U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended: December 31, 2020
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 [X]
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 [X]
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 [X] 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 [X] 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. [X]
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 | [X] |
| 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 [X]
As of June 30, 2020 (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 $0.109 per share) held by non-affiliates of the registrant was $1,966,263.
On February 22, 2021 there were 30,811,240 shares of the registrant’s common stock, par value $0.001, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
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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.
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COMPANY OVERVIEW
MOJO Organics, Inc. (“MOJO” or the “Company”) is a Delaware corporation headquartered in Jersey City, NJ. The Company engages in new product development, production, marketing, distribution and sales of beverage brands that are natural, Non-GMO Project verified, and USDA Organic. The Company’s flagship product is MOJO Pure Coconut Water. In addition to Pure Coconut Water, the Company produces Sparkling Coconut Water, Coconut Water + Mango Juice, Coconut Water + Pineapple Juice and Pure 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 improved broker network, and new products and packaging in 2021. The company predominantly 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.
CURRENT OPERATIONS
Sales and Distribution
The Company’s flagship product is MOJO Pure Coconut Water. In addition to Pure Coconut Water, the Company produced Sparkling Coconut Water, Coconut Water + Mango Juice, Coconut Water + Pineapple Juice, and Pure Organic Coconut Water in 2020. 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 an improved broker network, and new products and packaging in 2021. 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 for 2021.
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, 2020, 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.
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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.
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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 roll 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, independent Underwriters Laboratories testing of our products for safety, 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 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
The Company maintains office space in Jersey City, NJ. The initial lease agreement was for the period March 1, 2019 to February 29, 2020 and was renewed for one year under the same terms. In April 2020, the Company was given a 50% discount on the rent for April and May 2020 as well as an optional lease extension for an additional three months under the same terms. The base rent under this agreement is $2,343 per month, and expires May 31, 2021. Lease expense amounted to $25,773 and $27,648 for the twelve months ended December 31, 2020 and 2019 respectively. The security deposit for the lease agreement is $4,518 and the lease expires on May 31, 2021.
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 4. MINE SAFETY DISCLOSURE
Not applicable.
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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s Common Stock is currently quoted on the OTCQB under the symbol MOJO.
For the period January 1, 2019 to December 31, 2020, 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 | |||||||
| First Quarter 2020 | $ | 0.29 | $ | 0.06 | ||||
| Second Quarter 2020 | $ | 0.20 | $ | 0.07 | ||||
| Third Quarter 2020 | $ | 0.17 | $ | 0.06 | ||||
| Fourth Quarter 2020 | $ | 0.19 | $ | 0.07 | ||||
| First Quarter 2019 | $ | 0.20 | $ | 0.10 | ||||
| Second Quarter 2019 | $ | 0.45 | $ | 0.13 | ||||
| Third Quarter 2019 | $ | 0.27 | $ | 0.03 | ||||
| Fourth Quarter 2019 | $ | 0.32 | $ | 0.07 | ||||
Holders
As of December 31, 2020, there were 30,610,240 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, 2020 and 2019.
Issuer Purchases of Equity Securities
On January 23, 2020, the Company repurchased 25,000 shares of MOJO Restricted Common Stock from shareholders at a cost of $5,250 with an average purchase price of $0.21. The shares were cancelled.
On December10, 2020, the Company repurchased 100,000 shares of MOJO Restricted Common Stock from shareholders at a cost of $9,800 with an average purchase price of $0.098. The shares were cancelled.
Equity Compensation Plans
2012 Incentive Plan
On February 18, 2019, the Company’s Board of Directors signed an unanimous consent 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 non-trading, restricted Common Stock. It also consented the CEO of the Company to exercise options to purchase 222,000 Restricted and Non-Trading shares of Common Stock at $0.255 per share. The total exercise price was $56,610 and this reduced the loan payable to the CEO by the same amount. There are no options outstanding from this plan as of December 31, 2020 and December 31, 2019.
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. There are 505,608 options outstanding from this plan as of December 31, 2020, and 661,858 options were outstanding as of December 31, 2019.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided in addition to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flows. MD&A is organized as follows:
| ● | 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, 2020 to 2019. | |
| ● | 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.
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Fair Value of Financial Instruments — Our short-term financial instruments, including cash, accounts receivable, accounts payable and other liabilities, consist primarily of instruments without extended maturities. We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts.
Recent Accounting Pronouncements
In 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 had no impact on the financial statements.
Results of Operations
Years Ended December 31, 2020 and 2019
Revenue
For the year ended December 31, 2020, the Company reported revenue of $1,741,919 a decrease of $1,103 from revenue of $1,743,021 for the year ended December 31, 2019. The decrease in revenue was due to the COVID-19 pandemic which caused several channels of our business to be shut down.
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, 2020, cost of revenue was $917,639 or 53% of revenue. For the twelve months ended December 31, 2019, cost of revenue was $908,408 or 52% of revenue. The 1% increase in cost of revenue was due to the packaging costs updates for old products and also for new products launched in 2020.
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Operating Expenses
For the year ended December 31, 2020, the selling, general and administrative expenses was $910,218 a decrease of $221,594 from the year ended December 31, 2019 of $1,131,812.
This decrease in operating expenses was primarily due to lower compensation expenses coupled with lower marketing and selling expenses. Compensation expenses decreased by $145,036 compared to the same period last year. Marketing expenses decreased by $15,070 from the same period last year. Selling expenses were $428,110 for the year ended December 31, 2020 compared to $465,864 for the year ended December 31, 2019. This $37,754 decrease is attributable to the lower shipping expenses, broker fees and storage fees.
Net Income/(Loss)
For the year ended December 31, 2020, the net loss was ($83,719), a $213,980 improvement from a net loss of ($297,699) for the year ended December 31, 2019.
Liquidity and Capital Resources
Liquidity
As of December 31, 2020, the Company had working capital of $249,913. Net cash used in operating activities was $26,203 for the year ended December 31, 2019, compared to net cash provided by operating activities for the year ended December 31, 2019 of $32,196. Net cash used in financing activities to repurchase 125,000 MOJO Restricted Common Stock at an average stock price of $0.1204 was $15,050 for the year ended December 31, 2020 compared to $750 for the year ended December 31, 2019.
Working Capital Needs
Our working capital requirements increase as demand grows for our products. During 2020 and 2019, 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
The Company had no off balance sheet arrangements as of December 31, 2020.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
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.
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ITEM 9. 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 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act of 1934 (the “Exchange Act”) is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Under the supervision and with the participation of the Company’s senior management, consisting of the Company’s principal executive and financial officer and the Company’s principal accounting officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, the Company’s principal executive and financial officer concluded, as of the Evaluation Date, that the Company’s disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control over Financial Reporting
The management of MOJO Organics, Inc. is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Rule 13a-15(f)) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this evaluation, our officers concluded that, during the period covered by this annual report, our internal controls over financial reporting were not operating effectively.
As previously reported, the Company does not have an audit committee and is not currently obligated to have one. Management does not believe that the lack of an audit committee is a material weakness.
Attestation Report
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting as such report is not required for non-accelerated filers.
Changes in Internal Control over Financial Reporting
There was no change in our internal controls over financial reporting during the year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Not Applicable.
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ITEM 10. 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 | 68 | Chairman and CEO | October 27, 2011 | |||
| Jeffrey Devlin | 73 | 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.
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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.
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ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning the total compensation paid or earned by each of our named executive officers (as defined under SEC rules).
| Name and Principal Position | Year | Salary | Total | |||||||||
| Glenn Simpson | 2020 | $ | 164,788 | (1) | $ | 164,788 | ||||||
| Chairman and CEO | 2019 | $ | 218,120 | (1) | $ | 218,120 | ||||||
The Summary Compensation Table omits columns for Option Awards, Non-Equity Incentive Plan Compensation, Non-Qualified Deferred Compensation Earnings and All Other Compensation as no such amounts were paid to the named executive officers during the fiscal years ended December 31, 2020 or 2019.
(1) Pursuant his employment agreement (the “Simpson Agreement”), Mr. Simpson will be 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 based upon revenue performance goals. The revenue goals range from $900,000 to $19,200,000 per year. The bonus awards are accelerated should revenue exceed the annual target amounts.
During the twelve months ended December 31, 2020, 804,000 shares of Non-trading, Restricted Common Stock were issued to the CEO for the stock portion of his compensation. During the first quarter of 2020, Mr. Simpson exercised stock options to purchase 156,250 non-trading, restricted shares at $0.16 per share and the total exercise price of $25,000 reduced the accrued salary owed to him. He was paid in cash for the second and fourth quarters, and for the month of September. Mr. Simpson received 108,696 non-trading, restricted shares in lieu of cash payments.
During 2019, Mr. Simpson exercised stock options to purchase 555,688 non-trading, restricted shares at an average price of $0.198 per share for a total of $110,000. The total exercise price reduced the accrued salary owed to him by $95,000 and reduced a non-interest loan payable to the CEO by 15,000. He was owed $10,000 as of December 31, 2019 for the cash portion of his salary.
Mr. Simpson’s employment agreement is the only executive employment agreement in effect as of December 31, 2020.
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The Company has no other plans in place and has never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans.
Employment Agreements
The “Simpson Agreement” is the only employment agreement in effect as of December 31, 2020. 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 | Option awards | |||||||||||
| Name | Year | exercisable options | Expiration date | Exercise price | ||||||||
| Glenn Simpson | 2020 | 505,608 | 4/6/2022 | $ | 0.16 | |||||||
| 2019 | 661,858 | 4/6/2022 | $ | 0.16 | ||||||||
Option Exercises in 2019 and 2020
On February 25, 2019, Mr. Simpson exercised options to purchase 222,000 shares of Non-Trading, Restricted, Common Stock at $0.255 per share and the accrued payroll owed to him was reduced by $56,610. On the same date, two directors who had 35,000 options each were issued a total of 70,000 shares of Non-Trading, Restricted, Common Stock following the resolution to terminate the 2012 Incentive Plan.
On August 13, 2019, Mr. Simpson exercised options to purchase 93,750 shares of Non-Trading, Restricted, Common Stock at $0.16 per share. The total exercise value is $15,000 and this reduced a non interest loan payable balance to the CEO to $0.
On November 1, 2019, Mr. Simpson exercised options to purchase 239,938 shares of Non-Trading, Restricted, Common Stock at $0.16 per share. The total exercise value is $38,390 and the accrued payroll owed to him was reduced by the same amount.
On January 14, 2020, Mr. Simpson exercised options to purchase 93,750 Restricted and Non-trading shares at $0.16 per share. The total exercise value was $15,000 and this reduced the accrued salary payable to the CEO by the same amount.
On March 6, 2020, Mr. Simpson exercised options to purchase 62,500 Restricted and Non-Trading shares at $0.16 per share. The total exercise value was $10,000 and this reduced the accrued salary payable to the CEO to $0.
| 13 |
Director Compensation
The non-employee directors 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. During the year ended December 31, 2020, there were no arrangements that resulted in our making payments to any of our non-employee directors for any services provided to us by them as directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information with respect to the beneficial ownership of our Common Stock known by us as of December 31, 2020 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 including Options (1) | |||||||||||||
| Glenn Simpson | 11,788,176 | 39 | % | |||||||||||||||
| Glenn Simpson | 505,608 | $ | 0.16 | 4/6/2022 | 1 | % | ||||||||||||
| Total – Glenn Simpson | 11,788,176 | 505,608 | 40 | % | ||||||||||||||
| Chairman and CEO | ||||||||||||||||||
| Diane Cudia | 390,000 | 1 | % | |||||||||||||||
| Corporate Controller | ||||||||||||||||||
| Jeffrey Devlin | 492,953 | 2 | % | |||||||||||||||
| Director | ||||||||||||||||||
| All Officers and Directors as a group (3 persons) | 12,671,129 | 505,608 | 43 | % | ||||||||||||||
| (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, 2020 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 |
Securities Authorized For Issuance Under Equity Compensation Plans
2012 Incentive Plan
On February 18, 2019, the Company’s Board of Directors signed an unanimous consent 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 consented the CEO of the Company to exercise options to purchase 222,000 Restricted and Non-Trading shares of Common Stock at $0.255 per share. The total exercise price was $56,610 and this reduced the loan payable to the CEO by the same amount.
There are no options outstanding from this plan as of December 31, 2020 and December 31, 2019.
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.
There are 505,608 options outstanding from this plan as of December 31, 2020, and 661,858 options were outstanding as of December 31, 2019.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Other than as disclosed below and in this Form 10-K, there have been no transactions, since January 1, 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 yearend 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 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
On November 18, 2020, MSPC, Certified Public Accountants and Advisors, a Professional Corporation (“MSPC”) was dismissed as the Company’s independent public accounting firm. As of November 18, 2020, the Company engaged Boyle CPA LLC, Certified Public Accountants and Consultants (“Boyle CPA) as its new independent registered public accounting firm.
The aggregate fees billed to the Company for services rendered in connection with the years ended December 31, 2020 and 2019 are set forth in the table below:
| Fee Category | 2020 | 2019 | ||||||
| Fees for quarterly review - MSPC | $ | 24,750 | $ | 24,750 | ||||
| Fees for annual audit -MSPC | - | 30,750 | ||||||
| Consent fee to use prior year report - MSPC | 5,000 | |||||||
| Fees for annual audit - Boyle CPA | 23,000 | - | ||||||
| Total Audit Fees | $ | 52,750 | $ | 55,500 | ||||
Audit fees consist of fees incurred for professional services rendered for the audit of financial statements, for reviews of our interim financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.
Consent fees consist of fees incurred for yearend the use of the 2019 audit report by the previous auditor. All audit consent fees represent fees billed by MSPC.
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 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Financial Statement Schedules
The financial statements of MOJO Organics, Inc. are listed on the Index to Financial Statements on this annual report on Form 10-K beginning on page F-1.
The following Exhibits are being filed with this Annual Report on Form 10-K:
| 17 |
* Filed herewith.
** Filed previously
† Management compensatory plan, contract or arrangement.
| (1) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the Securities and Exchange Commission (the “SEC”) on May 18, 2011. |
| (2) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on November 2, 2011. |
| (3) | Incorporated by reference to the Registrant’s Registration Statement on Form SB-2 as an exhibit, numbered as indicated above, filed with the SEC on December 19, 2007. |
| (4) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on May 4, 2011. |
| (5) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on January 4, 2012. |
| (6) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on October 31, 2011. |
| (7) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on August 12, 2011. |
| (8) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on June 8, 2011. |
| (9) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on April 2, 2013. |
| (10) | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q as an exhibit, numbered as indicated above, filed with the SEC on June 25, 2013. |
| (11) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on February 1, 2013. |
| (12) | Incorporated by reference to the Registrant’s Current Report on Form 8-K/A as an exhibit, numbered as indicated above, filed with the SEC on February 7, 2013. Portions of the exhibit and/or related schedules or exhibits thereto have been omitted pursuant to a request for confidential treatment, which has been granted by the Commission. |
| (13) | Incorporated by reference to the Registrant’s Current Report on Form 10-K as an exhibit, numbered as indicated above, filed with the SEC on September 24, 2013. |
| (14) | Incorporated by reference to the Registrant’s Annual Report on Form 10-K as an exhibit, numbered as indicated above, filed with the SEC on April 16, 2014. |
| (15) | Incorporated by reference to the Registrant’s Annual Report on Form 10-Q as an exhibit, numbered as indicated above, filed with the SEC on October 2, 2014. |
| (16) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on October 23, 2015. |
| (17) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on December 9, 2015. |
| (18) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on December 15, 2015. |
| (19) | Incorporated by reference to the Registrant’s Current Report on Form 8-K as an exhibit, numbered as indicated above, filed with the SEC on April 19, 2016. |
| 18 |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MOJO ORGANICS, INC. | ||
| Dated: February 22, 2021 | 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 22, 2021 | ||
| Glenn Simpson | ||||
| /s/ Diane Cudia | Corporate Controller (Principal Accounting Officer) | February 22, 2021 | ||
| Diane Cudia |
| 19 |
PART IV - FINANCIAL INFORMATION
| 20 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of MOJO Organics, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of MOJO Organics, Inc. (the “Company”) as of December 31, 2020, and the related statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2020, 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, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, 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 PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our 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.
Inventory Valuation
At December 31, 2020, the Company’s inventory balance was $174,171. As described in Note 2 to the financial statements, 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 net realizable value when the net realizable value is below cost. At December 31, 2020, there were no such adjustments to inventory.
Our audit procedures included testing the reasonableness of management’s key assumptions and judgments used to determine the inventory valuation. For instance, we confirmed the units held at an independent warehouse, for selected purchases we vouched the unit costs to supplier invoices, we compared the quantities and carrying value of on-hand inventories to related unit sales, and we reviewed historic inventory turnover.
Stock Issued for Services
During the year ended December 31, 2020, the Company recognized $177,322 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. | |
| Bayville, NJ | |
| February 22, 2021 |
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and directors of
MOJO Organics, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of MOJO Organics, Inc. (the “Company”) as of December 31, 2019, the related statements of operations, changes in stockholders’ equity/deficit, and cash flows for the year ended December 31, 2019, 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, 2019, and the results of its operations and its cash flows for the year ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our 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 the 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 the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our 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 controls 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.
| /s/ MSPC | |
| Certified Public Accountants and Advisors, | |
| A Professional Corporation |
We began serving as the Company’s auditor in 2016. In 2020, we became the predecessor auditor.
Cranford, New Jersey
March 30, 2020
| F-2 |
Statements of Operations
For the Years Ended December 31, 2020 and 2019
| 2020 | 2019 | |||||||
| Revenue | $ | 1,741,919 | $ | 1,743,021 | ||||
| Cost of Revenue | 917,639 | 908,408 | ||||||
| Gross Profit | 824,279 | 834,613 | ||||||
| Operating Expenses | ||||||||
| Selling, general and administrative | 910,218 | 1,131,812 | ||||||
| Loss from Operations | (85,938 | ) | (297,699 | ) | ||||
| Other Income | 2,219 | - | ||||||
| Loss Before Provision for Income Taxes | (83,719 | ) | (297,699 | ) | ||||
| Provision for Income Taxes | - | - | ||||||
| Net Loss | $ | (83,719 | ) | $ | (297,699 | ) | ||
| Net loss per common share, basic and diluted | $ | 0.00 | (0.01 | ) | ||||
| Weighted average number of common shares outstanding, basic and diluted | 30,037,847 | 28,621,683 | ||||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
Balance Sheets
As of December 31, 2020 and 2019
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 50,233 | $ | 55,978 | ||||
| Accounts receivable, net | 73,562 | 75,087 | ||||||
| Inventory | 174,171 | 175,719 | ||||||
| Supplier deposits | 24,000 | 11,539 | ||||||
| Prepaid expenses | 15,104 | 14,767 | ||||||
| Security deposit | 4,518 | 4,518 | ||||||
| Total Current Assets | $ | 341,588 | $ | 337,608 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | 56,167 | $ | 140,854 | ||||
| Accrued payroll to related parties | - | 25,394 | ||||||
| SBA Loans | 35,508 | - | ||||||
| Total Current Liabilities | 91,675 | 166,248 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock, 190,000,000 shares authorized at $0.001 par value, 30,610,240 and 29,351,294 shares issued and outstanding, at December 31, 2020 and December 31, 2019, respectively | 30,611 | 29,352 | ||||||
| Additional paid in capital | 23,649,639 | 23,488,626 | ||||||
| Accumulated deficit | (23,439,337 | ) | (23,346,618 | ) | ||||
| Total Stockholders’ Equity | 249,913 | 171,360 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 341,588 | $ | 337,608 | ||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
Statements of Changes in Stockholders’ Equity
For the Years Ended December 31, 2020 and 2019
| Common Stock | Additional Paid-In | Accumulated | Stockholders’ Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||
| Balance, January 1, 2019 | 27,825,773 | $ | 27,826 | 23,190,882 | $ | (23,048,919 | ) | $ | 169,789 | |||||||||||
| Stock issued to Directors and employees | 1,529,688 | 1,530 | 298,490 | - | 300,020 | |||||||||||||||
| Stock retired to treasury | (4,167 | ) | (4 | ) | (746 | ) | - | (750 | ) | |||||||||||
| Net Loss | - | - | - | (297,699 | ) | (297,699 | ) | |||||||||||||
| Balance, December 31, 2019 | 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 | $ | (23,430,336 | ) | $ | 249,913 | ||||||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
Statements of Cash Flows
For the Years Ended December 31, 2020 and 2019
| 2020 | 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (83,719 | ) | $ | (297,699 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock and warrants issued to directors and employees | 177,322 | 300,020 | ||||||
| Changes in assets and liabilities: | ||||||||
| Decrease in accounts receivable | 1,525 | 53,254 | ||||||
| Decrease/(Increase) in inventory | 1,548 | (16,189 | ) | |||||
| Increase in supplier deposits | (12,461 | ) | (11,539 | ) | ||||
| Increase in prepaid expenses | (337 | ) | (6,968 | ) | ||||
| (Decrease)/Increase in accounts payable and accrued expenses | (84,687 | ) | 30,923 | |||||
| Decrease in accrued payroll to officers | (25,394 | ) | (19,606 | ) | ||||
| Net cash (used in)/provided by operating activities | (26,203 | ) | 32,196 | |||||
| Net cash provided by/ (used in) financing activities: | ||||||||
| Proceeds from SBA Loan | 35,508 | - | ||||||
| Shares repurchased for cancellation | (15,050 | ) | (750 | ) | ||||
| Net cash provided by/ (used in) financing activities | 20,458 | (750 | ) | |||||
| Net (decrease)/increase in cash and cash equivalents | (5,745 | ) | 31,947 | |||||
| Cash and cash equivalents at beginning of period | 55,978 | 24,031 | ||||||
| Cash and cash equivalents at end of periods | $ | 50,233 | $ | 55,978 | ||||
Summary of non-cash investing and financing activity: During the twelve-month period ended December 31, 2020 the Company issued a total of 1,383,946 Restricted and Non-Trading shares with an implied value of $177,322 to directors and officers to settle obligations payable.
The accompanying notes are an integral part of these financial statements.
| F-6 |
Notes to Financial Statements
December 31 2020 and 2019
NOTE 1 – BUSINESS
Overview
MOJO Organics, Inc. (“MOJO” or the “Company”) is a Delaware Corporation 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.
The Company’s flagship product is MOJO Pure Coconut Water. In addition to Pure Coconut Water, the Company produces Sparkling Coconut Water, Coconut Water + Mango Juice, Coconut Water + Pineapple Juice and Pure 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 improved broker network, and new products and packaging in 2021. The company predominantly 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.
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, 2020, and December 31, 2019, 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, 2020 and 2019 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 (“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 2020 or 2019.
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-7 |
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:
| Expiration | Days to | Exercise | As of December 31, | |||||||||||||||||
| Issued To | Date | Expiration | Price | 2020 | 2019 | |||||||||||||||
| Shares underlying options outstanding | Glenn Simpson | 4/6/2022 | 461 | $ | 0.16 | 505,608 | 661,858 | |||||||||||||
Income Taxes
The Net Operating Loss Carryforwards for federal taxes was $4,637,871 at December 31, 2020 and $5,008,013 for the State of New Jersey. The Deferred Tax Assets for federal taxes was $973,953 at December 31, 2020 and $451,721 for the State of New Jersey. The total Deferred Tax Assets was $1,424,674 at December 31, 2020. 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, 2020, the Company’s Federal income tax payable would be $12,477 and State Income Tax payable would be $5,347 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, 2020 and December 31, 2019.
As of December 31, 2020, and December 31, 2019, 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.
New Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. The ASC aims to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The Company is still assessing the impact of this pronouncement to the financial statements.
| F-8 |
NOTE 3 – COMMITMENTS AND CONTINGENCIES
The global coronavirus (COVID-19) pandemic has caused disruptions in supply chains, affecting production and sales across a range of industries. While this disruption is currently expected to be temporary, there is considerable uncertainty around the duration.
The extent of the impact of COVID-19 on our operational and financial performance will depend on the effect on our customers and vendors – all of which are uncertain and cannot be predicted. The related financial impact cannot be reasonably estimated at this time.
Employment Agreements
On April 6, 2017, the Company entered into an Amended and Restated Employment Agreement 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 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 Simpson 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 based upon achieving revenue performance goals. The revenue goals range from $900,000 to $19,200,000 per year. The bonus awards are accelerated when revenues exceed the annual target amounts.
During the twelve months ended December 31, 2020, the CEO was issued 804,000 Restricted and Non-Trading shares of Common Stock under the terms of the Simpson Agreement for the stock portion of his annual compensation. Refer to Note 4 – Restricted Stock Issuances.
During the first quarter of 2020, Mr. Simpson exercised stock options to purchase 156,250 non-trading, restricted shares at $0.16 per share and the total exercise price of $25,000 reduced the accrued salary owed to him. Refer to Note 4 for the explanation of the conversions. He was paid in cash for the second and fourth quarters, and for the month of September. Mr. Simpson received 108,696 non-trading, restricted shares in lieu of cash payments.
The “Simpson Agreement” is the only executive employment agreement in effect as of December 31, 2020.
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, 2019 to February 29, 2020 and was renewed for one year under the same terms. In April 2020, the Company was given a 50% discount on the rent for April and May 2020 as well as an optional lease extension for an additional three months under the same terms. The base rent under this agreement is $2,343 per month, and expires May 31, 2021. Lease expense amounted to $25,773 and $27,648 for the year ended December 31, 2020 and 2019 respectively. The security deposit for the lease agreement is $4,518 and the lease expires on May 31, 2021.
| F-9 |
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.
Restricted Stock Issuances
During the year ended December 31, 2020, 1,383,946 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 or transfer. The CEO exercised options to purchase 156,250 shares at $0.16 per share for a total exercise price of $25,000 which reduced the accrued salary payable to the CEO by the same amount.
The CEO was also issued 804,000 shares of Restricted and Non-Trading Common Stock for the stock portion of his annual salary. A Director was issued 90,000 shares of non-trading, restricted Common stock as an award for continuing to serve as a Director of the Company. The Corporate Controller was also issued 225,000 shares of non-trading, restricted Common stock for her annual stock bonus. The value of these shares was recorded as a component of compensation expense.
On December 8, 2020 the Company’s Board of Directors signed a unanimous consent to convert Mr. Simpson’s accrued salary payable for the months of July and August amounting $10,000 to 108,696 non-trading, restricted shares in lieu of cash payments. This reduced the salary payable to the CEO by the same amount.
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 | 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
On January 23, 2020 the Company purchased 25,000 shares of its restricted common stock from one shareholder for cancellation. The Company paid $5,250 or $0.21 per share which was the average market price for its traded shares during the period. The shares were cancelled and are available for reissuance.
On December 10, 2020 the Company purchased 100,000 shares of its restricted common stock from one shareholder for cancellation. The Company paid $9,800 or $0.098 per share which was the average market price for its traded shares during the period. The shares were cancelled and are available for reissuance.
NOTE 5 – STOCK OPTIONS
2012 Incentive Plan
On February 18, 2019, the Company’s Board of Directors signed an unanimous consent 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 non-trading, restricted Common Stock. It also consented the CEO of the Company to exercise options to purchase 222,000 Restricted and Non-Trading shares of Common Stock at $0.255 per share. The total exercise price was $56,610 and this reduced the loan payable to the CEO by the same amount. There are no options outstanding from this plan as of December 31, 2020 and December 31, 2019.
| F-10 |
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. There are 505,608 options outstanding from this plan as of December 31, 2020, and 661,858 options were outstanding as of December 31, 2019.
Stock Option Activity
On February 25, 2019, Mr. Simpson exercised options to purchase 222,000 shares of Non-Trading, Restricted, Common Stock at $0.255 per share and the accrued payroll owed to him was reduced by $56,610. On the same date, two directors who had 35,000 options each were issued a total of 70,000 shares of non-trading, restricted Common Stock following the resolution to terminate the 2012 Incentive Plan.
On August 13, 2019, Mr. Simpson exercised options to purchase 93,750 shares of Non-Trading, Restricted, Common Stock at $0.16 per share. The total exercise value is $15,000 and this reduced a non interest loan payable balance to the CEO to $0.
On November 1, 2019, Mr. Simpson exercised options to purchase 239,938 shares of Non-Trading, Restricted, Common Stock at $0.16 per share. The total exercise value is $38,390 and the accrued payroll owed to him was reduced by the same amount.
On January 14, 2020, Mr. Simpson exercised options to purchase 93,750 Restricted and Non-trading shares at $0.16 per share. The total exercise value was $15,000 and this reduced the accrued salary payable to the CEO by the same amount.
On March 6, 2020, Mr. Simpson exercised options to purchase 62,500 Restricted and Non-Trading shares at $0.16 per share. The total exercise value was $10,000 and this reduced the accrued salary payable to the CEO to $0.
The following table summarizes stock option activity under the Plans:
| Issued To | Expiration Date | Days to Expiration | Exercise Price | Options | ||||||||||||
| Outstanding, December 31, 2019 | Glenn Simpson | 4/6/2022 | 827 | $ | 0.16 | 661,858 | ||||||||||
| Exercised | Glenn Simpson | 4/6/2022 | 736 | $ | 0.16 | (156,250 | ) | |||||||||
| Outstanding, December 31, 2020 | Glenn Simpson | 4/6/2022 | 461 | $ | 0.16 | 505,608 | ||||||||||
| Exercisable, December 31, 2020 | Glenn Simpson | 4/6/2022 | 461 | $ | 0.16 | 505,608 | ||||||||||
During the years ended December 31, 2020 and 2019, compensation expense related to stock options was $0. As of December 31, 2020, there was no unrecognized compensation cost related to non-vested stock options.
NOTE 6 – CONCENTRATIONS
Major Customers
During the year ended December 31, 2020, the Company had three customers that accounted for 80% of revenue. The increase in the concentration percentage is due to the shut down of customers that were affected by the COVID-19 mandated closures. Accounts receivable at December 31, 2020 from these three customers amounted to $45,193. For the year ended December 31, 2019, there were two major customers accounting for 48% of total revenue.
| F-11 |
Major Suppliers
During the year ended December 31, 2020, 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, 2020 to both suppliers was $20,672.
NOTE 8 – RELATED PARTY TRANSACTIONS
On January 14, 2020 the CEO of the Company exercised 93,750 stock options at an exercise price of $0.16. The Company issued 93,750 Restricted and Non-Trading shares of Common Stock, and the accrued payroll owed to him was reduced by $15,000.
On March 12, 2020 the $10,000 accrued salary 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 62,500 Restricted and Non-Trading shares of Common Stock to the CEO and the accrued payroll then owed to the CEO was reduced to $0.
NOTE 9 – 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”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period.
On May 27, 2020, the Company received grant proceeds in the amount of $2,000 under the Economic Injury Disaster Loan (“EIDL”) Program. This grant was recorded as other income during the second quarter of 2020. The EIDL program was created to assist businesses, renters and homeowners located in regions affected by declared disasters. The Company applied for the EIDL Emergency Advance which provides $1,000 per employee up to a maximum of $10,000.
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 believes it has met the criteria for forgiveness and should receive that determination from the US Treasury.
NOTE 10 – SUBSEQUENT EVENTS
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.
| F-12 |
Exhibit 31.1
FORM OF CERTIFICATION
PURSUANT TO RULE 13a-14 AND 15d-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
CERTIFICATIONS
I, Glenn Simpson, certify that:
1. I have reviewed this annual report on Form 10-K of Mojo Organics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the issuer is made known to me by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
| Date: February 22, 2021 | /s/ Glenn Simpson | |
| Name: | Glenn Simpson | |
| Title: | Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) | |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Mojo Organics, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
| Date: February 22, 2021 | /s/ Glenn Simpson | |
| Name: | Glenn Simpson | |
| Title: | Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) | |
Document and Entity Information - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2020 |
Feb. 22, 2021 |
Jun. 30, 2020 |
|
| Cover [Abstract] | |||
| Entity Registrant Name | Mojo Organics, Inc. | ||
| Entity Central Index Key | 0001414953 | ||
| Document Type | 10-K | ||
| Document Period End Date | Dec. 31, 2020 | ||
| Amendment Flag | false | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity Well Known Seasoned Issuer | No | ||
| Entity Voluntary Filer | No | ||
| Entity Current Reporting Status | Yes | ||
| Entity Interactive Data Current | Yes | ||
| Entity Filer Category | Non-accelerated Filer | ||
| Entity Small Business Flag | true | ||
| Entity Emerging Growth Company | false | ||
| Entity Shell Company | false | ||
| Entity Public Float | $ 1,966,263 | ||
| Entity Common Stock, Shares Outstanding | 30,811,240 | ||
| Document Fiscal Period Focus | FY | ||
| Document Fiscal Year Focus | 2020 |
Statements of Operations - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Income Statement [Abstract] | ||
| Revenue | $ 1,741,919 | $ 1,743,021 |
| Cost of Revenue | 917,639 | 908,408 |
| Gross Profit | 824,279 | 834,613 |
| Operating Expenses | ||
| Selling, general and administrative | 910,218 | 1,131,812 |
| Loss from Operations | (85,938) | (297,699) |
| Other Income | 2,219 | |
| Loss Before Provision for Income Taxes | (83,719) | (297,699) |
| Provision for Income Taxes | ||
| Net Loss | $ (83,719) | $ (297,699) |
| Net loss per common share, basic and diluted | $ 0 | $ (0.01) |
| Weighted average number of common shares outstanding, basic and diluted | 30,037,847 | 28,621,683 |
Balance Sheets - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
|---|---|---|
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 50,233 | $ 55,978 |
| Accounts receivable, net | 73,562 | 75,087 |
| Inventory | 174,171 | 175,719 |
| Supplier deposits | 24,000 | 11,539 |
| Prepaid expenses | 15,104 | 14,767 |
| Security deposit | 4,518 | 4,518 |
| Total Current Assets | 341,588 | 337,608 |
| CURRENT LIABILITIES: | ||
| Accounts payable and accrued expenses | 56,167 | 140,854 |
| Accrued payroll to related parties | 25,394 | |
| SBA Loans | 35,508 | |
| Total Current Liabilities | 91,675 | 166,248 |
| STOCKHOLDERS' EQUITY | ||
| Common stock, 190,000,000 shares authorized at $0.001 par value, 30,610,240 and 29,351,294 shares issued and outstanding, at December 31, 2020 and December 31, 2019, respectively | 30,611 | 29,352 |
| Additional paid in capital | 23,649,639 | 23,488,626 |
| Accumulated deficit | (23,439,337) | (23,346,618) |
| Total Stockholders' Equity | 249,913 | 171,360 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 341,588 | $ 337,608 |
Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, shares authorized | 190,000,000 | 190,000,000 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares issued | 30,610,240 | 29,351,294 |
| Common stock, shares outstanding | 30,610,240 | 29,351,294 |
Statements of Changes in Stockholders' Equity - USD ($) |
Common Stock [Member] |
Additional Paid-In Capital [Member] |
Accumulated Deficit [Member] |
Total |
|---|---|---|---|---|
| Balance at Dec. 31, 2018 | $ 27,826 | $ 23,190,882 | $ (23,048,919) | $ 169,789 |
| Balance, shares at Dec. 31, 2018 | 27,825,773 | |||
| Stock issued to Directors and employees | $ 1,530 | 298,490 | 300,020 | |
| Stock issued to Directors and employees, shares | 1,529,688 | |||
| Stock retired to treasury | $ (4) | (746) | (750) | |
| Stock retired to treasury, shares | (4,167) | |||
| Net loss | (297,699) | (297,699) | ||
| Balance at Dec. 31, 2019 | $ 29,352 | 23,488,626 | (23,346,618) | 171,360 |
| Balance, shares at Dec. 31, 2019 | 29,351,294 | |||
| Stock issued to Directors and employees | $ 1,384 | 175,938 | 177,322 | |
| Stock issued to Directors and employees, shares | 1,383,946 | |||
| Stock retired to treasury | $ (125) | (14,925) | (15,050) | |
| Stock retired to treasury, shares | (125,000) | |||
| Net loss | (83,719) | (83,719) | ||
| Balance at Dec. 31, 2020 | $ 30,611 | $ 23,649,639 | $ (23,430,336) | $ 249,913 |
| Balance, shares at Dec. 31, 2020 | 30,610,240 |
Statements of Cash Flows (Parenthetical) |
12 Months Ended |
|---|---|
|
Dec. 31, 2020
shares
| |
| Directors And Officers [Member] | |
| Total number of restricted and non-trading shares issued | 1,383,946 |
Business |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Accounting Policies [Abstract] | |
| Business | NOTE 1 – BUSINESS
Overview
MOJO Organics, Inc. (“MOJO” or the “Company”) is a Delaware Corporation 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.
The Company’s flagship product is MOJO Pure Coconut Water. In addition to Pure Coconut Water, the Company produces Sparkling Coconut Water, Coconut Water + Mango Juice, Coconut Water + Pineapple Juice and Pure 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 improved broker network, and new products and packaging in 2021. The company predominantly 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. |
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | 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, 2020, and December 31, 2019, 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, 2020 and 2019 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 (“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 2020 or 2019.
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.
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:
Income Taxes
The Net Operating Loss Carryforwards for federal taxes was $4,637,871 at December 31, 2020 and $5,008,013 for the State of New Jersey. The Deferred Tax Assets for federal taxes was $973,953 at December 31, 2020 and $451,721 for the State of New Jersey. The total Deferred Tax Assets was $1,424,674 at December 31, 2020. 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, 2020, the Company’s Federal income tax payable would be $12,477 and State Income Tax payable would be $5,347 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, 2020 and December 31, 2019.
As of December 31, 2020, and December 31, 2019, 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.
New Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. The ASC aims to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The Company is still assessing the impact of this pronouncement to the financial statements. |
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Commitments and Contingencies |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | NOTE 3 – COMMITMENTS AND CONTINGENCIES
The global coronavirus (COVID-19) pandemic has caused disruptions in supply chains, affecting production and sales across a range of industries. While this disruption is currently expected to be temporary, there is considerable uncertainty around the duration.
The extent of the impact of COVID-19 on our operational and financial performance will depend on the effect on our customers and vendors – all of which are uncertain and cannot be predicted. The related financial impact cannot be reasonably estimated at this time.
Employment Agreements
On April 6, 2017, the Company entered into an Amended and Restated Employment Agreement 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 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 Simpson 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 based upon achieving revenue performance goals. The revenue goals range from $900,000 to $19,200,000 per year. The bonus awards are accelerated when revenues exceed the annual target amounts.
During the twelve months ended December 31, 2020, the CEO was issued 804,000 Restricted and Non-Trading shares of Common Stock under the terms of the Simpson Agreement for the stock portion of his annual compensation. Refer to Note 4 – Restricted Stock Issuances.
During the first quarter of 2020, Mr. Simpson exercised stock options to purchase 156,250 non-trading, restricted shares at $0.16 per share and the total exercise price of $25,000 reduced the accrued salary owed to him. Refer to Note 4 for the explanation of the conversions. He was paid in cash for the second and fourth quarters, and for the month of September. Mr. Simpson received 108,696 non-trading, restricted shares in lieu of cash payments.
The “Simpson Agreement” is the only executive employment agreement in effect as of December 31, 2020.
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, 2019 to February 29, 2020 and was renewed for one year under the same terms. In April 2020, the Company was given a 50% discount on the rent for April and May 2020 as well as an optional lease extension for an additional three months under the same terms. The base rent under this agreement is $2,343 per month, and expires May 31, 2021. Lease expense amounted to $25,773 and $27,648 for the year ended December 31, 2020 and 2019 respectively. The security deposit for the lease agreement is $4,518 and the lease expires on May 31, 2021. |
Stockholders' Equity |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity | 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.
Restricted Stock Issuances
During the year ended December 31, 2020, 1,383,946 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 or transfer. The CEO exercised options to purchase 156,250 shares at $0.16 per share for a total exercise price of $25,000 which reduced the accrued salary payable to the CEO by the same amount.
The CEO was also issued 804,000 shares of Restricted and Non-Trading Common Stock for the stock portion of his annual salary. A Director was issued 90,000 shares of non-trading, restricted Common stock as an award for continuing to serve as a Director of the Company. The Corporate Controller was also issued 225,000 shares of non-trading, restricted Common stock for her annual stock bonus. The value of these shares was recorded as a component of compensation expense.
On December 8, 2020 the Company’s Board of Directors signed a unanimous consent to convert Mr. Simpson’s accrued salary payable for the months of July and August amounting $10,000 to 108,696 non-trading, restricted shares in lieu of cash payments. This reduced the salary payable to the CEO by the same amount.
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.
Stock Purchased for Cancellation
On January 23, 2020 the Company purchased 25,000 shares of its restricted common stock from one shareholder for cancellation. The Company paid $5,250 or $0.21 per share which was the average market price for its traded shares during the period. The shares were cancelled and are available for reissuance.
On December 10, 2020 the Company purchased 100,000 shares of its restricted common stock from one shareholder for cancellation. The Company paid $9,800 or $0.098 per share which was the average market price for its traded shares during the period. The shares were cancelled and are available for reissuance. |
Stock Options |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Options | NOTE 5 – STOCK OPTIONS
2012 Incentive Plan
On February 18, 2019, the Company’s Board of Directors signed an unanimous consent 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 non-trading, restricted Common Stock. It also consented the CEO of the Company to exercise options to purchase 222,000 Restricted and Non-Trading shares of Common Stock at $0.255 per share. The total exercise price was $56,610 and this reduced the loan payable to the CEO by the same amount. There are no options outstanding from this plan as of December 31, 2020 and December 31, 2019.
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. There are 505,608 options outstanding from this plan as of December 31, 2020, and 661,858 options were outstanding as of December 31, 2019.
Stock Option Activity
On February 25, 2019, Mr. Simpson exercised options to purchase 222,000 shares of Non-Trading, Restricted, Common Stock at $0.255 per share and the accrued payroll owed to him was reduced by $56,610. On the same date, two directors who had 35,000 options each were issued a total of 70,000 shares of non-trading, restricted Common Stock following the resolution to terminate the 2012 Incentive Plan.
On August 13, 2019, Mr. Simpson exercised options to purchase 93,750 shares of Non-Trading, Restricted, Common Stock at $0.16 per share. The total exercise value is $15,000 and this reduced a non interest loan payable balance to the CEO to $0.
On November 1, 2019, Mr. Simpson exercised options to purchase 239,938 shares of Non-Trading, Restricted, Common Stock at $0.16 per share. The total exercise value is $38,390 and the accrued payroll owed to him was reduced by the same amount.
On January 14, 2020, Mr. Simpson exercised options to purchase 93,750 Restricted and Non-trading shares at $0.16 per share. The total exercise value was $15,000 and this reduced the accrued salary payable to the CEO by the same amount.
On March 6, 2020, Mr. Simpson exercised options to purchase 62,500 Restricted and Non-Trading shares at $0.16 per share. The total exercise value was $10,000 and this reduced the accrued salary payable to the CEO to $0.
The following table summarizes stock option activity under the Plans:
During the years ended December 31, 2020 and 2019, compensation expense related to stock options was $0. As of December 31, 2020, there was no unrecognized compensation cost related to non-vested stock options. |
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Concentrations |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Risks and Uncertainties [Abstract] | |
| Concentrations | NOTE 6 – CONCENTRATIONS
Major Customers
During the year ended December 31, 2020, the Company had three customers that accounted for 80% of revenue. The increase in the concentration percentage is due to the shut down of customers that were affected by the COVID-19 mandated closures. Accounts receivable at December 31, 2020 from these three customers amounted to $45,193. For the year ended December 31, 2019, there were two major customers accounting for 48% of total revenue.
Major Suppliers
During the year ended December 31, 2020, 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, 2020 to both suppliers was $20,672. |
Related Party Transactions |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | NOTE 8 – RELATED PARTY TRANSACTIONS
On January 14, 2020 the CEO of the Company exercised 93,750 stock options at an exercise price of $0.16. The Company issued 93,750 Restricted and Non-Trading shares of Common Stock, and the accrued payroll owed to him was reduced by $15,000.
On March 12, 2020 the $10,000 accrued salary 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 62,500 Restricted and Non-Trading shares of Common Stock to the CEO and the accrued payroll then owed to the CEO was reduced to $0. |
SBA Loans Cares Act |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Debt Instruments [Abstract] | |
| SBA Loans Cares Act | NOTE 9 – 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”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period.
On May 27, 2020, the Company received grant proceeds in the amount of $2,000 under the Economic Injury Disaster Loan (“EIDL”) Program. This grant was recorded as other income during the second quarter of 2020. The EIDL program was created to assist businesses, renters and homeowners located in regions affected by declared disasters. The Company applied for the EIDL Emergency Advance which provides $1,000 per employee up to a maximum of $10,000.
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 believes it has met the criteria for forgiveness and should receive that determination from the US Treasury. |
Subsequent Events |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | NOTE 10 – SUBSEQUENT EVENTS
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. |
Summary of Significant Accounting Policies (Policies) |
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Use of Estimates | 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. |
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| Cash and Cash Equivalents | 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, 2020, and December 31, 2019, the Company did not have any cash equivalents. |
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| Accounts Receivable | 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, 2020 and 2019 was zero. |
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| Inventories | Inventories
Inventories, 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 2020 or 2019. |
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| Revenue Recognition | 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. |
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| Deductions from Revenue | Deductions from Revenue
Costs incurred for sales incentives and discounts are accounted for as a reduction in revenue. These costs include payments to customers for performing merchandising activities on our behalf, including in-store displays, promotions for new items and obtaining optimum shelf space. |
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| Shipping and Handling Costs | 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. |
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| Net Income/(Loss) Per Common Share | 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:
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| Income Taxes | Income Taxes
The Net Operating Loss Carryforwards for federal taxes was $4,637,871 at December 31, 2020 and $5,008,013 for the State of New Jersey. The Deferred Tax Assets for federal taxes was $973,953 at December 31, 2020 and $451,721 for the State of New Jersey. The total Deferred Tax Assets was $1,424,674 at December 31, 2020. 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, 2020, the Company’s Federal income tax payable would be $12,477 and State Income Tax payable would be $5,347 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, 2020 and December 31, 2019.
As of December 31, 2020, and December 31, 2019, 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. |
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| Fair Value of Financial Instruments | 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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| New Accounting Pronouncements | New Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. The ASC aims to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The Company is still assessing the impact of this pronouncement to the financial statements. |
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Summary of Significant Accounting Policies (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | 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:
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Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Cancellation of Shares | The Transfer Agent shall maintain the right to uphold the transfer in the event of forgery.
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Stock Options (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stock Options Activity | The following table summarizes stock option activity under the Plans:
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Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Cash equivalents | ||
| Allowance for doubtful accounts | 0 | 0 |
| Deferred tax assets | 1,424,674 | |
| Deferred tax liabilities | ||
| Accrued interest or penalties | ||
| Federal [Member] | ||
| Net operating loss carryforwards | 4,637,871 | |
| Deferred tax assets | 973,953 | |
| Income tax payable | 12,477 | |
| State of New Jeresy [Member] | ||
| Net operating loss carryforwards | 5,008,013 | |
| Deferred tax assets | 451,721 | |
| State [Member] | ||
| Income tax payable | $ 5,347 | |
Summary of Significant Accounting Policies - Antidilutive Securities Excluded From Computation Of Earnings Per Share (Details) - Glenn Simpson [Member] - $ / shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Expiration Date | Apr. 06, 2022 | |
| Days to Expiration | 461 days | |
| Exercise Price | $ 0.16 | |
| Number of securities | 505,608 | 661,858 |
Stockholders' Equity - Schedule of Cancellation of Shares (Details) |
12 Months Ended |
|---|---|
|
Dec. 31, 2020
shares
| |
| Certificate #605 [Member] | |
| Shares cancelled | 50,000 |
| Certificate #606 [Member] | |
| Shares cancelled | 50,000 |
| Certificate #607 [Member] | |
| Shares cancelled | 50,000 |
| Certificate #608 [Member] | |
| Shares cancelled | 50,000 |
| Certificate #610 [Member] | |
| Shares cancelled | 167,204 |
Concentrations (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Customer Concentration Risk [Member] | Three Customers [Member] | ||
| Concentration of risk | 80.00% | |
| Accounts receivable | $ 45,193 | |
| Customer Concentration Risk [Member] | Two Customers [Member] | ||
| Concentration of risk | 48.00% | |
| Supplier Concentration Risk [Member] | Both Suppliers [Member] | ||
| Accounts payable | $ 20,672 | |
Related Party Transactions (Details Narrative) - USD ($) |
1 Months Ended | 12 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Mar. 12, 2020 |
Mar. 06, 2020 |
Jan. 14, 2020 |
Nov. 01, 2019 |
Aug. 13, 2019 |
Oct. 03, 2013 |
Feb. 25, 2019 |
Dec. 31, 2020 |
|
| Stock issued during period shares restricted stock | 167,204 | |||||||
| CEO [Member] | ||||||||
| Stock issued during period stock options exercised, shares | 156,250 | |||||||
| Restricted and Non-Trading Shares [Member] | CEO [Member] | ||||||||
| Stock issued during period stock options exercised, shares | 62,500 | 93,750 | 239,938 | 93,750 | 70,000 | |||
| Exercise price | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.255 | |||
| Stock issued during period shares restricted stock | 62,500 | 93,750 | 222,000 | |||||
| Accrued payroll/salary | $ 0 | $ 0 | $ 15,000 | |||||
| Stock Option [Member] | CEO [Member] | ||||||||
| Accrued payroll/salary | $ 10,000 |
SBA Loans Cares Act (Details Narrative) - USD ($) |
Dec. 18, 2020 |
May 27, 2020 |
May 05, 2020 |
|---|---|---|---|
| Paycheck Protection Program, CARES Act [Member] | |||
| Proceeds from loan | $ 35,508 | ||
| Debt description | The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. | ||
| Debt forgiveness description | The Company applied for the loan forgiveness for the loan proceeds amounting $35,508 under the Paycheck Protection Program. The Company believes it has met the criteria for forgiveness and should receive that determination from the US Treasury. | ||
| Economic Injury Disaster Loan ("EIDL") Program, CARES Act [Member] | |||
| Proceeds from loan | $ 2,000 | ||
| Economic Injury Disaster Loan ("EIDL") Program, CARES Act [Member] | Employee [Member] | |||
| Emergency advance amount | $ 1,000 | ||
| Emergency advance, description | The Company applied for the EIDL Emergency Advance which provides $1,000 per employee up to a maximum of $10,000. | ||
| Economic Injury Disaster Loan ("EIDL") Program, CARES Act [Member] | Employee [Member] | Maximum [Member] | |||
| Emergency advance amount | $ 10,000 |
Subsequent Events (Details Narrative) |
Jan. 31, 2021
USD ($)
|
|---|---|
| Subsequent Event [Member] | Paycheck Protection Program, CARES Act [Member] | |
| Forgiveness of loan | $ 33,508 |
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