We sell our products principally to supermarkets, and to a lesser extent to convenience and other foods stores. Distribution is made through warehouse facilities and commissioned food brokers. Through a 2010 agreement, we have a preferred vendor status with C&S Wholesale Grocers, pursuant to which we pay a monthly fee (based on gross sales) in exchange for allowing us to leverage off of its warehouses, inventory control and billing systems and promotional and advertising campaigns over most of the Northeast Region. We market our products principally through in-store advertising and promotions. During 2012, we expanded our distribution to approximately 2,100 new supermarket locations throughout the Eastern region of the United States and in Texas. Due to a lack of capital, we reduced our distribution to only the New York Metropolitan area. For the years ended December 31, 2013 and 2012, three customers accounted for approximately 100% and 87% of our sales, respectively. Sales were substantially discontinued after March 2013.
We believe our business generally experiences highest volumes during the winter and spring months and lowest volumes during the late summer and fall months.
We generally enter a new market with three flavors of our bars and two flavors of our frozen yogurt sandwich. Thereafter, dependent upon the level of sales from the introduced product and available cash for slotting fees, additional products may be introduced to the existing market. We have experienced strong product demand and loyalty in each geographical market that we have entered. We believe that product demand is generated principally by our unique product packaging and in store promotions. We also believe that our proprietary mix, which delivers a rich and creamy taste with little fat content, creates strong customer loyalty.
Advertising and marketing generally has been in the form of coupons or advertisements in supermarket flyers.
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We attract new markets through the independent efforts of its principal officers. In each new market, we generally will be required to pay slotting fees to the supermarket for shelf space. These fees are common in most segments of the food industry and vary from chain to chain. Supermarket chains generally are reluctant to give up shelf space to new products when existing products are performing. During the twelve months ended December 31, 2012, we paid approximately $50,000 (or 3% of gross revenues) in slotting fees and during the twelve months ended December 31, 2013, we paid no slotting fees. Consequently, our expansion into new markets, if any, may be constrained by cash available to pay for slotting fees.
We will need to obtain additional financing to fund our operations.
Sales
Gross Sales were $164,552 and $1,787,947 for the years ended December 31, 2013 and December 31, 2012, respectively. Reconciling items that included sales discounts, returns and allowances, trade spending, and slotting fees totaled $47,519 and $759,218 for the years ended December 31, 2013 and December 31, 2012, respectively. Gross sales as of December 31, 2013 decreased $1,623,395 or 91% as compared to 2012. This decrease is primarily attributable to the lack of capital necessary for marketing and production which resulted in the substantial discontinuance of sales after March 2013.
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