SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2016

¨ 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 000-55307

FUDA GROUP (USA) CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	47-2031462
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

12th Floor	48 Wall Street, 11^th Floor
100 Jin Jiang Street	New York, New York 10005
Dandong City, Liaoning Province China	USA
+86 415 316 5852	+1-646-837-7950

(Registrant's telephone number, including area code)

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 ¨

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer's classes of stock, as of the latest practicable date.

Class	Outstanding at November 15, 2016
Common Stock, par value $0.0001	105,954,309

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements	3
Condensed Consolidated Balance Sheets as of September 30, 2016 (Unaudited) and December 31, 2015	3
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2016 and 2015 (Unaudited)	4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 (Unaudited)	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Fuda Group (USA) Corporation and Subsidiaries

Consolidated Balance Sheets

	September 30,			December 31,
	2016			2015
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	40,790,889		$	18,178,550
Accounts receivable, net		2,378,103			475,041
Inventory		455,791			-
Prepaid rent		29,894			28,254
Security deposits to suppliers		6,320,562			996,166
Other receivables		-			6,380
Total Current Assets		49,975,239			19,684,391
Land, property & equipment (net)		48,144,580			49,478,802
Other assets		44,992			46,233
Total Assets	$	98,164,811		$	69,209,426

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	27,303		$	29,014
Due to related parties		43,828			3,631,621
Advances from customers		63,734			6,164
Total Current Liabilities		134,865			3,666,799
Total Liabilities		134,865			3,666,799

Commitments & contingencies		-			-

Stockholders' Equity
Common stock, $0.0001 par value, 480,000,000 shares authorized; 105,954,309 shares at September 30, 2016 and December 31, 2015, respectively		10,595			10,595
Additional paid-in capital		9,579,682			9,579,682
Accumulated other comprehensive income		(5,427,313	)		(3,188,494	)
Statutory reserve		8,577,367			5,990,116
Accumulated earnings (unrestricted)		85,289,615			53,150,728
Total Stockholders' Equity		98,029,946			65,542,627
Total Liabilities and Stockholders' Equity	$	98,164,811		$	69,209,426

The accompanying notes are an integral part of these financial statements

Fuda Group (USA) Corporation and Subsidiaries

Consolidated Statements of Operations

(unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2016			2015			2016			2015
Sales
Affiliated Entities	$	936,276		$	-		$	936,276		$	-
Third parties		35,714,073			14,466,259			63,240,289			29,296,619
Sales		36,650,349			14,466,259			64,176,565			29,296,619

Cost of sales
Affiliated Entities		83,596			-			83,596			-
Third parties		17,254,292			3,051,831			27,862,130			10,704,330
Cost of sales		17,337,888			3,051,831			27,945,726			10,704,330

Gross margin		19,312,461			11,414,428			36,230,839			18,592,289

Operating expenses
Selling, general & administrative expenses		355,289			448,748			1,508,081			782,263
Total operating expenses		355,289			448,748			1,508,081			782,263

Income (Loss) from operation		18,957,172			10,965,680			34,722,758			17,810,026

Other income (expenses)
Interest income (expenses), net		304			51			304			(1,288	)
Government rebate		-			105,096			-			139,640
Other income		557			-			3,076			-
Gain/(Loss) from barter trade		-			2,842,131			-			7,701,792
Total other income (expenses)		861			2,947,278			3,380			7,840,144

Income before income tax		18,958,033			13,912,958			34,726,138			25,650,170

Income tax		-			(4,907	)		-			(4,907	)

Net income		18,958,033			13,908,051			34,726,138			25,645,263

Foreign currency translation adjustment		(432,253	)		(2,685,441	)		(2,238,819	)		(2,250,193	)

Comprehensive income	$	18,525,780		$	11,222,610		$	32,487,319		$	23,395,070

Common Shares Outstanding, basic and diluted		105,954,309			61,496,698			105,954,309			81,188,649

Net income per share Basic and diluted	$	0.18		$	0.23		$	0.33		$	0.32

The accompanying notes are an integral part of these financial statements

Fuda Group (USA) Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

	For the Nine Months Ended
	September 30,			September 30,
	2016			2015
Cash flows from operating activities
Net income	$	34,726,138		$	25,645,263
Adjustments to reconcile net income to net cash provided by or used in operating activities:
Bad debt expense		-			215,209
Depreciation and amortization		5,304			3,156
Expenses paid by stockholder and contributed as capital		-			695
Gain from barter trade		-			(7,701,792	)
Changes in operating assets and liabilities:
Accounts receivable		(1,935,243	)		(359,730	)
Inventory		(461,934	)		(121,014	)
Prepaid rent		(2,432	)		57,298
Other receivables		6,293			315,182
Security deposits to suppliers		(5,378,844	)		1,982,855
Accounts payable and accrued expenses		(962	)		1,661
Accounts payable-related parties		-			(631,295	)
Taxes payable		-			4,905
Other payables		-			(11,459	)
Advances from customers		58,513			-
Other assets		-			48,815
Net cash provided by operating activities		27,016,833			19,449,749

Cash flows from financing activities
Proceeds/(Repayment) to related party, net		(3,600,994	)		(1,546	)
Proceeds/(Repayments) from trade financing loans, net		-			(1,891,048	)
Net cash used in financing activities		(3,600,994	)		(1,892,594	)

Effect of exchange rate changes		(803,500	)		(508,550	)

NET INCREASE (DECREASE) IN CASH		22,612,339			17,048,605

CASH
Beginning of period		18,178,550			466
End of period	$	40,790,889		$	17,049,071
Less: cash and cash equivalents of discontinued operations at end of year		-			-
CASH AT END OF PERIOD	$	40,790,889		$	17,049,071

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID FOR:
Interest	$	-		$	1,357
Income Taxes	$	-		$	-

The accompanying notes are an integral part of these financial statements

FUDA GROUP (USA) CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Fuda Group (USA) Corporation (“Fuda USA”) was incorporated on September 25, 2014 under the laws of the state of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

On September 28, 2015, Fuda USA entered into stock-for-stock acquisition agreements with each of Fuda Gold (UK) Limited (“Fuda UK”) and Marvel Investment Corporation Limited (“Marvel”). As a result of the Acquisitions, each of Fuda UK and Marvel has been acquired by Fuda USA, and now each has become a wholly owned subsidiary of Fuda USA. Fuda USA, as the surviving entity from the Acquisitions, has taken over the respective operations and business plans of each of both Fuda UK and Marvel (and also of Liaoning Fuda by virtue of Marvel’s ownership of Liaoning Fuda). Refer to “Principal of Consolidation” under Note 2 Summary of Significant Accounting Policies

Fuda UK a private company organized under the laws of England and Wales was incorporated in May 20, 2015. Since its inception, Fuda UK has conducted minimal business operations but has started to purchase gold stones and powder and wholesale trading of gold bars. Fuda UK has executed a cooperative operation agreement to filter and sort gold sands or gold dust from the gold mine tailings and to sell the goods under a profit-sharing ratio.

Marvel Investment Corporation Limited was incorporated on October 28, 2009 under the laws of Hong Kong, PRC. The Company was established to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

Marvel has conducted limited business operations in trading graphite and fluorite.

On February 28, 2015, Marvel entered into an Equity Interest Transfer Agreement with Liaoning Fuda Mining Co., Ltd (“Liaoning Fuda”) whereas Marvel agreed to acquire 100% equity interest in Liaoning effective June 30, 2015. Both Marvel and Liaoning Fuda are under common control of the same shareholder and no consideration was given in exchange for the equity interest in Liaoning Fuda. The acquisition was done to position Liaoning Fuda in a more favorable tax position under the laws of Hong Kong, PRC. Refer to “Principal of Consolidation” under Note 2 Summary of Significant Accounting Policies

Liaoning Fuda was established in August 2012 in Dandong City, Liaoning Province, China (“PRC”) with authorized capital of 60 million Chinese Yuan. Liaoning Fuda is a natural resource trading company that consists of raw blocks, stone carvings, slabs, pavers and wall claddings.

Fuda USA and its subsidiaries Marvel, Fuda UK, and Liaoning Fuda shall be collectively known as the “Company”.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements and related notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred.

The Company’s financial statements are expressed in U.S. dollars.

Interim Financial Information

The accompanying consolidated balance sheet as of December 31, 2015, which has been derived from the Company's audited financial statements as of that date, and the unaudited condensed financial information of the Company as of September 30, 2016 and for the three and nine months ended September 30, 2016, has been prepared in accordance with the instructions to Form 10-Q and Article8-03 of Regulation S-X for interim financial information.

In the opinion of management, such financial information includes all adjustments considered necessary for a fair presentation of the Company's financial position at such date and the operating results and cash flows for such periods. Operating results for the interim period ended September 30, 2016 are not necessarily indicative of the results that may be expected for the entire year. Certain information and footnote disclosure normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the United States Securities and Exchange Commission ("SEC").

These unaudited financial statements should be read in conjunction with our audited financial statements and accompanying notes included in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2015 filed on April 22, 2016.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported net income or losses.

Principal of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

Acquisition of Fuda UK and Marvel by Fuda USA

The acquisition was accounted under US GAAP as a business combination under common control with Fuda USA being the acquirer and Fuda UK and Marvel being the acquirees because all entities were controlled directly or indirectly by the same majority shareholder. The consolidated financial statements have been presented at historical costs and on a retroactive basis to reflect the capital structure of Fuda UK and Marvel as a recapitalization. The share exchange transaction was completed and effective on September 28, 2015 and Fuda UK and Marvel became subsidiaries of Fuda USA.

Acquisition of Liaoning Fuda by Marvel

The acquisition was accounted under US GAAP as a business combination under common control with Marvel being the acquirer as both entities were owned by the same shareholder. The consolidated financial statements have been presented at historical costs and on a retroactive basis. No purchase price or reverse merger accounting methods were used. The business combination transaction was completed and effective on June 30, 2015 and Liaoning became a subsidiary of Marvel.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Actual results could differ materially from those results.

Comprehensive Income (Loss)

The Company follows the provisions of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 220 “Reporting Comprehensive Income”, and establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements. The Company’s comprehensive income (loss) consist of net income (loss) and foreign currency translation adjustments.

Fair Value Measurements

The Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

- Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

- Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

- Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of the balance sheet date.

Foreign Currency Translation

The reporting and functional currency of Fuda Group (USA) Corporation is the US Dollar (“US$”).

The functional currency of Liaoning Fuda is the Chinese Renminbi (“RMB”) and its local currency is Chinese Renminbi (“RMB”).

The functional currency of Marvel is the Chinese Renminbi (“RMB”) and its local currency is Hong Kong Dollar (“HK$”). The functional currency of Fuda UK is Chinese Renminbi (“RMB”) and its local currency is British Pounds (“GBP”).

Transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at the end of the reporting periods. Exchange differences arising on the settlement of monetary items and on translation of monetary items at period-end are included in income statement of the period.

For the purpose of presenting these financial statements, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, stockholder’s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder’s equity section of the balance sheets.

Exchange rate used for the translation as follows:

	September 30,		September 30,		December 31,
RMB to US$	2016		2015		2015
Period end spot rate		0.14997		0.15739		0.15411
Average periodic rate		0.15199		0.16199

Cash and Cash Equivalents

The Company considers highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.

Accounts Receivable

Accounts receivable are stated at the amount the Company expects to collect from outstanding balances. The Company provides for probable uncollectible amounts through a charge to earnings and a credit to an allowance for doubtful accounts based on its assessment of the current status of individual accounts. Balances that are still outstanding after the Company has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable.

Bad debt expenses were $nil and $215,209 for the three and nine months ended September 30, 2016 and 2015, respectively.

Inventories

Inventories, which are primarily comprised of goods for sale, are stated at the lower of cost or net realizable value, using the first- in first-out (FIFO) method. The Company evaluates the need for reserves associated with obsolete, slow-moving and non-salable inventory by reviewing net realizable values on a periodic basis.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method, at original cost, over the estimated useful lives of the assets as follows:

Machinery		5 years
Office equipment		5 years
Motor Vehicle		10 years

Expenditures for repairs and maintenance, which do not improve or extend the expected useful lives of the assets, are expensed as incurred while major replacements and improvements are capitalized.

Valuation of Long-Lived assets

Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Revenue Recognition

The Company generally recognizes product sales revenue when the significant risks and rewards of ownership have been transferred pursuant to PRC law, including such factors as when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, sales and value-added tax laws have been complied with, and collectability is reasonably assured.

Liaoning Fuda Direct Domestic Sales

The Company recognizes product sales revenue when customers pick up and pay for the goods at once. The customer is responsible for losses when occurred. The Company sets out the terms and conditions of the sales contract and deals directly with customers.

Liaoning Fuda Direct International Sales

The Company recognizes product sales revenue when bill of lading is received from shipping company. Although the title does not formally transfer until the goods have reach its destination port, the customer has a binding agreement for the goods; and is obligated to purchase them because a deposit has been made by the customer on the purchased goods. The Company is responsible for losses in case of a shipping issue, but in all cases the Company has purchased insurance to cover for such loss. The Company sets out the terms and conditions of the sales contract and deals directly with customers.

Liaoning Fuda Agency International Sales

The Company recognizes product sales revenue at gross amounts in accordance to ASC 605-45-45 as a principal when bill of lading is received from the shipping company although the title does not transfer until the goods have reach its destination port. The Company is responsible for losses when occurred which the Company has a blanket insurance to cover for such loss and reimburse the Company at the gross sales price. The Company Agent prepares the terms and conditions of the sales contract and deals directly with customers.

The Company is the principal in the sales transactions because the Company is the primary obligator. The Company selects and deals directly with the suppliers of the products, and has the general inventory risk as well as credit risk. The Company purchases the products from the supplier and ships the product to the customer and is responsible to collect the full invoice amount plus commission charged from the agent. The Company remains the primary obligator, keeps general inventory risk when inventory is held, has the ability in setting the prices charged to the customers, has full discretion in supplier selection and has both physical loss of inventory risk and credit risk. Risk is mitigated by insurance but the Company holds the risk and would have to get reimbursed by insurance in case of any issues.

Marvel Sales

The Company derives its revenues from trading graphite and fluorite. The Company recognizes sales of graphite and fluorite revenue when the goods are delivered to destination designated by the customer. Customer is allowed to return the goods or cancel the order subject to a penalty. The Company sets out the terms and conditions of the sales contract and deals directly with customers.

Fuda UK Sales

The Company derives its revenues from trading gold stones, gold sand, or gold bars. The Company recognizes sales of gold stones, gold sand, or gold bars revenue when the goods are delivered to destination designated by the customer. Sales price of the goods are to be negotiated between Fuda UK and the customer, and accepted by the customer after a third-party inspection report for quality and weight is obtained prior to arrival at the destination of the customer. In case of finding irregularity or discrepancy in weight or purity of the goods, the customer is allowed to claim from Fuda UK to deduct the corresponding amount and any cost within 7 days upon receipt of the actual goods. The Company sets out the terms and conditions of the sales contract and deals directly with customers. The Company has not made any reserves on claims for irregularity and discrepancy as the Company believe the amount will be minimal,

Fuda UK Cooperative Operation

The Company derives its revenues from trading gold sands or gold dust filtered and sorted from the gold mine tailings owned by the Chinese government under a cooperative profit sharing agreement. The cooperative agreement indicated the profit sharing is based on the gross sales price for the products sold and the ratios are to be 25% to mine owner, 35% to mine workers, and 40% to the Company. The Company shall collect payments from the customers for the goods sold and distribute the gross amount upon payment from the customers. The Company is responsible for managing the day to day operation activities in providing labor, tools, and equipment. At Sale, the Company is only entitled to 40% of the proceeds when the goods are sold similar to a royalty interest or net smelter interest, and the payments are only legally owed when the goods are sold while nothing is owed to the Company until completion of the sale.

Nonmonetary Transactions

The Company recognizes nonmonetary transactions in accordance to ASC 845-10-30 which in general, that nonmonetary transactions should be based on the fair values of the assets (or services) involved, which is the same basis as that used in monetary transactions. Thus, the cost of a nonmonetary asset acquired in exchange for another nonmonetary asset is the fair value of the asset surrendered to obtain it, and a gain or loss shall be recognized on the exchange. The fair value of the asset received shall be used to measure the cost if it is more clearly evident than the fair value of the asset surrendered. Similarly, a nonmonetary asset received in a nonreciprocal transfer shall be recorded at the fair value of the asset received. A transfer of a nonmonetary asset to a stockholder or to another entity in a nonreciprocal transfer shall be recorded at the fair value of the asset transferred and a gain or loss shall be recognized on the disposition of the asset.”

Value added taxes

The Company is subject to Value Added Taxes (“VAT”) at a rate of 17% on proceeds received from customers, and are entitled to a refund for VAT already paid or borne on the goods purchased by it that have generated the gross sales proceeds. The VAT balance is recorded in other payables on the balance sheets. For the nine months ended September 30, 2016 and 2015 there are no amounts recorded because the Company received a VAT tax holiday from the government that will expire in 2017.

Advertising

The Company expenses advertising costs as incurred and are included in selling expenses.

Government Subsidies

The Company recognizes government grants that are non-operating in nature and with no further conditions to be met as other income when received. The Company recognizes government grants that contain certain operating conditions as liabilities when received, and as a reduction of the related costs for which the grants are intended to compensate when the conditions are met.

The government subsidies or rebates received by the Company as other income was an incentive to the Company to support export trade were $nil and $139,640 for the nine months ended September 30, 2016 and 2015, respectively.

Stock Based Compensation

The Company recognizes stock based compensation in accordance to ASC718 which requires companies to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.

Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by ASC No. 718. FASB ASC No. 505, Equity Based Payments to Non-Employees, defines the measurement date and recognition period for such instruments. In general, the measurement date is when either (a) a performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB ASC.

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigations based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the year incurred.

Segment Information

The standard, “Disclosures about Segments of an Enterprise and Related Information,” codified with ASC-280, requires certain financial and supplementary information to be disclosed on an annual and interim basis for each reportable segment of an enterprise. The Company believes that it operates in one business segment (marketing and sales) and in one geographical segment (China), as all of the Company’s current operations are carried in China.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. The standard requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. We will adopt the standard no later than July 1, 2019. The Company is currently assessing the impact that the new standard will have on the Company’s consolidated results of operations and financial condition.

In March 2016, the FASB issued ASU 2016-09, “Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The standard amends several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. We will adopt the standard no later than July 1, 2017. The Company is currently assessing the impact of the new standard, and do not expect the new guidance to have a material impact on the Company’s consolidated results of operations and financial condition.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The standard provides guidance on how certain cash receipts and payments are presented and classified in the statement of cash flows, including beneficial interests in securitization, which would impact the presentation of the deferred purchase price from sales of receivables. The standard is intended to reduce current diversity in practice. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures and the timing of adoption.

In September 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). The amendments in ASU 2016-13 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2019, and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of ASU No. 2016-13 on its consolidated financial statements and related disclosures.

The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

3. ACCOUNTS RECEIVABLES

Accounts receivables consist of the following:

	September 30,		December 31,
	2016		2015
Accounts receivables	$	2,378,103	$	736,888
Less: allowance for doubtful accounts		-		(261,847	)
Net		2,378,103		475,041

Bad debt expenses were $nil and $215,209 for the nine months ended September 30, 2016 and 2015, respectively.

4. INVENTORY

Inventory consist of the following:

	September 30,		December 31,
	2016		2015
Granite blocks	$	-	$	-
Granite slabs		-		-
Graphite		-		-
Fluorite		-		-
Gold dust		-		-
Gold bar		455,791		-
Less: write-down on inventory		-		-
Net	$	455,791	$	-

The gold bars are stored in security safe by the Company. The Company would compare the purchase price of gold bar to the quoted price on Shanghai Gold Exchange to evaluate if there is a write-down in inventory. Loss on inventory write-down was $nil and $nil for the nine months ended September 30, 2016 and 2015, respectively.

5. SECURITY DEPOSITS TO SUPPLIERS

Security deposits paid by Liaoning Fuda were to maintain its relationship with the suppliers in order to ensure ample, constant supply and prompt delivery of goods. The security deposits can be used to offset against purchases of inventory by the Company.

Security deposits paid by Fuda UK was a purchase commitment upon execution of the contract

Security deposits to suppliers consist of the following:

	September 30,		December 31,
	2016		2015
Liaoning Fuda - Supplier A	$	1,574,704	$	-
Liaoning Fuda - Supplier B		1,424,732		-
Liaoning Fuda - Supplier C		1,383,490		-
Fuda UK - Supplier D		1,937,636		996,166
Total	$	6,320,562	$	996,166

6. LAND, PROPERTY & EQUIPMENT

Land, property & equipment consist of the following:

	September 30,			December 31,
	2016			2015
Depreciable assets
Office equipment	$	8,059		$	8,281
Motor vehicle		14,000			14,386
Machinery		19,634			20,154
Total		41,693			42,821
Less: accumulated depreciation		(15,025	)		(10,049	)
Net		26,668		$	32,772

Non-depreciable assets
Land		48,117,912			49,446,030
Total	$	48,144,580		$	49,478,802

The depreciation expense charged to general and administrative expenses were $5,304 and $3,156 for the nine months ended September 30, 2016 and 2015, respectively.

The Company would review the historical cost of the land to evaluate if there is an impairment loss to be recognized. Impairment loss was $nil and $nil for the nine months ended September 30, 2016 and 2015, respectively.

The difference in land, motor vehicle, machinery, and office equipment value is due to currency exchange rate fluctuations.

7. OTHER ASSETS

Other assets consist of the following:

	September 30,		December 31,
	2016		2015
Rent Security Deposits	$	44,992	$	46,233
Total	$	44,992	$	46,233

8. TRADE FINANCING LOANS

The Company has executed short term accounts receivables factoring agreements with the banks with maturity from one to three months. The bank would advance the Company a contracted discount percentage of 70%-85% of the accounts receivables invoices factored up front (the “Discount”) and charge a contracted interest fee at average rate of 2%-4% based on the percentage advanced until the loan is repaid in full. When the outstanding accounts receivable invoice is collected, the advanced amount plus any accrued interest are to be repaid. The Company has also purchased insurance for the full invoiced amount.

The trade financing loans are unrelated to security deposits paid to suppliers and the related purchasing of inventory.

The outstanding amount of trade financing loans were $nil and $nil as of September 30, 2016 and December 31, 2015, respectively. The shareholders of the Company have repaid the outstanding trade financing loans on behalf of the Company which was included in Due to related parties.

The Discounts and interest expenses were $nil and $1,357 for the nine months ended September 30, 2016 and 2015, respectively.

9. ADVANCES FROM CUSTOMERS

Advances from customers consist of amounts received from a customer as a security deposit for a machinery equipment sales commitment contract in the amount of $6,164 as of December 31, 2015, and from a customer as deposit for goods to be delivered in the future by the Company in the amount of $63,734 as of September 30, 2016.

The Company acquired and sold the machinery equipment to the customer and recognized $2,280 as other income for the nine months ended September 30, 2016.

10. RELATED PARTY AND AFFILIATED ENTITIES TRANSACTIONS

Related parties’ receivables/(payables) consist of the following:

	September 30,			December 31,
	2016			2015
Receivables/(Payables)
Mr. Tan Lin	$	-		$	(1,227,280	)
Mr. Wu Xiao Bin		(43,828	)		(778,449	)
Mr. Yang Yuan Xi		-			(539,389	)
Mr. Wu Zhong Chen		-			(539,389	)
Ms. Lynn Lee		-			(547,114	)
Total	$	(43,828	)	$	(3,631,621	)

The relationships of the related parties above as follows:

Name		Relationship
Mr. Tan Lin		Shareholder and General Manager of Fuda UK
Mr. Wu Xiao Bing		CEO, Director, Majority Shareholder of the Company
Mr. Yang Yuan Xi		Legal Representative of Liaoning Fuda
Mr. Wu Zhong Chen		Father of Mr. Wu Xiao Bin, Shareholder of the Company
Ms. Lynn Lee		Officer of the Company

The amounts payable to parties above are advances received from related parties from time to time as working capital to fund for its operations. These advances are due on demand, unsecured and non-interest bearing.

On March 2016, the Company mistakenly paid Ms. Lynn Lee in the amount of $486,387 as expenses reimbursements which was repaid previously. This amount has been returned by the Ms. Lynn Lee to the Company on April 2016.

Mr. Xiaobin Wu, the Company’s officer and director, was the Manager Director of Dandong Fuda Investment Co., Ltd (“Fuda Investment”) from 2009 to 2012 and worked as trading manager at Winner International Industries Ltd., (“Winner International”), each of these entities also holds a small (under 5%) interest in the Company which are considered affiliated entities.

Sales revenues for affiliated entities were $936,276 and $nil, and the corresponding cost of sales for theses sales revenues were $83,596 and $nil for the nine months ended September 30, 2016 and 2015, respectively.

In 2014, the Company acquired lands from Fuda Investment for RMB 127,424,700, and from Winner International for RMB 65,965,000. In addition, Fuda Investment and Winner International has executed sales agreements to purchase granite stones from the Company. Any revenues and cost of sales for these entities is shown separately on the Statement of Operation as Revenue and Cost of Sales from Affiliated Entities. The purchase price of the land (corresponding outstanding payables) was to be paid off by fair market sales price of the stones (corresponding accounts receivables) as a barter trade exchange. (Refer to “Barter Trade Exchange” Footnote)

Barter trade gains from affiliated entities were $nil and $7,701,792 for the nine months ended September 30, 2016 and 2015, respectively.

11. BARTER TRADE EXCHANGE

In 2013, the Company acquired lands from Beijing Huanda Renewal Resources Recycling Co. Ltd. (“Beijing Huanda”) (non- related party) for RMB 55,944,000. In addition, Beijing Huanda is also a customer of the Company who has executed sales agreements to purchase granite stones from the Company. The purchase price of the land (its corresponding outstanding payables) were partially paid off in cash as well as in a barter trade exchange which the fair market sales price of the stones (its corresponding accounts receivables) were used to offset the outstanding payables.

In 2014, the Company acquired lands from Fuda Investment (affiliated entity) for RMB 127,424,700, and from Winner International (affiliated) for RMB 65,965,000. In addition, Fuda Investment and Winner International has executed sales agreements to purchase granite stones from the Company. The purchase price of the land (its corresponding outstanding payables) was to be paid off by fair market sales price of the stones (its corresponding accounts receivables) as a barter trade exchange.

In accordance to ASC 845-10-05-6, the transactions above are considered nonmonetary transaction because the transactions involve exchange of products held for sale in the ordinary course of business (inventory) for other productive assets (lands) as a means of selling the product (inventory) to a customer.

In accordance to ASC 845-10-30, the lands purchased were recorded at the purchase price of the lands (assets received) as indicated on the agreement because the costs to acquire the stones from the suppliers, and the types, the sales price, and the quantity of stones to be delivered was not determinable at the time of the exchange. As a result, the earning process was not completed at the time of the exchange and therefore gain or loss cannot be computed at the time of the exchange.

The Company could not record the exchange of land for stones at historical costs of the stones because the stones to be delivered to the land sellers are based on fair market sales price in the future, and is not based on the costs of the stones paid by the Company. The sales to relieve the accounts payable were not needed immediately as the exchange wasn’t instant and the stones in inventory at the time weren’t all going to relieve this debt. The agreement was to provide stones in barter when the land sellers needed the stones. The transaction would have been completed when the lands were transferred if all of the stones were immediately delivered from inventory and extinguished but instead the stones were delivered as required and “sold” or bartered at fair market value of the stones in the future which changed considerably over the period of the barter where there was no fixed or historical price that could be utilized.

The “Sales Agreement” and the “Land Purchase and Sale Agreements” executed by the parties above consisted of two separate agreements.

The Sales Agreement includes a total sales amount equal to the purchase price of the granite and provides that payment may be made by cash or land. The Sales Agreement also includes the name, type and grade of granite and a unit sales price for each granite product based on the fair market value on the day of execution of the Sales Agreement. However, the actual sales price to be paid is the fair market value of that product on the date of the purchase order. Such price fluctuation is usually no greater than 10% (higher or lower) and is typically acceptable to both the purchaser and seller. In addition, the Sales Agreements also indicate the acceptable quality of the granite block, the delivery terms, and penalty clauses for breach of contract.

The Land Purchase and Sale agreements indicate the sales price of the land, the size of the land, and the unit sales price per mu/acre but do not contain payment terms or maturity date. Each of the Land Purchase and Sale Agreements also states that the Company is required to manage, nurture, harvest and develop the woodlands in accordance to the guidelines of the Forestry Department as long as the Company owns the lands. The guidelines of the Forestry Department does not require the company to provide any maintenance as long as the land is not being developed and naturally growing. The Company does not intend to develop the property at this time. The contractual period of the land is approximately 55 years for each contract. The Company estimated that the cost to manage, nurture, harvest and develop the woodlands is minimal because the trees would grow and develop naturally without much care or intervention. The only cost would be laborers to manage and harvest the woodlands, if required, but the Company does not anticipate doing any such harvesting or managing. If used, any laborers would be unskilled workers at a very low wage. Therefore, the effect to the Company's financial and operational obligation is minimal.

In 2013, the Company and Beijing Huanda (the land seller) executed a “Land Purchase and Sales Agreement” for approximately 621.6mu (102.4 acre) at a price of RMB90,000 (approximately $14,645) per mu. Initial payment was due on transfer of the land title which the Company paid in cash to Beijing Huanda. Subsequently, Beijing Huanda experienced a need for granite and entered into a sales agreement with the Company to purchase granite from the Company. The parties also agreed to use granite to reduce the remaining amount due on the Land Purchase and Sales Agreement.

In 2014, Fuda Investment and Winner International (the “Land Sellers”) executed a series of “Sales Agreement” and “Land Purchase and Sale Agreement” with the Company for an aggregate of approximately 1,415.83mu (233.24 acre) for an average price of RMB90,000 (approximately $14,645) per mu, and approximately 607.1mu (100.0 acre) for an average price of RMB108,656 (approximately $17,680) per mu, respectively. As the Company desired to acquire land from the Land Sellers, and the Land Sellers desired to purchase granite from the Company, the parties agreed to trade the land for granite. Thereafter, each executed a Sales Agreement and a Land Purchase and Sales Agreement with the Company. The transaction is considered an arm- length transaction as the purchase price of the land is determined based on appraised value and the price of granite is based on normal sales price without any special consideration or discount or conditions. The appraisal was a current appraisal and performed by an independent third-party.

The land debts above were treated as Accounts Payable and Accrued expenses classified as a current liability on the balance sheet as there were no payment terms or maturity date.

The Company initially recognized land assets and its corresponding payables to the sellers at purchase price of the lands as indicated on the agreement. When stones were delivered to the sellers as ordered, the fair market sales price of the stones delivered were recognized against the outstanding amount owed to the sellers. The differences between the fair market sales price of the stones delivered and the cost of the stones purchased by the Company in inventory were recognized as gain or loss from barter trade. Accordingly, the Company netted the barter trade sales and cost of sales and recorded as gain or loss on barter trade, no revenue or cost of sales are recorded related to these barter trades.

For Beijing Huanda, the Company delivered stones with fair market sales price of $3,240 that cost the Company $245 to purchase the stones in inventory from the suppliers, as a result the Company recognized gain on barter trade of $2,995 for the nine months ended September 30, 2015. Outstanding payable to Beijing Huanda was reduced by $3,240 through barter exchange.

For Fuda Investment, the Company delivered stones with fair market sales price of $6,192,648 that cost the Company $469,140 to purchase the stones in inventory from the suppliers, as a result the Company recognized gain on barter trade of $5,723,508 for the nine months ended September 30, 2015. Outstanding payable to Fuda Investment was reduced by $6,192,648 through barter exchange.

For Winner International, the Company delivered stones with fair market sales price of $2,137,199 that cost the Company$161,910 to purchase the stones in inventory from the suppliers, as a result the Company recognized gain on barter trade of $1,975,289 for the nine months ended September 30, 2015. Outstanding payable to Winner International was reduced by $2,137,199 through barter exchange.

The Company reviewed ASC 845-10-30-4 and determined that the barter trade exchange transactions above are in the normal course of business and have commercial substance because the Company’s future cash flows are expected to significantly change as a result of the exchange. The Company’s future cash flows are expected to significantly change because the configuration (risk, timing, and amount) of the future cash flows of the asset(s) received differs significantly from the configuration of the future cash flows of the asset(s) transferred. In the normal course of business, the Company purchase granite, sell to customers for profit and receive cash payment from the customers which has commercial substance. In the barter trade exchange, the Company purchased granites stones and sold to the land sellers as customers and received land as payment. The future cash flows of the lands received differs significantly from the configuration of the future cash flows of the granite transferred. If the Company did not acquire lands from these customers, the Company would receive cash from these customers as payment. In contrary, if the Company did not sell granite to these land sellers as customers, the Company would pay cash to these land sellers for the lands as payment.

12. STOCKHOLDERS' EQUITY

The Company is authorized to issue 480,000,000 shares of common stock and 20,000,000 shares of preferred stock.

On September 25, 2014, the Company issued 8,200,000 founders common stock at $0.0001 per share for a total of $820 for cash to two directors and officers of which 7,995,000 shares were cancelled on February 20, 2015 at $0.0001 per share for a total of $800. The shares issued were valued at $0.0001 per share based on the current stock price with assumed price provided by the recent transactions as no quoted price is available.

On February 21, 2015, the Company issued 123,615,000 shares of its common stock at $0.0001 per share for cash which all 123,615,000 shares were cancelled between July 1, 2015 and September 7, 2015. The shares issued were valued at $0.0001 per share based on the current stock price with assumed price provided by the recent transactions as no quoted price is available.

Between July 1, 2015 and September 7, 2015, the Company issued 59,794,309 shares of its common stock at $0.0001 per share for a total of $5,979 for cash. The shares issued were valued at $0.0001 per share based on the current stock price with assumed price provided by the recent transactions as no quoted price is available.

On September 28, 2015, pursuant to the Acquisition Agreements, the Company acquires each of Fuda UK and Marvel through the exchange of (i) all of the outstanding shares of Fuda UK for 20,500,000 shares of common stock of the Company, and (ii) all of the outstanding shares of Marvel for 25,420,000 shares of common stock of the Company. Accordingly, a total of 45,920,002 shares were issued at $0.0001 per share for a total of $4,592 for the acquisitions. The shares issued were valued at $0.0001 per share based on the current stock price with assumed price provided by the recent transactions as no quoted price is available.

In October 2015, the Company adopted an amendment to its certificate of incorporation effecting a reverse share split on a forty- one (41) for one hundred (100) basis, such that each one hundred (100) shares of common stock outstanding held by a stockholder were converted into only forty-one (41) shares of common stock outstanding. All outstanding shares of common stock were so converted in October when such amendment was filed in the State of Delaware. The action was duly approved by the board of directors and shareholders of the Company. As a result of the reverse share split, the total number of outstanding shares of common stock of the Company decreased from 258,339,773 shares outstanding to 105,954,309 shares outstanding at such time.

All references to common stock and per share amounts for all prior periods presented have been retroactively presented to reflect the reverse share split.

On October 1, 2015, the Company issued 35,000 shares of its common stock at $0.0001 as compensation to various employees for a total of $4. The shares issued were valued at $0.0001 per share based on the current stock price with assumed price provided by the recent transactions as no quoted price is available.

From time to time, the Company’s majority shareholder has paid expenses on behalf of the Company that are recorded as contribution to paid-in capital. The amounts contributed to paid-in capital were $nil and $695 for the nine months ended September 30, 2016 and 2015, respectively.

13. STOCK-BASED COMPENSATION

On December 31, 2015, the Company converted 59,999,037 shares of its previously unpaid common stock subscriptions to compensation expense as it has become unlikely that this subscription receivable will be paid back to the company and needed to be written off for a total of $14,634. The shares issued were valued at $0.0001 per share based on the current stock price with assumed price provided by the recent transactions as no quoted price is available.

14. GOVERNMENT CONTRIBUTION PLAN

Pursuant to the laws applicable to PRC law, the Company is required to participate in a government-mandated multi-employer defined contribution plan pursuant to which certain retirement, medical and other welfare benefits are provided to employees. Chinese labor regulations require the Company to pay to the local labor bureau a monthly contribution at a stated contribution rate based on the monthly basic compensation of qualified employees. The relevant local labor bureau is responsible for meeting all retirement benefit obligations; the Company has no further commitments beyond its monthly contribution.

15. STATUTORY RESERVE

Pursuant to the laws applicable to the PRC, the Company must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC ("PRC GAAP") at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the “reserve fund”. For foreign invested enterprises, the annual appropriation for the “reserve fund” cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulate loss.

The PRC regulations also restrict the ability of the Company to make dividend and other payments to offshore entities or individuals. The PRC legal restrictions permit payments of dividend by the Company only out of its accumulated after-tax profits, if any, determined in accordance with PRC GAAP and regulations. Any limitations on the ability of the Company to transfer funds could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to the Company’s business, pay dividends and otherwise fund and conduct the Company’s business.

16. INCOME TAXES

United States

Fuda USA is established in the State of Delaware in United States and is subject to Delaware State and US Federal tax laws. Fuda USA has approximately $1,039,219 of unused net operating losses (“NOLs”) available for carry forward to future years for U.S. federal income tax reporting purposes. The benefit from the carry forward of such NOLs will begin expiring during the year ended December 31, 2034. Because United States tax laws limit the time during which NOL carry forwards may be applied against future taxable income, the Company may be unable to take full advantage of its NOLs for federal income tax purposes should the Company generate taxable income. Further, the benefit from utilization of NOL carry forwards could be subject to limitations due to material ownership changes that could occur in the Company as it continues to raise additional capital. Based on such limitations, the Company has significant NOLs for which realization of tax benefits is uncertain.

United Kingdom

Fuda UK is established in United Kingdom and its income is subject to a 20% profit tax rate for income sourced within the country. During the nine months ended September 30, 2016 and 2015, Fuda UK did not earn any income derived in United Kingdom, and therefore was not subject to United Kingdom Profits Tax.

Hong Kong

Marvel is established in Hong Kong and its income is subject to a 16% profit tax rate for income sourced within the country. During the nine months ended September 30, 2016 and 2015, Marvel did not earn any income derived in Hong Kong, and therefore was not subject to Hong Kong Profits Tax.

China, PRC

Liaoning Fuda established in China and its income is subject to income tax rate of 25%, but has received an income tax holiday from the government for three years that will expire in 2017.

The reconciliation of effective income tax rate as follows:

	For the Nine Months Ended
	September 30,			September 30,
	2016			2015
PRC Statutory income tax rate		25	%		25	%
Less: Income tax holiday		-25	%		-25	%
Total		-			-

The provision for income tax on earnings as follows:

	For the Nine Months Ended
	September 30,			September 30,
	2016			2015
PRC income tax expense/(benefit) at statutory rate	$	8,779,435		$	6,405,282
Less: Income tax subject to tax holiday		(8,779,435	)		(6,405,282	)
Total	$	-		$	-

17. COMMITMENTS, CONTINGENCIES, RISKS AND UNCERTAINTIES

The Company has executed lease agreements for office space and dormitory for Liaoning Fuda in Dandong, China which expires in October 2018. Rent expenses for office space and dormitory were $45,598 and $57,010 for the nine months ended September 30, 2016 and 2015, respectively.

The Company executed a car lease for Liaoning Fuda that expired on June 2016 that were not renewed. The Company also executed various car leases that will expire on December 2016.

The total future minimum lease payments under the operating leases as follows:

Periods	Amounts
For year ended December 31, 2016	$	33,439
For year ended December 31, 2017		60,797
For year ended December 31, 2018		60,797
For year ended December 31, 2019		-
Thereafter		-
Total	$	155,033

Concentration and Credit risk

Cash deposits with banks are held in financial institutions in China, which are not federally insured deposit protection. Accordingly, the Company has a concentration of credit risk related to these uninsured bank deposits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area.

The Company depends on a limited number of suppliers for its products. Accordingly, the Company has a concentration risk related to these suppliers. Failure to maintain existing relationships with our suppliers or to establish new relationships in the future could also negatively affect our ability to obtain products sold to customers in a timely manner. If the Company is unable to obtain ample supply of products from existing suppliers or alternative sources of supply, the Company may be unable to satisfy our customers’ orders, which could materially and adversely affect revenues.

18. BUSINESS SEGMENTS

The revenues and cost of goods sold from operation consist of the following:

	Revenues				Cost of Sales
	For the Nine Months Ended				For the Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2016		2015		2016		2015
Granite Blocks		26,849,686		18,517,084		3,757,623		3,968,985
Granite Slabs		9,869,209		10,374,687		6,041,801		6,360,453
Graphite		2,733,165		213,126		2,136,655		199,975
Fluorite		1,304,569		191,722		1,134,547		174,917
Gold Bar		3,336,738		-		2,825,181		-
Gold Dust		20,083,198		-		12,049,919		-
Total		64,176,565		29,296,619		27,945,726		10,704,330

	Revenues				Cost of Sales
	For the Three Months Ended				For the Three Months Ended
	September 30,		September 30,		September 30,		September 30,
	2016		2015		2016		2015
Granite Blocks	$	12,886,731	$	11,492,528	$	1,726,050	$	1,304,456
Granite Slabs		5,496,554		2,568,883		3,403,614		1,372,483
Graphite		2,453,157		213,126		1,860,191		199,975
Fluorite		1,024,561		191,722		856,721		174,917
Gold Bar		2,539,691		-		2,141,519		-
Gold Dust		12,249,655		-		7,349,793		-
Total	$	36,650,349	$	14,466,259	$	17,337,888	$	3,051,831

19. CONDENSED PARENT COMPANY FINANCIAL INFORMATION

Basis of Presentation

The ability of the Company’s Chinese Subsidiary-Liaoning Fuda to pay dividends, royalties, management fees, etc. may be restricted due to the foreign exchange control policies and availability of cash balance of the Chinese operating subsidiaries. A majority of our revenue being earned and currency received are denominated in RMB, which is subject to the exchange control regulation in China, and, as a result, we may unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into US Dollars. Accordingly, Liaoning Fuda funds may not be readily available to us to satisfy obligations which have been incurred outside the PRC, which could adversely affect our business and prospects or our ability to meet our cash obligations.

Foreign exchange transactions under the capital account are subject to limitations and require registration with or approval by the relevant PRC governmental authorities. In particular, if the Company finances the Company’s PRC subsidiaries by foreign currency loans, those loans cannot exceed certain statutory limits and must be registered with the SAFE, and if the Company finance the Company’s PRC subsidiaries by capital contributions, then those capital contributions must be approved by the Ministry of Commerce or its local agency. In addition, because of the regulatory issues related to foreign currency loans to, and foreign investment in, domestic PRC enterprises, the Company may not be able to finance its operations by loans or capital contributions.

The restricted net assets of consolidated subsidiary Liaoning Fuda as of September 30, 2016 and December 31, 2015 were $90,000,895 and $66,251,944, respectively.

The condensed parent company financial information has been prepared in accordance with Rule 4-08(e) of Regulation S-X, as the net assets of the subsidiaries of Fuda Group (USA) Corp (the “Registrant”) exceed 25% of the consolidated net assets of the Registrant.

The condensed parent company financial information has been prepared using the same accounting principles and policies described in the notes to the consolidated financial statements, with the only exception being that the parent company accounts for its subsidiaries using the equity method. Refer to the consolidated financial statements and notes presented above for additional information and disclosures with respect to the financial information.

Fuda Group (USA) Corporation and Subsidiaries

Condensed Parent Company Balance Sheets

	September 30,			December 31,
	2016			2015
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	-		$	-
Total Current Assets		-			-
Investment in subsidiaries, at equity in net assets		98,134,241			66,155,921
Total Assets	$	98,134,241		$	66,155,921


LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses		-			-
Due to related parties		40,561			613,294
Total Current Liabilities		104,295			613,294
Total Liabilities		104,295			613,294

Commitments & contingencies		-			-

Stockholders' Equity
Common stock, $0.0001 par value, 480,000,000 shares authorized;
105,954,309 shares at September 30, 2016 and December 31, 2015, respectively		10,595			10,595
Additional paid-in capital		9,579,682			9,579,682
Accumulated other comprehensive income		(5,427,313	)		(3,188,494	)
Statutory reserve		8,577,367			5,990,116
Accumulated earnings (unrestricted)		85,289,615			53,150,728
Total stockholders' equity		98,029,946			65,542,627
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	98,134,241		$	66,155,921

The accompanying notes are an integral part of these financial statements

Fuda Group (USA) Corporation and Subsidiaries

Condensed Parent Company Statements of Operations

(unaudited)

	For the Three Months Ended					For the Nine Months Ended
	September 30,			September 30,		September 30,			September 30,
	2016			2015		2016			2015
Revenues	$	-		$	-	$	-		$	-
Cost of sales		-			-		-			-
Gross margin		-			-		-			-

Operating expenses
Selling, general & administrative expenses		86,065			-		409,956			619
Total operating expenses		86,065			-		409,956			619

Income (Loss) from operation		(86,065	)		-		(409,956	)		(619	)

Other income (expenses)
		-			-		-			-
Equity in undistributed income of subsidiaries		19,044,098			13,908,051		35,136,094			25,645,882
Total other income (expenses)		19,044,098			13,908,051		35,136,094			25,645,882

Income before income tax		18,958,033			13,908,051		34,726,138			25,645,263

Income tax		-			-		-			-

Net income		18,958,033			13,908,051		34,726,138			25,645,263

The accompanying notes are an integral part of these financial statements

Fuda Group (USA) Corporation and Subsidiaries

Condensed Parent Company Statements of Cash Flows

(unaudited)

	For the Nine Months Ended
	September 30,			September 30,
	2016			2015

Cash flows from operating activities
Net income	$	34,726,138		$	25,645,263
Adjustments to reconcile net income to net cash provided by or used in operating activities:
Equity in undistributed income of subsidiaries		(35,136,094	)		(25,645,882	)
Bad debt expense
Expenses paid by stockholder and contributed as capital		-			619
Changes in operating assets and liabilities:
Accounts payable and accrued expenses		-			-
Net cash used in operating activities		(409,956	)		-

Cash flows from financing activities
Proceeds from/(Repayment) to related party, net		(572,733	)		-
Proceeds from/(Repayment) to subsidiary		982,689			-
Net cash provided by financing activities		409,956			-

Cash flows from investing activities
Purchase of land, property and equipment		-			-
Net cash used in investing activities		-			-

Effect of exchange rate changes		-			-

NET INCREASE (DECREASE) IN CASH		-			-

CASH
Beginning of period		-			-
End of period	$	-		$	-

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID FOR:
Interest	$	-		$	-
Income Taxes	$	-		$	-

The accompanying notes are an integral part of these financial statements

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company

The Company was incorporated in the State of Delaware in September 2014 and was formerly known as Spruce Valley Acquisition Corporation. In September 2015, the Company acquired each of Fuda Gold (UK) Limited, a private company organized under the laws of England and Wales (“Fuda UK”), and Marvel Investment Corporation Limited, a private company organized under the laws of Hong Kong (“Marvel”), in separate stock-for-stock acquisitions.

Prior to the Acquisitions, the Company had no ongoing business or operations and was established for the purpose of completing a business combination with a target company, such as Fuda UK and Marvel. Accordingly, the business of the Company is now that of Fuda UK and Marvel (and of Liaoning Fuda by virtue of Marvel’s ownership of Liaoning Fuda), each of which was acquired by the Company in the Acquisitions.

After the Acquisition, the Company and its subsidiaries operate as a natural resource trading company that consists of granite and marble (raw blocks, stone carvings, slabs, pavers, wall claddings) fluorite (rocks), graphite (rocks), gold and precious metal (sand, rocks, bars) in China.

References to the financial condition and performance of the Company below in this section “Management’s Discussions and Analysis of Financial Condition and Results of Operation” are to Liaoning Fuda Mining Co. Ltd, Fuda UK and Marvel respectively.

Operations

Since 2013, the Company is a natural resource trading company that consists of granite raw blocks, stone carvings, slabs, and wall claddings in China.

The Company believes that the demand for granite in China, particularly near and around Dandong City, where the Company is operating, will continue to grow through 2016 and beyond. Dandong City is experiencing massive growth and development in residential, commercial and governmental building. In addition, the domestic demand for granite is greatly increasing as a decorative and a building material as China experiences such internal growth. China’s real estate development, construction projects, municipal projects, construction market and retail market requires a large number of stone products. In 2016, we have introduced more varied line of stone products, art carvings, custom made stone products, construction slabs and retail market standard size slabs.

In August 2015, the Company has started conducting business operations in trading graphite, fluorite and gold.

In October 2015, the Company commenced gold trading activities. The Company purchase gold bars from the supplier with the intention to resell to jewelry or gold stores. The purchase price of gold bars is based on the quoted commodity exchange price at the time of the transaction.

At the end of 2015, the Company entered into an agreement with a mine owner whereby the Company will filter and sort gold mine tailings from discarded mine materials. The contract stipulates that the sorting function would be outsourced to a third party on a profit share basis with the distribution of profits as follows: 40% to the Company, 35% to the labor party for supplying labors for sorting and filtering and the tools (the "Labor Party"), and 25% to the mine owner. Subsequent to the execution of a contract with a mine owner, a contract will be executed with the filtering and sorting party (labor party) to do the actual filtering and sorting, to provide laborers, knowledge and tools at their cost. The time it takes from sorting and filtering of gold mine tailings to completing a sale is about 7 to 10 working days.

The Company plans to consolidate and expand its gold bar trading and its gold mine tailings sorting and filtering business. The Company intends to seek gold mine tailings sorting and filtering opportunities with other mine owners.

Besides the operations above, the Company’s subsidiary Liaoning Fuda also purchased the titles to land use right surrounding the mines for investment purposes.

The Company’s management believes that the market demand for natural resources, such as gold, granite and marble, will continue to increase. Gold and other precious metals are commodities and will thereby experience times of high and low trading values, but the demand for it as a commodity would be ever present. The same could be said for granite and marble, which would be additionally affected by the economy in terms of the construction industry.

As for the Company’s diversification into marble and granite industry, the Company is executing plans to acquire an open-pit granite mine that employs saw-cutting methods to remove large granite blocks from the quarry. In addition, the Company is also preparing to further process the raw blocks into slabs, pavers, wall claddings, and carvings. These products can be sold to government agencies for infrastructure projects, corporations, granite processing plants, civil engineering companies as well renovation companies.

Reverse Stock Split

The Company effected 100-for-41 reverse stock split of all 258,339,773 of its then outstanding common stock at the record date of October 1, 2015 resulting in 105,919,309 shares outstanding. The Stockholders approved the reverse stock split at a Special Meeting of Stockholders on October 1, 2015. All references to common stock and per share amounts for all prior periods presented have been retroactively presented to reflect the reverse share split.

Registration Statement

The Company has filed a registration statement on Form S-1 for the offer and sale of 50,000,000 shares of common stock offered by the Company. No public market currently exists for our common stock. The registration statement has not yet been declared effective and can be viewed at the SEC website.

The Company will receive no proceeds from the sale of the shares by the Selling Shareholders but will receive the proceeds from the sale of the 50,000,000 shares offered by it. The Company intends to use the proceeds from the sale of the shares, minus expenses and commissions, if any, to purchase fund capital development and for general corporate purposes.

Property

The Company currently has the following physical locations and respective lease arrangements:

The Company’s USA office is located at 48 Wall Street, 11th Floor, New York, NY 10005, USA.

The Company’s China Head office is located at 903-904 Ling Hang International, Guang Qu Men Nei, Dong Cheng District, Beijing, China

The Company’s China Regional office is located at 12th Floor, 100 Jin Jiang Street, Dandong City, Liaoning Province, China. The Company’s China office consists of approximately 5000 square feet of office space leased on a 3 years’ basis at approximately $5,250 (RMB 33,333) per month.

The Company’s Hong Kong office is located at Room 801-2, 8/F., Easey Commercial Building, 253-261 Hennessy Road, Wanchai, Hong Kong

The Company’s UK office is located at 20-22 Wenlock Road, London N1 7G

If the Company were forced to relocate, it believes it could obtain an equally satisfactory location at a comparable price.

The Company currently owns land use rights to 8 parcels of lands surrounding the mines for investment purposes,

containing a total of approximately 21.56 million square feet of land.

Subsidiaries

The Company’s subsidiaries are: Marvel Investment Corporation Limited (and its subsidiary Liaoning Fuda Mining Co., Ltd) and Fuda Gold (UK) Limited.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Equipment Financing

The Company has no existing equipment financing arrangements.

Potential Revenue

The Company expects to earn potential revenue from existing customers and product sales and refining and trading activities. The Company prospects for new clients on an ongoing basis and also seeks additional revenue enhancement opportunities from existing clients. The Company will be also expanding its portfolio of products.

Alternative Financial Planning

The Company has no alternative financial plans. If the Company is not able to successfully raise monies as needed through a private placement or other securities offering (including, but not limited to, a primary public offering of securities), the Company’s ability to expand its business plan or strategy over the next two years will be jeopardized.

Critical Accounting Policies

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Liquidity and Capital Resources at September 30, 2016 and December 31, 2015

As of September 30, 2016, Fuda Group (USA) had cash available of $0, Liaoning Fuda had cash available of $31,848,426, Marvel had cash available of $970,680, and Fuda UK had cash available of $7,971,783, with consolidated cash available for the Company at $40,790,889.

As of December 31, 2015, Fuda Group (USA) had cash available of $0, Liaoning Fuda had cash available of $18,166,602, Marvel had cash available of $11,549, and Fuda UK had cash available of $399, with consolidated cash available for the Company at $18,178,550.

Overall, the Company expects to generate its liquidity and capital resources from sales revenues by its operating subsidiaries-Liaoning Fuda, Fuda UK, Marvel. These capital resources are used to purchase inventory and to pay its vendors and suppliers for expenses incurred under normal operation of the Company.

At December 31, 2014, the Company had outstanding payable balances of $8,379,978 to the land sellers for land purchased during the fiscal years ended December 31, 2014 and 2013.

In 2013, the Company and Beijing Huanda (the land seller) executed a “Land Purchase and Sales Agreement” for approximately 621.6mu (102.4 acre) at a price of RMB90,000 (approximately $14,645) per mu. Initial payment was due on transfer of the land title which the Company paid in cash. Subsequently, Beijing Huanda experienced a need for granite and entered into a sales agreement with the Company to purchase granite from the Company. The parties also agreed to use granite to reduce the remaining amount due on the Land Purchase and Sales Agreement.

In 2014, Fuda Investment and Winner International (the “Land Sellers”) executed a series of “Sales Agreement” and “Land Purchase and Sale Agreement” with the Company for an aggregate of approximately 1,415.83mu (233.24 acre) for an average price of RMB90,000 (approximately $14,645) per mu, and approximately 607.1mu (100.0 acre) for an average price of RMB108,656 (approximately $17,680) per mu, respectively. As the Company desired to acquire land from the Land Sellers, and the Land Sellers desired to purchase granite from the Company, the parties agreed to trade the land for granite. Thereafter, each executed a Sales Agreement and a Land Purchase and Sales Agreement with the Company. The transaction is considered an arms-length transaction as the purchase price of the land is determined based on appraised value and the price of granite is based on normal sales price without any special consideration or discount or conditions. The appraisal was a current appraisal and performed by an independent third-party.

Mr. Wu, President of the Company was trading manager of Winner International from 2007 to 2009 and worked in Fuda Investment from 2009 to 2012. At the time of the land sale Mr. Wu was not an officer or employee of either company.

The land debts above were treated as Accounts Payable and Accrued expenses classified as a current liability on the balance sheet as there were no payment terms or maturity date. The land debts were to be paid off by fair market sales price of granites in a barter trade exchange.

Sales Agreements for granite include a total sales amount equal to the purchase price of the land and provides that payment may be made by cash or land.

If the land sellers demand the outstanding payables to be paid immediately, the Company will be able to obtain financing through the banks by putting the lands as a collateral to pay off the outstanding balances owed to the land sellers. If the Company is not able to raise capital for this purpose through other debt or equity financings, the Company’s business and financial conditions may be adversely affected.

During the year ended December 31, 2015. the Company barter traded granites with total fair market sales price of $8,260,746 and reduced the corresponding amounts in land debts. As at December 31, 2015, the Company has repaid the outstanding land debts above. Gain from barter trade were $7,634,932 for the year ended December 31, 2015.

In 2013 and 2014, the Company executed short term account receivable factoring agreements with the banks with maturity from 1 to 3 months. The bank would advance the Company at contracted discount percentage of 70%-85% of the accounts receivable invoices factored up front and charge a contracted interest fee at average rate of 2%-4% based on the percentage advanced. The discount is recognized as financing interest expense. When the outstanding accounts receivable invoice is collected, the advanced amount plus any accrued interest are repaid. The Company has also purchased insurance for the full invoiced amount. Please refer to additional discussions below.

As at December 31, 2015, the Director of the Company has repaid the outstanding trade financing loans on behalf of the Company which increased amounts due to related party. The outstanding amount of trade financing loans were $nil and $nil as of September 30, 2016 and December 31, 2015 respectively. The interest expenses were $nil and $1,357 for the nine months ended September 30, 2016 and 2015, respectively. The trade financing loans were repaid in January 2015 when the goods were returned by the customers.

The Company’s proposed expansion plans and business process improvements described above will necessitate additional capital and financing. Accordingly, the Company plans to raise outside funding in order to achieve its expanded growth and profit objectives in its business over the next two years. The monies raised will be utilized for general operations, working capital, acquisition of mines, acquisition of gold sorting and refining facilities and acquisition of granite and marble processing facilities.

There can be no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly, given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its contemplated business plans and operations unless it obtains additional financing or otherwise is able to generate sufficient revenues and profits. The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans.

The ability of the Company’s Chinese Subsidiary-Liaoning Fuda-to pay dividends, royalties, management fees, etc may be restricted due to the foreign exchange control policies and availability of cash balance of the Chinese operating subsidiaries. A majority of the revenue being earned and currency received are denominated in RMB, which is subject to the exchange control regulation in China, and, as a result, the Company may unable to distribute any dividends outside China due to PRC exchange control regulations that restrict its ability to convert RMB into US Dollars. Accordingly, Liaoning Fuda funds may not be

readily available the Company to satisfy obligations which have been incurred outside the PRC, which could adversely affect business and prospects or the Company’s ability to meet its cash obligations.

During the nine months ended September 30, 2016, net cash provided by operating activities was $27,016,833, and net cash provided by operating activities for the nine months ended September 30, 2015 was $19,449,749, respectively. Net cash provided by operating activities in 2015 was lower resulting from gain from barter trade of $7,701,792 adjustment to reconcile net income to net cash provided by operating activities. The significant changes resulted from net income increase with gain from barter trade reduction. The Company generated net income of $34,726,138 for the nine months ended September 30, 2016 compared to net income of $25,645,263 for the same period in 2015. In 2015, the net income of $25,645,263 was generated from $7,701,792 of gain from barter trade as compared to 2016 no net income generated from barter trade, as a result cash provided by operating activities was higher for the nine months ended September 30, 2016. However, in 2016 the Company paid $5,378,844 to its suppliers as part of the purchase agreements while in 2015 the Company received security deposits returned from its suppliers which reduce the cash provided by operating activities in 2016. During the nine months ended September 30, 2016, the Company had outstanding receivable from its customers of $2,378,103 as compared to $475,041 for the same period in 2015. The increase in receivable resulted from sales generated at the end of the quarter with payments collected subsequently.

Net cash used by financing activities for the nine months ended September 30, 2016 was $3,600,994 whereas net cash used in financing activities for the same period in 2015 was $1,892,594. The Company repaid $3,600,994 to the shareholders in 2016 and $1,546 in 2015. In 2013 and 2014, the Company has executed various short term accounts receivables factoring agreements with the banks where the banks would advance the Company a contracted percentage of the invoices factored up front. These trade financing loans derived from export sales generated in 2013 and 2014 that carryover to 2015. Financing activities attributable to repayments of trade financing loans was $1,891,048 in 2015. The trade financing loans had to be repaid by the shareholders as the goods were returned by the customers.

The resulting effect on cash as at September 30, 2016 was $22,612,339 with an effect of exchange rate changes of $(803,500), as compared to cash at September 30, 2015, the net changes in cash was $17,048,605 with an effect of exchange rate changes of $(508,550).

Discussion of Three months ended September 30, 2016 and 2015

The Company generated revenues from sales of products of $36,650,349 and $14,466,259 during the three months ended September 30, 2016 and 2015, respectively, an increase of approximately 153.4% on a year-over-year basis. Gross margin for the three months ended September 30, 2016 was $19,312,461 or approximately 52.7% of revenues as compared to $11,414,428 or approximately 78.9% of revenues for the same period in 2015, representing a decrease in gross margin.

As the Company granite business steadies, there was an increase of customers and therefore sales orders have increased. According to the increase in market and customer demand, the Company’s revenues generated from granite increased. The Company generated sales revenues from the cooperative operation agreement to filter and sort gold sands or gold dust from the gold mine tailings.

The gross margin was effected by the quality of the granite blocks received by the Company from the supplier. The Company purchased granite blocks in batches from the suppliers, and the Company would sort the granite blocks into different grades. The better quality of granite blocks received by the Company would allow the Company to sell at a higher price. The imperfect granite would be included as part of the cost of the inventory which effect the profit margin.

The Company commenced graphite and fluorite activities only in August 2015. During the three months ended September 30, 2016, the Company experience an increase in sales of graphite and fluorite as the numbers of customers increased. The increase in profit margin resulted from change of suppliers. Previously the Company purchased the goods from trade merchants, and until recently the Company located new suppliers purchased the goods directly from the mines at a lower price.

The Company commenced gold trading activities only in October 2015. The Company purchase gold bars from the supplier with the intention to resell to jewelry or gold stores. The purchase price of gold bars is based on the quoted commodity exchange price at the time of the transaction.

The Company’s primary customers for gold bars are jewelry and gold shops. The Company’s primary customers for filtered tailings are gold dust trading companies and gold refining companies. The gold market is more of a seller's market than a buyer's market. When available stock is made known to the market, which is a very close community, a gold buyer will contact the seller. Through word of mouth and introductions, the Company has established and built relationships with many buyers. Buyers will arrange for pick-up and delivery of the gold at their cost and the Labor Party will package and load the gold for the buyers.

The Company has experienced a rise in gold revenues in 2016 primarily from the sale of gold dust that commenced in April 2016. For the three months ended September 30, 2016, the Company sold 12,867.71 tons of gold dust from mine tailings which generated revenues of $12,249,655 with a cost of $7,349,793, resulting in a gross profit of $4,899,862. Additionally, during the same period, the Company sold approximately 59,711.85 grams of gold bars for $2,539,691 with a cost of $2,141,519, resulting in a gross profit of $398,172.

The sales revenues and cost of sales as follows:

	Revenues				Cost of Sales				Margin %
	For the Three Months Ended				For the Three Months Ended				For the Three Months Ended
	September 30,		September 30,		September 30,		September 30,		September 30,			September 30,
	2016		2015		2016		2015		2016			2015
Granite Blocks		12,886,731		11,492,528		1,726,050		1,304,456		86.6	%		88.6	%
Granite Slabs		5,496,554		2,568,883		3,403,614		1,372,483		38.1	%		46.6	%
Graphite		2,453,157		213,126		1,860,191		199,975		24.2	%		6.2	%
Fluorite		1,024,561		191,722		856,721		174,917		16.4	%		8.8	%
Gold Bar		2,539,691		-		2,141,519		-		15.7	%		-%
Gold Dust		12,249,655		-		7,349,793		-		40.0	%		-%
Total		36,650,349		14,466,259		17,337,888		3,051,831		52.7	%		78.9	%

	Sales Revenues				Cost of Sales				Margin %
	For the Three Months Ended				For the Three Months Ended				For the Three Months Ended
	September 30,		September 30,		September 30,		September 30,		September 30,			September 30,
	2016		2015		2016		2015		2016			2015
Affiliated entities		936,276		-		83,596		-		91.1	%		-%
Third parties		35,714,073		14,466,259		17,254,292		3,051,831		51.7	%		78.9	%
Total		36,650,349		14,466,259		17,337,888		3,051,831		52.7	%		78.9	%

Operating expenses decreased 21% from $448,748 in the three months ended September 30, 2015 to $355,289 in the same period of 2016.

	For the Three Months Ended
	September 30,		September 30,
	2016		2015
Selling, general and administrative expenses
Employees’ wages and salaries		126,916		92,415
Bad debt expense		-		215,209
Rent expense		14,996		18,709
Professional fees		41,994		39,589
Motor vehicle expenses		22,431		1,167
Travel expenses		46,952		34,251
Other SG&A expenses		102,000		47,408
Total		355,289		448,748

The Company’s motor vehicle expenses increased as a result of new car leases obtained by the Company for its officers in 2016. The Company also incurred additional travel expenses and professional fees being a public reporting company. The Company wrote-off accounts receivable that were deemed uncollectible of $215,209 for granite sales generated from international customers in the three months ended September 30, 2015.

In October 2015, the Company started operation of trading gold, graphite, and fluorite, as well as sorting and filtering gold mine tailing activities which continued into 2016. Sorting and filtering activities of gold mine tailing required the Company to incur additional expenses such as hiring additional workers - supervisors, technical experts, mining advisors— and purchasing some basic tools and supplies. As a result, wages and salaries were higher in 2016.

Total other income generated was $861 in the three months ended September 30, 2016 as compared to other income of $2,842,131 in the same period of 2015. The Company received interest income of $304 and $51 for the three months ended September 30, 2016 and 2015, respectively. The Company received $nil and $105,096 in the three months ended September 30, 2016 and 2015, respectively in government rebates which were mainly for export and insurance incentives that occurred in 2014 for export sales by the Company. The Company generated gain from barter trade of $nil and $2,842,131 for the three months ended September 30, 2016 and 2015, respectively. The barter trade was trading granite for land acquired in 2014.

The Company generated higher gain from through barter trade in 2015 as compared to 2016 as outstanding balance owed were paid off in 2015. The barter trade was trading granite for land acquired in 2014. The granites were traded at market sales price.

	Gain on Barter Trade
	For the Three Months Ended
	September 30,		September 30,
	2016		2015
Affiliated entities		-		2,842,131
Third parties		-		-
Total		-		2,842,131

As a result, during the three months ended September 30, 2016, the Company posted operating income of $18,958,033 and net income of $18,958,033 as compared to operating income of $13,912,958 and net income of $11,222,610 for the three months ended September 30, 2015.

Discussion of Nine Months ended September 30, 2016 and 2015

The Company commenced graphite and fluorite activities only in August 2015. During the nine months ended September 30, 2016, the Company experience an increase in sales of graphite and fluorite as the numbers of customers increased. The increase in profit margin resulted from change of suppliers. Previously the Company purchased the goods from trade merchants, and until recently the Company located new suppliers and purchased the goods directly from the mines at a lower price.

The Company has experienced a rise in gold revenues in 2016 primarily from the sale of gold dust that commenced in April 2016. For the nine months ended September 30, 2016, the Company sold 21,374.42 tons of gold dust from mine tailings which generated revenues of $20,083,198 with a cost of $12,049,919, resulting in a gross profit of $8,033,279. Additionally, during the same period, the Company sold approximately 80,676.29 grams of gold bars for $3,336,738 with a cost of $2,825,181, resulting in a gross profit of $511,557.

The sales revenues and cost of sales as follows:

	Revenues				Cost of Sales				Margin %
	For the Nine Months Ended				For the Nine Months Ended				For the Nine Months Ended
	September 30,		September 30,		September 30,		September 30,		September 30,			September 30,
	2016		2015		2016		2015		2016			2015
Granite Blocks		26,849,686		18,517,084		3,757,623		3,968,985		86.0	%		78.6	%
Granite Slabs		9,869,209		10,374,687		6,041,801		6,360,453		38.8	%		38.7	%
Graphite		2,733,165		213,126		2,136,655		199,975		21.8	%		6.2	%
Fluorite		1,304,569		191,722		1,134,547		174,917		13.0	%		8.8	%
Gold Bar		3,336,738		-		2,825,181		-		15.3	%		-%
Gold Dust		20,083,198		-		12,049,919		-		40.0	%		-%
Total		64,176,565		29,296,619		27,945,726		10,704,330		56.5	%		63.5	%

	Sales Revenues				Cost of Sales				Margin %
	For the Nine Months Ended				For the Nine Months Ended				For the Nine Months Ended
	September 30,		September 30,		September 30,		September 30,		September 30,			September 30,
	2016		2015		2016		2015		2016			2015
Affiliated entities		936,276		-		83,596		-		91.1	%		-%
Third parties		63,240,289		29,296,619		27,862,130		10,704,330		55.9	%		63.5	%
Total		64,176,565		29,296,619		27,945,726		10,704,330		56.5	%		63.5	%

Operating expenses increased 48% from $782,263 in the nine months ended September 30, 2015 to $1,508,081 in the same period of 2016. The increase in these costs was primarily attributable to wages and salaries, professional fees, motor vehicle expenses and travel expenses

	For the Nine Months Ended
	September 30,		September 30,
	2016		2015
Selling, general and administrative expenses
Wages and salaries		639,456		286,964
Bad debt expense		-		215,209
Rent expense		45,598		57,010
Professional fees		215,753		45,303
Motor vehicle expenses		77,804		2,788
Travel expenses		223,700		52,258
Other SG&A expenses		305,770		122,731
Total		1,508,081		782,263

In late 2015, the Company started operation of trading gold, graphite, and fluorite, as well as sorting and filtering gold mine tailing activities which continued into 2016. Sorting and filtering activities of gold mine tailing required the Company to incur additional expenses such as hiring additional workers - supervisors, technical experts, mining advisors— and purchasing some basic tools and supplies. As a result, wages and salaries were higher in 2016.

Total Other income generated were $3,380 in the nine months ended September 30, 2016 as compared to other income of $7,840,144 in the same period of 2015. The Company received interest income of $304 and incurred interest expenses of $1,288 for the nine months ended September 30, 2016 and 2015, respectively. The interest expense was incurred for trade financing loans that were paid off in January 2015. The Company received $nil and $139,640 in the nine months ended September 30, 2016 and 2015, respectively in government rebates which were mainly for export and insurance incentives that occurred in 2014 for export sales by the Company. The Company generated gain from barter trade of $nil and $7,701,792 for the nine months ended September 30, 2016 and 2015, respectively.

	Gain on Barter Trade
	For the Nine Months Ended
	September 30,		September 30,
	2016		2015
Affiliated entities		-		7,698,797
Third parties		-		2,995
Total		-		7,701,792

During the nine months ended September 30, 2016, the Company posted operating income of $34,726,138 and net income of $34,726,138 as compared to operating income of $25,650,170 and net income of $25,645,263 for the nine months ended September 30, 2015.

Related Party Transactions

From time to time, the Company receives advances from related parties as working capital to fund for its operations which consist of the following. These advances are due on demand, unsecured and non-interest bearing.

	September 30,			December 31,
	2016			2015
Receivables/(Payables)
Mr. Tan Lin		-			(1,227,280	)
Mr. Wu Xiao Bin		(43,828	)		(778,449	)
Mr. Yang Yuan Xi		-			(539,389	)
Mr. Wu Zhong Chen		-			(539,389	)
Ms. Lynn Lee		-			(547,114	)
Total		(43,828	)		(3,631,621	)

Sales revenues for affiliated entities were $936,276 and $nil, and the corresponding cost of sales for these sales revenues were $83,596 and $nil for the nine months ended September 30, 2016 and 2015, respectively.

Barter trade gains from affiliated entities were $nil and $7,701,792 for the nine months ended September 30, 2016 and 2015, respectively.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

Information not required to be filed by Smaller reporting companies.

ITEM 4. Controls and Procedures. Disclosures and Procedures

Pursuant to Rules adopted by the Securities and Exchange Commission, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the period covered by this report under the supervision and with the participation of the Company's principal executive officer (who is also the principal financial officer).

Based upon that evaluation, we believe that the Company's disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

This Quarterly 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 the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Quarterly Report.

Changes in Internal Controls

With the acquisitions of the Company’s subsidiaries, the Company has grown in size and revenues and management of the Company believes that currently its internal controls over financial reporting are efficient and effective; however, given the time constraints and growth of the Company, management believes that it will likely examine and change the process of reporting financial matters and internal control will likely change. There was no change that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II — OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS

There are no legal proceedings against the Company and the Company is unaware of such proceedings contemplated against it.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

From inception (September 25, 2014), the Company has issued common shares pursuant to Section 4(2) of the Securities Act of 1933 as follows:

(1)

On September 25, 2014, the Company issued the following shares of its common stock:

Name	Number of Shares
James Cassidy		4,100,000
James McKillop		4,100,000

(2)

On February 20, 2015, 7,995,000 shares were cancelled, pro rata, on February 20, 2015 from the holders.

(3)

On February 21, 2015, the Company issued 123,615,000 shares as follows:

Name	Number of Shares
Liaoning Fuda Mining Co., LTD		25,010,000
Dandong Hao Han Mining Co., LTD		23,780,000
Xiaobin Wu		21,115,000
B. Square Pty LTD		19,680,000
JFL International Group Private Limited		14,350,000
Lina Wu		14,350,000
Lihua Sun		5,330,000

(4)

Between July 1, 2015 and September 7, 2015, the Company subsequently cancelled those 123,615,000 shares that were issued on February 21, 2015.

(5)

Between July 1, 2015 and September 7, 2015, 59,794,307 shares of common stock were issued by the Company to shareholders pursuant to executed subscription agreements under a Regulation D offering or other private placement of securities. Each of these transactions was issued as part of the private placement of securities by the Company in which no underwriting discounts or commissions applied to any of the transactions. The Company conducted such private placement offering in order to build a base of shareholders and establish relationships with a variety of shareholders. Tiber Creek Corporation did not assist the Company in conducting the offering.

(6)

On September 30, 2015, the Company issued 45,920,002 shares of common stock in connection with the Acquisitions.

(7)

On October 1, 2015, the Company issued 100 shares each to 350 shares for a total of 35,000 shares of common stock as compensation.

The number of shares above is shown as post-split numbers of shares. The Company effectuated a 41-for-100 reverse stock split in October 2015.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On September 30, 2015, the Board of Directors approved the 41-for-100 reverse stock split and resolved to present the matter to a vote of shareholders at a special meeting of the stockholders held October 1, 2015. The 41-for-100 reverse stock split was approved with a record date of October 1, 2015.

ITEM 5. OTHER INFORMATION

(a)

Not applicable.

(b)

Item 407(c)(3) of Regulation S-K:

During the quarter covered by this Report, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

ITEM 6. EXHIBITS

(a)

Exhibits

Number		Item

31		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes- Oxley Act of 2002
32		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FUDA GROUP (USA) CORPORATION

By:	/s/ Xiaobin Wu
	President, Chief Executive Office and Chief Financial Officer

Dated: November 14, 2016

Fuda Group (USA) Corp 10-Q