EQUATOR Beverage Co 10-K

U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Fiscal Year Ended: December 31 , 2022 OR ☐ TRANSITION REPORT PURSUANT TO UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number: 000-55269 EQUATOR Beverage Company (Exact name of registrant as specified in its charter) Delaware 26-0884348 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 185 Hudson Street , Floor 25 Jersey City , New Jersey 07302 (Address of principal executive offices) (Postal Code) Registrant’s telephone number: 929 264 7944 Securities registered under Section 12(b) of the Act: None Securities registered under Section 12(g) of the Act: Common Stock, $0.001 par value per share Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒ 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 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ 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,” “smaller reporting company”, and emerging growth company in Rule 12b-2 of the Exchange Act: Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller reporting company ☒ Emerging growth company ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of June 30, 2022 (the last day of the registrant’s most recently completed second quarter), the aggregate market value of the registrant’s common stock (based on its reported last sale price on such date of $0.07 per share) held by non-affiliates of the registrant was $ 542,941 . On March 31, 2023 there were 16,469,115 shares of the registrant’s common stock, par value $0.001, issued and outstanding. DOCUMENTS INCORPORATED BY REFERENCE None . TABLE OF CONTENTS Page Forward Looking Information 1 PART I Item 1. Business 2 Item 2. Risk Factors 3 Item 3. Unresolved Staff Comments 4 Item 4. Legal Proceedings 4 Item 5. Mine Safety Disclosures 4 PART II Item 6. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 5 Item 7. Selected Financial Data 5 Item 8. Management’s Discussion and Analysis of Financial Condition and Results of Operations 6 Item 9. Quantitative and Qualitative Disclosures About Market Risk 8 Item 10. Financial Statements and Supplementary Data 8 Item 11. Changes and Disagreements with Accountants on Accounting and Financial Disclosure 9 Item 12. Controls and Procedures 9 Item 13. Other Information 9 PART III Item 14. Directors, Executive Officer and Corporate Governance 10 Item 15. Executive Compensation 12 Item 16. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 14 Item 17. Certain Relationships and Related Transactions, and Director Independence 15 Item 18. Principal Accountant Fees and Services 16 PART IV Item 19. Exhibits, Financial Statement Schedules 17 SIGNATURES 19 ii FORWARD-LOOKING STATEMENTS This report contains forward-looking statements. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements using words such as “expects,” “anticipates,” “intends,” “believes” and similar language. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document. All references in this Annual Report on Form 10-K to “EQUATOR,” “EQUATOR Beverage Company,” the “Company,” “we,” “us” or “our” mean EQUATOR Beverage Company. 1 PART I ITEM 1. BUSINESS COMPANY OVERVIEW EQUATOR Beverage Company, a Delaware corporation is headquartered in Jersey City, NJ. EQUATOR’s business is new product development, beverage production, distribution, and sales & marketing of its beverages. Our beverages are Non-GMO Project Verified, and USDA Organic. We produce both nonalcoholic and ready to drink alcoholic beverages. EQUATOR also has a line of sparkling energy beverages that are focused on the female consumer. EQUATOR beverages are available in North America, the Caribbean and Bermuda. We package our beverages in 100% recyclable, eco-friendly packaging. The packaging has a low impact on the environment. Also, our products are plant-based, Eco-friendly and renewable. CURRENT OPERATIONS Sales and Distribution The Company’s flagship product is MOJO Coconut Water. In addition to Coconut Water, the Company produces Coconut Water + Pineapple Juice, Sparkling Coconut Water + Citrus, Sparkling Coconut Water + Blood Orange, Sparkling Coconut Water + Pink Grapefruit, Sparkling Coconut Water Energy + Citrus, Sparkling Coconut Water Energy + Blood Orange, Sparkling Coconut Water Energy + Pink Grapefruit, Cubano Blue Agave Tequila Organic Sparkling Coconut Water + Citrus, Cubano Blue Agave Tequila Organic Sparkling Coconut Water + Blood Orange and Organic Coconut Water. 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. Employees As of December 31, 2022, the Company had two employees. The Company also uses the services of contractors, consultants and other third-parties. We contract with food brokers to represent our products to specific specialized sales channels. We utilize the services of direct sales and distribution companies that deliver and sell our products to their customers. We contract with manufacturing facilities to produce our products and outsource the storage and transportation of our products. CORPORATE HISTORY AND DEVELOPMENT The Company began producing MOJO branded products in 2016. 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. On June 8, 2022, the Board of Directors and majority stockholder of the Company approved a change of name from MOJO Organics, Inc. to EQUATOR Beverage Company. This change of name was filed with the State of Delaware and became effective July 5, 2022. 2 ITEM 2. RISK FACTORS In addition to the other information set forth in this report, you should consider the following factors, which could materially affect our business, financial condition or results of operations in future periods. The risks described below are not the only risks facing our Company. Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations in future periods. If we are unable to expand our operations in the marketplace, our growth rate could be negatively affected. Our success depends in part on our ability to grow our business. We have adopted and implemented a strategic plan to increase awareness of our products, secure additional distribution channels, and foster and strengthen our supply, manufacturing and distribution relationships. Our strategic plan includes addressing changes in the market. There can be no assurance that we will achieve the growth necessary to achieve our objectives. We could need additional capital in the future to expand our operations and execute our business objectives. Should we need additional capital to expand our operations, financing transactions may include the issuance of equity, debt securities, and credit facilities. The challenges of competing with other beverage companies could result in reductions to our revenue and operating margins. The nonalcoholic beverage segment of the beverage industry is competitive. We compete with numerous beverage companies, including those marketing similar products. All beverages’ companies are competing for stomach share on a daily basis which is approximately 64 oz. of fluid per day, per person. Our success depends on our ability to secure distribution channels for our products, our ability to make consumers aware of our products and the appeal of our products to consumers. Disruption of supply, increases in costs or shortages of ingredients could affect our operating results. Availability of supply and the prices charged by the producers of production inputs used in our products can be affected by a variety of factors, including the general demand by other buyers for the same fruits used by us in our products, and country politics and country economics in the area in which our fruit is grown. The quality of fruit we seek trades on a negotiated basis, depending on supply and demand at the time of the purchase. An increase in the price of any fruit that we use in our products will have a negative effect on our margins should we be unable to increase our sales price. Higher energy costs may increase the cost of transporting our supplies. Changes in emission rules for maritime vessels will likely increase costs of shipping our products. Conversely, lower fruit prices and lower energy prices will have a positive result on transport and packaging costs. 3 We use independent bottlers for the filling of our products and, as such, are subject to the bottler’s production and quality control. We use independent bottlers for the production of our products. Accordingly, we are dependent on the bottlers and their ability to meet production demands and to achieve product quality. We play an active role in the production of our beverages, which includes but is not limited to developing our formulations, maintaining control over the labeling and packaging of our beverages, and packaging and function of our packaging and correct FDA labeling. We also review and monitor the safety certifications of the factories including their status with the United States Food and Drug Administration. We also inspect the warehouses that our products are stored in, and monitor the trucking companies that deliver our goods. Litigation and publicity concerning food quality, health claims, and other issues could expose us to significant liabilities. The packaged food industry can be adversely affected by litigation and complaints from customers and government authorities resulting from product quality, health claims, allergens, illness, and injury. Adverse publicity about these allegations may negatively affect the Company, regardless of whether the allegations are true. In addition, the food industry has been subject to a number of claims based on the nutritional content of food products they sell, and disclosure and advertising practices. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot predict the ultimate outcome of any such proceedings. An unfavorable outcome will have an adverse impact on our business. In addition, any litigation or regulatory proceedings may result in substantial costs. ITEM 3. UNRESOLVED STAFF COMMENTS None ITEM 4. LEGAL PROCEEDINGS We are not a party to any legal or administrative proceedings and are not aware of any pending or threatened legal or administrative proceedings against the Company in all material aspects. We could from time to time become a party to various legal or administrative proceedings arising in the course of our business. ITEM 5. MINE SAFETY DISCLOSURE None 4 PART II ITEM 6. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s Common Stock is currently quoted on the OTCQB under the symbol MOJO. For the period January 1, 2021 to December 31, 2022, the following table sets forth the high and low closing bid prices by quarter, based upon information obtained from inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions:   High Low VWAP* Shares Traded Fourth Quarter 2022 $ 0.08 $ 0.05 $ 0.06 332,890 Third Quarter 2022 $ 0.51 $ 0.06 $ 0.12 1,065,864 Second Quarter 2022 $ 0.22 $ 0.14 $ 0.16 132,619 First Quarter 2022 $ 0.30 $ 0.16 $ 0.20 66,677 Fourth Quarter 2021 $ 0.36 $ 0.12 $ 0.22 213,837 Third Quarter 2021 $ 0.36 $ 0.20 $ 0.30 66,652 Second Quarter 2021 $ 0.42 $ 0.26 $ 0.32 250,218 First Quarter 2021 $ 2.00 $ 0.14 $ 0.42 732,864 *Volume-weighted average price (VWAP) Holders As of December 31, 2022, there were 16,230,615 shares of Common Stock issued and outstanding held by 907 shareholders of record. Dividends The Company has not declared a cash dividend with respect to its Common Stock. Future payment of dividends is within the discretion of the Board of Directors and will depend on earnings, capital requirements, financial condition and other relevant factors. Recent Sales of Unregistered Securities, Use of Proceeds from Registered Securities There were no sales of unregistered securities during the years ended December 31, 2022 and 2021. Issuer Purchases of Equity Securities During the year ended December 31, 2022, the Company repurchased 830,342 shares of EQUATOR Restricted Common Stock from shareholders at a total cost of $193,188. The shares were cancelled. During the year ended December 31, 2021, the Company repurchased 382,913 shares of EQUATOR Restricted Common Stock from shareholders at a total cost of $107,215. The shares were cancelled. ITEM 7. SELECTED FINANCIAL DATA None 5 ITEM 8. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided in addition to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flows. MD&A is organized as follows: ● Significant Accounting Policies — Accounting policies that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. ● Results of Operations — Analysis of our financial results comparing the year ended December 31, 2022 to 2021. ● Liquidity and Capital Resources — Analysis of changes in our cash flows, and discussion of our financial condition and potential sources of liquidity. This report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this annual report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. Significant Accounting Policies We have prepared our financial statements in conformity with accounting principles generally accepted in the United States, which requires management to make significant judgments and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. We base these significant judgments and estimates on historical experience and other applicable assumptions we believe to be reasonable based upon information presently available. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the financial statements as soon as they became known. Actual results could materially differ from our estimates under different assumptions, judgments or conditions. All of our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, to our financial statements, included elsewhere in this Annual Report. We have identified the following as our significant 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 significant 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. 6 Fair Value of Financial Instruments — Our short-term financial instruments, including cash, accounts receivable, accounts payable and other liabilities, consist primarily of instruments without extended maturities. We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts. Results of Operations Years Ended December 31, 2022 and 2021 Revenue For the year ended December 31, 2022, the Company reported revenue of $1,821,492 a decrease of $97,390 from revenue of $1,918,882 for the year ended December 31, 2021. The decrease in revenue was due to fewer cases sold in 2022 compared to the same period last year. The Company’s revenue was affected by production and shipping challenges during the year 2022. The factory closures due to COVID-19 and port congestions in the United States during 2022 resulted to backordered inventory and lost sales for the Company. 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 year ended December 31, 2022, cost of revenue was $1,190,536 or 65% of revenue. For the year ended December 31, 2021, cost of revenue was $1,069,844 or 56% of revenue. The 9 percentage points increase in cost of revenue was due to higher costs of product, ocean freight and warehousing costs compared to the same period last year. 7 Operating Expenses For the year ended December 31, 2022, the selling, general and administrative expenses was $859,155 an increase of $14,501 from the year ended December 31, 2021 of $844,654. This increase in operating expenses was primarily due to higher compensation expenses in 2022. Office expenses and marketing fees also increased compared to the same period last year. These increases were partially offset by lower selling expenses for the year ended December 31, 2022 compared to the same period last year. Liquidity and Capital Resources Liquidity As of December 31, 2022, the Company had working capital of $145,867. Net cash used in operating activities was $93,004 for the year ended December 31, 2022, compared to net cash provided by operating activities for the year ended December 31, 2022 of $103,463. Net cash provided by financing activities was $57,261 for year ended December 31, 2022 compared to $107,215 net cash used in financing activities for the year ended December 31, 2021. Net cash was provided by financing activities of a related party loan and proceeds from the exercise of stock options, offset by cash used in financing activities to repurchase EQUATOR Restricted Common Stock for the year ended December 31, 2022. Working Capital Needs Our working capital requirements increase as demand grows for our products. During the year ended December 31, 2022, the Company had net borrowings of $225,000. This was the direct result of supply chain delays in manufacturing and ocean transport times. In 2021, borrowings were zero. Should the Company require additional working capital during the next twelve months, it may seek to raise additional funds. Financing transactions may include the issuance of equity, debt securities and obtaining credit facilities. OFF BALANCE SHEET ARRANGEMENTS None ITEM 9. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK None ITEM 10. FINANCIAL STATEMENTS The audited financial statements are included beginning immediately following the signature page to this report. See Item 15 for a list of the financial statements included herein. 8 ITEM 11. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None ITEM 12. 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 EQUATOR Beverage Company 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 (2013). Based on this evaluation, our officers concluded that, during the period covered by this annual report, our internal controls over financial reporting were not operating effectively. As previously reported, the Company does not have an audit committee and is not currently obligated to have one. Management does not believe that the lack of an audit committee is a material weakness. Attestation Report This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting as such report is not required for non-accelerated filers. Changes in Internal Control over Financial Reporting There was no change in our internal controls over financial reporting during the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. ITEM 13. OTHER INFORMATION None 9 PART III ITEM 14. DIRECTORS, EXECUTIVE OFFICER, AND CORPORATE GOVERNANCE Executive Officer and Directors Below are the names and certain information regarding our current executive officer and directors: Name Age Title Appointed Glenn Simpson 70 Chairman and CEO October 27, 2011 Jeffrey Devlin 75 Director January 27, 2012 Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Biographical information of each current officer and director is set forth below. Glenn Simpson is Chairman of the Board of Directors and Chief Executive Officer of the Company. Mr. Simpson joined the Company in October 2011. He has extensive experience in the beverage industry. Mr. Simpson was Vice President and Chief Financial Officer of Coca-Cola Bottlers, Inc. in Uzbekistan from 1995 to 2000. His primary responsibilities included corporate strategy, supervision of bottling and distribution operations and facilities construction. His accomplishments included growing revenues from a base at $4 million to over $160 million annually. The company was awarded “Bottler of the Year” by The Coca-Cola Company for two consecutive years under his leadership based upon product quality and revenue growth. From 2009 to 2011, Mr. Simpson was engaged in beverage projects on a consulting basis in Russia and Afghanistan. Mr. Simpson is a Certified Public Accountant and holds an MBA from Columbia University School of Business. Jeffrey Devlin has served on the Board of Directors of the Company since January 2012. Mr. Devlin has over 35 years of advertising and business development experience. Mr. Devlin currently serves as Chief Marketing Officer – Government, Advertising and Commerce at Deloitte Consulting LLP. He has held various other executive and creative positions over the course of his advertising career, including launching the introduction of Diet Coke for The Coca-Cola Company. Mr. Devlin currently serves on the board of directors of a number of private organizations, as well as on the board of directors of Location Based Technologies, Inc., a publicly traded company. Mr. Devlin received a Bachelor’s degree from Bethel University. 10 Board Committees The Company has not established any committees of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations. Our two directors perform all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and allocate responsibilities accordingly. Shareholder Communications Currently, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations. Code of Ethics We have adopted a written code of ethics (the “Code of Ethics”) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. We believe that the Code of Ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. To request a copy of the Code of Ethics, please make written request to our Company at 185 Hudson Street, Floor 25, Jersey City, New Jersey 07302. Section 16(a) Beneficial Ownership Reporting Compliance Under Section 16(a) of the Exchange Act, all executive officers, directors, and each person who is the beneficial owner of more than 10% of the common stock of a company that files reports pursuant to Section 12 of the Exchange Act of 1934, are required to report the ownership of such common stock, options, and stock appreciation rights (other than certain cash only rights) and any changes in that ownership with the SEC. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2022 all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with. 11 ITEM 15. EXECUTIVE COMPENSATION The following table sets forth information concerning the total compensation paid or earned by each of our named executive officers (as defined under SEC rules). Name and Principal Position Year Salary Stock Awards Glenn Simpson, Chairman & CEO 2022 $ 72,000 (1) $ 127,288 (1) 2021 $ 30,000 (2) $ 150,868 (2) (1) Pursuant to Mr. Simpson’s employment agreement (the “Amended Simpson Agreement”) amended September 1, 2022, Mr. Simpson is paid a salary of $8,000 per month in cash and the Company is obligated to grant Mr. Simpson 67,000 shares of non-trading, restricted Common Stock per month. Pursuant to this agreement, Mr. Simpson is also entitled to an annual bonus comprised of cash and non-trading, restricted Common shares based on performance goals established by the Board of Directors of the Company. The cash bonus is established at $44,400 per year. The stock bonus is set at 200,000 shares of non-trading, restricted Common Stock per year through March 31, 2027. (2) Pursuant to Mr. Simpson’s employment agreement (the “Simpson Agreement”), Mr. Simpson is paid a salary of $5,000 per month in cash and the Company is obligated to grant Mr. Simpson 33,500 shares of non-trading, restricted Common Stock per month. Pursuant to this agreement, Mr. Simpson is also entitled to an annual bonus comprised of cash and non-trading, restricted Common shares based on performance goals established by the Board of Directors of the Company. The cash bonus is established at $44,400 per year. The stock bonus is set at 100,000 shares of non-trading, restricted Common Stock per year through March 31, 2025. During the year ended December 31, 2022, 603,000 shares of Non-trading, Restricted Common Stock were issued to Mr. Simpson for the stock portion of his compensation. Mr. Simpson was also issued 350,000 shares of Non-Trading Restricted Common Stock as a one-time stock award. During the year ended December 31, 2021, 804,000 shares of Non-trading, Restricted Common Stock were issued to the Mr. Simpson for the stock portion of his compensation. During the year 2021, Mr. Simpson exercised stock options to purchase 93,750 non-trading, restricted shares for a total exercise price of $30,000. This reduced the accrued salary owed to him. 12 Employment Agreements The “Simpson Agreement” is the only employment agreement in effect as of December 31, 2022. See discussion above. Outstanding Option Awards at December 31 The following table sets forth information regarding stock options held by executive officers at December 31. Expiration Exercise As of December 31, Issued To Date Price 2022 2021 Shares underlying options outstanding Glenn Simpson 4/6/2024 $ 0.16 0 159,054 On February 4, 2022, the Company adjusted the exercise price of the options granted to Mr. Simpson from $0.32 per share to $0.16 per share. On September 24, 2021, the Company extended the expiration date of the options granted to Mr. Simpson from expiring an April 6, 2022 to April 6, 2024. Option Exercises in 2022 and 2021 During the year ended December 31, 2022, Mr. Simpson exercised options to purchase 159,054 Restricted and Non-Trading shares at $0.16 per share. The total exercise value was $25,449. During the year ended December 31, 2021, Mr. Simpson exercised options to purchase 93,750 Restricted and Non-Trading shares at $0.32 per share. The total exercise value was $30,000 and this reduced the accrued salary payable to Mr. Simpson to $0. 13 Director Compensation The non-employee director did not receive cash compensation for serving as such, for serving on committees (if any) of the Board of Directors or for special assignments. Board members are not reimbursed for expenses incurred in connection with attending meetings. ITEM 16. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth information with respect to the beneficial ownership of our Common Stock known by us as of December 31, 2022 by: ● each director; ● each named executive officer; and ● all directors and executive officers as a group. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common Stock owned by them, except to the extent such power may be shared with a spouse. Name Shares Percent of Common Stock (1) Glenn Simpson 7,501,892 46% Chairman and CEO Diane Cudia 491,667 3% Corporate Controller Jeffrey Devlin 480,643 3% Director All Officers and Directors 8,474,202 52% (1) Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of Common Stock subject to options currently exercisable or convertible, or exercisable or convertible within 60 days of December 31, 2022 are deemed outstanding for computing the percentage of the person holding such option but are not deemed outstanding for computing the percentage of any other person. The Company had no options outstanding or convertible securities outstanding. 14 ITEM 17. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Other than as disclosed below and in this Form 10-K, there have been no transactions, since January 1, 2022, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year end for the last two completed fiscal years and in which any of our directors, executive officers or beneficial holders of more than 5% of our outstanding Common Stock, or any of their respective immediate family members, has had or will have any direct or material indirect interest. Director Independence We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to (and we do not) have our Board of Directors comprised of a majority of “Independent Directors.” Our Board of Directors has considered the independence of its directors in reference to the definition of “independent director” established by the Nasdaq Marketplace Rule 5605(a)(2). In doing so, the Board of Directors has reviewed all commercial and other relationships of each director in making its determination as to the independence of its directors. After such review, the Board of Directors has determined that Mr. Devlin qualifies as independent under the requirements of the Nasdaq listing standards. 15 ITEM 18. PRINCIPAL ACCOUNTANT FEES AND SERVICES The aggregate fees billed to the Company for services rendered in connection with the years ended December 31, 2022 and 2021 are set forth in the table below: Fee Category 2022 2021 Fee for quarterly reviews $ 15,000 $ 15,000 Fee for annual audit 23,000 23,000 Total $ 38,000 $ 38,000 Principal accountant fees and services consist of fees incurred for professional services rendered for the audit of financial statements, for reviews of our interim financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements. For the years ended December 31, 2022 and December 31, 2021, total principal accountant fees represent fees billed by Boyle CPA. Audit Committee’s Pre-Approval Practice We do not have an audit committee. Our board of directors has approved the services described above. 16 ITEM 19. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Financial Statement Schedules The financial statements of EQUATOR Beverage Company are listed on the Index to Financial Statements on this annual report on Form 10-K beginning on page F-1. The following Exhibits are being filed with this Annual Report on Form 10-K: Exhibit No. SEC Report Reference Number Description 3.1 3.1 Certificate of Incorporation of MOJO Shopping, Inc. (2) 3.2 3.1 Amendment to Certificate of Incorporation of MOJO Ventures, Inc. (3) 3.3 3.1 Certificate of Amendment to Certificate of Incorporation of MOJO Ventures, Inc. (4) 3.4 3.4 Articles of Merger (1) 3.5 3.1 Certificate of Amendment to Certificate of Incorporation of MOJO Organics, Inc. (6) 3.6 3.1 Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (7) 3.7 3.1 Amended and Restated Bylaws of MOJO Ventures, Inc. (5) 3.8 3.8 Amendment No. 1 to Amended and Restated Bylaws of MOJO Organics, Inc. (8) 3.9 3.1 Certificate of Amendment (10) 3.10 3.1 Certificate of Amendment to Certificate of Incorporation of MOJO Organics, Inc.(11) 16.1 16.1 Letter from MSPC Certified Public Accountants and Advisors, P.C. (9) 31.1 31.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) (1) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the Securities and Exchange Commission (the “SEC”) on May 18, 2011. (2) Incorporated by reference to the Registrant’s Registration Statement on Form SB-2 as an exhibit, numbered as indicated above, filed with the SEC on December 19, 2007. (3) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on May 4, 2011. (4) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on January 4, 2012. (5) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on October 31, 2011. (6) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on April 2, 2013. (7) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on February 1, 2013. (8) Incorporated by reference to the Registrant’s Current Report on Form 10-K as an exhibit, numbered as indicated above, filed with the SEC on September 24, 2013. (9) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on October 23, 2015. (10) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on July 1, 2021. (11) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on July 20, 2022. 17 SIGNATURES 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. EQUATOR BEVERAGE COMPANY Dated: March 31, 2023 By: /s/ Glenn Simpson Glenn Simpson, Chief Executive Officer and Chairman (Principal Executive and Principal Financial Officer) In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/ Glenn Simpson Director, Chief Executive Officer and Chairman (Principal Executive and Principal Financial Officer) March 31, 2023 Glenn Simpson /s/ Diane Cudia Corporate Controller (Principal Accounting Officer) March 31, 2023 Diane Cudia 18 PART IV - FINANCIAL INFORMATION Page Report of Independent Registered Public Accounting Firm – Boyle CPA, LLC Certified Public Accountants and Consultants (PCAOB: 6285 ) F-1 Statements of Operations for the years ended December 31, 2022 and 2021 F-2 Balance Sheets as of December 31, 2022 and 2021 F-3 Statements of Changes in Stockholders’ Equity for the years ended December 31, 2022 and 2021 F-4 Statements of Cash Flows for the years ended December 31, 2022 and 2021 F-5 Notes to Financial Statements F-6 19 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of EQUATOR Beverage Company Opinion on the Financial Statements We have audited the accompanying balance sheets of EQUATOR Beverage Company (the “Company”) as of December 31, 2022 and 2021, the related statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis of Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to fraud or error. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Stock Issued for Services During the year ended December 31, 2022, the Company recognized $181,889 in expenses related to stock issued for services. As discussed in Notes 3 and 4, the Company has issued stock to Management under an employment agreement and periodically issued other shares for services. Shares issued for services are recorded at their fair value on their measurement dates based upon prices on OTC markets. Our audit procedures to evaluate the appropriateness and accuracy of the accounting and fair value determined by management included reviewing the agreements and selected documentation supporting the issuances as well as recomputing the valuations made by Management by examining the prices from third party sources. /s/ Boyle CPA, LLC We have served as the Company’s auditor since 2020 Red Bank, NJ March 31, 2023 F- 1 EQUATOR BEVERAGE COMPANY Statements of Operations For the Years Ended December 31, 2022 and 2021 2022 2021 Revenue $ 1,821,492 $ 1,918,882 Cost of Revenue 1,190,536 1,069,844 Gross Profit 630,956 849,038 Operating Expenses Selling, general and administrative 859,155 844,654 (Loss)/Income from Operations ( 228,199 ) 4,384 Other (Expense)/Income ( 10,637 ) 35,508 (Loss)/Income Before Provision for Income Taxes ( 238,836 ) 39,892 Provision for Income Taxes - - Net (Loss)/Income $ ( 238,836 ) $ 39,892 Net loss per common share, basic and diluted $ ( 0.02 ) 0.00 Weighted average number of common shares outstanding, basic and diluted 15,841,585 15,540,259 The accompanying notes are an integral part of these financial statements. F- 2 EQUATOR BEVERAGE COMPANY Balance Sheets As of December 31, 2022 and 2021 2022 2021 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 10,738 $ 46,481 Accounts receivable, net 93,852 108,635 Inventory 268,289 234,566 Supplier deposits 44,772 28,000 Prepaid expenses 23,355 11,702 Security deposit 113 113 Total Current Assets $ 441,119 $ 429,497 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 70,252 58,944 Loan related parties 225,000 - SBA Loans - - Total Current Liabilities 295,252 58,944 STOCKHOLDERS’ EQUITY Common stock, 20,000,000 shares authorized at $ 0.001 par value, 16,230,615 and 15,548,903 shares issued and outstanding, at December 31, 2022 and December 31, 2021, respectively 16,231 15,549 Additional paid in capital 23,758,917 23,745,449 Accumulated deficit ( 23,629,281 ) ( 23,390,445 ) Total Stockholders’ Equity 145,867 370,553 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 441,119 $ 429,497 The accompanying notes are an integral part of these financial statements. F- 3 EQUATOR BEVERAGE COMPANY Statements of Changes in Stockholders’ Equity For the Years Ended December 31, 2022 and 2021 Common Stock Additional Paid-In Accumulated Stockholders’ Shares Amount Capital Deficit Equity Balance, January 1, 2021 15,305,233 $ 15,305 $ 23,664,945 $ ( 23,430,337 ) $ 249,913 Stock issued to Directors and employees 626,583 627 187,337 - 187,963 Stock retired to treasury ( 382,913 ) ( 383 ) ( 106,832 ) - ( 107,215 ) Net Income - - - 39,892 39,892 Balance, December 31, 2021 15,548,903 $ 15,549 $ 23,745,449 $ ( 23,390,445 ) $ 370,553 Balance 15,548,903 $ 15,549 $ 23,745,449 $ ( 23,390,445 ) $ 370,553 Stock issued to Directors and employees 1,353,000 1,353 180,536 - 181,889 Exercise of stock options 159,054 159 25,290 - 25,449 Stock retired to treasury ( 830,342 ) ( 830 ) ( 192,358 ) - ( 193,188 ) Net Loss - - - ( 238,836 ) ( 238,836 ) Net Income Loss - - - ( 238,836 ) ( 238,836 ) Balance, December 31, 2022 16,230,615 $ 16,231 $ 23,758,917 $ ( 23,629,281 ) $ 145,867 Balance 16,230,615 $ 16,231 $ 23,758,917 $ ( 23,629,281 ) $ 145,867 The accompanying notes are an integral part of these financial statements. F- 4 EQUATOR BEVERAGE COMPANY Statements of Cash Flows For the Years Ended December 31, 2022 and 2021 2022 2021 Cash flows from operating activities: Net Loss / Income $ ( 238,836 ) $ 39,892 Adjustments to reconcile net loss to net cash used in operating activities: Stock and warrants issued to directors and employees 181,889 187,963 SBA Loan Forgiveness - ( 35,508 ) Changes in assets and liabilities: Decrease/(Increase) in accounts receivable 14,783 ( 35,073 ) Increase in inventory ( 33,723 ) ( 60,395 ) Increase in supplier deposits ( 16,772 ) ( 4,000 ) (Increase)/Decrease in prepaid expenses ( 11,653 ) 7,807 Increase in accounts payable and accrued expenses 11,308 2,777 Net cash (used in)/provided by operating activities ( 93,004 ) 103,463 Net cash provided by/ (used in) financing activities: Proceeds from related party loan 510,000 - Repayments from related party loan ( 285,000 ) - Proceeds from stock option exercise 25,449 Shares repurchased for cancellation ( 193,188 ) ( 107,215 ) Net cash provided by/(used in) financing activities 57,261 ( 107,215 ) Net decrease in cash and cash equivalents ( 35,743 ) ( 3,752 ) Cash and cash equivalents at beginning of period 46,481 50,233 Cash and cash equivalents at end of periods $ 10,738 $ 46,481 Summary of non-cash investing and financing activity: During the year ended December 31, 2022 the Company issued a total of 1,353,000 Restricted and Non-Trading shares with an implied value of $ 181,889 to directors and officers to settle obligations payable. During the twelve-month period ended December 31, 2021 the Company issued a total of 626,583 Restricted and Non-Trading shares with an implied value of $ 187,963 to directors and officers to settle obligations payable. The accompanying notes are an integral part of these financial statements. F- 5 EQUATOR BEVERAGE COMPANY Notes to Financial Statements December 31 2022 and 2021 NOTE 1 – BUSINESS Overview EQUATOR Beverage Company, a Delaware corporation is headquartered in Jersey City, NJ. EQUATOR’s business is new product development, beverage production, distribution, and sales & marketing of its beverages. Our beverages are Non-GMO Project Verified, and USDA Organic. We produce both nonalcoholic and ready to drink alcoholic beverages. EQUATOR also has a line of sparkling energy beverages that are focused on the female consumer. EQUATOR beverages are available in North America, the Caribbean and Bermuda. We package our beverages in 100% recyclable, eco-friendly packaging. The packaging has a low impact on the environment. Also, our products are plant-based, Eco-friendly and renewable. 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 of America (“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 December 31, 2022, and December 31, 2021, the Company did no t 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 December 31, 2022 and 2021 was zero . 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 2022 or 2021. Revenue Recognition Revenue from sales of products is recognized when the related performance obligation is satisfied. The Company’s performance obligation is satisfied upon the shipment or delivery of products to customers. The Company’s products are sold on cash and credit terms which are established in accordance with standardized industry practices and typically require payment within 30 days of delivery. Costs incurred for sales incentives and discounts are accounted for as reductions in revenue. F- 6 Deductions from Revenue Costs incurred for sales incentives and discounts are accounted for as a reduction in revenue. These costs include payments to customers for performing merchandising activities on our behalf, including in-store displays, promotions for new items and obtaining optimum shelf space. Shipping and Handling Costs Shipping and Handling Costs incurred to move finished goods from our sales distribution centers to customer locations are included in the line Selling, General and Administrative Expenses in our Statements of Operations. Net (Loss)/Income 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 income/(loss) per common share: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE Expiration Exercise As of December 31, Issued To Date Price 2022 2021 Shares underlying options outstanding Glenn Simpson 4/6/2024 $ 0.16 0 159,054 Income Taxes The Net Operating Loss Carryforwards for federal taxes was $ 3,803,700 , at December 31, 2022 and 3,746,752 at December 31, 2021. The Net Operating Loss Carryforwards at December 31, 2022 was $ 3,803,700 and $ 3,746,752 for the State of New Jersey. The Deferred Tax Assets for federal taxes was $ 798,777 at December 31, 2022 and $ 786,818 at December 31, 2021. The Deferred Tax Assets at December 31, 2022 was $ 342,333 and $ 337,208 at December 31, 2021 for the State of New Jersey. The total Deferred Tax Assets was $ 1,141,110 at December 31, 2022 and $ 1,124,026 at December 31, 2021. The Deferred Tax assets have been fully reserved by valuation allowances beyond that portion which is expected to offset current taxes. As of December 31, 2022, the Company’s Federal income tax payable and State Income Tax payable is zero . At December 31, 2021, The Company’s Federal income tax payable was $ 39,632 and State Income Tax payable was $ 16,985 if these had not been offset by deferred tax assets. 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 no t have a deferred tax liability at December 31, 2022 and December 31, 2021. As of December 31, 2022, and December 31, 2021, the Company had no accrued interest or penalties because there were none. The Company had no Federal or State tax examinations in the past nor does it have any at the current time. SCHEDULE OF DEFERRED TAX ASSETS Tax Rate 2022 2021 Deferred Tax Assets as of December 31, Net Operating Loss Carryforwards as of December 31, Tax Rate 2022 2021 2022 2021 Federal 21 % $ 798,777 $ 786,818 $ 3,803,700 $ 3,746,752 State of New Jersey 9 % $ 342,333 $ 337,208 $ 3,803,700 $ 3,746,752 Total $ 1,141,110 $ 1,124,026 $ 7,607,400 $ 7,493,504 Fair value of financial instruments The carrying amounts of financial instruments, which include cash, accounts receivable, accounts payable and accrued expenses approximate their fair values due to their short-term nature. F- 7 NOTE 3 – COMMITMENTS AND CONTINGENCIES Employment Agreements Pursuant to Mr. Simpson’s Amended and Restated Employment Agreement (“the Agreement”) dated April 6, 2017 and amended on September 1, 2022, Mr. Simpson is paid a salary of $ 8,000 per month and 67,000 shares of non-trading, restricted Common Stock. Mr. Simpson is also paid an annual bonus comprised of cash and non-trading, restricted Common Stock based on the achievement of performance goals established by the Board of Directors of the Company and set forth in the Agreement. The cash bonus is established at $ 44,400 per year. The stock bonus is set at 200,000 shares of non-trading, restricted Common Stock per year through March 31, 2027. Pursuant to the Agreement, if Mr. Simpson’s employment is terminated without cause, the Company is obligated to pay him all amounts due under the contract for the remaining term of the contract immediately. At December 31, 2022, the potential liability to EQUATOR Beverage Company was $ 408,000 and 3,417,000 shares of non-trading, restricted Common Stock. F- 8 NOTE 4 – STOCKHOLDERS’ EQUITY On July 5, 2022, the State of Delaware approved the 1-for-2 reverse split and the decrease in Authorized shares from 40,000,000 to 20,000,000 shares. On June 8, 2022, the Board of Directors of the Company approved a prospective amendment to the Fourth Article of the Company’s Articles of Incorporation to decrease the authorized common stock from 40,000,000 shares, par value $ 0.001 , to 20,000,000 shares, par value $ 0.001 . On June 8, 2022, the majority stockholders approved the decrease in authorized shares amendment by written consent, in lieu of a special meeting of the stockholders. On June 8, 2022, 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. On June 8, 2022, stockholders of the Company owning a majority of the Company’s outstanding voting stock 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 on July 19, 2022 and effective July 20, 2022. All share and per share data has been retroactively adjusted to reflect the reverse stock split. In June 2021, the Company decreased its Authorized Shares from 190,000,000 to 40,000,000 shares. This was a reduction of 150,000,000 in Authorized Shares. As of December 31, 2022 there are 16,230,615 shares outstanding and no other classes of stock. Restricted Stock Issuances During the year ended December 31, 2022, 1,353,000 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 and transfer. On June 1, 2022, Mr. Simpson exercised his options to purchase 159,054 shares of Restricted and Non-Trading shares at $ 0.16 per share. The total exercise value was $ 25,449 . On February 4, 2022, the board of Directors approved the issuance of 525,000 shares of Restricted and Non-Trading Common Stock to Mr. Simpson, Mr. Devlin and Ms. Cudia for their continued service to the Company. Mr. Simpson was issued 350,000 shares of Restricted and Non-Trading Common Stock. Mr. Devlin and Ms. Cudia were each issued 87,500 shares of Restricted and Non-Trading Common Stock. The value of these shares was recorded as a component of compensation expense. Additionally, Mr. Simpson was issued 603,000 shares of Restricted and Non-Trading Common Stock for the stock portion of his annual salary. Mr. Devlin was issued 112,500 shares of Restricted and Non-Trading Common Stock as for continuing to serve as a Director of the Company. Ms. Cudia was issued 112,500 shares of Restricted and Non-Trading Common Stock for her annual stock bonus. The value of these shares was recorded as a component of compensation expense. Stock Purchased for Cancellation During the year ended December 31, 2022 the Company purchased 830,342 shares of its Restricted Common Stock from shareholders at a cost of $ 193,188 . During the year ended December 31, 2021 the Company purchased 382,913 shares of its Restricted Common Stock from shareholders at a cost of $ 765,826 . The shares were cancelled. F- 9 NOTE 5 – STOCK OPTION During the year ended December 31, 2022, Mr. Simpson exercised options to purchase 159,054 shares of Restricted and Non-Trading shares at $ 0.16 per share. The total exercise value was $ 25,449 . On February 4, 2022, the Company adjusted the exercise price of the options granted to Mr. Simpson from $ 0.32 per share to $ 0.16 per share. During the year ended December 31, 2021, Mr. Simpson exercised options to purchase 93,750 shares of Restricted and Non-Trading shares at $ 0.32 per share. The total exercise value was $ 30,000 and this reduced the accrued salary payable to Mr. Simpson to $ 0 . On September 24, 2021, the Company extended the expiration date of the options granted to Mr. Simpson from April 6, 2022 to April 6, 2024. The following table summarizes stock option activity: SCHEDULE OF STOCK OPTIONS ACTIVITY Issued To Expiration Date Days to Expiration Exercise Price Options Outstanding, December 31, 2021 Glenn Simpson 4/6/2024 827 $ 0.16 159,054 Exercised, June 1, 2022 Glenn Simpson 4/6/2024 $ 0.16 ( 159,054 ) Outstanding, December 31, 2022 Glenn Simpson - - - 0 During the years ended December 31, 2022 and 2021, compensation expense related to stock options was $ 0 . As of December 31, 2022, there was no unrecognized compensation cost related to non-vested stock options. NOTE 6 – CONCENTRATIONS Major Customers During the year ended December 31, 2022, the Company had five customers that accounted for 89 % of revenue. The increase in the concentration percentage is due to the shutdown of customers that were affected by the COVID-19 mandated closures. Accounts receivable at December 31, 2022 from these five customers amounted to $ 74,654 . For the year ended December 31, 2021, there were five major customers accounting for 90 % of total revenue. F- 10 Major Suppliers During the year ended December 31, 2022, the Company purchased its inventory from two suppliers. The Company has established relationships with other suppliers which management believes could meet its needs on similar terms. Accounts payable at December 31, 2022 to both suppliers were $ 15,840 . NOTE 7 – RELATED PARTY TRANSACTIONS During the year ended December 31, 2022, Mr. Simpson lent funds to the Company. As of December 31, 2022, the loan payable to Mr. Simpson was $ 225,000 . On June 1, 2022, Mr. Simpson exercised 159,054 stock options at an exercise price of $ 0.16 . The Company issued 159,054 Restricted and Non-Trading shares of Common Stock in exchange for the total exercise price of $ 25,449 . During the year ended December 31, 2021, Mr. Simpson exercised 93,750 stock options at an exercise price of $ 0.32 . The Company issued 93,750 Restricted and Non-Trading shares of Common Stock, and the accrued payroll owed to him was reduced by $ 30,000 . NOTE 8 – SBA LOANS “CARES ACT” In January 2021, the Company received the loan forgiveness decision from the SBA for the loan proceeds under the Paycheck Protection Program. The full amount of the loan amounting $ 35,508 was forgiven in January 2021. F- 11