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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, 2021

 

OR

 

☐ TRANSITION REPORT PURSUANT TO UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________ to _______________

 

Commission file number: 000-55269

 

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: 929 264 7944

 

Securities registered under Section 12(b) of the Act: None

 

Securities registered under Section 12(g) of the Act: Common Stock, $0.001 par value per share

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.

Yes ☐ No ☒

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See the definitions of the “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and emerging growth company in Rule 12b-2 of the Exchange Act:

 

Large Accelerated Filer ☐ Accelerated Filer ☐
Non-Accelerated Filer ☐ Smaller reporting company ☒
Emerging growth company ☐    

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

 

As of June 30, 2021 (the last day of the registrant’s most recently completed second quarter), the aggregate market value of the registrant’s common stock (based on its reported last sale price on such date of $0.168 per share) held by non-affiliates of the registrant was $1,966,263.

 

On February 17, 2022 there were 30,661,080 shares of the registrant’s common stock, par value $0.001, issued and outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page
Forward Looking Information 1
   
PART I    
Item 1. Business 2
Item 2. Risk Factors 3
Item 3. Unresolved Staff Comments 4
Item 4. Legal Proceedings 4
Item 5. Mine Safety Disclosures 4
     
PART II    
Item 6. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 5
Item 7. Selected Financial Data 5
Item 8. Management’s Discussion and Analysis of Financial Condition and Results of Operations 6
Item 9. Quantitative and Qualitative Disclosures About Market Risk 8
Item 10. Financial Statements and Supplementary Data 8
Item 11. Changes and Disagreements with Accountants on Accounting and Financial Disclosure 9
Item 12. Controls and Procedures 9
Item 13. Other Information 9
     
PART III    
Item 14. Directors, Executive Officer and Corporate Governance 10
Item 15. Executive Compensation 12
Item 16. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 14
Item 17. Certain Relationships and Related Transactions, and Director Independence 15
Item 18. Principal Accountant Fees and Services 16
     
PART IV    
Item 19. Exhibits, Financial Statement Schedules 17
SIGNATURES 19

 

ii

 

 

FORWARD-LOOKING STATEMENTS

 

This report contains forward-looking statements. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements using words such as “expects,” “anticipates,” “intends,” “believes” and similar language.

 

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

 

All references in this Annual Report on Form 10-K to “MOJO,” “MOJO Organics,” the “Company,” “we,” “us” or “our” mean MOJO Organics, Inc.

 

1

 

 

PART I

 

ITEM 1. BUSINESS

 

COMPANY OVERVIEW

 

MOJO Organics, Inc. (“MOJO”) is a Delaware corporation headquartered in Jersey City, NJ. The Company’s business is new product development, beverage production, marketing, distribution and the sale of beverages that are, Non-GMO Project verified, and USDA Organic. The Company’s flagship product is MOJO Coconut Water. In addition to Coconut Water, the Company produces Sparkling Coconut Water, Coconut Water + Mango Juice and Coconut Water + Pineapple Juice and USDA Organic Coconut Water. We seek to grow the market share of our products by expanding our hybrid distribution network through the relationships and efforts of our management, third party partners and our broker network, and add new products and packaging including pH7 water (pH is a scale of acidity) and energy beverages which are the two largest sectors of the beverage industry. The Company packages its beverages in 100% recyclable, Eco-Friendly packaging. The packaging has a low impact on the environment when recycled.

 

CURRENT OPERATIONS

 

Sales and Distribution

 

The Company’s flagship product is MOJO Coconut Water. In addition to Coconut Water, the Company produces Sparkling Coconut Water, Coconut Water + Mango Juice, Coconut Water + Pineapple Juice, and Organic Coconut Water. We seek to grow the market share of our products by expanding our hybrid distribution network through the relationships and efforts of our management and third-party partners and broker network, and new products and packaging. The company packages its beverages in 100% recyclable, Eco-Friendly packaging that can be recycled infinite times and is not made from carbon oil-based packaging. The packaging has a very low impact on the environment, and does not contribute to landfills and the pollution of our bodies of water.

 

Production

 

The Company has multiple sources for its production. The Company’s fruit sources are of high quality. The fruit is part of the overall taste and quality of our products. Currently, the Company has multiple production facilities that it could source products from, each of the facilities could supply our forecasted demand.

 

Competition

 

The beverage industry is competitive. Competitors in our market compete for brand recognition, ingredient sourcing, product shelf space, and e-commerce page rankings. Our competitors have similar distribution channels and retailers to deliver and sell their products.

 

Government Regulation

 

Within the United States, beverages are governed by the U.S. Food and Drug Administration (the “FDA”). As such, it is necessary for the Company to establish, maintain and make available for inspection records as well as to develop labels (including nutrition information) that meet FDA requirements. The Company’s production facilities are subject to FDA regulation.

 

Employees

 

As of December 31, 2021, the Company had two employees. The Company also uses the services of contractors, consultants and other third-parties. We contract with food brokers to represent our products to specific specialized sales channels. We utilize the services of direct sales and distribution companies that deliver and sell our products to their customers. We contract with manufacturing facilities to produce our products and outsource the storage and transportation of our products.

 

CORPORATE HISTORY AND DEVELOPMENT

 

The Company was incorporated in 2007 and began producing MOJO branded products in 2016. 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.

 

2

 

 

ITEM 2. RISK FACTORS

 

In addition to the other information set forth in this report, you should consider the following factors, which could materially affect our business, financial condition or results of operations in future periods. The risks described below are not the only risks facing our Company. Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations in future periods.

 

If we are unable to expand our operations in the marketplace, our growth rate could be negatively affected.

 

Our success depends in part on our ability to grow our business. We have adopted and implemented a strategic plan to increase awareness of our products, secure additional distribution channels, and foster and strengthen our supply, manufacturing and distribution relationships. Our strategic plan includes addressing changes in the market. There can be no assurance that we will achieve the growth necessary to achieve our objectives.

 

We could need additional capital in the future to expand our operations and execute our business objectives.

 

Should we need additional capital to expand our operations, financing transactions may include the issuance of equity, debt securities, and credit facilities.

 

The challenges of competing with other beverage companies could result in reductions to our revenue and operating margins.

 

The nonalcoholic beverage segment of the beverage industry is competitive. We compete with numerous beverage companies, including those marketing similar products. All beverages’ companies are competing for stomach share on a daily basis which is approximately 64 oz. of fluid per day, per person. Our success depends on our ability to secure distribution channels for our products, our ability to make consumers aware of our products and the appeal of our products to consumers.

 

Disruption of supply, increases in costs or shortages of ingredients could affect our operating results.

 

Availability of supply and the prices charged by the producers of production inputs used in our products can be affected by a variety of factors, including the general demand by other buyers for the same fruits used by us in our products, and country politics and country economics in the area in which our fruit is grown.

 

The quality of fruit we seek trades on a negotiated basis, depending on supply and demand at the time of the purchase. An increase in the price of any fruit that we use in our products will have a negative effect on our margins should we be unable to increase our sales price. Higher energy costs may increase the cost of transporting our supplies. Changes in emission rules for maritime vessels will likely increase costs of shipping our products. Conversely, lower fruit prices and lower energy prices will have a positive result on transport and packaging costs.

 

3

 

 

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

 

We use independent bottlers for the production of our products. Accordingly, we are dependent on the bottlers and their ability to meet production demands and to achieve product quality. We play an active role in the production of our beverages, which includes but is not limited to developing our formulations, maintaining control over the labeling and packaging of our beverages, and packaging and function of our packaging and correct FDA labeling. We also review and monitor the safety certifications of the factories including their status with the United States Food and Drug Administration. We also inspect the warehouses that our products are stored in, and monitor the trucking companies that deliver our goods.

 

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

 

The packaged food industry can be adversely affected by litigation and complaints from customers and government authorities resulting from product quality, health claims, allergens, illness, and injury. Adverse publicity about these allegations may negatively affect the Company, regardless of whether the allegations are true. In addition, the food industry has been subject to a number of claims based on the nutritional content of food products they sell, and disclosure and advertising practices. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot predict the ultimate outcome of any such proceedings. An unfavorable outcome will have an adverse impact on our business. In addition, any litigation or regulatory proceedings may result in substantial costs.

 

ITEM 3. UNRESOLVED STAFF COMMENTS

 

None

 

ITEM 4. LEGAL PROCEEDINGS

 

We are not a party to any legal or administrative proceedings and are not aware of any pending or threatened legal or administrative proceedings against the Company in all material aspects. We could from time to time become a party to various legal or administrative proceedings arising in the course of our business.

 

ITEM 5. MINE SAFETY DISCLOSURE

 

None

 

4

 

 

PART II

 

ITEM 6. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

The Company’s Common Stock is currently quoted on the OTCQB under the symbol MOJO.

 

For the period January 1, 2020 to December 31, 2021, the following table sets forth the high and low closing bid prices by quarter, based upon information obtained from inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions:

 

   High   Low   VWAP*   Shares Traded 
Fourth Quarter 2021  $0.18   $0.06   $0.11    427,674 
Third Quarter 2021  $0.18   $0.10   $0.15    133,304 
Second Quarter 2021  $0.21   $0.13   $0.16    500,436 
First Quarter 2021  $1.00   $0.07   $0.21    1,465,729 
                     
Fourth Quarter 2020  $0.19   $0.07   $0.10    518,513 
Third Quarter 2020  $0.17   $0.06   $0.10    484,154 
Second Quarter 2020  $0.20   $0.07   $0.12    471,884 
First Quarter 2020  $0.29   $0.06   $0.19    133,688 

 

*Volume weighted average shares

 

Holders

 

As of December 31, 2021, there were 31,097,580 shares of Common Stock issued and outstanding held by 944 shareholders of record.

 

Dividends

 

The Company has not declared a cash dividend with respect to its Common Stock. Future payment of dividends is within the discretion of the Board of Directors and will depend on earnings, capital requirements, financial condition and other relevant factors.

 

Recent Sales of Unregistered Securities, Use of Proceeds from Registered Securities

 

There were no sales of unregistered securities during the years ended December 31, 2021 and 2020.

 

Issuer Purchases of Equity Securities

 

During the year ended December 31, 2021, the Company repurchased 765,826 shares of MOJO Restricted Common Stock from shareholders at a total cost of $107,215. The shares were cancelled.

 

During the year ended December 31, 2020, the Company repurchased 125,000 shares of MOJO Restricted Common Stock from shareholders at a total cost of $15,050. The shares were cancelled.

 

ITEM 7. SELECTED FINANCIAL DATA

 

None

 

5

 

 

ITEM 8. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

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

 

  ● Significant Accounting Policies — Accounting policies that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
     
  ● Results of Operations — Analysis of our financial results comparing the year ended December 31, 2021 to 2020.
     
  ● Liquidity and Capital Resources — Analysis of changes in our cash flows, and discussion of our financial condition and potential sources of liquidity.

 

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

 

Significant Accounting Policies

 

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

 

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

 

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

 

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

 

6

 

 

Fair Value of Financial Instruments — Our short-term financial instruments, including cash, accounts receivable, accounts payable and other liabilities, consist primarily of instruments without extended maturities. We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts.

 

Results of Operations

 

Years Ended December 31, 2021 and 2020

 

Revenue

 

For the year ended December 31, 2021, the Company reported revenue of $1,918,882 an increase of $176,963 from revenue of $1,741,919 for the year ended December 31, 2020. The increase in revenue was primarily due to the strong sales for the MOJO Organic Coconut Water 1Liter product coupled with an increase in cases sold for the other MOJO branded 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 twelve months ended December 31, 2021, cost of revenue was $1,069,844 or 56% of revenue. For the twelve months ended December 31, 2020, cost of revenue was $917,639 or 53% of revenue. The 3% increase in cost of revenue was primarily due to the higher costs of ocean freight compared to last year.

 

7

 

 

Operating Expenses

 

For the year ended December 31, 2021, the selling, general and administrative expenses was $844,654 a decrease of $65,564 from the year ended December 31, 2020 of $910,218.

 

This decrease in operating expenses was primarily due to lower selling expenses and professional fees. Office expenses and marketing fees also decreased compared to the same period last year. Selling expenses decreased by $27,865 compared while professional fees decreased by $12,068 compared to the year ended December 31, 2020. Office expenses including rent expense amounted to $20,096 for the year ended December 31, 2021 compared to $35,904 for the year ended December 31, 2020. Marketing fees decreased by $9,484 compared to the same period last year.

 

Net Income/(Loss)

 

For the year ended December 31, 2021, the net income was $39,892 a $123,610 improvement from a net loss of ($83,719) for the year ended December 31, 2020.

 

Liquidity and Capital Resources

 

Liquidity

 

As of December 31, 2021, the Company had working capital of $370,552 Net cash provided by operating activities was $103,463 for the year ended December 31, 2021, compared to net cash used in operating activities for the year ended December 31, 2020 of $26,203. Net cash used in financing activities was $107,215 for the year ended December 31, 2021 compared to net cash provided by financing activities of $20,458 for the year ended December 31, 2020. Net cash was used in financing activities to repurchase MOJO Restricted Common Stock for the year ended December 31, 2021.

 

Working Capital Needs

 

Our working capital requirements increase as demand grows for our products. During 2021 and 2020, the Company did not require additional funding. 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, debt securities and obtaining credit facilities.

 

OFF BALANCE SHEET ARRANGEMENTS

 

None

 

ITEM 9. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

 

None

 

ITEM 10. FINANCIAL STATEMENTS

 

The audited financial statements are included beginning immediately following the signature page to this report. See Item 15 for a list of the financial statements included herein.

 

8

 

 

ITEM 11. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

On November 18, 2020, the Company advised MSPC Certified Public Accountants and Advisors (MSPC) that it was dismissed as the Company’s independent registered public accounting firm. The decision to dismiss MSPC as the Company’s independent registered public accounting firm was approved by the Company’s Board of Directors on November 18, 2020. On November 18, 2020, the Company engaged Boyle CPA, LLC as its independent registered public accounting firm for the Company’s fiscal year ended December 31, 2020. The decision to engage the New Auditor as the Company’s independent registered public accounting firm was approved by the Company’s Board of Directors.

 

ITEM 12. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

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

 

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

 

Management’s Annual Report on Internal Control over Financial Reporting

 

The management of 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, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

ITEM 13. OTHER INFORMATION

 

None

 

9

 

 

PART III

 

ITEM 14. DIRECTORS, EXECUTIVE OFFICER, AND CORPORATE GOVERNANCE

 

Executive Officer and Directors

 

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

 

Name   Age   Title   Appointed
Glenn Simpson   69   Chairman and CEO   October 27, 2011
Jeffrey Devlin   74   Director   January 27, 2012

 

Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Biographical information of each current officer and director is set forth below.

 

Glenn Simpson is Chairman of the Board of Directors and Chief Executive Officer of the Company. Mr. Simpson joined the Company in October 2011. He has extensive experience in the beverage industry. Mr. Simpson was Vice President and Chief Financial Officer of Coca-Cola Bottlers, Inc. in Uzbekistan from 1995 to 2000. His primary responsibilities included corporate strategy, supervision of bottling and distribution operations and facilities construction. His accomplishments included growing revenues from a base at $4 million to over $160 million annually. The company was awarded “Bottler of the Year” by The Coca-Cola Company for two consecutive years under his leadership based upon product quality and revenue growth. From 2009 to 2011, Mr. Simpson was engaged in beverage projects on a consulting basis in Russia and Afghanistan. Mr. Simpson is a Certified Public Accountant and holds an MBA from Columbia University School of Business.

 

Jeffrey Devlin has served on the Board of Directors of the Company since January 2012. Mr. Devlin has over 35 years of advertising and business development experience. Mr. Devlin currently serves as Chief Marketing Officer – Government, Advertising and Commerce at Deloitte Consulting LLP. He has held various other executive and creative positions over the course of his advertising career, including launching the introduction of Diet Coke for The Coca-Cola Company. Mr. Devlin currently serves on the board of directors of a number of private organizations, as well as on the board of directors of Location Based Technologies, Inc., a publicly traded company. Mr. Devlin received a Bachelor’s degree from Bethel University.

 

10

 

 

Board Committees

 

The Company has not established any committees of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations. Our two directors perform all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and allocate responsibilities accordingly.

 

Shareholder Communications

 

Currently, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations.

 

Code of Ethics

 

We have adopted a written code of ethics (the “Code of Ethics”) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. We believe that the Code of Ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. To request a copy of the Code of Ethics, please make written request to our Company at 185 Hudson Street, Floor 25, Jersey City, New Jersey 07302.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Under Section 16(a) of the Exchange Act, all executive officers, directors, and each person who is the beneficial owner of more than 10% of the common stock of a company that files reports pursuant to Section 12 of the Exchange Act of 1934, are required to report the ownership of such common stock, options, and stock appreciation rights (other than certain cash only rights) and any changes in that ownership with the SEC. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2020 all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with.

 

11

 

 

ITEM 15. EXECUTIVE COMPENSATION

 

The following table sets forth information concerning the total compensation paid or earned by each of our named executive officers (as defined under SEC rules).

 

Name and Principal Position  Year   Salary 
Glenn Simpson, Chairman & CEO  2021   $180,868(1)
   2020   $164,788(1)

 

(1) Pursuant his employment agreement (the “Simpson Agreement”), Mr. Simpson is paid a salary of $5,000 per month in cash and the Company is obligated to grant Mr. Simpson 67,000 shares of non-trading, restricted Common Stock per month. Pursuant to this agreement, Mr. Simpson is also entitled to an annual bonus comprised of cash and non-trading, restricted Common shares based on performance goals established by the Board of Directors of the Company. The cash bonus is established at $44,400 per year. The stock bonus is set at 200,000 shares of non-trading, restricted Common Stock per year through March 31, 2025.

 

During the year ended December 31, 2021, 804,000 shares of Non-trading, Restricted Common Stock were issued to Mr. Simpson for the stock portion of his compensation. During the year 2021, Mr. Simpson exercised stock options to purchase 187,500 non-trading, restricted shares for a total exercise price of $30,000. This reduced the accrued salary owed to him.

 

During the year ended December 31, 2020, 804,000 shares of Non-trading, Restricted Common Stock were issued to the Mr. Simpson for the stock portion of his compensation. During the year 2020, Mr. Simpson exercised stock options to purchase 156,250 non-trading, restricted shares for a total exercise price of $25,000. This reduced the accrued salary owed to him.

 

12

 

 

Employment Agreements

 

The “Simpson Agreement” is the only employment agreement in effect as of December 31, 2021. See discussion above.

 

Outstanding Option Awards at December 31

 

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

 

       Common stock underlying    
Name  Year   exercisable options   Expiration date  Exercise price 
Glenn Simpson   2021    318,108   4/6/2024  $0.16 
    2020    505,608   4/6/2024  $0.16 

 

Option Exercises in 2021 and 2020

 

During the year ended December 31, 2021, Mr. Simpson exercised options to purchase 187,500 Restricted and Non-Trading shares. The total exercise value was $30,000 and this reduced the accrued salary payable to Mr. Simpson to $0.

 

During the year ended December 31, 2020, Mr. Simpson exercised options to purchase 156,250 Restricted and Non-Trading shares. The total exercise value was $25,000 and this reduced the accrued salary payable to Mr. Simpson to $0.

 

13

 

 

Director Compensation

 

The non-employee director did not receive cash compensation for serving as such, for serving on committees (if any) of the Board of Directors or for special assignments. Board members are not reimbursed for expenses incurred in connection with attending meetings.

 

ITEM 16. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth information with respect to the beneficial ownership of our Common Stock known by us as of December 31, 2021 by:

 

  ● each director;
  ● each named executive officer; and
  ● all directors and executive officers as a group.

 

Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common Stock owned by them, except to the extent such power may be shared with a spouse.

 

Name  Shares   Options   Strike Price   Expiration Date  Percent of Common Stock and Options (1) 
Glenn Simpson   12,779,676                 41%
Glenn Simpson        318,108   $0.16   4/6/2024   1%
Total – Glenn Simpson   12,779,676    318,108            42%
Chairman and CEO                       
Diane Cudia   583,833                 2%
Corporate Controller                       
Jeffrey Devlin   561,286                 2%
Director                       
All Officers and Directors as a group (3 persons)   13,924,295    318,108            46%

 

(1)   Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of Common Stock subject to options currently exercisable or convertible, or exercisable or convertible within 60 days of December 31, 2021 are deemed outstanding for computing the percentage of the person holding such option but are not deemed outstanding for computing the percentage of any other person.

 

14

 

 

ITEM 17. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Other than as disclosed below and in this Form 10-K, there have been no transactions, since January 1, 2020, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year end for the last two completed fiscal years and in which any of our directors, executive officers or beneficial holders of more than 5% of our outstanding Common Stock, or any of their respective immediate family members, has had or will have any direct or material indirect interest.

 

Director Independence

 

We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to (and we do not) have our Board of Directors comprised of a majority of “Independent Directors.”

 

Our Board of Directors has considered the independence of its directors in reference to the definition of “independent director” established by the Nasdaq Marketplace Rule 5605(a)(2). In doing so, the Board of Directors has reviewed all commercial and other relationships of each director in making its determination as to the independence of its directors. After such review, the Board of Directors has determined that Mr. Devlin qualifies as independent under the requirements of the Nasdaq listing standards.

 

15

 

 

ITEM 18. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Audit Fee

 

The aggregate fees billed to the Company for services rendered in connection with the years ended December 31, 2021 and 2020 are set forth in the table below:

 

Fee Category  2021   2020 
Fee for quarterly review  $15,000   $24,750 
Consent fee to use prior year report   -    5,000 
Fee for annual audit   23,000    23,000 
Total Audit Fee  $38,000   $52,750 

 

Audit fee consist of fees incurred for professional services rendered for the audit of financial statements, for reviews of our interim financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.

 

For the year ended December 31, 2021, total audit fee represents fees billed by Boyle CPA. For the year ended December 31, 2020, quarterly review and consent fee represent fees billed by the previous auditor MSPC, and the annual audit fee represent fees billed by Boyle CPA.

 

Audit Committee’s Pre-Approval Practice

 

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

 

16

 

 

ITEM 19. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

Financial Statement Schedules

 

The financial statements of 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
3.1   3.1   Certificate of Incorporation of MOJO Shopping, Inc. (2)
3.2   3.1   Amendment to Certificate of Incorporation of MOJO Ventures, Inc. (3)
3.3   3.1   Certificate of Amendment to Certificate of Incorporation of MOJO Ventures, Inc. (4)
3.4   3.4   Articles of Merger (1)
3.5   3.1   Certificate of Amendment to Certificate of Incorporation of MOJO Organics, Inc. (6)
3.6   3.1   Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (7)
3.7   3.1   Amended and Restated Bylaws of MOJO Ventures, Inc. (5)
3.8   3.8   Amendment No. 1 to Amended and Restated Bylaws of MOJO Organics, Inc. (8)
3.9   3.1   Certificate of Amendment (10)
16.1   16.1   Letter from MSPC Certified Public Accountants and Advisors, P.C. (9)
31.1   31.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

17

 

 

(1) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the Securities and Exchange Commission (the “SEC”) on May 18, 2011.
   
(2) Incorporated by reference to the Registrant’s Registration Statement on Form SB-2 as an exhibit, numbered as indicated above, filed with the SEC on December 19, 2007.
   
(3) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on May 4, 2011.
   
(4) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on January 4, 2012.
   
(5) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on October 31, 2011.
   
(6) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on April 2, 2013.
   
(7) Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on February 1, 2013.
   
(8) Incorporated by reference to the Registrant’s Current Report on Form 10-K as an exhibit, numbered as indicated above, filed with the SEC on September 24, 2013.
   
(9)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on October 23, 2015.

   
(10)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on July 1, 2021.

 

18

 

 

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: February 17, 2022 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 17, 2022
Glenn Simpson        
         
/s/ Diane Cudia   Corporate Controller (Principal Accounting Officer)   February 17, 2022
Diane Cudia        

 

19

 

 

PART IV - FINANCIAL INFORMATION

 

    Page
Report of Independent Registered Public Accounting Firm – Boyle CPA, LLC Certified Public Accountants and Consultants (PCAOB: 6285)   F-1
Statements of Operations for the years ended December 31, 2021 and 2020   F-2
Balance Sheets as of December 31, 2021 and 2020   F-3
Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2020   F-4
Statements of Cash Flows for the years ended December 31, 2021 and 2020   F-5
Notes to Financial Statements   F-6

 

20

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Boyle CPA, LLC

Certified Public Accountants & Consultants

 

To the Shareholders and Board of 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, 2021 and 2020, the related statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

 

Basis of Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to fraud or error. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

Critical Audit Matters

 

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 

Stock Issued for Services

 

During the year ended December 31, 2021, the Company recognized $187,963 in expenses related to stock issued for services. As discussed in Notes 3 and 4, the Company has issued stock to Management under an employment agreement and periodically issued other shares for services. Shares issued for services are recorded at their fair value on their measurement dates based upon prices on OTC markets.

 

Our audit procedures to evaluate the appropriateness and accuracy of the accounting and fair value determined by management included reviewing the agreements and selected documentation supporting the issuances as well as recomputing the valuations made by Management by examining the prices from third party sources.

 

/s/ Boyle CPA, LLC  
   
We have served as the Company’s auditor since 2020  
Red Bank, NJ  
(PCAOB: 6285)  
February 16, 2022  
   
331 Newman Springs Road P (732) 784-1582
Building 1, 4th Floor, Suite 143 F (732) 510-0665

 

F-1

 

 

MOJO ORGANICS, INC.

Statements of Operations

For the Years Ended December 31, 2021 and 2020

 

   2021   2020 
Revenue  $1,918,882   $1,741,919 
Cost of Revenue   1,069,844    917,639 
Gross Profit   849,038    824,279 
           
Operating Expenses          
Selling, general and administrative   844,654    910,218 
Income/(Loss) from Operations   4,384    (85,938)
Other Income   35,508    2,219 
Income/Loss Before Provision for Income Taxes   39,892    (83,719)
Provision for Income Taxes   -    - 
Net Income/ Loss  $39,892  $(83,719)
Net loss per common share, basic and diluted  $0.00    0.00 
Weighted average number of common shares outstanding, basic and diluted   31,080,518    30,037,847 

 

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

 

F-2

 

 

MOJO ORGANICS, INC.

Balance Sheets

As of December 31, 2021 and 2020

 

  

December 31, 2021

  

December 31, 2020

 
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents  $46,481   $50,233 
Accounts receivable, net   108,635    73,562 
Inventory   234,566    174,171 
Supplier deposits   28,000    24,000 
Prepaid expenses   11,702    15,104 
Security deposit   113    4,518 
Total Current Assets  $429,497   $341,588 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES:          
Accounts payable and accrued expenses  $58,944    56,167 
Accrued payroll to related parties   -    - 
SBA Loans   -    35,508 
Total Current Liabilities   58,944    91,675 
           
STOCKHOLDERS’ EQUITY          
Common stock, 40,000,000 shares authorized at $0.001 par value, 31,097,580 and 30,610,240 shares issued and outstanding, at December 31, 2021 and December 31, 2020, respectively   31,098    30,611 
Additional paid in capital   23,729,900    23,649,639 
Accumulated deficit   (23,390,445)   (23,430,337)
Total Stockholders’ Equity   370,553    249,913 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $429,497   $341,588 

 

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

 

F-3

 

 

MOJO ORGANICS, INC.

Statements of Changes in Stockholders’ Equity

For the Years Ended December 31, 2021 and 2020

 

                     
   Common Stock   Additional Paid-In   Accumulated   Stockholders’ Equity 
   Shares   Amount   Capital   Deficit   (Deficit) 
Balance, January 1, 2020   29,351,294   $29,352    23,488,626   $(23,346,618)  $171,360 
Stock issued to Directors and employees   1,383,946    1,384    175,938    -    177,322 
Stock retired to treasury   (125,000)   (125)   (14,925)   -    (15,050)
Net Loss   -    -    -    (83,719)   (83,719)
Balance, December 31, 2020   30,610,240   $30,611   $23,649,639   $(23,430,337)  $249,913 
Stock issued to Directors and employees   1,253,166    1,253    186,710    -    187,963 
Stock retired to treasury   (765,826)   (766)   (106,449)   -    (107,215)
Net Income   -    -    -    39,892    39,892 
Balance, December 31, 2021   31,097,580   $31,098   $23,729,900   $(23,390,445)  $370,553 

 

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, 2021 and 2020

 

   2021   2020 
Cash flows from operating activities:          
Net Income/ Loss  $39,892   $(83,719)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock and warrants issued to directors and employees   187,963    177,322 
SBA Loan Forgiveness   (35,508)   - 
Changes in assets and liabilities:          
(Increase)/Decrease in accounts receivable   (35,073)   1,525 
(Increase)/Decrease in inventory   (60,395)   1,548 
Increase in supplier deposits   (4,000)   (12,461)
Decrease/(Increase) in prepaid expenses   7,807    (337)
Increase/(Decrease) in accounts payable and accrued expenses   2,777    (84,687)
Decrease in accrued payroll to officers   -    (25,394)
Net cash provided by/(used in) operating activities   103,463    (26,203)
Net cash provided by/ (used in) financing activities:          
Proceeds from SBA Loan   -    35,508 
Shares repurchased for cancellation   (107,215)   (15,050)
Net cash provided by/ (used in) financing activities   (107,215)   20,458 
           
Net (decrease)/increase in cash and cash equivalents   (3,752)   (5,745)
Cash and cash equivalents at beginning of period   50,233    55,978 
Cash and cash equivalents at end of periods  $46,481   $50,233 

 

Summary of non-cash investing and financing activity: During the twelve-month period ended December 31, 2021 the Company issued a total of 1,253,166 Restricted and Non-Trading shares with an implied value of $187,963 to directors and officers to settle obligations payable.

 

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

 

F-5

 

 

MOJO ORGANICS, INC.

Notes to Financial Statements

December 31 2021 and 2020

 

NOTE 1 – BUSINESS

 

Overview

 

MOJO Organics, Inc. (“MOJO”) is a Delaware corporation headquartered in Jersey City, NJ. The Company’s business is new product development, beverage production, marketing, distribution and the sale of beverages that are, Non-GMO Project verified, and USDA Organic. The Company’s flagship product is MOJO Coconut Water. In addition to Coconut Water, the Company produces Sparkling Coconut Water, Coconut Water + Mango Juice and Coconut Water + Pineapple Juice and USDA Organic Coconut Water. We seek to grow the market share of our products by expanding our hybrid distribution network through the relationships and efforts of our management, third party partners and our broker network, and add new products and packaging including pH7 water (pH is a scale of acidity) and energy beverages which are the two largest sectors of the beverage industry. The Company packages its beverages in 100% recyclable, Eco-Friendly packaging. The packaging has a low impact on the environment when recycled.

 

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, 2021, and December 31, 2020, 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, 2021 and 2020 was zero.

 

Inventory

 

Inventory, consisting solely of finished goods, are stated at the lower of cost (first-in, first-out method) or net realizable value (“NRV”). If necessary, the Company provides allowances to adjust the carrying value of its inventories to NRV when NRV is below cost. There were no such adjustments in 2021 or 2020.

 

Revenue Recognition

 

Revenue from sales of products is recognized when the related performance obligation is satisfied. The Company’s performance obligation is satisfied upon the shipment or delivery of products to customers. The Company’s products are sold on cash and credit terms which are established in accordance with standardized industry practices and typically require payment within 30 days of delivery. Costs incurred for sales incentives and discounts are accounted for as reductions in revenue.

 

F-6

 

 

Deductions from Revenue

 

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

 

Shipping and Handling Costs

 

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

 

Net Income/(Loss) Per Common Share

 

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

 

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

 SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

      Expiration   Days to   Exercise   As of December 31, 
   Issued To  Date   Expiration   Price   2021   2020 
Shares underlying options outstanding  Glenn Simpson  4/6/2024    827   $0.16    318,108    505,608 

 

Income Taxes

 

The Net Operating Loss Carryforwards for federal taxes was $3,746,752 at December 31, 2021 and $3,746,752 for the State of New Jersey. The Deferred Tax Assets for federal taxes was $786,818 at December 31, 2021 and $337,208 for the State of New Jersey. The total Deferred Tax Assets was $1,124,026 at December 31, 2021. The Deferred Tax assets have been fully reserved by valuation allowances beyond that portion which is expected to offset current taxes. As of December 31, 2021, the Company’s Federal income tax payable would be $39,632 and State Income Tax payable would be $16,985 if this had not been offset by the deferred tax assets.

 

The Company provides for income taxes using the asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company did not have a deferred tax liability at December 31, 2021 and December 31, 2020.

 

As of December 31, 2021, and December 31, 2020, the Company had no accrued interest or penalties because there were none. The Company had no Federal or State tax examinations in the past nor does it have any at the current time.

 

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.

 

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NOTE 3 – COMMITMENTS AND CONTINGENCIES

 

Employment Agreements

 

Pursuant to the Amended and Restated Employment Agreement (“the Agreement”) dated April 6, 2017 date, Mr. Simpson is paid a salary of $5,000 per month in cash and the Company is obligated to grant 67,000 shares of non-trading, restricted Common Stock per month. Additionally, Mr. Simpson is entitled to an annual bonus comprised of cash and non-trading, restricted Common Stock based on the achievement of performance goals established by the Board of Directors of the Company and set forth in the Agreement. The cash bonus is established at $44,400 per year. The stock bonus is set at 200,000 shares of non-trading, restricted Common Stock per year through March 31, 2025.

 

The term of the Agreement is through April 1, 2025. In the event that the Agreement is terminated for good reason, the Company shall pay Mr. Simpson any accrued but unpaid salary for services rendered to the date of termination, and an amount equal to the salary at the time of termination, payable for the remainder of the current term. As of December 31, 2021, there are 39 months remaining on the Agreement. The Company’s liability on the remainder of the Agreement is $195,000 for the cash portion of Mr. Simpson’s salary, and 2,613,000 shares of non-trading, restricted Common Stock.

 

During the year ended December 31, 2021, the Mr. Simpson was issued 804,000 Restricted and Non-Trading shares of Common Stock under the terms of the Agreement for the stock portion of his compensation. Refer to Note 4 – Restricted Stock Issuances.

 

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NOTE 4 – STOCKHOLDERS’ EQUITY

 

In June 2021, the Company decreased its Authorized Shares from 190,000,000 to 40,000,000 shares. This was a reduction of 150,000,000 in Authorized Shares. As of December 31, 2021 there are 31,097,580 shares outstanding and no other classes of stock.

 

Restricted Stock Issuances

 

During the year ended December 31, 2021, 1,253,166 shares of Restricted and Non-Trading Common Stock were issued to Directors and Officers of the Company. These shares have full voting rights but are restricted for sale and transfer. Mr. Simpson exercised options to purchase 187,500 shares at $0.16 per share for a total exercise price of $30,000 which reduced the accrued salary payable to Mr. Simpson by the same amount.

 

Mr. Simpson was also issued 804,000 shares of Restricted and Non-Trading Common Stock for the stock portion of his annual salary. Mr. Devlin was issued 68,333 shares of Restricted and Non-Trading Common Stock as an award for continuing to serve as a Director of the Company. Ms. Cudia was issued 193,333 shares of Restricted and Non-Trading Common Stock for her annual stock bonus. The value of these shares was recorded as a component of compensation expense.

 

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. (Ian Thompson has not complied with the Company’s demand to have the physical certificates returned.) It is the Company’s position that this cancellation reduces the number of shares outstanding by 367,204.

 SCHEDULE OF CANCELLATION OF SHARES

Certificates   Registered To   No. of Shares   Status  
605   Ian Thompson   50,000   Cancelled  
606   Ian Thompson   50,000   Cancelled  
607   Ian Thompson   50,000   Cancelled  
608   Ian Thompson   50,000   Cancelled  
610   Ian Thompson   167,204   Cancelled  

 

Stock Purchased for Cancellation

 

During the year ended December 31, 2021 the Company purchased 765,826 shares of its Restricted Common Stock from shareholders at a cost of $765,826. The shares were cancelled.

 

During the year ended December 31, 2020 the Company purchased 125,000 shares of its Restricted Common Stock from shareholders at a cost of $14,050. The shares were cancelled.

 

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NOTE 5 – STOCK OPTION

 

On September 24, 2021, the Company extended the expiration date of the options granted to Mr. Glenn Simpson from April 6, 2022 to April 6, 2024.

 

During the year ended December 31, 2021, Mr. Simpson exercised options to purchase 187,500 shares of Restricted and Non-Trading shares at $0.16 per share. The total exercise value was $30,000 and this reduced the accrued salary payable to Mr. Simpson to $0.

 

During the year ended December 31, 2020, Mr. Simpson exercised options to purchase 156,250 shares of Restricted and Non-Trading shares at $0.16 per share. The total exercise value was $25,000 and this reduced the accrued salary payable to Mr. Simpson to $0.

 

The following table summarizes stock option activity:

 SCHEDULE OF STOCK OPTIONS ACTIVITY

   Issued To  Expiration Date  Days to Expiration   Exercise Price   Options 
Outstanding, December 31, 2020  Glenn Simpson  4/6/2024   1192   $0.16    505,608 
Exercised  Glenn Simpson  4/6/2024   1053   $0.16    (187,500)
Exercisable, December 31, 2021  Glenn Simpson  4/6/2024   827   $0.16    318,108 

 

During the years ended December 31, 2021 and 2020, compensation expense related to stock options was $0. As of December 31, 2021, there was no unrecognized compensation cost related to non-vested stock options.

 

NOTE 6 – CONCENTRATIONS

 

Major Customers

 

During the year ended December 31, 2021, the Company had three customers that accounted for 83% of revenue. The increase in the concentration percentage is due to the shutdown of customers that were affected by the COVID-19 mandated closures. Accounts receivable at December 31, 2021 from these three customers amounted to $101,635. For the year ended December 31, 2020, there were three major customers accounting for 80% of total revenue.

 

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Major Suppliers

 

During the year ended December 31, 2021, 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, 2021 to both suppliers were $31,871.

 

NOTE 7 – RELATED PARTY TRANSACTIONS

 

During the year ended December 31, 2021, Mr. Simpson exercised 187,500 stock options at an exercise price of $0.16. The Company issued 187,500 Restricted and Non-Trading shares of Common Stock, and the accrued payroll owed to him was reduced by $30,000.

 

During the year ended December 31, 2020 Mr. Simpson exercised 156,250 stock options at an exercise price of $0.16. The Company issued 156,250 Restricted and Non-Trading shares of Common Stock, and the accrued payroll owed to him was reduced by $25,000.

 

NOTE 8 – SBA LOANS “CARES ACT”

 

On May 5, 2020, the Company received loan proceeds in the amount of $35,508 under the Paycheck Protection Program (“PPP”). On December 18, 2020, the Company applied for the loan forgiveness for the loan proceeds amounting $35,508 under the Paycheck Protection Program. The Company received the loan forgiveness decision from the SBA in January 2021. The full amount of the loan proceeds amounting $35,508 was forgiven.

 

NOTE 9 – SUBSEQUENT EVENTS

 

In January 2022, the Company purchased 750,000 shares of its Restricted Common Stock at a cost of $101,250. The shares were cancelled.

 

F-11

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