Item 1. Financial Statements.
STERLING CONSOLIDATED CORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, |
| 2017 | 2016 |
| (UNAUDITED) |
| ASSETS |
| Current assets |
| Cash and cash equivalents | $ | 22,348 | $ | 6,814 |
| Accounts receivable, net | 790,434 | 556,025 |
| Inventory, net | 2,827,545 | 2,723,222 |
| Notes receivable and other current assets | 99,362 | 45,888 |
| Total current assets | 3,739,689 | 3,331,949 |
| Property and equipment, net | 1,860,562 | 1,903,512 |
| Intangible assets, net | 103,209 | 103,209 |
| Deferred tax asset | 107,324 | 157,428 |
| Total assets | $ | 5,810,784 | $ | 5,496,098 |
| LIABILITIES AND STOCKHOLDERS' EQUITY |
| Current liabilities |
| Accounts payable and accrued expenses | $ | 1,307,943 | $ | 1,022,407 |
| Bank line of credit | 788,858 | 758,858 |
| Other liabilities | 71,662 | 70,960 |
| Derivative liability | 7,632 | 15,061 |
| Current portion of long-term notes payable | 23,706 | 42,194 |
| Total current liabilities | 2,199,801 | 1,909,480 |
| Other liabilities |
| Long-term notes payable, related parties | 1,670,329 | 1,681,632 |
| Long-term notes payable | 1,096,984 | 1,135,817 |
| Total other liabilities | 2,767,313 | 2,817,449 |
| Total liabilities | 4,967,114 | 4,726,929 |
| Stockholders' equity |
| Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued | - | - |
| Common stock, $0.001 par value; 200,000,000 shares authorized, 40,715,540 and 40,715,540 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 40,716 | 40,716 |
| Additional paid-in capital | 1,446,278 | 1,446,278 |
| Accumulated deficit | (643,324 | ) | (717,825 | ) |
| Total stockholders' equity | 843,670 | 769,169 |
| Total liabilities and stockholders' equity | $ | 5,810,784 | $ | 5,496,098 |

See accompanying notes to consolidated financial statements
F-1
STERLING CONSOLIDATED CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the three months ended June 30, | For the six months ended June 30, |
| 2017 | 2016 | 2017 | 2016 |
| Revenues |
| O-rings and rubber product sales | $ | 1,513,824 | $ | 1,514,503 | $ | 3,257,283 | $ | 2,967,691 |
| Freight services | 55,878 | 41,855 | 95,763 | 70,778 |
| Total revenues | 1,569,702 | $ | 1,556,358 | 3,353,046 | $ | 3,038,469 |
| Cost of sales |
| Cost of goods | 1,115,889 | 1.068,794 | 2,275,733 | 2,118,488 |
| Cost of services | 69,497 | 46,068 | 129,640 | 98,030 |
| Total cost of sales | 1,185,386 | 1,114,862 | 2,405,373 | 2,216,518 |
| Gross profit | 384,316 | 441,496 | 947,673 | 821,951 |
| Operating expenses |
| Sales and marketing | 59,772 | 47,264 | 108,814 | 94,495 |
| General and administrative | 314,038 | 355,302 | 658,419 | 740,434 |
| Total operating expenses | 373,810 | 402,566 | 767,233 | 834,929 |
| Operating income (loss) | 10,506 | 38,930 | 180,440 | (12,978 | ) |
| Other income and expense |
| Other income | 5,108 | (3,772 | ) | 14,494 | (3,995 | ) |
| Loss on sale of real estate | - | - | (39,910 | ) |
| Loss on sale of vehicle | (2,502 | ) | (2,502 | ) |
| Gain (loss) on interest rate swap | 2,390 | (550 | ) | 7,429 | (9,982 | ) |
| Interest expense | (39,161 | ) | (33,463 | ) | (75,256 | ) | (71,852 | ) |
| Total other expense | (34,165 | ) | (37,785 | ) | (55,835 | ) | (125,739 | ) |
| Income (loss) before provision for income taxes | (23,659 | ) | 1,145 | 124,605 | (138,717 | ) |
| Provision (benefit) for income taxes | (9,201 | ) | 460 | 50,104 | (65,485 | ) |
| Net income (loss) | $ | (14,458 | ) | $ | 685 | $ | 74,501 | $ | (73,232 | ) |
| Net income (loss) per share of common stock: |
| Basic and diluted | $ | (0.00 | ) | $ | 0.00 | $ | 0.00 | $ | (0.00 | ) |
| Weighted average number of shares outstanding |
| Basic and diluted | 40,715,540 | 40,715,540 | 40,715,540 | 40,715,540 |

See accompanying notes to consolidated financial statements
F-2
STERLING CONSOLIDATED CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended June 30 |
| 2017 | 2016 |
| Cash flows from operating activities |
| Net income (loss) | $ | 74,501 | $ | (73,232 | ) |
| Adjustments to reconcile net income to net cash provided by operating activities: |
| Depreciation and amortization | 60,288 | 92,464 |
| Bad debt expense | - | 12,911 |
| Loss on sale of building | - | 39,910 |
| Loss on sale of vehicle | 2,502 | - |
| Gain on swap | (7,429 | ) | 9,982 |
| Changes in operating assets and liabilities: |
| Accounts receivable | (234,409 | ) | (1,936 | ) |
| Inventory | (104,323 | ) | 1,860 |
| Deferred tax asset | 50,104 | (26,534 | ) |
| Accrued interest, related party | - | (7,765 | ) |
| Other assets | (53,474 | ) | (77,664 | ) |
| Accounts payable and accrued interest payable | 285,536 | (29,479 | ) |
| Other liabilities | 702 | (40,226 | ) |
| Net cash provided by (used in) operating activities | 73,998 | (99,709 | ) |
| Cash flows from investing activities |
| Purchase of fixed and intangible assets | (19,840 | ) |
| Sale of building | - | 562,327 |
| Net cash provided by (used in) investing activities | (19,840 | ) | 562,327 |
| Cash flows from financing activities |
| Net borrowing (paydown) of bank line of credit | 30,000 | (411,000 | ) |
| Payments on notes payable | (57,322 | ) | (20,724 | ) |
| Net loan (paid) - related party | (11,302 | ) | - |
| Net cash (used in) financing activities | (38,624 | ) | (431,724 | ) |
| Net change in cash and cash equivalents | 15,534 | 30,894 |
| Cash and cash equivalents at the beginning of period | 6,814 | 31,429 |
| Cash and cash equivalents at the end of period | $ | 22,348 | $ | 62,323 |
| Supplemental disclosures of cash flow information: |
| Cash paid for interest | $ | 72,929 | $ | 71,852 |
| Cash paid for taxes | $ | 750 | $ | 750 |

See accompanying notes to consolidated financial statements
F-3
STERLING CONSOLIDATED CORP AND AFFILIATES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017
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, 2016 audited financial statements. The results of operations for the periods ended June 30, 2017 and June 30, 2016 are not necessarily indicative of the operating results for the full years.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied by the Company in these condensed interim financial statements are the same as those applied by the Company in its audited consolidated financial statements as at and for the year ended December 31, 2016.
There have been no changes in the Company's significant accounting policies for the period ended June 30, 2017 as compared to those disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2016.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the accounts receivable and sales allowances, fair values of financial instruments, useful lives of intangible assets and property and equipment, inventory valuations, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
Inventories
Inventories, which are comprised of finished goods, are stated at the lower of cost (based on the first in, first out method) or market. Cost does not include shipping and handling fees, which are charged directly to income. The Company provides for estimated losses from obsolete or slow-moving inventories, which is approximately 4% of the total inventory, and writes down the cost of inventory at the time such determinations are made. Reserves are estimated based upon inventory on hand, historical sales activity, industry trends, the business environment, and the expected net realizable value. The net realizable value is determined based upon current awareness of market prices.
Revenue Recognition
The Company recognizes revenue based on Account Standards Codification (“ASC”) 605 “Revenue Recognition” which contains Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements’ and No. 104, “Revenue Recognition”. In the case of Sterling, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, shipment of the product has occurred, price is fixed or determinable and collectability of the resulting receivable is reasonably assured. For provision of third-party freight services provided by Integrity, revenue is recognized on a gross basis in accordance with ASC 605-45 " Revenue Recognition: Principal Agent Considerations " since Integrity is the primary obligor in its shipping arrangements. Revenue is generally recognized when the contracted goods arrive at their destination point. When revenues and expenses straddle a period end due to the time between shipment and delivery, Integrity allocates revenue between reporting periods based on relative transit time in each period with expenses recognized as incurred. Cost of goods is comprised of sale of o-rings and related rubber products. Freight services is comprised of freight forwarding and related services earned by Integrity and Rental services is comprised of revenue from rental of commercial space to third parties.
F-4
STERLING CONSOLIDATED CORP AND AFFILIATES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Basic and Diluted Earnings (Loss) per Share
The computation of basic earnings (loss) per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings (loss) per share includes common stock equivalents outstanding at the balance sheet date. The Company had no stock options and warrants that would have been included in the fully diluted earnings per share for the six month periods ended June 30, 2017 and 2016, respectively.
NOTE 3 – SALE OF REAL ESTATE
In March of 2016, the Company sold its commercial building in Cliffwood Beach, New Jersey. The sale price was $625,000 and the Company recognized a loss on the sale of $39,910. The Company received $562,327 in cash at closing with $20,000 held in escrow for repairs. $14,826 of the $20,000 in escrow was returned to the Company on August 1, 2016.
NOTE 4 – SUBSEQUENT EVENTS
The Company reviewed any significant transactions that would qualify for subsequent event reporting up through August 18, 2017. None were noted.
F-5
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. ADDR used to own another property in Cliffwood Beach, New Jersey, that was previously occupied by Sterling Seal. In March of 2016, the Company sold its commercial building in Cliffwood Beach. The sale price was $625,000 and the Company recognized a loss on the sale of $39,910. Q5 owns a 5,000 square foot facility that is used by Sterling Seal in Florida.
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.
Results of Operations
Comparison for the three months ended June 30, 2017 and 2016
Net Revenue
Net revenue increased by approximately $13,344 or approximately 0.86%, from $1,556,358 for the three months ended June 30, 2016 to $1,569,702 for the three months ended June 30, 2017. This minor increase was due primarily to a slowdown of overall revenue growth carried over from the first quarter of 2017.
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Total Cost of Sales
Cost of sales increased by approximately $70,524 or approximately 6.3%, from $1,114,862 for the three months ended June 30, 2016 to $1,185,386 for the three months ended June 30, 2017. This increase was due primarily to rising cost of o-rings purchased in the second quarter of 2017.
Gross profit
Gross profit decreased by approximately $57,180 or approximately 13.0 %, from $441,496 for the three months ended June 30, 2016 to $384,316 for the three months ended June 30, 2017. This decrease was due primarily to relatively flat sales and the above described increase in cost of goods sold and an increased cost of services in the Company’s freight business.
Net Income
As a result of the above factors, the Company showed a net loss of $14,458 for the three months ended June 30, 2017, as compared to a net income of $685 for the three months ended June 30, 2016. This decrease of $15,143 or approximately 2,211 % is primarily attributed to the above described increase in cost of goods and cost of services.
Comparison for the six months ended June 30, 2017 and 2016
Revenue
Revenue increased by approximately $314,577 or approximately 10.4%, from $3,038,469 for the six months ended June 30, 2016 to $3,353,046 for the six months ended June 30, 2016. This increase is due to increased demand for o-rings in the industrial sector.
Total Cost of Sales
Cost of sales increased by $188,855.3 or approximately 8.5%, from $2,216,518 for the six months ended June 30, 2016 to $2,405,373 for the six months ended June 30, 2017. The increase in cost of sales was attributed to a commensurate increase in sales and the factors noted above.
Gross profit
Gross profit increased approximately $125,722, or approximately 15.3%, from $821,951 for the six months ended June 30, 2016 to $947,673 for the six months ended June 30, 2017. This increase can be attributed to the above described changes in revenue and cost of sales.
Net Loss
As a result of the above described changes in revenue and cost of sales, our net income was $74,501 for the six months ended June 30, 2017, as compared to a net loss of $73,232 for the six months ended June 30, 2016. This was an increase of $147,733 or approximately 202 %. This increase can be explained by increased sales coupled with reduced general and administrative costs attributed to a reduction in professional fees.
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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, 2017, we had cash and cash equivalents of approximately $22,348 as compared to approximately $6,814 as of December 31, 2016, representing an increase of $15,534. This increase can be explained by net cash provided by operating activities of $73,998 primarily attributed to an increase in accounts receivable of $234,409 and an increase of inventory of $104,323 offset by an increase in accounts payable of $285,536; net cash flows used in investing activities of $19,840 from the purchase of fixed assets; and net cash used in financing activities of $38,624 primarily attributed to a net borrowing of a bank line of credit in the amount of $30,000 offset by a paydown notes payable of $57,322 and a paydown of related party notes payable of $11,302. On June 30, 2017, our working capital was approximately $1,539,888.
The cash flow used in operating activities increased from net cash used of $99,709 for the quarter ended June 30, 2016 to net cash provided of $73,997 for the quarter ended June 30, 2017. This increase of $173,707 is primarily attributed to an increase of net income.
The cash flow from investing activities decreased from cash provided of $562,237 for the quarter ended June 30, 2016 to net cash used of $19,840. This decrease is attributed to the fact that in the 1st quarter of 2016, the Company realized cash on the sale of its Cliffwood Beech property in the amount of $562,237.
The cash flow from financing activities increased from net cash used of $431,724 for the quarter ended June 30, 2016 to net cash used of $38,624 for the quarter ended June 30, 2017. This is primarily attributed to the fact that the Company made a large paydown on the bank line of credit in the amount of $411,000 in the first quarter of 2016 from its proceeds on the sale of its Cliffwood Beech property.
Bank Loans
The Company refinanced its debt in 2013 with a New York commercial bank and there are currently a $788,858 line of credit and a $1,099,506 mortgage outstanding. The line of credit calls for a variable interest rate of the Wall St. Journal published prime rate plus 1% and requires an annual review. The mortgage has a variable rate of LIBOR plus 4.25% and is for a 5-year term expiring in October of 2018. The Company is currently in violation of one of its financial covenants with the bank and is seeking a waiver. Additionally, the Company is researching re-financing of its line of credit with asset based financing.
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.
5
Revenue recognition
The Company recognizes revenue based on Account Standards Codification (“ASC”) 605 “Revenue Recognition” which contains Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements’ and No. 104, “Revenue Recognition”. In the case of Sterling Seal, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, shipment of the product has occurred, price is fixed or determinable and collectability of the resulting receivable is reasonably assured. For provision of third-party freight services provided by Integrity, revenue is recognized on a gross basis in accordance with ASC 605-45 " Revenue Recognition: Principal Agent Considerations " since Integrity is the primary obligor in its shipping arrangements. Revenue is generally recognized when the contracted goods arrive at their destination point. When revenues and expenses straddle a period end due to the time between shipment and delivery, Integrity allocates revenue between reporting periods based on relative transit time in each period with expenses recognized as incurred. Cost of goods is comprised of sale of O-rings and related rubber products. Freight services is comprised of freight forwarding and related services earned by Integrity and rental services is comprised of revenue from rental of commercial space to third parties.
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, 2016, 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). |

6
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 Company currently does not have any issued and outstanding stock options or other derivatives.
Recent Accounting Pronouncements
The Company’s management has considered all recent accounting pronouncements. Management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a Smaller Reporting Company and are not required to provide the information under this item.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, have conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Company’s Principal Executive Officer and Principal Financial Officer concluded that due to material weaknesses the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, as appropriate, to allow timely decisions regarding required disclosure.
As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements and Related Independence Rule and Conforming Amendments,” established by the Public Company Accounting Oversight Board ("PCAOB"), a material weakness is a deficiency or combination of deficiencies that result in a more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of June 30, 2017:
7
| (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 June 30, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
8
PART II - OTHER INFORMATION
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.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
9
None.
| Exhibit Number | Exhibit Title |
| 31.1* | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2* | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1** | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2** | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS * | XBRL Instance Document |
| 101.SCH * | XBRL Taxonomy Schema |
| 101.CAL * | XBRL Taxonomy Calculation Linkbase |
| 101.DEF * | XBRL Taxonomy Definition Linkbase |
| 101.LAB * | XBRL Taxonomy Label Linkbase |
| 101.PRE * | XBRL Taxonomy Presentation Linkbase |

* Filed herewith.
** In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.
10
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 18, 2017 |
| By: | /s/ Scott Chichester |
| Scott Chichester, |
| Chief Financial Officer |
| (Principal Financial and Accounting Officer) |
| Dated: August 18, 2017 |

11

Question: If Sterling Consolidated Corp's net revenue amount for the three months ended June 30, 2016 was represented by 100%, what percentage did the decrease in the gross profit represent for the same period ended June 30, 2017?

Solution:
def solution():
    #Define variables name and value
    net_revenue_2016 = 1556358
    gross_profit_2016 = 441496 
    gross_profit_2017 = 384316

    #Do math calculation to get the answer
    decrease_gross_profit = gross_profit_2016 - gross_profit_2017
    percentage_decrease = (decrease_gross_profit / net_revenue_2016) * 100
    answer = percentage_decrease
    return answer


Answer: 3.673961903366706