EQUATOR Beverage Co swings to $123K Q3 2026 profit
Two customers accounted for approximately 65% of third-quarter revenue; cash stood at $147,908 at September 30, 2026.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
EQUATOR Beverage Co (MOJO) reported third-quarter revenue of $1,510,658, compared with $1,184,589 a year earlier, and net income of $123,058, versus a $61,003 loss. For the nine months ended September 30, 2026, revenue was $3,731,595, versus $3,104,914; gross profit was $1,957,647, compared with $1,371,029. Operating cash flow was $290,086, against $55,551 used in the prior-year period.
Nine-month net income was $1,298,872, compared with $176,087; management attributed the increase partly to a non-cash tax benefit from releasing its deferred-tax valuation allowance and $117,264 of tariff-related recoveries. At September 30, cash was $147,908 and related-party loans were fully repaid. Two customers accounted for approximately 65% of third-quarter revenue. Management said internal control over financial reporting was not effective as of December 31, 2025 because of material weaknesses in segregation of duties and technical-accounting review; remediation continues. Disclosure controls were deemed effective as of September 30, 2026.
3 points · 0 major1 major · 2 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter revenue increased 28% to $1,510,658 year over year.
- Moderate pointThird-quarter net income was $123,058, versus a $61,003 loss.
- Moderate pointNine-month operating cash flow was $290,086 provided, versus $55,551 used.
Negative
- Major pointInternal-control material weaknesses identified at December 31, 2025 remain under remediation.
- Moderate pointTwo customers accounted for approximately 65% of third-quarter revenue.
Filing Explained
A specified CEO-termination event could trigger $675,000 in cash and 1,080,000 shares; none had occurred by September 30, 2026.
Form 10-Q is an unaudited quarterly report; this filing reports results through
The awards were non-cash, non-trading shares valued at
Separately, specified termination events under the CEO’s employment agreement could require
Key Figures
Revenue: $1,510,658
Net income: $123,058
Revenue: $3,731,595
+4 more
7 metrics
Revenue
$1,510,658
Three months ended September 30, 2026; $1,184,589 in 2025
Net income
$123,058
Three months ended September 30, 2026; net loss of $61,003 in 2025
Revenue
$3,731,595
Nine months ended September 30, 2026; $3,104,914 in 2025
Net income
$1,298,872
Nine months ended September 30, 2026; $176,087 in 2025
Operating cash flow
$290,086 provided
Nine months ended September 30, 2026; $55,551 used in 2025
Cash and cash equivalents
$147,908
As of September 30, 2026
Customer revenue concentration
Approximately 65%
Two customers, three months ended September 30, 2026
Key Terms
valuation allowance, net operating loss carryforwards, performance obligation, FOB shipping point, +1 more
5 terms
valuation allowance financial
"released its valuation allowance during the three months ended June 30, 2026"
A valuation allowance is a reserve set aside to reduce the value of certain assets on a company's financial records when there is uncertainty about whether they will generate the expected benefits. It acts like a caution sign, indicating that some assets might not be fully recoverable or worth their recorded amount. This matters to investors because it provides a more realistic picture of a company's financial health and potential risks.
net operating loss carryforwards financial
"expected utilization of federal and state net operating loss carryforwards"
Net operating loss carryforwards are tax rules that let a company apply past operating losses against future taxable profits, reducing the amount of tax it must pay when it returns to profitability. Think of it like a negative balance in a tax ledger that can be used to lower future tax bills, improving after-tax cash flow and earnings; investors track the size, expiration rules and any limits because they affect valuation and future cash available to the business.
performance obligation financial
"single performance obligation, which is the delivery of products"
A performance obligation is a specific promise in a contract to deliver a good or provide a service to a customer, and it is the unit companies use to decide when and how much revenue to record. Think of it like checklist items in a service agreement: each item completed can trigger part of the payment to be recognized as revenue. Investors care because how obligations are identified and satisfied changes the timing and amount of reported revenue and profits, affecting comparisons and valuation.
FOB shipping point financial
"For sales shipped FOB shipping point, control transfers upon shipment."
volume-weighted average price financial
"Volume-weighted average price"
Volume-weighted average price (VWAP) is the average price of a stock over a specific time period where each trade is weighted by the number of shares traded, so larger trades influence the average more than small ones. Investors and traders use VWAP as a reference point to judge whether trades are happening at relatively good or poor prices—like checking the average price paid for an item at a market where bulk purchases count more than single-item buys.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What was MOJO's revenue in the third quarter of 2026?
MOJO reported revenue of $1,510,658 for the three months ended September 30, 2026, compared with $1,184,589 for the corresponding 2025 period. The company attributed the increase primarily to higher sales volumes across its product portfolio.
How much net income did MOJO report for the first nine months of 2026?
MOJO reported net income of $1,298,872 for the nine months ended September 30, 2026, compared with $176,087 in the prior-year period. Management said the increase primarily reflected an income-tax benefit associated with releasing the deferred-tax valuation allowance, higher gross profit and tariff-related recoveries, partly offset by higher operating expenses.
How much cash did MOJO have at September 30, 2026?
MOJO had $147,908 in cash and cash equivalents as of September 30, 2026. Net cash provided by operating activities was $290,086 for the nine months ended September 30, 2026.
Did MOJO declare a dividend?
MOJO had not declared a cash dividend on its common stock. Future dividend payments are within the board of directors' discretion and depend on earnings, capital requirements, financial condition and other relevant factors.
AI-generated analysis. How Rhea-AI works. Not financial advice.
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended: September 30, 2026
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to _______________
Commission file number: 000-55269
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address of principal executive offices) | (Postal Code) |
Registrant’s telephone number: 929 -264-7944
Securities registered pursuant to Section 12(b) of the Act:
None
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
x
No
¨
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
x
No
¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See the definitions of the “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer | ¨ | Accelerated Filer | ¨ |
x | Smaller reporting company | ||
Emerging growth company |
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
November
4
, 2026, there were 9,629,655 shares of the registrant’s common stock, par value $0.001, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
Page | ||
PART I – FINANCIAL INFORMATION | ||
Item 1. | Financial Statements (Unaudited) | 3 |
Condensed Balance Sheets | F-1 | |
Condensed Statements of Operations | F-2 | |
Condensed Statements of Cash Flows | F-4 | |
Condensed Statements of Changes in Stockholders’ Equity | F-5 | |
Notes to Condensed Financial Statements | F-6 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 8 |
Item 4. | Controls and Procedures | 8 |
PART II – OTHER INFORMATION | ||
Item 1. | Legal Proceedings | 10 |
Item 1A. | Risk Factors | 10 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 12 |
Item 3. | Defaults Upon Senior Securities | 12 |
Item 4. | Mine Safety Disclosures | 12 |
Item 5. | Other Information | 13 |
Item 6. | Exhibits | 14 |
SIGNATURES | 15 |
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
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.
| 3 |
EQUATOR BEVERAGE COMPANY
Condensed Balance Sheets (Unaudited)
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September 30, 2026 |
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December 31, 2025 |
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Assets |
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Current Assets |
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Cash |
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$ |
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$ |
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Accounts and other receivables |
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Inventory |
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Supplier deposits |
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Prepaid expenses |
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Total Current Assets |
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$ |
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$ |
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Noncurrent Assets |
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Deferred tax assets, net |
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$ |
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$ |
- |
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Total Noncurrent Assets |
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- |
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Total Assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current Liabilities |
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Accounts payable and accrued expenses |
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$ |
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$ |
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Related party loans |
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- |
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Total Current Liabilities |
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Total Liabilities |
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$ |
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$ |
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Commitments and Contingencies – Refer to Note 4 |
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Stockholders’ Equity |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
) |
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( |
) |
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Total Stockholders’ Equity |
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Total Liabilities and Stockholders’ Equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed financial statements.
| F-1 |
EQUATOR BEVERAGE COMPANY
Condensed Statements of Operations (Unaudited)
For the Three Months Ended September 30
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2026 |
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2025 |
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Revenue |
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$ |
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$ |
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Cost of Sales |
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Gross Profit |
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Operating Expenses |
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Selling, general, and administrative |
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Total Operating Expenses |
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Income from Operations |
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( |
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Interest Expense |
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( |
) |
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( |
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Other Income |
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Income Before Provision for Income Taxes |
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$ |
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$ |
( |
) |
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Income Tax Benefit (Expense) – Refer to Note 8 |
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( |
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( |
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Net Income |
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$ |
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$ |
( |
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Net Income Per Common Share, Basic and Diluted |
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$ |
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$ |
( |
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Weighted-Average Common Shares Outstanding, Basic and Diluted |
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The accompanying notes are an integral part of these condensed financial statements.
| F-2 |
EQUATOR BEVERAGE COMPANY
Condensed Statements of Operations (Unaudited)
For the Nine Months Ended September 30
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2026 |
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2025 |
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Revenue |
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$ |
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$ |
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Cost of Sales |
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Gross Profit |
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Operating Expenses |
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Selling, general, and administrative |
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Total Operating Expenses |
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Income from Operations |
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Interest Expense |
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( |
) |
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( |
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Other Income |
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Income Before Provision for Income Taxes |
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$ |
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$ |
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Income Tax Benefit (Expense) – Refer to Note 8 |
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( |
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Net Income |
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$ |
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$ |
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Net Income Per Common Share, Basic and Diluted |
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$ |
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$ |
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Weighted-Average Common Shares Outstanding, Basic and Diluted |
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The accompanying notes are an integral part of these condensed financial statements.
| F-3 |
EQUATOR BEVERAGE COMPANY
Condensed Statements of Cash Flows (Unaudited)
For the Nine Months Ended September 30
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2026 |
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2025 |
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Cash Flows from Operating Activities: |
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Net income |
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$ |
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$ |
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Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities: |
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Restricted, non-trading common stock issued to directors and employees |
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Deferred income tax benefit |
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( |
) |
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- |
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Changes in Assets and Liabilities: |
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Accounts and other receivables |
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( |
) |
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( |
) |
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Inventory |
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( |
) |
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( |
) |
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Supplier deposits |
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( |
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Prepaid expenses |
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( |
) |
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Accounts payable and accrued expenses |
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( |
) |
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Net Cash Provided by (Used in) Operating Activities |
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( |
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Net Cash Provided by (Used in) Financing Activities: |
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Shares repurchased for cancellation |
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( |
) |
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( |
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Proceeds from related party loan |
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Repayments of related party loan |
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( |
) |
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( |
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Net Cash Provided by (Used in) Financing Activities |
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( |
) |
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Net Increase (Decrease) in Cash and Cash Equivalents |
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( |
) |
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( |
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Cash and Cash Equivalents at Beginning of Period |
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Cash and Cash Equivalents at End of Period |
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$ |
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$ |
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Supplemental Disclosure of Cash Flow Information: |
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Cash Paid for Interest |
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$ |
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$ |
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Summary of non-cash investing and financing activity: |
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Restricted, non-trading common stock issued for settlement of accrued liabilities |
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$ |
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Restricted, non-trading common stock issued to directors and employees See Note 5 – Stock Transactions |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed financial statements.
| F-4 |
EQUATOR BEVERAGE COMPANY
Condensed Statements of Changes in Stockholders’ Equity (Unaudited)
For the Nine Months Ended September 30, 2026 and 2025
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Additional |
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Common Stock |
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Paid-In |
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Accumulated |
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Shares |
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Amount |
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Capital |
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Deficit |
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Total |
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Balance, December 31, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Restricted, non-trading common stock issued to directors and employees |
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Stock repurchased and retired |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
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Net Income |
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Balance, March 31, 2026 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Restricted, non-trading common stock issued to directors and employees |
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Stock repurchased and retired |
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Net Income |
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Balance, June 30, 2026 |
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$ |
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$ |
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$ |
( |
) |
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$ |
|
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|
Restricted, non-trading common stock issued to directors and employees |
|
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|
|
|
|
|
|
|
|
|
|
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|
|
|
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Net Income |
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|
- |
|
|
|
- |
|
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- |
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|
|
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|
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|
Balance, September 30, 2026 |
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|
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|
$ |
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$ |
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$ |
( |
) |
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$ |
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Additional |
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||||||||
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Common Stock |
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Paid-In |
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Accumulated |
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Shares |
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Amount |
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Capital |
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Deficit |
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Total |
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|||||
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Balance, December 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Restricted, non-trading common stock issued to directors, employees and unrelated parties |
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Net Income |
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- |
|
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- |
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- |
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Balance, March 31, 2025 |
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|
$ |
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$ |
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$ |
( |
) |
|
$ |
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Restricted, non-trading common stock issued to directors and employees |
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|
|
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Stock repurchased and retired |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
|
Net Income |
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Balance, June 30, 2025 |
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|
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$ |
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$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
Restricted, non-trading common stock issued to directors and employees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
Stock repurchased and retired |
|
|
( |
) |
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|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
Net Loss |
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|
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|
|
|
|
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|
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|
( |
) |
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( |
) |
|
Balance, September 30, 2025 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
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The accompanying notes are an integral part of these condensed financial statements.
| F-5 |
EQUATOR BEVERAGE COMPANY
Notes to Condensed Financial Statements (Unaudited)
September 30, 2026
NOTE 1 – BUSINESS
EQUATOR Beverage Company is a Delaware corporation engaged in the development, production, and distribution of beverage products.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete annual financial statements.
In the opinion of management, the accompanying unaudited condensed financial statements include all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for the interim periods presented.
The results of operations for the interim period are not necessarily indicative of the results that may be expected for the full fiscal year.
The accounting policies followed by the Company in preparing these unaudited condensed financial statements are consistent with those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, except as otherwise disclosed herein. There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2026.
Use of Estimates
The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. 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
The Company considers investments with original maturities of three months or less to be cash equivalents. The Company held no
Accounts Receivable
Accounts receivable are stated at the net amount expected to be collected from outstanding balances. The Company evaluates expected credit losses in accordance with Accounting Standards Codification ("ASC") 326, Financial Instruments—Credit Losses. The allowance for credit losses is estimated based on historical collection experience, current conditions, customer-specific factors, and reasonable and supportable forecasts of future economic conditions. Accounts receivable are written off when deemed uncollectible.
Based on management's evaluation of expected credit losses, the allowance for credit losses was $0
The Company has concentrations of revenue among certain major customers. For the three months ended September 30, 2026, two customers collectively accounted for approximately 65 % of the Company's total revenue.
Other Receivables
During the nine months ended September 30, 2026, the Company recognized customs-related recoveries arising from two separate matters.
During the nine months ended September 30, 2026, the Company recognized $117,264 in other income related to the recovery of tariffs following the U.S. Supreme Court ruling nullifying the applicable tariffs. Of this amount, $112,291 was recognized during the three months ended March 31, 2026, and $4,973 was recognized during the three months ended June 30, 2026. The Company received the related cash proceeds in May and June 2026.
During the three months ended June 30, 2026, the Company identified $33,538 of customs duties paid to U.S. Customs and Border Protection as a result of incorrect tariff codes used in connection with the importation of coconut water for which an applicable tariff exemption had not been claimed. During the three months ended September 30, 2026, U.S. CBP repaid the Company $8,394 . As of September 30, 2026, the outstanding receivable related to this matter was $25,144 .
| F-6 |
Inventory
Inventory consists solely of finished goods and is stated at the lower of cost or net realizable value. Cost is determined using the average-cost method, which approximates the first-in, first-out (“FIFO”) method. The Company evaluates inventory for excess or obsolescence and records valuation allowances when necessary. No such allowances were recorded as of September 30, 2026 or December 31, 2025, as inventory turnover has been sufficient to support recoverability. No inventory write-downs were required.
Finished goods inventory is maintained at a third-party warehouse. Management reconciles inventory records maintained by the warehouse provider to the Company’s accounting records on a monthly basis to verify the completeness and accuracy of inventory balances.
Inventory in transit is included in inventory as of the last day of the reporting period when title transfers to the Company at the shipping point, in accordance with the Company’s contractual shipping terms.
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. Revenue from product sales is recognized when control of the promised goods is transferred to the customer, which generally occurs upon shipment or delivery in accordance with the applicable shipping terms.
Each sale is based on a customer purchase order. Collectively, the purchase order and the Company’s standard terms and conditions constitute the contract with the customer. The Company’s contracts generally include a single performance obligation, which is the delivery of products.
The transaction price is the amount stated in the purchase order and reflects the consideration the Company expects to receive. The Company does not have material variable consideration, significant financing components, or multiple performance obligations. Payments are typically due within 30 days of delivery.
For sales shipped FOB shipping point, control transfers upon shipment. For sales shipped FOB destination, control transfers upon delivery at the customer’s location.
The Company has not historically experienced material returns and, accordingly, has not recorded a reserve for returns.
Disaggregation of Revenue
The Company generates substantially all of its revenue from the sale of beverage products. Revenue is recognized at a point in time when control of the products transfers to customers. Management has evaluated the nature, amount, timing, and uncertainty of revenue and cash flows and determined that its revenue streams have similar economic characteristics. Accordingly, the Company presents revenue as a single category.
| F-7 |
Shipping and Handling Costs
Shipping and handling costs incurred to move finished goods from the Company’s sales distribution centers to customer locations are included in selling, general, and administrative expenses in the Statements of Operations.
Net Income 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 income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted EPS is based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the periods. Diluted earnings per share equals basic earnings per share because the Company has no potentially dilutive securities.
Stock-Based Compensation
The Company accounts for non-cash, restricted stock compensation in accordance with ASC Topic 718, Compensation—Stock Compensation. Compensation cost is measured at the grant-date fair value, based on the closing price of the Company’s common stock on the grant date, and is recognized over the requisite service period.
Non-cash, restricted stock compensation expense is included in selling, general, and administrative expenses in the condensed statements of operations.
Income Taxes
The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for temporary differences between the financial-statement and tax bases of assets and liabilities and are measured using enacted tax rates expected to apply when such differences reverse. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that such assets will not be realized.
As of September 30, 2026, the Company recognized net deferred tax assets of $653,122 . As of December 31, 2025, the Company had gross deferred tax assets of $918,141 that were fully offset by a valuation allowance of $918,141 , resulting in no net deferred tax assets recognized on the balance sheet. Effective June 30, 2026, the Company released its valuation allowance after concluding that it was more likely than not that its deferred tax assets would be realized. As of September 30, 2026, management concluded that a valuation allowance was not required. See Note 8 for additional information.
The Company recognizes interest and penalties related to income taxes, if any, as a component of income tax expense. As of September 30, 2026, and December 31, 2025, the Company had no accrued interest or penalties related to income taxes and is not currently under examination by any federal or state taxing authorities.
| F-8 |
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.
Recently Issued Accounting Pronouncements
The Company evaluates new accounting pronouncements to determine their impact on the financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), which expands required segment disclosures. The Company adopted the guidance effective January 1, 2025. The adoption did not have a material impact on the Company’s financial statements other than expanded disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which enhances income tax disclosure requirements. The Company adopted the guidance effective January 1, 2025. The adoption did not have a material impact on the Company’s financial statements other than expanded disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses, including purchases of inventory, employee compensation, and depreciation. In January 2025, the FASB issued ASU 2025-01, which clarified that the guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its financial statement disclosures.
NOTE 3 – SEGMENT REPORTING
Adoption of ASU 2023-07
Effective January 1, 2025, the Company adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments require enhanced disclosures regarding significant segment expenses, the title and role of the Chief Operating Decision Maker (“CODM”), and other segment items. The amendments were applied retrospectively to all periods presented. The adoption did not change the Company’s identification of its operating and reportable segment and did not have a material impact on the Company’s financial position, results of operations, or cash flows.
Operating and Reportable Segment
The Company has one operating and reportable segment.
Chief Operating Decision Maker
The Company’s Chief Executive Officer serves as the CODM. The CODM evaluates performance and allocates resources based on consolidated financial information.
Measure of Segment Profit
The measure of segment profit used by the CODM is consolidated net income, consistent with the amount reported in the Company’s Statements of Operations. This measure is used to assess performance and determine resource allocation.
The Company does not present additional segment-level measures of profit because no other measures are regularly reviewed by the CODM for decision-making purposes.
Significant Segment Expenses
In accordance with ASU 2023-07, the following expense categories are significant expenses that are regularly provided to the CODM and are included within operating expenses in the Statements of Operations:
E-commerce fulfillment fees
Freight and delivery expenses
Compensation expenses
These amounts are further described in Note 7, Selling, General, and Administrative Expenses.
| F-9 |
Other Segment Items
Other segment items consist of the remaining operating expenses not separately disclosed above, together with interest expense and income tax expense (benefit), which are not individually reviewed by the CODM as separate components for purposes of evaluating segment performance.
NOTE 4 – COMMITMENTS AND CONTINGENCIES
Contingent Obligation Under Employment Agreement
Pursuant to the Employment Agreement between the Company and its Chief Executive Officer, if certain termination events specified in the agreement were to occur, the Company could be required to provide cash payments of $675,000 and issue 1,080,000 shares of its common stock.
Because the obligation is contingent upon future events that had not occurred as of September 30, 2026, no liability has been recognized in accordance with ASC 450, Contingencies.
NOTE 5 – STOCKHOLDERS’ EQUITY
The Company has authorized 10,000,000 shares of common stock having a par value of $0.001 .
Restricted Stock Issuances
The table below summarizes the restricted, non-trading common stock awards during the nine months ended September 30, 2026 and 2025:
Restricted, Non-Trading Common Stock Awards
Officers and Directors
Nine Months Ended September 30
2026 | 2025 | |||||||||||||||||||||||||||
Price | Shares | Amount | Price | Shares | Amount | |||||||||||||||||||||||
Q1 | Q1 | |||||||||||||||||||||||||||
Glenn Simpson | $ | $ | Glenn Simpson | $ | $ | |||||||||||||||||||||||
Total Q1 | $ | Total | - | $ | ||||||||||||||||||||||||
Q2 | Q2 | |||||||||||||||||||||||||||
Glenn Simpson | $ | $ | Glenn Simpson | $ | $ | |||||||||||||||||||||||
Total Q2 | $ | Total | - | $ | ||||||||||||||||||||||||
Q3 | Q3 | |||||||||||||||||||||||||||
Glenn Simpson | $ | $ | Glenn Simpson | $ | $ | |||||||||||||||||||||||
Nine-Month Total | $ | Nine-Month Total | - | $ | ||||||||||||||||||||||||
The fair value of restricted, non-trading stock awards issued during the nine months ended September 30, 2026 was determined based on the closing market price of the Company’s common stock on the grant date. These awards are earned over the service periods specified in the Chief Executive Officer’s employment agreement. In accordance with ASC 718, the grant-date fair value is recognized ratably as non-cash restricted stock compensation expense. Such expense is included in selling, general, and administrative expenses in the accompanying statements of operations. See Note 2 for further information regarding the Company’s non-cash, restricted stock compensation policy.
Stock Transactions
During the nine months ended September 30, 2026, the Company issued 210,000 shares of restricted, non-trading common stock to its Chief Executive Officer pursuant to the terms of his employment agreement. The shares had an aggregate fair value of $152,100 , based on the quoted OTC market price of the Company’s common stock on the grant dates. Of this amount, $24,300 represented a performance bonus that was accrued during 2025 and settled through the issuance of restricted, non-trading common stock in 2026. The remaining $127,800 represented compensation expense during the nine months ended September 30, 2026. The Company’s common stock closed at $0.81 per share on November 17, 2025, and $0.66 per share on April 8, 2026, which were the respective grant dates used to determine the fair value of the awards.
During the nine months ended September 30, 2025, the Company issued 841 shares of its restricted, non-trading common shares for marketing services and 201,000 shares of its restricted, non-trading common shares as a result of contractual stock awards.
The Company repurchased and retired 20,605 shares of its common stock from a stockholder during the nine months ended September 30, 2026. The Company repurchased and retired 225,000 shares of its common stock from stockholders during the nine months ended September 30, 2025.
| F-10 |
NOTE 6 – RELATED PARTY TRANSACTIONS
The Company engages in transactions with related parties in the ordinary course of business. Related parties include the Company’s directors, executive officers, and entities in which such individuals have a financial interest.
During the nine months ended September 30, 2026, the Company issued 210,000 shares of restricted, non-trading common stock to its Chief Executive Officer pursuant to a non-cash, restricted stock compensation arrangement. The shares had an aggregate fair value of $152,100 determined based on the quoted OTC market price of the Company’s common stock on the grant date. Of this amount, $24,300 represented a performance bonus that was accrued during 2025 and settled through the issuance of restricted, non-trading common stock in 2026. The remaining $127,800 represented compensation expense during the nine months ended September 30, 2026. The Company’s common stock closed at $0.81 per share on November 17, 2025, and $0.66 per share on April 8, 2026, which were the respective grant dates used to determine the fair value of the awards.
During the nine months ended September 30, 2025, the Company issued 201,000 shares of restricted, non-trading common stock to its Chief Executive Officer pursuant to a non-cash, restricted stock compensation arrangement.
On October 1, 2025, EQUATOR Beverage Company (the “Company”) entered into a loan agreement with Glenn Simpson (the “Lender”), who is considered a related party. Pursuant to the agreement, the Lender provided the Company with a loan in the principal amount of $340,000 . The loan bore interest at a rate of 9.25 % per annum and required monthly principal payments of at least $10,000 , together with accrued interest.
Effective July 20, 2026, the original loan agreement was superseded by a new loan agreement between the Company and the Lender with respect to the remaining principal balance of $120,000 . In August 2026, the Lender provided an additional $200,000 in financing. Under the new agreement, the outstanding principal balance bore interest at a rate of 9.00 % per annum on a simple interest basis, with all unpaid principal and accrued interest due on December 25, 2026. The Company was permitted to prepay all or any portion of the outstanding balance at any time without penalty.
As of September 30, 2026, the Company had fully repaid the loan balance and all accrued interest. The loan payable to Mr. Simpson was $0 , which was a decrease of $340,000 from the December 31, 2025 balance of $340,000 .
Interest expense associated with related-party loans totaled $2,864 and $14,191 for the three and nine months ended September 30, 2026, respectively, compared to $9,760 and $21,732 for the corresponding periods in 2025, respectively.
NOTE 7 – SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES (SG&A)
The material components of selling, general, and administrative expenses for the three and nine months ended September 30, 2026 and 2025 were as follows:
Three Months:
Sept 30, | Sept 30, | Sept 30, | Sept 30, | |||||||||||||
2026 SG&A | 2026 % of SG&A | 2025 SG&A | 2025 % of SG&A | |||||||||||||
E-commerce Fulfillment Fees | $ | % | $ | % | ||||||||||||
Compensation Expenses | $ | % | $ | % | ||||||||||||
Freight and Delivery Expenses | $ | % | $ | % | ||||||||||||
| F-11 |
Nine Months:
Sept 30, | Sept 30, | Sept 30, | Sept 30, | |||||||||||||
2026 SG&A | 2026 % of SG&A | 2025 SG&A | 2025 % of SG&A | |||||||||||||
E-commerce Fulfillment Fees | $ | % | $ | % | ||||||||||||
Compensation Expenses | $ | % | $ | % | ||||||||||||
Freight and Delivery Expenses | $ | % | $ | % | ||||||||||||
NOTE 8 – INCOME TAXES
The Company accounts for income taxes in accordance with Accounting Standards Codification (“ASC”) Topic 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, as well as for net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the periods in which the temporary differences are expected to reverse or the tax attributes are expected to be utilized.
For interim reporting periods, the Company determines its income tax provision in accordance with ASC 740-270, Interim Reporting. The Company computed its interim income tax provision based on its actual year-to-date effective tax rate.
Valuation Allowance
As of December 31, 2025, the Company had gross deferred tax assets of $918,141 , which were fully offset by a valuation allowance, resulting in no net deferred tax assets recognized on the balance sheet.
During the three months ended June 30, 2026, management reassessed the realizability of the Company's deferred tax assets. In evaluating the available positive and negative evidence, management considered the Company's recent taxable income, operating performance, projected future taxable income, historical cumulative losses, expected utilization of federal and state net operating loss carryforwards, and applicable carryforward periods.
Based on the weight of the available evidence, management concluded that realization of the deferred tax assets was more likely than not. Accordingly, the Company released its valuation allowance during the three months ended June 30, 2026.
Management reassessed the realizability of the deferred tax assets as of September 30, 2026, and concluded that no valuation allowance was required as of that date.
Net Operating Loss Carryforwards and Deferred Tax Assets
The following table summarizes the Company's net operating loss carryforwards and related deferred tax assets for the nine months ended September 30, 2026 and 2025:
2026 | 2025 | |||||||
Net Operating Loss Carryforward, January 1 | $ | $ | ||||||
Taxable Income, January 1 to September 30 | ||||||||
Net Operating Loss Carryforward, September 30 | $ | $ | ||||||
Gross Federal Deferred Tax Asset, January 1 | ||||||||
Federal Tax Expense as of September 30 (21% Tax Rate) | ( | ) | ( | ) | ||||
Gross Federal Deferred Tax Asset, September 30 | $ | $ | ||||||
State of New Jersey Deferred Tax Asset, January 1 | ||||||||
State of New Jersey Tax Expense as of September 30 (9% Tax Rate) | ( | ) | ( | ) | ||||
State of New Jersey Deferred Tax Asset, September 30 | $ | $ | ||||||
Total Deferred Tax Asset, September 30 | $ | $ | ||||||
Federal Tax Benefit Adjustment Associated with Deductible State Income Taxes | ( | ) | - | |||||
Valuation Allowance | - | |||||||
Total Deferred Tax Asset, Net Allowance | $ | $ | - | |||||
As of September 30, 2026, the Company reported net deferred tax assets of $653,122 , compared with no net deferred tax assets as of December 31, 2025.
| F-12 |
Income Tax Provision
For the nine months ended September 30, 2026, the Company recognized income tax benefit of $638,942 , compared with income tax expense of $7,207 for the corresponding period in 2025.
The income tax benefit for the nine months ended September 30, 2026 primarily resulted from the release of the valuation allowance against the Company's deferred tax assets during the second quarter of 2026, partially offset by the current income tax provision.
Income Tax Expense
The following table summarizes the computation of the income tax provision for the nine months ended September 30, 2026 and 2025:
2026 | 2025 | ||||||||
Total Tax Expense | $ | $ | |||||||
Tax Shield Applied: | |||||||||
Federal Tax as of September 30 ( | ( | ) | ( | ) | |||||
State of New Jersey Tax as of September 30 ( | ( | ) | ( | ) | |||||
Total Tax Shield Applied | $ | ( | ) | $ | ( | ) | |||
Current Income Tax Expense | $ | $ | |||||||
Deferred Income Tax Benefit | ( | ) | |||||||
Total Income Tax Benefit | $ | ( | ) | - | |||||
Reconciliation of Pretax Book Income to Taxable Income
The following table reconciles pretax book income to taxable income before utilization of net operating loss carryforwards for the nine months ended September 30, 2026 and 2025:
2026 | 2025 | |||||||
Net Income before Taxes | $ | $ | ||||||
Stock Awards | ||||||||
Taxable Net Income | $ | $ | ||||||
Effective Income Tax Rate
The Company's effective income tax rate for the nine months ended September 30, 2026 differed significantly from the federal statutory income tax rate of 21 %, primarily because of the release of the deferred tax asset valuation allowance during the second quarter of 2026 and the utilization of available net operating loss carryforwards.
| F-13 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (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 results improved during the nine months ended September 30, 2026. Revenue increased 20% year-over-year, gross margin expanded to 52%, and the Company generated positive operating income and net income. These results were driven by operating efficiencies, improved distribution execution, and continued customer demand for the Company’s beverage portfolio.
Management continues to monitor potential risks, including volatility in freight costs, oil and fuel prices, input costs, and consumer demand, as well as uncertainty surrounding U.S. trade and tariff policies and geopolitical developments, including the conflict involving Iran and the broader Middle East. These factors could disrupt global shipping routes, increase transportation and logistics costs, affect product availability, and adversely affect the Company’s supply chain, margins, operating results, and cash flows in future periods.
Forward-Looking Statements
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.
Company Overview
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.
| 4 |
Products
The Company’s beverage portfolio includes ready-to-drink beverage products. 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 products.
A core offering within the Company’s portfolio is MOJO Coconut Water. Each 11-ounce serving contains five electrolytes and naturally occurring vitamins B and C with no preservatives.
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, energy sparkling pink grapefruit, and chocolate coconut water.
Sustainability and Packaging
Sustainability is a core component of EQUATOR’s business strategy. The Company uses recyclable packaging for its beverage products. EQUATOR’s products are plant-based and made from renewable resources.
CURRENT OPERATIONS
Markets and Distribution
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. The Company seeks to grow the market share of its products by expanding its hybrid distribution network through the relationships and efforts of its management, third-party partners, and broker networks, as well as through new products and packaging.
Production
The Company utilizes multiple manufacturing sources. Fruit quality is a key contributor to the overall taste and quality of its products. Currently, the Company has multiple production facilities from which it can source products. Each facility is capable of meeting anticipated demand levels.
Competition
The beverage industry is competitive. Competitors in the Company’s market compete for brand recognition, ingredient sourcing, product shelf space, and e-commerce page rankings. Competition is based on price, quality, innovation, distribution, and brand recognition.
Government Regulation
Within the United States, beverages are regulated 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 September 30, 2026, the Company had two employees and utilized third-party service providers for manufacturing, logistics, and professional services.
| 5 |
Results of Operations
Three Months Ended September 30, 2026 and 2025
Revenue
Revenue for the three months ended September 30, 2026 increased by $326,069, or 28%, to $1,510,658, compared with $1,184,589 for the corresponding period in 2025. The increase was primarily attributable to higher sales volumes across the Company’s product portfolio.
Cost of Sales and Gross Margin
Cost of sales totaled $759,321, representing 50% of revenue, compared to 51% in the prior year. Gross margin increased to 50% from 49% in the prior-year period.
Operating Expenses
Operating expenses decreased to $507,490 for the quarter ended September 30, 2026, compared to $625,780 in the prior year. The decrease was primarily attributable to lower stock awards expense, partially offset by an increase in selling expenses. Excluding non-cash, restricted stock compensation, cash operating expenses rose 15%, primarily driven by higher freight and delivery expenses in line with a 49% increase in revenue from a key customer, increased marketing spend, and higher e-commerce fulfillment fees associated with a 26% increase in e-commerce revenue.
Net Income
Net income for the quarter ended September 30, 2026, was $123,058, compared to a net loss of $61,003 for the quarter ended September 30, 2025. The increase of $184,061 was primarily attributable to higher gross profit and lower operating expenses, partially offset by higher income tax expense of $117,925 compared with $2,861 for the quarter ended September 30, 2025
.
Nine Months Ended September 30, 2026 and 2025
Revenue
For the nine months ended September 30, 2026, the Company reported revenue of $3,731,595, an increase of $626,681, or 20% from revenue of $3,104,914 for the nine months ended September 30, 2025. The increase in revenue was primarily attributable to higher sales volume across the Company’s product portfolio during the third quarter of 2026, improved e-commerce performance, and expanded distribution.
Cost of Sales and Gross Margin
For the nine months ended September 30, 2026, cost of sales was $1,773,948, or 48% of revenue, compared to $1,733,885 or 56% of revenue from the same period in 2025. The reduction in cost of sales as a percentage of revenue reflects improved operating efficiencies and contributed to a significant improvement in gross margin during the current period. Future gross margins will depend on factors including sales volume, product mix, input costs, freight costs, and overall market conditions.
Operating Expenses
Operating expenses increased to $1,400,790 for the nine months ended September 30, 2026, compared to $1,166,003 in the prior year. Excluding non-cash, restricted stock compensation, cash operating expenses rose 34%, primarily driven by higher freight and delivery expenses in line with a 59% increase in revenue from a key customer, increased marketing and promotional efforts, and a 38% increase in e-commerce fulfillment fees associated with increased e-commerce revenue.
Other Income
For the nine months ended September 30, 2026, the Company recognized other income of $117,264 due to tariff-related recoveries associated with previously paid import duties during the period. In accordance with U.S. GAAP, these amounts are presented within other income in the accompanying condensed financial statements. Management believes these recoveries are non-recurring in nature.
| 6 |
Net Income
Net income for the nine months ended September 30, 2026, was $1,298,872, compared to $176,087 for the same period in 2025. The increase of $1,122,785 primarily reflected the recognition of an income tax benefit associated with the release of the deferred tax asset valuation allowance, higher gross profit, and higher other income, partially offset by higher operating expenses.
Net income for the period included a non-recurring, non-cash income tax benefit of $918,141 related to the release of the valuation allowance on the Company’s deferred tax assets. Liquidity and Capital Resources
As of September 30, 2026, the Company had working capital of $1,332,188 and cash and cash equivalents of $147,908. Net cash provided by operating activities was $290,086 for the nine months ended September 30, 2026, compared to net cash used in operating activities of $55,551 for the nine months ended September 30, 2025. Based on its current operating plans, management believes that existing cash and cash equivalents, together with cash expected to be generated from operations, will be sufficient to meet the Company’s anticipated working capital requirements.
Borrowings
Borrowings under the Company’s related party loan arrangements with its Chief Executive Officer decreased from $340,000 at December 31, 2025 to $0 as of September 30, 2026. During the nine months ended September 30, 2026, the Company borrowed an aggregate of $268,000, including a $200,000 advance received in August 2026, and made total principal repayments of $608,000. The August 2026 advance was repaid in full during the three months ended September 30, 2026. See Note 6
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not currently have material exposure to market risk arising from derivative instruments or foreign currency exchange rates. The Company is, however, exposed to fluctuations in freight, transportation, raw material, and other input costs, as discussed elsewhere in this report.
ITEM 4. CONTROLS AND PROCEDURES
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 management, including the Company’s principal executive and principal financial officer, the Company evaluated the effectiveness of its disclosure controls and procedures as of September 30, 2026. Based on that evaluation, the principal executive and principal financial officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2026. In reaching this conclusion, management considered the material weaknesses in internal control over financial reporting described below and the compensating controls implemented by the Company.
Management's Report on Internal Control over Financial Reporting
Management 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 for external purposes 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 all 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”), as previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, 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:
·
Segregation of duties and governance.
Limited segregation of duties and independent oversight resulting from the Company’s size and limited number of personnel, including concentration of financial reporting responsibilities.| 8 |
·
Technical accounting review.
Limited independent technical accounting oversight and the absence of a formal secondary review process for complex or non-routine transactions, including transactions involving significant estimates or specialized accounting guidance.These material weaknesses create a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements would not be prevented or detected on a timely basis.
Remediation Efforts
Management continues to evaluate and implement measures intended to strengthen the Company's internal control over financial reporting. These efforts include enhancing supervisory review procedures, strengthening the documentation and reconciliation of significant accounting balances, and supplementing the financial reporting process with independent technical accounting assistance when appropriate.
The Company intends to continue evaluating the design and operating effectiveness of these procedures. The previously identified material weaknesses will not be considered remediated until management has determined that the applicable controls have been appropriately designed, implemented, and operated effectively for a sufficient period.
Notwithstanding these material weaknesses, management believes that the unaudited condensed financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, the Company's financial position as of September 30, 2026, and its results of operations and cash flows for the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Changes in Internal Control over Financial Reporting
Except for the ongoing remediation activities described above, there were no changes in the Company's internal control over financial reporting during the quarter ended September 30, 2026, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not currently a party to any material legal or administrative proceedings and is not aware of any material proceedings pending or threatened against it.
ITEM 1A. RISK FACTORS
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 the Company’s business, financial condition, or results of operations in future periods. The risks described below are not the only risks facing the Company. Additional risks not currently known to the Company or that it currently deems to be immaterial also may materially adversely affect its business, financial condition, or results of operations in future periods.
RISKS RELATED TO OPERATIONS
Adverse Economic and Geopolitical Conditions
The Company’s business, financial condition, and results of operations may be affected by adverse economic and geopolitical conditions, including inflation, commodity and energy price volatility, trade restrictions, tariffs, armed conflicts, and disruptions to international shipping. These conditions may increase product and transportation costs, disrupt the Company’s supply chain, reduce consumer demand, or adversely affect sales and profitability.
Competition
The Company operates in a highly competitive beverage industry. Competitive pressures may limit its 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.
Innovation Risk
The Company’s 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 and Customer Concentration
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.
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Supply Chain and Input Cost Volatility
The Company’s 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 its financial condition and results of operations.
Third-Party Risks
The Company relies on third-party suppliers, distributors, and service providers. Their failure to meet contractual, operational, cybersecurity, regulatory, or compliance obligations may expose the Company to financial, legal, operational, and reputational risks, which could adversely affect the Company’s results.
RISKS RELATED TO CONSUMER DEMAND FOR PRODUCTS
Evolving Consumer Preferences and Digital Commerce
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.
RISKS RELATED TO REGULATORY AND LEGAL MATTERS
Packaging and Environmental Regulations
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.
Labeling, Marketing, and Product Restrictions
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.
Litigation and Legal Proceedings
The Company is 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.
Compliance and Anti-Corruption Risks
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.
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Intellectual Property Protection
The Company’s 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.
RISKS RELATED TO FINANCE, ACCOUNTING AND INVESTMENTS
Failure to Achieve Long-Term Growth Objectives
The Company has publicly announced long-term growth objectives based on assumptions regarding sales potential, pricing, and product mix. If it is unable to realize anticipated demand, maintain favorable pricing, or achieve the expected product mix, it may not meet these objectives. Failure to achieve stated growth targets could adversely affect the Company’s financial performance and the market value of its securities.
RISKS RELATED TO INFORMATION TECHNOLOGY AND DATA PRIVACY
The Company relies on internal and third-party information systems, including cloud-based services, to support its 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. The Company is 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 its business, financial condition, or results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
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ITEM 5. OTHER INFORMATION
Corporate Governance Update
On April 20, 2026, the Company an Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws. The amended documents are filed as Exhibits 3.1 and 3.2 to this report.
adopted
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company’s common stock is quoted on the OTCQB under the symbol MOJO.
For the period from January 1, 2025 through September 30, 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:
Period | Close | High | Low | VWAP* | Shares Traded | |||||||||||||||
July 1 to September 30, 2026 | $ | 0.69 | $ | 1.10 | $ | 0.69 | $ | 0.84 | 165,757 | |||||||||||
April 1 to June 30, 2026 | $ | 1.10 | $ | 1.29 | $ | 0.52 | $ | 0.90 | 175,158 | |||||||||||
January 1 to March 31, 2026 | $ | 0.89 | $ | 1.39 | $ | 0.53 | $ | 1.06 | 336,160 | |||||||||||
October 1 to December 31, 2025 | $ | 0.79 | $ | 1.41 | $ | 0.37 | $ | 0.70 | 441,818 | |||||||||||
July 1 to September 30, 2025 | $ | 1.14 | $ | 1.42 | $ | 0.88 | $ | 1.12 | 557,081 | |||||||||||
April 1 to June 30, 2025 | $ | 1.06 | $ | 1.08 | $ | 0.72 | $ | 0.86 | 238,496 | |||||||||||
January 1 to March 31, 2025 | $ | 0.84 | $ | 1.30 | $ | 0.80 | $ | 0.94 | 138,425 | |||||||||||
*Volume-weighted average price
Stockholders
As of September 30, 2026, there were 80 stockholders of record of the Company’s common stock and 9,569,655 shares of common stock issued and outstanding.
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 quarters ended September 30, 2026 and 2025.
Issuer Purchases of Equity Securities
Since January 1, 2018, the Company has repurchased 1,105,072 shares of its common stock.
During the nine months ended September 30, 2026, the Company repurchased 20,605 shares of its common stock compared with 225,000 shares during the nine months ended September 30, 2025.
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ITEM 6. EXHIBITS
Financial Statement Schedules
The financial statements of EQUATOR Beverage Company are listed in 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:
Exhibit No. | SEC Report Reference Number | Description | ||
3.1 | 3.1 | Amended and Restated Certificate of Incorporation of EQUATOR Beverage Company, as of April 20, 2026 (1) | ||
3.2 | 3.2 | Amended and Restated Bylaws of EQUATOR Beverage Company, as of April 20, 2026 (1) | ||
31.1 | 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1) | ||
32.1 | 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1) |
101.INS | Inline XBRL Instance Document |
101.SCH | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
(1) | Filed herewith |
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SIGNATURES
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.
EQUATOR BEVERAGE COMPANY | ||
Dated: November 4, 2026 | By: | /s/ Glenn Simpson |
Glenn Simpson, Chairman and Chief Executive Officer (Principal Executive and Principal Financial Officer) | ||
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