10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO 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: 333-183246

STERLING CONSOLIDATED CORP.

(Exact name of registrant as specified in its charter)

Nevada	45-1840913
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1105 Green Grove Road

Neptune, New Jersey 07753

(Address of principal executive offices) (Zip Code)

(732) 918-8004

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year,

if changed since last report)

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 ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨  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. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨ (do not check if smaller reporting company)	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

As of January 20, 2017, there were 40,715,540 shares of common stock, $0.001 par value issued and outstanding.

STERLING CONSOLIDATED CORP.

TABLE OF CONTENTS

FORM 10-Q REPORT

September 30, 2016

		Page Number
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	8
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	12
Item 4.	Controls and Procedures.	12
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	13
Item 1A.	Risk Factors.	13
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	13
Item 3.	Defaults Upon Senior Securities.	13
Item 4.	Mine Safety Disclosures	13
Item 5.	Other Information.	13
Item 6.	Exhibits.	14
SIGNATURES		14

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

STERLING CONSOLIDATED CORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2016			2015
		(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	20,769		$	31,429
Account receivable, net		573,559			732,972
Inventory, net		2,827,309			2,796,796
Notes receivable and other current assets		70,315			20,525
Total current assets		3,491,951			3,581,722
Property and equipment, net		1,784,825			2,527,227
Goodwill and other intangibles, net		120,466			120,466
Deferred tax asset		211,875			162,439
Total assets	$	5,609,118		$	6,391,854
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses	$	1,118,337		$	1,291,227
Bank line of credit		808,858			1,245,316
Other liabilities		52,464			66,665
Derivative liability		26,386			24,560
Current portion of long-term notes payable		48,442			61,416
Total current liabilities		2,054,487			2,689,184
Other liabilities
Long-term notes payable, related parties		1,692,951			1,720,949
Long-term notes payable, net of current portion		1,094,340			1,127,261
Total other liabilities		2,787,291			2,848,210
Total liabilities		4,841,778			5,537,394
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, 40,715,540 and 40,715,540  shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		40,716			40,716
Additional paid-in capital		1,446,278			1,446,278
Accumulated deficit		(719,654	)		(632,534	)
Total stockholders' equity		767,340			854,460
Total liabilities and stockholders' equity	$	5,609,118		$	6,391,854

See accompanying notes to consolidated financial statements

3

STERLING CONSOLIDATED CORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2016			2015			2016			2015
Revenues
O-rings and rubber product sales	$	1,366,162		$	1,466,942		$	4,333,853		$	4,794,529
Freight services		18,086			39,479			88,864			135,421
Total revenues		1,384,248		$	1,506,421			4,422,717		$	4,929,950
Cost of sales
Cost of goods		870,203			1,214,668			2,988,691			3,554,433
Cost of services		50,111			53,667			148,141			176,813
Total cost of sales		920,314			1,268,335			3,136,832			3,731,246
Gross profit		463,934			238,086			1,285,885			1,198,704
Operating expenses
Sales and marketing		59,553			49,316			154,048			160,860
General and administrative		398,596			449,871			1,139,030			1,365,990
Total operating expenses		458,149			499,187			1,293,078			1,526,850
Operating income (loss)		5,785			(261,101	)		(7,193	)		(328,146	)
Other income and expense
Other income (expense)		2,558			(10,897	)		(1,437	)		2,804
Loss on sale of real estate		-			-			(39,910	)		-
Gain/(loss) on swap		8,156			(7,903	)		(1,826	)		(11,386	)
Interest expense		(39,649	)		(50,544	)		(111,501	)		(113,223	)
Total other expense		(28,935	)		(69,344	)		(154,674	)		(121,805	)
Loss before provision for income taxes		(23,150	)		(330,445	)		(161,867	)		(449,951	)
Benefit for income taxes		(9,262	)		(74,453	)		(74,747	)		(120,862	)
Net Loss	$	(13,888	)	$	(255,992	)	$	(87,120	)	$	(329,089	)
Net income per share of common stock:
Basic and diluted	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.01	)
Weighted average number of shares outstanding
Basic and diluted		40,715,540			40,715,540			40,715,540			40,650,991

See accompanying notes to consolidated financial statements

4

STERLING CONSOLIDATED CORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Nine Months Ended September 30,
	2016			2015
Cash flows from operating activities
Net Loss	$	(87,120	)	$	(329,089	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		112,780			104,353
Bad debt expense		14,144			37,121
Loss on sale of building		39,910			-
Accrued interest		-			37,211
Loss on swap		1,826			11,386
Changes in operating assets and liabilities:
Accrued Interest		(27,998	)		-
Accounts receivable		145,269			256,003
Inventory		(30,512	)		167,661
Deferred tax asset		(49,436	)		-
Other assets		(49,790	)		(7,104	)
Accounts payable and accrued interest payable		(172,890	)		64,975
Other liabilities		(14,202	)		(231,691	)
Net cash provided by (used in) operating activities		(118,019	)		110,826
Cash flows from investing activities
Purchase of fixed and intangible assets		-			(43,199	)
Sale of building		589,712			-
Net cash provided by (used in) investing activities		589,712			(43,199	)
Cash flows from financing activities
Net paydown of bank line of credit		(436,458	)		56,276
Payments on notes payable		(45,895	)		(116,670	)
Net loan (paid) - related party		-			(4,471	)
Net proceeds(cost) of common stock after issuance costs		-			6,701
Net cash (used in) financing activities		(482,353	)		(58,164	)
Net change in cash and cash equivalents		(10,660	)		9,463
Cash and cash equivalents at the beginning of period		31,429			13,458
Cash and cash equivalents at the end of period	$	20,769		$	22,921
Supplemental disclosures of cash flow Information:
Cash paid for interest	$	111,501		$	76,016
Cash paid for taxes	$	750		$	750

See accompanying notes to consolidated financial statements

5

STERLING CONSOLIDATED CORP AND AFFILIATES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2016

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 September 30, 2016, 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, 2015 audited financial statements.  The results of operations for the periods ended September 30, 2016 and September 30, 2015 are not necessarily indicative of the operating results for the full years.

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, 2015.

There have been no changes in the Company's significant accounting policies for the periods ended September 30, 2016 as compared to those disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

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 the first in, first out 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 4% 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.

Revenue Recognition

The Company recognizes revenue based on Account Standards Codification (“ASC”) 605 “Revenue Recognition” which contains Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements’ and No. 104, “Revenue Recognition”. In the case of Sterling, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, shipment of the product has occurred, price is fixed or determinable and collectability of the resulting receivable is reasonably assured.  For provision of third-party freight services provided by Integrity, revenue is recognized on a gross basis in accordance with ASC 605-45 " Revenue Recognition: Principal Agent Considerations " since Integrity is the primary obligor in its shipping arrangements. Revenue is generally recognized when the contracted goods arrive at their destination point. When revenues and expenses straddle a period end due to the time between shipment and delivery, Integrity allocates revenue between reporting periods based on relative transit time in each period with expenses recognized as incurred. Cost of goods is comprised of sale of o-rings and related rubber products. Freight services is comprised of freight forwarding and related services earned by Integrity and Rental services is comprised of revenue from rental of commercial space to third parties.

6

STERLING CONSOLIDATED CORP AND AFFILIATES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2016

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 no stock options and warrants that would have been included in the fully diluted earnings per share for the nine month periods ended September 30, 2016 and 2015, respectively.

NOTE 3 – SALE OF REAL ESTATE

In March of 2016, the Company sold its commercial building in Cliffwood Beach, New Jersey. The sale price was $625,000 and the Company recognized a loss on the sale of $39,910. The Company received $562,327 in cash at closing with $20,000 held in escrow for repairs. $14,826 of the $20,000 in escrow was returned to the Company on August 1, 2016.

NOTE 4 – RESTATEMENT

The Company restated its March 31, 2015, June 30, 2015, and September 30, 2015 Income Statement and Statement of Cash Flows to reflect the unrealized gain or loss on its swap used to fix its floating rate mortgage instrument. The effects of the changes on the financial statements can be noted as follows:

	3 months ended September 30, 2015						9 months ended September 30 2015
Income Statement	Original			As Restated			Original			As Restated
Gain/(loss) on swap	$	-		$	(7,903	)	$	-		$	(11,386	)
Net income (loss)	$	(248,089	)	$	(255,992	)	$	(317,703	)	$	(329,089	)
Statement of Cash Flows
Net income (loss)							$	(317,703	)	$	(329,089	)
Loss/(gain) on swap/derivative							$	-		$	(11,386	)

NOTE 5 – SUBSEQUENT EVENTS

The Company reviewed any significant transactions that would qualify for subsequent event reporting up through January 20, 2017. None were noted.

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Notice Regarding Forward Looking Statements

The information contained in Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

This filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.

Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Overview

We were incorporated in the State of Nevada as Oceanview Acquisition Corp. on January 31, 2011. On May 18, 2012, we amended our Articles of Incorporation to change our name to Sterling Consolidated Corp.

Our largest subsidiary is Sterling Seal & Supply, Inc. (“Sterling Seal”), a New Jersey corporation which was incorporated in 1997. Its predecessor was Sterling Plastic & Rubber Products, Inc., incorporated in New Jersey and founded in 1970. Sterling Seal engages primarily in the distribution and sale of O-rings, rubber seals, oil seals, custom molded rubber parts, custom Teflon parts, Teflon rods, O-ring cord, bonded seals, O-ring kits, and stuffing box sealant.

We also own real property through our subsidiaries ADDR Properties, LLC (“ADDR”) and Q5 Ventures, LLC (“Q5”). ADDR owns a 28,000 square foot facility in Neptune, New Jersey, that is primarily used by Sterling Seal for its operations.

In addition, our subsidiary Integrity Cargo Freight Corporation (“Integrity”) is a freight forwarding business. Integrity shares a facility with Sterling Seal and manages the importation of Sterling Seal’s products and exports products on behalf of Sterling Seal to various countries. Currently eighty percent (80%) of Sterling Seal’s imports come from Asia, and ten percent (10%) of the Company’s sales are exported to various countries. However, all payables are billed and collected in USD, so Sterling does not bear any foreign exchange risk on open payables. 

8

Results of Operations 

Comparison for the three months ended September 30, 2016 and 2015

Revenue

Revenue decreased by approximately $122,173 or approximately 8%, from $1,506,421 for the three months ended September 30, 2015 to $1,384,248 for the three months ended September 30, 2016. This decrease is due primarily to a general decline in the mining and manufacturing sector.

Total Cost of Sales

Cost of sales decreased by approximately $348,021 or approximately 27%, from $1,268,335 for the three months ended September 30, 2015 to $920,314 for the three months ended September 30, 2016. The decrease in cost of sales was attributed primarily to a commensurate decrease in sales.

Gross profit

Gross profit increased approximately $225,848, or approximately 95%, from $238,086 for the three months ended September 30, 2015 to $463,934 for the three months ended September 30, 2016. This increase in gross profit is primarily explained by an inventory adjustment of $163,000 charged to operations in the 3^rdquarter of 2015 coupled with a reduction in warehouse headcount.

Net Loss

As a result of the factors described above, our net loss was $13,888 for the three months ended September 30, 2016, as compared to a net loss of $255,992 for the three months ended September 30, 2015. This was an decrease of $242,104 or approximately 95%.

Comparison for the nine months ended September 30, 2016 and 2015

Revenue

Revenue decreased by approximately $507,233 or approximately 10%, from $4,929,950 for the nine months ended September 30, 2015 to $4,422,717 for the nine months ended September 30, 2016. This decrease is due to a general economic slowdown in the mining and manufacturing sector.

Total Cost of Sales

Cost of sales decreased by $594,414 or approximately 16%, from $3,731,246 for the nine months ended September 30, 2015 to $3,136,832 for the nine months ended September 30, 2016. The decrease in cost of sales was attributed to an overall decrease in sales of approximately 10% coupled with decreased labor costs due to headcount reductions.

Gross profit

Gross profit increased approximately $87,181, or approximately 7%, from $1,198,704 for the nine months ended September 30, 2015 to $1,285,558 for the nine months ended September 30, 2016. This increase can be attributed to the above described changes in revenues and cost of sales.

Net Loss

As a result of the factors described above, our net loss was $87,120 for the nine months ended September 30, 2016, as compared to a net loss of $329,089 for the nine months ended September 30, 2015. This was a decrease of $241,969 or approximately 74%.

9

Liquidity and Capital Resources 

Cash requirements for, but not limited to, working capital, capital expenditures, and debt repayments have been funded from cash balances on hand, revolver borrowings, loans from officers, notes payable and cash generated from operations.

At September 30, 2016, we had cash and cash equivalents of approximately $20,769 as compared to approximately $31,429 as of December 31, 2015, representing a decrease of $10,660. This decrease can be explained by net cash used in operating activities of $118,019 primarily attributed to an increase in accounts payable offset by collections in accounts receivables; net cash provided by investing activities of $589,792 due to the sale of the Company’s Cliffwood Beach building in March 2016; and net cash used in financing activities of $483,353 primarily attributed to paying down the Company’s line of credit. At September 30, 2016, our working capital was approximately $1,437,464.

The cash flow from operating activities decreased from net cash provided of $110,826 for the nine months ended September 30, 2015 to net cash used of $118,019 for the nine months ended September 30, 2016. This decrease of $228,845 is primarily attributed to an increase in accounts payable.

The cash flow from investing activities increased from net cash used of $43,199 for the nine months ended September 30, 2015 to net cash provided of $589,792 for the nine months ended September 30, 2016. This increase of $632,991 is due to the sale of the Company’s Cliffwood Beach building in March 2016.

The cash flow from financing activities decreased from net cash used of $58,164 for the nine months ended September 30, 2015 to net cash used of $482,353 for the nine months ended September 30, 2016. This decrease of $424,189 is primarily attributed to paying down the Company’s line of credit in the amount of $436,458.

Bank Loans

The Company refinanced its debt in 2013 with a New York commercial bank and there are currently a $1.25 million line of credit and a $1,200,000 mortgage outstanding. The line of credit calls for a variable interest rate of the Wall St. Journal published prime rate plus 1% and requires an annual review. The mortgage has a variable rate of LIBOR plus 4.50% and is for a 5-year term expiring in October of 2018. The Company is currently out of compliance with one of its covenants and has requested a waiver from the bank.

Critical Accounting Policies and Estimates

The preparation of our Consolidated Financial Statements, in accordance with accounting principles generally accepted in the United States, requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures pertaining to contingent assets and liabilities. Note 2, “Significant Accounting Policies,” to the Consolidated Financial Statements describes the significant accounting policies used to prepare the Consolidated Financial Statements. On an ongoing basis we evaluate our estimates, including, but not limited to, those related to bad debts, inventories, income taxes, and contingencies. We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from our estimates.

We believe the following accounting policies and estimates are the most critical. Some of them involve significant judgments and uncertainties and could potentially result in materially different results under different assumptions and conditions.

Revenue recognition

The Company recognizes revenue based on Account Standards Codification (“ASC”) 605 “Revenue Recognition” which contains Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements’ and No. 104, “Revenue Recognition”. In the case of Sterling, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, shipment of the product has occurred, price is fixed or determinable and collectability of the resulting receivable is reasonably assured.  For provision of third-party freight services provided by Integrity, revenue is recognized on a gross basis in accordance with ASC 605-45 " Revenue Recognition: Principal Agent Considerations " since Integrity is the primary obligor in its shipping arrangements. Revenue is generally recognized when the contracted goods arrive at their destination point. When revenues and expenses straddle a period end due to the time between shipment and delivery, Integrity allocates revenue between reporting periods based on relative transit time in each period with expenses recognized as incurred. Cost of goods is comprised of sale of o-rings and related rubber products. Freight services is comprised of freight forwarding and related services earned by Integrity and Rental services is comprised of revenue from rental of commercial space to third parties.

10

Income taxes 

Under the asset and liability method prescribed under ASC 740, Income Taxes, the Company uses the liability method of accounting for income taxes.  The liability method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements.  The resulting deferred tax assets or liabilities have been adjusted to reflect changes in tax laws as they occur.  A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized.

The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a "more-likely-than-not" threshold, the amount to be recognized in the financial statements will be the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of December 31, 2015, the Company had no uncertain tax positions.

Fair values of financial instruments

In January 2010, the FASB ASC Topic 825, Financial Instruments, requires disclosures about fair value of financial instruments in quarterly reports as well as in annual reports.  For the Company, this statement applies to certain investments and long-term debt.  Also, the FASB ASC Topic 820, Fair Value Measurements and Disclosures, clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements.   

Various inputs are considered when determining the value of the Company’s investments and long-term debt.  The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities.  These inputs are summarized in the three broad levels listed below.

· Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets.

· Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.).

· Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).

The Company’s adoption of FASB ASC Topic 825, effectively at the beginning of the second quarter in FY 2010, did not have a material impact on the company’s financial statements.

The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared.

11

Stock-based compensation 

The Company records stock-based compensation at fair value of the stock provided for services. The Company currently does not have any issued and outstanding stock options or other derivatives.

Recent Accounting Pronouncements

The Company’s management has considered all recent accounting pronouncements. Management believes that these recent pronouncements will not have a material effect on the Company’s financial statements. 

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a Smaller Reporting Company and are not required to provide the information under this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, have conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Company’s Principal Executive Officer and Principal Financial Officer concluded that due to material weaknesses the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, as appropriate, to allow timely decisions regarding required disclosure.

As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements and Related Independence Rule and Conforming Amendments,” established by the Public Company Accounting Oversight Board ("PCAOB"), a material weakness is a deficiency or combination of deficiencies that result in a more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of September 30, 2016:

(1) Lack of an independent audit committee or audit committee financial expert. Although our board of directors serves as the audit committee it has no independent directors These factors are counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management.

(2) We do not have sufficient experience from our accounting personnel with the requisite U.S. GAAP public company reporting experience that is necessary for adequate controls and procedures.

(3) Need for greater integration, oversight, communication and financial reporting of the books and records of our satellite offices.

Our management determined that these deficiencies constituted material weaknesses. 

12

Due to our small size, we were not able to immediately take any action to remediate these material weaknesses. Notwithstanding the assessment that our Internal Controls over Financial Reporting was not effective and that there were material weaknesses identified herein, we believe that our consolidated financial statements contained in this Annual Report fairly present our financial position, results of operations and cash flows for the years covered thereby in all material respects.

Changes in Internal Control

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our fiscal quarter ended September 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors.

We are a Smaller Reporting Company and are not required to provide the information under this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

13

Item 6. Exhibits.

Exhibit Number	Exhibit Title
31.1*	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS *	XBRL Instance Document
101.SCH *	XBRL Taxonomy Schema
101.CAL *	XBRL Taxonomy Calculation Linkbase
101.DEF *	XBRL Taxonomy Definition Linkbase
101.LAB *	XBRL Taxonomy Label Linkbase
101.PRE *	XBRL Taxonomy Presentation Linkbase

* Filed herewith.

** In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.

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.

STERLING CONSOLIDATED CORP.
By:	/s/ Darren DeRosa
	Darren DeRosa,
	Chief Executive Officer
	(Principal Executive Officer)
	Dated: January 20, 2017
By:	/s/ Scott Chichester
	Scott Chichester,
	Chief Financial Officer
	(Principal Financial and Accounting Officer)
	Dated: January 20, 2017

14

EX-31.1

EXHIBIT 31.1

CERTIFICATION

OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Darren DeRosa, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Sterling Consolidated Corp.

2. Based on my knowledge, this report 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrants’ other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 20, 2017

/s/ Darren DeRosa

Darren DeRosa

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Scott Chichester, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Sterling Consolidated Corp.

2. Based on my knowledge, this report 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrants’ other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 20, 2017

/s/ Scott Chichester 

Scott Chichester

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Sterling Consolidated Corp. (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the period ended September 30, 2016 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.

Date: January 20, 2017

/s/ Darren DeRosa

Darren DeRosa

Chief Executive Officer

(Principal Executive Officer)

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Sterling Consolidated Corp. (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the period ended September 30, 2016 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.

Date: January 20, 2017

/s/ Scott Chichester

Scott Chichester

Chief Financial Officer

 (Principal Financial and Accounting Officer)

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Jan. 20, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Entity Registrant Name	STERLING CONSOLIDATED Corp
Entity Central Index Key	0001555972
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	STCC
Entity Common Stock, Shares Outstanding		40,715,540

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 20,769	$ 31,429
Account receivable, net	573,559	732,972
Inventory, net	2,827,309	2,796,796
Notes receivable and other current assets	70,315	20,525
Total current assets	3,491,951	3,581,722
Property and equipment, net	1,784,825	2,527,227
Goodwill and other intangibles, net	120,466	120,466
Deferred tax asset	211,875	162,439
Total assets	5,609,118	6,391,854
Current liabilities
Accounts payable and accrued expenses	1,118,337	1,291,227
Bank line of credit	808,858	1,245,316
Other liabilities	52,464	66,665
Derivative liability	26,386	24,560
Current portion of long-term notes payable	48,442	61,416
Total current liabilities	2,054,487	2,689,184
Other liabilities
Long-term notes payable, related parties	1,692,951	1,720,949
Long-term notes payable, net of current portion	1,094,340	1,127,261
Total other liabilities	2,787,291	2,848,210
Total liabilities	4,841,778	5,537,394
Stockholders' equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued	0	0
Common stock, $0.001 par value; 200,000,000 shares authorized, 40,715,540 and 40,715,540 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively	40,716	40,716
Additional paid-in capital	1,446,278	1,446,278
Accumulated deficit	(719,654)	(632,534)
Total stockholders' equity	767,340	854,460
Total liabilities and stockholders' equity	$ 5,609,118	$ 6,391,854

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
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	40,715,540	40,715,540
Common Stock, Shares, Outstanding	40,715,540	40,715,540

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues
O-rings and rubber product sales	$ 1,366,162	$ 1,466,942	$ 4,333,853	$ 4,794,529
Freight services	18,086	39,479	88,864	135,421
Total revenues	1,384,248	1,506,421	4,422,717	4,929,950
Cost of sales
Cost of goods	870,203	1,214,668	2,988,691	3,554,433
Cost of services	50,111	53,667	148,141	176,813
Total cost of sales	920,314	1,268,335	3,136,832	3,731,246
Gross profit	463,934	238,086	1,285,885	1,198,704
Operating expenses
Sales and marketing	59,553	49,316	154,048	160,860
General and administrative	398,596	449,871	1,139,030	1,365,990
Total operating expenses	458,149	499,187	1,293,078	1,526,850
Operating income (loss)	5,785	(261,101)	(7,193)	(328,146)
Other income and expense
Other income (expense)	2,558	(10,897)	(1,437)	2,804
Loss on sale of real estate	0	0	(39,910)	0
Gain/(loss) on swap	8,156	(7,903)	(1,826)	(11,386)
Interest expense	(39,649)	(50,544)	(111,501)	(113,223)
Total other expense	(28,935)	(69,344)	(154,674)	(121,805)
Loss before provision for income taxes	(23,150)	(330,445)	(161,867)	(449,951)
Benefit for income taxes	(9,262)	(74,453)	(74,747)	(120,862)
Net Loss	$ (13,888)	$ (255,992)	$ (87,120)	$ (329,089)
Net income per share of common stock:
Basic and diluted	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)
Weighted average number of shares outstanding
Basic and diluted	40,715,540	40,715,540	40,715,540	40,650,991

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities
Net Loss	$ (87,120)	$ (329,089)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	112,780	104,353
Bad debt expense	14,144	37,121
Loss on sale of building	39,910	0
Accrued interest	0	37,211
Loss on swap	1,826	11,386
Changes in operating assets and liabilities:
Accrued Interest	(27,998)	0
Accounts receivable	145,269	256,003
Inventory	(30,512)	167,661
Deferred tax asset	(49,436)	0
Other assets	(49,790)	(7,104)
Accounts payable and accrued interest payable	(172,890)	64,975
Other liabilities	(14,202)	(231,691)
Net cash provided by (used in) operating activities	(118,019)	110,826
Cash flows from investing activities
Purchase of fixed and intangible assets	0	(43,199)
Sale of building	589,712	0
Net cash provided by (used in) investing activities	589,712	(43,199)
Cash flows from financing activities
Net paydown of bank line of credit	(436,458)	56,276
Payments on notes payable	(45,895)	(116,670)
Net loan (paid) - related party	0	(4,471)
Net proceeds(cost) of common stock after issuance costs	0	6,701
Net cash (used in) financing activities	(482,353)	(58,164)
Net change in cash and cash equivalents	(10,660)	9,463
Cash and cash equivalents at the beginning of period	31,429	13,458
Cash and cash equivalents at the end of period	20,769	22,921
Supplemental disclosures of cash flow Information:
Cash paid for interest	111,501	76,016
Cash paid for taxes	$ 750	$ 750

XML

BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

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 September 30, 2016, 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, 2015 audited financial statements.  The results of operations for the periods ended September 30, 2016 and September 30, 2015 are not necessarily indicative of the operating results for the full years.

XML

SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

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, 2015.

There have been no changes in the Company's significant accounting policies for the periods ended September 30, 2016 as compared to those disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

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 the first in, first out 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 4% 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.

Revenue Recognition

The Company recognizes revenue based on Account Standards Codification (“ASC”) 605 “Revenue Recognition” which contains Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements’ and No. 104, “Revenue Recognition”. In the case of Sterling, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, shipment of the product has occurred, price is fixed or determinable and collectability of the resulting receivable is reasonably assured.  For provision of third-party freight services provided by Integrity, revenue is recognized on a gross basis in accordance with ASC 605-45 " Revenue Recognition: Principal Agent Considerations " since Integrity is the primary obligor in its shipping arrangements. Revenue is generally recognized when the contracted goods arrive at their destination point. When revenues and expenses straddle a period end due to the time between shipment and delivery, Integrity allocates revenue between reporting periods based on relative transit time in each period with expenses recognized as incurred. Cost of goods is comprised of sale of o-rings and related rubber products. Freight services is comprised of freight forwarding and related services earned by Integrity and Rental services is comprised of revenue from rental of commercial space to third parties.

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 no stock options and warrants that would have been included in the fully diluted earnings per share for the nine month periods ended September 30, 2016 and 2015, respectively.

XML

SALE OF REAL ESTATE

9 Months Ended

Sep. 30, 2016

Real Estate [Abstract]

Real Estate Disclosure [Text Block]

NOTE 3 – SALE OF REAL ESTATE

In March of 2016, the Company sold its commercial building in Cliffwood Beach, New Jersey. The sale price was $625,000 and the Company recognized a loss on the sale of $39,910. The Company received $562,327 in cash at closing with $20,000 held in escrow for repairs. $14,826 of the $20,000 in escrow was returned to the Company on August 1, 2016.

XML

RESTATEMENT

9 Months Ended

Sep. 30, 2016

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

NOTE 4 – RESTATEMENT

The Company restated its March 31, 2015, June 30, 2015, and September 30, 2015 Income Statement and Statement of Cash Flows to reflect the unrealized gain or loss on its swap used to fix its floating rate mortgage instrument. The effects of the changes on the financial statements can be noted as follows:

	3 months ended September 30, 2015				9 months ended September 30 2015
Income Statement	Original		As Restated		Original		As Restated
Gain/(loss) on swap	$	-	$	(7,903)	$	-	$	(11,386)
Net income (loss)	$	(248,089)	$	(255,992)	$	(317,703)	$	(329,089)
Statement of Cash Flows
Net income (loss)					$	(317,703)	$	(329,089)
Loss/(gain) on swap/derivative					$	-	$	(11,386)

XML

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 5 – SUBSEQUENT EVENTS

The Company reviewed any significant transactions that would qualify for subsequent event reporting up through January 20, 2017. None were noted.

XML

SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Use of Estimates, Policy [Policy Text Block]

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.

Inventory, Policy [Policy Text Block]

Inventories

Inventories, which are comprised of finished goods, are stated at the lower of cost (based on the first in, first out 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 4% 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.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company recognizes revenue based on Account Standards Codification (“ASC”) 605 “Revenue Recognition” which contains Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements’ and No. 104, “Revenue Recognition”. In the case of Sterling, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, shipment of the product has occurred, price is fixed or determinable and collectability of the resulting receivable is reasonably assured.  For provision of third-party freight services provided by Integrity, revenue is recognized on a gross basis in accordance with ASC 605-45 " Revenue Recognition: Principal Agent Considerations " since Integrity is the primary obligor in its shipping arrangements. Revenue is generally recognized when the contracted goods arrive at their destination point. When revenues and expenses straddle a period end due to the time between shipment and delivery, Integrity allocates revenue between reporting periods based on relative transit time in each period with expenses recognized as incurred. Cost of goods is comprised of sale of o-rings and related rubber products. Freight services is comprised of freight forwarding and related services earned by Integrity and Rental services is comprised of revenue from rental of commercial space to third parties.

Earnings Per Share, Policy [Policy Text Block]

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 no stock options and warrants that would have been included in the fully diluted earnings per share for the nine month periods ended September 30, 2016 and 2015, respectively.

XML

RESTATEMENT (Tables)

9 Months Ended

Sep. 30, 2016

Accounting Changes and Error Corrections [Abstract]

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

The Company restated its March 31, 2015, June 30, 2015, and September 30, 2015 Income Statement and Statement of Cash Flows to reflect the unrealized gain or loss on its swap used to fix its floating rate mortgage instrument. The effects of the changes on the financial statements can be noted as follows:

	3 months ended September 30, 2015				9 months ended September 30 2015
Income Statement	Original		As Restated		Original		As Restated
Gain/(loss) on swap	$	-	$	(7,903)	$	-	$	(11,386)
Net income (loss)	$	(248,089)	$	(255,992)	$	(317,703)	$	(329,089)
Statement of Cash Flows
Net income (loss)					$	(317,703)	$	(329,089)
Loss/(gain) on swap/derivative					$	-	$	(11,386)

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SIGNIFICANT ACCOUNTING POLICIES (Details Textual)	9 Months Ended
	Sep. 30, 2016
Summary Of Significant Accounting Policies [Line Items]
Estimated Losses Of Obsolete Or Slow Moving Inventory Percent	4.00%

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SALE OF REAL ESTATE (Details Textual) - USD ($)		1 Months Ended	3 Months Ended		9 Months Ended
	Aug. 01, 2016	Mar. 31, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Real Estate [Line Items]
Sale Price Of Real Estate Property		$ 625,000
Return Of Escrow Deposits	$ 14,826
Gain (Loss) on Sale of Properties		39,910	$ 0	$ 0	$ (39,910)	$ 0
Proceeds from Sale of Buildings		562,327			$ 589,712	$ 0
Escrow Deposits Related to Property Sales		$ 20,000

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RESTATEMENT (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement
Gain/(loss) on swap	$ 8,156	$ (7,903)	$ (1,826)	$ (11,386)
Net income (loss)	(13,888)	(255,992)	(87,120)	(329,089)
Statement of Cash Flows
Net income (loss)	(13,888)	(255,992)	(87,120)	(329,089)
Loss/(gain) on swap/derivative	$ 8,156	(7,903)	$ (1,826)	(11,386)
Scenario, Previously Reported [Member]
Income Statement
Gain/(loss) on swap		0		0
Net income (loss)		(248,089)		(317,703)
Statement of Cash Flows
Net income (loss)		(248,089)		(317,703)
Loss/(gain) on swap/derivative		0		0
Restatement Adjustment [Member]
Income Statement
Gain/(loss) on swap		(7,903)		(11,386)
Net income (loss)		(255,992)		(329,089)
Statement of Cash Flows
Net income (loss)		(255,992)		(329,089)
Loss/(gain) on swap/derivative		$ (7,903)		$ (11,386)