EQUATOR Beverage Co 10-Q/A

ITEM 1. FINANCIAL STATEMENTS (Unaudited) EQUATOR BEVERAGE COMPANY Condensed Balance Sheets (Unaudited) As of September 30, 2024 and December 31, 2023 September 30, 2024 (As Restated) December 31, 2023 Assets Current Assets Cash and cash equivalents $ 31,478 $ 87,339 Accounts receivable, net 298,436 135,061 Inventory 442,722 270,788 Supplier deposits 26,756 52,655 Prepaid expenses 39,050 35,650 Total Current Assets $ 838,442 $ 581,493 Total Assets $ 838,442 $ 581,493 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable and accrued expenses $ 168,321 $ 80,621 Related party loans 310,000 230,000 Total Current Liabilities 478,321 310,621 Commitments and Contingencies – Refer to Note 3 Stockholders’ Equity Common stock, 20,000,000 shares authorized at $ 0.001 par value, 17,948,846 and 16,933,346 shares issued and outstanding, at September 30, 2024 and December 31, 2023, respectively 17,949 16,934 Additional paid-in capital 24,743,011 24,063,176 Accumulated deficit ( 24,400,839 ) ( 23,809,238 ) Total Stockholders’ Equity 360,121 270,872 Total Liabilities and Stockholders’ Equity $ 838,442 $ 581,493 The accompanying notes are an integral part of these condensed financial statements. F-1 Table of Contents EQUATOR BEVERAGE COMPANY Condensed Statements of Operations (Unaudited) For the Three Months Ended September 30, 2024 and 2023 2024 (As Restated) 2023 Revenue $ 1,061,645 $ 675,947 Cost of Revenue 704,370 367,262 Gross Profit 357,275 308,685 Operating Expenses Selling, general and administrative 778,786 358,639 Total Operating Expenses 778,786 358,639 Income / (Loss) from Operations Interest Expense ( 5,655 ) ( 3,957 ) Income / (Loss) Before Provision for Income Taxes $ ( 427,166 ) $ ( 53,911 ) Provision for Income Taxes ( 1,277 ) - Net Income / (Loss) $ ( 428,443 ) $ ( 53,911 ) Net Income / (Loss) Per Common Share, Basic and Diluted $ ( 0.02 ) $ 0.00 Weighted Average Number of Common Shares Outstanding, Basic and Diluted 17,948,846 17,274,826 The accompanying notes are an integral part of these condensed financial statements. F-2 Table of Contents EQUATOR BEVERAGE COMPANY Condensed Statements of Operations (Unaudited) For the Nine Months Ended September 30, 2024 and 2023 2024 (As Restated) 2023 Revenue $ 2,547,620 $ 1,780,059 Cost of Revenue 1,577,278 988,441 Gross Profit 970,342 791,618 Operating Expenses Selling, general and administrative 1,544,394 812,222 Total Operating Expenses 1,544,394 812,222 Income / (Loss) from Operations Interest Expense ( 14,916 ) ( 9,992 ) Income / (Loss) Before Provision for Income Taxes $ ( 588,968 ) $ ( 30,596 ) Provision for Income Taxes ( 2,633 ) - Net Income / (Loss) $ ( 591,601 ) $ ( 30,596 ) Net Income / (Loss) Per Common Share, Basic and Diluted $ ( 0.03 ) $ 0.00 Weighted Average Number of Common Shares Outstanding, Basic and Diluted 17,948,846 15,732,060 The accompanying notes are an integral part of these condensed financial statements. F-3 Table of Contents EQUATOR BEVERAGE COMPANY Condensed Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2024 and 2023 2024 (As Restated) 2023 Cash Flows from Operating Activities: Net income / (loss) $ ( 591,601 ) $ ( 30,596 ) Adjustments to Reconcile Net Income / (Loss) to Net Cash Provided by / (Used In) Operating Activities: Restricted, non-trading common stock issued to directors and employees 680,850 158,567 Changes in Assets and Liabilities: (Increase) / decrease in accounts receivable ( 163,375 ) ( 153,610 ) (Increase) / decrease in inventory ( 171,934 ) 34,946 (Increase) / decrease in supplier deposits 25,899 21,172 (Increase) / decrease in prepaid expenses ( 3,400 ) ( 16,576 ) (Increase) / decrease in accounts payable and accrued expenses 87,700 ( 1,309 ) Net Cash Provided by / (Used in) Operating Activities ( 135,861 ) 12,594 Net Cash Provided by / (Used in) Financing Activities: Proceeds from related party loan 344,000 170,000 Repayments of related party loan ( 264,000 ) ( 155,000 ) Shares purchased for cancellation - ( 38,002 ) Net Cash Provided by / (Used in) Financing Activities 80,000 ( 23,002 ) Net Increase / (Decrease) in Cash and Cash Equivalents ( 55,861 ) ( 10,408 ) Cash and Cash Equivalents at Beginning of Period 87,339 10,738 Cash and Cash Equivalents at End of Periods $ 31,478 $ 330 Supplemental Disclosure of Cash Flow Information: Cash Paid for Interest $ 14,916 $ 9,992 Summary of non-cash investing and financing activity: During the nine-month period ended September 30, 2024 the Company issued a total of 1,015,500 restricted and non-trading shares with an implied value of $680,850 to directors and officers as a result of contractual stock awards. During the three-month period ended September 30, 2023 the Company issued a total of 790,500 restricted and non-trading shares with an implied value of $158,567 to directors and officers as a result of contractual stock awards. The accompanying notes are an integral part of these condensed financial statements. F-4 Table of Contents EQUATOR BEVERAGE COMPANY Condensed Statements of Changes in Stockholders’ Equity (Unaudited) For the Nine Months Ended September 30, 2024 and 2023 Additional Common Stock Paid-In Accumulated Shares Amount Capital Deficit Total Balance, December 31, 2023 16,933,346 $ 16,934 $ 24,063,176 $ ( 23,809,238 ) $ 270,872 Restricted, Non-Trading Stock issued to Directors and employees 201,000 201 122,409 122,610 Net Loss ( 103,020 ) ( 103,020 ) Balance, March 31, 2024 17,134,346 $ 17,135 $ 24,185,585 $ ( 23,912,258 ) $ 290,462 Restricted, Non-Trading Stock issued to Directors and employees 276,000 276 114,894 115,170 Net Loss ( 60,138 ) ( 60,138 ) Balance, June 30, 2024 17,410,346 $ 17,411 $ 24,300,479 $ ( 23,972,396 ) $ 345,494 Restricted, Non-Trading Stock issued to Directors and employees 538,500 539 442,532 443,070 Net Loss ( 428,443 ) ( 428,443 ) Balance, September 30, 2024 17,948,846 $ 17,950 $ 24,743,011 $ ( 24,400,839 ) $ 360,121 Additional Common Stock Paid-In Accumulated Shares Amount Capital Deficit Total Balance, December 31, 2022 16,230,615 $ 16,231 $ 23,758,917 $ ( 23,629,281 ) $ 145,867 Restricted, Non-Trading Stock issued to Directors and employees 238,500 239 13,753 13,992 Net Income 4,485 4,485 Balance, March 31, 2023 16,469,115 $ 16,470 $ 23,772,670 $ ( 23,624,796 ) $ 164,344 Restricted, Non-Trading Stock issued to Directors and employees 238,500 238 25,996 - 26,235 Stock Retired to Treasury ( 380,019 ) ( 380 ) ( 37,622 ) - ( 38,002 ) Net Income - - - 18,830 18,830 Balance, June 30, 2023 16,327,596 $ 16,328 $ 23,761,045 $ ( 23,605,966 ) $ 171,407 Restricted, Non-Trading Stock issued to Directors and employees 313,500 313 118,027 - 118,340 Net Income - - - ( 53,911 ) ( 53,911 ) Balance, September 30, 2023 16,641,096 $ 16,641 $ 23,879,072 $ ( 23,659,877 ) $ 235,836 The accompanying notes are an integral part of these condensed financial statements. F-5 Table of Contents EQUATOR BEVERAGE COMPANY Notes to Condensed Financial Statements (Unaudited) September 30, 2024 NOTE 1 – BUSINESS Overview EQUATOR Beverage Company, headquartered in Jersey City, NJ, is a Delaware corporation that specializes in developing, producing, distributing, and marketing new beverage products. Our beverages have been certified Non-GMO Project Verified and USDA Organic, and we offer both nonalcoholic and ready-to-drink alcoholic options. In addition, we have a line of sparkling energy beverages. Our beverages can be found in North America, the Caribbean, and Bermuda. We are committed to sustainability and use 100% recyclable, eco-friendly packaging that has a minimal impact on the environment. Furthermore, our products are plant-based, renewable, and eco-friendly. Coconut water is nature's super hydration drink for skin and body. In each 11 oz serving, there are five essential electrolytes totaling 1043 mg more than other sports drinks. It is a fast rehydration recovery drink which performs faster than water. Coconut water has natural nutrients for skin and hair and vitamins B & C natural - not added. Coconut water is plant based and renewable; great for vegan, kosher, paleo keto and low carb diets. All this comes with a fresh crisp coconut taste. There are no preservatives in this coconut water and it is packaged in an eco-friendly container. CURRENT OPERATIONS Sales and Distribution The Company’s main product is MOJO Coconut Water. In addition to Coconut Water, the Company produces Coconut Water + Pineapple Juice, Coconut Water + Mango Juice, Organic Coconut Water, Sparkling Coconut Water Citrus, Sparkling Coconut Water Blood Orange, Sparkling Coconut Water Pink Grapefruit, Energy Sparkling Citrus, Energy Sparkling Blood Orange, Energy Sparkling Pink Grapefruit, Cubano Blue Agave Tequila Organic Sparkling Coconut Water Citrus and Cubano Blue Agave Tequila Organic Sparkling Coconut Water Blood Orange. 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 broker network, and new products and packaging. 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. Also, our products are plant-based, Eco-friendly and renewable. Production The Company has multiple sources for its production. The Company’s fruit sources are of high quality. The fruit is part of the overall taste and quality of our products. Currently, the Company has multiple production facilities that it could source products from, each of the facilities could supply our forecasted demand. Competition The beverage industry is competitive. Competitors in our market compete for brand recognition, ingredient sourcing, product shelf space, and e-commerce page rankings. Our competitors have similar distribution channels and retailers to deliver and sell their products. Government Regulation Within the United States, beverages are governed by the U.S. Food and Drug Administration (the “FDA”). As such, it is necessary for the Company to establish, maintain and make available for inspection records as well as to develop labels (including nutrition information) that meet FDA requirements. The Company’s production facilities are subject to FDA regulation. F-6 Table of Contents Employees As of September 30, 2024, the Company had two employees. The Company also uses the services of contractors, consultants and other third-parties. The Company uses third party bottlers to produce its products which is standard industry practice for every beverage company. We also use trucking and logistics companies to transport and store our products. We use brokers to sell our product and other professionals for accounting, legal and marketing support, to do all these functions internally would take hundreds of employees and is not cost effective. CORPORATE HISTORY AND DEVELOPMENT The Company began producing MOJO branded products in 2015. EQUATOR Beverage Company is headquartered in Jersey City, New Jersey and our internet site is www.EquatorBeverage.com. EQUATOR’s stock is traded on the OTCQB under the symbol MOJO. 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 nine months ended September 30, 2024 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, 2023 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 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. Cash and Cash Equivalents Cash equivalents include investment instruments and time deposits purchased with a maturity of three months or less. As of September 30, 2024, and December 31, 2023, 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 September 30, 2024 and December 31, 2023 was zero. F-7 Table of Contents Inventory Inventory, 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 were no such adjustments in 2024 or 2023. 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. Shipping and Handling Costs Shipping and Handling Costs incurred to move finished goods from our distribution center to customer locations are included in the line Selling, General and Administrative Expenses in our Statements of Operations. Net Income/(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 income/(loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted average number of shares of common stock and common stock equivalents outstanding during the periods. 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 did not have a deferred tax liability at September 30, 2024 and 2023. As of September 30, 2024, and September 30, 2023, the Company had no accrued interest or penalties. The Company had no Federal or State tax examinations in the past nor does it have any at the current time. The table below shows the details of the Net Operating Loss Carryforward and Deferred Tax Assets for 2024 and 2023: 2024 2023 Net Operating Loss Carryforward, January 1 $ 3,616,513 $ 3,796,573 Taxable Income, January 1 to September 30 89,249 145,584 Net Operating Loss Carryforward, September 30 $ 3,527,264 $ 3,650,989 Federal Deferred Tax Asset, January 1 759,468 797,280 Federal Tax Expense as of September 30 (21% Tax Rate) ( 18,742 ) ( 30,573 ) Federal Deferred Tax Asset, September 30 $ 740,726 $ 776,707 State of New Jersey Deferred Tax Asset, January 1 324,678 341,692 State of New Jersey Tax Expense as of September 30 (9% Tax Rate) ( 8,032 ) ( 13,103 ) State of New Jersey Deferred Tax Asset, September 30 $ 316,646 $ 328,589 Total Deferred Tax Asset, September 30 $ 1,057,372 $ 1,105,296 Total Tax Expense $ 26,775 43,676 The table below shows the reconciliation of Net Income / (Loss) per Books to Taxable Income: 2024 2023 Net Income/(Loss) before Taxes $ ( 591,601 ) $ ( 30,596 ) Stock Awards 680,850 176,180 Taxable Net Income $ 89,249 $ 145,584 F-8 Table of Contents 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. NOTE 3 – COMMITMENTS AND CONTINGENCIES Employment Agreement Pursuant to Mr. Simpson’s employment agreement dated January 1, 2024, Mr. Simpson is paid a salary of $ 9,000 per month in cash from the months of January to June 2024 and $ 9,500 per month in cash from the months of July to December 2024. The Company is obligated to grant Mr. Simpson 67,000 shares of restricted, non-trading, common stock per month. Should the Company meet its revenue targets, the Company is obligated to grant Mr. Simpson 200,000 shares of restricted, non-trading common stock per month, and a cash bonus of $ 44,400 . Pursuant to the Agreement, should Mr. Simpson’s employment be terminated without cause, the Company is obligated to pay Mr. Simpson all amounts from the contract immediately for the remaining term of 63 months. At September 30, 2024, the potential liability to EQUATOR Beverage Company was $ 598,500 and 4,221,000 shares of non-trading, restricted Common Stock. NOTE 4 – STOCKHOLDERS’ EQUITY The Company has authorized 20,000,000 shares of Common Stock having a par value of $ 0.001 . F-9 Table of Contents Table of Contents Restricted Stock Issuances The table below summarizes the restricted, non-trading stock awards during the first nine months of 2024 and 2023: Restricted, Non-trading Stock Awards Officers and Directors January 1 to September 30 2024 2023 Price Shares Amount Price Shares Amount Q1 Q1 Glenn Simpson $ 0.70 201,000 $ 140,700 Glenn Simpson $ 0.06 201,000 $ 11,792 - $ - - - Jeffrey Devlin $ 0.06 37,500 2,200 Diane Cudia $ 0.70 37,500 $ 26,250 Diane Cudia $ - - - Total 238,500 $ 166,950 Total 238,500 $ 13,992 Q2 Q2 Glenn Simpson $ 0.70 201,000 $ 140,700 Glenn Simpson $ 0.10 201,000 $ 22,110 - $ - - $ - Jeffrey Devlin $ 0.10 37,500 $ 4,125 Diane Cudia $ 0.70 37,500 $ 26,250 Diane Cudia $ 0.08 75,000 $ 6,325 Total 238,500 $ 166,950 Total 313,500 $ 32,560 Q3 Q3 Glenn Simpson $ 0.65 401,000 $ 260,700 Glenn Simpson $ 0.10 201,000 $ 94,403 - $ - - $ - Jeffrey Devlin $ 0.47 37,500 $ 17,613 Diane Cudia $ 0.63 137,500 $ 86,250 Diane Cudia $ - - $ - Total - 538,500 346,950 Total 238,500 $ 112,016 Grand Total 1,015,500 $ 680,850 Total 790,500 $ 158,568 Stock Purchased for Cancellation During the nine months ended September 30, 2024, the Company did not purchase any shares of its Common Stock from shareholders. During the year ended December 31, 2023, the Company purchased 401,269 shares of its Common Stock from shareholders at a cost of $ 51,814 . NOTE 5 – RELATED PARTY TRANSACTIONS Mr. Simpson lent funds to the Company for a revolving loan with a principal amount up to $ 300,000 . The loan bears a 6 % simple interest per year. The principal and any accrued interest are due and payable on demand, and the Company has the right to pay back the loan in full or make payments without penalty. As of September 30, 2024, the loan payable to Mr. Simpson was $ 310,000 . As of September 30, 2023, the loan payable to Mr. Simpson was $ 290,000 . F-10 Table of Contents