Annual Report (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, 2017

☐ 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

MOJO Organics, Inc.

(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: 201 633 6519

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark 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,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer	☐	Accelerated Filer	☐

Non-Accelerated Filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting 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 December 31, 2017 (the last day of the registrant’s most recently completed third quarter), the aggregate market value of the registrant’s common stock (based on its reported last sale price on such date of $0.20 per share) held by non-affiliates of the registrant was $10,501,198.

On February 21, 2018, there were 26,659,447 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 1A.	Risk Factors	3
Item 1B.	Unresolved Staff Comments	4
Item 2.	Properties	4
Item 3.	Legal Proceedings	4
Item 4.	Mine Safety Disclosures	4

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	5
Item 6.	Selected Financial Data	6
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 8.	Financial Statements and Supplementary Data	9
Item 9.	Changes and Disagreements With Accountants on Accounting and Financial Disclosure	10
Item 9A.	Controls and Procedures	10
Item 9B.	Other Information	11

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	12
Item 11.	Executive Compensation	14
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	17
Item 13.	Certain Relationships and Related Transactions, and Director Independence	18
Item 14.	Principal Accountant Fees and Services	20

PART IV
Item 15.	Exhibits, Financial Statement Schedules	21
SIGNATURES		25

iii

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 “MOJO,” “MOJO Organics,” the “Company,” “we,” “us” or “our” mean MOJO Organics, Inc.

PART I

ITEM 1. BUSINESS

COMPANY OVERVIEW

MOJO Organics, Inc. (“MOJO” or the “Company”) a Delaware Corporation is headquartered in Jersey City, NJ. The Company engages in new product development, production, marketing, distribution and sales of beverage brands that are natural and Non GMO Project Verified.

CURRENT OPERATIONS

Sales and Distribution

The Company began selling MOJO Pure Coconut Water in December 2015. In addition to Pure Coconut Water, the Company produces Sparkling Coconut Water, Coconut Water + Peach Mango Juice and Coconut Water + Pineapple Juice. We seek to grow the market share of our products by expanding our distribution network through the relationships and efforts of our management and third party distribution relationships.

Production

The Company has multiple sources for its products. The Company’s fruit sources are of high quality and are part of the overall taste and quality of its products. The Company’s current arrangements for production and packaging exceed required levels.

Competition

The beverage industry is competitive. Competitors in our market compete for brand recognition, ingredient sourcing, and product shelf space. 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 February 21, 2018, the Company had four employees. The Company also uses the services of contractors, consultants and other third-parties. We contract with food brokers to represent our products to sales channels. We utilize the services of direct sales and distribution companies that 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 was incorporated in 2007 and since then has undergone several changes to its business structure. MOJO Organics Inc is headquartered in Jersey City, and our internet site is www.mojoorganicsinc.com. MOJO’s stock is traded on the OTC Markets under the symbol “MOJO”. On January 20, 2016, the Company approved a subscription agreement (the “2016 Subscription”) whereby shares of the Company’s common stock, $0.001 par value (“Common Stock”) were offered to accredited investors for $0.35 per share. For every two shares purchased, the investor received a warrant to acquire one share of Common Stock at an exercise price of $0.70 per share exercisable for a period of two years from the date of issuance. The Company issued a total of 964,286 shares of Common Stock and two year purchase warrants to acquire a total of 482,143 shares of Common Stock to four accredited investors for consideration of $337,500. The warrants expired on February 16, 2018.

ITEM 1A. 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 obtaining 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, increase in costs or shortage 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 politics and economics in the regions 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 pricing of any fruit that we use in our products will have a negative effect on our margins. Higher energy costs may affect the cost of transporting our supplies, thereby increasing costs. Conversely, lower fruit prices and energy prices will have a positive result on transport and packaging costs.

We use independent bottlers for the production and filling of our products and, as such, are subject to the bottler’s production and quality control.

We use independent bottlers for the production and filling of our products. We play an active role in the manufacturing of our products, supervision of the production process lies with the bottlers. Accordingly, we are dependent on the bottlers and their ability to meet production demands and to achieve product quality.

Litigation and publicity concerning food quality, health claims, and other issues could expose us to significant liabilities.

Food product businesses can be adversely affected by litigation and complaints from customers or government authorities resulting from product quality, health claims, allergens, illness, and injury. Adverse publicity about these allegations will negatively affect us, 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 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

The Company maintains office space in Jersey City, New Jersey. The lease agreement is for the period March 1, 2017 to February 28, 2018. The rent under this agreement is $2,259 per month. After February 28, 2018 the lease will be on a month to month basis with no required commitments.

ITEM 3. 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 us in all material aspects. We may from time to time become a party to various legal or administrative proceedings arising in the course of our business.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

PART II

ITEM 5. 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 from January 1, 2016 to December 31, 2017, 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
2017
Fourth Quarter	$	0.34	$	0.13
Third Quarter	$	0.20	$	0.16
Second Quarter	$	0.35	$	0.12
First Quarter	$	0.40	$	0.18

2016
Fourth Quarter	$	0.57	$	0.40
Third Quarter	$	0.64	$	0.50
Second Quarter	$	0.50	$	0.40
First Quarter	$	0.60	$	0.40

Holders

As of February 21, 2018, there were 26,659,447 shares of Common Stock issued and outstanding held by 111 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 year ended December 31, 2017.

Issuer Purchases of Equity Securities

There were no purchases of equity securities during the year ended December 31, 2017.

Equity Compensation Plans

On April 6, 2017, the Company granted stock options to purchase 356,559 shares and 1,500,000 shares of Common Stock pursuant to the 2012 Plan and the 2015 Plan, respectively. See note 3. The options were priced at the fair market value of the Common Stock and are immediately exercisable.

In October 2015, the Company approved the 2015 Plan, which provides the Company with the ability to issue stock options, stock awards and/or restricted stock purchase offers for up to an aggregate of 1,500,000 shares of Common Stock. As of December 31, 2017, there have been no issuances under the 2015 Plan.

In March 2013, the 2012 plan was approved by our shareholders. The 2012 plan provides the Company with the ability to issue stock options, stock appreciation rights, restricted stock and/or other stock-based awards for up to an aggregate of 2,050,000 shares of Common Stock. As of December 31, 2016, the Company issued stock options to purchase shares of Common Stock and issued restricted Common Stock under the 2012 Plan to its Directors and employees for 620,000 shares and 1,073,441 shares, respectively.

The following table sets forth certain information at December 31, 2017 with respect to our equity compensation plans that provide for the issuance of options, warrants or rights to purchase our securities.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)
2015 Plan		—	$	—		1,500,000
2012 Plan		1,693,441	$	1.22		356,559
Equity compensation plans not approved by security holders		—	$	—		—
Total		1,693,441	$	1.22		1,856,559

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. 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:

•

Critical 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, 2017 to 2016.

•

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.

Critical Accounting Policies

We have prepared our financial statements in conformity with accounting principles generally accepted in the United States, which requires management to make significant judgments and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. We base these significant judgments and estimates on historical experience and other applicable assumptions we believe to be reasonable based upon information presently available. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the financial statements as soon as they became known. Actual results could materially differ from our estimates under different assumptions, judgments or conditions.

All of our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, to our financial statements, included elsewhere in this Annual Report. We have identified the following as our critical accounting policies and estimates, which are defined as those that are reflective of significant judgments and uncertainties, are the most pervasive and important to the presentation of our financial condition and results of operations and could potentially result in materially different results under different assumptions, judgments or conditions.

We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements:

Use of Estimates — The financial statements are prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Stock-based Compensation — ASC Topic 718, “ Accounting for Stock-Based Compensation ” prescribes accounting and reporting standards for employee stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights.

ASC Topic 718 requires employee compensation expense to be recorded using the fair value method. The Company accounts for employee stock based compensation in accordance with the provisions of ASC Topic 718.

Determining the appropriate fair value of the stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based payment and stock price volatility. The Company uses the Black-Scholes option-pricing option model to value its stock option awards which incorporate the Company’s stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life.

The Company accounts for equity based transactions with non-employees under the provisions of ASC Topic 505-50, “Equity-Based Payments to Non-Employees.” ASC Topic 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. When the equity instrument is utilized for measurement the fair value of (i) common stock issued for payments to non-employees is measured at the market price on the date of grant; (ii) equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize an asset or expense in the same manner as if it is to pay cash or services instead of paying with or using the equity instrument.

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.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09. Revenue from Contracts with Customers (Topic 606), which will supersede the current revenue recognition requirements in Topic 605, Revenue Recognition . The ASC is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year. The new guidance will be effective for public companies for annual periods beginning January 1, 2018. The ASU permits application of the new revenue recognition guidance to be applied using one of two retrospective application methods. The Company currently recognizes revenue as soon as delivery of goods has occurred. The new pronouncement will not have a material impact on the financial statements.

Results of Operations

Years Ended December 31, 2017 and 2016

Revenue

During the year ended December 31, 2017, the Company reported revenue of $1,314,722, a decrease of $ 16,830 or 1.3% over revenue of $1,331,552 for the year ended December 31, 2016. The decline in revenue was primarily due to a decrease in private label business, partially offset by an increase in MOJO branded business. In addition to that, there were ads and promotional activities that were done at store levels in 2017. The costs of these ads were passed on to the company as sales deductions which reduced the 2017 revenue .

Cost of Revenue

Cost of Revenue includes finished goods purchase 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, 2017, cost of revenue was $786,914 or 60% of revenue, compared to $741,898 or 56% of revenue for the year ended December 31, 2016. The increase is due to the increases in finished goods purchase costs and freight costs. Also, during the year ended December 31, 2017, the Company started the production of MOJO Sparkling Coconut Water.

Operating Expenses

For the year ended December 31, 2017, selling, general and administrative expenses were $1,762,876, a decrease of $95,213 over selling, general and administrative expenses for the year ended December 31, 2016 of $1,858,089.

This decrease in selling, general and administrative expenses of $95,213 was primarily comprised of a decrease in compensation costs of $11,140 and a decrease in selling costs of $127,134 offset by an increase in stock based compensation costs of $111,130. Compensation costs decreased by $11,140 in 2017 from 2016. This is primarily attributable to lower employee salary costs, offset by an increase in stock compensation costs. Selling costs, including freight and delivery expenses, broker fees and outside sales fees decreased by $127,134 from 2016 to 2017. This is a result of the decrease in outside sales fees and lower sales commissions.

Stock-based compensation costs to directors and employees, which consist of charges to income for vesting in connection with restricted stock issuances, stock options and warrants, were $1,235,463 for the year ended December 31, 2017, compared to $511,231 for the year ended December 31, 2016. This represents a reduction in selling, general and administrative expenses of $724,232 Although stock-based compensation costs reduce the Company’s earnings, they do not reduce cash and have no effect on working capital.

Liquidity and Capital Resources

Liquidity

As of December 31, 2017, the Company had working capital of $359,814. Net cash used in operating activities was $16,311 for the year ended December 31, 2017, a decrease of $297,963 over net cash used in operating activities for the year ended December 31, 2016 of $314,274. Net cash provided by financing activities was $0 for the year ended December 31, 2017 compared to $337,500 for the year ended December 31, 2016.

Working Capital Needs

Our working capital requirements increase as demand grows for our products. During 2017, the Company did not require additional funding. Due to increased demand, the Company raised $337,500 in January and February 2016 through the issuance of Common Stock and warrants. See Note 5 of the Notes to the Financial Statements for further discussion. If the Company requires additional working capital during the next twelve months, it may seek to raise additional funds. Financing transactions may include the issuance of equity or debt securities or obtaining credit facilities.

OFF-BALANCE SHEET ARRANGEMENTS

The Company had no off-balance sheet arrangements as of December 31, 2017.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

ITEM 8. 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.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act of 1934 (the “Exchange Act”) is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Under the supervision and with the participation of the Company’s senior management, consisting of the Company’s principal executive and financial officer and the Company’s principal accounting officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, the Company’s principal executive and financial officer concluded, as of the Evaluation Date, that the Company’s disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control over Financial Reporting

The management of MOJO Organics, Inc. is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Rule 13a-15(f)) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this evaluation, our officers concluded that, during the period covered by this annual report, our internal controls over financial reporting were 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, 2016 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION

Not Applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Executive Officers and Directors

Below are the names and certain information regarding our current executive officers and directors:

Name	Age	Title	Date First Appointed
Glenn Simpson	65	Chief Executive Officer, Chairman and Director	October 27, 2011

Peter Spinner	48	Chief Operating Officer, Director	March 17, 2014

Jeffrey Devlin	70	Director	January 27, 2012

Robert Kaufman	61	Director	April 1, 2015

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.

Peter Spinner joined the Board of Directors of the Company in March 2014 and became the Chief Operating Officer of the Company in August 2014. He is the founder and managing director of Wyatts Torch Equity Partners LP, (“Wyatts”), a family business focused on public and private investments in the food and beverage industry. As General Partner and Portfolio Manager of Wyatts since 2011, Mr. Spinner is responsible for investing the assets of the Partnership. From 2009 until Wyatts was founded in 2011, Mr. Spinner was the managing partner of Ardent Asset Management, a money management firm based in New York City. From 2000 to 2009, Mr. Spinner was a portfolio manager and an equity analyst at Trellus Capital Management focusing on technology, media and telecommunications. During his tenure at Trellus Capital Management, assets under management expanded from $100 million to $2 billion. Prior thereto, Mr. Spinner has also previously served as an analyst and portfolio manager at Irvine Capital and Forstmann, Leff Associates. He began his career at Salomon Brothers Inc. in the equity trading division. Mr. Spinner received his undergraduate degree from Franklin and Marshall College and his MBA from Fordham University.

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 Chairman, US Government Practice at WPP, which is a world leader in marketing communications services. 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.

Robert Kaufman joined the Board of Directors of the Company in April 2015. Since 2012, Mr. Kaufman has served as the General Manager of Woodstock Farms Company. Woodstock Farms is a natural and organic food manufacturer with over 250 products in 10 categories selling to the natural and organic sector. Woodstock Farms is a division of United Natural Foods, Inc., a NASDAQ listed company with over $6 billion in annual revenue. From 1985 to 2011, Mr. Kaufman served in sales management roles at Performance Food Group, including Director of Special Segment Accounts. Performance Food Group is a broad line food distributor.

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 four 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, 2017 all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with.

ITEM 11. 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).

Summary Compensation Table
Name and Principal Position (a)	Year (b)		Salary ($) (c)			Bonus ($) (d)		Stock Awards ($) (e)		Total ($) (j)
Glenn Simpson	2017	$	225,790	(1)	$		$		$	225,790
Chief Executive Officer and Chairman	2016	$	126,000	(1)	$	88,800 ⁽²⁾	$	160,000 ⁽³⁾	$	374,800

Peter Spinner	2017	$	195,850	(4)	$		$	—	$	195,850
Chief Operating Officer	2016	$	112,000	(4)	$	76,800 ⁽⁵⁾	$	—	$	188,800

The Summary Compensation Table omits columns for Option Awards (f), Non-Equity Incentive Plan Compensation (g), Non-Qualified Deferred Compensation Earnings (h) and (i) All Other Compensation as no such amounts were paid to the named executive officers during the fiscal years ended December 31, 2017 or 2016.

(1)

Pursuant to the Amended Simpson Agreement revised in April 2017 , Mr. Simpson will be paid a salary of $5,000 per month in cash and the right to receive 67,000 shares of restricted Common Stock per month. Pursuant to his employment agreement, Mr. Simpson is entitled to a salary of not less than $18,500 per month. During 2017 and 2016, he received cash payments of $0 and $40,000, respectively. Mr. Simpson received stock in lieu of cash in 2017 and forgave $96,000 due to him for the years ended December 31, 2016.

(2)

Pursuant to his employment agreement discussed below, Mr. Simpson is entitled to a cash bonus of 20% of his salary for achieving certain annual revenue targets, as defined. The cash bonus is established at $44,400 per year. The stock bonus is set at 200,000 shares of Common Stock per year through December 31, 2025 based upon revenue performance goals. The revenue goals range from $2,400,000 to $19,200,000 per year. As of December 31, 2017 and as a result of not reaching said revenue targets, Mr. Simpson was not entitled to the cash bonus.

(3)

Pursuant to his employment agreement discussed below, Mr. Simpson is entitled to a stock bonus of 200,000 shares of Common Stock for achieving certain annual revenue targets, as defined. As of December 31, 2016 and as a result of reaching said revenue targets, Mr. Simpson is entitled to the stock bonus for both 2016 and 2017. The value of the Common Stock is based upon the closing price of the Common Stock on December 31, 2016 of $0.40 per share. As of December 31, 2016, Mr. Simpson is owed 400,000 shares of Common Stock.

(4)

Pursuant to the Amended Spinner Agreement revised in April 2017, Mr. Spinner will be paid a salary of $5,000 per month in cash and the right to receive 55,000 shares of restricted Common Stock per month. Pursuant to his employment agreement, Mr Spinner is entitled to a salary of not less than $16,000 per month. During 2017 and 2016, he received cash payments of $0 and $40,000, respectively. Mr. Spinner received stock in lieu of cash in 2017 and forgave $81,000 due to him for the years ended December 31, 2016.

(5)

Pursuant to his employment agreement discussed below, Mr. Spinner is entitled to a cash bonus of 20% of his salary for achieving certain annual revenue targets, as defined. As of December 31, 2016 and as a result of reaching said revenue targets, Mr. Spinner is entitled to the cash bonus for both 2016 and 2017. As of December 31, 2016, he is owed $76,800 in cash bonus.

The Company has no other plans in place and has never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans.

Employment Agreements

On April 6, 2017, the Company entered into Amended and Restated Employment Agreements with Mr. Glenn Simpson (the “Amended Simpson Agreement”), the Company’s Chairman and Chief Executive Officer (the “CEO”) and Mr. Peter Spinner (the “Amended Spinner Agreement”), the Company’s Chief Operating Officer (the “COO”). The Simpson Agreement and the Spinner Agreement were effective April 1, 2017 and have eight year terms.

Pursuant to the Amended Simpson Agreement, Mr. Simpson will be paid a salary of $5,000 per month in cash and the right to receive 67,000 shares of restricted Common Stock per month. These shares have no voting rights, are not eligible for dividends and are non-transferable unless the restriction is lifted. The restriction shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period. Additionally, Mr. Simpson is entitled to an annual bonus comprised of cash and Common Stock based on performance goals established by the Board of Directors of the Company as set forth in the Amended Simpson Agreement. The cash bonus is established at $44,400 per year. The stock bonus is set at 200,000 shares of Common Stock per year through December 31, 2025 based upon revenue performance goals. The revenue goals range from $2,400,000 to $19,200,000 per year. The bonus awards may be accelerated should revenue exceed the annual target amounts.

Pursuant to the Amended Spinner Agreement, Mr. Spinner will be paid a salary of $5,000 per month in cash and the right to receive 55,000 shares of restricted Common Stock per month. These shares have no voting rights, are not eligible for dividends and are non-transferable unless the restriction is lifted. The restriction shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period. Additionally, Mr. Spinner is entitled to an annual bonus comprised of cash and Common Stock based on performance goals established by the Board of Directors of the Company as set forth in the Amended Spinner Agreement. The cash bonus is established at $38,400 per year. The stock bonus is set at 200,000 shares of Common Stock per year beginning in the year 2020 through December 31, 2025 based upon revenue performance goals. The revenue goals range from $5,200,000 to $19,200,000 per year. The bonus awards may be accelerated should revenue exceed the annual target amounts.

Mr. Spinner was issued a one-time stock bonus equal to 597,632 shares of restricted Common Stock and stock options to purchase 861,013 shares of Common Stock at $0.16 per shares as part of the Amended Spinner Agreement. The restricted shares have no voting rights, are not eligible for dividends and are non-transferable. The restriction shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information regarding stock options held by our named executive officers at December 31, 2017.

			Options awards				Stock awards
Name (a)	Year	Number of securities underlying unexercised options exercisable (#) (b)		Number of securities underlying unexercised options unexercisable (#)(c)(1)	Option exercise price ($) (e)	Option expiration date (f)	Number of shares or units of stock that have not vested (#) (g)		Market value of shares of units of stock that have not vested ($) (h)
Glenn Simpson	2017	995,546		--	0.160	April 6, 2022		--	--
	2016	222,000		--	0.255	August 14, 2019		--	--

Peter Spinner	2017	861,013		--	0.160	April 6, 2022		--	--
	2016	192,000		--	0.255	August 14, 2019		1,500,000	$600,000

The Outstanding Equity Awards Table omits column (d) Equity incentive plan awards: Number of securities underlying unexercised unearned options related to Option Awards and columns (i) Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) and (j) Equity incentive plan awards: Market value of payout value of unearned shares, units or other rights that have not vested related to stock awards, as no such awards were outstanding as of December 31, 2017 and December 31, 2016.

(1)

Of such shares that have not yet vested, 1,500,000 will vest upon achievement of performance goals.

Option Exercises in 2017

No options were exercised by our executive officers during the year ended December 31, 2017.

Director Compensation

None of the non-employee directors 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. During the year ended December 31, 2017, there were no arrangements that resulted in our making payments to any of our non-employee directors for any services provided to us by them as directors.

ITEM 12. 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 February 21, 2018 by:

	•	each person or entity known by us to be the beneficial owner of more than 5% of our Common Stock;
	•	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 Of Owner	Number Of Shares Owned			Percentage Of Common Stock (1)
Glenn Simpson Chief Executive Officer, Chairman and Director		8,702,542	(2)		33	%
Jeffrey Devlin Director		367,953	(3)		2	%
Robert Kaufman Director		26,250	(4)		—	%
Peter Spinner Chief Operating Officer and Director		11,193,899	(5)		41	%
All Officers and Directors As a Group (4 persons)		20,397,617	(6)		76	%

	(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 or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of February 19, 2018 are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person.

	(2)	Includes (i) 8,480,542 shares of restricted Common Stock and (ii) 222,000 shares of Common Stock underlying stock options granted pursuant to the Company’s 2012 Plan.

	(3)	Includes (i) 367,953 shares of restricted Common Stock and (ii) 35,000 shares of Common Stock underlying stock options granted pursuant to the Company’s 2012 Plan.

	(4)	Includes 26,250 shares of Common Stock underlying stock options granted pursuant to the Company’s 2012 Plan. Does not include 8,750 shares of Common Stock underlying a stock option granted pursuant to the 2012 Plan, which option became exercisable in June 15, 2017.

	(5)	Includes (i) 4,634,022 shares of restricted Common Stock; (ii) 2,684,066 shares of Common Stock held by Wyatts, an entity of which Mr. Spinner is the general partner and portfolio manager; (iii) 192,000 shares of Common Stock underlying stock options granted pursuant to the Company’s 2012 Plan; (v) 3,291,209 shares of Common Stock underlying currently exercisable warrants held by Wyatts; (vi) 392,602 shares of Common Stock owned individually and/or jointly with his spouse. Does not include 1,500,000 shares of restricted Common Stock which shares vest upon the achievement of performance goals.

	(6)	Includes (i) 16,238,556 shares of restricted Common Stock; (ii) 475,250 shares of Common Stock underlying stock options granted pursuant to the Company’s 2012 Plan and (iii) 3,291,209 shares of Common Stock underlying warrants, as described above. Does not include stock options to purchase 8,750 shares of Common Stock, as described above.

Securities Authorized For Issuance Under Equity Compensation Plans

On April 6, 2017, the Company granted stock options to purchase 356,559 shares and 1,500,000 shares of Common Stock pursuant to the 2012 Plan and the 2015 Plan, respectively. The options were priced at the fair market value of the Common Stock and are immediately exercisable.

On October 20, 2015, the 2015 Plan was approved by the Board of Directors. The 2015 Plan provides the Company with the ability to issue stock options, stock awards and/or restricted stock purchase offers for up to an aggregate of 1,500,000 shares of Common Stock. As of December 31, 2016, no shares had been issued under the 2015 Plan.

On February 22, 2013, the 2012 Plan was adopted by the Board of Directors, subject to stockholder approval. The Company’s stockholders approved the 2012 Plan on March 29, 2013. The 2012 Plan provides the Company with the ability to issue stock options, stock appreciation rights, restricted stock and/or other stock-based awards for up to an aggregate of 2,050,000 shares of Common Stock. As of March 30, 2017, (i) stock options to purchase 620,000 shares of the Company’s Common Stock and (ii) 1,073,441 shares of restricted Common Stock had been issued to directors and employees under the 2012 Plan.

ITEM 13. 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, 2015, 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.

On March 2, 2017, the Company entered into an amendment to the Spinner Agreement effective December 31, 2016 reducing the Spinner Bonus Plan by 1,500,000 shares.

In connection with two private placement offerings in March 2014, investors received one purchase warrant at $0.91 per share for each share of stock purchased. The warrants issued to Wyatts were incorrectly calculated. On March 6, 2017, the Company issued warrants to purchase 915,447 shares of Common Stock at $0.91 per share to Wyatts to correct for this error. There was no financial impact resulting from this warrant understatement other than an understatement of potentially dilutive shares.

In January 2016, Wyatts purchased 285,715 shares of Common Stock pursuant to the 2016 Subscription. The purchase price of the shares was $0.35 per share, and included purchase warrants for 142,858 shares at a price of $0.70 per share. The five year warrant is immediately exercisable.

In August 2015, the Company entered into a subscription agreement (the “2015 Subscription”) whereby 750,000 shares of Common Stock were sold to Wyatts, for a total of $150,000, along with a purchase warrant for 1,500,000 shares of Common Stock at a price of $0.40 per share. The five year warrant is immediately exercisable.

On December 8, 2015, the Company entered into a settlement agreement with Richard Seet, a former officer and director, pursuant to which the parties agreed (i) to terminate that certain Employment Agreement entered into between the Company and Seet dated October 1, 2012 and that certain Amended and Restated Restricted Stock Agreement entered into between the Company and Seet dated December 4, 2013 and all obligations set forth therein; (ii) that Seet will return stock certificates representing 1,165,251 shares of Common Stock of the Company that would have vested upon certain revenue milestones to the Company for cancellation; (iii) the Company will issue to Seet settlement shares of the Company which will be subject to a certain lock up legend providing that Seet may only sell 145,656 of the settlement shares per quarter upon the Rule 144 holding period being satisfied and upon the Company generating a minimum of $5,000,000 in revenue during any 12 month period; and (iv) Seet will provide the Company with a release and discharge from any and all liability.

On June 15, 2015, the Company entered into the Simpson Agreement with the CEO pursuant to which the CEO will continue to act as the Company's CEO and Chairman of the Board for a term of five years as extended in consideration of, among other items, the Simpson Bonus Plan and the Simpson Shares (1,544,737 shares) to be issued to the CEO upon the Company generating revenue of $3,000,000 during any twelve month period during the term. This agreement was superseded by the Amended Simpson Agreement entered into in April 2017.

In addition, on June 15, 2015, the Company entered into the Spinner Agreement with Peter Spinner pursuant to which Mr. Spinner will continue to act as the Company's COO for a term of five years as extended in consideration of, among other items, the Spinner Bonus Plan and the Spinner Shares (252,632 shares) of the Company to be issued to the COO upon the Company generating revenue of $3,000,000 during any twelve month period during the term. This agreement was superseded by the Amended Spinner Agreement entered into in April 2017.

On December 15, 2015, the Company and Mr. Simpson entered into an amendment to the Simpson Agreement increasing the number of Simpson Shares by 337,500 and the Company and Mr. Spinner entered into an amendment to the Spinner Agreement increasing the number of Spinner Shares by 345,000.

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 and Mr. Kaufman qualify as independent under the requirements of the Nasdaq listing standards.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

On April 19, 2016, Cowan, Gunteski & Co., P.A discontinued its SEC practice and resigned as the Company’s independent registered public accounting firm. The Company appointed MSPC, Certified Public Accountants and Advisors, a Professional Corporation (“MSPC”) as its independent registered public accounting firm.

The aggregate fees billed to the Company for services rendered in connection with the years ended December 31, 2017 and 2016 are set forth in the table below:

Fee Category	2017		2016
Audit fees (1)	$	36,500	$	32,000
Audit-related fees (2)		—		—
Tax fees (3)		—		—
All other fees (4)		—		—
Total fees	$	36,500	$	32,000

	(1)	Audit fees 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 2016 and 2017, audit fees represent fees billed by MSPC.
	(2)	Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our financial statements, but are not reported under “Audit fees.”
	(3)	Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice.
	(4)	All other fees consist of fees billed for all other services.

Audit Committee’s Pre-Approval Practice

We currently do not have an audit committee. Our board of directors has approved the services described above.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Financial Statement Schedules

The financial statements of MOJO Organics, Inc. 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
2.1	2.1	Agreement and Plan of Merger by and among Specialty Beverage and Supplement, Inc., SBSI Acquisition Corp. and MOJO Ventures, Inc. dated May 13, 2011 (1)

2.2	2.1	Split-Off Agreement, dated as of October 27, 2011, by and among MOJO Ventures, Inc., SBSI Acquisition Corp., MOJO Organics, Inc., and the Buyers party thereto (2)

3.1	3.1	Certificate of Incorporation of MOJO Shopping, Inc. (3)

3.2	3.1	Amendment to Certificate of Incorporation of MOJO Ventures, Inc. (4)

3.3	3.1	Certificate of Amendment to Certificate of Incorporation of MOJO Ventures, Inc. (5)

3.4	3.4	Articles of Merger (1)

3.5	3.1	Certificate of Amendment to Certificate of Incorporation of MOJO Organics, Inc. (9)

3.6	3.1	Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (11)

3.7	3.1	Amended and Restated Bylaws of MOJO Ventures, Inc. (6)

3.8	3.8	Amendment No. 1 to Amended and Restated Bylaws of MOJO Organics, Inc. (13)

10.1	10.1	Form of Second Amended and Restated Restricted Stock Agreement (14)

10.2	10.6	2012 Long-Term Incentive Equity Plan (13)

10.3	10.7	Form of Stock Option Agreement under the 2012 Long-Term Incentive Equity Plan (13) †

10.4	10.8	Form of Indemnification Agreement with officers and directors (13)

10.5	10.1	Form of Promissory Note issued to OmniView Capital LLC and Paul Sweeney (11)

10.6	10.2	Advisor Agreement with OmniView Capital LLC (11)

10.7	10.3	Amended and Restated Securities Purchase Agreement (11)

10.8	10.4	Registration Rights Agreement (11)

10.9	10.5	Commitment letter executed by each of Glenn Simpson, Jeffrey Devlin and Richard Seet (11)

10.10	10.6	Amendment to Richard X. Seet Restricted Stock Agreement (11)

10.11	10.7	Letter Agreement relating to nominee right of OmniView Capital LLC (11)

10.12	10.1	Juice License Agreement between Chiquita Brands L.L.C. and MOJO Organics, Inc. dated as of August 15, 2012 (12)

10.13	10.17	Form of Subscription Agreement for 2013 Offering (13)

10.14	10.18	Employment Agreement dated March 1, 2013 between MOJO Organics, Inc. and Glenn Simpson (13) †

10.15	10.15	Form of Advisor Agreement (14)

10.16	10.16	Form of Restricted Stock Agreement, dated December 4, 2014, between MOJO Organics, Inc. and each of Glenn Simpson, Richard Seet, Jeffrey Devlin and Nicholas Giannuzzi. (14) †

10.17	10.17	Form of Restricted Stock Agreement, dated March 2014, between MOJO Organics, Inc. and each of Glenn Simpson, Richard Seet, Jeffrey Devlin, Peter Spinner and Marianne Vignone. (14) †

10.18	10.18	Form of Subscription Agreement for March 2014 Stock (with Warrants) Offering (14)

10.19	10.18	Form of Warrant (14)

10.20	10.20	Form of Subscription Agreement for March 2014 Stock Offering (14)

10.21	10.21	Form of Distribution Agreement

10.22	10.2	Form of Stock Option Agreement under the 2012 Long-Term Incentive Equity Plan, dated August 14, 2014, between MOJO Organics, Inc. and each of Glenn Simpson, Peter Spinner, Richard Seet, Jeffery Devlin and Marianne Vignone. (15)

10.23	10.3	Employment Agreement, dated August 12, 2014, between MOJO Organics, Inc. and Peter Spinner. (15)

10.24	10.1	Form of Restricted Stock Agreement, dated August 12, 2014, between MOJO organics, Inc. and Peter Spinner. (15)

10.25	10.1	Settlement and Release Letter Agreement by and between MOJO Organics, Inc. and Richard Seet (17)

10.26	10.1	Letter Agreement by and between MOJO Organics, Inc. and Glenn Simpson dated December 15, 2015 (18)

10.27	10.1	Letter Agreement by and between MOJO Organics, Inc. and Peter Spinner dated December 15, 2015 (18)

10.28	10.1	Common Stock Purchase Agreement by and between MOJO Organics, Inc. and Wyatts Torch Equity Partners, LP dated March 6, 2017

16.1	16.1	Letter from Liggett, Vogt & Webb, P.A. (16)

16.2	16.2	Letter from Cowan, Gunteski & Co., P.C. (19)

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

* Filed herewith.

** Filed previously

† Management compensatory plan, contract or arrangement.

(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 Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on November 2, 2011.

(3)

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.

(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 May 4, 2011.

(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 January 4, 2012.

(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 October 31, 2011.

(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 August 12, 2011.

(8)

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 June 8, 2011.

(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 April 2, 2013.

(10)

Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q as an exhibit, numbered as indicated above, filed with the SEC on June 25, 2013.

(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 February 1, 2013.

(12)

Incorporated by reference to the Registrant’s Current Report on Form 8-K/A as an exhibit, numbered as indicated above, filed with the SEC on February 7, 2013. Portions of the exhibit and/or related schedules or exhibits thereto have been omitted pursuant to a request for confidential treatment, which has been granted by the Commission.

(13)

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.

(14)

Incorporated by reference to the Registrant’s Annual Report on Form 10-K as an exhibit, numbered as indicated above, filed with the SEC on April 16, 2014.

(15)

Incorporated by reference to the Registrant’s Annual Report on Form 10-Q as an exhibit, numbered as indicated above, filed with the SEC on October 2, 2014.

(16)

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.

(17)

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 December 9, 2015.

	(18)	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 December 15, 2015.

	(19)	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 19, 2016.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MOJO ORGANICS, INC.

Dated: February 21, 2018	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)	February 21, 2018
Glenn Simpson


/s/ Diane Cudia	Corporate Controller (Principal Accounting Officer)	February 21, 2018
Diane Cudia

PART IV - FINANCIAL INFORMATION

	Page

Report of Independent Registered Public Accounting Firm – MSPC Certified Public Accountants and Advisors, A Professional Corporation	F-1

Statements of Operations for the years ended December 31, 2017 and 2016	F-2

Balance Sheets as of December 31, 2017 and 2016	F-3

Statements of Changes in Stockholders’ Equity /(Deficit) for the years ended December 31, 2016 and 2015	F-4

Statements of Cash Flows for the years ended December 31, 2016 and 2015	F-5

Notes to Financial Statements	F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and directors of
MOJO Organics, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of MOJO Organics, Inc. (the “Company”) as of December 31, 2017 and 2016, the related statements of operations, changes in stockholders’ equity/deficit, and cash flows for each of the two years in the period ended December 31, 2017, 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, 2017 and 2016, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for 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 audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent wih respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. 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 error or fraud. 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 audits 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 controls over financial reporting. Accordingly, we express no such opinion.

Our audits 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 audits 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 audits provide a reasonable basis for our opinion.

/s/ MSPC

Certified Public Accountants and Advisors,

A Professional Corporation

We have served as the Company’s auditor since 2016.

Cranford, New Jersey

February 15, 2018

F- 1

MOJO ORGANICS, INC.
Statements of Operations
For the Years Ended December 31, 2017 and 2016


		2017			2016
Revenue	$	1,314,722		$	1,331,552

Cost of Revenue		786,914			741,898

Gross Profit (Loss)		527,808			589,654

Operating Expenses
Selling, general and administrative		1,762,876			1,858,089

Loss from Operations		(1,235,068	)		(1,268,435	)
Total Other Income		2,180			518

Loss Before Provision for Income Taxes		(1,232,888	)		(1,267,917	)

Provision for Income Taxes		—			—

Net Loss	$	(1,232,888	)	$	(1,267,917	)

Net loss per common share, basic and diluted	$	(0.05	)	$	(0.07	)
Basic and diluted weighted average number of common shares outstanding		26,667,781			18,380,326

The accompanying notes are an integral part of these financial statements.

F- 2

MOJO ORGANICS, INC.
Balance Sheets
As of December 31, 2017 and 2016


		2017			2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	22,357		$	38,668
Accounts receivable, net		82,326			29,872
Inventory		273,734			312,029
Prepaid expenses		10,905			29,709
TOTAL CURRENT ASSETS		353,322			410,278
Security deposit		4,518			4,461
TOTAL ASSETS	$	393,840		$	414,739

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	29,508		$	39,329
Accrued payroll to related parties		—			484,600
Total Current Liabilities		29,508			523,929

Commitments and Contingencies

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, 10,000,000 shares authorized at $0.00 preferred stock, 10,000,000 shares authorized at $0.001 par value, no shares issued and outstanding		—			—
Common stock, 190,000,000 shares authorized at $0.001 par value, 26,667,781 and 18,380,326 shares issued and outstanding, at December 31, 2017 and December 31, 2016, respectively		26,667			18,380
Additional paid in capital		22,963,323			21,265,200
Accumulated deficit		(22,625,658	)		(21,392,770	)
Total Stockholders' Equity (Deficit)		364,332			(109,190	)

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)	$	393,840		$	414,739

The accompanying notes are an integral part of these financial statements.

F- 3

MOJO ORGANICS, INC.
Statements of Changes in Stockholders’ Equity (Deficit)
For the Years Ended December 31, 2017 and 2016


	Common Stock
	Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Stockholders’ Equity (Deficit)
Balance, January 1, 2016	17,309,590	$	17,309	$	20,192,089	$	(20,124,853	)	$	84,545

Issuance of restricted Common Stock and Warrants:
Private Placement	964,286		965		336,535		—			337,500
Advisors and Consultants	106,450		106		48,345		—			48,451
Stock based compensation :
Stock options	—		—		45,097		—			45,097
Restricted Common Stock vesting	—		—		466,134		—			466,134
Accrued payroll to related parties - forgiven	—		—		177,000		—			177,000
Net Loss	—		—		—		(1,267,917	)		(1,267,917	)
Balance, December 31, 2016	18,380,326	$	18,380	$	21,265,200	$	(21,392,770	)	$	(109,190	)
Stock-based compensation
Stock options	—		—		214,690		—			214,690
Stock and warrants issued to directors and employees	8,287,455		8,287		1,483,433		—			1,491,720
Net Loss	—		—		—		(1,232,888	)		(1,232,888	)
Balance, December 31, 2017	26,667,781	$	26,667	$	22,963,323	$	(22,625,658	)	$	364,332

The accompanying notes are an integral part of these financial statements.

F- 4

MOJO ORGANICS, INC.
Statements of Cash Flows
For the Years Ended December 31, 2017 and 2016


		2017			2016
Cash flows from operating activities:
Net loss	$	(1,232,888	)	$	(1,267,917	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		—			458
Loss on disposal of property and equipment		—			1,102
Stock-based compensation - stock options		214,690			45,097
Stock and warrants issued to directors and employees		1,491,721			466,134
Stock and warrants issued for Consulting Fees		—			48,451

Changes in assets and liabilities:
Increase in accounts receivable		(52,455	)		(23,236	)
Decrease (increase) in inventory		38,295			(278,556	)
Decrease in supplier deposits		—			33,835
Decrease (increase) in prepaid expenses		18,804			(19,359	)
Increase in security deposit		(57	)		(1,683	)
Increase (decrease) in accounts payable and accrued expenses		(9,821	)		22,850
(Decrease) increase in accrued payroll to related parties		(484,600	)		658,550
Net cash used in operating activities		(16,311	)		(314,274	)

Net cash used in investing activities:
Purchase of property and equipment		—			(1,527	)
Net cash used in investing activities		—			(1,527	)

Net cash from financing activities:
Sale of common stock, net		—			337,500
Net cash provided by financing activities		—			337,500

Net increase (decrease) in cash and cash equivalents		(16,311	)		23,226

Cash and cash equivalents at beginning of period		38,668			15,442

Cash and cash equivalents at end of period	$	22,357		$	38,668
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	—		$	—
Taxes paid	$	—		$	—

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Accrued payroll to related parties converted to additional paid-in capital	$	588,100		$	177,000

The accompanying notes are an integral part of these financial statements.

F- 5

MOJO ORGANICS, INC.

Notes to Financial Statements

December 31, 2017 and 2016

NOTE 1 – BUSINESS

Overview

MOJO Organics, Inc. (“MOJO” or the “Company”) was incorporated in the State of Delaware on August 2, 2007. Headquartered in Jersey City, NJ, the Company engages in new product development, production, marketing, distribution and sales of beverage brands that are natural and Non GMO Project Verified.

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, 2017 and December 31, 2016, 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 December 31, 2017 and 2016 was zero and $3,000 respectively.

Inventories

Inventories, consisting solely of finished goods, are stated at the lower of cost (first-in, first-out method) or net realizable value (“NRV”). When necessary, the Company provides allowances to adjust the carrying value of its inventories to the lower of cost or NRV.

Revenue Recognition

Revenue from sales of products is recognized when persuasive evidence of an arrangement exists, delivery of products has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Costs incurred for sales incentives and discounts are accounted for as a reduction in revenue.

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.

F- 6

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 Per Common Share

The Company computes per share amounts in accordance with the 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.

The following potentially dilutive securities have been excluded from the computation of weighted average shares outstanding for the years ended December 31, 2017 and 2016, as they would have had an anti-dilutive impact on the Company’s net loss per common share:

	2017		2016
Shares underlying options outstanding		2,476,559		620,000
Shares underlying warrants outstanding		4,012,367		3,069,919
Total		6,488,926		3,716,919

Income Taxes

The Company provides for income taxes using the asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2017 and December 31, 2016, the Company had no accrued interest or penalties. The Company has had no Federal or state tax examinations in the past nor does it have any at the current time.

Stock-Based Compensation

ASC Topic 718, “ Accounting for Stock-Based Compensation ” prescribes accounting and reporting standards for employee stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. ASC Topic 718 requires employee compensation expense to be recorded using the fair value method. The Company accounts for employee stock based compensation in accordance with the provisions of ASC Topic 718.

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

New Accounting Pronouncements

In May 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-09, which creates ASC Topic 606, “ Revenue from Contracts with Customers” , and supersedes the revenue recognition requirements in Topic 605, “ Revenue Recognition” , including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, ASU 2014-09 supersedes the cost guidance in Subtopic 605-35, “ Revenue Recognition—Construction-Type and Production-Type Contracts ,” and creates new Subtopic 340-40, “ Other Assets and Deferred Costs—Contracts with Customers .” In summary, the core principle of ASC Topic 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and early application is not permitted. Therefore the amendments in ASU 2014-09 will become effective for us as of the beginning of our 2017 fiscal year. The The Company currently recognizes revenue as soon as delivery of goods has occurred. The new pronouncement will not have a material impact on the financial statements.

Management does not believe that any other recently issued, but not yet effective accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

F- 8

NOTE 3 – COMMITMENTS AND CONTINGENCIES

Employment Agreements

Pursuant to the Amended Simpson Agreement, Mr. Simpson will be paid a salary of $5,000 per month in cash and the right to receive 67,000 shares of restricted Common Stock per month. These shares have no voting rights, are not eligible for dividends and are non-transferable unless the restriction is lifted. The restriction shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period. Additionally, Mr. Simpson is entitled to an annual bonus comprised of cash and Common Stock based on performance goals established by the Board of Directors of the Company as set forth in the Simpson Agreement. The cash bonus is established at $44,400 per year. The stock bonus is set at 200,000 shares of Common Stock per year through December 31, 2025 based upon revenue performance goals. The revenue goals range from $2,400,000 to $19,200,000 per year. The bonus awards may be accelerated should revenue exceed the annual target amounts.

Pursuant to the Amended Spinner Agreement, Mr. Spinner will be paid a salary of $5,000 per month in cash and the right to receive 55,000 shares of restricted Common Stock per month. These shares have no voting rights, are not eligible for dividends and are non-transferable unless the restriction is lifted. The restriction shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period. Additionally, Mr. Spinner is entitled to an annual bonus comprised of cash and Common Stock based on performance goals established by the Board of Directors of the Company as set forth in the Spinner Agreement. The cash bonus is established at $38,400 per year. The stock bonus is set at 200,000 shares of Common Stock per year beginning in the year 2020 through December 31, 2025 based upon revenue performance goals. The revenue goals range from $5,200,000 to $19,200,000 per year. The bonus awards may be accelerated should revenue exceed the annual target amounts.

Mr. Simpson was issued a one-time stock bonus equal to 1,882,237 shares of restricted Common Stock and stock options to purchase 995,546 shares of Common Stock at $0.16 per shares as part of the Simpson Agreement. The restricted shares have no voting rights, are not eligible for dividends and are non-transferable. The restriction shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period. Mr. Spinner was issued a one-time stock bonus equal to 597,632 shares of restricted Common Stock and stock options to purchase 861,013 shares of Common Stock at $0.16 per shares as part of the Spinner Agreement. The restricted shares have no voting rights, are not eligible for dividends and are non-transferable. The restriction shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period.

Mr. Spinner was issued a one-time stock bonus equal to 597,632 shares of restricted Common Stock and stock options to purchase 861,013 shares of Common Stock at $0.16 per shares as part of the Spinner Agreement. The restricted shares have no voting rights, are not eligible for dividends and are non-transferable. The restriction shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period.

Lease Commitment

The Company maintains office space in Jersey City, New Jersey. The Company leases the space from a third-party pursuant to a lease agreement dated September 15, 2016 at a rate of $2,230 per month. The lease agreement was terminated on February 28, 2017. The Company signed a new lease agreement for the period March 1, 2017 to February 28, 2018. The new rent under this agreement is $2,259 per month. Lease expense amounted to $28,019 and $25,021 for the years ended December 31, 2017 and 2016, respectively. After February 28, 2018 the lease will be on a month to month basis with no required commitments.

NOTE 4 – STOCKHOLDERS’ EQUITY

The Company has authorized 190,000,000 shares of Common Stock and 10,000,000 shares of preferred stock (“Preferred Stock”), each having a par value of $0.001.

In October 2015, the Company approved the 2015 Incentive Stock Plan, which provides the Company with the ability to issue stock options, stock awards and/or restricted stock purchase offers for up to an aggregate of 1,500,000 shares of Common Stock.

In March 2013, the Company approved the 2012 Long-Term Incentive Equity Plan (the “2012 Plan”), which provides the Company with the ability to issue stock options, stock appreciation rights, restricted stock and/or stock based awards for up to an aggregate of 2,050,000 shares of Common Stock.

Private Placement Offerings

On January 20, 2016, the Company approved a subscription agreement (the “2016 Subscription”) whereby 1,428,572 shares of Common Stock were offered to accredited investors for $0.35 per share. For every two shares purchased, the investor received a warrant to acquire one share of Common Stock at an exercise price of $0.70 per share exercisable for a period of two years from the date of issuance representing a potential aggregate of 714,286 shares of Common Stock. The Company issued a total of 964,286 shares of Common Stock and two year purchase warrants to acquire a total 482,143 shares of Common Stock to four accredited investors in consideration of $337,500.

F- 9

Restricted Stock Compensation

The CEO and COO agreed to forego the receipt of $588,100 owed to them for salary and bonus in exchange for shares of restricted Common Stock. In May 2017, the Company issued an aggregate 3,138,125 shares of restricted Common Stock as settlement of that liability. The shares issued have no voting rights, are not eligible for dividends and are non-transferable unless the restrictions are lifted. The restrictions shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period.

Also in May 2017, the Company issued an aggregate 2,479,869 restricted shares of Common Stock to the CEO and COO as part of the Amended Simpson Agreement and Amended Spinner Agreement, respectively. These shares have no voting rights, are not eligible for dividends and are non-transferable unless the restrictions are lifted. The restrictions shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period.

Pursuant to the Amended Simpson Agreement and the Amended Spinner Agreement, the Company issued 603,000 shares and 495,000 shares, respectively, to the CEO and COO for the stock portion of their monthly compensation for the year ended December 31, 2017. These restricted shares have no voting rights, are not eligible for dividends and are non-transferable unless the restrictions are lifted. The restriction shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period.

During the year ended December 31, 2017, the Company issued 1,128,125 shares of restricted Common Stock to certain of its executive officers. The shares issued have no voting rights, are not eligible for dividends and are non-transferable unless the restrictions are lifted. The restrictions shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period.

In connection with the issuance of restricted Common Stock to certain of its directors, executive officers and employees, unvested restricted shares are subject to forfeiture. With the exception of 1,726,485 shares issued to employees and directors and 582,626 shares issued to a former director, which vest based upon achieving certain milestones, the Company records compensation expense over the vesting period based upon the fair market value on the date of grant for each share, adjusted for forfeitures.

The Company recorded $805,403 and $479,839 for restricted stock based compensation costs for the twelve months ended December 31, 2017 and December 31, 2016, respectively.

A summary of the restricted stock issuances to directors, executive officers and employees is as follows:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested share balance, January 1, 2016		4,210,306		$	0.75
Granted		—			—
Vested		(1,901,193	)		1.33
Forfeited		—			—
Unvested share balance, December 31, 2016		2,309,113		$	0.21
Granted		7,112,119			0.19
Vested		(7,112,119)			0.19
Forfeited		—			—
Unvested share balance, December 31, 2017		2,309,113		$	0.21

Stock Warrants

In connection with two private placement offerings in March 2014 (the “2014 Offerings”), investors received one purchase warrant at $0.91 per share for each share of Common Stock purchased. The warrants issued to Wyatts Torch Equity Partners, LP (“Wyatts”) were incorrectly calculated. On March 6, 2017, the Company issued warrants to purchase 915,447 shares of Common Stock at $0.91 per share to Wyatts to correct for this error. There was no financial impact resulting from this warrant understatement other than an understatement of potentially dilutive shares.

In connection with the February 2016 Subscription, warrants to purchase 482,143 shares of Common Stock were issued at a price of $0.70 per share and are exercisable for a period of two years from the date of issuance.

F- 10

The following table summarizes warrant activity during the period:

	Number of Warrants
Outstanding at January 1, 2016		2,614,776
Issued in connection with the 2016 Subscription		482,143
Outstanding at December 31, 2016		3,096,919
Issued in connection with the 2014 Offerings		915,447
Outstanding at December 31, 2017		4,012,366
Exercisable at December 31, 2017		4,012,366

Advisory Services

On October 3, 2013, the Company entered into an agreement with Ian Thompson for strategic business advisory services, public relations services and investor relations services with Ian Thompson. In connection with this agreement, the Company issued 167,204 shares of restricted Common Stock and recorded consulting fees of $501,612 during 2013, which was the fair market value of the stock on the date of issue. The stock is vested; however it is restricted from trading. Ian Thompson was also issued 200,000 shares of restricted Common Stock, which was to vest quarterly based upon the Company reaching certain market capitalization and revenue goals, in addition to providing the above services, with the last tranche vesting scheduled to vest on June 30, 2014. Consulting fees amounting to $105,000 and $280,000 were recorded in 2014 and 2013, respectively, related to the 200,000 shares of Common Stock. Throughout the term of the agreement, the Company requested that Ian Thompson to render performance under the agreement and to provide evidence of same. Ian Thompson failed to perform in all material respects under the terms of the agreement and refused to provide evidence.

On June 27, 2014, the Company terminated the agreement. The Company is taking all necessary steps for the cancellation of the 367,204 shares, due to lack of delivery of consideration and material breach of the agreement.

NOTE 5 – STOCK OPTIONS

In June 2015, the Company granted a director of the Company stock options to purchase 35,000 shares of Common Stock pursuant to the 2012 Plan. The exercise price is $0.255 per share and the options are exercisable in four equal tranches in December 2015, June 2016, December 2016 and June 2017. They expire in June 2020. On April 6, 2017, the Company granted stock options to purchase 356,559 shares and 1,500,000 shares of Common Stock pursuant to the 2012 Plan and the 2015 Plan, respectively. See note 3. The options were priced at the fair market value of the Common Stock and are immediately exercisable.

The following table summarizes stock option activity under the Plans:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding, January 1, 2016		620,000	$	0.255		1.6
Granted		1,856,559	$	0.160		4.3
Expired		—	$	—		—
Forfeited		—	$	—		—
Outstanding, December 31, 2017		2,476,559	$	0.184		3.7
Granted		—		—		—
Expired		—		—		—
Forfeited		—		—		—
Outstanding, December 31, 2017		2,476,559	$	0.184		2.7
Exercisable, December 31, 2017		1,865,309	$	0.184		2.7

During the years ended December 31, 2017 and 2016, compensation expense of $214,690 and $45,097, respectively, was recorded. As of December 31, 2017, there were no unrecognized compensation cost related to non-vested stock options.

F- 11

The aggregate intrinsic value of options outstanding and exercisable at December 31, 2017 and 2016 was $495,312 and $89,900, respectively. Aggregate intrinsic value represents the difference between the Company's closing stock price on the last trading day of the fiscal period, which was $0.20 and $0.40 as of December 31, 2017 and 2016, respectively, and the exercise price multiplied by the number of options outstanding.

The following table summarizes weighted-average assumptions using the Black-Scholes option-pricing model used on the date of the grants issued for the years ended December 31, 2017:

	2017
Volatility		115	%
Expected term (years)		5
Risk-free interest rate		1.87	%
Dividend yield		0	%

The exercise price on the grant date in relation to the market price during 2015 is as follows:

	2017
Exercise price lower than market price	$	—
Exercise price equal to market price	$	—
Exercise price exceeded market price	$	0.184

NOTE 6 – CONCENTRATIONS

Major Customers

During the year ended December 31, 2017, the Company had two customers that accounted for approximately 26% and 28% of revenue. Accounts receivable at December 31, 2017 from these two customers amounted to $9,345 and 28,800, respectively. For the year ended December 31, 2016, there were two major customers accounting for more than 10% of total revenue.

Major Suppliers

During the year ended December 31, 2017, 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, 2017 to both suppliers was zero.

NOTE 7 – RELATED PARTY TRANSACTIONS

In August 2017, the Company settled all of its accrued payroll balance at June 30, 2017. The CEO and the COO agreed to forego the receipt of cash owed to them as of June 30, 2017 of $10,000 each in exchange for shares of restricted Common Stock, which have no voting rights, are not eligible for dividends and are non-transferable unless the restrictions are lifted and the restrictions shall be lifted only upon the generation of $3,000,000 in revenue by the Company during a consecutive twelve month period. In addition, the Company paid its remaining accrued payroll balance of $16,514 in cash.

As of December 31, 2016, accrued payroll of $484,600 was payable to the CEO and COO, and such amount included unpaid salary as well as unpaid bonus.

During 2016, the CEO and the COO forgave unpaid salary due to them of $96,000 and $81,000, respectively.

In January 2016, the Company sold 285,715 shares of Common Stock and warrants to purchase 142,857 shares of Common Stock at $0.70 per share to Wyatts for $100,000 pursuant to the 2016 Subscription. The managing member of Wyatts is the COO of the Company, as well as a Director of the Company.