EQUATOR Beverage Co 10-Q

ITEM 1. FINANCIAL STATEMENTS (Unaudited) EQUATOR BEVERAGE COMPANY Condensed Balance Sheets (Unaudited) As of June 30, 2025 and December 31, 2024 June 30, 2025 December 31, 2024 Assets Current Assets Cash and cash equivalents $ 43,708 $ 22,799 Accounts receivable, net 353,570 196,294 Inventory 869,474 219,388 Supplier deposits 54,982 93,930 Prepaid expenses 62,154 43,751 Total Current Assets $ 1,383,888 $ 576,162 Total Assets $ 1,383,888 $ 576,162 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable and accrued expenses $ 410,657 $ 124,861 Related party loans 459,000 115,000 Total Current Liabilities 869,657 239,861 Commitments and Contingencies – Refer to Note 3 Stockholders’ Equity Common stock, 20,000,000 shares authorized at $ 0.001 par value, 18,070,316 and 18,218,634 shares issued and outstanding, at June 30, 2025 and December 31, 2024, respectively 18,070 18,219 Additional paid-in capital 24,869,453 24,928,464 Accumulated deficit ( 24,373,292 ) ( 24,610,382 ) Total Stockholders’ Equity 514,231 336,301 Total Liabilities and Stockholders’ Equity $ 1,383,888 $ 576,162 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 Six Months Ended June 30, 2025 and 2024 2025 2024 Revenue $ 1,920,325 $ 1,485,975 Cost of Revenue 1,126,694 872,908 Gross Profit 793,631 613,067 Operating Expenses Selling, general and administrative 540,223 765,608 Total Operating Expenses 540,223 765,608 Income / (Loss) from Operations 253,408 ( 152,541 ) Interest Expense ( 11,973 ) ( 9,261 ) Income / (Loss) Before Provision for Income Taxes $ 241,435 $ ( 161,802 ) Provision for Income Taxes ( 72,430 ) ( 43,324 ) Benefit from Deferred Tax Asset 68,085 41,968 Net Income / (Loss) $ 237,090 $ ( 163,158 ) Net Income / (Loss) Per Common Share, Basic and Diluted $ 0.01 $ ( 0.01 ) Weighted Average Number of Common Shares Outstanding, Basic and Diluted 18,204,301 17,240,104 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 Three Months Ended June 30, 2025 and 2024 2025 2024 Revenue $ 1,102,577 $ 845,321 Cost of Revenue 629,690 502,838 Gross Profit 472,887 342,483 Operating Expenses Selling, general and administrative 309,045 396,865 Total Operating Expenses 309,045 396,865 Income / (Loss) from Operations 163,842 ( 54,382 ) Interest Expense ( 7,981 ) ( 5,041 ) Income / (Loss) Before Provision for Income Taxes $ 155,861 $ ( 59,423 ) Provision for Income Taxes ( 46,759 ) ( 32,642 ) Benefit from Deferred Tax Asset 43,954 31,927 Net Income / (Loss) $ 153,056 $ ( 60,138 ) Net Income / (Loss) Per Common Share, Basic and Diluted $ 0.01 $ 0.00 Weighted Average Number of Common Shares Outstanding, Basic and Diluted 18,190,125 17,350,280 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 Six Months Ended June 30, 2025 and 2024 2025 2024 Cash Flows from Operating Activities: Net income / (loss) $ 237,090 $ ( 163,158 ) 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 840 237,780 Changes in Assets and Liabilities: (Increase) / decrease in accounts receivable ( 157,276 ) ( 102,128 ) (Increase) / decrease in inventory ( 650,086 ) ( 220,594 ) (Increase) / decrease in supplier deposits 38,948 ( 25,670 ) (Increase) / decrease in prepaid expenses ( 18,403 ) ( 7,950 ) (Increase) / decrease in accounts payable and accrued expenses 285,796 121,472 Net Cash Provided by / (Used in) Operating Activities ( 263,091 ) ( 160,248 ) Net Cash Provided by / (Used in) Financing Activities: Shares repurchased for cancellation ( 60,000 ) - Proceeds from related party loan 384,000 264,000 Repayments of related party loan ( 40,000 ) ( 178,000 ) Net Cash Provided by / (Used in) Financing Activities 284,000 86,000 Net Increase / (Decrease) in Cash and Cash Equivalents 20,909 ( 74,248 ) Cash and Cash Equivalents at Beginning of Period 22,799 87,339 Cash and Cash Equivalents at End of Periods $ 43,708 $ 13,091 Supplemental Disclosure of Cash Flow Information: Cash Paid for Interest $ 11,973 $ 9,261 Summary of non-cash investing and financing activity: During the six-month period ended June 30, 2025 the Company issued a total of 1,682 restricted and non-trading shares with an implied value of $840 to an unrelated party for marketing services. During the six-month period ended June 30, 2024 the Company issued a total of 477,000 restricted and non-trading shares with an implied value of $237,780 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 Six Months Ended June 30, 2025 and 2024 Common Stock Additional Paid-In Accumulated Shares Amount Capital Deficit Total Balance, December 31, 2024 18,218,634 $ 18,219 $ 24,928,464 $ ( 24,610,382 ) $ 336,301 Restricted, Non-Trading Stock issued to Directors, employees and unrelated parties 1,682 1 - 840 Stock Retired to Treasury - - - - - Net Loss ( 84,034 ) ( 84,034 ) Balance, March 31, 2025 18,220,316 $ 18,220 $ 24,929,303 $ ( 24,526,348 ) $ 421,175 Restricted, Non-Trading Stock issued to Directors, employees and unrelated parties - - - - Stock Retired to Treasury ( 150,000 ) ( 150 ) ( 59,850 ) ( 60,000 ) Net Income 153,056 153,056 Balance, June 30, 2025 18,070,316 $ 18,070 $ 24,869,453 $ ( 24,373,292 ) $ 514,231 Common Stock Additional 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, employees and unrelated parties 201,000 201 122,409 122,610 Stock Retired to Treasury - - - - - 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, employees and unrelated parties 276,000 276 114,894 115,170 Stock Retired to Treasury - - - - - Net Loss ( 60,138 ) ( 60,138 ) Balance, June 30, 2024 17,410,346 $ 17,411 $ 24,300,479 $ ( 23,972,396 ) $ 345,494 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) June 30, 2025 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. 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, EQUATOR Sparkling Coconut Water + Tequila Citrus, EQUATOR Sparkling Coconut Water + Tequila Blood Orange, EQUATOR Sparkling Coconut Water + Tequila Pink Grapefruit, and EQUATOR Sparkling Coconut Water + Tequila Watermelon. 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 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 June 30, 2025, 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 six months ended June 30, 2025 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, 2024 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 June 30, 2025, and December 31, 2024, 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 June 30, 2025 and December 31, 2024 was zero . F-7 Table of Contents Inventory Inventory, consisting solely of finished goods, are stated at average 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 as of June 30, 2025 or 2024. 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 June 30, 2025 and 2024. As of June 30, 2025, and June 30, 2024, 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 as of June 30, 2025 and 2024: 2025 2024 Net Operating Loss Carryforward, January 1 $ 3,549,884 $ 3,616,513 Taxable Income, January 1 to June 30 241,435 75,978 Net Operating Loss Carryforward, June 30 $ 3,308,449 $ 3,540,535 Federal Deferred Tax Asset, January 1 745,476 759,468 Federal Tax Expense as of June 30 (21% Tax Rate) 50,701 15,955 Federal Deferred Tax Asset, June 30 $ 694,775 743,512 State of New Jersey Deferred Tax Asset, January 1 318,681 324,678 State of New Jersey Tax Expense as of June 30 (9% Tax Rate) 21,729 6,838 State of New Jersey Deferred Tax Asset, June 30 $ 296,952 $ 317,840 Total Deferred Tax Asset, June 30 $ 991,727 $ 1,061,352 Total Tax Expense $ 72,430 $ 22,793 2 025 2 024 Provision for Income Taxes $ ( 72,430 ) $ ( 43,324 ) Benefit from Deferred Tax Asset 68,085 41,968 Net Provision for Income Taxes -State of New Jersey* $ 4,345 $ 1,356 *The State of New Jersey NOL deduction is limited to 80% of taxable income. F-8 Table of Contents The table below shows the reconciliation of Net Income / (Loss) per Books to Taxable Income as of June 30: 2025 2024 Net Income/(Loss) before Taxes $ 241,435 $ ( 161,802 ) Stock Awards - 237,780 Taxable Net Income $ 241,435 $ 75,978 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 (“the Agreement”) effective January 1, 2025 Mr. Simpson is paid a salary of $ 9,500 per month until June 30, 2025. Effective July 1, 2025 Mr. Simpson will be paid a salary of $10,833 per month. 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 66 months. As of June 30, 2025, the potential liability to EQUATOR Beverage Company was $ 714,978 . At December 30, 2024, the potential liability to EQUATOR Beverage Company was $ 570,000 . 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 Restricted Stock Issuances The table below summarizes the restricted, non-trading stock awards during the first six months of 2025 and 2024: Restricted, Non-trading Stock Awards Officers and Directors January 1 to June 30 2025 2024 Price Shares Amount Price Shares Amount Q1 Q1 Glenn Simpson $ - - $ - Glenn Simpson $ 0.70 201,000 $ 140,700 Diane Cudia $ - - - Diane Cudia $ 0.70 37,500 26,250 Total - $ - Total 238,500 $ 166,950 Q2 Q2 Glenn Simpson $ - - $ - Glenn Simpson $ 0.70 201,000 $ 140,700 Diane Cudia $ - - - Diane Cudia $ 0.70 37,500 26,250 Total - $ - Total 238,500 $ 166,950 Stock Transactions During the six months ended June 30, 2025, the Company issued 1,682 shares of its restricted, non-trading common shares for marketing services. During the period ended June 30, 2025, the Company purchased 150,000 shares of its common stock from shareholders at a cost of $ 60,000 . During the period ended June 30, 2024, the Company did not purchase any shares of its common stock from shareholders. 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 9.25 % 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 June 30, 2025, the loan payable to Mr. Simpson was $ 459,000 . As of December 31, 2024, the loan payable to Mr. Simpson was $ 115,000 . NOTE 6 – SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A) Selling, General, and Administrative expenses ("SG&A") consist of all costs related to the general operation of the company, excluding direct production costs. SG&A includes costs such as sales and marketing expenses including e-commerce fulfillment fees, salaries, office expenses, shipping and handling costs, and other overhead costs necessary to support the company's core business activities. The table below presents the material components of Selling, General and Administrative (SG&A) expenses as a percentage of total expenses for the quarters ended June 30, 2025 and 2024: June 30, 2025 June 30, 2024 E-commerce Fulfillment Fees 42 % 29 % Freight and Delivery Expenses 12 % 7 % Compensation Expenses 22 % 16 % F-10 Table of Contents