Attached files
| file | filename |
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| EX-32.1 - EXHIBIT 32.1 - MOJO Organics, Inc. | ex32_1.htm |
| EX-31.1 - EXHIBIT 31.1 - MOJO Organics, Inc. | ex31_1.htm |
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: March 31, 2020
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) |
| 185 Hudson Street, Floor 25 | ||
| Jersey City, New Jersey | 07302 | |
(Address of principal executive offices) |
(Postal Code) |
Registrant’s telephone number: 929 264 7944
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 March 31, 2020, there were 29,723,544 shares of the registrant's common stock, par value $0.001, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
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| The accompanying notes are an integral part of these condensed financial statements. |
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Notes to Condensed Financial Statements (Unaudited)
March 31, 2020
NOTE 1 – BUSINESS
Overview
MOJO Organics, Inc. (“MOJO” or the “Company”) a Delaware corporation is headquartered in Jersey City, NJ. The Company engages in new product development, production, marketing, distribution and sales of beverage brands that are natural, Non GMO Project verified, and USDA Organic. The Company’s flagship product is MOJO Pure Coconut Water. In addition to Pure Coconut Water, the Company produces Sparkling Coconut Water, Coconut Water + Mango Juice and Coconut Water + Pineapple Juice. We seek to grow the market share of our products by expanding our hybrid distribution network through the relationships and efforts of our management and third party partners an improved broker network, and new products and packaging in 2020, including pH7 water (pH is a scale of acidity) and energy beverages which are both major sectors of the beverage industry. The company packages its beverages in 100% recyclable, Eco-Friendly packaging that can be recycled infinite times and is not made from carbon oil based packaging. The packaging has a very low impact on the environment, and does not contribute to landfills and the pollution of our bodies of water.
Interim Financial Statements
The accompanying unaudited interim condensed financial statements have beaen 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 audited 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 three months ended March 31, 2020 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, 2019 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. As of March 31, 2020 and December 31, 2019, the Company did not have any cash equivalents.
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 March 31, 2020 and December 31, 2019 was zero.
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Inventories
Inventories, consisting solely of finished goods, are stated at the lower of cost (first-in, first-out method) or net realizable value (“NRV”). If necessary, the Company provides allowances to adjust the carrying value of its inventories to NRV when NRV is below cost. There was no such adjustments in 2020 and 2019.
Revenue Recognition
Revenue from sales of products is recognized when the related performance obligation is satisfied. The Company’s performance obligation is satisfied upon the shipment or delivery of products to customers. The Company’s products are sold on cash and credit terms which are established in accordance with standardized industry practices and typically require payment within 30 days of delivery. Costs incurred for sales incentives and discounts are accounted for as reductions in revenue.
Deductions from Revenue
Costs incurred for sales incentives and discounts are accounted for as reductions 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 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 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 as they would have had an anti-dilutive impact on the Company’s net loss per common share:
| As of March 31, | ||||||||||
| Expiration Date | Exercise Price | 2020 | 2019 | |||||||
| Shares underlying options outstanding | Apr 6, 2022 | $0.16 | 505,608 | 901,796 | ||||||
| Shares underlying warrants outstanding | Aug 19, 2020 | $0.40 | 1,500,000 | 1,500,000 | ||||||
| Total | 2,005,608 | 2,401,796 | ||||||||
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Income Taxes
The Company provides for income taxes using the 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. Deferred tax assets are reduced 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.
The Company recognizes interest and penalties related to income tax matters in income tax expense. As of March 31, 2020 and December 31, 2019, the Company had no accrued interest or penalties. The Company has had no Federal or state tax examinations in the past nor does it have any at the current time. As of March 31, 2020 and December 31, 2019, the Company had Net Operating Loss Carryforwards of approximately $5,100,000 and $5,050,000, respectively, and a Deferred Tax Assets amounting to $1,333,505 and $1,319,434, respectively, which have been fully reserved by a valuation allowance. The Company does not expect the valuation allowance to be reversed within the next twelve months.
Stock-Based Compensation
The Company accounts for equity based transactions under the provisions of ASC Topic 718, “Accounting for Stock-Based Compensation”. The ASC prescribes accounting and reporting standards for 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.
Share based payment awards are measured at grant date fair value of the equity instrument that an entity is obligated to issue when the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.
Fair value of financial instruments
The carrying amounts of financial instruments, which include cash, accounts receivable, accounts payable and accrued expense, approximate their fair values due to their short-term nature.
Recent Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. The ASC aims to to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The Company is still assessing the impact of this pronouncement to the financial statements.
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NOTE 3 – COMMITMENTS AND CONTINGENCIES
The global coronavirus (COVID-19) pandemic has caused disruptions in supply chains, affecting production and sales across a range of industries. While this disruption is currently expected to be temporary, there is considerable uncertainty around the duration.
The extent of the impact of COVID-19 on our operational and financial performance will depend on the effect on our customers and vendors – all of which are uncertain and cannot be predicted. The related financial impact cannot be reasonably estimated at this time.
Employment Agreements
On April 6, 2017, the Company entered into an Amended and Restated Employment Agreements with Mr. Glenn Simpson (the “Simpson Agreement”), the Company’s Chairman and Chief Executive Officer (the “CEO”).The Simpson Agreement was effective April 1, 2017 and has an eight year term.
Pursuant to the Simpson Agreement dated April 6, 2017, Mr. Simpson will be paid a salary of $5,000 per month in cash and the right to receive 67,000 shares of restricted Common Stock per month. Pursuant to his employment agreement, Mr. Simpson is entitled to a salary of not less than $18,500 per month. Additionally, Mr. Simpson is entitled to an annual bonus comprised of cash and Common Stock based on performance goals established by the Board of Directors of the Company as set forth in the Simpson Agreement. The cash bonus is established at $44,400 per year. The stock bonus is set at 200,000 shares of Common Stock per year through May 31, 2025 based upon achieving revenue performance goals. The revenue goals range from $900,000 to $19,200,000 per year. The bonus awards are accelerated when revenues exceed the annual target amounts.
During the three months ended March 31, 2020, the CEO was issued 201,000 Restricted and Non-Trading shares of Common Stock under the terms of the Simpson Agreement for the stock portion of his first quarter compensation. During 2020 and 2019, Mr. Simpson did not receive cash payments. He was owed $15,000 and $10,000 as of March 31, 2020 and December 31, 2019, respectively, for the cash portion of his salary.
The “Simpson Agreement” is the only executive employment agreement in effect as of March 31, 2020.
The Company has no other plans in place and has never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans.
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Lease Commitment
The Company maintains office space in Jersey City, NJ. The lease agreement is for the period March 1, 2019 to February 29, 2020 and was renewed for one year under the same terms. The rent under this agreement is $2,343 per month, and expires February 28, 2021. Lease expense amounted to $7,029 and $6,912 for the three months ended March 31, 2020 and 2019 respectively. The security deposit for the lease agreement is $4,518 and the lease expires on February 28, 2021. The Company has made an accounting policy election not to recognize right-of-use assets and lease liabilities that arise from short-term leases such as this office lease.
NOTE 4 – STOCKHOLDERS’ EQUITY
The Company has authorized 190,000,000 shares of Common Stock having a par value of $0.001. On February 4, 2019, the Company by a vote of its majority shareholders cancelled the authorization for the issuance of up to 10,000,000 shares of preferred stock. There were no shares of preferred stock issued or outstanding prior to this change.
Restricted Stock Issuances
During the three months ended March 31, 2020, 397,250 shares of Restricted and Non-Trading Common Stock were issued to Directors and Officers of the Company. These shares have full voting rights but are restricted for sale or transfer. The CEO exercised options to purchase 156,250 shares at $0.16 per share for a total exercise price of $25,000 which reduced the accrued salary payable to the CEO by the same amount. The CEO was also issued 201,000 shares of Restricted and Non-Trading Common Stock for the stock portion of his salary for the first quarter. A Director was issued 40,000 shares of Common stock as an award for continuing to serve as a Director of the Company. The value of these shares was recorded as a component of compensation expense.
Stock Warrants
In connection with private placement offerings in March 2014 (the “2014 Offerings”), warrants to purchase 2,030,223 shares of Common Stock were issued at a price of $0.91 per share. These warrants expired on March 12, 2019.
In connection with a private placement offering in August 2015 (the “2015 Offerings), warrants to purchase 1,500,000 shares of Common Stock were issued at a price of $0.40 per share. These warrants will expire on August 19, 2020.
The following table summarizes warrant activity during the period:
| Number of Warrants | Expiration Date | Exercise Price | Exercise Value | |||||||||||
| Issued August 19, 2015 | 1,500,000 | August 19, 2020 | $ | 0.40 | $ | 600,000 | ||||||||
| Outstanding at March 31, 2020 | 1,500,000 | August 19, 2020 | $ | 0.40 | $ | 600,000 | ||||||||
| Exercisable at March 31, 2020 | 1,500,000 | August 19, 2020 | $ | 0.40 | $ | 600,000 | ||||||||
Stock Purchased for Cancellation
During the period January 1, 2020 to March 31, 2020 the Company purchased 25,000 shares of its restricted common stock from one shareholder for cancellation. The Company paid $5,250 or $0.21 per share which was the average market price for its traded shares during the period. The shares were cancelled and are available for reissuance.
Advisory Services
On October 3, 2013, the Company entered into an agreement for strategic business advisory services, public relations services and investor relations services with Ian Thompson from Carricklee House, Strabane, Northern Ireland.
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. The stock is vested; however it is restricted from trading. Ian Thompson was also issued 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 on June 30, 2014. Consulting fees amounting to $105,000 and $280,000 were recorded in 2014 and 2013, respectively, related to the 200,000 shares of Common Stock. Throughout the term of the agreement, the Company requested that Ian Thompson to render performance under the agreement and to provide evidence of same. Ian Thompson failed to perform in all material respects under the terms of the agreement and refused to provide evidence.
On June 27, 2014, the Company terminated the agreement. Empire Stock Transfer, Inc, the Company’s transfer agent was directed to process cancellation requests regarding the certificates listed below. The Board of Directors approved the Company’s irrevocable agreement to indemnify the Transfer Agent for all loss, liability or expense in carrying out the authority and direction contained on the terms of the Unanimous Written Consent to terminate the Thompson Agreement. The Transfer Agent shall maintain the right to uphold the transfer in the event of forgery.
| Certificate No(s) | Registered To | No. of Shares | CANCELLED | No. of Shares | ||||||||||
| 605 | Ian Thompson | 50,000 | CANCELLED | 50,000 | ||||||||||
| 606 | Ian Thompson | 50,000 | CANCELLED | 50,000 | ||||||||||
| 607 | Ian Thompson | 50,000 | CANCELLED | 50,000 | ||||||||||
| 608 | Ian Thompson | 50,000 | CANCELLED | 50,000 | ||||||||||
| 610 | Ian Thompson | 167,204 | CANCELLED | 167,204 | ||||||||||
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NOTE 5 – STOCK OPTIONS
On April 6, 2017, the Company granted stock options to purchase 356,559 shares and 1,500,000 shares of Common Stock pursuant to the 2012 Incentive Plan and the 2015 Incentive Plan, respectively. The options were priced at the fair market value of the Common Stock and are immediately exercisable.
2012 Incentive Plan
On February 18, 2019, the Company’s Board of Directors signed an unanimous consent to terminate the 2012 Incentive Plan, and it was resolved further that 70,000 options to purchase shares of Common Stock be converted into 70,000 shares of Common Stock. It also allowed the CEO of the Company to exercise options to purchase 222,000 Restricted and Non-Trading shares of Common Stock at $0.255 per share. The total exercise price was $56,610 and this reduced the loan payable to the CEO by the same amount.
The 2012 Incentive Plan was approved by our shareholders in March 2013. The 2012 Incentive Plan provided the Company with the ability to issue stock options, stock appreciation rights, restricted stock and/or other stock-based awards for up to an aggregate of 2,050,000 shares of common stock. In 2016, the Company issued 620,000 stock options to purchase shares of common stock that expire in August 2019, and issued 1,073,441,restricted common stock to its Directors and employees. In 2017, the Company granted stock options to purchase 356,559 shares that expire in April 2022. The options were priced at the fair market value of the Common Stock and are exercisable. In 2018, there were no issuances under the 2012 plan. As of December 31, 2018, issued stock options total 976,559. During 2018, 495,403 stock options had been cancelled due to termination of employment and were available for reissuance at that time. There are no options outstanding from this plan as of March 31, 2020 and December 31, 2019.
2015 Incentive Plan
The 2015 Incentive Plan was terminated by the Board of Directors on January 24, 2019. The 2015 Incentive Plan provided the Company with the ability to issue stock options, stock awards and/or restricted stock purchase offers for up to an aggregate of 1,500,000 shares of Common Stock.
The Company approved the 2015 Incentive Plan in October 2015. The 2015 Incentive Plan provided the Company with the ability to issue stock options, stock awards and/or restricted stock purchase offers for up to an aggregate of 1,500,000 shares of Common Stock. In April, 2017, the Company granted stock options to purchase 1,500,000 shares of Common Stock pursuant to the 2015 Plan. The options were priced at the fair market value of the Common Stock and were exercisable from the date of issuance. In 2018, there were no issuances under the 2015 plan. As of December 31, 2018, issued stock options total 1,500,000. During 2018, 693,610 stock options had been cancelled due to termination of employment and were available for reissuance at that time. There are 505,609 options outstanding from this plan as of March 31, 2020, and 661,858 options outstanding as of December 31, 2019.
During February 2019, two of the Company’s Directors surrendered 70,000 stock options and were issued 70,000 shares of Common Stock in exchange. The CEO of the Company was also issued 222,000 Restricted and Non-Trading shares of Common Stock.
On August 13, 2019, the Company’s Board of Directors signed an unanimous consent to allow the CEO to exercise options to purchase 93,750 Restricted and Non-Trading shares at $0.16 per share. The total exercise value of $15,000 was reduced the loan payable to the CEO to $0.
On November 1, 2019, the Company’s Board of Directors signed an unanimous consent to allow the CEO to exercise options to purchase 239,938 Restricted and Non-Trading shares at $0.16 per share. The total exercise value of $38,390 was reduced the accrued salary payable to the CEO by the same amount.
As of December 31, 2019, there are 661,858 options outstanding that were issued to Glenn Simpson. The exercise price is $0.16.
On January 14, 2020 the Company’s Board of Directors signed an unanimous consent to allow the CEO to exercise options to purchase 93,750 Restricted and Non-trading shares at $0.16 per share. The total exercise value of $15,000 was reduced the accrued salary payable to the CEO by the same amount.
On March 6, 2020 the Company’s Board of Directors signed an unanimous consent to allow the CEO to exercise options to purchase 62,500 Restricted and Non-Trading shares at $0.16 per share. The total exercise value was $10,000 and this reduced the accrued salary payable to the CEO to $0.
The following table summarizes stock option activity under the Plans:
| Options | Exercise Price | Remaining Contractual Term (in years) | ||||||||||||
| Outstanding, December 31, 2019 | 661,858 | $ | 0.16 | 2.27 | ||||||||||
| Granted | — | |||||||||||||
| Exercised | (156,250 | ) | 0.16 | — | ||||||||||
| Forfeited | — | |||||||||||||
| Outstanding, March 31, 2020 | 505,608 | $ | 0.16 | 2.02 | ||||||||||
| Exercisable, March 31, 2020 | 505,608 | $ | 0.16 | 2.02 | ||||||||||
During the three months ended March 31, 2020 and 2019, compensation expense related to stock options was $0. As of March 31, 2020, there was no unrecognized compensation cost related to non-vested stock options.
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NOTE 6 – RELATED PARTY TRANSACTIONS
On January 14, 2020 the CEO of the Company exercised 93,750 stock options at an exercise price of $0.16. The Company issued 93,750 Restricted and Non-Trading shares of Common Stock, and the accrued payroll owed to him was reduced by $15,000.
On March 12, 2020 the $10,000 accrued salary balance was used to pay for an option exercise made by the CEO of the Company. As a result of the transaction, the Company issued 62,500 Restricted and Non-Trading shares of Common Stock to the CEO and the accrued payroll then owed to the CEO was reduced to $0.
As of March 31, 2020, accrued payroll of $21,644 was owed to employees.
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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:
| • | Significant 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 March 31, 2020 to March 31, 2019. |
| • | 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.
Significant 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.
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Recent Accounting Pronouncements
New Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. The ASC aims to to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The Company is still assessing the impact of this pronouncement to the financial statements.
COMPANY OVERVIEW
MOJO Organics, Inc. (“MOJO” or the “Company”) a Delaware Corporation is headquartered in Jersey City, NJ. The Company engages in new product development, production, marketing, distribution and sales of beverage brands that are Non GMO Project Verified.
The Company’s flagship product is MOJO Pure Coconut Water. In addition to Pure Coconut Water, the Company produces Sparkling Coconut Water, Coconut Water + Mango Juice and Coconut Water + Pineapple Juice. We seek to grow the market share of our products by expanding our hybrid distribution network through the relationships and efforts of our management and third party partners an improved broker network, and new products and packaging in 2020, including pH7 water (pH is a scale of acidity) and energy beverages which are both major sectors of the beverage industry. The company packages its beverages in 100% recyclable, Eco-Friendly packaging that can be recycled infinite times and is not made from carbon oil based packaging. The packaging has a very low impact on the environment, and does not contribute to landfills and the pollution of our bodies of water.
Results of Operations
Three Months Ended March 31, 2020 and 2019
Revenue
For the three months ended March 31, 2020, the Company reported revenue of $440,090 increase of $ 31,593 or 8% from revenue of $408,497 for the three months ended March 31, 2019. The increase in revenue was primarily due to the growing demand for both MOJO branded and private label products. Cases sold in the first quarter of 2020 increased by 9,461 compared to the same period in 2019.
Cost of Revenue
Cost of revenue includes finished goods purchase costs, production costs, raw material costs and freight in costs. Also included in cost of revenue are adjustments made to inventory carrying amounts, including markdowns to market.
For the three months ended March 31, 2020, cost of revenue was $237,050 or 54% of revenue. For the three months ended March 31, 2019, cost of revenue was $200,632 or 49% of revenue. The 5% percentage points increase was primarily due to higher purchase price of goods and higher freight in costs.
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Operating Expenses
For the three months ended March 31, 2020, operating expenses were $259,653 a decrease of $26,359 from operating expenses of $286,012 for the three months ended March 31, 2019.
This decrease in operating expenses was comprised of higher selling expenses offset by lower compensation expenses. Selling expenses were $114,141 for the three months ended March 31, 2020 compared to $126,756 for the three months ended March 31, 2019. This $12,615 decrease is attributable to the lower storage fees. There were also no trade show fees recorded and marketing fees decreased by $5,104 from the same period last year.
Liquidity and Capital Resources
Liquidity
As of March 31, 2020 the Company had working capital of $184,037. Net cash provided by operating activities was $335 for the three months ended March 31, 2020, an increase of $1,872 compared to net cash used for operating activities of ($1,537) for the three months ended March 31 2019. Net cash used in financing activities was $5,250 for the three months ended March 31, 2020 and $750 for the three months ended March 31, 2019.
Working Capital Needs
Our working capital requirements increase as demand grows for our products. Should the Company require additional working capital in the next twelve months, it may seek to raise funds. Financing transactions could include the issuance of equity or debt securities or obtaining credit facilities. The Company has not required additional financing since February 2016.
OFF-BALANCE SHEET ARRANGEMENTS
The Company had no off-balance sheet arrangements as of March 31, 2020
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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
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act of 1934 (the “Exchange Act”) is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Under the supervision and with the participation of the Company’s senior management, consisting of the Company’s principal executive and financial officer and the Company’s principal accounting officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, the Company’s principal executive and financial officer concluded, as of the Evaluation Date, that the Company’s disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control over Financial Reporting
The management of MOJO Organics, Inc. is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Rule 13a-15(f)) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this evaluation, our officers concluded that, during the period covered by this annual report, our internal controls over financial reporting were operating effectively.
Changes in Internal Control over Financial Reporting
There was no change in our internal controls over financial reporting during the three months ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
| 15 |
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.
The global coronavirus (COVID-19) pandemic has caused disruptions in supply chains, affecting production and sales across a range of industries. While this disruption is currently expected to be temporary, there is considerable uncertainty around the duration.
The extent of the impact of COVID-19 on our operational and financial performance will depend on the effect on our customers and vendors – all of which are uncertain and cannot be predicted. The related financial impact cannot be reasonably estimated at this time.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
None.
| 16 |
* Filed herewith.
† Management compensatory plan, contract or arrangement.
| 17 |
| (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 Annual Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on June 30, 2015. | |
| (17) | Incorporated by reference to the Registrant’s Annual Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on August 25, 2015. | |
| (18) | 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 December 15, 2015. | |
| (19) | 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 22, 2016. |
| 18 |
| Filings | Description | Filing Date | File/Film Number | |
| 8-K | Current report, items 8.01 and 9.01 | 4/1/2020 | 000-55269 | |
| 10-K | Annual report [Section 13 and 15(d), not S-K Item 405] | 3/30/2020 | 000-55269 | |
| 8-K | Current report, item 5.02 | 12/26/2019 | 000-55269 | |
| 8-K | Current report, items 8.01 and 9.01 | 11/4/2019 | 000-55269 | |
| 8-K | Current report, items 8.01 and 9.01 | 10/28/2019 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 10/28/2019 | 000-55269 | |
| 8-K/A | [Amend] Current report, item 5.02 | 10/16/2019 | 000-55269 | |
| 8-K | Current report, item 5.02 | 10/16/2019 | 000-55269 | |
| 8-K | Current report, items 8.01 and 9.01 | 9/20/2019 | 000-55269 | |
| 8-K | Current report, items 8.01 and 9.01 | 9/16/2019 | 000-55269 | |
| SC 13D/A | [Amend] General statement of acquisition of beneficial ownership | 8/16/2019 | 005-88469 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 8/14/2019 | 000-55269 | |
| SC 13D | General statement of acquisition of beneficial ownership | 8/12/2019 | 005-88469 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 5/10/2019 | 000-55269 | |
| DEF 14C | Other definitive information statements | 3/4/2019 | 000-55269 | |
| 10-K | Annual report [Section 13 and 15(d), not S-K Item 405] | 2/25/2019 | 000-55269 | |
| 8-K | Current report, item 5.02 | 2/22/2019 | 000-55269 | |
| PRE 14C | Other preliminary information statements | 2/12/2019 | 000-55269 | |
| 8-K | Current report, items 2.02 and 9.01 | 1/22/2019 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 10/30/2018 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 7/13/2018 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 5/10/2018 | 000-55269 | |
| 10-K | Annual report [Section 13 and 15(d), not S-K Item 405] | 2/21/2018 | 000-55269 | |
| 8-K | Current report, items 8.01 and 9.01 | 1/26/2018 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 11/3/2017 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 8/15/2017 | 000-55269 | |
| 8-K | Current report, items 8.01 and 9.01 | 5/24/2017 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 5/1/2017 | 000-55269 | |
| 10-K | Annual report [Section 13 and 15(d), not S-K Item 405] | 3/24/2017 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 10/14/2016 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 7/13/2016 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 5/2/2016 | 000-55269 | |
| 8-K | Current report, items 4.01 and 9.01 | 4/22/2016 | 000-55269 | |
| 10-K | Annual report [Section 13 and 15(d), not S-K Item 405] | 2/16/2016 | 000-55269 | |
| 10-Q/A | [Amend] Quarterly report [Sections 13 or 15(d)] | 2/16/2016 | 000-55269 | |
| 10-Q/A | [Amend] Quarterly report [Sections 13 or 15(d)] | 2/16/2016 | 000-55269 | |
| 8-K | Current report, item 4.02 | 2/16/2016 | 000-55269 | |
| 8-K | Current report, item 8.01 | 1/7/2016 | 000-55269 | |
| 8-K | Current report, item 8.01 | 12/16/2015 | 000-55269 | |
| 8-K | Current report, item 8.01 | 12/15/2015 | 000-55269 |
| 19 |
| 8-K | Current report, items 1.01, 3.02, and 5.02 | 12/15/2015 | 000-55269 | |
| 8-K | Current report, items 1.01, 3.02, and 5.02 | 12/9/2015 | 000-55269 | |
| 8-K | Current report, items 4.01 and 9.01 | 10/23/2015 | 000-55269 | |
| S-8 | Securities to be offered to employees in employee benefit plans | 10/22/2015 | 333-207561 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 10/8/2015 | 000-55269 | |
| 8-K | Current report, items 1.01, 3.02, 5.02, and 9.01 | 8/25/2015 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 7/21/2015 | 000-55269 | |
| 10-Q/A | [Amend] Quarterly report [Sections 13 or 15(d)] | 7/21/2015 | 000-55269 | |
| 8-K | Current report, items 1.01, 3.02, 5.02, and 9.01 | 6/30/2015 | 000-55269 | |
| 8-K | Current report, item 8.01 | 5/29/2015 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 5/7/2015 | 000-55269 | |
| 8-K | Current report, item 5.02 | 4/2/2015 | 000-55269 | |
| 8-K | Current report, item 1.01 | 4/2/2015 | 000-55269 | |
| 10-K | Annual report [Section 13 and 15(d), not S-K Item 405] | 2/27/2015 | 000-55269 | |
| SC 13D | General statement of acquisition of beneficial ownership | 12/23/2014 | 005-88469 | |
| SC 13D | General statement of acquisition of beneficial ownership | 12/23/2014 | 005-88469 | |
| EFFECT | Notice of Effectiveness | 10/29/2014 | 333-196488 | |
| CORRESP | [Cover]Correspondence | 10/27/2014 | ||
| UPLOAD | [Cover]SEC-generated letter | 10/24/2014 | ||
| CORRESP | [Cover]Correspondence | 10/17/2014 | ||
| S-1/A | [Amend] [Cover]General form for registration of securities under the Securities Act of 1933 | 10/17/2014 | 333-196488 | |
| 10-K/A | [Amend] Annual report [Section 13 and 15(d), not S-K Item 405] | 10/17/2014 | 000-55269 | |
| UPLOAD | [Cover]SEC-generated letter | 10/10/2014 | ||
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 10/2/2014 | 000-55269 | |
| CORRESP | [Cover]Correspondence | 9/24/2014 | ||
| 10-K/A | [Amend] [Cover]Annual report [Section 13 and 15(d), not S-K Item 405] | 9/24/2014 | 000-55269 | |
| S-1/A | [Amend] [Cover]General form for registration of securities under the Securities Act of 1933 | 9/24/2014 | 333-196488 | |
| UPLOAD | [Cover]SEC-generated letter | 8/21/2014 | ||
| 8-A12G | Registration of securities [Section 12(g)] | 8/20/2014 | 000-55269 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 8/14/2014 | 333-148190 | |
| CORRESP | [Cover]Correspondence | 8/11/2014 | ||
| S-1/A | [Amend] General form for registration of securities under the Securities Act of 1933 | 8/11/2014 | 333-196488 | |
| 10-K/A | [Amend] Annual report [Section 13 and 15(d), not S-K Item 405] | 8/6/2014 | 333-148190 | |
| 8-K | Current report, items 4.01 and 9.01 | 8/4/2014 | 333-148190 | |
| UPLOAD | [Cover]SEC-generated letter | 7/1/2014 | ||
| S-1 | General form for registration of securities under the Securities Act of 1933 | 6/3/2014 | 333-196488 |
| 20 |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 4/18/2014 | 333-148190 | |
| 10-K | Annual report [Section 13 and 15(d), not S-K Item 405] | 4/16/2014 | 333-148190 | |
| D | Notice of Exempt Offering of Securities, item 06b | 3/14/2014 | 021-213601 | |
| D | Notice of Exempt Offering of Securities, item 06b | 3/14/2014 | 021-213600 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 10/9/2013 | 333-148190 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 10/1/2013 | 333-148190 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 9/27/2013 | 333-148190 | |
| 10-K | Annual report [Section 13 and 15(d), not S-K Item 405] | 9/24/2013 | 333-148190 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 7/8/2013 | 333-148190 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 6/25/2013 | 333-148190 | |
| D | Notice of Exempt Offering of Securities, item 06 | 5/22/2013 | 021-196904 | |
| 8-K | Current report, items 5.03, 5.07, and 9.01 | 4/2/2013 | 333-148190 | |
| CT ORDER | Confidential treatment order | 2/11/2013 | 333-148190 | |
| 8-K/A | [Amend] Current report, item 9.01 | 2/7/2013 | 333-148190 | |
| D | Notice of Exempt Offering of Securities, item 06 | 2/7/2013 | 021-191488 | |
| 8-K | Current report, items 1.01, 2.03, 3.02, 5.02, and 9.01 | 2/1/2013 | 333-148190 | |
| 8-K | Current report, items 1.01 and 9.01 | 8/17/2012 | 333-148190 | |
| 8-K | Current report, item 1.01 | 6/4/2012 | 333-148190 | |
| 8-K | Current report, items 3.02, 5.01, and 5.02 | 5/24/2012 | 333-148190 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 5/15/2012 | 333-148190 | |
| 8-K | Current report, item 5.02 | 5/9/2012 | 333-148190 | |
| 10-K/A | [Amend] Annual report [Section 13 and 15(d), not S-K Item 405] | 5/4/2012 | 333-148190 | |
| 10-K | Annual report [Section 13 and 15(d), not S-K Item 405] | 5/2/2012 | 333-148190 | |
| NT 10-K | Notification of inability to timely file Form 10-K 405, 10-K, 10-KSB 405, 10-KSB, 10-KT, or 10-KT405 | 3/30/2012 | 333-148190 | |
| UPLOAD | [Cover]SEC-generated letter | 3/1/2012 | ||
| 8-K | Current report, items 7.01 and 9.01 | 2/8/2012 | 333-148190 | |
| 8-K | Current report, items 5.02, 7.01, and 9.01 | 2/2/2012 | 333-148190 | |
| 8-K | Current report, items 5.03, 5.07, 7.01, and 9.01 | 1/4/2012 | 333-148190 | |
| 8-K | Current report, items 4.01 and 9.01 | 12/20/2011 | 333-148190 | |
| CORRESP | [Cover]Correspondence | 11/23/2011 | ||
| 10-Q/A | [Amend] Quarterly report [Sections 13 or 15(d)] | 11/22/2011 | 333-148190 | |
| 10-Q | Quarterly report [Sections 13 or 15(d)] | 11/21/2011 | 333-148190 | |
| NT 10-Q | Notification of inability to timely file Form 10-Q or 10-QSB | 11/15/2011 | 333-148190 | |
| 8-K | Current report, items 1.01, 2.01, 5.02, and 9.01 | 11/2/2011 | 333-148190 | |
| 8-K | Current report, items 5.03 and 9.01 | 10/31/2011 | 333-148190 |
| 21 |
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: April 15, 2020 | By: | /s/ Glenn Simpson |
| Glenn Simpson | ||
| Chief Executive Officer and Chairman | ||
| (Principal Executive and Principal Financial Officer) |
| 22 |