ZHUDING INTERNATIONAL LIMITED

Transcription

1 ZHUDING INTERNATIONAL LIMITED State of Incorporation: Nevada Company Address: 20th Floor, Block 9, Thaihot plaza, Hengyu Road, Fuzhou Fujian, China Telephone: : CorporateWebsite: ng.com SIC Code: 152/1521/153/1531/15 4/1541 Quarterly Report For the period ended June 30June 30, 2018 The number of shares outstanding of our Common Stock is 401,181,506 as of June 30,2018 The number of shares outstanding of our Common Stock was 401,181,506 as of December 31, 2017 Indicate by check mark whether the company is a shell company (as defined in Rule405 of the Securities Act of 1933 and Rule12b-2 of the Exchange Act of 1934): Yes: No: Indicate by check mark whether the company s shell status has changed since the previous reporting period: Yes: No: Indicate by check mark whether a change in control of the company has occurred over this reporting period: Yes: No:

2 Disclosure Regarding Forward-Looking Statements Any reference to Zhuding (which may also be referred to as the Company, we, us or our ) means Zhuding International Limited and its consolidated subsidiary. This report contains forward-looking statements. Forward-looking statements are subject to many risks and uncertainties, which include, but are not limited to, statements about our financial position, result of operations, business, competitive position, potential growth opportunities, future operating performance, effect of competition, the effects of future legislation or regulations and plans and objectives of our management for future operations. Any statement which is not a statement of historical fact should be considered a forward-looking statement. We made forward-looking statements based on our management s expectation and assumptions together with information available to our management when the statements are made. Use of the words may, should, can, plan, potential, anticipate, believe, estimate, expect, intend, could, project, likely or like words and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. These forward-looking statements rely on assumptions, estimates and predictions that could be inaccurate and that are subject to risks and uncertainties, should any of risks or uncertainties materialize or any future event occur, our actual results could differ materially from expected results. Forward-looking statements speak only as of the date of this report. We undertake no obligation to update any forward looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

3 TABLE OF CONTENTS Page Item 1 Exact name of the issuer and the address of its principal executive offices 2 Item 2 Shares outstanding 2 Item 3 Interim financial statements 3-13 Item 4 Management s Discussion and Analysis or Plan of Operation Item 5 Legal proceedings 16 Item 6 Defaults upon senior securities 16 Item 7 Other information 16 Item 8 Exhibits 16 Item 9 Issuer s Certifications

4 Item1 Exact name of the issuer and the address of its principal executive offices. The name of the Company is Zhuding International Limited.The Company was formerly called Van Gold Resources,Inc.and changed its name to Zhuding International Limited on July 18, Address:20th Floor, Block 9, Thaihot plaza, Hengyu Road, Fuzhou Fujian, China. Telephone: , Corporate Website: Contact person: Han Jin Item 2 Shares outstanding. Period end date June 30, 2018 Dec 31, 2017 Dec 31, 2016 Number of shares authorized Common stock: 490,000,000 Preferred stock: 10,000,000 Common stock: 490,000,000 Preferred stock: 10,000,000 Common stock: 490,000,000 Preferred stock: 10,000,000 Number of shares Common stock: 401,181,506 Common stock: 401,181,506 Common stock: 401,181,506 outstanding Preferred stock: Nil Preferred stock: Nil Preferred stock: Nil Freely tradable shares (public float) Number of beneficial shareholders owning at least 100 shares Total number of shareholders of record 41,181,506 41,181,506 41,181,

5 Item3 Interim financial statements. CONSOLIDATED BALANCE SHEETS (Stated in US Dollars) ASSETS Current Assets June 30, 2018 (unaudited) December 31, 2017 (audited) Cash and cash equivalents $ 29,919,577 $ 24,366,007 Trade receivables, net 2,011,275 3,403,391 Inventories 3,752,910 3,747,756 Other receivables 49,875 50,504 Total Current Assets 35,733,637 31,567,658 Property, plant and equipment, net 692, ,453 Total Assets $ 36,426,335 $ 32,339,111 Current Liabilities Trade payables 3,012,634 3,357,289 Salary and related costs payables 254, ,688 Advance from customers 3,876,160 1,812,104 Other payables 2,177,091 2,468,285 Amount due to directors 559, ,084 Income tax payable 890,688 1,191,755 Total current liabilities 10,770,348 9,685,205 Total Liabilities $ 10,770,348 $ 9,685,205 Commitments and Contingencies (Note 10) Stockholders' Equity: Preferred stock:$0.001 par value,10,000,000 shares authorized; No shares issued and outstanding Common stock, $0.001 par value; 490,000,000 shares authorized; 401,181,506 shares outstanding 401, ,182 Additional paid-in capital - - Statutory reserves 801, ,490 Accumulated other comprehensive income (491,991) (82,239) Retained earnings 24,945,306 21,533,473 Total Stockholder s equity 25,655,987 22,653,906 Total Liabilities and Stockholders Equity $ 36,426,335 $ 32,339,111 3

6 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited, Stated in US Dollars) For the three months ended June 30, For the six months ended June 30, Revenue $ 14,639,658 $ 10,417,124 $ 26,162,418 $ 20,069,946 Cost of Revenue (10,537,006) (7,841,161) (19,221,211) (15,175,018) Gross Profit 4,102,652 2,575,963 6,941,207 4,894,928 Operating Expenses: Selling and Distribution (444,923) (357,934) (859,987) (705,654) General and Administrative (446,254) (454,994) (822,738) (768,723) Research and Development (13,667) (13,549) (29,549) (26,854) Total Operating Expenses (904,844) (826,477) (1,712,274) (1,501,231) Income from Operations 3,197,808 1,749,486 5,228,933 3,393,697 Other Income, Net 24,268 13,470 41,568 28,025 Income before Income Taxes 3,222,076 1,762,956 5,270,501 3,421,722 Income Tax Expenses (1,167,294) (690,123) (1,858,668) (1,310,761) Net Income $ 2,054,782 $ 1,072,833 $ 3,411,833 $ 2,110,961 Other Comprehensive Income-foreign currency translation adjustment (1,320,472) 293,035 (409,752) 573,682 Total Comprehensive Income $ 734,310 $ 1,365,868 $ 3,002,081 $ 2,684,643 Earnings per share: Basic and diluted $ $ $ $ Weighted average number of outstanding shares 401,181, ,181, ,181, ,181,506 4

7 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, Stated in US Dollars) Cash Flows from Operating Activities: For the six months ended June 30, Net income $ 3,411,833 $ 2,110,962 Adjustments reconcile net Income to cash provided by operating activities: Depreciation expenses 72,425 68,152 Loss on disposal of property, plant and equipment - - Changes in operation assets and liabilities: Inventories (5,154) (445,042) Trade receivables 1,392,116 (763,695) Other receivables 629 (10,054) Trade payables (344,655) (324,533) Salary and related costs payables (155,594) (107,846) Advance from customers 2,064,056 (1,987,204) Other payables (592,261) (8,779) Amount due to directors 113, ,023 Net cash provided by operating activities 5,956,993 (1,363,017) Cash flows from investing activities: Purchase of plant and equipment - (2,955) Proceeds from disposal of plant and equipment - - Net cash used in investing activities - (2,955) Effect of exchange rate changes on cash (403,423) 400,811 Net increase in cash and cash equivalents 5,553,570 (965,161) Cash and cash equivalents at the beginning of period 24,366,007 20,768,166 Cash and cash equivalents at end of period $ 29,919,577 $ 19,803,005 5

8 Note 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Corporation formation and development Zhuding International Limited ( the Company, we, or us ) was incorporated in the State of Nevada on December 18, 2006 with fiscal year end on December 31. The Company was formerly known as Van Gold Resources, Inc. andchanged its name to Zhuding International Limited on July 18, On July 29, 2016, we effected a 1 for 100 reverse stock split. Each one outstanding share of the Company s common stock, par value $0.001 per share, was converted into 0.01 outstanding share of common stock of the Company, par value $0.001 per share (the Reverse Stock Split ). Immediately prior to the effectiveness of the reverse stock split, we had 478,150,511 shares of common stock of the Company issued and outstanding. Immediately upon the effectiveness of the reverse stock split, we had 4,781,506 shares of common stock of the Company issued and outstanding. On August 3, 2016, 3,600,000 shares owned by two original shareholders of the Company were cancelled, and we thus had 1,181,506 shares of common stock of the Company issued and outstanding. On August 5, 2016, the Company entered into a share exchange agreement (the SEA ) with (i) Taiping Futong International Holdings Limited (Corporation), (ii) New Fame Ventures Limited (Corporation), (iii) Hetai Investments Limited (Corporation), (iv) Midasi Investment Limited (Corporation), all of which were incorporated in Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands, (v) Fortune United Capital Limited (Corporation), a company incorporated in British Virgin Islands, and (vi) Financier Inc. (Corporation), a company incorporated in British West Indies (all these six entities together referred as Counterparties ). Pursuant to the SEA, the Company acquired all the shares of Yuehong Investment Group Co.Ltd ( YueHong ), a British Virgin Islands company and a wholly owned subsidiary of the Counterparties, meanwhile we issued to the counterparties 400,000,000 newly issued shares, accounting for 99.7% issued and outstanding shares of the Company on a post transaction basis (the Share Exchange ). The closing of the Share Exchange resulted in a change of control. As a result of the Share Exchange the Company abandoned prior business, and started pursuing the business of manufacturing innovative building materials. Fujian Zhuding Building Materials Co. Ltd ( Fujian Zhuding ), one of the Company s whollyowned PRC subsidiaries, is mainly conducting business in this area. For accounting purposes, the Share Exchange is treated as a reverse acquisition, where the Company was treated as the acquiree and YueHong as the acquirer. Description of Business Fujian Zhuding was incorporated in 2012, since its establishment Fujian Zhuding was committed to research, develop, manufacture, sell and integrate innovative building materials. Currently its products encompass mainly two products, i.e. wall panel trade and precast panel manufacture & engineering. Our products are characterized by fire insulation, thermal insulation, light weight, high strength, strong durability, and suitability for prefabrication construction. Additionally, ease of use, adaptability to all kinds of weather, maintenance free are obvious advantages over other building materials. Our products are extensively used in guesthouses, hotels, commercial buildings, hospitals and residential buildings etc, while industrial solid waste, ash and slag are main materials for manufacturing the products. 6

9 Consolidation and Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( GAAP ) and are expressed in United States dollars. The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries which include YueHong Investment Group Co. Ltd, Zhuding International Limited (Hong Kong), Fujian Ding Yi Trading Co. Ltd and Fujian Zhuding Building Materials Co. Ltd (together referred as Group ). All significant intercompany balances and transactions have been eliminated in the consolidation. Foreign Currency - Group entities functional currency are the United State dollars for Zhuding International Limited, Hong Kong dollars for YueHong Investment Group Co. Ltd and Zhuding International Limited (Hong Kong) and Chinese Renminbi for Fujian Zhuding Building Materials Co., Ltd and Fujian Dingyi Trading Co., Ltd respectively. The revenue and expenses are translated into United States dollars at the average exchange rate for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses from translating their financial statements are included in accumulated other comprehensive income, which is a component of stockholders equity. Gains and losses arising from transactions denominated in a currency other than the functional currency of the entity are included in the results of operations. Accounting Estimates - The methodology used to prepare for the Company s financial statements is in conformity with the US GAAP, which requires the management of the Company ( Management ) to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Therefore, actual results could differ from those estimates. Financial instruments - The US GAAP accounting standards regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs are defined 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 asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; Level 3 inputs to the valuation methodology are unobservable. The financial instruments are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest. Cash and Cash Equivalents Cash and cash equivalents include interest bearing bank deposits with original maturities within three months, and cash on hand. The Company did not have any record of loss on this account and we don t expect it will incur any credit loss therefrom. Trade Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivables are carried at the original invoiced amounts less an allowance for doubtful accounts. The allowances for doubtful accounts are calculated based on a detailed review of certain individual customer accounts and an estimation of the overall economic conditions affecting the Company's customer base. The Company reviews a customer's credit history before extending credit to the customer. The Company s normal trade credit terms range from 30 to 180 days. If the financial condition of its customers were to deteriorate, 7

10 resulting in an impairment of their ability to make payments, additions to the allowance would be required. No provision is made for the six months ended June 30, 2018 and the years ended December 31, Inventories Inventories consist of raw materials, work in process and finished goods-precast panels and are stated at the lower of cost or market, except for finished goods-precast panel manufacture & engineering which are not subject to write down to net realizable value since it is installed but not verified by customers. Cost is determined using a weighted average. For work in process and manufactured inventories, cost consists of raw materials, direct labor and an allocated portion of the Company s production overhead. The Company writes down excess and obsolete inventory to its estimated net realizable value based upon assumptions about future demand and market conditions. For finished goods and work in process, if the estimated net realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable value. Market for raw materials is based on replacement cost. Provisions for inventory writedowns are included in cost of revenues in the consolidated statements of operations. Once written down, inventories are carried at this lower cost basis until sold or scrapped. There was no write-down during the six months ended June 30, 2018 and the years ended December 31, Property, Plant and Equipment, Net Property plants and equipment are stated at cost. Maintenance and repairs are charged to expenses as incurred and major improvements are capitalized. Gains or losses on sale, trade-in or retirement are included in operations during the period of disposition. Depreciation relating to office equipment was included in general and administrative expenses, while other depreciation was included in cost of revenue and research and development. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows: Years Plant and equipment 10 years Motor vehicles 5 years Office equipment 5 years Furniture & fittings 5 years Valuation of Long-Lived Assets The carrying values of long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying values may not be recoverable. When such an event occurs, the Company projects the undiscounted cash flows to be generated from the use of the asset and its eventual disposition over the remaining life of the asset. If projections indicate that the carrying value of an asset will not be recovered, it is reduced by the estimated excess of the carrying value over the projected discounted cash flows estimated to be generated by the asset. For the six months ended June 30, 2018 and the years ended December 31, 2017.the Company has no such impaired assets. Advances from customers This relates to deposit received from customers. Revenue Recognition For wall panel trade, revenue is recognized when control of the goods is transferred to the customers at amount to which the Company expects to be entitled in exchange for the goods. Generally control is determined to have been transferred when the goods have been physically delivered to the customers or to their designated persons, with the customers having ability to direct the use of, and obtain substantially all of the remaining benefit from the goods. And for precast panel manufacture & engineering, revenue is considered earned only when customer verifies and accepts them. As all 8

11 of our payment terms are short thus no significant financing component is incorporated into our contract with customer. There is no variable consideration in our contracts. Cost of Revenues Cost of revenues includes wages, materials, handling charges, cost of purchase of products and other expenses associated with the manufacture and delivery of products. Research and Development Research and development expenditures are recorded as expenses in the period in which they occur. Retirement Benefit Plans The Company is required to make monthly contributions at prescribed rates to various employee retirement benefit plans organized by the provincial governments. The benefit plans of the government assume the retirement benefit obligations of all existing and future retired employees of the Company. Contributions to these plans are charged to expense as incurred. Basic and Diluted Earnings per Common Share Basic and Diluted earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. There were no potential dilutive common shares outstanding during the six months ended June 30, 2018 and 2017, respectively. Income Taxes The Company has adopted FASB ASC Topic 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Credit Risk The carrying amount of accounts receivable included in consolidated balance sheet represents the Company's exposure to credit risk in relation to its financial assets. No other financial asset carries a significant exposure to credit risk. The Company performs ongoing credit evaluations of each customer's financial condition. Recent Accounting Pronouncements In May 2014, the FASB issued ASU , "Revenue from Contracts with Customers" (ASU ), which contains new accounting literature relating to how and when a company recognizes revenue. Under ASU , a company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. In July 2015, the FASB decided to delay the effective date of the new standard by one year; as a result, the new standard will be effective for annual and interim reporting periods beginning after December 15, 2017.The standard allows for two transition methods - retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial adoption. The Company adopted this standard on January 1, 2018 with retrospective method. No adjustment to retained earnings was needed for the cumulative effect of initially applying the new standard In February 2016, the FASB issued ASU No , Leases, a new standard on accounting for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB's new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable users of 9

12 financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, using a modified retrospective approach. Early adoption is permitted. The Company has not completed an evaluation of the impact the pronouncement will have on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU No "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" which modifies the measurement of expected credit losses of certain financial instruments. This ASU is effective for fiscal years and interim periods within those years beginning after December 15, The Company is currently assessing the impact of this ASU on its consolidated financial statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies are not expected to have a material effect on the Company s financial position, result of operations or cash flows. NOTE 2 - INVENTORIES Inventory consisted of the following: June 30,2018 December 31, 2017 Raw materials $ $ - Work-in-progress 556, ,969 Finished goods 3,196,348 3,352,787 $ 3,752,910 $ 3,747,756 NOTE 3 PROPERTY, PLANT AND EQUIPMENT, Net Property, plant and equipment consisted of the following: June 30,2018 December 31, 2017 Plant and equipment $ 1,369,318 $ 1,386,586 Motor vehicles 22,982 23,271 Office equipment 17,432 17,652 Furniture & fittings - 20,661 1,409,732 1,448,170 Less: accumulated depreciation (717,034) (676,717) $ 692,698 $ 771,453 For the six months ended June 30, 2018 and 2017, depreciation expense was $ 72,425 and $ 68,152, respectively. 10

13 NOTE 4 SIGNIFICANT RELATED PARTY TRANSACTIONS Transactions between the Company and the respective related parties and directors during the financial year were as follows (majority of them arose from advances made by directors for OTC-listing related fees): Expense paid on behalf by directors for the six months ended June 30, 2018 and 2017 Amount due to directors as of June 30,2018 and December 31,2017 $ 113,900 $ 104,311 $ 559,681 $ 446,084 NOTE 5 INCOME TAXES Zhuding International Limited had no taxable income for United States income tax purposes for the six months ended June 30, 2018 and On December 22, 2017, the President signed into law Public Law No , a comprehensive tax reform bill commonly referred to as the Tax Cuts and Jobs Act (the Tax Act ) that makes significant changes to U.S. federal income tax laws. We have performed a preliminary assessment of the impact of the Tax Act. Based on the preliminary assessment we believe the Tax Act does not have any impact on our income tax and net profit All of the Company s income is generated in the PRC, through its subsidiary in Fujian province. They are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Chinese Enterprise Income Tax ( EIT ) law, the statutory corporate income tax rate applicable to Fujian Zhuding Building Materials Co., Ltd. is 25%. The EIT Law imposes a 10% withholding income tax, subject to reduction based on tax treaties where applicable, for dividends distributed by a foreign invested enterprise to its immediate holding company outside China. As the tax regulations involving transnational operation are very complicated, the Company was assumed to reinvest undistributed earnings of its Chinese operations located in the PRC to estimate and determine the tax liability. As a result, there is no deferred tax expense related to withholding tax on the future repatriation of these earnings. The provision for income taxes consisted of the following: For the six months ended June 30, 2018 June 30, 2017 Current $ 1,858,668 $ 1,310,761 Deferred - - Income tax expenses $ 1,858,668 $ 1,310,761 Following is a reconciliation of income taxes calculated at the federal statutory rates to the provision for income taxes: 11

14 For the six months ended June 30, 2018 June 30, 2017 Tax at statutory rate of 25% $ 1,317,625 $ 855,431 Expenses not deductible for income 512, ,999 tax purposes Other, 28,475 15,331 Income tax expenses $ 1,858,668 $ 1,310,761 The Company also incurred various other taxes, comprised primarily of value-added taxes, urban construction taxes, education surcharges and others. Any unpaid amounts are reflected on the balance sheets as accrued taxes payable. NOTE 6 STOCKHOLDERS EQUITY The Company s authorized capital consists of 490,000,000 shares of common stock and 10,000,000 shares of preferred stock, par value $0.001 per share, among which, 401,181,506 shares of common stock were issued and outstanding, no preferred stock was issued. On July 29, 2016, we effected a 1 for 100 Reverse Stock Split. Each outstanding share of Company s common stock, par value $0.001 per share, was converted into 0.01 outstanding share of common stock of the Company, par value $0.001 per share at a 1 for 100 reverse split ratio (the Reverse Stock Split ). Immediately prior to the effectiveness of the reverse stock split, we had 478,150,511 shares of common stock of the Company issued and outstanding. Immediately upon the effectiveness of the reverse stock split, we have 4,781,506 shares of common stock of the Company issued and outstanding. On August , 3,600,000 shares owned by two original shareholders of the Company were cancelled, and we thus we had 1,181,506 shares of common stock of the Company issued and outstanding. On August 5, 2016, 400,000,000 new shares were issued by the Company to effect the share exchange agreement (the SEA ) as note 1. Companies incorporated in China are required to allocate 10% of profit to Statutory Reserve until which reach 50% of share capital, the Statutory Reserve is not allowed to distribute except in the case of liquidation. The statutory Reserve of our operating company Fujian Zhuding reached 50% of its share capital by To eliminate the negative amount of additional paid-in capital derived from accounting for reverse acquisition we transferred USD555,870 from retained earnings to additional paid-in capital with approval of the Board. NOTE 7 COMMITMENTS AND CONTIGENCIES The company as the lessee As at the end of the reporting period, there were non-cancellable operating lease commitments for rental payable in subsequent accounting periods as follows: Rental commitment, for years ended December 31: Amount 12

15 2018 $ 217, , , , ,162 Thereafter 1,187,667 $ 3,044,673 The above operating lease commitments are based on existing rental rates at the end of each reporting period. NOTE 8 CONCENTRATIONS AND RISKS For the six months ended June 30, 2018, no customer accounted for more than 10.0% of sales and no customer accounted for more than 10% of accounts receivable. The three largest suppliers accounted 54.8%, 19.6%, 14.3% of goods purchases respectively. For the six months ended June 30, 2017, no customer accounted for more than 10% of sales and one supplier accounted for 48.2%, another supplier accounted for 17.4%, third supplier accounted for 16.9% and fourth supplier accounted for 13.3% of goods purchases; one customer accounted for 11.6% and another customer accounted for 11.2% of accounts receivable. Item4 Management s Discussion and Analysis or Plan of Operation. Results of Operations for the three months ended June 30 as follows: For the three months ended June 30, change Revenue $ 14,639,658 $ 10,417, % Cost of Revenue (10,537,006) (7,841,161) 34.4% Gross Profit 4,102,652 2,575, % Operating Expenses: Selling and Distribution (444,923) (357,934) 24.3% General and Administrative (446,254) (454,994) -1.9% Research and Development (13,667) (13,549) 0.9% Total Operating Expenses (904,844) (826,477) 9.5% Income from Operations 3,197,808 1,749, % 13

16 Other Income, Net 24,268 13, % Income before Income Taxes 3,222,076 1,762, % Income Tax Expenses (1,167,294) (690,123) 69.1% Net Income $ 2,054,782 $ 1,072, % Revenue by products For the three months ended June 30, change Total 14,639,658 10,417, % Wall panel trade 4,247,824 2,638, % Precast panel manufacture & engineering 10,391,834 7,778, % Our total revenue for the three months ended June 30, 2018 grew by 40.5% compared to the same period in 2017, in terms of RMB which is our main functional currency total revenue for the three months ended June 30, 2018 grew by significant 32.4% as both products achieved remarkable growth. Our gross profit margin for the three months ended June 30, 2018 rose robustly due to increased turnover combined with higher margin. Total operating expenses increased following sale growth but in less degree which was mainly due to increased transportation expense. Because our pre-tax profit has increased, and more types of expenses were allowable for tax deduction, our net income surged greatly or the three months ended June 30, 2018 year-over-year. Results of Operations for the six months ended June 30 as follows: For the six months ended June 30, change Revenue $ 26,162,418 $ 20,069, % Cost of Revenue (19,221,211) (15,175,018) 26.7% Gross Profit 6,941,207 4,894, % Operating Expenses: Selling and Distribution (859,987) (705,654) 21.9% 14

17 General and Administrative (822,738) (768,723) 7.0% Research and Development (29,549) (26,854) 10.0% Total Operating Expenses (1,712,274) (1,501,231) 14.1% Income from Operations 5,228,933 3,393, % Other Income, Net 41,568 28, % Income before Income Taxes 5,270,501 3,421, % Income Tax Expenses (1,858,668) (1,310,761) 41.8% Net Income $ 3,411,833 $ 2,110, % Revenue by products For the six months ended June 30, change Total 26,162,418 20,069, % Wall panel trade 7,135,745 5,037, % Precast panel manufacture & engineering 19,026,673 15,032, % Our total revenue for the six months ended June 30, 2018 grew by 30.4% compared to the same period in 2017, in terms of RMB which is our main functional currency total revenue for the six months ended June 30, 2018 grew by significant 21.4% as both products achieved remarkable growth. Our gross profit margin for the six months ended June 30, 2018 rose robustly due to increased turnover combined with higher margin, particularly caused by big growth for the three months ended June 30, Total operating expenses increase was mainly due to increased transportation expense linked to sale volume.. Because our pre-tax profit has increased, and more types of expenses were allowable for tax deduction, our net income surged greatly for the six months ended June 30, 2018 year-over-year. Cash flow For the six months ended June 30, Cash and cash equivalents at the beginning of the period $ 24,366,007 $ 20,768,166 15

18 Net cash flows from operating activities 5,956,993 (1,363,017) Net cash flows from investing activities - (2,955) Net cash flow from financing activities - - Effect of exchange rate on cash (403,423) 400,811 Cash and cash equivalents at the end of the period $ 29,919,577 $ 19,803,005 Our net cash flow used in operating activities for the six months ended June 30, 2018 amounted to 5,956,993, which was remarkable improvement compared to the same period of It was mainly because we received many orders in the late 2016 while the corresponding products were not scheduled to be delivered until 2017, but advanced amount were paid by our customers in 2016, nevertheless in the six months ended June 30, 2018 we received a lot of advanced payments for which we have not delivered our orders as of June 30, Our financial position and liquidity improved during the six months ended June 30, We still maintain adequate liquidity by measuring internal operating cash flow and current ratio. In the future, we may seek external financings through securities or loan to accelerate our growth. Item 5 Legal proceedings. None. Item 6 Defaults upon senior securities. None. Item 7 Other information. None. Item 8 Exhibits. None. Item 9 Issuer s Certifications. I, Mulin Xiang certify that: 1. I have reviewed this quarterly disclosure statement of Zhuding International Limited; 2. Based on my knowledge, this disclosure statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this disclosure statement; and 3. Based on my knowledge, the financial statements, and other financial information included or incorporated by reference in this disclosure statement, fairly present in all material respects the financial condition, results of operations and cash flows 16

19 of the issuer as of, and for, the periods presented in this disclosure statement. Date: Aug 11, 2018 /s/mulin Xiang Name: Mulin Xiang Title: Chief Executive Officer, Chief Financial Officer, and Director 17