Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Jan. 19, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 333-183246 | |
Entity Registrant Name | STERLING CONSOLIDATED Corp | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 45-1840913 | |
Entity Address, Address Line One | 1105 Green Grove Road | |
Entity Address, City or Town | Neptune | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 07753 | |
City Area Code | 732 | |
Local Phone Number | 918-8004 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | No | |
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 | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Trading Symbol | STCC | |
Title of 12(b) Security | Common |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 117,618 | $ 569,281 |
Account receivable, net | 3,128,466 | 1,474,570 |
Inventory, net | 3,352,663 | |
Notes receivable and other current assets | 55,674 | 171,674 |
Total current assets | 7,392,058 | 5,568,188 |
Property and equipment, net | 812,781 | 918,115 |
Intangible assets, net | 73,784 | 77,284 |
Deferred tax asset | 172,252 | 199,655 |
Total assets | 8,450,875 | 6,763,242 |
Current liabilities | ||
Accounts payable and accrued expenses | 3,063,985 | 1,422,031 |
Line of credit | 895,627 | 401,053 |
Other liabilities | 47,776 | 50,332 |
Current portion of long-term notes payable, rel. party | 52,702 | 52,702 |
Current portion of long-term notes payable | 36,554 | 39,858 |
Total current liabilities | 4,096,644 | 1,965,976 |
Other liabilities | ||
Long-term notes payable, related party | 246,343 | 767,159 |
Long-term notes payable | 1,668,672 | 1,691,728 |
Total other liabilities | 1,915,015 | 2,458,887 |
Total liabilities | 6,011,659 | 4,424,863 |
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 September 30, 2022 and December 31, 2021 | 47,285 | 47,285 |
Additional paid-in capital | 2,569,249 | 2,569,249 |
Common stock subscribed | 93,000 | 93,000 |
Accumulated deficit | (270,318) | (371,155) |
Total stockholders' equity | 2,439,216 | 2,338,379 |
Total liabilities and stockholders' equity | $ 8,450,875 | $ 6,763,242 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred shares authorized | 10,000,000 | 10,000,000 |
Preferred shares issued | 0 | 0 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common shares authorized | 200,000,000 | 200,000,000 |
Common shares issued | 47,284,689 | 47,284,689 |
Common Shares Outstanding | 47,284,689 | 47,284,689 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues | ||||
Total revenues | $ 4,728,018 | $ 2,640,976 | $ 11,498,796 | $ 7,639,215 |
Cost of sales | ||||
Total cost of sales | 4,104,741 | 1,833,214 | 9,506,372 | 5,660,266 |
Gross profit | 623,277 | 807,762 | 1,992,424 | 1,978,949 |
Operating expenses | ||||
Sales and marketing | 86,452 | 43,858 | 250,863 | 205,898 |
General and administrative | 627,142 | 535,887 | 1,543,523 | 1,297,051 |
Total operating expenses | 713,594 | 579,745 | 1,794,386 | 1,502,949 |
Operating (loss) income | (90,317) | 228,017 | 198,038 | 476,000 |
Other income (expense) | ||||
Other | 10,228 | 7,502 | 16,150 | 13,464 |
Gain on PPP loan forgiveness | 326,100 | |||
Interest expense | (11,161) | (21,706) | (83,698) | (95,776) |
Gain on sale of real estate | 225,330 | |||
Total other income (expense) | (933) | (14,204) | (67,548) | 469,118 |
Income before provision (benefit) for income taxes | (91,250) | 213,813 | 130,490 | 945,118 |
Provision for (benefit from) income taxes | (19,279) | (17,693) | 29,653 | 95,765 |
Net income (loss) | $ (71,971) | $ 231,506 | $ 100,837 | $ 849,353 |
Net income (loss) per share of common stock: | ||||
Basic | $ 0 | $ 0 | $ 0 | $ 0.02 |
Fully diluted | $ 0 | $ 0 | $ 0 | $ 0.01 |
Weighted average number of shares outstanding | ||||
Basic | 47,284,689 | 47,284,689 | 47,284,689 | 47,284,689 |
Fully diluted | 57,584,689 | 57,584,689 | 57,584,689 | 57,584,689 |
O-rings and rubber product sales | ||||
Revenues | ||||
Total revenues | $ 4,370,823 | $ 2,508,935 | $ 10,880,506 | $ 7,269,029 |
Cost of sales | ||||
Total cost of sales | 3,768,974 | 1,670,126 | 8,838,253 | 5,199,353 |
Freight services | ||||
Revenues | ||||
Total revenues | 357,195 | 132,041 | 618,290 | 370,186 |
Cost of sales | ||||
Total cost of sales | $ 335,767 | $ 163,088 | $ 668,119 | $ 460,913 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS'EQUITY - USD ($) | Common Stock | Common Stock Subscribed | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at the beginning at Dec. 31, 2020 | $ 47,285 | $ 2,569,249 | $ (1,179,006) | $ 1,437,528 | |
Balance at the beginning (in shares) at Dec. 31, 2020 | 47,284,689 | ||||
Net income | 849,353 | 849,353 | |||
Balance at the ending at Sep. 30, 2021 | $ 47,285 | 2,569,249 | (329,653) | 2,286,881 | |
Balance at the ending (in shares) at Sep. 30, 2021 | 47,284,689 | ||||
Balance at the beginning at Dec. 31, 2021 | $ 47,285 | $ 93,000 | 2,569,249 | (371,155) | 2,338,379 |
Balance at the beginning (in shares) at Dec. 31, 2021 | 47,284,689 | ||||
Common stock subscribed at Sep. 30, 2022 | 93,000 | ||||
Net income | 100,837 | 100,837 | |||
Balance at the ending at Sep. 30, 2022 | $ 47,285 | $ 93,000 | $ 2,569,249 | $ (270,318) | $ 2,439,216 |
Balance at the ending (in shares) at Sep. 30, 2022 | 47,284,689 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities | ||
Net income | $ 100,837 | $ 849,353 |
Adjustments to reconcile net income (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 108,834 | 65,747 |
Gain on sale of real estate | (225,330) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,653,896) | (659,174) |
Inventory | (737,637) | 144,531 |
Prepaids and other current assets | 116,000 | (57,828) |
Deferred tax asset | 27,403 | 95,765 |
Accounts payable and accrued interest payable | 1,641,954 | (323,006) |
Other liabilities | (2,556) | (1,005) |
Net cash used in operating activities | (399,061) | (110,947) |
Cash flows from investing activities | ||
Proceeds from sale of real estate | 712,500 | |
Net cash provided by investing activities | 712,500 | |
Cash flows from financing activities | ||
Net borrowing (paydown) on line of credit | 494,574 | (46,917) |
Net paydown on notes payable | (26,360) | (135,101) |
Net paydown to related party note payable | (520,816) | (236,643) |
Net cash used in financing activities | (52,602) | (418,661) |
Net change in cash and cash equivalents | (451,663) | 182,892 |
Cash and cash equivalents at the beginning of period | 569,281 | 171,818 |
Cash and cash equivalents at the end of period | 117,618 | 354,710 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 83,698 | $ 95,776 |
Cash paid for taxes | $ 2,522 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2022 | |
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, 2021 audited financial statements. The results of operations for the periods ended September 30, 2022 and September 30, 2021 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 2022. 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 | 9 Months Ended |
Sep. 30, 2022 | |
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, 2021. 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 2022 and 2021 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 On July 1, 2022 the Company elected to change its method of valuing inventory to the FIFO method, whereas from April 1, 2018 until June 30, 2022 inventory was valued using the weighted average cost method. Management moved to weighted average in 2018 as at the time they believed that average cost was preferable under the then-existing economic environment of low inflation. In the current environment of high inflation, management believes FIFO will produce a more accurate cost of goods sold. In accordance with ASC 250-10-45-9, the Company determined that it is impracticable to determine the cumulative effect of applying this change retrospectively because detailed records of inventory purchases and sales are no longer available for all periods from April 1, 2018. Accordingly, the Company did not recognize a cumulative effect adjustment in retained earnings related to this change. Sufficient information exists to apply the FIFO cost method beginning April 1, 2018. As such, the new method has been applied prospectively to the Company’s inventory balances as of July 1, 2022. Inventories, which are comprised of finished goods, are stated at the lower of cost 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. September 30, 2022 December 31, 2021 Inventory Type (FIFO method) (Avg. cost method) Finished goods $ 4,821,491 $ 4,508,102 Raw materials — — Work-in-progress — — Inventory Reserve (731,192) (731,192) Net Inventory $ 4,090,299 $ 3,352,663 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 are included in the fully diluted earnings per share for the three and nine month periods ended September 30, 2022 and 2021, respectively. |
CLOSURE OF FLORIDA OFFICE AND S
CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE | 9 Months Ended |
Sep. 30, 2022 | |
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 sales force based out of the Company’s headquarters in Neptune, New Jersey. 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 in the first quarter of 2021. |
PPP 1ST DRAW FORGIVENESS
PPP 1ST DRAW FORGIVENESS | 9 Months Ended |
Sep. 30, 2022 | |
PPP 1ST DRAW FORGIVENESS | |
PPP 1ST DRAW FORGIVENESS | NOTE 4 – PPP 1 ST DRAW FORGIVENESS In May of 2021, the Company’s Paycheck Protection Program |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 5 - SUBSEQUENT EVENTS Management reviewed transactions for disclosable subsequent events from September 30, 2022 through January 19, 2023. On December 22, 2022 CEO, Darren DeRosa and Chairman of the Board Angelo DeRosa made a cashless exercise of options granted December 26, 2017 with a $0.03/share strike price. The STCC underlying stock closed at $0.0754 that day. Applying the cashless exercise feature equates to Darren DeRosa and Angelo DeRosa acquiring 1,866,578 and 1,866,578 shares, respectively. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
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 On July 1, 2022 the Company elected to change its method of valuing inventory to the FIFO method, whereas from April 1, 2018 until June 30, 2022 inventory was valued using the weighted average cost method. Management moved to weighted average in 2018 as at the time they believed that average cost was preferable under the then-existing economic environment of low inflation. In the current environment of high inflation, management believes FIFO will produce a more accurate cost of goods sold. In accordance with ASC 250-10-45-9, the Company determined that it is impracticable to determine the cumulative effect of applying this change retrospectively because detailed records of inventory purchases and sales are no longer available for all periods from April 1, 2018. Accordingly, the Company did not recognize a cumulative effect adjustment in retained earnings related to this change. Sufficient information exists to apply the FIFO cost method beginning April 1, 2018. As such, the new method has been applied prospectively to the Company’s inventory balances as of July 1, 2022. Inventories, which are comprised of finished goods, are stated at the lower of cost 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. September 30, 2022 December 31, 2021 Inventory Type (FIFO method) (Avg. cost method) Finished goods $ 4,821,491 $ 4,508,102 Raw materials — — Work-in-progress — — Inventory Reserve (731,192) (731,192) Net Inventory $ 4,090,299 $ 3,352,663 |
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 are included in the fully diluted earnings per share for the three and nine month periods ended September 30, 2022 and 2021, respectively. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of inventory | September 30, 2022 December 31, 2021 Inventory Type (FIFO method) (Avg. cost method) Finished goods $ 4,821,491 $ 4,508,102 Raw materials — — Work-in-progress — — Inventory Reserve (731,192) (731,192) Net Inventory $ 4,090,299 $ 3,352,663 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Inventories (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Finished goods | $ 4,821,491 | $ 4,508,102 |
Raw materials | 0 | 0 |
Work-in-progress | 0 | 0 |
Inventory Reserve | $ (731,192) | (731,192) |
Net Inventory | $ 3,352,663 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
SIGNIFICANT ACCOUNTING POLICIES | ||||
Estimated losses from obsolete or slow-moving inventory, Percent | 20% | |||
Stock options | 10,800,000 | 10,800,000 | 10,800,000 | 10,800,000 |
CLOSURE OF FLORIDA OFFICE AND_2
CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Mar. 31, 2021 | Sep. 30, 2021 | |
CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE | ||
Proceeds from sale of real estate | $ 712,500 | |
Gain on sale of real estate | $ 225,330 | $ 225,330 |
PPP 1ST DRAW FORGIVENESS (Detai
PPP 1ST DRAW FORGIVENESS (Details) | 9 Months Ended |
Sep. 30, 2021 USD ($) | |
PPP 1ST DRAW FORGIVENESS | |
Paycheck Protection Program draw 1 loan forgiven in full | $ 326,100 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event | Dec. 22, 2022 $ / shares shares |
Subsequent Event | |
Strike price | $ / shares | 0.03 |
Underlying stock closing price | $ / shares | $ 0.0754 |
Angelo DeRosa | |
Subsequent Event | |
Number of shares acquired | shares | 1,866,578 |
Darren DeRosa | |
Subsequent Event | |
Number of shares acquired | shares | 1,866,578 |