Our Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is provided in addition to the accompanying financial
statements and notes to assist readers in understanding our results of
operations, financial condition and cash flows. MD&A is organized as follows:
? Significant Accounting Policies - Accounting policies that we believe are
important to understanding the assumptions and judgments incorporated in our
reported financial results and forecasts.
? Results of Operations - Analysis of our financial results comparing the
quarter ended March 31, 2022 to 2021.
? Liquidity and Capital Resources - Analysis of changes in our cash flows, and
discussion of our financial condition and potential sources of liquidity.
This report includes a number of forward-looking statements that reflect our
current views with respect to future events and financial performance. Forward
looking statements are often identified by words like: believe, expect,
estimate, anticipate, intend, project and similar expressions, or words which,
by their nature, refer to future events. You should not place undue certainty on
these forward-looking statements, which apply only as of the date of this annual
report. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or our predictions.
Significant Accounting Policies
We have prepared our financial statements in conformity with accounting
principles generally accepted in the United States, which requires management to
make significant judgments and estimates that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of expenses during
the reporting period. We base these significant judgments and estimates on
historical experience and other applicable assumptions we believe to be
reasonable based upon information presently available. These estimates may
change as new events occur, as additional information is obtained and as our
operating environment changes. These changes have historically been minor and
have been included in the financial statements as soon as they became known.
Actual results could materially differ from our estimates under different
assumptions, judgments or conditions.
All of our significant accounting policies are discussed in Note 2, Summary of
Significant Accounting Policies, to our financial statements, included elsewhere
in this Annual Report. We have identified the following as our critical
accounting policies and estimates, which are defined as those that are
reflective of significant judgments and uncertainties, are the most pervasive
and important to the presentation of our financial condition and results of
operations and could potentially result in materially different results under
different assumptions, judgments or conditions.
We believe the following critical accounting policies reflect our more
significant estimates and assumptions used in the preparation of our financial
statements:
Use of Estimates - The financial statements are prepared in conformity with
accounting principles generally accepted in the United States ("GAAP").
Management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Fair Value of Financial Instruments - Our short-term financial instruments,
including cash, accounts receivable, accounts payable and other liabilities,
consist primarily of instruments without extended maturities. We believe that
the fair values of our current assets and current liabilities approximate their
reported carrying amounts.
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COMPANY OVERVIEW
MOJO Organics, Inc. ("MOJO") is a Delaware corporation headquartered in Jersey
City, NJ. The Company's business is new product development, beverage
production, marketing, distribution and the sale of beverages that are, Non-GMO
Project verified, and USDA Organic. The Company's flagship product is MOJO
Coconut Water. In addition to Coconut Water, the Company produces Sparkling
Coconut Water, Coconut Water + Mango Juice and Coconut Water + Pineapple Juice
and USDA Organic Coconut Water. We seek to grow the market share of our products
by expanding our hybrid distribution network through the relationships and
efforts of our management, third party partners and our broker network, and add
new products and packaging including pH7 water (pH is a scale of acidity) and
energy beverages which are the two largest sectors of the beverage industry. The
Company packages its beverages in 100% recyclable, Eco-Friendly packaging. The
packaging has a low impact on the environment when recycled.
Results of Operations
Three Months Ended March 31, 2022 and 2021
Revenue
For the three months ended March 31, 2022, the Company reported revenue of
$379,657 a decrease from revenue of $403,766 for the three months ended March
31, 2022. The decrease in revenue was due to fewer cases sold for the quarter
ended March 31. 2022 compared to the same period last year. Some of the
Company's products were affected by production and shipping challenges during
the first quarter of 2022 because of closures due to COVID-19.
Cost of Revenue
Cost of revenue includes finished goods purchase costs, production costs, raw
material costs and freight in costs. Also included in cost of revenue are
adjustments made to inventory carrying amounts, including markdowns to market.
For the three months ended March 31, 2022, cost of revenue was $232,584 or 61%
of revenue. For the three months ended March 31, 2022, cost of revenue was
$208,401 or 52% of revenue. The 9% increase in cost of revenue was due to higher
costs of ocean freight compared to the same period last year.
Operating Expenses
For the three months ended March 31, 2022, selling, general and administrative
expenses was $281,566 an increase of $63,336 from the three months ended March
31, 2021 of $218,230.
This increase in operating expenses was primarily due to higher compensation
expenses resulting from the one-time stock grant that was issued to the
employees and directors of the Company. Compensation expenses increased by
$75,352 for the three months ended March 31, 2022 compared to the same period
last year. This increase is offset by lower office expenses and marketing
expenses.
Liquidity and Capital Resources
Liquidity
As of March 31, 2022, the Company had working capital of $245,929. Net cash used
in operating activities was $47,947 for the three months ended March 31, 2022,
compared to net cash used in operating activities for the three months ended
March 31, 2021 of $18,586. Net cash provided by financing activities was $26,152
for the quarter ended March 31, 2022 compared to zero for the quarter ended
March 31, 2021. Net cash was provided by financing activities of a related party
loan offset by cash used in financing activities to repurchase MOJO Restricted
Common Stock for the quarter ended March 31, 2022.
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Working Capital Needs
Our working capital requirements increase as demand grows for our products.
During the three months ended March 31, 2022 and 2021, the Company did not
require additional funding. If the Company requires additional working capital
during the next twelve months, it may seek to raise additional funds. Financing
transactions may include the issuance of equity, debt securities and obtaining
credit facilities.
OFF BALANCE SHEET ARRANGEMENTS
None
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