(Mark One)

 

 

For the Quarterly Period Ended:

 

 

 

 

Commission file number:

 

 

 

 

Securities registered pursuant to Section 12(b) of the Act:  

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 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes

☒

     No

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes

☒

     No

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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:

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

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

     No

 

On 

May ,

2026, there were 9,449,655 shares of the registrant’s common stock, par value $0.001, issued and outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

 

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

 

 

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

 

 

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

 

 

 

 

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

 

 

This Management’s Discussion and Analysis (MD&A) provides a narrative explanation of the Company’s financial statements and is intended to enhance understanding of its operating performance, financial condition, liquidity, and capital resources.

 

The Company’s operating performance improved significantly during the quarter ended March 31, 2026. Revenue increased 18% year-over-year, gross margin expanded to 52%, and the Company generated positive operating income and net income. These results were driven by improved operating leverage, enhanced distribution execution, and continued demand for the Company’s beverage portfolio.

 Management believes these trends may support the continued scalability of the Company’s business model.

 

Management is closely monitoring potential risks, including volatility in freight costs, input pricing, and evolving consumer demand patterns, which could impact margins and operating results in future periods.

 

This Management’s Discussion and Analysis contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company’s future operating performance, scalability, margin trends, demand for its products, and anticipated business and market conditions. Forward-looking statements are based on management’s current expectations, estimates, projections, and assumptions and are subject to significant risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such statements. These factors include, among others, changes in consumer preferences, competitive conditions, freight and commodity cost volatility, supply chain disruptions, inflationary pressures, regulatory developments, and general economic conditions. The Company undertakes no obligation to update any forward-looking statements, except as required by applicable law.

 

EQUATOR Beverage Company is a Delaware corporation headquartered in Jersey City,

NJ.

The Company is engaged in the development, production, distribution, and marketing of a portfolio of beverage products.

EQUATOR’s operations focus on identifying and responding to evolving consumer preferences through innovation, brand development, and disciplined execution.

 

The Company’s beverage portfolio includes ready-to-drink beverages and sparkling energy beverages. EQUATOR’s products are Non-GMO Project Verified and USDA Organic certified and are formulated to meet consumer demand for functional, clean-label, and premium beverage options.

 

A core offering within the Company’s portfolio is MOJO Coconut Water, a naturally functional hydration beverage. Each 11-ounce serving contains five essential electrolytes, supporting hydration and recovery. The product contains naturally occurring vitamins B and C, has no preservatives, and offers a fresh, crisp coconut taste. The Company’s coconut water is plant-based, renewable, and suitable for vegan, kosher, paleo, keto, and

low-carbohydrate diets

 

In addition to Coconut Water, the Company produces Coconut Water + Pineapple Juice, Coconut Water + Mango Juice, Organic Coconut Water, Sparkling Coconut Water Citrus, Energy Sparkling Blood Orange, and Energy Sparkling Pink Grapefruit.

 

 

Sustainability is a core component of EQUATOR’s business strategy. The Company uses 100% recyclable, eco-friendly packaging designed to reduce environmental impact. EQUATOR’s products are plant-based and made from renewable resources, demonstrating its commitment to responsible practices and long-term environmental stewardship.

  

 

 

EQUATOR Beverage Company distributes its products in North America, the Caribbean, and Bermuda through a combination of third-party distributors and retail channels. EQUATOR continues to evaluate opportunities to expand its geographic presence and strengthen its distribution network in existing and new markets. We seek to grow the market share of our products by expanding our hybrid distribution network through the relationships and efforts of our management, third-party partners, and broker networks, as well as through new products and packaging.

 

The Company utilizes multiple production sources. The quality of fruit is a key contributor to the overall taste and quality of our products. Currently, the Company has multiple production facilities from which it can source products. Each facility is capable of meeting forecasted demand levels.

 

 

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 use similar distribution channels and retailers to deliver and sell their products.

 

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.

 

 

As of March 31, 2026, the Company had two employees and utilizes third-party service providers for manufacturing, logistics, and professional services. This operating model enables scalability without significant fixed overhead.

  

EQUATOR Beverage Company commenced commercial production of coconut water on January 1, 2015, focusing on premium, natural hydration products. The Company’s products are Non-GMO Project Verified and USDA Organic certified. It initially distributed through independent retailers and regional partners while establishing sourcing relationships in Southeast Asia.

 

In June 2022, the board of directors approved a corporate name change from MOJO Organics, Inc. to EQUATOR Beverage Company, effective July 5, 2022. Around this time, the Company’s common stock began trading on the OTCQB Venture Market under the ticker symbol MOJO.

 

Following launch and uplisting, the Company expanded manufacturing partnerships, strengthened quality controls, and broadened distribution to grocery and e

-

commerce channels. Today, EQUATOR Beverage Company sells over 8 million units per year and continues to grow its national retail footprint, focusing on disciplined growth, supply chain stability, and shareholder value.

 

 

Revenue for the quarter ended March 31, 2026 increased 18% to $961,484 from $817,748 in the same period in 2025. This growth was driven primarily by higher sales volume reflecting stronger market demand, with the largest SKU contributing a 42% year-over-year increase in cases sold and accounting for a significant portion of the overall revenue gain.

 

Cost of revenue totaled $467,850, representing 49% of revenue, compared to 61% in the prior year. As a result, gross margin improved to 52% from 39%, an expansion of approximately 1,300 basis points. This margin improvement was driven primarily by better freight economics, enhanced supply chain efficiencies, and a more favorable product mix.

 

Operating expenses increased to $419,331 for the quarter ended March 31, 2026, compared to $231,178 in the prior year. Excluding non-cash restricted stock compensation, cash operating expenses rose approximately 50%, primarily driven by higher e-commerce selling fees in line with a 52% increase in e-commerce revenue, increased marketing spend, and higher warehouse costs associated with expanded storage needs.

 

 

Net income for the quarter ended March 31, 2026 was $176,115, compared to $84,034 for the quarter ended March 31, 2025. The increase of $92,081 was primarily attributable to improved gross margins, and enhanced operating efficiencies.

 

As of March 31, 2026, the Company had working capital of $783,353 and cash and cash equivalents of $126,670. Net cash provided by operating activities was $38,848 for the quarter ended March 31, 2026, compared to net cash used in operating activities of $70,867 for the quarter ended March 31, 2025. Management believes that its existing cash and cash equivalents, together with cash generated from operations, will be sufficient to meet its working capital requirements and support planned growth initiatives for the foreseeable future.

 

Borrowings under the Company’s credit arrangements during the quarter ended March 31, 2026 ranged from $230,000 to $340,000, with an outstanding balance of $230,000 as of March 31, 2026. Management believes that the Company’s expected growth and cash flow from operations will be sufficient to meet its future capital requirements, as evidenced in part by the reduction in outstanding borrowings from peak levels earlier in the year. The Company intends to continue reducing outstanding borrowings during fiscal 2026.

 

The Company repurchased 20,605 shares during the quarter as part of its capital allocation strategy.

We do not believe we have material exposure to market risk.

We do not engage in derivative transactions and are not exposed to significant foreign currency exchange risk, as substantially all of our transactions are denominated in U.S. dollars. While we are subject to general economic conditions and potential fluctuations in input costs, including freight and raw materials, we do not currently consider these exposures to be material.

 

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 at a reasonable assurance level.

 

Notwithstanding the material weaknesses in internal control over financial reporting described below, management believes that the Company’s disclosure controls and procedures were effective because additional compensating controls and procedures were performed to ensure that material information required to be disclosed was recorded, processed, summarized, and reported within the required time periods.

 

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Based on management’s evaluation under the criteria set forth in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2025, due to the following material weaknesses:

 

Limited segregation of duties and governance structure, resulting from the Company’s size and limited number of personnel, including the concentration of financial reporting responsibilities and limited independent oversight of the financial reporting process; and

 

Limited technical accounting oversight and review structure, as the Company’s current financial reporting structure does not incorporate an independent technical accounting oversight function or a formal secondary review layer to evaluate complex or non-routine transactions, including those involving significant estimates or specialized accounting guidance.

These material weaknesses create a reasonable possibility that a material misstatement of the Company’s financial statements would not be prevented or detected on a timely basis.

 

Management is implementing measures to enhance its internal control over financial reporting, including strengthening review controls and supplementing its financial reporting process with additional independent technical accounting support.

 

Notwithstanding the material weaknesses described above, management believes that the financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, the Company’s financial position, results of operations, and cash flows for the periods presented.

 

Management also evaluated the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2026. Based on that evaluation, management concluded that disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed is recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms.

While material weaknesses in internal control over financial reporting existed as of December 31, 2025, management implemented compensating controls during the quarter ended March 31, 2026, which supported its conclusion that disclosure controls and procedures were effective as of March 31, 2026.

 

 

There was no change in our internal control over financial reporting during the quarter ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

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 any material respect. We could from time to time become a party to various legal or administrative proceedings arising in the course of our business.

 

There have been no material changes to the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, except as set forth below.

 

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.

 

 

 

Our business, financial condition, and results of operations are subject to global economic and geopolitical conditions, including inflation, recessionary pressures, foreign currency volatility, commodity and energy price fluctuations, trade restrictions, government spending levels, sovereign debt risks, civil unrest, war, terrorism, and changes in international relations. Deteriorating economic conditions may reduce consumer purchasing power, shift demand to lower-priced or private-label products, and adversely affect sales volume, pricing, and profitability.

 

 

We operate in a highly competitive beverage industry. Competitive pressures may limit our ability to increase prices, require increased promotional spending, or result in reduced market share. Growth in private-label products and e-commerce may increase price transparency and margin pressure. Failure to sustain brand strength, marketing effectiveness, and innovation could adversely affect revenues and operating results.

 

 

Our growth depends on successfully developing, launching, and marketing new products and enhancing existing offerings. Failure to anticipate consumer preferences, protect intellectual property, or avoid infringement claims may impair growth objectives and negatively impact financial results.

 

 

Retail consolidation, expansion of discounters, and growth in digital commerce may increase pricing pressure and promotional demands. Inability to adapt to evolving retail channels or maintain key retail and food service relationships, including the loss of significant customers, could adversely affect sales, volume growth, and profitability.

 

 

Ongoing productivity and restructuring initiatives may disrupt operations, weaken internal controls, affect employee morale and retention, or result in reputational harm. Failure to effectively manage these initiatives could adversely affect operating performance.

 

 

Our operations depend on the availability of ingredients, agricultural commodities, packaging, energy, transportation, and labor, some of which are sourced from limited suppliers. Supply disruptions, adverse weather, climate change, disease, labor disputes, trade restrictions, geopolitical instability, cybersecurity incidents, or other external events may increase costs or interrupt supply. Input costs are volatile, and price increases, hedging, or productivity measures may not fully offset higher costs. Sustained cost increases or supply interruptions could materially and adversely affect our financial condition and results of operations.

 

 

We rely on third-party suppliers, distributors, and service providers. Their failure to meet contractual, operational, cybersecurity, regulatory, or compliance obligations may expose us to financial, legal, operational, and reputational risks, which could adversely affect our results.

 

 

Consumer preferences continue to evolve due to health, wellness, nutrition, sustainability, ingredient transparency, demographic changes, lifestyle trends, and competitive pricing pressures. Perceptions regarding ingredients, packaging, environmental and social impact, and third-party studies—whether scientifically valid or not—may adversely affect demand.

 

In addition, rapid growth in e-commerce, mobile applications, and digital platforms is changing shopping behaviors. Failure to anticipate or respond effectively to evolving product expectations and digital purchasing trends, or delays in executing digital transformation initiatives, could reduce market share, revenue growth, and overall financial performance.

 

 

 

Changes in laws governing beverage containers and packaging, including deposit schemes, recycling mandates, recycled content requirements, ecotaxes, product stewardship obligations, PFAS restrictions, and prohibitions on certain plastics, may increase costs and require modifications to manufacturing, packaging, or distribution. Widespread adoption of such measures could reduce net operating revenues and profitability.

 

 

New or expanded labeling, warning, or marketing restrictions relating to health, environmental, or ingredient concerns may inhibit product sales. For example, requirements under California’s Proposition 65 or similar laws could necessitate warning labels, potentially resulting in adverse consumer reaction, negative publicity, and reduced sales.

 

 

We are subject to litigation and regulatory proceedings relating to advertising, product labeling, competition, pricing, intellectual property, tax, environmental, and employment matters. Outcomes are inherently uncertain and may result in material liabilities, penalties, or reputational harm.

 

 

The Company sources products from Vietnam. These sourcing activities involve relationships with third-party manufacturers, suppliers, and logistics providers and are therefore subject to applicable anti-corruption, anti-bribery, trade, and import laws. Failure to comply with such laws could result in fines, penalties, or reputational harm.

 

Our trademarks, formulas, and other intellectual property are critical assets. Inadequate protection, infringement, misappropriation, or adverse legal developments could impair brand value, competitiveness, and financial performance, and may result in costly litigation.

 

 

We have publicly announced long-term growth objectives based on assumptions regarding sales potential, pricing, and product mix. If we are unable to realize anticipated demand, maintain favorable pricing, or achieve the expected product mix, we may not meet these objectives. Failure to achieve stated growth targets could adversely affect our financial performance and the market value of our securities.

 

 

We rely on internal and third-party information systems, including cloud-based services, to support our operations, financial reporting, and supply chain. Cybersecurity incidents, system failures, or disruptions—whether caused by cyberattacks, human error, insider misconduct, natural disasters, geopolitical events, or third-party vulnerabilities—could disrupt operations, delay financial reporting, result in unauthorized access to or disclosure of confidential or personal data, and lead to regulatory investigations, litigation, remediation costs, fines, reputational harm, and lost revenues. We are also subject to evolving privacy and data protection laws. Compliance obligations may increase costs and require operational changes, and noncompliance or unauthorized disclosure of personal data could adversely affect our business, financial condition, or results of operations.

 

None

 

 

None

 

 

None

 

On April 20, 2026, the Company adopted Amended and Restated Bylaws and an Amended and Restated Certificate of Incorporation to reflect updates to its governance framework. The updated documents are filed as Exhibits 3.1 and 3.2 to this report.

 

The Company’s common stock is quoted on the OTCQB under the symbol MOJO.

 

For the period January 1, 2025–March 31, 2026, the following table sets forth the high and low closing stock prices by quarter, based upon information obtained from interdealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions:

*Volume-weighted average price

 

As of March 31, 2026, there were 950 shareholders and 9,449,655 shares of common stock issued and outstanding.

 

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.

 

 

There were no sales of unregistered securities during the quarters ended March 31, 2026 and 2025.

 

 

Since January 1, 2018, the Company has repurchased 1,105,072 shares of its common stock.

 

During the quarter ended March 31, 2026, the Company repurchased 20,605 shares of EQUATOR common stock compared to zero shares in 2025.

 

 

 

The financial statements of EQUATOR Beverage Company are listed on the Index to Financial Statements on this quarterly report on Form 10-Q beginning on page F-1.

 

The following Exhibits are being filed with this Quarterly Report on Form 10-Q:

 

 

 

 

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