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:SeptemberJune 30, 20192020

OR

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

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:

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

Yes ☐  No ☒

On SeptemberJune 30, 2019,2020, there were 28,910,35629,924,544 shares of the registrant's common stock, par value $0.001, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None. 

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (Unaudited)

MOJO ORGANICS, INC.

Notes to Condensed Financial Statements (Unaudited)

SeptemberJune 30, 20192020 

NOTE 1 – BUSINESS

Overview

MOJO Organics, Inc. (“MOJO” or the “Company”) is 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 Non GMO Project verified.USDA Organic. The CompanyCompany’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 and 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 sellscompany predominantly packages its productsbeverages 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 distributors, wholesalerslandfills and direct to consumers through e-commerce platforms.the pollution of our bodies of water. 

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 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 ninethree months ended September 30, 2019March 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, 20182019 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 SeptemberOn June 30, 20192020 and December 31, 2018,2019, the Company did not have any cash equivalents. For purposes of reporting cash flows, cash and cash equivalents include all highly liquid investments purchases 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 SeptemberJune 30, 20192020 and December 31, 20182019 was zero.

Inventories

Inventories, consisting solely of finished goods, are stated at the lower of cost (first-in, first-out method) or net realizable value.value (“NRV”). If necessary, the Company provides allowances to adjust the carrying value of its inventories to the lower of costNRV when NRV is below cost.There were no such adjustments in 2020 or NRV.2019.

Revenue Recognition

Revenue from sales of products is recognized when persuasive evidence of an arrangement exists,the related performance obligation is satisfied. The Company’s performance obligation is satisfied upon the shipment or delivery of products has occurred, theto 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 price is fixed or determinableincentives and collectability is reasonably assured.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 LossIncome/(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 lossincome/(loss) per common share:

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 SeptemberJune 30, 20192020 and September 30, 2018,December 31, 2019, the Company had no accrued interest or penalties. The Company has had no Federal or stateState tax examinations in the past nor does it have any at the current time. As of SeptemberJune 30, 20192020 and December 31, 2018,2019, the Company had Net Operating Loss Carryforwards of $4,955,634approximately $4,660,000 and $4,736,851,$4,700,000, respectively, and recognized an Allowance for Deferred Tax Assets amounting to $1,295,155approximately $1,330,000 and $1,237,976, respectively.$1,320,000, respectively, which have been fully reserved by valuation allowances. The Company does not expect any significant reversals in 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 valuethe month-end volume weighted average price (VWAP) 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 MarchDecember 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-01,2019-12, “Leases(Topic 842)Income Taxes (Topic 740): Codification Improvements”Simplifying the Accounting for Income Taxes”.The ASC aims to increase transparencyidentify, evaluate, and comparability among organizations by recognizing lease assetsimprove areas of generally accepted accounting principles (GAAP) for which cost and lease liabilities oncomplexity can be reduced while maintaining or improving the balance sheet and disclosing essentialusefulness of the information about leasing transactions.provided to users of financial statements. The Company has assessed thatis still assessing the impact of this pronouncement has no impact onto the financial statements.

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 AgreementsAgreement with Mr. Glenn Simpson (the “Simpson Agreement”), the Company’s Chairman and Chief Executive Officer (the “CEO”).The. 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 the achievement of performance goals established by the Board of Directors of the Company asand 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 $2,400,000$900,000 to $19,200,000 per year. The bonus awards are accelerated when revenues exceed the annual target amounts.

During the ninesix months ended SeptemberJune 30, 2019, 603,0002020, the CEO was issued 402,000 Restricted and Non-Trading shares of restricted Common Stock were issued tounder the CEO as partterms of the Simpson Agreement for the stock portion of his first second and thirdsecond quarter compensation. During 2018, hethe first quarter of 2020 and for the first and second quarters of 2019, Mr. Simpson did not receive cash payments. Mr. Simpson received stock in lieu of cash payments for the firstsecond quarter of 2018.2020. He was owed $33,390$5,000 and $45,000$10,000 as of SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively, for the cash portion of his salary.

On December 8, 2017, the Company entered into an Amended and Restated Employment Agreement with Mr. Peter Spinner (the “Spinner Agreement”), who was the Company’s Chief Operating Officer at that date. This agreement was effective January 1, 2018. Pursuant to the Spinner Agreement, Mr. Spinner received $5,000 paid in stock each month for part-time employment.

The Spinner Agreement was terminated on March 31, 2018 when Mr. Spinner’s employment with MOJO ended.

The “Simpson Agreement” is the only executive employment agreement in effect as of SeptemberJune 30, 2019.2020.

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.

Lease Commitment

The Company maintains office space in Jersey City, NJ. The initial lease agreement was for the period March 1, 20182019 to February 28, 201929, 2020 and was renewed for one year (through February 29, 2020)under the same terms. In April 2020, the Company was given a 50% discount on the rent for April and May 2020 as well as an optional lease extension for an additional three months under the same terms. The base rent under this agreement is $2,304$2,343 per month.month, and expires May 31, 2021. Lease expense amounted to $20,736$4,686 and $20,682$6,912 for the ninesix months ended SeptemberJune 30, 20192020 and 20182019 respectively. The security deposit for the lease agreement is $4,518 and the lease expires on February 29, 2020.May 31, 2021.

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.

Common Stock outstanding at June 30, 2020 and December 31, 2019 includes a total of 367,204 restricted shares issued in certificate form to a former consultant which were ordered cancelled during 2014. Such shares cannot be cancelled until the physical shares are surrendered to the Company or the Company’s designee and are not otherwise transferable by the holder.

Restricted Stock Issuances

During the six months ended June 30, 2020, 598,250 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 402,000 shares of Restricted and Non-Trading Common Stock for the stock portion of his salary for the first and second 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:

Stock Purchased for Cancellation

On January 23, 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.

NOTE 5 – STOCKOPTIONS

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

The 2012 Incentive Plan was terminated by the Board of Directors onOn February 18, 2019. The2019, the Company’s Board of Directors resolved thatsigned an unanimous consent to terminate the 2012 Incentive Plan, which allowed the issuance of up to 2,050,000 securities to officers, directors and consultants as incentive compensation would be terminated. Itit was resolved further resolved that 70,000 options to purchase shares of common stock issued under the 2012 Incentive PlanCommon Stock be converted into 70,000 shares of Common Stock. Another resolution was made that Mr. Glenn Simpson be permittedIt also consented the CEO of the Company to exercise his optionoptions to purchase 222,000 Restricted and Non-Trading shares of Common Stock forat $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 June 30, 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.

Restricted Stock Compensation

On May 9, 2018, the Company’s Board There are 505,609 options outstanding from this plan as of Directors approved to the lifting of the prior restrictions on 8,756,542, shares issued to the CEO and 4,709,022, shares issued to the former COO of the Company. 

Restricted Stock Issuances

During the nine months ended September 30, 2019, 1,088,750 shares of restricted Common Stock were issued to Directors and Officers of the Company. These shares have full voting rights but are restricted for sale or transfer.

During the quarter ended March 31, 2019, a total of 493,000 shares of restricted Common Stock were issued. The CEO exercised his option to purchase 222,000 shares at $0.255 per share. The CEO was also issued 201,000 shares for the stock portion of his salary for the first quarter. Two directors who had 35,000 options each were issued a total of 70,000 shares of Common Stock following the resolution to terminate the 2012 Incentive Plan as discussed in Note 4.

During the quarter ended June 30, 2019, a total2020, and 661,858 options outstanding as of 251,000 shares of restricted Common Stock were issued. 201,000 shares were issued to the CEO for the stock portion of his salary for the second quarter and 50,000 shares were issued to the Corporate Controller as part of her annual stock bonus.

During the quarter ended September 30, 2019, a total of 344,750 shares of restricted Common Stock were issued. The CEO exercised his option to purchase 93,750 shares at $0.16 per share. The total exercise value is $15,000 and this reduced the loan payable balance to the CEO to $0. The CEO was also issued 201,000 shares for the stock portion of his salary for the third quarter. The Corporate Controller was also issued 50,000 shares as part of her annual stock bonus.

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,December 31, 2019.

In connection with the February 2016 Private Placement Offering, warrants to purchase 482,143 shares of Common Stock were issued at a price of $0.70 per share, these warrants expired on February 12, 2018.Option Activity

The following table summarizes warrant activity during the period:

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 resolved to allowconsented the CEO to exercise his optionoptions 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 consented 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 September 30,December 31, 2019, there are 901,796 remaining661,858 options outstanding that were issued to Glenn Simpson. The weighted average exercise price is $0.16.

On January 14, 2020 the Company’s Board of Directors consented 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 consented 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:

During the ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, compensation expense related to stock options of $0 and $0, respectively, was recorded.$0. As of SeptemberJune 30, 2019,2020, there was no unrecognized compensation cost related to non-vested stock options.

NOTE 6 – RELATED PARTY TRANSACTIONS

On February 25, 2019January 14, 2020 the CEO of the Company exercised 222,00093,750 stock options at an exercise price of $0.255$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 $56,610.$15,000.

On August 13, 2019March 12, 2020 the $15,000 loan payable$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 93,75062,500 Restricted and Non-Trading shares of Common Stock to the CEO and the balance payable underaccrued payroll then owed to the loanCEO was reduced to $0.

As of SeptemberJune 30, 2019,2020, accrued payroll of $48,784$14,135 was owed to the CEO and employees.the Controller of the Company.

NOTE 7 – SBA LOANS “CARES ACT”

On May 5, 2020, the Company received loan proceeds in the amount of $35,508 under the Paycheck Protection Program (“PPP”).  The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period.

If there were an unforgiven portion of the PPP loan, it would be payable over a period of up to two years at an interest rate of 1%, with a deferral of payments for the first six months.  The Company’s use of the proceeds is consistent with the PPP. The Company believes that its use of the loan proceeds has met the criteria for forgiveness of the loan. The Company believes that the loan will be forgiven on November 1, 2020 or sooner in accordance with the guidance from the PPP.

On May 27, 2020, the Company received grant proceeds in the amount of $2,000 under the Economic Injury Disaster Loan (“EIDL”) Program. The EIDL program was created to assist businesses, renters and homeowners located in regions affected by declared disasters. The Company applied for the EIDL Emergency Advance which provides $1,000 per employee up to a maximum of $10,000.

The EIDL Advances are 100% forgivable as long as it is used for providing sick leave benefits to employees, maintaining payroll to retain employees, payments on mortgage, rent and utilities, increased costs to obtain materials from the applicants original source due to interrupted supply chains, and repaying obligations that cannot be met due to revenue losses. The Company’s use of the advance has met the criteria for forgiveness of the advance.

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:

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.

Stock-based Compensation — ASC Topic 718, “Accounting for Stock-Based Compensation” prescribes accounting and reporting standards for employee 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.Recent Accounting Pronouncements

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.

Recent Accounting Pronouncements

New Accounting Pronouncements

In MarchDecember 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-01,2019-12, “Leases(Topic 842)Income Taxes (Topic 740): Codification Improvements”Simplifying the Accounting for Income Taxes”.The ASC aims to increase transparencyidentify, evaluate, and comparability among organizations by recognizing lease assetsimprove areas of generally accepted accounting principles (GAAP) for which cost and lease liabilities oncomplexity can be reduced while maintaining or improving the balance sheet and disclosing essentialusefulness of the information about leasing transactions.provided to users of financial statements. The Company has assessed thatis still assessing the impact of this pronouncement has no impact onto the financial statements.

COMPANY OVERVIEW

MOJO Organics, Inc. (“MOJO” or the “Company”) is 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 GMONon-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 and 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 predominantly 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

NineSix Months Ended SeptemberJune 30, 20192020 and 20182019

Revenue

For the ninesix months ended SeptemberJune 30, 2019,2020, the Company reported revenue of $1,346,573,$877,967 an increase of $ 63,487$34,732 or 5%4% from revenue of $1,283,086$843,235 for the ninesix months ended SeptemberJune 30, 2018.2019.  The increase in revenue was primarily due to the growinghigher demand for MOJO branded products. Cases sold for MOJO products in the first and second quarters of 2020 increased by 3,856 compared to a lesser extent private label products.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 ninesix months ended SeptemberJune 30, 2020, cost of revenue was $446,462 or 51% of revenue. For the six months ended June 30, 2019, cost of revenue was $692,219$430,113 or 51% of revenue. For the nine months ended September 30, 2018,The cost of revenue perception was $696,604 or 54%the same for both periods.

Operating Expenses

For the six months ended June 30, 2020, operating expenses were $483,633, a decrease of revenue. The 3 percentage points$105,072 from operating expenses of $588,705 for the six months ended June 30, 2019.

This decrease in operating expenses was primarily due tocomprised of lower purchase price of goodsselling expenses and lower compensation expenses. Selling expenses were $220,078 for the six months ended June 30, 2020 compared to $254,230 for the six months ended June 30, 2019. This $34,152 decrease is attributable to the lower freight in costs.and delivery expenses and storage fees.

Operating Expenses

For the nine months ended September 30, 2019, operating expensesThere were $864,562 an increase of $135 from operating expenses of $864,427 for the nine months ended September 30, 2018.

This increase in operating expenses was comprised of higher selling expenses offset by lower compensation expensesno trade show fees recorded and consulting fees. Selling expenses were $350,061 for the nine months ended September 30, 2019 compared to $289,015 for the nine months ended September 30, 2018. This $61,045 increase is attributable to the Amazon sellingmarketing fees coupled with an increase in freight and delivery expenses. Total compensation expense decreased by $10,308$8,473 from the same period last year, while consulting feesyear. Compensation expense also decreased by $50,683 due$60,291 compared to termination of consulting agreements in 2018.the same period last year.

Three Months Ended SeptemberJune 30, 20192020 and 20182019

Revenue

For the three months ended SeptemberJune 30, 2019,2020, the Company reported revenue of $503,338,$437,878, an increase of $13,560$ 3,140 or 3%1% from revenue of $489,778$434,738 for the three months ended SeptemberJune 30, 2018.2019.  The increase in revenue was due to lower deductions from revenue during 2020 compared to the new private label orders that MOJO fulfilled during the quarter.same period last year.

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 SeptemberJune 30, 2019,2020, cost of revenue was $262,106$209,412 or 52%48% of revenue. For the three months ended SeptemberJune 30, 2018,2019, cost of revenue was $254,251$229,480 or 52%53% of revenue. The Company5 percentage point decrease was ableprimarily due to maintain the same cost ratio from the same period last year.lower costs of packaging material and lower freight in costs.

Operating Expenses

For the three months ended SeptemberJune 30, 2019,2020, operating expenses were $275,857$223,981 a decrease of $98,865$78,713 from operating expenses of $374,722$302,694 for the three months ended SeptemberJune 30, 2018.2019.

TheThis decrease in operating expenses was comprised of lower selling expenses as well as lower compensation costs and consulting expenses. Selling expenses were $108,331$105,132 for the three months ended SeptemberJune 30, 20192020 compared to $122,850$121,435 for the ninethree months ended SeptemberJune 30, 2018.2019. This $14,519$16,303 decrease is attributable to the lower storage fees and warehouse processing fees offset by an increase in freight and delivery expenses.expenses and reduced storage and warehousing fees. Compensation expensesexpense also decreased by $6,747$60,289 from $126,827 in 2018 while consulting fees decreased by $50,683$137,470 for the same period last year.quarter ended June 30, 2020.

Liquidity and Capital Resources

Liquidity

As of SeptemberJune 30, 2019,2020, the Company had working capital of $180,930.$213,590. Net cash used forin operating activities was $17,934$71,359 for the ninesix months ended SeptemberJune 30, 2019, a decrease2020, an increase of $22,028$61,041 compared to $10,317 net cash derived from operating activitiesused for the ninesix months ended SeptemberJune 30, 2018.2019. Net cash provided by financing activities was $30,258 for the six months ended June 30, 2020 compared to net cash used in financing activities wasof $750 for the ninesix months ended SeptemberJune 30, 2019 and $14,636 for the nine months ended September 30, 2018.2019.

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 SeptemberJune 30, 2019.2020  

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 ninesix months ended SeptemberJune 30, 20192020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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

AsThe global coronavirus (COVID-19) pandemic has caused disruptions in supply chains, affecting production and sales across a smaller reporting company, as defined in Rule 12b-2range of industries. While this disruption is currently expected to be temporary, there is considerable uncertainty around the duration.

The extent of the Exchange Act, weimpact of COVID-19 on our operational and financial performance will depend on the effect on our customers and vendors – all of which are not required to provide the information required byuncertain and cannot be predicted. The related financial impact cannot be reasonably estimated at this Item.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.

ITEM 5.  OTHER INFORMATION

None. 

ITEM 6.  EXHIBITS

*  Filed herewith.

† Management compensatory plan, contract or arrangement.

SIGNATURESSIGNATURES

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.