|
GLOBAL CONDIMENTS, INC.
|
|
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
|
|
June 30,
|
|
December 31,
|
|
ASSETS
|
|
2013
|
|
2012
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
63,785
|
|
|
$
|
100,246
|
|
|
Accounts Receivable, net
|
|
|
3,873
|
|
|
|
6,712
|
|
|
Other Current Assets
|
|
|
2,858
|
|
|
|
—
|
|
|
Total Current Assets
|
|
|
70,516
|
|
|
|
106,958
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets, net of accumulated depreciation of $7,304 and $6,898, respectively
|
|
|
—
|
|
|
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
70,516
|
|
|
$
|
107,364
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts Payable – Related Party
|
|
$
|
14,466
|
|
|
$
|
5,895
|
|
|
Accounts Payable – Trade
|
|
|
1,929
|
|
|
|
9,841
|
|
|
Total Current Liabilities
|
|
|
16,395
|
|
|
|
15,736
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
16,395
|
|
|
|
15,736
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.001 par value, 20,000,000 authorized,
|
|
|
|
|
|
|
|
|
|
-0- issued and outstanding at June 30, 2013 and December 31, 2012
|
|
|
—
|
|
|
|
—
|
|
|
Common Stock, $0.001 par value, 50,000,000 authorized,
|
|
|
|
|
|
|
|
|
|
7,581,736 issued and outstanding at June 30, 2013 and December 31, 2012
|
|
|
7,582
|
|
|
|
7,582
|
|
|
Additional Paid-in-capital
|
|
|
336,320
|
|
|
|
336,320
|
|
|
Accumulated Deficit
|
|
|
(289,781
|
)
|
|
|
(252,274
|
)
|
|
Total Stockholders’ Equity
|
|
|
54,121
|
|
|
|
91,628
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
70,516
|
|
|
$
|
107,364
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to unaudited consolidated financial statements.
|
|
|
|
GLOBAL CONDIMENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2013 AND 2012
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30, 2013
|
|
June 30, 2012
|
|
June 30, 2013
|
|
June 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
20,346
|
|
|
$
|
28,829
|
|
|
$
|
33,261
|
|
|
$
|
49,659
|
|
|
Cost of Revenues
|
|
|
17,958
|
|
|
|
19,705
|
|
|
|
27,589
|
|
|
|
38,500
|
|
|
Gross Profit
|
|
|
2,388
|
|
|
|
9,124
|
|
|
|
5,672
|
|
|
|
11,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
—
|
|
|
|
609
|
|
|
|
406
|
|
|
|
1,218
|
|
|
Selling and Advertising Expenses
|
|
|
3,859
|
|
|
|
585
|
|
|
|
10,550
|
|
|
|
2,610
|
|
|
General and Administrative
|
|
|
20,142
|
|
|
|
33,211
|
|
|
|
32,267
|
|
|
|
52,666
|
|
|
Total Operating Expenses
|
|
|
24,001
|
|
|
|
34,405
|
|
|
|
43,223
|
|
|
|
56,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Loss
|
|
|
(21,613
|
)
|
|
|
(25,281
|
)
|
|
|
(37,551
|
)
|
|
|
(45,335
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income
|
|
|
17
|
|
|
|
173
|
|
|
|
44
|
|
|
|
248
|
|
|
Total Other Income
|
|
|
17
|
|
|
|
173
|
|
|
|
44
|
|
|
|
248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(21,596
|
)
|
|
$
|
(25,108
|
)
|
|
$
|
(37,507
|
)
|
|
$
|
(45,087
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
7,581,736
|
|
|
|
7,581,736
|
|
|
|
7,581,736
|
|
|
|
7,581,736
|
|
See accompanying notes to consolidated financial
statements.
|
GLOBAL CONDIMENTS, INC.
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
FOR THE SIX MONTHS ENDED JUNE 30, 2013 and 2012
(Unaudited)
|
|
|
|
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(37,507
|
)
|
|
$
|
(45,087
|
)
|
|
Adjustments to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
used by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation Expense
|
|
|
406
|
|
|
|
1,218
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts Receivable, net
|
|
|
2,839
|
|
|
|
(3,814
|
)
|
|
Other Current Assets
|
|
|
(2,858
|
)
|
|
|
(13,549
|
)
|
|
Accounts Payable – Related Party
|
|
|
8,571
|
|
|
|
2,569
|
|
|
Accounts Payable
|
|
|
(7,912
|
)
|
|
|
5,569
|
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
|
(36,461
|
)
|
|
|
(53,094
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
|
(36,461
|
)
|
|
|
(53,094
|
)
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
100,246
|
|
|
|
169,371
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
63,785
|
|
|
$
|
116,277
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES
|
|
|
|
|
|
|
|
|
|
Cash Paid During the Period for Interest Expense
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cash Paid During the Period for Taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to unaudited consolidated financial statements.
|
|
|
GLOBAL CONDIMENTS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
(Unaudited)
NOTE 1 – NATURE OF ACTIVITIES
Nature
of Activities, History and Organization:
Global
Condiments, Inc. (The “Company” or "GLOBAL") operates as an internet wholesaler and retailer of mustard,
salsa and other food products. The Company is located in State College, Pennsylvania and was incorporated on September
17, 2009 under the laws of the State of Nevada.
Global
Condiments, Inc., is the parent company of Herlocher Foods Online, L.L.C., (“HFO”), a company incorporated under the
laws of the State of Pennsylvania. HFO was established on March 2, 2007 and for the past two and a half years has been operating
from their offices in State College, PA.
GLOBAL was
formed in order to acquire 100% of the outstanding membership interests of HFO. On September 17, 2009, GLOBAL issued
7,000,000 shares of common stock in exchange for a 100% equity interest in HFO. As a result of the share exchange,
HFO became the wholly owned subsidiary of GLOBAL, and the former members of HFO owned a majority of the voting stock
of GLOBAL. The transaction was regarded as a reverse merger whereby HFO was considered to be the accounting acquirer
as its members retained control of GLOBAL after the exchange, although GLOBAL is the legal parent company. The share
exchange was treated as a recapitalization of GLOBAL. As such, HFO (and its historical financial statements) is the
continuing entity for financial reporting purposes. The financial statements have been prepared as if HFO had always been the
reporting company and, on the share exchange date, changed its name and reorganized its capital stock.
Basis
of Presentation and Consolidation:
The
accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States and applicable Securities and Exchange Commission (“SEC”) regulations for interim financial
information. These consolidated financial statements are unaudited and, in the opinion of management, include all adjustments
(consisting of normal recurring accruals) necessary to make the consolidated financial statements not misleading, and to present
fairly the balance sheets, statements of operations and statements of cash flows for the periods presented in accordance with
accounting principles generally accepted in the United States. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed
or omitted pursuant to SEC rules and regulations. It is presumed that users of this interim consolidated financial information
have read or have access to the audited consolidated financial statements and footnote disclosure for the preceding fiscal year.
Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the
year ending December 31, 2013.
Notes to the consolidated financial
statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the
most recent fiscal year ended December 31, 2012 as reported in form 10-K have been omitted.
Going
Concern
At June
30, 2013, the Company has limited revenues and cash flows. As such, the accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company does not have sufficient working capital for its planned activities,
which raises substantial doubt about its ability to continue as a going concern.
Continuation
of the company as a going concern is dependent upon obtaining additional working capital and the management of the Company will
accomplish this objective through short-term loans from related parties and additional equity investments, if necessary, which
will enable the Company to continue operations for the coming year.
Recently
Issued Accounting Pronouncements:
The
Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s
results of operations, financial position or cash flow.
GLOBAL CONDIMENTS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
(Unaudited)
NOTE 2 – RELATED PARTY TRANSACTIONS
Under a contract
with the Company beginning January 1, 2008, Herlocher Foods, Inc. (a company that Mr. Herlocher is a part owner) provides general
office space and administrative support at 2-6% of gross sales.
For the six months ended June 30, 2013 and 2012
the amounts charged were $983 and $1,490, respectively
.
The Company currently purchases all of their
products from Herlocher Foods, Inc. In the six months ended June 30, 2013 and 2012 the amounts purchased were
$27,055 and $38,493, respectively. The Company does not have a written supplier / distributor agreement with Herlocher Foods, Inc.,
nor is the Company an exclusive distributor.
On September 30,
2009 the Company signed a contract with Herlocher Foods, Inc. to provide management services at a cost of up to $5,000 per month,
depending on activity, beginning October 1, 2009. This agreement can be cancelled by either party with a 30 day written
notice.
Total management services expenses for the six months ended June 30, 2013 and 2012 were $0 and $0
.
During the six months ended June 30, 2013,
the Company paid $12,679 to Yorkdale Capital, and its affiliates, who are related parties, for services provided.
NOTE 3 – MAJOR CUSTOMERS
The Company has over 150 customers and
has one that is greater than 10% of the total revenue
. For the six months ended June 30, 2013, the Company sold $19,167
to Giant Eagle Grocery Stores, or 58% of the Company’s revenues. For the six months ended June 30, 2012, the comparable sales
to Giant Eagle were $33,843 or 68% of the Company’s revenues
.
NOTE 4- SUBSEQUENT EVENTS
At the time of this filing there were no reportable subsequent events.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
General
U.S. e-commerce sales in 2012 were $224.5 billion
a 15%+ increase versus 2011 (source: U.S. Department of Commerce, http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf).
Global Condiments (GLOBAL) continues to try and tap this growing retail segment and although sales are down $16,398, or 33%, versus
a year ago, the Company experienced an increase in sales Q2 versus Q1 and continues to aggressively market its products.
Employees
We currently employ one employee, the President, who is not compensated.
RESULTS FOR THE SIX MONTHS ENDED June 30, 2013 and 2012
Our quarter ended on June 30, 2013. Any
reference to the end of the fiscal quarter refers to the end of the third quarter for the period discussed herein.
REVENUE. Revenue for the three months
ended June 30, 2013 was $20,346 compared to $28,829 for the three month period ended June 30, 2012.
The decrease in revenue in the three month
period ended June 30, 2013 of $8,483 is mainly due to decreased sales to Giant Eagle of about $8,100. The volume decrease was 26%
and the revenue decrease was 29%. Mustard volume sales were down 25% and revenue 28%. Salsa volume sales were down 16%
and revenue 26%. Mustard accounted for 99% of the sales for the three months ended June 30, 2013.
Revenue for the six months ended June 30, 2013
was $33,261 compared to $49,659 for the six month period ended June 30, 2012.
The decrease in revenue in the six month period
ended June 30, 2013 of $16,398 is due to decreased sales to Giant Eagle of about $14,760. The volume decrease was 30% and the revenue
decrease was 33%. Mustard volume sales were also down 30% and revenue 33%. Salsa volume sales were down 42% and revenue
52%. Mustard accounted for 99% of the sales for the six months ended June 30, 2013.
GROSS PROFIT. Gross profit for the
three months ended June 30, 2013 was $2,388 compared to $9,124 for the three months ended June 30, 2012. Margins
decreased in the three months ended June 30, 2013 versus 2012 from 32% to 12%. The decrease is attributable to unfavorable
product mix.
Gross profit for the six months ended June
30, 2013 was $5,672 compared to $11,159 for the six months ended June 30, 2012. Margins decreased in the six months
ended June 30, 2013 versus 2012 from 23% to 17%. The decrease is attributable to unfavorable product mix.
OPERATING EXPENSES. Total operating expenses
for the three months ended June 30, 2013 were $24,001 compared to $34,405 for the three months ended June 30, 2012. Depreciation
expense included in the operating expense was $0 and $609 for the three months ended June 30, 2013 and 2012, respectively.
The decrease of approximately $10,404 in the
three months ended June 30, 2013 is attributed to lower professional fees of about $9,300.
Total operating expenses for the six months
ended June 30, 2013 were $43,223 compared to $56,494 for the six months ended June 30, 2012. Depreciation expense included in the
operating expense was $406 and $1,218 for the six months ended June 30, 2013 and 2012, respectively.
The decrease of approximately $13,271 in the
six months ended June 30, 2013 is attributed to lower professional fees of $16,400, general office expenses of about $3,400 and
partially offset by an increase in marketing and advertising of about $7,300.
NET LOSS. Net loss for the three months ended
June 30, 2013 was $21,956 compared to a loss of $25,108 for the three month period ended June 30, 2012.
Net loss for the six months ended June 30,
2013 was $37,507 compared to a loss of $45,087 for the six month period ended June 30, 2012.
LIQUIDITY AND CAPITAL RESOURCES. The Company reviews its capital
needs on both a short term and long term basis..
Trends, events or uncertainties impact on
liquidity:
The Company expects revenue trends to improve
toward the holiday and sports seasons. Off-peak periods will be financed, if needed, through shareholder advances.
In addition to the preceding, the Company plans
for liquidity needs on a short term and long term basis as follows:
Short Term Liquidity:
We believe our cash
balance affords us adequate short term liquidity. We anticipate we will need additional capital to continue our business operations.
We have historically financed our operations through equity financing.
We do not have any commitments for equity funding
at this time. As such there is no assurance that we can raise additional capital from external sources, the failure of which could
cause us to curtail operations.
Long Term Liquidity:
The long term liquidity needs of the Company
are projected to be met primarily through the cash flow provided by operations.
Capital Resources
At the time of this filing the Company has
no capital commitments.
Trends, events or uncertainties
The Company has not been in existence long
enough and has limited sales data to determine whether sales fluctuations are truly a result of trends. The Company
believes that sales will trend with promotions that typically follow the holiday and sports seasons. There are no other
known events or uncertainties.
Material Changes in Financial Condition
WORKING CAPITAL: Working Capital for the six
months ended June 30, 2013 decreased by $37,101 to $54,121, versus the year ended December 31, 2012 of $91,222. This
decrease is primarily due the reduction of cash of approximately $36,500.
STOCKHOLDER’S EQUITY: Stockholder’s
Equity for the six months ended June 30, 2013 decreased by $37,507 to $54,121 due to the net loss for the nine month period. Please
see the section on ‘Results for the Quarter Ended June 30, 2013’ that discusses in more detail the reasons for the
loss.
GOING CONCERN: The Company has limited operations
and has working capital of $54,121 and an accumulated deficit of $289,781 as of June 30, 2013. Because of this accumulated
deficit and limited operations, the Company may require additional working capital to survive. The Company intends to raise additional
working capital either through private placements or bank loans or loans from management if there is need for liquidity to alleviate
the substantial doubt to continuing as a going concern. There are no assurances that the Company will be able to do any of these.
No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If
adequate working capital cannot be generated, the Company may not be able to continue its operations. These factors raise substantial
doubt about the Company’s ability to continue as a going concern.
Item 4.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
as of June 30, 2013. This evaluation was accomplished under the supervision and with the participation of our chief
executive officer / principal executive officer, and chief financial officer / principal financial officer who concluded that our
disclosure controls and procedures are not effective.
Based upon an evaluation conducted for the
period ended June 30, 2013, our Chief Executive and Chief Financial Officer as of June 30, 2013 and as of the date of this Report,
has concluded that as of the end of the periods covered by this report, we have identified the following material weakness of our
internal controls:
• Reliance upon
third party financial reporting consultants for review of critical accounting areas and disclosures and material non-standard
transaction.
• Lack of sufficient
accounting staff which results in a lack of segregation of duties necessary for a good system of internal control.
In order to remedy our existing internal control deficiencies, as
our finances allow, we will hire additional accounting staff.
Changes in Internal Controls over Financial Reporting
There were no changes in our internal controls
over financial reporting that occurred during the period covered by this report on Form 10-Q that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
