U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q / A

(AMENDMENT NO. 1)

 

(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, 2015

 

OR

 

☐

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: 000-55269

 

MOJO Organics, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		26-0884348
(State or other jurisdiction of		(IRS Employer Identification No.)
incorporation or organization)

 

101 Hudson Street, 21st Floor
Jersey City, New Jersey		07302
(Address of principal executive offices)		(Postal Code)

Registrant’s telephone number: 201 633 6519

 

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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  ☒     No  ☐

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes  ☒    No  ☐

 

 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See the definitions of the “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	☒
(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes ☐   No ☒

 

On July 17, 2015, there were 16,907,396 shares of the registrant's common stock, par value $0.001, issued and outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

 

Purpose of This Amendment 

 

The purpose of this Amendment No. 1 to MOJO Organics, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015, filed with the Securities and Exchange Commission on July 21, 2015, is to correct the accounting treatment for the forgiveness of related party and officer compensation (as disclosed below and in Note 10 to the accompanying restated unaudited condensed financial statements).

 

In connection with the Original Filing, under the direction of our Principal Executive Officer and Principal Financial Officer, our management evaluated our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, and concluded that our disclosure controls and procedures were effective as of June 30, 2015. Subsequently, the Company’s management has determined that the improper design of controls with respect to the accounting for the forgiveness of related party and officer compensation was a deficiency in its internal control over financial reporting resulting from the material weakness identified at June 30, 2015.

 

Items Amended in This Filing

 

This Amended Filing sets forth the Original Filing, as modified and superseded where necessary to reflect the restatement described above. The following Items have been amended and restated as a result of, and to reflect, the Restated Financial Statements:

 

Part I – Item 1. Financial Statements;

Part I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations;

Part I – Item 4. Controls and Procedures; and

Part II – Item 6. Exhibits

 

The Company's Chief Executive Officer and Chief Financial Officer is providing currently dated certifications in connection with this Amended Filing, which are being filed or furnished as Exhibit 31.1 and Exhibit 32.1 to this Amended Filing. The Company is also filing various exhibits related to XBRL.

 

Except as set forth above, no other information included in the Original Filing has been amended or updated by this Amended Filing. This Amended Filing continues to describe the conditions as of the date of the Original Filing and, except as contained herein, we have not updated or modified the disclosures contained in the Original Filing. Accordingly, this Amended Filing should be read in conjunction with our filings made with the Commission subsequent to the filing of the Original Filing, including any amendments to those filings.

 

Restatement of Other Financial Statements

 

Along with the filing of this Amended Filing, we are concurrently filing an Amended Form 10-Q for the quarter ended September 30, 2015 related to the same above matter.

 

 

 

 

 

TABLE OF CONTENTS

 

		Page
PART I – FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)
	Condensed Balance Sheets as of June 30, 2015 and December 31, 2014	1
	Condensed Statements of Operations for the three months  ended June 30, 2015 and June 30, 2014	2
	Condensed Statements of Operations for the six months ended June 30, 2015 and June 30, 2014	3
	Condensed Statements of Cash Flows for the six months ended June 30, 2015 and June 30, 2014	4
	Condensed Statement of Stockholders’ Equity as of June 30, 2015	5
	Notes to the Condensed Financial Statements	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	17
ITEM 4.	CONTROLS AND PROCEDURES	18
PART II – OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	19
ITEM 1.	RISK FACTORS	19
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	19
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	19
ITEM 4.	MINE SAFETY DISCLOSURE	19
ITEM 5.	OTHER INFORMATION	20
ITEM 6.	EXHIBITS	20
SIGNATURES		23

 

 

 

MOJO ORGANICS, INC.
Condensed Balance Sheets
ASSETS
			June 30,				December 31,
			2015				2014
			(unaudited)
CURRENT ASSETS:
Cash and cash equivalents		$	85,665			$	345,616
Accounts receivable, net			28,723				43,890
Inventory			77,645				445,328
Supplier deposits			—				1,782
Prepaid expenses			15,281				37,887
Total Current Assets			207,314				874,503
PROPERTY AND EQUIPMENT, net of accumulated depreciation			2,213				2,603
OTHER ASSETS
Security deposit			2,778				2,294
TOTAL ASSETS		$	212,305			$	879,400
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses		$	10,516			$	542,157
Accrued payroll to related parties			16,858				220,677
Total Current Liabilities			27,374				762,834
Commitments and Contingencies
STOCKHOLDERS'  EQUITY / (DEFICIT)
Preferred stock, 10,000,000 shares authorized at $0.001 par value, no shares issued and outstanding			—				—
Common stock, 190,000,000 shares authorized at $0.001 par value, 16,907,396 shares issued and outstanding			16,907				16,907
Additional paid in capital			19,399,414				18,436,503
Accumulated deficit			(19,231,390	)			(18,336,844	)
Total Stockholders' Equity			184,931				116,566
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY		$	212,305			$	879,400
The accompanying notes are an integral part of these condensed financial statements.

 

 

 

MOJO ORGANICS, INC.
Condensed Statements of Operations
(unaudited)
		For the three months ended
		June 30, 2015				June 30, 2014
			(restated)
Revenue		$	77,721			$	76,300
Cost of Revenue			128,994				75,766
Gross (Loss) Profit			(51,273	)			534
Operating Expenses
Selling, general and administrative			432,192				1,103,978
License (settlement) fee			(2,253,085	)			92,120
Total Operating Expenses			(1,820,893	)			1,196,098
Income (Loss) from Operations			1,769,620				(1,195,564	)
Other Income			7,518				309
Income (Loss) Before Provision for Income Taxes			1,777,138				(1,195,255	)
Provision for Income Taxes			—				—
Net Income (Loss)		$	1,777,138			$	(1,195,255	)
Net income (loss) available to common stockholders, basic and fully diluted		$	0.11			$	(0.08	)
Basic and diluted weighted average number of common shares outstanding			16,907,396				15,407,945
The  accompanying notes are an integral part of these condensed financial statements.

 

MOJO ORGANICS, INC.
Condensed Statements of Operations
(unaudited)
		For the six months ended
		June 30, 2015				June 30, 2014
			(restated)
Revenue		$	146,606			$	161,778
Cost of Revenue			238,733				156,397
Gross (Loss) Profit			(92,127	)			5,381
Operating Expenses
Selling, general and administrative			1,280,563				2,471,894
License (settlement) fee			(477,223	)			184,240
Total Operating Expenses			803,340				2,656,134
Loss from Operations			(895,467	)			(2,650,753	)
Other Income			921				309
Loss Before Provision for Income Taxes			(894,546	)			(2,650,444	)
Provision for Income Taxes			—				—
Net Loss		$	(894,546	)		$	(2,650,444	)
Net loss available to common stockholders, basic and fully diluted		$	(0.05	)		$	(0.19	)
Basic and diluted weighted average number of common shares outstanding			16,907,396				14,220,969
The  accompanying notes are an integral part of these condensed financial statements.

 

MOJO ORGANICS, INC.
Condensed Statements of Cash Flows
(unaudited)
		For the six months ended
		June 30, 2015				June 30, 2014
Cash flows from operating activities:
Net loss		$	(894,546	)		$	(2,650,444	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			725				2,361
Share-based compensation - stock options			38,695				50,717
Stock and warrants issued to directors and employees			625,684				1,575,944
Stock issued to employees in lieu of salary			—				37,000
Stock and warrants issued to advisors and consultants			—				442,736
Changes in assets and  liabilities:
Decrease (increase) in accounts receivable			15,167				1,742
Decrease (increase) in inventory			367,683				(467,184	)
Decrease in supplier deposits			1,782				25,787
Decrease in prepaid expenses			22,606				(7,541	)
Decrease (increase) in security deposit			(484	)			3,504
Increase (decrease) in accounts payable and accrued expenses			(436,122	)			43,100
Net cash used in operating activities			(258,810	)			(942,278	)
Net cash from investing activities:
Purchases of property and equipment			(1,141	)			(2,705	)
Net cash used in investing activities			(1,141	)			(2,705	)
Net cash from financing activities:
Notes payable to related parties			—				(24,000	)
Repurchase of restricted stock			—				(11,373	)
Sale of common stock, net			—				1,835,000
Net cash provided by financing activities			—				1,799,627
Net increase (decrease) in cash and cash equivalents			(259,951	)			854,644
Cash and cash equivalents at beginning of period			345,616				8,080
Cash and cash equivalents at end of period		$	85,665			$	862,724
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid		$	—			$	—
Taxes paid		$	—			$	—
NON CASH INVESTING AND FINANCING ACTIVITIES:
Accrued compensation converted to notes payable to related parties		$	—			$	37,000
Common stock issued for the conversion of notes payable to related parties		$	—			$	37,000
Accrued payroll to related parties converted to additional paid-in capital		$	298,532			$	—
The accompanying notes are an integral part of these condensed financial statements.

 

MOJO ORGANICS, INC.
Condensed Statement of Stockholders' Equity
For the Six Months Ended June 30, 2015
(unaudited)
		Common Stock
						Additional
						Paid-In		Accumulated		Stockholders'
		Shares		Amount		Capital		Deficit		Equity
Balance, December 31, 2014		16,907,396		$ 16,907		$ 18,436,503		$ (18,336,844)		$         116,566
Issuance of restricted Common Stock and Warrants:
Directors and Employees, net of forfeitures						625,684				625,684
Stock based compensation - stock options						38,695				38,695
Accrued payroll to related parties forgiven						298,532				298,532
Net loss								(894,546)		(894,546)
Balance, June 30, 2015		16,907,396		$ 16,907		$ 19,399,414		$ (19,231,390)		$         184,931
The accompanying notes are an integral part of these condensed financial statements.

 

 

MOJO ORGANICS, INC.

Notes to Condensed Financial Statements

June 30, 2015

 

NOTE 1 – BUSINESS

 

Overview

Headquartered in Jersey City, NJ, MOJO Organics, Inc. (“MOJO” or the “Company”) is a developer of emerging beverage brands that are natural, USDA Organic and non-genetically modified (“Non GMO”). The Company has developed a line of coconut water beverages which are tropically flavored as well as natural, organic and Non GMO. The Company expects to launch these beverages during late 2015.

 

Since July 2013, the Company has produced 100% tropical fruit juices, under a license branding agreement (the “License Agreement”) from Chiquita Brands L.L.C. (“CBLLC”). The License Agreement will be terminated effective September 27, 2015. See Note 5 to the Notes to Condensed Financial Statements.

 

Interim Financial Statements

The accompanying unaudited interim condensed financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q  and article 10 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures included in these financial statements are adequate to make the information presented not misleading. The unaudited interim condensed financial statements included in this document have been prepared on the same basis as the annual financial statements, and in the Company’s opinion, reflect all adjustments necessary for a fair presentation in accordance with GAAP and SEC regulations for interim financial statements. The results for the six months ended June 30, 2015 are not necessarily indicative of the results that the Company will have for any subsequent period. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2014 included in the Company’s Annual  Report on Form 10-K.

 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

The financial statements are prepared in conformity with GAAP. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

Cash equivalents include investment instruments and time deposits purchased with a maturity of three months or less.

 

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company provides for probable uncollectible amounts based upon its assessment of the current status of the individual receivables and after using reasonable collection efforts. The allowance for doubtful accounts as of June 30, 2015 and December 31, 2014 was $4,726 and zero, respectively.

 

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or market. When necessary, the Company provides allowances to adjust the carrying value of its inventories to the lower of cost or net realizable value.

 

Supplier Deposits

Supplier Deposits consist of prepaid inventory for which the Company has not yet taken delivery.

 

Property and Equipment and Depreciation

Property and equipment are stated at cost.  Depreciation is computed using the straight line method over the estimated useful life of the respective assets.  Computer equipment is depreciated over a period of 3 to 5 years.  Maintenance and repairs are charged to expense when incurred.  When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income.  At June 30, 2015 and December 31, 2014, accumulated depreciation related to property and equipment was $2,267 and $5,539, respectively.

 

Revenue Recognition

Revenue from sales of products are recognized when title and risk of loss passes to the customer.  Recognition of revenue also requires reasonable assurance of collection of sales proceeds.

 

Deductions from Revenue

Costs incurred for sales incentives and discounts are accounted for as a reduction in revenue. These costs include payments to customers for performing merchandising activities on our behalf, including in-store displays, promotions for new items and obtaining optimum shelf space.

 

Shipping and Handling Costs

Shipping and Handling Costs incurred to move finished goods from our sales distribution centers to customer locations are included in the line Selling, General and Administrative Expenses in our Statements of Operations.

 

Net Loss Per Common Share

The Company computes per share amounts in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, “Earnings per Share”.  ASC Topic 260 requires presentation of basic and diluted EPS.  Basic EPS is computed by dividing the income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period.  Diluted EPS is based on the weighted average number of shares of common stock and common stock equivalents outstanding during the periods.

 

The following potentially dilutive securities have been excluded from the computation of weighted average shares outstanding for the six months ended June 30, 2015 and 2014, as they would have had an anti-dilutive impact on the Company’s net loss per common share:

 

		2015		2014
Shares underlying options outstanding		865,000		210,000
Shares underlying warrants outstanding		1,114,776		1,114,776
Shares underlying unvested restricted stock		2,023,854		-
Total		4,003,630		1,324,776

 

Start-Up Costs

In accordance with ASC topic 720-15, “Start-Up Costs,” the Company charges all costs associated with its start-up operations to income as incurred.

 

 

Income Taxes

The Company provides for income taxes under ASC topic 740, “Income Taxes,” which requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. ASC Topic 740 also requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Tax returns for the years from 2010 to 2014 are subject to examination by tax authorities.

 

Stock-Based Compensation

ASC Topic 718, “Accounting for Stock-Based Compensation” prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. ASC Topic 718 requires employee compensation expense to be recorded using the fair value method. The Company accounts for employee stock based compensation in accordance with the provisions of ASC Topic 718. For non-employee options and warrants, the Company uses the fair value method as prescribed in ASC Topic 718.

 

Fair value of financial instruments

The carrying amounts of financial instruments, which include accounts payable, accrued expenses and debt obligations approximate their fair values due to their short-term nature and/or variable interest rates. The Company’s debt obligations bear interest at rates which approximate prevailing market rates for instruments with similar characteristics and, accordingly, the carrying values for these instruments approximate fair value.

 

The Company adopted ASC Topic 820, “Fair Value Measurement,” which established a framework for measuring fair value and expands disclosure about fair value measurements.  ASC Topic 820 defines fair value as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC Topic 820 describes the following three levels of inputs that may be used:

 

·

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical,, unrestricted assets or liabilities;

 

·

Level 2 Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

 

·

Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

The Company did not have any assets or liabilities measured at fair value on a recurring basis at June 30, 2015 or December 31, 2014. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the six months ended June 30, 2015 or 2014.

 

New Accounting Pronouncements

In May 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-09, which creates ASC Topic 606, “Revenue from Contracts with Customers”, and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition”, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, ASU 2014-09 supersedes the cost guidance in Subtopic 605-35, “Revenue Recognition—Construction-Type and Production-Type Contracts,” and creates new Subtopic 340-40, “Other Assets and Deferred Costs—Contracts with Customers.” In summary, the core principle of ASC Topic 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and early application is not permitted. Therefore the amendments in ASU 2014-09 will become effective for us as of the beginning of our 2017 fiscal year. The Company is currently assessing the impact of implementing the new guidance.

 

In June 2014, FASB issued ASU No. 2014-12, “Compensation – Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period must be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.  Earlier adoption is permitted.  The Company is currently evaluating the impact of the adoption of ASU 2014-12 on the Company's financial statements.

 

In August 2014, FASB issued ASU 2014-15, “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this ASU provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards.

 

Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of

management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on the Company’s financial statements.

 

Management does not believe that any other recently issued, but not yet effective accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

 

 

NOTE 3 - GOING CONCERN

 

The Company's financial statements are prepared using GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company’s business is largely predicated on its relationship with CBLLC and the termination of the License Agreement with CBLLC could have a material adverse impact on its business.

 

The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

 

NOTE 4 – INVENTORY

 

As of June 30, 2015, inventory consisted of finished goods of $59,836 and raw materials of $17,809. As of December 31, 2014, inventory consisted of finished goods of $308,708 and raw materials of $136,620.

 

NOTE 5 – COMMITMENTS AND CONTINGENCIES

 

Lease Commitment

The Company maintains office space in Jersey City, New Jersey. The Company leases the space from a third-party pursuant to a lease agreement dated May 1, 2015 at a rate of $1,389 per month.  This agreement will terminate on April 30, 2016.

 

Licensing Agreement

On March 27, 2015, pursuant to the terms of the License Agreement, CBLLC provided the Company with written notice of termination effective September 27, 2015. The notice (i) provided the Company with a right of sell off of existing inventory of the licensed products and (ii) demanded payment by the Company of liquidated damages and royalties in the amount of $2,283,089.

 

On May 29, 2015, the Company and CBLLC settled the termination terms of the License Agreement via letter agreement. The accompanying financial statements reflect a credit to income of $2,260,589 for the three months ended June 30, 2015 and a credit to income of $477,223 for the six months ended June 30, 2015.

 

NOTE 6 – STOCKHOLDERS’ EQUITY

 

The Company has authorized 10,000,000 shares of preferred stock (“Preferred Stock”) and 190,000,000 shares of common stock (“Common Stock”), each having a par value of $0.001.

 

In March 2013, the Company approved the 2012 Long-Term Incentive Equity Plan (the “2012 Plan”), which provides the Company with the ability to issue stock options, stock appreciation rights, restricted stock and/or stock based awards for up to an aggregate of 2,050,000 shares of Common Stock. As of June 30, 2015, there were 111,559 shares available under the 2012 Plan.

 

Private Placement Offering

In March 2014, the Company consummated two concurrent private placement offerings, receiving an aggregate of $1,819,832, net of expenses, from accredited investors.  The Company sold an aggregate of 2,016,483 shares of Common Stock for $0.91 per share for a total of $1,835,000.  In the first offering, investors received an immediately exercisable, five year warrant to purchase one share of Common Stock at a price of $0.91 per share for each share purchased in the offering.   The investor in the second concurrent offering did not receive warrants. 

 

Treasury Stock

In April 2014, the Company approved a repurchase of 12,497 shares of Common Stock for $11,372.  The shares were subsequently cancelled.

 

Restricted Stock Compensation

The Company issued shares of restricted Common Stock to its directors, executive officers and employees. Unvested restricted shares are subject to forfeiture. With the exception of 4,689,105 shares which vest based upon achieving certain milestones, the Company records compensation expense over the vesting period based upon the fair market value on the date of grant for each share, adjusted for forfeitures.

 

In June 2015, the Company awarded 2,023,854 shares of Common Stock to its officers and employees. The shares will be issued and will vest upon the Company reaching a $3,000,000 revenue threshold during any twelve month period. See Note 8 to the Notes to Condensed Financial Statements.

In August 2014, the Company issued 1,500,000 shares of Common Stock to an executive officer. The shares are subject to a restricted stock agreement, and the vesting is conditional upon the Company reaching certain performance goals. Should the executive officer’s employment with the Company end, any unvested shares are forfeited.

 

In March 2014, the Company issued 465,000 shares of Common Stock under the 2012 Plan to its directors, executive officers and employees. The shares are subject to a restricted stock agreement, pursuant to which the shares will vest one year from the date of such agreement if the grantee is a director or employee (as applicable) of the Company at the time.

 

A summary of the restricted stock issuances to directors, executive officers and employees is as follows:

 

		Number of Shares				Weighted Average Grant Date Fair Value
Unvested share balance, January 1, 2014			4,790,408			$	1.45
Granted			1,965,000				0.49
Vested			(633,416	)			2.09
Forfeited			-				-
Unvested share balance, December 31, 2014			6,091,992			$	1.07
Granted			2,023,854				0.17
Vested			(1,415,596	)			1.31
Forfeited			-				-
Unvested share balance, June 30, 2015			6,700,250			$	0.75

 

In connection with the issuance of restricted stock, the Company recorded share-based compensation expense of $625,684 and $1,329,464 for the six months ended June 30, 2015 and 2014, respectively.  As of June 30, 2015, there was $3,740,998 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation.  That cost is expected to be recognized during the years 2015 and 2016.

 

Stock Warrants

As part of the private placement offering in March 2014, the Company issued warrants to purchase 1,114,776 shares of Common Stock at a price of $0.91 per share. The warrants are exercisable for five years from the date of issuance.

 

Advisory Services

In March 2014, the Company entered into two agreements pursuant to which the Company was to receive advisory services related to strategy, distributorship, sales and sales channels and investor relations.  The Company granted to each advisor 100,000 shares of restricted Common Stock, subject to forfeiture if the advisor terminated or materially breached the agreement before the six-month anniversary thereof.  The aggregate value of the advisory fees of $260,000 was calculated based upon the closing price of the Company’s Common Stock on the date of the agreement. Advisory fees of $21,667 were charged to income during the three months ended June 30, 2014.

 

Also in March 2014, the Company issued 82,418 and 1,234 shares of Common Stock for advisory work and consulting work, respectively.  The number of shares issued was calculated based upon the fair market value of the stock.

 

On October 3, 2013, the Company entered into an advisor agreement whereby the Company would receive strategic business advisory services, distributorship advisory services, sales and sales channel advisory services and investor relation advisory services in exchange for the issuance of 50,000 shares of restricted Common Stock.  The Common Stock vested on April 3, 2014.  In connection with this issuance, the Company recorded $75,000 in consulting fees during the three months ended June 30, 2014.

 

 

On October 3, 2013, the Company entered into an agreement for strategic business advisory services, public relations services and investor relations services with Mr. Ian Thompson.  In connection with this agreement, the Company issued 167,204 shares of restricted Common Stock and recorded consulting fees of $501,612 during 2013, which was the fair market value of the stock on the date of issue; there was no cash payment to Mr. Thompson by the Company.  The stock is fully vested; however it is restricted from trading. The advisor was also issued an additional 200,000 shares of restricted Common Stock, which was to vest quarterly based upon the Company reaching certain market capitalization and revenue goals, in addition to providing the above services, with the last tranche vesting scheduled to vest on June 30, 2014. Consulting fees amounting to $72,500 were recorded during the three months ended June 30, 2014 related to the additional shares of Common Stock issued.  Throughout the term of the agreement, the Company requested the advisor to render performance under the agreement and to provide evidence of same. Mr. Thompson failed to perform in all material respects under the terms of the agreement. 

 

On June 27, 2014, the Company terminated the agreement.  The Company is taking all necessary steps for the cancellation of the shares totaling 367,204 shares, due to lack of delivery of consideration and material breach of the agreement.

  

NOTE 7 – STOCK OPTIONS

 

In June 2015, the Company granted a director of the Company stock options to purchase 35,000 shares of Common Stock pursuant to the 2012 Plan. The exercise price is $0.255 per share and the options become exercisable in four equal tranches in December 2015, June 2016, December 2016 and June 2017. They expire in June 2020.

In August 2014, the Company granted certain directors and employees of the Company stock options to purchase 620,000 shares of Common Stock pursuant to the 2012 Plan. The exercise price is $0.255 per share and the options become exercisable in four equal tranches in February 2015, August 2015, February 2016 and August 2016. They expire in August 2019.

In July 2013, the Company granted certain directors and employees of the Company stock options pursuant to purchase 210,000 shares of Common Stock at an exercise price of $2.07 per share, which was 115% of the last sale price of the Common Stock on the date of grant. The options were granted pursuant to the 2012 Plan and became exercisable in July 2014. They expired July 1, 2015.

During the six months ended June 30, 2015 and 2014, compensation expense of $38,695 and $25,358, respectively, was recorded. As of June 30, 2015, there was $94,627 of total unrecognized compensation cost related to non-vested stock options. That cost is expected to be recognized 2015 through 2017 in conjunction with the applicable vesting periods.

 

 

NOTE 8 – RELATED PARTY TRANSACTIONS

 

In June 2015, pursuant to letter agreements, the Chief Executive Officer, the Chief Operating Officer and the Controller of the Company forgave unpaid salary due to them of $239,500, $16,000 and $43,032, respectively. This resulted in an increase to additional paid-in capital of $298,532 for the three months and six months ended June 30, 2015.

 

On June 15, 2015, the Company entered into an Amended and Restated Employment Agreement (the "Simpson Agreement") with the Chief Executive Officer (the “CEO”) pursuant to which the CEO will continue to act as the Company's CEO and Chairman of the Board for a term of five years as extended in consideration of (i) a base salary of $5,000 per month from June 2015 through September 2015 and then increasing to $18,500 per month, (ii) 1,544,737 shares of Common Stock of the Company to be issued to the CEO upon the Company generating revenue of $3,000,000 during any twelve month period during the term and (iii) an annual bonus based on performance goals established by the Board of Directors of the Company as set forth in the Simpson Agreement.

 

In addition, on June 15, 2015, the Company entered into an Amended and Restated Employment Agreement (the "Spinner Agreement") with Peter Spinner pursuant to which Mr. Spinner will continue to act as the Company's Chief Operating Officer (“COO”) for a term of five years as extended in consideration of (i) a base salary of $8,000 per month from June 2015 through September 2015 and then increasing to $16,000 per month, (ii) 252,632 shares of Common Stock of the Company to be issued to the COO upon the Company generating revenue of $3,000,000 during any twelve month period during the term and (iii) an annual bonus based on performance goals established by the Board of Directors of the Company as set forth in the Spinner Agreement.

 

Additionally, the Company awarded its Controller a one-time grant of 226,485 shares of Common Stock of the Company (the "Controller Grant Shares") in consideration of her previous and continued services as Controller of the Company, which such Controller Grant Shares will be issued to the Controller upon the Company generating revenue of $3,000,000 during any twelve month period on or prior to June 26, 2025.

 

During the three months ended June 30, 2014, the Company issued 23,272 shares of restricted, non-transferable Common Stock to an officer of the Company as payment of salary in lieu of cash, equivalent to $37,000. The shares were valued by the Company at the closing price of the Company’s Common Stock on the last trading day of the applicable month for which payment was due.  

 

In December 2013, the Company received $24,000 in non-interest bearing, demand loans from certain related parties.  The loans were repaid in full by February 2014.

 

NOTE 9 – SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855, “Subsequent Events,” the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements. The effects of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of June 30, 2015. In preparing these financial statements, the Company evaluated the events and transactions that occurred through the date these financial statements were issued. 

 

 

NOTE 10 – RESTATEMENT

 

The Company identified an error in these financial statements while in the course of preparing the financial statements for the year end ended December 31, 2015.

 

As described in Note 8, pursuant to letter agreements, the CEO, COO and the Controller of the Company forgave unpaid salary due to them of $239,500, $16,000 and $43,032, respectively. The Company originally recorded a credit to selling, general and administrative expenses for $298,532 for the three months and six months ended June 30, 2015. The restatement reflects the correction of the error to record the credit to additional paid-in capital of $298,532 for the three months and six months ended June 30, 2015.

 

There was no material effect on the Company’s balance sheet and cash flows for each of the periods and therefore there has been no restatement to the condensed balance sheets or condensed statements of cash flows.

 

The net effect of the error and its restatement for the six months ended June 30, 2015 is set forth as follows:

 

		As				Net				As
		Reported				Change				Restated
Selling, general and administrative expenses		$	982,031			$	298,532			$	1,280,563
Total operating expenses		$	504,808			$	298,532			$	803,340
Net loss		$	596,014			$	298,532			$	894,546
Net loss available to common stockholders, basic and fully diluted		$	0.04			$	0.01			$	0.05

 

The net effect of the error and its restatement for the three months ended June 30, 2015 is set forth as follows:

 

		As				Net				As
		Reported				Change				Restated
Selling, general and administrative expenses		$	133,660			$	298,532			$	432,192
Total operating expenses		$	(2,119,425)			$	298,532			$	(1,820,893)
Net income ( loss)		$	2,075,670			$	(298,532	)		$	1,777,138
Net income (loss) available to common stockholders, basic and fully diluted		$	0.12			$	(0.01	)		$	0.11

 

 

ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided in addition to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flows. MD&A is organized as follows:

 

 

•

Critical Accounting Policies — Accounting policies that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.

 

•

Results of Operations — Analysis of our financial results comparing the three months ended June 30, 2015 to the three months ended June 30, 2014.

 

•

Results of Operations — Analysis of our financial results comparing the six months ended June 30, 2015 to the six months ended June 30, 2014.

 

•

Liquidity and Capital Resources — Analysis of changes in our cash flows, and discussion of our financial condition and potential sources of liquidity.

 

  

This report includes a number of forward looking statements that reflect our current views with respect to future events and financial performance.  Forward looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events.  You should not place undue certainty on these forward looking statements, which apply only as of the date of this annual report.  These forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

 

Critical Accounting Policies

 

We have prepared our financial statements in conformity with accounting principles generally accepted in the United States, which requires management to make significant judgments and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. We base these significant judgments and estimates on historical experience and other applicable assumptions we believe to be reasonable based upon information presently available. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the financial statements as soon as they became known. Actual results could materially differ from our estimates under different assumptions, judgments or conditions.

 

All of our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, to our financial statements, included elsewhere in this Annual Report. We have identified the following as our critical accounting policies and estimates, which are defined as those that are reflective of significant judgments and uncertainties, are the most pervasive and important to the presentation of our financial condition and results of operations and could potentially result in materially different results under different assumptions, judgments or conditions.

 

We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements:

 

Use of Estimates — The financial statements are prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Stock-based Compensation — ASC Topic 718, “Accounting for Stock-Based Compensation” prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights.

 

ASC Topic 718 requires employee compensation expense to be recorded using the fair value method. The Company accounts for employee stock based compensation in accordance with the provisions of ASC Topic 718. For non-employee options and warrants, the company uses the fair value method as prescribed in ASC Topic 718. 

 

Determining the appropriate fair value of the stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based payment and stock price volatility. The Company uses the Black-Scholes option-pricing option model to value its stock option awards which incorporate the Company’s stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life.

 

Fair Value of Financial Instruments — Our short-term financial instruments, including cash, accounts payable and other liabilities, consist primarily of instruments without extended maturities. We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts.

 

Recent Accounting Pronouncements

 

Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC, did not, or are not believed by management, to have a material impact on the Company's present or future financial statements.

 

COMPANY OVERVIEW

 

Headquartered in Jersey City, New Jersey, the Company engages in product development, production, marketing and distribution of emerging beverage brands that are natural, USDA Organic and non-genetically modified. Commencing July 2013, the Company produced beverages produced under a license agreement with CBLLC; the license agreement will be terminated effective September 27, 2015. See Note 5 to the Notes to Condensed Financial Statements.

 

The Company has developed a line of coconut water beverages with tropical juice which are natural, organic and Non GMO. The Company expects these beverages will be launched during late 2015.

  

Results of Operations

 

Three Months Ended June 30, 2015 and 2014

 

Revenue

 

During the three months ended June 30, 2015, the Company reported revenue of $77,721. Sales were primarily comprised of orders from distributors and direct accounts. Sales to distributors and direct accounts amounted to approximately 57% and 34% of total revenue, respectively.

 

During the three months ended June 30, 2014, the Company reported revenue of $76,300. Sales were comprised of orders from grocers, direct accounts and distributors. Sales to grocers and direct accounts amounted to 65% of total revenue. Sales to distributors amounted to 35% of total revenue. The Company had agreements with two Direct Sales Distributors (“DSDs”) in the form of the Company’s standard distribution agreement. This form agreement provides for an initial term of one year, with automatic renewals for additional one year periods unless terminated after the initial one year term upon 60 days prior written notice by the Company. The distribution agreements provided the distributors with the exclusive right to distribute the Company’s products in certain territories of the United States. Both of these DSDs were terminated in early 2015.

 

Cost of Revenue

 

Cost of Revenue includes production costs, raw material costs and consideration in the form of free product offered to certain customers.  As a result, cost of revenue as a percentage of sales can vary from period to period. For the three months ended June 30, 2015, cost of revenue was $128,994 or 166% as a percentage of revenue, compared to $75,766 or 99% as a percentage of revenue for the three months ended June 30, 2014.

 

Operating Expenses

 

For the three months ended June 30, 2015, operating expenses were a credit of $1,820,893. For the three months ended June 30, 2014, operating expenses were $1,196,098. This represented a decrease of $3,016,991.

 

The settlement of the amounts due pursuant to the termination of the license agreement resulted in a credit to operating expenses of $2,253,085 for the three months ended June 30, 2015. See Note 5 of the Notes to the Condensed Financial Statements.

 

Stock-based compensation costs to directors and employees, which consist of charges to income for vesting in connection with restricted stock issuances, stock options and warrants, were $270,235 for the three months ended June 30, 2015, compared to $752,225 for the three months ended June 30, 2014.  This represents a decrease of $481,990. Although stock-based compensation costs reduce the Company’s earnings, they do not reduce cash and have no effect on working capital.

 

 

Six Months Ended June 30, 2015 and 2014

 

Revenue

 

During the six months ended June 30, 2015, the Company reported revenue of $146,606. Sales were primarily comprised of orders from distributors and direct accounts. Sales to distributors and direct accounts amounted to approximately 52% and 39% of total revenue, respectively.

 

During the six months ended June 30, 2014, the Company reported revenue of $161,778. Sales were comprised of orders from direct accounts and distributors. Sales to direct accounts amounted to 55% of total revenue. Sales to distributors and DSD’s amounted to 28% and 17% of total revenue, respectively.

 

Cost of Revenue

 

Cost of Revenue includes production costs, raw material costs and consideration in the form of free product offered to certain customers.  As a result, cost of revenue as a percentage of sales can vary from period to period. For the six months ended June 30, 2015, cost of revenue was $238,733 or 163% as a percentage of revenue, compared to $156,397 or 97% as a percentage of revenue for the six months ended June 30, 2014.

 

 

Operating Expenses

 

For the six months ended June 30, 2015, operating expenses were $803,340, a decrease of $1,852,794 or 70% over operating expenses for the six months ended June 30, 2014 of 2,656,134.  

 

Stock-based compensation costs to directors and employees, which consist of charges to income for vesting in connection with restricted stock issuances, stock options and warrants, were $664,379 for the six months ended June 30, 2015, compared to $1,626,660 for the six months ended June 30, 2014.  This represents a reduction to operating expenses of $962,281. Although stock-based compensation costs reduce the Company’s earnings, they do not reduce cash and have no effect on working capital.

 

Marketing, promotional, selling and licensing fees were a credit of $421,883 for the six months ended June 30, 2015, compared to expense of $235,363 for the six months ended June 30, 2014. The settlement of the license agreement, discussed in Note 5 to the accompanying Condensed Notes to the Financial Statements, was the primary reason for this decrease in marketing, promotional, selling and licensing fees of $657,246.

 

Advisory fees, which are primarily paid in Common Stock, were zero for the six months ended June 30, 2015, as compared to $453,286 for the six months ended June 30, 2014.

 

 

Liquidity and Capital Resources

 

Liquidity

 

As of June 30, 2015, the Company had working capital of $179,940.

 

 

Working Capital Needs

 

The Company believes it has insufficient cash to fund its operations for the next twelve months, and will require additional capital to develop, market and produce its products.   The Company cannot predict whether this additional financing will be in the form of equity or debt, or be in another form. The Company expects that the sale of equity securities or convertible debt will result in dilution to the stockholders.   In addition, the Company may not be able to obtain additional debt or equity financing on terms acceptable to it, or at all. If the Company is not able to secure additional capital, it could result in foregone business opportunities.

 

   

OFF-BALANCE SHEET ARRANGEMENTS

 

The Company had no off-balance sheet arrangements as of June 30, 2015. 

 

 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

 

Not applicable.

 

 

 

 

 

ITEM 4.  CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as of the end of the period covered by this report on Form 10-Q/A. This evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures are not effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure and that our disclosure controls and procedures are effective to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

 

At the time that our Quarterly Report on Form 10-Q for the quarters ended June 30, 2015 and 2014, our Principal Executive Officer and Principal Financial Officer concluded that our internal control over financial reporting was effective as of June 30, 2015. Subsequent to that evaluation, our management, including our Principal Executive Officer and Principal Financial Officer, concluded that we did not maintain effective internal control over financial reporting as of June 30, 2015 because of a material weakness in our internal control over financial reporting described below related to accounting for the forgiveness of related party and officer compensation. Notwithstanding the material weakness described above, management has concluded that our condensed consolidated financial statements for the periods included in this Quarterly Report on Amended Form 10-Q/A are fairly stated in all material respects in accordance with generally accepted accounting principles for each of the periods presented herein.

 

To respond to this material weakness, we have devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement of our internal control over financial reporting. While we have processes to identify and intelligently apply developments in accounting, we plan to enhance these processes to better evaluate our research and understanding of the nuances of increasingly complex accounting standards. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time and we can offer no assurance that these initiatives will ultimately have the intended effects.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting during the period covered by this report that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on Effectiveness of Controls and Procedures

 

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. 

 

 

PART II – OTHER INFORMATION

  

ITEM 1.  LEGAL PROCEEDINGS

 

We are currently not a party to any material legal or administrative proceedings and are not aware of any pending or threatened material legal or administrative proceedings arising in the ordinary course of business.  We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.

 

 

ITEM 1A.  RISK FACTORS

 

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.

 

   

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On June 15, 2015, the Company entered into (“the CEO Agreement” and “the COO Agreement”) with the CEO and the COO pursuant to which the CEO and COO agreed to continue to serve in their positions for a term of five years, as extended, in consideration of, among other items, 1,544,737 and 252,632 shares of Common Stock of the Company, respectively, to be issued to each party upon the Company generating revenue of $3,000,000 during any twelve month period during the term. Additionally, the Company awarded its Controller 226,485 shares (“the Controller Grant Shares”) in consideration of her previous and continued services as Controller of the Company, which such Controller Grant Shares will be issued upon the Company generating revenue of $3,000,000 during any twelve month period on or prior to June 26, 2025.  In June 2015, the Company granted a director of the Company stock options to purchase 35,000 shares of Common Stock pursuant to the 2012 Plan. The exercise price is $0.255 per share and the options become exercisable in four equal tranches in December 2015, June 2016, December 2016 and June 2017. They expire in June 2020.

 

This issuance of these above securities is exempt from the registration requirements under Rule 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 as promulgated under Regulation D. The investors are accredited investors as defined in Rule 501 of Regulation D promulgated under the Securities Act.  

 

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

 

None.

 

 

ITEM 4.  MINE SAFETY DISCLOSURE

 

Not applicable.

 

 

 

 

 

 

 

 

 

 

ITEM 5.  OTHER INFORMATION

 

None.

 

ITEM 6.  EXHIBITS

 

Exhibit No.		SEC Report Reference Number		Description
2.1		2.1		Agreement and Plan of Merger by and among Specialty Beverage and Supplement, Inc., SBSI Acquisition Corp.  and MOJO Ventures, Inc. dated May 13, 2011 (1)
2.2		2.1		Split-Off Agreement, dated as of October 27, 2011, by and among MOJO Ventures, Inc., SBSI Acquisition Corp., MOJO Organics, Inc., and the Buyers party thereto (2)
3.1		3.1		Certificate of Incorporation of MOJO Shopping, Inc. (3)
3.2		3.1		Amendment to Certificate of Incorporation of MOJO Ventures, Inc. (4)
3.3		3.1		Certificate of Amendment to Certificate of Incorporation of MOJO Ventures, Inc. (5)
3.4		3.4		Articles of Merger (1)
3.5		3.1		Certificate of Amendment to Certificate of Incorporation of MOJO Organics, Inc. (9)
3.6		3.1		Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (11)
3.7		3.1		Amended and Restated Bylaws of MOJO Ventures, Inc. (6)
3.8		3.8		Amendment No. 1 to Amended and Restated Bylaws of MOJO Organics, Inc. (13)
10.1		10.1		Form of Second Amended and Restated Restricted Stock Agreement (14)
10.2		10.6		2012 Long-Term Incentive Equity Plan (13)
10.3		10.7		Form of Stock Option Agreement under the 2012 Long-Term Incentive Equity Plan (13) †
10.4		10.8		Form of Indemnification Agreement with officers and directors (13)
10.5		10.1		Form of Promissory Note issued to OmniView Capital LLC and Paul Sweeney (11)
10.6		10.2		Advisor Agreement with OmniView Capital LLC (11)
10.7		10.3		Amended and Restated Securities Purchase Agreement (11)
10.8		10.4		Registration Rights Agreement (11)
10.9		10.5		Commitment letter executed by each of Glenn Simpson, Jeffrey Devlin and Richard Seet (11)
10.10		10.6		Amendment to Richard X. Seet Restricted Stock Agreement (11)

 

10.11		10.7		Letter Agreement relating to nominee right of OmniView Capital LLC (11)
10.12		10.1		Juice License Agreement between Chiquita Brands L.L.C. and MOJO Organics, Inc. dated as of August 15, 2012 (12)
10.13		10.17		Form of Subscription Agreement for 2013 Offering (13)
10.14		10.18		Employment Agreement dated March 1, 2013 between MOJO Organics, Inc. and Glenn Simpson (13) †
10.15		10.15		Form of Advisor Agreement (14)
10.16		10.16		Form of Restricted Stock Agreement, dated December 4, 2014, between MOJO Organics, Inc. and each of Glenn Simpson, Richard Seet, Jeffrey Devlin and Nicholas Giannuzzi.  (14) †
10.17		10.17		Form of Restricted Stock Agreement, dated March 2014, between MOJO Organics, Inc. and each of Glenn Simpson, Richard Seet, Jeffrey Devlin, Peter Spinner and Marianne Vignone. (14) †
10.18		10.18		Form of Subscription Agreement for March 2014 Stock (with Warrants) Offering (14)
10.19		10.18		Form of Warrant (14)
10.20		10.20		Form of Subscription Agreement for March 2014 Stock Offering (14)
10.21		10.21		Form of Distribution Agreement
10.22		10.2		Form of Stock Option Agreement under the 2012 Long-Term Incentive Equity Plan, dated August 14, 2014, between MOJO Organics, Inc. and each of Glenn Simpson, Peter Spinner, Richard Seet, Jeffery Devlin and Marianne Vignone. (15)
10.23		10.3		Employment Agreement, dated August 12, 2014, between MOJO Organics, Inc. and Peter Spinner. (15)
10.24		10.1		Form of Restricted Stock Agreement, dated August 12, 2014, between MOJO organics, Inc. and Peter Spinner. (15)
10.25		10.25		Amended and Restated Employment Agreement by and between MOJO Organics, Inc. and Glenn Simpson dated June 15, 2015 (16)
10.26		10.26		Amended and Restated Employment Agreement by and between MOJO Organics, Inc. and Peter Spinner dated June 15, 2015 (16)
31.1*		31.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

*  Filed herewith.

† Management compensatory plan, contract or arrangement.

 

(1)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the Securities and Exchange Commission (the “SEC”) on May 18, 2011.

 

(2)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on November 2, 2011.

 

(3)

Incorporated by reference to the Registrant's Registration Statement on Form SB-2 as an exhibit, numbered as indicated above, filed with the SEC on December 19, 2007.

 

(4)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on May 4, 2011.

 

(5)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on January 4, 2012.

 

(6)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on October 31, 2011.

 

(7)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on August 12, 2011.

 

(8)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on June 8, 2011.

 

(9)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on April 2, 2013.

 

(10)

Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q as an exhibit, numbered as indicated above, filed with the SEC on June 25, 2013.

 

(11)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on February 1, 2013.

 

(12)

Incorporated by reference to the Registrant’s Current Report on Form 8-K/A as an exhibit, numbered as indicated above, filed with the SEC on February 7, 2013.  Portions of the exhibit and/or related schedules or exhibits thereto have been omitted pursuant to a request for confidential treatment, which has been granted by the Commission.

 

(13)

Incorporated by reference to the Registrant’s Current Report on Form 10-K as an exhibit, numbered as indicated above, filed with the SEC on September 24, 2013.

 

(14)

Incorporated by reference to the Registrant’s Annual Report on Form 10-K as an exhibit, numbered as indicated above, filed with the SEC on April 16, 2014.

 

	(15)	Incorporated by reference to the Registrant’s Annual Report on Form 10-Q as an exhibit, numbered as indicated above, filed with the SEC on October 2, 2014.
	(16)	Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on June 30, 2015

 

 

 

 

 

 SIGNATURES

 

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	MOJO ORGANICS, INC.
Dated: February 16, 2016	By:	/s/Glenn Simpson
		Glenn Simpson, Chief Executive Officer and Chairman (Principal Executive and Principal Financial Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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