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 June 30, 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, 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 ☒	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 August 22, 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	OTCMarkets.com Pink Current

STERLING CONSOLIDATED CORP.

TABLE OF CONTENTS

FORM 10-Q REPORT

June 30, 2022

		Page  Number
PART I - FINANCIAL INFORMATION		3
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	15
Item 4.	Controls and Procedures.	15
PART II - OTHER INFORMATION		16
Item 1.	Legal Proceedings.	16
Item 1A.	Risk Factors.	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	16
Item 3.	Defaults Upon Senior Securities.	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information.	16
Item 6.	Exhibits.	17
SIGNATURES		18

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

STERLING CONSOLIDATED CORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,		December 31,
	2022		2021
	(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents	$	33,231	$	569,281
Account receivable, net		2,779,118		1,474,570
Inventory, net		4,276,597		3,352,663
Notes receivable and other current assets		78,675		171,674
Total current assets		7,167,621		5,568,188
Property and equipment, net		872,303		918,115
Intangible assets, net		73,784		77,284
Deferred tax asset		153,245		199,655
Total assets	$	8,266,953	$	6,763,242
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	3,216,710	$	1,422,031
Line of credit		560,627		401,053
Other liabilities		50,751		50,332
Current portion of long-term notes payable, rel. party		52,702		52,702
Current portion of long-term notes payable		36,554		39,858
Total current liabilities		3,917,344		1,965,976
Other liabilities
Long-term notes payable, related party		163,022		767,159
Long-term notes payable		1,675,337		1,691,728
Total other liabilities		1,838,359		2,458,887
Total liabilities		5,755,703		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 June 30, 2022 and December 31, 2021		47,285		47,285
Additional paid-in capital		2,569,249		2,569,249
Common stock subscribed		93,000		93,000
Accumulated deficit		(198,284)		(371,155)
Total stockholders’ equity		2,511,250		2,338,379
Total liabilities and stockholders’ equity	$	8,266,953	$	6,763,242

See accompanying notes to condensed consolidated financial statements

3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Revenues
O-rings and rubber product sales	$	3,640,862		2,549,529	$	6,509,683		4,760,094
Freight services		170,966		102,356		261,095		238,145
Total revenues		3,811,828	$	2,651,885		6,770,778		4,998,239
Cost of sales
Cost of goods		2,882,067		1,925,347		5,069,279		3,529,227
Cost of services		182,010		126,451		332,352		297,825
Total cost of sales		3,064,077		2,051,798		5,401,631		3,827,052
Gross profit		747,751		600,087		1,369,147		1,171,187
Operating expenses
Sales and marketing		86,411		84,908		164,411		162,040
General and administrative		463,351		295,461		916,381		761,164
Total operating expenses		549,762		380,369		1,080,792		923,204
Operating income		197,989		219,718		288,355		247,983
Other income (expense)
Other		3,003		2,981		5,985		5,963
Gain on PPP loan forgiveness		—		326,100		—		326,100
Interest expense		(30,089)		(37,065)		(72,537)		(74,070)
Gain on sale of real estate		—		—		—		225,330
Total other income (expense)		(27,086)		292,016		(66,552)		483,323
Income before provision (benefit) for income taxes		170,903		511,734		221,803		731,306
Provision for income taxes		34,680		51,978		48,932		113,458
Net income	$	136,223	$	459,756	$	172,871	$	617,848
Net income per share of common stock:
Basic	$	0.00	$	0.01	$	0.00	$	0.01
Fully diluted	$	0.00	$	0.01	$	0.00	$	0.01
Weighted average number of shares outstanding
Basic		47,284,689		47,284,689		47,284,689		47,284,689
Fully diluted		57,584,689		57,584,689		57,584,689		57,584,689

See accompanying notes to condensed consolidated financial statements

4

STERLING CONSOLIDATED CORP

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

				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, June 30, 2021	47,284,689		47,285		—		2,569,249		(1,020,914)		1,595,620
Net income for the three months ended June 30, 2021	—		—		—		—		459,756		459,756
Balance, June 30, 2021	47,284,689	$	47,285	$	—	$	2,569,249	$	(561,158)	$	2,055,376
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		(198,284)		2,511,250
Net income for the three months ended June 30, 2022	—		—		—		—		136,223		136,223
Balance, June 30, 2022	47,284,689	$	47,285	$	93,000	$	2,569,249	$	(198,284)	$	2,511,250

See accompanying notes to condensed consolidated financial statements

5

STERLING CONSOLIDATED CORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Six Months Ended
	June 30,
	2022		2021
Cash flows from operating activities
Net income	$	172,871	$	617,848
Adjustments to reconcile net income (loss) income to net cash provided by operating activities:
Depreciation and amortization		49,312		51,247
Gain on sale of real estate		—		(225,330)
Changes in operating assets and liabilities:
Accounts receivable		(1,304,548)		(299,232)
Inventory		(923,934)		435,816
Prepaids and other current assets		92,999		(57,828)
Deferred tax asset		46,410		113,458
Accounts payable and accrued interest payable		1,794,679		(440,245)
Other liabilities		419		(1,005)
Net cash (used in) provided by operating activities		(71,792)		194,729
Cash flows from investing activities
Proceeds from sale of real estate		—		712,500
Net cash used in investing activities		—		712,500
Cash flows from financing activities
Net borrowing (paydown) on line of credit		159,574		(593,851)
Net paydown on notes payable		(19,695)		(130,236)
Net paydown to related party		(604,137)		(148,049)
Net cash used in financing activities		(464,258)		(872,136)
Net change in cash and cash equivalents		(536,050)		35,093
Cash and cash equivalents at the beginning of period		569,281		171,818
Cash and cash equivalents at the end of period	$	33,231	$	206,911
Supplemental disclosures of cash flow information:
Cash paid for interest	$	72,537	$	74,070
Cash paid for taxes	$	2,522	$	—

See accompanying notes to condensed consolidated financial statements

6

STERLING CONSOLIDATED CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 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 June 30, 2022 and June 30, 2021 are not necessarily indicative of the operating results for the full years.

COVID-19

In the first quarter of 2020 the Company was affected by COVID-19. The COVID-19 pandemic has caused us to modify our business practices (including employee travel, employee work locations, and reduction of physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. We reiterate that COVID 19 has affected our results of operations and the first quarter 2020 financial results are not necessarily indicative of the annual 2021 results.

COVID-19 continues to affect the world economy in 2022. The extent to which COVID-19 impacts our business, results of operations and financial condition will depend on future developments, which are uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Even after the coronavirus outbreak has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by the Company in these condensed interim financial statements are the same as those applied by the Company in its audited consolidated financial statements as at and for the year ended December 31, 2021.

ASU 2016-13, “Financial Instruments - Credit Losses” (Topic 326)

This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected. The standard was effective for fiscal years beginning after December 15, 2019. Management has evaluated the impact in 2022 and 2021 and has concluded the effect is not material to the Consolidated Financial Statements as a whole.

7

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the accounts receivable and sales allowances, fair values of financial instruments, useful lives of intangible assets and property and equipment, inventory valuations, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Inventories

Inventories, which are comprised of finished goods, are stated at the lower of cost (based on weighted average method) or market. Cost does not include shipping and handling fees, which are charged directly to income. The Company provides for estimated losses from obsolete or slow-moving inventories, which is approximately 20% of the total inventory, and writes down the cost of inventory at the time such determinations are made. Reserves are estimated based upon inventory on hand, historical sales activity, industry trends, the business environment, and the expected net realizable value. The net realizable value is determined based upon current awareness of market prices.

Inventory Type	June 30, 2022		December 31, 2021
Finished goods	$	5,007,789	$	4,508,102
Raw materials		—		—
Work-in-progress		—		—
Inventory Reserve		(731,192)		(731,192)
Net Inventory	$	4,276,597	$	3,352,663

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 10,800,000 stock options that are included in the fully diluted earnings per share for the three and six month periods ended June 30, 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 sales force based out of the Company’s headquarters in Neptune, New Jersey. The closure was an effort to reduce costs and consolidate operations and was not related to COVID-19.

On March 30, 2021 the Company sold its building and land in Apopka, Florida. The proceeds on the sale were $712,500 and the company recorded a gain on the sale of $225,330 in the first quarter of 2021.

8

NOTE 4 – PPP 1^ST DRAW FORGIVENESS

In May of 2021, the Company’s Paycheck Protection Program draw 1 loan of $326,100 was forgiven in full and was recorded as other income in the accompanying condensed consolidated statement of operations.

NOTE 5 - SUBSEQUENT EVENTS

Management reviewed transactions for disclosable subsequent events from June 30, 2022 through August 22, 2022. None were noted.

9

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, and 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 subsidiary ADDR Properties, LLC (“ADDR”). ADDR owns a 28,000 square foot facility in Neptune, New Jersey, that is used by Sterling Seal for its operations and corporate headquarters.

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 ninety percent (90%) 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.

10

Results of Operations

Comparison for the three months ended June 30, 2022 and 2021

Net Revenue

Net revenue increased by approximately $1,159,943 or approximately 44%, to $3,811,828 for the three months ended June 30, 2022 from $2,651,885 for the three months ended June 30, 2021. This increase was due primarily to selling price increases and larger order sizes from existing customers attempting to build inventory against the current worldwide o-ring inventory supply chain issues. The Company expects this trend of aggressive buying from its customers to continue through the 4^th quarter of 2022.

Total Cost of Sales

Cost of sales increased by approximately $1,012,279 or 49%, to $3,064,077 for the three months ended June 30, 2022 from $2,051,798 for the three months ended June 30, 2021. This increase was primarily due to an approximately commensurate increase in sales coupled with increased freight costs.

Gross profit

Gross profit increased by $147,664 or 25%, to $747,751 for the three months ended June 30, 2022 from $600,087 for the three months ended June 30, 2021. This increase was due primarily to higher sales resulting from increased consumer demand offset by higher freight costs.

Operating income

Operating income decreased to $197,989 for the three months ended June 30, 2022 from income of $219,718 for the three months ended June 30, 2021. This decrease is attributed to the above-described increase in revenues and gross profit offset by an increase of $155,217 in general and administrative costs mainly attributed increases in payroll of $89,986 due to headcount increases and commissions and fees of $41,512.

Other income (expense)

Other income decreased by $319,102 to expense of $27,086 for the three months ended June 30, 2022, from income of $292,016 for the three months ended June 30, 2021. This increase is attributed to the PPP loan forgiveness resulting in other income of $326,100 in the first quarter of 2021.

Net Income

As a result of the above factors, the Company showed net income of $136,223 for the three months ended June 30, 2022, as compared to net income of $459,756 for the three months ended June 30, 2021. This decrease of $323,533 or 70% is primarily attributed to the aforementioned factors that affected revenues and cost of sales resulting in operating income of $197,989 coupled with the PPP loan forgiveness of $326,100 in the first quarter of 2021, which was absent in the 2022 results.

Comparison for the six months ended June 30, 2022 and 2021

Net Revenue

Net revenue increased by approximately $1,772,539 or 35%, to $6,770,778 for the six months ended June 30, 2022 from $4,998,238 for the six months ended June 30, 2021. This increase was due primarily to selling price increases and larger order sizes from existing customers attempting to build inventory against the current worldwide o-ring inventory shortage. The Company expects this trend of aggressive buying from its customers to continue through the 4th quarter of 2022.

11

Total Cost of Sales

Cost of sales increased by $1,574,579 or 41%, to $5,401,631 for the six months ended June 30, 2022, from $3,827,052 for the six months ended June 30, 2021. This increase is primarily attributed to increased sales coupled with higher inventory costs due to higher freight costs.

Gross profit

Gross profit increased by $197,960 or approximately 17%, to $1,369,147 for the six months ended June 30, 2022, to $1,171,187 for the six months ended June 30, 2021. This increase was due to an increase in sales offset by a higher cost of rubber products and higher freight costs.

Operating income

Operating income increased $40,872 to income of $288,355 for the six months ended June 30, 2022, from income of $247,982 for the six months ended June 30, 2021. This increase is attributed to the above-described increase in revenues and gross profit.

Other income (expense)

Other income (expense) decreased by $549,875 to expense of $66,552 for the six months ended June 30, 2022, from income of $483,323 for the six months ended June 30, 2021. This decrease is attributed to one time income events including PPP loan forgiveness of $326,100 coupled with the gain on the sale of the Florida real estate of $225,330 recorded in the 1^st quarter of 2021 which were absent in the 2022 reporting period.

Net Income

As a result of the above factors, the Company showed net income of $221,803 for the six months ended June 30, 2022, as compared to a net income of $731,306 for the six months ended June 30, 2021. This decrease is attributed to operational income of $288,355 coupled with gains on the PPP loan forgiveness of $326,100 and a gain on the sale of the Florida real estate of $225,330 for the six months ended June 30, 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 and cash generated from operations.

On June 30, 2022, we had cash and cash equivalents of approximately $33,231 as compared to approximately $569,281 as of December 31, 2021, representing a decrease of $536,050. This decrease can be explained by cash used in operating activities of $71,792 primarily attributed to increased buying of inventory and resultant accounts payable to satisfy increased customer demand; offset by cash used in financing activities of $464,258 which was the result of paydowns of the note payable related party of $604,137, offset by increased borrowing on the line of credit of $159,974.

The cash flow from operating activities decreased from cash provided of $194,729 for the six months ended June 30, 2021 to net cash used of $71,792 for the six months ended June 30, 2022. This decrease of $266,521 is primarily attributed to increased accounts payable and inventory offset by a lesser increase in accounts receivable.

The cash flow from investing activities decreased from net cash provided of $712,500 for the six months ended June 30, 2021 to $0 for the six months ended June 30, 2022. This decrease is explained by the proceeds from the sale of the Florida real estate totaling $712,500 in the first quarter of 2021 which was absent for the 2022 rep.

The cash flow from financing activities increased from net cash used of $872,136 for the six months ended June 30, 2021 to net cash used of $464,258 for the six months ended June 30, 2022. This increase is primarily attributed to the company using the proceeds from the sale of the Florida real estate to pay down a portion of the existing debt (including the asset based line of credit in the amount of $593,851) in the 1^st quarter of 2021,

12

Debt Transactions

Asset Based Loan

The Company refinanced its debt in 2020 with a commercial bank and obtained a line of credit with a limit of $1,000,000. The line of credit calls for a variable interest rate which is currently at 5.75% per annum and there is an outstanding balance of $560,627 as of June 30, 2022.

Mortgage Note

The Company obtained a mortgage on its Neptune, NJ headquarters in the 4th quarter of 2019, offset by a pay down of a portion of its related party note and asset-based line of credit. The mortgage payable is due in monthly installments of principal and interest. Interest is charged at a fixed rate of 5.00%. The mortgage is secured by the assets of the Company and personal guarantee of the Chairman of the Board and the CEO. The note is amortized over a 20-year period but has a 5-year maturity, which will require refinancing in November of 2024.

COVID-19 related financing:

EIDL Note

Additionally, on May 28, 2020, the Company received $150,000 in loan funding from the SBA under the Economic Injury Disaster Loan (“EIDL”) program administered by the SBA, which program was expanded pursuant to the CARES Act. The EIDL is evidenced by a promissory note, dated May 28, 2020 (the “EIDL Note”) in the original principal amount of $150,000 with the SBA, the lender.

Under the terms of the EIDL Note, interest accrues on the outstanding principal at the rate of 3.75% per annum. The term of the EIDL Note is 30 years, though it may be payable sooner upon an event of default under the EIDL Note. Under the EIDL Note, the Company will be obligated to make equal monthly payments of principal and interest beginning on May 28, 2022 through the maturity date of May 28, 2050. The EIDL Note may be prepaid in part or in full, at any time, without penalty.

The EIDL Note provides for certain customary events of default, including: (i) a failure to comply with any provision of the EIDL Note, the related Loan Authorization and Agreement, or other EIDL loan documents; (ii) a default on any other SBA loan; (iii) a sale or transfer of, or failure to preserve or account to SBA’s satisfaction for, any of the collateral or its proceeds; (iv) a failure of the Company or anyone acting on its behalf to disclose any material fact to SBA; (v) the making of a materially false or misleading representation to SBA by the Company or anyone acting on their behalf; (vi) a default on any loan or agreement with another creditor, if SBA believes the default may materially affect the Company’s ability to pay the EIDL Note; (vii) a failure to pay any taxes when due; (viii) if the Company becomes the subject of a proceeding under any bankruptcy or insolvency law; (ix) if a receiver or liquidator is appointed for any part of the Company’s business or property; (x) the making of an assignment for the benefit of creditors; (xi) has any adverse change in financial condition or business operation that SBA believes may materially affect the Company’s ability to pay the EIDL Note; (xii) effects any reorganization, merger, consolidation, or other transaction changing ownership or business structure without SBA’s prior written consent; or (xiii) becomes the subject of a civil or criminal action that SBA believes may materially affect the Company’s ability to pay the EIDL Note.

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.

13

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 control of the product passes to the customer or the service is provided and is recognized at an amount that reflects the consideration expected to be received in exchange for such goods or services. 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.

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, 2020, 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.

14

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 June 30, 2021 were fully vested and therefore, no compensation expense was recorded in the quarter ended June 30, 2021.

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

The Company has declared a dividend of its proprietary cryptocurrency, DIMO, that is yet to be distributed. As there is currently no market for the cryptocurrency, the Company has valued the dividend at $0.

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 June 30, 2020:

(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.

15

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 June 30, 2022 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.

16

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.

17

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: August 22, 2022
By:	/s/ Scott Chichester
	Scott Chichester,
	Chief Financial Officer
	(Principal Financial and Accounting Officer)
	Dated: August 22, 2022

18

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: August 22, 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: August 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 June 30, 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: August 22, 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 June 30, 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: August 22, 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	6 Months Ended
	Jun. 30, 2022	Aug. 22, 2022
Document and Entity Information
Document Type	10-Q
Document Period End Date	Jun. 30, 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	No
Entity Interactive Data Current	No
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	Q2
Amendment Flag	false
Trading Symbol	STCC
Title of 12(b) Security	Common

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 33,231	$ 569,281
Account receivable, net	2,779,118	1,474,570
Inventory, net	4,276,597	3,352,663
Notes receivable and other current assets	78,675	171,674
Total current assets	7,167,621	5,568,188
Property and equipment, net	872,303	918,115
Intangible assets, net	73,784	77,284
Deferred tax asset	153,245	199,655
Total assets	8,266,953	6,763,242
Current liabilities
Accounts payable and accrued expenses	3,216,710	1,422,031
Line of credit	560,627	401,053
Other liabilities	50,751	50,332
Current portion of long-term notes payable, rel. party	52,702	52,702
Current portion of long-term notes payable	36,554	39,858
Total current liabilities	3,917,344	1,965,976
Other liabilities
Long-term notes payable, related party	163,022	767,159
Long-term notes payable	1,675,337	1,691,728
Total other liabilities	1,838,359	2,458,887
Total liabilities	5,755,703	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 June 30, 2022 and December 31, 2021	47,285	47,285
Additional paid-in capital	2,569,249	2,569,249
Common stock subscribed	93,000	93,000
Accumulated deficit	(198,284)	(371,155)
Total stockholders' equity	2,511,250	2,338,379
Total liabilities and stockholders' equity	$ 8,266,953	$ 6,763,242

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 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 (UNAUDITED) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenues
Total revenues	$ 3,811,828	$ 2,651,885	$ 6,770,778	$ 4,998,239
Cost of sales
Total cost of sales	3,064,077	2,051,798	5,401,631	3,827,052
Gross profit	747,751	600,087	1,369,147	1,171,187
Operating expenses
Sales and marketing	86,411	84,908	164,411	162,040
General and administrative	463,351	295,461	916,381	761,164
Total operating expenses	549,762	380,369	1,080,792	923,204
Operating income	197,989	219,718	288,355	247,983
Other income (expense)
Other	3,003	2,981	5,985	5,963
Gain on PPP loan forgiveness		326,100		326,100
Interest expense	(30,089)	(37,065)	(72,537)	(74,070)
Gain on sale of real estate				225,330
Total other income (expense)	(27,086)	292,016	(66,552)	483,323
Income before provision (benefit) for income taxes	170,903	511,734	221,803	731,306
Provision for income taxes	34,680	51,978	48,932	113,458
Net income	$ 136,223	$ 459,756	$ 172,871	$ 617,848
Net income per share of common stock:
Basic	$ 0.00	$ 0.01	$ 0.00	$ 0.01
Fully diluted	$ 0.00	$ 0.01	$ 0.00	$ 0.01
Weighted average number of shares outstanding
Basic	47,284,689	47,284,689	47,284,689	47,284,689
Fully diluted	57,584,689	57,584,689	57,584,689	57,584,689
O-rings and rubber product sales
Revenues
Total revenues	$ 3,640,862	$ 2,549,529	$ 6,509,683	$ 4,760,094
Cost of sales
Total cost of sales	2,882,067	1,925,347	5,069,279	3,529,227
Freight services
Revenues
Total revenues	170,966	102,356	261,095	238,145
Cost of sales
Total cost of sales	$ 182,010	$ 126,451	$ 332,352	$ 297,825

XML

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) - 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, 2020	$ 47,285		2,569,249	(1,179,006)	1,437,528
Balance (in shares) at Dec. 31, 2020	47,284,689
Net income					617,848
Balance at Jun. 30, 2021	$ 47,285		2,569,249	(561,158)	2,055,376
Balance (in shares) at Jun. 30, 2021	47,284,689
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
Net income				459,756	459,756
Balance at Jun. 30, 2021	$ 47,285		2,569,249	(561,158)	2,055,376
Balance (in shares) at Jun. 30, 2021	47,284,689
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
Net income				36,648	36,648
Balance at Mar. 31, 2022	$ 47,285	93,000	2,569,249	(198,284)	2,511,250
Balance (in shares) at Mar. 31, 2022	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 Jun. 30, 2022					93,000
Net income					172,871
Balance at Jun. 30, 2022	$ 47,285	93,000	2,569,249	(198,284)	2,511,250
Balance (in shares) at Jun. 30, 2022	47,284,689
Balance at Mar. 31, 2022	$ 47,285	93,000	2,569,249	(198,284)	2,511,250
Balance (in shares) at Mar. 31, 2022	47,284,689
Common stock subscribed at Jun. 30, 2022					93,000
Net income				136,223	136,223
Balance at Jun. 30, 2022	$ 47,285	$ 93,000	$ 2,569,249	$ (198,284)	$ 2,511,250
Balance (in shares) at Jun. 30, 2022	47,284,689

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities
Net income	$ 172,871	$ 617,848
Adjustments to reconcile net income (loss) income to net cash provided by operating activities:
Depreciation and amortization	49,312	51,247
Gain on sale of real estate		(225,330)
Changes in operating assets and liabilities:
Accounts receivable	(1,304,548)	(299,232)
Inventory	(923,934)	435,816
Prepaids and other current assets	92,999	(57,828)
Deferred tax asset	46,410	113,458
Accounts payable and accrued interest payable	1,794,679	(440,245)
Other liabilities	419	(1,005)
Net cash (used in) provided by operating activities	(71,792)	194,729
Cash flows from investing activities
Proceeds from sale of real estate		712,500
Net cash used in investing activities		712,500
Cash flows from financing activities
Net borrowing (paydown) on line of credit	159,574	(593,851)
Net paydown on notes payable	(19,695)	(130,236)
Net paydown to related party	(604,137)	(148,049)
Net cash used in financing activities	(464,258)	(872,136)
Net change in cash and cash equivalents	(536,050)	35,093
Cash and cash equivalents at the beginning of period	569,281	171,818
Cash and cash equivalents at the end of period	33,231	206,911
Supplemental disclosures of cash flow information:
Cash paid for interest	72,537	$ 74,070
Cash paid for taxes	$ 2,522

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2022

BASIS OF PRESENTATION

BASIS OF PRESENTATION

NOTE 1 – BASIS OF PRESENTATION

The accompanying interim financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows as of and for the period ended, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2021 audited financial statements. The results of operations for the periods ended June 30, 2022 and June 30, 2021 are not necessarily indicative of the operating results for the full years.

COVID-19

In the first quarter of 2020 the Company was affected by COVID-19. The COVID-19 pandemic has caused us to modify our business practices (including employee travel, employee work locations, and reduction of physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. We reiterate that COVID 19 has affected our results of operations and the first quarter 2020 financial results are not necessarily indicative of the annual 2021 results.

COVID-19 continues to affect the world economy in 2022. The extent to which COVID-19 impacts our business, results of operations and financial condition will depend on future developments, which are uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Even after the coronavirus outbreak has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future.

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SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2022

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by the Company in these condensed interim financial statements are the same as those applied by the Company in its audited consolidated financial statements as at and for the year ended December 31, 2021.

ASU 2016-13, “Financial Instruments - Credit Losses” (Topic 326)

This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected. The standard was effective for fiscal years beginning after December 15, 2019. Management has evaluated the impact in 2022 and 2021 and has concluded the effect is not material to the Consolidated Financial Statements as a whole.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the accounts receivable and sales allowances, fair values of financial instruments, useful lives of intangible assets and property and equipment, inventory valuations, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Inventories

Inventories, which are comprised of finished goods, are stated at the lower of cost (based on weighted average method) or market. Cost does not include shipping and handling fees, which are charged directly to income. The Company provides for estimated losses from obsolete or slow-moving inventories, which is approximately 20% of the total inventory, and writes down the cost of inventory at the time such determinations are made. Reserves are estimated based upon inventory on hand, historical sales activity, industry trends, the business environment, and the expected net realizable value. The net realizable value is determined based upon current awareness of market prices.

Inventory Type	June 30, 2022		December 31, 2021
Finished goods	$	5,007,789	$	4,508,102
Raw materials		—		—
Work-in-progress		—		—
Inventory Reserve		(731,192)		(731,192)
Net Inventory	$	4,276,597	$	3,352,663

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 10,800,000 stock options that are included in the fully diluted earnings per share for the three and six month periods ended June 30, 2022 and 2021, respectively.

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CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE

6 Months Ended

Jun. 30, 2022

CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE

CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE

NOTE 3- CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE

In the first quarter of 2020, the Company closed down its Florida operations and consolidated the sales accounts with its sales force based out of the Company’s headquarters in Neptune, New Jersey. The closure was an effort to reduce costs and consolidate operations and was not related to COVID-19.

On March 30, 2021 the Company sold its building and land in Apopka, Florida. The proceeds on the sale were $712,500 and the company recorded a gain on the sale of $225,330 in the first quarter of 2021.

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PPP 1ST DRAW FORGIVENESS

6 Months Ended

Jun. 30, 2022

PPP 1ST DRAW FORGIVENESS

PPP 1ST DRAW FORGIVENESS

NOTE 4 – PPP 1^ST DRAW FORGIVENESS

In May of 2021, the Company’s Paycheck Protection Program draw 1 loan of $326,100 was forgiven in full and was recorded as other income in the accompanying condensed consolidated statement of operations.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2022

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 5 - SUBSEQUENT EVENTS

Management reviewed transactions for disclosable subsequent events from June 30, 2022 through August 22, 2022. None were noted.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2022

SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the accounts receivable and sales allowances, fair values of financial instruments, useful lives of intangible assets and property and equipment, inventory valuations, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Inventories

Inventories

Inventories, which are comprised of finished goods, are stated at the lower of cost (based on weighted average method) or market. Cost does not include shipping and handling fees, which are charged directly to income. The Company provides for estimated losses from obsolete or slow-moving inventories, which is approximately 20% of the total inventory, and writes down the cost of inventory at the time such determinations are made. Reserves are estimated based upon inventory on hand, historical sales activity, industry trends, the business environment, and the expected net realizable value. The net realizable value is determined based upon current awareness of market prices.

Inventory Type	June 30, 2022		December 31, 2021
Finished goods	$	5,007,789	$	4,508,102
Raw materials		—		—
Work-in-progress		—		—
Inventory Reserve		(731,192)		(731,192)
Net Inventory	$	4,276,597	$	3,352,663

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 10,800,000 stock options that are included in the fully diluted earnings per share for the three and six month periods ended June 30, 2022 and 2021, respectively.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2022

SIGNIFICANT ACCOUNTING POLICIES

Schedule of inventory

Inventory Type	June 30, 2022		December 31, 2021
Finished goods	$	5,007,789	$	4,508,102
Raw materials		—		—
Work-in-progress		—		—
Inventory Reserve		(731,192)		(731,192)
Net Inventory	$	4,276,597	$	3,352,663

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SIGNIFICANT ACCOUNTING POLICIES - Inventories (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
SIGNIFICANT ACCOUNTING POLICIES
Finished goods	$ 5,007,789	$ 4,508,102
Raw materials	0	0
Work-in-progress	0	0
Inventory Reserve	(731,192)	(731,192)
Net Inventory	$ 4,276,597	$ 3,352,663

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SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 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	10,800,000

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CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE (Details) - USD ($)	3 Months Ended	6 Months Ended
	Mar. 31, 2021	Jun. 30, 2021
CLOSURE OF FLORIDA OFFICE AND SALE OF REAL ESTATE
Proceeds from sale of real estate	$ 712,500
Gain on sale of real estate	$ 225,330	$ 225,330

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PPP 1ST DRAW FORGIVENESS (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2021
PPP 1ST DRAW FORGIVENESS
Paycheck Protection Program draw 1 loan forgiven in full	$ 326,100	$ 326,100