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EX-31.1 - CERTIFICATION - GLOBAL CONDIMENTS, INC.ex31one.htm
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EXCEL - IDEA: XBRL DOCUMENT - GLOBAL CONDIMENTS, INC.Financial_Report.xls

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

(Mark One)

 

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

 

For the quarterly period ended March 31, 2012

 

OR

 

[    ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

 

From the transition period from ___________ to ____________.

 

Commission File Number 333-138111

 

GLOBAL CONDIMENTS, INC.

(Exact name of small business issuer as specified in its charter)

 

Nevada   27-1458154
(State or other jurisdiction of incorporation or organization)   (IRS Employer Identification No.)

 

415 East Calder Way, State College, Pennsylvania 16801

 (Address of principal executive offices)

 

  (814) 237-0134

(Issuer's telephone number)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ X ]   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 [X] 

 

 

Indicate by a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act:  Yes [    ]   No [ X ].

 

As of March 31, 2012, there were 7,581,736 shares of Common Stock of the issuer outstanding.

 

 

1
 

 

 

 

 

 

TABLE OF CONTENTS

 

 

  PART I FINANCIAL STATEMENTS  
     
Item 1 Consolidated Financial Statements 3
     
Item 2 Management’s Discussion and Analysis or Plan of Operation 8
     
  PART II OTHER INFORMATION  
     
Item 1 Legal Proceedings 11
Item 2 Changes in Securities 11
Item 3 Default upon Senior Securities 11
Item 4 Submission of Matters to a Vote of Security Holders 11
Item 5 Other Information 11
Item 6 Exhibits 11

 

 

 

 

 

 

2
 

 

 

 

GLOBAL CONDIMENTS, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2012 AND DECEMBER 31, 2011
 
ASSETS   2012    2011 
Current Assets   

 (Unaudited)

 

      
    Cash  $148,313   $169,371 
    Accounts Receivable, net   4,170    8,119 
    Other Current Assets   6,323    —   
        Total Current Assets   158,806    177,490 
           
    Fixed Assets, net   2,232    2,841 
           
TOTAL ASSETS  $161,038   $180,331 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities          
    Accounts Payable – Related Party  $8,784   $7,270 
    Accounts Payable – Trade   1,898    2,726 
           
        Total Current Liabilities   10,682    9,996 
           
TOTAL LIABILITIES   10,682    9,996 
           
Commitments          
           
Stockholders’ Equity          
    Preferred stock, $0.001 par value, 20,000,000 authorized,          
            -0-  issued and outstanding at March 31, 2012 and December 31, 2011   —      —   
    Common stock, $0.001 par value, 50,000,000 authorized,          
            7,581,736 issued and outstanding at March 31, 2012 and December 31, 2011   7,582    7,582 
    Additional paid-in-capital   336,320    336,320 
   Accumulated Deficit   (193,546)   (173,567)
    Total Stockholders’ Equity   150,356    170,335 
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $161,038   $180,331 
           
See accompanying summary of accounting policies and notes to consolidated financial statements.  

 

 

 

 

 

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GLOBAL CONDIMENTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011

(Unaudited)

 

    
    2012    2011 
           
           
  Revenue  $20,830   $30,036 
  Cost of Revenues   18,795    23,312 
  Gross Profit   2,035    6,724 
           
Operating Expenses:          
   Depreciation and Amortization   609    608 
   Selling and Advertising Expenses   2,025    17,166 
   Other General and Administrative   19,455    39,996 
    Total Operating Expenses   22,089    57,770 
           
Operating Loss   (20,054)   (51,046)
           
Other Income          
    Interest Income   75    130 
           
    Total Other Income   75    130 
           
Net Loss  $(19,979)  $(50,916)
           
           
Basic and Diluted Loss per share  $(0.00)  $(0.01)
           
Weighted Average Shares Outstanding:          
Basic and Diluted   7,581,736    7,431,736 

 

 

See accompanying summary of accounting policies and notes to consolidated financial statements.

 

 

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GLOBAL CONDIMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 and 2011
(Unaudited)
 
       
    2012    2011 
CASH FLOWS FROM OPERATING ACTIVITIES          
    Net Loss  $(19,979)  $(50,916)
    Adjustments to reconcile net loss to net cash          
            used by operating activities:          
                Depreciation Expense   609    608 
        Changes in operating assets and liabilities:          
                Accounts Receivable, net   3,949    11,247 
               Other Current Assets   (6,323)   (3,755)
                Inventory   —      (2,847)
                Accounts Payable – Related Party   1,514    (262)
                Accounts Payable – Trade   (828)   (24,528)
NET CASH USED IN OPERATING ACTIVITIES   (21,058)   (70,453)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
                Purchase of Fixed Assets   —      —   
NET CASH USED IN INVESTING ACTIVITIES   —      —   
           
           
           
NET CHANGE IN CASH AND CASH EQUIVALENTS   (21,058)   (70,453)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   169,371    267,069 
CASH AND CASH EQUIVALENTS AT END OF PERIOD  $148,313   $196,616 
           
SUPPLEMENTAL DISCLOSURES          
   Cash Paid During the Period for Interest Expense  $—     $—   
   Cash Paid During the Period for Taxes  $—     $—   
           
           
           
See accompanying summary of accounting policies and notes to consolidated financial statements.

 

 

 

 

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GLOBAL CONDIMENTS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

 

NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

 

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, 2012. 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, 2011 as reported in form 10-K have been omitted.

 

 

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.  

 

 

 

 

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GLOBAL CONDIMENTS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Unaudited)

 

NOTE 2 – EQUITY

 

The Company is authorized to issue 20,000,000 preferred shares at a par value of $0.001 per share. These shares have full voting rights.  At March 31, 2012 and December 31, 2011, there were zero shares issued and outstanding.

 

The Company is authorized to issue 50,000,000 common shares at a par value of $0.001 per share. These shares have full voting rights.  At March 31, 2012 and December 31, 2011, there were 7,581,736 shares issued and outstanding.

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

Under a contract with the Company beginning January 1, 2008, Herlocher Foods, Inc. provides general office space and administrative support at 2-6% of gross sales.  For the three months ended March 31, 2012 and 2011 the amounts charged were $625 and $904, respectively.

 

The Company currently purchases all of their product from Herlocher Foods, Inc.  In the three months ended March 31, 2012 and 2011 the amounts purchased were $17,633 and $26,159, 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 three months ended March 31, 2012 and 2011 were $0 and $0, respectively.

 

 

NOTE 4 – MAJOR CUSTOMERS

 

The Company has over 150 customers and has one that is greater than 10% of the total revenue. For the three months ended March 31, 2012, the Company sold $13,188 to Giant Eagle Grocery Stores, or 63% of the Company’s revenues. For the three months ended March 31, 2011, the comparable sales to Giant Eagle were $9,891 or 33% of the Company’s revenues.

 

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Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS

 

General

 

Over the past few years sales via the internet have increased year-over-year and GLOBAL is no exception.  The Company’s sales have decreased in 2012 by 31% to $20,830 for the three months ended March 31, 2012.  The Company is looking for new ways to market its products in the face of these reduced revenues.

 

Employees

 

We currently employ have employee, the President, who is not compensated.

 

 

RESULTS FOR THE THREE MONTHS ENDED March 31, 2012 and 2011

 

Our quarter ended on March 31, 2012.  Any reference to the end of the fiscal quarter refers to the end of the first quarter for the period discussed herein.

 

REVENUE.  Revenue for the three months ended March 31, 2012 was $20,830 compared to $30,036 for the three month period ended March 31, 2011.  

 

The decrease in revenue in the three month period ended March 31, 2012 of $9,206 is due to lower general internet sales compared to 2011 when we engaged in an aggressive marketing campaign. The volume decrease was 32% and the revenue decrease was 31% as the first quarter was impacted by not attending trade shows (as we did in 2011). Due to the mustard product mix the AUP (average unit price) was lower.  Mustard volume sales were down 30% and revenue 28%.  Salsa volume sales were down 90% and revenue 84%.  Mustard accounted for 96% of the sales for the three months ended March 31, 2012.

 

GROSS PROFIT.  Gross profit for the three months ended March 31, 2012 was $2,035 compared to $6,724 for the three months ended March 31, 2011.   Margins deteriorated in the three months ended March 31, 2012 versus 2011 from 22.4% to 9.8%.  The decline is attributable to unfavorable product mix.

 

OPERATING EXPENSES. Total operating expenses for the three months ended March 31, 2012 were $22,089 compared to $57,770 for the three months ended March 31, 2011. Depreciation expense included in the operating expense was $609 and $608 for the three months ended March 31, 2012 and 2011, respectively

 

The decrease of $35,681 in the three months ended March 31, 2012 is attributed to professional fees of $10,200 (a one-time $10,000 fee for being DTC eligible in 2011), decreased advertising and marketing expenses and trade show costs ($14,400). $6,281 in general office expenses and $4,800 of auto and general repairs.

 

NET LOSS. Net loss for the three months March 31, 2012 was $19,979 compared to a loss of $50,916 for the three month period ended March 31, 2011.   The decreased sales volume and lower margins were offset by the reduced expenses as discussed above.

8
 

 

LIQUIDITY AND CAPITAL RESOURCES. Global Condiments filed on Form S-1/A, a registration statement with the U.S. Securities & Exchange Commission in order to raise funds to develop their business. The registration statement became effective in July 2010, the offering closed on October 12, 2010 and the Company raised $323,802 by selling 431,736 shares.

 

 

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 and this will be monitored over the next few quarters.  There are no other known events or uncertainties.

 

Material Changes in Financial Condition

 

WORKING CAPITAL: Working Capital for the three months ended March 31, 2012 decreased by $19,370 to $148,124, versus the year ended December 31, 2011.  This decrease is primarily due the reduction of cash of approximately $21,100 and partially offset by an increase in accounts receivable and other assets of approximately $2,000.

 

 

   Working Capital  Change from prior period
 March 31, 2012   $148,124   $(19,370)
 December 31, 2011   $167,494   $(93,000)
 December 31, 2010   $260,494   $270,472 

 

 

STOCKHOLDER’S EQUITY: Stockholder’s Equity for the three months ended March 31, 2012 decreased by $19,979 to $150,356 due to the net loss for the quarter.  Please see the section on ‘Results for the Quarter Ended March 31, 2012’ that discusses in more detail the reasons for the loss.

 

GOING CONCERN: The Company has limited operations and has working capital of $148,124 and an accumulated deficit of $193,546 as of  March 31, 2012. 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.

 

 

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Item 3:  Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

 

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 March 31, 2012.  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 March 31, 2012, our Chief Executive and Chief Financial Officer as of March 31, 2012 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.

 

 

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PART II

 

Items No. 1, 2, 3, 4, 5 - Not Applicable.

 

 

Item No. 6 - Exhibits

 

(a)  None

 

(b)   Exhibits

 

 

 Exhibit Number      Name of Exhibit
   
31.1  Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.
   
 31.2  Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.
   
 32.1  Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

SIGNATURES

 

In accordance with 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.

 

Global Condiments, Inc.

 

By /s/ Charles C. Herlocher

Charles C. Herlocher, Chief Executive Officer

and  Chief Financial Officer

 

Date: May 14, 2012

 

 

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