6,828. The motors were manufactured and supplied by Zhong Nan Fu Rui. and shipped out at FOB shipping point at Qingdao, China.

The company sold Motors, icemakers, and some related refrigerator appliance parts to North Carolina Electrolux Major Appliances, Inc for $ 299,927. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.

The company sold Thermosatl and icemakers to an US company, Exact Peplacement Parts for $ 45,797. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.

The company also sold Thermostat to an US company, JC Technology Industries Inc for $ 600. The parts were manufactured and supplied by Zhong Nan Fu Rui, and were shipped out at FOB shipping point at Qingdao, China.
 
 
32

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenues Recognition (Continued)

For the period of January to December 2011, the Company sold thermostats and other related key parts for icemakers and motors, to Zhong Nan Fu Rui. The parts were used for the icemakers and motors. Flurida Group purchased the parts from Wako Electronics, Inc., an US Company located at Louisville, KY 40299.  Flurida Group also sold Rocker Switch, the key parts for icemakers, to Zhong Nan Fu Rui.  The parts, Rocker Switch, were used for the icemakers .The Company purchased the parts, Rocker Switch, from CW Industries, an US Company located at Southampton, PA; and also Flurida Group purchased some other related key parts from corporate America, and then sold to Zhong Nan Fu Rui. Flurida Group, Inc. adds averaged 5% - 10% margin based on the cost of purchase, then sold to them, so, $ 440,556 were sold and invoiced to Zhong Nan Fu Rui in the year of 2011.

The Company also sold parts and other related service to General Electric Company for $ 197,560.
 
The Company also had other tooling and service income of $ 11,825.
 
In summary, for the period of January 1 to December 31, 2011, the Company incurred the total gross sales of $ 13,809,066. And the Company had sales discount and return of $ 28,692, so, a total of $ 13,780,374 net sales were recorded. The cost of goods sold is discussed in details in Note C, Related Party Transactions.

Operating Expense

Operating Expenses includes research and development expense, all selling, general and administrative expenses, and depreciation expenses for Flurida Group Inc.  For the fiscal year ended December 31, 2011 and 2010, the Company had total operating expenses of $1,040,836 and $ 899,410 respectively. Detail was showed on Exhibit A.

Professional Fee

Professional fees are consist of accounting and auditing fee, legal fee, commission and consulting expenses, SEC filling fee, and other professional expenses. The total professional fees were $ 95,009 and $157,985.18 for the fiscal year ended December 31, 2011 and 2010 respectively.
 
 
33

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Payroll Expense

Started from January 2011, Flurida Group had salaries for officers Jianfeng Ding, Yaru Huang, and Ying Zhong for $350,000, $80,000, $ 80,000. The Social Security tax and Medicare tax were paid by both employer and employees in USA; employees also withheld portion of Federal and State tax calculate by each individual’s status. All of the tax was submitted to Internal Revenue Service and local government at a semiweekly basis.

The consolidated total payroll expenses for the year ended December 31, 2011 and 2010 were listed as follows:

   
Year Ended
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2011
   
2010
 
Payroll Expense - ER
           
Federal Unemployment Tax
    584.89       435.84  
Hosing public accumulate fund -ER
    -       -  
Social  insurance-ER
    -       -  
State Unemployment Tax
    3,184.66       1,801.34  
US Medicare Tax - ER
    8,496.89       6,716.87  
US Social Security Tax -ER
    20,953.17       19,841.84  
Payroll Expense - ER - Other
    232.46       239.92  
Total Payroll Expense - ER
    33,452.07       29,035.81  
Payroll Expenses - EE
               
Federal Tax Withholding
    106,358.47       72,739.36  
Housing public accumulate fund -EE
    -       -  
Net Wage Payment-EE
    -       -  
Social Insurance-EE
    -       -  
State Tax Withholding
    32,316.65       14,834.40  
US Medicare Tax -EE
    8,496.89       6,716.87  
US Net Salaries payment - EE
    424,108.86       348,924.28  
US Social Security Tax - EE
    14,697.27       19,841.84  
Total Payroll Expenses - EE
    585,978.14       463,056.75  
                 
Total Payroll Expenses
    619,430.21       492,092.56  

The housing public accumulated fund and social insurance were paid by both employer and employees in China; the employee portion of housing public accumulated fund and social insurance was withheld by employer, and then submitted to local tax authority in China.
 
 
34

 

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.

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.
 
 
35

 

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.
 
 
36

 
 
 FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.


NOTE C – RELATED PARTY TRANSACTIONS

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

As of December 31, 2011, total 30,129,960 shares were issued to officers and directors.  Please see the table below for details:
 
Name
Total Shares
Total Amount
Percentage
Fenglan  Li
165,000
15,750
0.42%
Fuling Li
115,000
10,750
0.29%
Ying Zhong
2,000,000
200,000
5.13%
Gian Franco Barbieri
102,000
9,700
0.26%
Xiaoyong Fu
750,000
75,000
1.92%
Jianfeng Ding & Yaru Huang
26,997,760
323,998
 69.24%
Total
30,129,760
$635,198
77.26%

 
·
Based on total issued shares as of December 31, 2009: 38,990,827.
 
·
Total outstanding issued shares as of December 31, 2011: 38,990,827
 
 
37

 
 
FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE C – RELATED PARTY TRANSACTIONS (Continued)

Cost of Goods Sold

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

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

 
38

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 
NOTE C – RELATED PARTY TRANSACTIONS (Continued)

Cost of Goods Sold ( Continued)

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

Flurida Group, Inc. and Zhong Nan Fu Rui will operate independently.  Zhong Nan Fu Rui, as a Chinese local manufacturer, will record their manufacturing costs and inventories based on the Chinese accounting regulations rulings.  But, when Flurida Group, Inc. purchases the parts from Zhong Nan Fu Rui, Flurida Group will record the actual costs paid to Zhong Nan Fu Rui as the costs for inventory of Flurida Group, Inc.  There is no any relationship for Zhong Nan Fu Rui’s manufacturing historic costs with Flurida Group’s inventory value.  Specifically, Flurida’s inventory value is equal to the purchase price or actual cost of the parts purchased from Zhong Nan Fu Rui, and the purchase price of the parts will be fair market price.  Flurida Group, Inc. will adopt the first-in and first-out inventory system according to generally accepted accounting principles in USA.

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

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

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

 
39

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 
NOTE C – RELATED PARTY TRANSACTIONS (Continued)

Cost of Goods Sold ( Continued)

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

Chuzhou Fuda Mechanical & Electronics Co., Ltd. owned 100% indirectly by Jianfeng Ding and Yaru Huang, husband and wife is an appliance components and sub-assemblies manufacturer established on March 18, 2008. Chuzhou Fuda is located in Chuzhou City, Anhui Province, China. The plant space is around 100,000sq. ft. with 18 molding machine up to 800 metric ton and 6 assemblies lines for appliance components and assemblies.

At the year ended December 31, 2010, the Company had ending inventory $1,533,220 that was purchased from Zhong Nan Fu Rui and ChuZhou FuDa.

From the period January 1 to December 31, 2011, Flurida Group, Inc. purchased Motors and parts from Zhong Nan Fu Rui at total cost of $ 9,106,575 for FOB shipping point at Qingdao, China.

Flurida Group, Inc. also purchased Motors, Deflectors, Icemakers, Magnets, Dac boxes, and other related parts from Qingdao Fubida Electronics Co., Ltd. at total cost of $ 946,212 for FOB shipping point at Qingdao, China.

The Company purchased Icemakers and parts from ChuZhou FuDa at total cost of $ 2,100,901 for FOB shipping point at Nanjing, China.

In addition, Flurida Group, Inc. purchased Magnets, Icemakers, Timers and related parts from Shanghai Fulu International Trading Co., Ltd., at total cost of $116,135 for FOB shipping point at Shanghai, China.

To manufacture the related refrigerator appliance parts, Zhong Nan Fu Rui and Qingdao Fubida Electronics Co., needs key parts made in USA, which were purchased through Flurida Group, Inc. in USA.  The costs of purchasing the parts were $ 371,889 in year 2011.

For the fiscal year ended December 31, 2011, the Company had total purchase of $ 12,641,713.

 
40

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 
NOTE C – RELATED PARTY TRANSACTIONS (Continued)

Cost of Goods Sold (Continued)

At the periods ended of December 31, 2011, the company had total of 29,106 Icemakers and 535,680 pieces motors inventory at a value $ 1,803,674.

For the period of January 1 to December 31, 2011, the company had freight cost of $ 27,460 and other cost of $ 1,431.

Therefore, in the fiscal year ended December 31, 2011, the Company incurred a total cost of good sold of $ 12,400,149.

Loan to Supplier

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


NOTE D – SHAREHOLDERS’ EQUITY

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

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

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

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

 
41

 

FLURIDA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 
NOTE D – SHAREHOLDERS’ EQUITY (Continue)

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

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

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

Therefore, as of December 31, 2011 total shares issued and outstanding are 38,990,827.

NOTE E – SUBSEQUENT EVENTS

On January 1, 2012, Mr. Xiaoyong Fu resigned as a Director.

Mr. Fu did furnish us with written correspondence confirming no disagreement with the Company or its management concerning any matter, and that his resignation is solely for personal reasons.

NOTE F – GOING CONCERN

The Company’s operating history and financial resources may raise doubt about its ability to continue as a going concern.  The financial statements do not include adjustments that might result from the outcome of this uncertainty and if the Company is unable to generate significant revenue or secure financing, then the Company may be required to cease or curtail its operations.  In year 2011, the Company generated sales revenue of $ 13,780,374.  The Company’s most concentrated customer is Electrolux located in various countries.  If Electrolux discontinue the purchase which may be very unlikely in near future, the Company may face the ability to continue as a going concern.  However, due to the close relationship between the Company and it’s suppliers, Zhong Nan Fu Rui and Qingdao Fubida Electronics Co., which are 100% owned by the founder, Jianfeng Ding.  Zhong Nan Fu Rui and Qingdao Fubida Electronics Co.’s current customers can be served by the Company for the same quality of products and services.  Besides, as of December 31, 2011, the cash and cash equivalent balance was $ 741,230, 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.

 
42

 
 
Exhibit A
Operating Expense
           
   
Year Ended
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2011
   
2010
 
Administration Expense
    2,071       9,091  
Bad Debt Expense
    5,895       14,393  
Bank Service Charges
    4,449       1,869  
Business operation tax
    -       579  
Business Registration
    1,513       1,387  
Certification Fee
    73,832       68,234  
Computer and Internet Expenses
    1,100       1,637  
Credit card Finance Charge
    60       235  
Depreciation and amortization expenses
    14,965       1,389  
Dues and Subscriptions
    -       292  
Flurida Europe Operating Expense
    -       3,951  
Fuel charge
    883       871  
Gift and Promotion
    5,048       6,983  
Industry Show
    -       100  
Insurance Expense
    945       1,012  
Meals and Entertainment
    14,293       6,191  
Office Supplies
    12,920       8,030  
Parking fee
    376       237  
Payroll Europe
    -       -  
Payroll Expense - ER
    33,452       29,036  
Payroll Expenses - EE
    585,978       463,057  
Penalty & Fine Expenses
    218       -  
Postage & Shipping
    6,035       4,791  
Professional Fees
    95,009       157,985  
Rent Expense
    52,075       30,443  
Repairs and Maintenance
    6,104       1,529  
Research and development Expense
    15,191       -  
Service Cost
    4,406       -  
Telephone Expense
    9,284       7,454  
Travel Expense
               
air agent fee
    789       1,023  
Airfare
    58,332       45,136  
Car Rental
    3,872       2,863  
Hotel Expense
    27,954       19,976  
Local Transportation
    1,511       1,649  
Travel Expense - Other
    1,134       5,556  
Total Travel Expense
    93,592       76,202  
Utilities
    1,142       2,434  
Total Expense
  $ 1,040,836     $ 899,410  
 
 
43

 
 
Item 9.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosures

None
 
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, 2011. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2011, 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, 2011.

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, 2011 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, 2011, our management concluded that our internal controls over financial reporting were not effective as of December 31, 2011. 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.
 
44
 

 
 
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, 2011, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
Item 9B.  Other Information
 
None.
 
 
45

 
 
PART III
 
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 director and executive officer is as follows:
 
Name
 
Age
 
Position
Jianfeng Ding
 
53
 
Chairman of the Board, President, and CEO
Yaru Huang
 
42
 
Chief Financial Officer and Chief Accounting Officer
Xiaoyong Fu
 
48
 
Director
Ying Zhong
 
38
 
Chief Representative, Director

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.
 
Xiaoyong Fu.  He has been a director since December 2008 and resigned effective January 1, 2012.  From 04/1997 to 06/2004, he was Senior Design Engineer, Maytag Corporation, Appliance Manufacturer.  From 07/2004 to 10/2005, he was Manager of Technology, Jacuzzi Whirlpool Bath, Bath Products.  From 11/2005 to 09/2007, he was Senior Design Engineer, Electrolux Major Appliance, Appliance Manufacturer.  From 09/2007 to date, he has been Senior Engineer, GE – Energy, Gas Turbines.  In 07/1984, he received a Bachelor of Mechanical Engineering, Tsinghua University.  In 10/1987, he received a Master of Nuclear Engineering, China Institute of Atomic.  In 05/1997, he received a Ph.D. of Mechanical Engineering, Purdue University.  As a member of the board, Mr. Fu contributed the benefits of his executive leadership and management 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.
 
 
46

 
 
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.
 
 
47

 

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, 2011, and December 31, 2010.


Name
 
Title
 
Year
 
Salary
   
Bonus
   
Stock
awards
   
Option
awards
   
Non equity
incentive plan
compensation
   
Non
qualified
deferred
compensation
and all
other
compensation
   
Total
compensation
 
Jianfeng Ding
 
Chairman CEO
 
2010
   
200,000
     
50,000
     
0
     
0
     
0
     
0
     
250,000
 
       
2011
   
350,000
                                             
350,000
 
Yaru Huang
 
CFO
 
2010
   
70,000
     
10,000
     
0
     
0
     
0
     
0
     
80,000
 
       
2011
   
80,000
                                             
80,000
 
Ying Zhong
 
Director
 
2010
   
70,000
     
10,000
     
0
     
0
     
0
     
0
     
80,000
 
       
2011
   
80,000
                                             
80,000
 

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.
 
 
48

 
 
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 $350,000 in 2011.

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 and $80,000 in 2011.

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
 
 
49

 
 
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 four directors: Jianfeng Ding, Yaru Huang, Ying Zhong are also executive officers and shareholders with more than 5% of issued common stocks; Director Xiayong Fu is an outside director without participating the Company’s daily management function.  Xiaoyong Fu is not compensated for serving as director.  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, 2011
Name 
 
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
   
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
   
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
   
Option
Exercise
Price
($)
   
Option
Expiration
Date
   
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
   
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
   
Equity
Incentive
Plan
Awards:
Number
Of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested 
(#)
   
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
($)
 
Jianfeng Ding
   
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
 
Yaru Huang
   
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
 
                                                                         
Ying Zhong
   
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
 
 
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, 2011.
 
Director Compensation

The following table summarizes the compensation paid to Flurida Group’ directors for the fiscal year ended December 31, 2011:
 
Name
 
Fees
Earned
or
Paid in
Cash
   
Stock
Awards
($)
   
Option
Awards
($)
   
Non-Equity
Incentive Plan
Compensation
($)
   
All Other
Compensation
($)
   
Total
($)
 
Jianfeng Ding
   
0
     
0
     
0
     
0
     
0
     
0
 
Yaru Huang
   
0
     
0
     
0
     
0
     
0
     
0
 
Xiaoyong Fu
   
0
     
0
     
0
     
0
     
0
     
0
 
Ying Zhong
   
0
     
0
     
0
     
0
     
0
     
0
 
 
 
50

 
 
No director was paid in any form of compensation as of December 31, 2011.

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.
 
Name
 
Number of 
Shares of 
Common stock
   
Percentage
 
             
Jianfeng Ding [1]
   
13,498,880
     
34.62
%
Yaru Huang [1]
   
13,498,880
     
34.62
%
Ying Zhong
   
2,000,000
     
5.13
%
Xiaoyong Fu
   
750,000
     
1.92
%
All executive officers and directors as a group [4 persons]
   
32,129,760
     
77.26
%

[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 38,990,827 shares of common stock outstanding as of December 31, 2011.
 
Securities authorized for issuance under equity compensation plans

5,000,000 shares of Common Stock
 
Item 13.  Certain Relationships and Related Transactions, and Director Independence.

At July 23, 2009, the Company's founders Jianfeng Ding and Yaru Huang transferred total 2,000,000 of their common shares to Chuanyun Mu and Xia Liu as a gift. Therefore, as of December 31, 2011, total 30,129,960 shares were issued to officers and directors.  Please see the table below for details:

Name
 
Total Shares
   
Total Amount
   
Percentage
 
Fenglan  Li
   
165,000
     
15,750
     
0.42
%
Fuling Li
   
115,000
     
10,750
     
0.29
%
Ying Zhong
   
2,000,000
     
200,000
     
5.13
%
Gian Franco Barbieri
   
102,000
     
9,700
     
0.26
%
Xiaoyong Fu
   
750,000
     
75,000
     
1.92
%
Jianfeng Ding & Yaru Huang
   
26,997,760
     
323,998
     
69.24
%
Total