MOJO 10-K & 10-Q changes, risk factors and insider trading

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

RISKS RELATED TO OUR OPERATIONS

OurThe Company’s business, financial condition, and results of operations aremay subjectbe toaffected globalby adverse economic and geopolitical conditions, including inflation, recessionary pressures, foreign currency volatility, commodity and energy price fluctuations,volatility, trade restrictions, governmenttariffs, spendingarmed levels, sovereign debt risks, civil unrest, war, terrorism,conflicts, and changesdisruptions into international relations.shipping. Deteriorating economicThese conditions may increase product and transportation costs, disrupt the Company’s supply chain, reduce consumer purchasing power, shift demand to lower-priceddemand, or private-label products, and adversely affect sales volume, pricing, and profitability.

WeThe operateCompany operates in a highly competitive beverage industry. Competitive pressures may limit ourits 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.

OurThe 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.

OurThe 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 ourits financial condition and results of operations.

WeThe relyCompany relies on third-party suppliers, distributors, and service providers. Their failure to meet contractual, operational, cybersecurity, regulatory, or compliance obligations may expose usthe Company to financial, legal, operational, and reputational risks, which could adversely affect ourthe Company’s results.

RISKS RELATED TO CONSUMER DEMAND FOR OUR PRODUCTS

WeThe areCompany 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.

OurThe 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.

WeThe haveCompany has publicly announced long-term growth objectives based on assumptions regarding sales potential, pricing, and product mix. If weit areis unable to realize anticipated demand, maintain favorable pricing, or achieve the expected product mix, weit may not meet these objectives. Failure to achieve stated growth targets could adversely affect ourthe Company’s financial performance and the market value of ourits securities.

WeThe relyCompany relies on internal and third-party information systems, including cloud-based services, to support ourits 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. WeThe areCompany 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 ourits business, financial condition, or 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 performanceresults improved significantly during the quartersix months ended MarchJune 31,30, 2026. Revenue increased 18%16% year-over-year, gross margin expanded to 52%,54%, and the Company generated positive operating income and net income. These results were driven by improved operating leverage,efficiencies, enhancedimproved distribution execution, and continued customer demand for the Company’s beverage portfolio.

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.

The Company’s beverage portfolio includes ready-to-drink beveragesbeverage and sparkling energy beverages.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 options.products.

A core offering within the Company’s portfolio is MOJO Coconut Water, a naturally functional hydration beverage.Water. Each 11-ounce serving contains five essential electrolytes, supporting hydrationelectrolytes and recovery. The product contains naturally occurring vitamins B and C,C hasand contains 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 .preservatives.

In addition to Coconutcoconut Water,water, the Company produces Coconutcoconut Waterwater + Pineapplepineapple Juice,juice, Coconutcoconut Waterwater + Mangomango Juice,juice, Organicorganic Coconutcoconut Water,water, Sparklingsparkling Coconutcoconut Waterwater Citrus,citrus, Energyenergy Sparklingsparkling Bloodblood Orange,orange, energy sparkling pink grapefruit, and Energychocolate Sparklingcoconut Pink Grapefruit.water.

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

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. WeThe seekCompany seeks to grow the market share of ourits products by expanding ourits hybrid distribution network through the relationships and efforts of ourits management, third-party partners, and broker networks, as well as through new products and packaging.

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

The beverage industry is competitive. Competitors in ourthe Company’s market compete for brand recognition, ingredient sourcing, product shelf space, and e-commerce page rankings. OurCompetition competitorsis usebased similaron distributionprice, channelsquality, innovation, distribution, and retailersbrand to deliver and sell their products.recognition.

Within the United States, beverages are governedregulated 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 MarchJune 31,30, 2026, the Company had two employees and utilizesutilized third-party service providers for manufacturing, logistics, and professional services. This operating model enables scalability without significant fixed overhead.

Revenue for the quarter ended MarchJune 31,30, 2026 increased 18%14% to $961,484$1,259,453 from $817,748$1,102,577 infor the samequarter periodended inJune 30, 2025. ThisThe growthincrease was driven primarily by higher sales volumevolume. reflectingCases strongersold market demand, withof the Company’s largest SKU contributingincreased a9% 42%year year-over-yearover year and contributed to the increase in cases sold and accounting for a significant portion of the overall revenue gain.revenue.

Cost of RevenueSales and Gross Margin

Gross margin increased to 57% from 43%, primarily due to lower freight costs, supply chain efficiencies, and a more favorable product mix Operating expenses increased to $419,331$473,970 for the quarter ended MarchJune 31,30, 2026, compared to $231,178$309,045 in the prior year. ExcludingThe non-cashincrease restricted stock compensation, cashin operating expenses rose approximately 50%,was primarily drivenattributable byto higher e-commerce selling fees in line with a 52% increase in e-commerce revenue,fees, increased marketing spend, andexpenses, higher warehouse costs associated with expanded storage needs.needs, and non-cash restricted stock compensation.

Net income for the quarter ended MarchJune 31,30, 2026 was $176,115,$999,699, compared to $84,034$153,056 for the quarter ended MarchJune 31,30, 2025. The increase of $92,081 was$846,643 primarily attributablereflected tothe improvedrecognition of an income tax benefit associated with the release of the Company’s deferred tax asset valuation allowance, together with higher gross margins,profit and enhanced operating efficiencies.income.

As of MarchJune 31,30, 2026, the Company had working capital of $783,353$1,056,655 and cash and cash equivalents of $126,670.$73,757. Net cash provided by operating activities was $38,848$55,935 for the quartersix months ended MarchJune 31,30, 2026, compared to net cash used in operating activities of $70,867$263,091 for the quartersix months ended MarchJune 31,30, 2025. ManagementBased on its current operating plans, management believes that its existing cash and cash equivalents, together with cash expected to be generated from operations, will be sufficient to meet itsthe Company’s anticipated working capital requirements and support planned growth initiatives for the foreseeable future.requirements.

Borrowings under the Company’s credit arrangements duringdecreased thefrom quarter$340,000 endedat MarchDecember 31, 2026 ranged from $230,0002025 to $340,000, with an outstanding balance of $230,000$160,000 as of MarchJune 31,30, 2026. Management believes that the Company’s expected growth and cash flowflows from operations will be sufficient to meet its futureanticipated capital requirements, as evidenced in part by the reduction in outstanding borrowings from peak levels earlier in the year.requirements. The Company intends to continue reducing outstanding borrowings during fiscal 2026.