Sterling Consolidated (STCC) 10-Q 27 Sep 21 2021 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Sep. 27, 2021
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity Registrant Name	STERLING CONSOLIDATED Corp
Entity File Number	333-183246
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	45-1840913
Entity Address, Address Line One	1105 Green Grove Road
Entity Address, Postal Zip Code	07753
Entity Address, State or Province	NJ
Entity Address, City or Town	Neptune
City Area Code	732
Local Phone Number	918-8004
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		47,284,689
Entity Central Index Key	0001555972
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false
Title of 12(b) Security	Common
Trading Symbol	STCC

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Current assets
Cash and cash equivalents	$ 206,911	$ 171,818
Account receivable, net	1,477,160	1,177,928
Inventory, net	2,609,902	3,045,718
Notes receivable and other current assets	78,675	20,847
Total current assets	4,372,648	4,416,311
Property and equipment, net	916,654	1,448,071
Intangible assets, net	84,284	91,284
Deferred tax asset	212,349	325,807
Total assets	5,585,935	6,281,473
Current liabilities
Accounts payable and accrued expenses	602,583	1,042,828
Asset-based line of credit	518,719	896,913
Other liabilities	4,325	5,330
Current portion of long-term notes payable, rel. party	52,702	52,702
Current portion of long-term notes payable	41,953	257,610
Total current liabilities	1,220,282	2,255,383
Other liabilities
Long-term notes payable, related party	601,025	749,074
Long-term notes payable	1,709,252	1,839,488
Total other liabilities	2,310,277	2,588,562
Total liabilities	3,530,559	4,843,945
Stockholders' equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued
Common stock, $0.001 par value; 200,000,000 shares authorized, 47,284,689 shares issued and outstanding as of June 30, 2021 and December 31, 2020.	47,285	47,285
Additional paid-in capital	2,569,249	2,569,249
Accumulated deficit	(561,158)	(1,179,006)
Total stockholders' equity	2,055,376	1,437,528
Total liabilities and stockholders' equity	$ 5,585,935	$ 6,281,473

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	0	0
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	200,000,000	200,000,000
Common Stock, Shares, Issued	47,284,689	47,284,689
Common Stock, Shares, Outstanding	47,284,689	47,284,689

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenues
Total revenues	$ 2,651,885	$ 2,157,473	$ 4,998,239	$ 4,553,127
Cost of sales
Total cost of sales	2,051,798	1,997,671	3,827,052	3,572,190
Gross profit	600,087	159,802	1,171,187	980,937
Operating expenses
Sales and marketing	84,908	15,900	162,040	91,257
General and administrative	295,461	457,874	761,164	825,877
Total operating expenses	380,369	473,774	923,204	917,134
Operating income (expense)	219,718	(313,972)	247,983	63,803
Other income (expense)
Other	2,981	2,981	5,963	5,963
Loss on theft				(10,000)
Interest expense	(37,065)	(41,331)	(74,070)	(93,335)
Gain on sale of real estate			225,330
Gain on PPP loan forgiveness	326,100		326,100
Total other income (expense)	292,016	(38,350)	483,323	(97,372)
Income (loss) before provision for income taxes	511,734	(352,322)	731,306	(33,569)
Provision (benefit) for income taxes	51,978	(106,502)	113,458	(10,255)
Net income (loss)	$ 459,756	$ (245,820)	$ 617,848	$ (23,314)
Net income (loss) per share of common stock:
Basic and diluted	$ 0.01	$ (0.01)
Weighted average number of shares outstanding
Basic and diluted	47,284,689	47,284,689	47,284,689	47,284,689
O-rings and rubber product sales [Member]
Revenues
Total revenues	$ 2,549,529	$ 2,112,057	$ 4,760,094	$ 4,476,530
Cost of sales
Total cost of sales	1,925,347	1,932,632	3,529,227	3,441,246
Freight services [Member]
Revenues
Total revenues	102,356	45,416	238,145	76,597
Cost of sales
Total cost of sales	$ 126,451	$ 65,039	$ 297,825	$ 130,944

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2019	$ 47,285	$ 2,569,249	$ (1,103,727)	$ 1,512,807
Balance (in shares) at Dec. 31, 2019	47,284,689
Net income			(23,314)	(23,314)
Balance at Jun. 30, 2020	$ 47,285	2,569,249	(1,127,041)	1,489,493
Balance (in shares) at Jun. 30, 2020	47,284,689
Balance at Dec. 31, 2020	$ 47,285	2,569,249	(1,179,006)	1,437,528
Balance (in shares) at Dec. 31, 2020	47,284,689
Net income			617,848	617,848
Balance at Jun. 30, 2021	$ 47,285	$ 2,569,249	$ (561,158)	$ 2,055,376
Balance (in shares) at Jun. 30, 2021	47,284,689

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities
Net income	$ 617,848	$ (23,314)
Adjustments to reconcile net income (loss) income to net cash provided by operating activities:
Depreciation and amortization	51,247	64,248
Gain on sale of real estate	(225,330)
Changes in operating assets and liabilities:
Accounts receivable	(299,232)	111,683
Inventory	435,816	393,517
Prepaids and other current assets	(57,828)	(63,926)
Deferred tax asset	113,458	(11,151)
Accounts payable and accrued interest payable	(440,245)	(465,545)
Other liabilities	(1,005)
Net cash provided by operating activities	194,729	5,512
Cash flows from investing activities
Proceeds from sale of real estate	712,500
Net cash used in investing activities	712,500
Cash flows from financing activities
Net paydown on asset-based line of credit	(593,851)	(190,916)
Net paydown on notes payable	(130,236)	356,316
Net paydown on related party note	(148,049)	(231,433)
Net cash provided by financing activities	(872,136)	(66,033)
Net change in cash and cash equivalents	35,093	(60,521)
Cash and cash equivalents at the beginning of period	171,818	106,348
Cash and cash equivalents at the end of period	206,911	45,827
Supplemental disclosures of cash flow information:
Cash paid for interest	$ 74,070	93,335
Cash paid for taxes		$ 1,338

BASIS OF PRESENTATION

BASIS OF PRESENTATION	6 Months Ended
	Jun. 30, 2021
BASIS OF PRESENTATION
BASIS OF PRESENTATION	NOTE 1 – BASIS OF PRESENTATION The accompanying interim financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows as of and for the period ended, and for all periods presented herein, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2020 audited financial statements. The results of operations for the periods ended June 30, 2021 and June 30, 2020 are not necessarily indicative of the operating results for the full years. COVID-19 In the first quarter of 2020 the Company was affected by COVID-19. The COVID-19 pandemic has caused us to modify our business practices (including employee travel, employee work locations, and reduction of physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. We reiterate that COVID 19 has affected our results of operations and the first quarter 2020 financial results are not necessarily indicative of the annual 2021 results. COVID-19 continues to affect the world economy in 2021. The extent to which COVID-19 impacts our business, results of operations and financial condition will depend on future developments, which are uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Even after the coronavirus outbreak has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future.

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Jun. 30, 2021
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES	NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES The accounting policies applied by the Company in these condensed interim financial statements are the same as those applied by the Company in its audited consolidated financial statements as at and for the year ended December 31, 2020. ASU 2016-13, "Financial Instruments - Credit Losses" (Topic 326) This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an "expected loss" model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected. The standard was effective for fiscal years beginning after December 15, 2019. Management has evaluated the impact in 2021 and 2020 and has concluded the effect is not material to the Consolidated Financial Statements as a whole. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the accounts receivable and sales allowances, fair values of financial instruments, useful lives of intangible assets and property and equipment, inventory valuations, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Inventories Inventories, which are comprised of finished goods, are stated at the lower of cost (based on weighted average method) or market. Cost does not include shipping and handling fees, which are charged directly to income. The Company provides for estimated losses from obsolete or slow-moving inventories, which is approximately 20% of the total inventory, and writes down the cost of inventory at the time such determinations are made. Reserves are estimated based upon inventory on hand, historical sales activity, industry trends, the business environment, and the expected net realizable value. The net realizable value is determined based upon current awareness of market prices. ​ ​ ​ ​ ​ ​ ​ ​ Inventory Type June 30, 2021 December 31, 2020 Finished goods ​ $ 3,341,094 ​ $ 3,776,910 Raw materials ​ — ​ — Work-in-progress ​ — ​ — Inventory Reserve ​ (731,192) ​ (731,192) Net Inventory ​ $ 2,609,902 ​ $ 3,045,718 ​ Revenue Recognition The Company recognizes revenue based on Account Standards Codification ("ASC") Revenue from Contracts with Customers Basic and Diluted Earnings per Share The computation of basic earnings (loss) per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings (loss) per share includes common stock equivalents outstanding at the balance sheet date. The Company had 10,800,000 and 10,800,000 stock options that would have been included in the fully diluted earnings per share for the three and six month periods ended June 30, 2021 and 2020, respectively.

CLOSURE OF FLORIDA OFFICE AND S

CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE	6 Months Ended
	Jun. 30, 2021
CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE
CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE	NOTE 3- CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE In the first quarter of 2020, the Company closed down its Florida operations and consolidated the sales accounts with its New Jersey based sales force based out of the Company’s headquarters in Neptune, New Jersey. The Company owns the Florida property unencumbered and intends to sell it in 2020. The closure was an effort to reduce costs and consolidate operations and was not related to COVID-19. On March 30, 2021 the Company sold its building and land in Apopka, Florida. The proceeds on the sale were $712,500 and the company recorded a gain on the sale of $225,330.

LOSS ON THEFT

LOSS ON THEFT	6 Months Ended
	Jun. 30, 2021
LOSS ON THEFT
LOSS ON THEFT	NOTE 4 – LOSS ON THEFT In the first quarter of 2020, the Company was subjected to a fraudulent request for refund from an individual posing as a customer. The Company honored the refund request, but soon discovered the request was fraudulent. The Company had an initial loss of $92,435 and received $82,435 in the second quarter of 2020 from a claim with its insurance company. The net loss of $10,000 was recorded in other expense in the consolidated statement of operations for the 3 months ended March 31, 2020.

PPP 1ST DRAW FORGIVENESS

PPP 1ST DRAW FORGIVENESS	6 Months Ended
	Jun. 30, 2021
PPP 1ST DRAW FORGIVENESS
PPP 1ST DRAW FORGIVENESS	NOTE 5 – PPP 1 ST DRAW FORGIVENESS In May of 2021, the Company’s Paycheck Protection Program

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	6 Months Ended
	Jun. 30, 2021
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	NOTE 6 – SUBSEQUENT EVENTS Management reviewed transactions for subsequent events from June 30, 2021 through September 27, 2021. None were noted.

SIGNIFICANT ACCOUNTING POLICI_2

SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jun. 30, 2021
SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the accounts receivable and sales allowances, fair values of financial instruments, useful lives of intangible assets and property and equipment, inventory valuations, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
Inventories	Inventories Inventories, which are comprised of finished goods, are stated at the lower of cost (based on weighted average method) or market. Cost does not include shipping and handling fees, which are charged directly to income. The Company provides for estimated losses from obsolete or slow-moving inventories, which is approximately 20% of the total inventory, and writes down the cost of inventory at the time such determinations are made. Reserves are estimated based upon inventory on hand, historical sales activity, industry trends, the business environment, and the expected net realizable value. The net realizable value is determined based upon current awareness of market prices. ​ ​ ​ ​ ​ ​ ​ ​ Inventory Type June 30, 2021 December 31, 2020 Finished goods ​ $ 3,341,094 ​ $ 3,776,910 Raw materials ​ — ​ — Work-in-progress ​ — ​ — Inventory Reserve ​ (731,192) ​ (731,192) Net Inventory ​ $ 2,609,902 ​ $ 3,045,718
Revenue Recognition	Revenue Recognition The Company recognizes revenue based on Account Standards Codification ("ASC") Revenue from Contracts with Customers
Basic and Diluted Earnings per Share	Basic and Diluted Earnings per Share The computation of basic earnings (loss) per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings (loss) per share includes common stock equivalents outstanding at the balance sheet date. The Company had 10,800,000 and 10,800,000 stock options that would have been included in the fully diluted earnings per share for the three and six month periods ended June 30, 2021 and 2020, respectively.

SIGNIFICANT ACCOUNTING POLICI_3

SIGNIFICANT ACCOUNTING POLICIES (Tables)	6 Months Ended
	Jun. 30, 2021
SIGNIFICANT ACCOUNTING POLICIES
Schedule of inventory	​ ​ ​ ​ ​ ​ ​ ​ Inventory Type June 30, 2021 December 31, 2020 Finished goods ​ $ 3,341,094 ​ $ 3,776,910 Raw materials ​ — ​ — Work-in-progress ​ — ​ — Inventory Reserve ​ (731,192) ​ (731,192) Net Inventory ​ $ 2,609,902 ​ $ 3,045,718

SIGNIFICANT ACCOUNTING POLICI_4

SIGNIFICANT ACCOUNTING POLICIES - Inventories (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
SIGNIFICANT ACCOUNTING POLICIES
Finished goods	$ 3,341,094	$ 3,776,910
Raw materials	0	0
Work-in-progress	0	0
Inventory Reserve	(731,192)	(731,192)
Net Inventory	$ 2,609,902	$ 3,045,718

SIGNIFICANT ACCOUNTING POLICI_5

SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - shares	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
SIGNIFICANT ACCOUNTING POLICIES
Estimated Losses of Obsolete or Slow Moving Inventory Percent	20.00%
Incremental Common Shares Attributable to Dilutive Effect of Call Options and Warrants	10,800,000	10,800,000

CLOSURE OF FLORIDA OFFICE AND_2

CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE (Details) - USD ($)	Mar. 30, 2021	Jun. 30, 2021
CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE
Gain on sale of real estate	$ 225,330	$ 225,330
Proceeds from sale of real estate	$ 712,500

LOSS ON THEFT (Details)

LOSS ON THEFT (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Initial loss on theft				$ 92,435
Amount of claim received from insurance company		$ 82,435
Net loss	$ 459,756	$ (245,820)		$ 617,848	$ (23,314)
Other Expense [Member]
Net loss			$ (10,000)

PPP 1ST DRAW FORGIVENESS (Detai

PPP 1ST DRAW FORGIVENESS (Details)	1 Months Ended
	May 31, 2021USD ($)
Paycheck Protection Program
Loan forgiven amount	$ 326,100