10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐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)

(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 ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 15, 2022 there were 47,284,689 shares of common stock, $0.001 par value issued and outstanding.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common	STCC	OTC

STERLING CONSOLIDATED CORP.

TABLE OF CONTENTS

FORM 10-Q REPORT

March 31, 2022

		Page  Number
PART I - FINANCIAL INFORMATION		F-1
Item 1.	Financial Statements.	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	7
Item 4.	Controls and Procedures.	7
PART II - OTHER INFORMATION		8
Item 1.	Legal Proceedings.	8
Item 1A.	Risk Factors.	8
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	8
Item 3.	Defaults Upon Senior Securities.	8
Item 4.	Mine Safety Disclosures	8
Item 5.	Other Information.	8
Item 6.	Exhibits.	9
SIGNATURES		10

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

STERLING CONSOLIDATED CORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,		December 31,
	2022		2021
ASSETS
Current assets
Cash and cash equivalents	$	172,711	$	569,281
Account receivable, net		1,977,050		1,474,570
Inventory, net		3,713,734		3,352,663
Notes receivable and other current assets		171,674		171,674
Total current assets		6,035,169		5,568,188
Property and equipment, net		898,569		918,115
Intangible assets, net		75,534		77,284
Deferred tax asset		199,655		199,655
Total assets	$	7,208,927	$	6,763,242
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses	$	2,003,326	$	1,422,031
Line of credit		701,053		401,053
Other liabilities		50,332		50,332
Current portion of long-term notes payable, rel. party		52,702		52,702
Current portion of long-term notes payable		38,768		39,858
Total current liabilities		2,846,181		1,965,976
Other liabilities
Long-term notes payable, related party		305,885		767,159
Long-term notes payable		1,681,834		1,691,728
Total other liabilities		1,987,719		2,458,887
Total liabilities		4,833,900		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 March 31, 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		(334,507)		(371,155)
Total stockholders' equity		2,375,027		2,338,379
Total liabilities and stockholders' equity	$	7,208,927	$	6,763,242

See accompanying notes to condensed consolidated financial statements

F-1

STERLING CONSOLIDATED CORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended
	March 31,
	2022		2021
Revenues
O-rings and rubber product sales	$	2,868,821	$	2,210,565
Freight services		90,129		135,789
Total revenues		2,958,950		2,346,354
Cost of sales
Cost of goods		2,187,212		1,603,880
Cost of services		150,342		171,374
Total cost of sales		2,337,554		1,775,254
Gross profit		621,396		571,100
Operating expenses
Sales and marketing		78,000		77,132
General and administrative		453,030		465,703
Total operating expenses		531,030		542,835
Operating income		90,366		28,265
Other income (expense)
Other		2,982		2,982
Interest expense		(42,448)		(37,005)
Gain on sale of real estate		—		225,330
Total other income (expense)		(39,466)		191,307
Income before provision (benefit) for income taxes		50,900		219,572
Provision for income taxes		14,252		61,480
Net income	$	36,648	$	158,092
Net income (loss) per share of common stock:
Basic	$	0.00	$	0.00
Fully diluted	$	0.00	$	0.00
Weighted average number of shares outstanding
Basic		47,284,689		47,284,689
Fully diluted		57,584,689		57,584,689

See accompanying notes to condensed consolidated financial statements

F-2

STERLING CONSOLIDATED CORP

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

				Common		Additional
	Common Stock			Stock		Paid-in		Accumulated
	Shares	Amount		Subcribed		Capital		Deficit		Total
Balance, December 31, 2020	47,284,689	$	47,285	$	—	$	2,569,249	$	(1,179,006)	$	1,437,528
Net income for the three months ended March 31, 2021									158,092		158,092
Balance, March 31, 2021	47,284,689	$	47,285	$	—	$	2,569,249	$	(1,020,914)	$	1,595,620
Balance, December 31, 2021	47,284,689	$	47,285	$	93,000	$	2,569,249	$	(371,155)	$	2,338,379
Net income for the three months ended March 31, 2022									36,648		36,648
Balance, March 31, 2022	47,284,689	$	47,285	$	93,000	$	2,569,249	$	(334,507)	$	2,375,027

See accompanying notes to condensed consolidated financial statements

F-3

STERLING CONSOLIDATED CORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Three Months Ended
	March 31,
	2022		2021
Cash flows from operating activities
Net income	$	36,648	$	158,092
Adjustments to reconcile net income (loss) income to net cash provided by operating activities:
Depreciation and amortization		7,044		25,624
Gain on sale of real estate		—		(225,330)
Changes in operating assets and liabilities:
Accounts receivable		(502,480)		(154,554)
Inventory		(361,071)		334,832
Prepaids and other current assets		—		8,929
Deferred tax asset		14,252		61,480
Accounts payable and accrued interest payable		581,295		(405,064)
Other liabilities		(0)		(1,005)
Net cash used in operating activities		(224,312)		(196,996)
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 on asset-based line of credit		300,000		107,972
Net (paydown) borrowing on notes payable		41,718		(10,055)
Net paydown to related party		(513,976)		(38,885)
Net cash provided by (used in) financing activities		(172,258)		59,032
Net change in cash and cash equivalents		(396,570)		574,536
Cash and cash equivalents at the beginning of period		569,281		171,818
Cash and cash equivalents at the end of period	$	172,711	$	746,354
Supplemental disclosures of cash flow information:
Cash paid for interest	$	42,448	$	37,005
Cash paid for taxes	$	—	$	—

See accompanying notes to condensed consolidated financial statements

F-4

STERLING CONSOLIDATED CORP AND AFFILIATES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

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 March 31, 2022 and March 31, 2021 are not necessarily indicative of the operating results for the full years.

COVID-19 AND ATTENDANT SUPPLY CHAIN ISSUES

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 and the attendant supply chain problems has affected our results of operations and the first quarter 2022 financial results are not necessarily indicative of the annual 2022 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, rubber supply shortages 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.

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 has concluded the effect is not material to the Consolidated Financial Statements as a whole.

F-5

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) 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	March 31, 2022		March 31, 2021
Finished goods	$	4,444,926	$	3,442,078
Raw materials		—		—
Work-in-progress		—		—
Inventory Reserve		(731,192)		(731,192)
Net Inventory	$	3,713,734	$	2,710,866

Revenue Recognition

The Company recognizes revenue based on Account Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, and all of the related amendments (“new revenue standard”). 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 606. 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 10,800,000 and zero stock options and warrants that would have been included in the fully diluted earnings per share for the three- and 3-month periods ended March 31, 2022 and 2021, respectively.

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 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 quarter ended March 31, 2021.

F-6

NOTE 4 – SUBSEQUENT EVENTS

Option Exercise

In December of 2021, CFO, Scott Chichester exercised his option to purchase 3,100,000 common shares of the Company. The Company received $93,000 for this option exercise in the second quarter of 2022 and the common shares are expected to be issued in the third quarter of 2022 and are currently reported as common stock subscribed on the balance sheet as of March 31, 2022.

F-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 was 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.

3

Results of Operations

Comparison for the three months ended March 31, 2022 and 2021

Net Revenue

Net revenue increased by $612,596, or 26%, from $2,346,354 for the three months ended March 31, 2021 to $2,958,950 for the three months ended March 31, 2022. This increase was due primarily to higher product prices exacerbated by inflation and global supply issues in the rubber industry. We expect the global supply issuesto continue through 2022.

Total Cost of Sales

Cost of sales increased by $562,300 or 32%, from $1,775,254 for the three months ended March 31, 2021 to $2,337,554 for the three months ended March 31, 2022. This increase was due primarily to higher sales, price increases attributed to the worldwide o-ring inventory shortage, higher freight costs and inflation.  We expect these trends to continue through 2022.

Gross profit

Gross profit increased by $50,296 or 9 %, from $ 571,100 for the three months ended March 31, 2021 to $621,396 for the three months ended March 31, 2022. This increase was due primarily to the above mentioned factors and the fact that costs increased faster than product price increases.

Operating income

Operating income increased by $62,101, or 220%, from $ 28,265 for the three months ended March 31, 2021 to $90,366 for the three months ended March 31, 2022. This increase can be explained by the above explained increases in net revenue and gross profit.

Other income (expense)

Other expense decreased from a gain of $191,307 for the three months ended March 31, 2021 to a loss of $39,466 for the three months ended March 31, 2022. This decrease was primarily due to a one-time gain on sale of real estate of $225,330 for the quarter ended March 31, 2021.

Net Income

As a result of the above factors, the Company showed a net income of $36,648 for the three months ended March 31, 2022, as compared to a net income of $158,092 for the three months ended March 31, 2021.

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, CARES ACT loans and cash generated from operations.

On March 31, 202, we had cash and cash equivalents of $172,711 as compared to approximately $569,281 as of December 31, 2021, representing an decrease of $396,570. This decrease can be explained by net cash used in operating activities of $224,312 primarily attributed to net income of $36,648, an increase in inventory of $361,071, and accounts receivable of $502,480, offset by an increase in accounts payable of $581,295. This was coupled with net cash used in financing activities of $172,258 which was primarily due to a paydown on related party notes payable of $513,976, offset by a drawdown of $300,000 on the Company’s line of credit. On March 31, 2022, our working capital was approximately $3,188,988.

The cash flow from operating activities decreased from net cash used of $196,996 for the quarter ended March 31, 2021 to net cash used of $224,312 for the quarter ended March 31, 2022. This decrease of $27,316 is primarily attributed to reduced net income coupled with an increases accounts receivable and inventory related to rising prices and larger batch inventory purchases due to the global supply issues, offset by a corresponding increase in accounts payable.

4

The cash flow from investing activities decreased from cash provided of $712,500 for the quarter ended March 31, 2021 to $0 for the quarter ended March 31, 2022. This decrease is attributed to the sale of the Florida property on March 30, 2021.

The cash flow from financing activities decreased by $231,290, from net cash provided of $59,032 for the quarter ended March 31, 2021 to net cash used of $172,258 for the quarter ended March 31, 2022. This decrease is primarily attributed to a increased paydown of the related party notes payable offset by a drawdown on the Company line of credit.

Bank Loans

In the 4^th quarter 2019, the Company obtained a mortgage with a New Jersey commercial bank. The mortgage was for $1,650,000 and carries a fixed interest rate of 5.00% amortized over 25 years with a re-financing required after 5 years. As of March 31, 2022 the Company had a balance of $1,570,602 outstanding on the note.

The Company currently also utilized a traditional bank line of credit.  The line utilizes market rates of interest, has a $1,000,000 credit limit and had a balance of $701,053 as of March 31, 2022.

The Company is currently in arrears on its public company financial reporting requirements which may be considered a covenant breach by the lender.

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”) 606, Revenue from Contracts with Customers, and all of the related amendments (“new revenue standard”). 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. The new revenue standard does not materially change this calculation method.  For provision of third-party freight services provided by Integrity, revenue is recognized on a gross basis in accordance with ASC 606. 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.

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.

5

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, 2021, 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.

Stock-based compensation

The Company records stock-based compensation at fair value of the stock provided for services. The 10,300,000 of the stock options outstanding as of March 31, 2021 were fully vested and therefore, no compensation expense was recorded in the quarters ended March 31, 2022 or 2021.

Recent Accounting Pronouncements

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 has concluded the effect is not material to the Consolidated Financial Statements as a whole.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

6

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 March 31, 2021:

(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.

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 March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

7

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.

8

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
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

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

9

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: July 15, 2022
By:	/s/ Scott Chichester
	Scott Chichester,
	Chief Financial Officer
	(Principal Financial and Accounting Officer)
	Dated: July 15, 2022

10

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.

Dated: July 15, 2022

/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.

Dated: July 15, 2022

/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 March 31, 2022 (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.

Dated: July 15, 2022

/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 March 31, 2022 (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.

Dated: July 15, 2022

/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	3 Months Ended
	Mar. 31, 2022	Jul. 15, 2022
Document and Entity Information
Document Type	10-Q
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Local Phone Number	918-8004
Entity Address, City or Town	Neptune
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	45-1840913
Entity File Number	333-183246
City Area Code	732
Entity Address, Address Line One	1105 Green Grove Road
Entity Address, Postal Zip Code	07753
Entity Address, State or Province	NJ
Entity Registrant Name	STERLING CONSOLIDATED Corp
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Document Quarterly Report	true
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	Q1
Amendment Flag	false
Trading Symbol	STCC
Title of 12(b) Security	Common

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 172,711	$ 569,281
Account receivable, net	1,977,050	1,474,570
Inventory, net	3,713,734	3,352,663
Notes receivable and other current assets	171,674	171,674
Total current assets	6,035,169	5,568,188
Property and equipment, net	898,569	918,115
Intangible assets, net	75,534	77,284
Deferred tax asset	199,655	199,655
Total assets	7,208,927	6,763,242
Current liabilities
Accounts payable and accrued expenses	2,003,326	1,422,031
Line of credit	701,053	401,053
Other liabilities	50,332	50,332
Current portion of long-term notes payable, rel. party	52,702	52,702
Current portion of long-term notes payable	38,768	39,858
Total current liabilities	2,846,181	1,965,976
Other liabilities
Long-term notes payable, related party	305,885	767,159
Long-term notes payable	1,681,834	1,691,728
Total other liabilities	1,987,719	2,458,887
Total liabilities	4,833,900	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 March 31, 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	(334,507)	(371,155)
Total stockholders' equity	2,375,027	2,338,379
Total liabilities and stockholders' equity	$ 7,208,927	$ 6,763,242

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
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

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenues
Total revenues	$ 2,958,950	$ 2,346,354
Cost of sales
Total cost of sales	2,337,554	1,775,254
Gross profit	621,396	571,100
Operating expenses
Sales and marketing	78,000	77,132
General and administrative	453,030	465,703
Total operating expenses	531,030	542,835
Operating income	90,366	28,265
Other income (expense)
Other	2,982	2,982
Interest expense	(42,448)	(37,005)
Gain on sale of real estate		225,330
Total other income (expense)	(39,466)	191,307
Income before provision (benefit) for income taxes	50,900	219,572
Provision for income taxes	14,252	61,480
Net income	$ 36,648	$ 158,092
Net income (loss) per share of common stock:
Basic	$ 0.00	$ 0.00
Fully diluted	$ 0.00	$ 0.00
Weighted average number of shares outstanding
Basic	47,284,689	47,284,689
Fully diluted	57,584,689	57,584,689
O-rings and rubber product sales
Revenues
Total revenues	$ 2,868,821	$ 2,210,565
Cost of sales
Total cost of sales	2,187,212	1,603,880
Freight services
Revenues
Total revenues	90,129	135,789
Cost of sales
Total cost of sales	$ 150,342	$ 171,374

XML

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($)	Common Stock	Common Stock Subscribed	Additional Paid-in Capital	Accumulated Deficit	Total
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				158,092	158,092
Balance at Mar. 31, 2021	$ 47,285		2,569,249	(1,020,914)	1,595,620
Balance (in shares) at Mar. 31, 2021	47,284,689
Balance at Dec. 31, 2021	$ 47,285	$ 93,000	2,569,249	(371,155)	2,338,379
Balance (in shares) at Dec. 31, 2021	47,284,689
Common stock subscribed at Mar. 31, 2022					93,000
Net income				36,648	36,648
Balance at Mar. 31, 2022	$ 47,285	$ 93,000	$ 2,569,249	$ (334,507)	$ 2,375,027
Balance (in shares) at Mar. 31, 2022	47,284,689

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities
Net income	$ 36,648	$ 158,092
Adjustments to reconcile net income (loss) income to net cash provided by operating activities:
Depreciation and amortization	7,044	25,624
Gain on sale of real estate		(225,330)
Changes in operating assets and liabilities:
Accounts receivable	(502,480)	(154,554)
Inventory	(361,071)	334,832
Prepaids and other current assets		8,929
Deferred tax asset	14,252	61,480
Accounts payable and accrued interest payable	581,295	(405,064)
Other liabilities	0	(1,005)
Net cash used in operating activities	(224,312)	(196,996)
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 on asset-based line of credit	300,000	107,972
Net (paydown) borrowing on notes payable	41,718	(10,055)
Net paydown to related party	(513,976)	(38,885)
Net cash provided by (used in) financing activities	(172,258)	59,032
Net change in cash and cash equivalents	(396,570)	574,536
Cash and cash equivalents at the beginning of period	569,281	171,818
Cash and cash equivalents at the end of period	172,711	746,354
Supplemental disclosures of cash flow information:
Cash paid for interest	$ 42,448	$ 37,005

XML

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 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 March 31, 2022 and March 31, 2021 are not necessarily indicative of the operating results for the full years.

COVID-19 AND ATTENDANT SUPPLY CHAIN ISSUES

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 and the attendant supply chain problems has affected our results of operations and the first quarter 2022 financial results are not necessarily indicative of the annual 2022 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, rubber supply shortages 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.

XML

SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 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 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) 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	March 31, 2022		March 31, 2021
Finished goods	$	4,444,926	$	3,442,078
Raw materials		—		—
Work-in-progress		—		—
Inventory Reserve		(731,192)		(731,192)
Net Inventory	$	3,713,734	$	2,710,866

Revenue Recognition

The Company recognizes revenue based on Account Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, and all of the related amendments (“new revenue standard”). 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 606. 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 10,800,000 and zero stock options and warrants that would have been included in the fully diluted earnings per share for the three- and 3-month periods ended March 31, 2022 and 2021, respectively.

XML

CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE

3 Months Ended

Mar. 31, 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 New Jersey based 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 quarter ended March 31, 2021.

XML

SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2022

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 4 – SUBSEQUENT EVENTS

Option Exercise

In December of 2021, CFO, Scott Chichester exercised his option to purchase 3,100,000 common shares of the Company. The Company received $93,000 for this option exercise in the second quarter of 2022 and the common shares are expected to be issued in the third quarter of 2022 and are currently reported as common stock subscribed on the balance sheet as of March 31, 2022.

XML

SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 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

Inventories, which are comprised of finished goods, are stated at the lower of cost (based on weighted average method) 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	March 31, 2022		March 31, 2021
Finished goods	$	4,444,926	$	3,442,078
Raw materials		—		—
Work-in-progress		—		—
Inventory Reserve		(731,192)		(731,192)
Net Inventory	$	3,713,734	$	2,710,866

Revenue Recognition

Revenue Recognition

The Company recognizes revenue based on Account Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, and all of the related amendments (“new revenue standard”). 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 606. 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

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 zero stock options and warrants that would have been included in the fully diluted earnings per share for the three- and 3-month periods ended March 31, 2022 and 2021, respectively.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2022

SIGNIFICANT ACCOUNTING POLICIES

Schedule of inventory

Inventory Type	March 31, 2022		March 31, 2021
Finished goods	$	4,444,926	$	3,442,078
Raw materials		—		—
Work-in-progress		—		—
Inventory Reserve		(731,192)		(731,192)
Net Inventory	$	3,713,734	$	2,710,866

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SIGNIFICANT ACCOUNTING POLICIES - Inventories (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021
SIGNIFICANT ACCOUNTING POLICIES
Finished goods	$ 4,444,926		$ 3,442,078
Raw materials	0		0
Work-in-progress	0		0
Inventory Reserve	(731,192)		(731,192)
Net Inventory	$ 3,713,734	$ 3,352,663	$ 2,710,866

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SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
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	0

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CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE (Details)	3 Months Ended
	Mar. 31, 2021 USD ($)
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

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SUBSEQUENT EVENTS (Details)	1 Months Ended
	Dec. 31, 2021 USD ($) shares
SUBSEQUENT EVENTS
Purchase of common shares | shares	3,100,000
Received option exercise | $	$ 93,000