Quarterly Report (10-q)

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: September 30, 2019

☐ TRANSITION REPORT PURSUANT TO 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		(IRS Employer Identification No.)
incorporation or organization)

185 Hudson Street, Floor 25

Jersey City, New Jersey

07302

(Address of principal executive

offices)

(Postal Code)

Registrant’s telephone number: 929 264 7944

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 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 ☒

On September 30, 2019, there were 28,910,356 shares of the registrant's common stock, par value $0.001, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	Page
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
Condensed Balance Sheets as of September 30, 2019 and December 31, 2018	1
Condensed Statements of Operations for the nine months ended September 30, 2019 and September 30, 2018	2
Condensed Statements of Operations for the three months ended September 30, 2019 and September 30, 2018	3
Condensed Statements of Cash Flows for the nine months ended September 30, 2019 and September 30, 2018	4
Condensed Statement of Changes in Stockholders’ Equity for the nine months ended September 30, 2019	5
Notes to the Condensed Financial Statements	6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	18
ITEM 4. CONTROLS AND PROCEDURES	18
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	19
ITEM 1a. RISK FACTORS	19
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	19
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	19
ITEM 4. MINE SAFETY DISCLOSURE	19
ITEM 5. OTHER INFORMATION	19
ITEM 6. EXHIBITS	20
SIGNATURES	22

MOJO ORGANICS, INC.
Condensed Balance Sheets (Unaudited)
As of September 30, 2019 and December 31, 2018


	September 30, 2019			December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	5,346		$	24,031
Accounts receivable, net		133,649			128,342
Inventory		169,758			159,531
Supplier deposits		5,000			—
Prepaid expenses		21,729			8,299
Security deposit		4,518			4,518
Total Current Assets	$	340,000		$	324,720
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	125,679		$	109,931
Accrued payroll to related parties		33,390			45,000
Total Current Liabilities		159,069			154,931

STOCKHOLDERS'EQUITY
Common stock, 190,000,000 shares authorized at $0.001 par value, 28,910,356 and 26,667,781 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		28,910			27,826
Additional paid in capital		23,411,147			23,190,882
Accumulated deficit		(23,259,126	)		(23,048,919	)
Total Stockholders'Equity		180,931			169,789
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	340,000		$	324,720

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

MOJO ORGANICS, INC.
Condensed Statements of Operations (Unaudited)
For the Nine Months Ended September 30, 2019 and 2018


		2019			2018
Revenue	$	1,346,573		$	1,283,086
Cost of Revenue		692,219			696,604
Gross Profit		654,354			586,482

Operating Expenses
Selling, general and administrative		864,562			864,427
Total Operating Expenses		864,562			864,427

Loss from Operations		(210,208	)		(277,945	)
Other Income		—			—

Loss Before Provision for Income Taxes		(210,208	)		(277,945	)
Provision for Income Taxes		—			—
Net Loss	$	(210,208	)	$	(277,945	)
Net loss per common share, basic and diluted	$	(0.00	)	$	(0.01	)
Basic and diluted weighted average number of common shares outstanding		28,431,664			27,011,460

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

MOJO ORGANICS, INC.
Condensed Statements of Operations (Unaudited)
For the Three Months Ended September 30, 2019 and 2018


		2019			2018
Revenue	$	503,338		$	489,778
Cost of Revenue		262,106			254,251
Gross Profit		241,232			235,526

Operating Expenses
Selling, general and administrative		275,857			374,722
Total Operating Expenses		275,857			374,722

Loss from Operations		(34,625	)		(139,196	)
Other Income		—			—

Loss Before Provision for Income Taxes		(34,625	)		(139,196	)
Provision for Income Taxes		—			—
Net Loss	$	(34,625	)	$	(139,196	)
Net loss per common share, basic and diluted	$	(0.00	)	$	(0.01	)
Basic and diluted weighted average number of common shares outstanding		29,623,689			27,250,188

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

MOJO ORGANICS, INC.
Condensed Statements of Cash Flows (Unaudited)
For the Nine Months Ended September 30, 2019 and 2018


		2019			2018
Cash flows from operating activities:
Net loss	$	(210,208	)	$	(277,945	)
Adjustments to reconcile net loss to net cash (used in)/provided by operating activities:
Stock and warrants issued to directors and employees		222,100			188,824
Changes in assets and liabilities:
Increase in accounts receivable		(5,307	)		(57,648	)
(Decrease)/Increase in inventory		(10,227	)		101,589
Increase in supplier deposits		(5,000	)		(36,677	)
(Increase)/Decrease in prepaid expenses		(13,430	)		1,553
Increase in accounts payable and accrued expenses		15,748			54,323
(Decrease)/Increase in accrued payroll to related parties		(11,610	)		30,075
Net cash (used in)/provided by operating activities		(17,934	)		4,094

Net cash from financing activities:
Shares repurchased for cancellation		(750	)		(14,636	)
Net cash used in financing activities		(750	)		(14,636	)

Net decrease in cash and cash equivalents		(18,684	)		(10,542	)
Cash and cash equivalents at beginning of periods		24,031			22,357
Cash and cash equivalents at end of periods	$	5,346		$	11,815

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

MOJO ORGANICS, INC.
Condensed Statements of Changes in Stockholders' Equity
For the Nine Months Ended September 30, 2019
(Unaudited)


	Common Stock
	Shares			Amount			Additional Paid-In Capital			Accumulated Deficit			Stockholders’ Equity
Balance, January 1, 2019	27,825,773		$	27,826		$	23,190,822		$	(23,048,918	)	$	169,789
Stock and warrants issued to Directors and Employees	1,088,750			1,089			221,011			—			222,100
Stock repurchased and cancelled	(4,167	)		(4	)		(746	)		—			(750	)
Net loss	—			—			—			(210,208	)		(210,208	)
Balance, September 30, 2019	28,910,606		$	28,910		$	23,411,147		$	(23,259,126	)	$	180,930

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

MOJO ORGANICS, INC.

Notes to Condensed Financial Statements

September 30, 2019

NOTE 1 – BUSINESS

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. The Company flagship product is MOJO Pure Coconut Water. In addition to Pure Coconut Water, the Company produces Sparkling Coconut Water, Coconut Water + Mango Juice, and Coconut Water + Pineapple Juice. The Company sells its products to distributors, wholesalers and direct to consumers through e-commerce platforms.

Interim Financial Statements

The accompanying unaudited interim condensed financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q and article 10 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures included in these financial statements are adequate to make the information presented not misleading. The unaudited interim condensed financial statements included in this document have been prepared on the same basis as the annual audited financial statements, and in the Company’s opinion, reflect all adjustments necessary for a fair presentation in accordance with GAAP and SEC regulations for interim financial statements. The results for the nine months ended September 30, 2019 are not necessarily indicative of the results that the Company will have for any subsequent period. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The financial statements are prepared in conformity with GAAP. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash equivalents include investment instruments and time deposits purchased with a maturity of three months or less. As of September 30, 2019 and December 31, 2018, the Company did not have any cash equivalents. For purposes of reporting cash flows, cash and cash equivalents include all highly liquid investments purchases with a maturity of three months or less.

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company provides for probable uncollectible amounts based upon its assessment of the current status of the individual receivables and after using reasonable collection efforts. The allowance for doubtful accounts as of September 30, 2019 and December 31, 2018 was zero.

Inventories

Inventories, consisting solely of finished goods, are stated at the lower of cost (first-in, first-out method) or net realizable value. If 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.

Deductions from Revenue

Costs incurred for sales incentives and discounts are accounted for as reductions in revenue. These costs include payments to customers for performing merchandising activities on our behalf, including in store displays, promotions for new items and obtaining optimum shelf space.

Shipping and Handling Costs

Shipping and handling costs incurred to move finished goods from our sales distribution centers to customer locations are included in the line Selling, General and Administrative Expenses in our Statements of Operations.

Net Loss Per Common Share

The Company computes per share amounts in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, “Earnings per Share”. ASC Topic 260 requires presentation of basic and diluted EPS. Basic EPS is computed by dividing the loss available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted average number of shares of common stock and common stock equivalents outstanding during the periods.

The following potentially dilutive securities have been excluded from the computation of weighted average shares outstanding as they would have had an anti-dilutive impact on the Company’s net loss per common share:

	At September 30,
	2019		2018
Shares underlying options outstanding		901,796		2,476,559
Shares underlying warrants outstanding		1,500,000		3,530,223
Total		2,401,796		6,006,782

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 penalties related to income tax matters in income tax expense. As of September 30, 2019 and September 30, 2018, 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. As of September 30, 2019 and December 31, 2018, the Company had Net Operating Loss Carryforwards of $4,955,634 and $4,736,851, respectively, and recognized an Allowance for Deferred Tax Assets amounting to $1,295,155 and $1,237,976, respectively. The Company does not expect the allowance to be reversed within the next twelve months.

Stock-Based Compensation

The Company accounts for equity based transactions under the provisions of ASC Topic 718, “Accounting for Stock-Based Compensation”. The ASC prescribes accounting and reporting standards for 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.

Share based payment awards are measured at grant date fair value of the equity instrument that an entity is obligated to issue when the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.

Fair value of financial instruments

The carrying amounts of financial instruments, which include cash, accounts receivable, accounts payable and accrued expense, approximate their fair values due to their short-term nature.

Recent Accounting Pronouncements

In March 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-01, “Leases(Topic 842): Codification Improvements”. The ASC aims to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing essential information about leasing transactions. The Company has assessed that this pronouncement has no impact on the financial statements.

NOTE 3 – COMMITMENTS AND CONTINGENCIES

Employment Agreements

On April 6, 2017, the Company entered into an Amended and Restated Employment Agreements with Mr. Glenn Simpson (the “Simpson Agreement”), the Company’s Chairman and Chief Executive Officer (the “CEO”).The Simpson Agreement was effective April 1, 2017 and has an eight year term.

Pursuant to the Simpson Agreement dated April 6, 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. 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 May 31, 2025 based upon achieving revenue performance goals. The revenue goals range from $2,400,000 to $19,200,000 per year. The bonus awards are accelerated when revenues exceed the annual target amounts.

During the nine months ended September 30, 2019, 603,000 shares of restricted Common Stock were issued to the CEO as part of the Simpson Agreement for his first, second and third quarter compensation. During 2018, he did not receive cash payments. Mr. Simpson received stock in lieu of cash for the first quarter of 2018. He was owed $33,390 and $45,000 as of September 30, 2019 and December 31, 2018, respectively, for the cash portion of his salary.

On December 8, 2017, the Company entered into an Amended and Restated Employment Agreement with Mr. Peter Spinner (the “Spinner Agreement”), who was the Company’s Chief Operating Officer at that date. This agreement was effective January 1, 2018. Pursuant to the Spinner Agreement, Mr. Spinner received $5,000 paid in stock each month for part-time employment.

The Spinner Agreement was terminated on March 31, 2018 when Mr. Spinner’s employment with MOJO ended.

The “Simpson Agreement” is the only executive employment agreement in effect as of September 30, 2019.

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.

Lease Commitment

The Company maintains office space in Jersey City, NJ. The initial lease agreement was for the period March 1, 2018 to February 28, 2019 and was renewed for one year (through February 29, 2020) under the same terms. The rent under this agreement is $2,304 per month. Lease expense amounted to $20,736 and $20,682 for the nine months ended September 30, 2019 and 2018 respectively. The security deposit for the lease agreement is $4,518 and the lease expires on February 29, 2020.

NOTE 4 – STOCKHOLDERS’ EQUITY

The Company has authorized 190,000,000 shares of Common Stock having a par value of $0.001. On February 4, 2019, the Company by a vote of its majority shareholders cancelled the authorization for the issuance of up to 10,000,000 shares of preferred stock. There were no shares of preferred stock issued or outstanding prior to this change.

2012 Incentive Plan

The 2012 Incentive Plan was terminated by the Board of Directors on February 18, 2019. The Company’s Board of Directors resolved that the 2012 Incentive Plan which allowed the issuance of up to 2,050,000 securities to officers, directors and consultants as incentive compensation would be terminated. It was further resolved that 70,000 options to purchase shares of common stock issued under the 2012 Incentive Plan be converted into 70,000 shares of Common Stock. Another resolution was made that Mr. Glenn Simpson be permitted to exercise his option to purchase 222,000 shares of Common Stock for $0.255 per share.

The 2012 Incentive Plan was approved by our shareholders in March 2013. The 2012 Incentive Plan provided 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. In 2016, the Company issued 620,000 stock options to purchase shares of common stock that expire in August 2019, and issued 1,073,441,restricted common stock to its Directors and employees. In 2017, the Company granted stock options to purchase 356,559 shares that expire in April 2022. The options were priced at the fair market value of the Common Stock and are exercisable. In 2018, there were no issuances under the 2012 plan. As of December 31, 2018, issued stock options total 976,559. During 2018, 495,403 stock options had been cancelled due to termination of employment and were available for reissuance at that time.

2015 Incentive Plan

The 2015 Incentive Plan was terminated by the Board of Directors on January 24, 2019. The 2015 Incentive Plan provided 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.

The Company approved the 2015 Incentive Plan in October 2015. The 2015 Incentive Plan provided 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 April, 2017, the Company granted stock options to purchase 1,500,000 shares of Common Stock pursuant to the 2015 Plan. The options were priced at the fair market value of the Common Stock and were exercisable from the date of issuance. In 2018, there were no issuances under the 2015 plan. As of December 31, 2018, issued stock options total 1,500,000. During 2018, 693,610 stock options had been cancelled due to termination of employment and were available for reissuance at that time.

Restricted Stock Compensation

On May 9, 2018, the Company’s Board of Directors approved to the lifting of the prior restrictions on 8,756,542, shares issued to the CEO and 4,709,022, shares issued to the former COO of the Company.

Restricted Stock Issuances

During the nine months ended September 30, 2019, 1,088,750 shares of restricted Common Stock were issued to Directors and Officers of the Company. These shares have full voting rights but are restricted for sale or transfer.

During the quarter ended March 31, 2019, a total of 493,000 shares of restricted Common Stock were issued. The CEO exercised his option to purchase 222,000 shares at $0.255 per share. The CEO was also issued 201,000 shares for the stock portion of his salary for the first quarter. Two directors who had 35,000 options each were issued a total of 70,000 shares of Common Stock following the resolution to terminate the 2012 Incentive Plan as discussed in Note 4.

During the quarter ended June 30, 2019, a total of 251,000 shares of restricted Common Stock were issued. 201,000 shares were issued to the CEO for the stock portion of his salary for the second quarter and 50,000 shares were issued to the Corporate Controller as part of her annual stock bonus.

During the quarter ended September 30, 2019, a total of 344,750 shares of restricted Common Stock were issued. The CEO exercised his option to purchase 93,750 shares at $0.16 per share. The total exercise value is $15,000 and this reduced the loan payable balance to the CEO to $0. The CEO was also issued 201,000 shares for the stock portion of his salary for the third quarter. The Corporate Controller was also issued 50,000 shares as part of her annual stock bonus.

Stock Warrants

In connection with private placement offerings in March 2014 (the “2014 Offerings”), warrants to purchase 2,030,223 shares of Common Stock were issued at a price of $0.91 per share. These warrants expired on March 12, 2019.

In connection with the February 2016 Private Placement Offering, warrants to purchase 482,143 shares of Common Stock were issued at a price of $0.70 per share, these warrants expired on February 12, 2018.

The following table summarizes warrant activity during the period:

Outstanding at December 31, 2018	3,530,223
Expired in March 2019	(2,030,223	)
Outstanding at September 30, 2019	1,500,000
Exercisable at September 30, 2019	1,500,000

	Number of Warrants		Expiration Date	Exercise Price		Exercise Value
Issued August 19, 2015		1,500,000	August 19, 2020	$	0.40	$	600,000
Exercisable at September, 2019		1,500,000

Advisory Services

On October 3, 2013, the Company entered into an agreement for strategic business advisory services, public relations services and investor relations services with Ian Thompson from Carricklee House, Strabane, Northern Ireland.

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 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. Empire Stock Transfer, Inc, the Company’s transfer agent was directed to process cancellation requests regarding the certificates listed below. The Board of Directors approved the Company’s irrevocable agreement to indemnify the Transfer Agent for all loss, liability or expense in carrying out the authority and direction contained on the terms of the Unanimous Written Consent to terminate the Thompson Agreement. The Transfer Agent shall maintain the right to uphold the transfer in the event of forgery.

Certificate No(s)		Registered To	No. of Shares		Transfer to or CANCELLED	No. of Shares
	605	Ian Thompson		50,000	CANCELLED		50,000
	606	Ian Thompson		50,000	CANCELLED		50,000
	607	Ian Thompson		50,000	CANCELLED		50,000
	608	Ian Thompson		50,000	CANCELLED		50,000
	610	Ian Thompson		167,204	CANCELLED		167,204

Stock Purchased for Cancellation

During the period January 1, 2019 to September 30, 2019, the Company purchased 4,167 shares of its restricted common stock from one shareholder for cancellation. The Company paid $750 which was the market price for its traded shares during the period. The shares were cancelled and are available for reissuance.

NOTE 5 – STOCK OPTIONS

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 Incentive Plan and the 2015 Incentive Plan, respectively. See note 4. The options were priced at the fair market value of the Common Stock and are immediately exercisable.

On March 31,2018, 1,189,013 stock options were forfeited due to a termination of employment.

On February 18, 2019, the Company’s Board of Directors resolved to terminate the 2012 Incentive Plan, and it was resolved further that 70,000 options to purchase shares of Common Stock be converted into 70,000 shares of Common Stock. It also allowed the CEO of the Company to exercise his option to purchase 222,000 shares of Common Stock.

During February, two of the Company’s Directors surrendered 70,000 stock options and were issued 70,000 shares of Common Stock in exchange. The CEO of the Company was also issued 222,000 shares of Common Stock.

On August 13, 2019, the Company’s Board of Directors resolved to allow the CEO to exercise his option to purchase 93,750 shares at $0.16 per share. The total exercise value of $15,000 was reduced the loan payable to the CEO to $0.

As of September 30, 2019, there are 901,796 remaining options outstanding that were issued to Glenn Simpson. The weighted average exercise price is $0.16.

The following table summarizes stock option activity under the Plans:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding, December 31, 2018		1,287,546		$	0.182		2.69
Granted
Exercised		(315,750	)		0.227		—
Forfeited		(70,000	)		0.255		—
Outstanding, September 30, 2019		901,796		$	0.160		2.52
Exercisable, September 30, 2019		901,796		$	0.160		2.52

During the nine months ended September 30, 2019 and 2018, compensation expense related to stock options of $0 and $0, respectively, was recorded. As of September 30, 2019, there was no unrecognized compensation cost related to non-vested stock options.

NOTE 6 – RELATED PARTY TRANSACTIONS

On February 25, 2019 the CEO of the Company exercised 222,000 stock options at an exercise price of $0.255 and the accrued payroll owed to him was reduced by $56,610.

On August 13, 2019 the $15,000 loan payable balance was used to pay for an option exercise made by the CEO of the Company. As a result of the transaction, the Company issued 93,750 shares to the CEO and the balance payable under the loan was reduced to $0.

As of September 30, 2019, accrued payroll of $48,784 was owed to the CEO and employees.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided in addition to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flows. MD&A is organized as follows:

•

Significant Accounting Policies — Accounting policies that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.

•

Results of Operations — Analysis of our financial results comparing the nine months ended September 30, 2019 to September 30, 2018.

•

Results of Operations — Analysis of our financial results comparing the three months ended September 30, 2019 to September 30, 2018.

•

Liquidity and Capital Resources — Analysis of changes in our cash flows, and discussion of our financial condition and potential sources of liquidity.

This report includes a number of forward looking statements that reflect our current views with respect to future events and financial performance. Forward looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward looking statements, which apply only as of the date of this annual report. These forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Significant Accounting Policies

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

All of our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, to our financial statements, included elsewhere in this Annual Report. We have identified the following as our 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.

Recent Accounting Pronouncements

New Accounting Pronouncements

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 Non GMO Project Verified.

Results of Operations

Nine Months Ended September 30, 2019 and 2018

Revenue

For the nine months ended September 30, 2019, the Company reported revenue of $1,346,573, an increase of $ 63,487 or 5% from revenue of $1,283,086 for the nine months ended September 30, 2018. The increase in revenue was primarily due to the growing demand for MOJO branded products, and to a lesser extent private label products.

Cost of Revenue

Cost of revenue includes finished goods purchase costs, production costs, raw material costs and freight in costs. Also included in cost of revenue are adjustments made to inventory carrying amounts, including markdowns to market.

For the nine months ended September 30, 2019, cost of revenue was $692,219 or 51% of revenue. For the nine months ended September 30, 2018, cost of revenue was $696,604 or 54% of revenue. The 3 percentage points decrease was primarily due to lower purchase price of goods and lower freight in costs.

Operating Expenses

For the nine months ended September 30, 2019, operating expenses were $864,562 an increase of $135 from operating expenses of $864,427 for the nine months ended September 30, 2018.

This increase in operating expenses was comprised of higher selling expenses offset by lower compensation expenses and consulting fees. Selling expenses were $350,061 for the nine months ended September 30, 2019 compared to $289,015 for the nine months ended September 30, 2018. This $61,045 increase is attributable to the Amazon selling fees coupled with an increase in freight and delivery expenses. Total compensation expense decreased by $10,308 from the same period last year, while consulting fees decreased by $50,683 due to termination of consulting agreements in 2018.

Three Months Ended September 30, 2019 and 2018

Revenue

For the three months ended September 30, 2019, the Company reported revenue of $503,338, an increase of $13,560 or 3% from revenue of $489,778 for the three months ended September 30, 2018. The increase in revenue was due to the new private label orders that MOJO fulfilled during the quarter.

Cost of Revenue

For the three months ended September 30, 2019, cost of revenue was $262,106 or 52% of revenue. For the three months ended September 30, 2018, cost of revenue was $254,251 or 52% of revenue. The Company was able to maintain the same cost ratio from the same period last year.

Operating Expenses

For the three months ended September 30, 2019, operating expenses were $275,857 a decrease of $98,865 from operating expenses of $374,722 for the three months ended September 30, 2018.

The decrease in operating expenses was comprised of lower selling expenses, compensation costs and consulting expenses. Selling expenses were $108,331 for the three months ended September 30, 2019 compared to $122,850 for the nine months ended September 30, 2018. This $14,519 decrease is attributable to lower storage fees and warehouse processing fees offset by an increase in freight and delivery expenses. Compensation expenses decreased by $6,747 from $126,827 in 2018 while consulting fees decreased by $50,683 for the same period last year.

Liquidity and Capital Resources

Liquidity

As of September 30, 2019, the Company had working capital of $180,930. Net cash used for operating activities was $17,934 for the nine months ended September 30, 2019, a decrease of $22,028 compared to net cash derived from operating activities for the nine months ended September 30, 2018. Net cash used in financing activities was $750 for the nine months ended September 30, 2019 and $14,636 for the nine months ended September 30, 2018.

Working Capital Needs

Our working capital requirements increase as demand grows for our products. Should the Company require additional working capital in the next twelve months, it may seek to raise funds. Financing transactions could 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 September 30, 2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

Not applicable.

ITEM 4. 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 operating effectively.

Changes in Internal Control over Financial Reporting

There was no change in our internal controls over financial reporting during the nine months ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are currently not a party to any material legal or administrative proceedings and are not aware of any pending or threatened material legal or administrative proceedings arising in the ordinary course of business. We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.

ITEM 1A. RISK FACTORS

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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	10.19	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	10.25	Amended and Restated Employment Agreement by and between MOJO Organics, Inc. and Glenn Simpson dated June 15, 2015 (16)
10.26	10.26	Amended and Restated Employment Agreement by and between MOJO Organics, Inc. and Peter Spinner dated June 15, 2015 (16)
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	16.1	Letter from Cowan, Gunteski & Co., P.C. dated April 21, 2016 (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.

† 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 Annual Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on June 30, 2015.

	(17)	Incorporated by reference to the Registrant’s Annual Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on August 25, 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 22, 2016.

SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		MOJO ORGANICS, INC.

Dated: October 25, 2019	By:	/s/ Glenn Simpson
		Glenn Simpson
		Chief Executive Officer and Chairman
		(Principal Executive and Principal Financial Officer)