EQUATOR Beverage Co 10-Q

ITEM 1. FINANCIAL STATEMENTS (Unaudited) EQUATOR BEVERAGE COMPANY Condensed Balance Sheets (Unaudited) As of September 30, 2025 and December 31, 2024 September 30, 2025 December 31, 2024 Assets Current Assets Cash and cash equivalents $ 11,248 $ 22,799 Accounts receivable, net 283,153 196,294 Inventory 650,957 219,388 Supplier deposits 24,946 93,930 Prepaid expenses 63,796 43,751 Total Current Assets $ 1,034,100 $ 576,162 Total Assets $ 1,034,100 $ 576,162 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable and accrued expenses $ 144,792 $ 124,861 Related party loans 399,000 115,000 Total Current Liabilities 543,792 239,861 Commitments and Contingencies – Refer to Note 3 Stockholders’ Equity Common stock, 10,000,000 shares authorized at $ 0.001 par value, 9,086,158 and 9,109,317 shares issued and outstanding, at September 30, 2025 and December 31, 2024, respectively 9,086 9,109 Additional paid-in capital 24,915,517 24,937,574 Accumulated deficit ( 24,434,295 ) ( 24,610,382 ) Total Stockholders’ Equity 490,308 336,301 Total Liabilities and Stockholders’ Equity $ 1,034,100 $ 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 Three Months Ended September 30, 2025 and 2024 2025 2024 Revenue $ 1,184,589 $ 1,061,645 Cost of Revenue 607,191 704,370 Gross Profit 577,398 357,275 Operating Expenses Selling, general and administrative 625,780 778,786 Total Operating Expenses 625,780 778,786 Income / (Loss) from Operations ( 48,382 ) ( 421,511 ) Interest Expense ( 9,760 ) ( 5,655 ) Income / (Loss) Before Provision for Income Taxes $ ( 58,142 ) $ ( 427,166 ) Provision for Income Taxes – Refer to Note 2 ( 47,681 ) ( 1,277 ) Benefit from Deferred Tax Assets 44,820 - Net Income / (Loss) $ ( 61,003 ) $ ( 428,443 ) Net Income / (Loss) Per Common Share, Basic and Diluted $ 0.00 $ ( 0.02 ) Weighted Average Number of Common Shares Outstanding, Basic and Diluted 9,079,645 8,974,423 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, 2025 and 2024 2025 2024 Revenue $ 3,104,914 $ 2,547,620 Cost of Revenue 1,733,885 1,577,278 Gross Profit 1,371,029 970,342 Operating Expenses Selling, general and administrative 1,166,003 1,544,394 Total Operating Expenses 1,166,003 1,544,394 Income / (Loss) from Operations 205,026 ( 574,052 ) Interest Expense ( 21,732 ) ( 14,916 ) Income / (Loss) Before Provision for Income Taxes $ 183,294 $ ( 588,968 ) Provision for Income Taxes – Refer to Note 2 ( 120,112 ) ( 2,633 ) Benefit from Deferred Tax Assets 112,905 - Net Income / (Loss) $ 176,087 $ ( 591,601 ) Net Income / (Loss) Per Common Share, Basic and Diluted $ 0.01 $ ( 0.03 ) Weighted Average Number of Common Shares Outstanding, Basic and Diluted 9,099,318 8,974,423 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, 2025 and 2024 2025 2024 Cash Flows from Operating Activities: Net income / (loss) $ 176,087 $ ( 591,601 ) 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 217,920 680,850 Changes in Assets and Liabilities: (Increase) / decrease in accounts receivable ( 86,859 ) ( 163,375 ) (Increase) / decrease in inventory ( 431,569 ) ( 171,934 ) (Increase) / decrease in supplier deposits 68,984 25,899 (Increase) / decrease in prepaid expenses ( 20,045 ) ( 3,400 ) (Increase) / decrease in accounts payable and accrued expenses 19,931 87,700 Net Cash Provided by / (Used in) Operating Activities ( 55,551 ) ( 135,861 ) Net Cash Provided by / (Used in) Financing Activities: Shares repurchased for cancellation ( 240,000 ) - Proceeds from related party loan 385,000 344,000 Repayments of related party loan ( 101,000 ) ( 264,000 ) Net Cash Provided by / (Used in) Financing Activities 44,000 80,000 Net Increase / (Decrease) in Cash and Cash Equivalents ( 11,551 ) ( 55,861 ) Cash and Cash Equivalents at Beginning of Period 22,799 87,339 Cash and Cash Equivalents at End of Periods $ 11,248 $ 31,478 Supplemental Disclosure of Cash Flow Information: Cash Paid for Interest $ 21,732 $ 14,916 Summary of non-cash investing and financing activity: During the nine-month period ended September 30, 2025 the Company issued a total of 201,841 restricted and non-trading shares with an implied value of $217,920. The Company issued 841 restricted and non-trading shares to an unrelated party for marketing services and 201,000 shares of restricted, non-trading shares to directors and officers as a result of contractual stock awards. During the nine-month period ended September 30, 2024 the Company issued a total of 507,750 restricted and non-trading shares with an implied value of $680,850 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, 2025 and 2024 Additional Common Stock Paid-In Accumulated Shares Amount Capital Deficit Total Balance, December 31, 2024 9,109,317 $ 9,110 $ 24,937,573 $ ( 24,610,382 ) $ 336,301 Restricted, Non-Trading Stock issued to Directors and employees 841 1 839 - 840 Net Income / (Loss) - - - 84,034 84,034 Balance, March 31, 2025 9,110,158 $ 9,111 $ 24,938,412 $ ( 24,526,348 ) $ 421,175 Restricted, Non-Trading Stock issued to Directors and employees - - - - - Stock repurchased and returned to Treasury ( 75,000 ) ( 75 ) ( 59,925 ) - ( 60,000 ) Net Income / (Loss) - - - 153,056 153,056 Balance, June 30, 2025 9,035,158 $ 9,036 $ 24,878,487 $ ( 24,373,292 ) $ 514,231 Restricted, Non-Trading Stock issued to Directors and employees 201,000 201 216,879 - 217,080 Stock repurchased and returned to Treasury ( 150,000 ) ( 150 ) ( 179,850 ) - ( 180,000 ) Net Income / (Loss) - - - ( 61,003 ) ( 61,003 ) Balance, September 30, 2025 9,086,158 $ 9,087 $ 24,915,516 $ ( 24,434,295 ) $ 490,308 Additional Common Stock Paid-In Accumulated Shares Amount Capital Deficit Total Balance, December 31, 2023 8,466,673 $ 8,467 $ 24,064,823 $ ( 23,809,238 ) $ 270,872 Restricted, Non-Trading Stock issued to Directors and employees 100,500 101 122,509 122,610 Net Loss ( 103,020 ) ( 103,020 ) Balance, March 31, 2024 8,567,173 $ 8,568 $ 24,186,332 $ ( 23,912,258 ) $ 290,462 Restricted, Non-Trading Stock issued to Directors and employees 138,000 138 115,032 115,170 Net Loss ( 60,138 ) ( 60,138 ) Balance, June 30, 2024 8,705,173 $ 8,706 $ 24,301,364 $ ( 23,972,396 ) $ 345,494 Restricted, Non-Trading Stock issued to Directors and employees 269,250 270 442,801 443,071 Net Loss ( 428,443 ) ( 428,443 ) Balance, September 30, 2024 8,974,423 $ 8,976 $ 24,744,165 $ ( 24,400,839 ) $ 360,122 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, 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. 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, Energy Sparkling Blood Orange, Energy Sparkling Pink Grapefruit. 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 September 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 nine months ended September 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 September 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 September 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 September 30, 2025 or 2024. Inventory quantities were determined from inventory reports provided by the third-party warehouse provider. Th Company reconciles this report with its records. 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, 2025 and 2024. As of September 30, 2025, and September 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 September 30, 2025 and 2024: 2025 2024 Net Operating Loss Carryforward, January 1 $ 3,549,884 $ 3,616,513 Taxable Income, January 1 to September 30 ( 400,374 ) ( 89,249 ) Net Operating Loss Carryforward, September 30 $ 3,149,510 $ 3,527,264 Federal Deferred Tax Asset, January 1 745,476 759,468 Federal Tax Expense as of September 30 (21% Tax Rate) ( 84,078 ) ( 18,742 ) Federal Deferred Tax Asset, September 30 $ 661,398 740,726 State of New Jersey Deferred Tax Asset, January 1 318,681 324,678 State of New Jersey Tax Expense as of September 30 (9% Tax Rate) ( 36,034 ) ( 8,032 ) State of New Jersey Deferred Tax Asset, September 30 $ 282,647 $ 316,646 Total Deferred Tax Asset, September 30 $ 944,045 $ 1,057,372 Total Tax Expense $ 120,112 $ 26,774 2025 2024 Provision for Income Taxes $ ( 120,112 ) $ ( 43,324 ) Benefit from Deferred Tax Asset 112,905 41,968 Net Provision for Income Taxes -State of New Jersey* $ 7,207 $ 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 September 30: 2025 2024 Net Income/(Loss) before Taxes $ 183,294 $ ( 591,601 ) Stock Awards 217,080 680,850 Taxable Net Income $ 400,374 $ 89,249 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 to December 31, 2025 Mr. Simpson is paid a salary of $ 10,833 in cash and 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 100,000 shares of restricted, non-trading common stock 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 51 months. As of September 30, 2025, the potential liability to EQUATOR Beverage Company was $ 552,483 . At December 30, 2024, the potential liability to EQUATOR Beverage Company was $ 570,000 . NOTE 4 – STOCKHOLDERS’ EQUITY On October 20, 2025, the State of Delaware approved the 1-for-2 reverse split and the decrease in Authorized shares from 20,000,000 to 10,000,000 shares. On June 24, 2025, the Board of Directors of the Company approved the prospective amendment to the Fourth Article of the Company’s Articles of Incorporation to decrease the authorized common stock from 20,000,000 shares, par value $ 0.001 , to 10,000,000 shares, par value $ 0.001 . On June 24, 2025, the Majority Stockholders approved the Decrease in Authorized Amendment by written consent, in lieu of a special meeting of the stockholders. On June 24, 2025, the Board of Directors of the Company approved the prospective amendment to the Company’s Articles of Incorporation to effect a 1-for-2 reverse split of the Company’s Common Stock (the “Reverse Stock Split”). On June 24, 2025, stockholders of the Company owning a majority of the Company’s outstanding voting stock (the “Majority Stockholders”) approved the Reverse Stock Split by written consent, in lieu of a special meeting of the stockholders. The decrease in authorized shares and reverse stock split was approved by FINRA effective October 27, 2025. All share and per share data has been retroactively adjusted to reflect the reverse stock split. F-9 Table of Contents Restricted Stock Issuances The table below summarizes the restricted, non-trading stock awards during the first nine months of 2025 and 2024: Restricted, Non-trading Stock Awards Officers and Directors January 1 to September 30 2025 2024 Price Shares Amount Price Shares Amount Q1 Q1 Glenn Simpson $ - - $ - Glenn Simpson $ 1.40 100,500 $ 140,700 - $ - - - - $ - - - Diane Cudia $ - - $ - Diane Cudia $ 1.40 18,750 26,250 Total - $ - Total 119,250 $ 166,950 Q2 Q2 Glenn Simpson $ - - $ - Glenn Simpson $ 1.40 100,500 $ 140,700 - $ - - $ - - $ - - $ - Diane Cudia $ - - $ - Diane Cudia $ 1.40 18,750 $ 26,250 Total - $ - Total 119,250 $ 166,950 Q3 Q3 Glenn Simpson $ 1.08 201,000 $ 217,080 Glenn Simpson $ 1.30 200,500 $ 260,700 - $ - - $ - - $ - - $ - Diane Cudia $ - - $ - Diane Cudia $ 1.26 68,750 $ 86,250 Total - 201,000 217,080 Total 269,250 $ 346,950 Grand Total 201,000 $ 217,080 Total 507,750 $ 680,850 Stock Transactions During the nine months ended September 30, 2025, the Company issued 841 shares of its restricted, non-trading common shares for marketing services and 200,500 shares of its restricted, non-trading common shares as a result of contractual stock awards. During the nine months ended September 30, 2025, the Company purchased 225,000 shares of its common stock from shareholders at a cost of $ 240,000 . During the period ended September 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 September 30, 2025, the loan payable to Mr. Simpson was $ 399,000 . 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 September 30, 2025 and 2024: September 30, 2025 September 30, 2024 E-commerce Fulfillment Fees 28 % 15 % Freight and Delivery Expenses 6 % 4 % Compensation Expenses 12 % 16 % F-10 Table of Contents