EQUATOR Beverage Co (MOJO) stock intrinsic value fair value estimate & owner earnings analysis

EQUATOR Beverage Company (formerly MOJO Organics; the shares trade over the counter as MOJO) sells MOJO Coconut Water and related drinks - coconut water blended with pineapple or mango juice, organic and sparkling coconut water, and two sparkling energy drinks. It is a very small, asset-light brand: two employees, with bottling, freight, warehousing and sales brokerage all outsourced, product sourced from two suppliers in Southeast Asia, and sales through distributors and retailers in North America, the Caribbean and Bermuda. Six customers accounted for 94% of 2025 revenue. Track record. Revenue has grown from $1.33 million in 2016 to $1.82 million in 2022, $3.25 million in 2024 and $4.19 million in 2025, and was up 16% in the first half of 2026. Profit has not kept pace. Measured as the cash the business generates for its owners after paying its people (including the stock it hands to its two executives), it lost money in eight of the last ten years, broke even in 2021, and earned $49,000 in 2025 - about half a cent per share. The company has no meaningful plant or equipment, so capital spending and depreciation are nil and owner earnings are essentially equal to reported net income. The key accounting judgement is stock compensation. The CEO and CFO are paid largely in restricted stock - roughly 500,000 to 640,000 new shares a year recently, about 5-7% of the company, partly offset by buybacks. That cost $357,000 in 2023, $867,000 in 2024 and $410,000 in 2025 (the dollar figure moves with the share price). We treat it as a real operating expense, because it is: it is how management is paid, and every share issued dilutes outside owners. It is the difference between a business that looks profitable before stock pay and one that has barely broken even. Why we start above the 2025 result. The three most recent full years (2023-2025), which reflect the business at roughly its current size and structure, have a median result of a loss of about two cents per share. We do not use that as the starting point, for two specific, documented reasons. First, 2025 absorbed $122,039 of import tariffs that the company reports have since been eliminated; without them 2025 owner earnings would have been about $171,000. Second, gross margin has improved in four consecutive periods: 38% in 2024, 41% in the first half of 2025, 47% in the second half, 51% in the first quarter of 2026 and 57% in the second quarter. We therefore start the base case at about $150,000 a year (about 1.6 cents per share) - roughly the 2025 result with the tariff cost removed. We did not use the first half of 2026 at face value: its $1.18 million of net income includes a $766,000 non-cash tax benefit from recognising past tax losses, and about $117,000 of other income that we treat as one-off (it may be the tariff refund the company said it could claim, but we could not confirm this from the filings). Base case ($0.18 per share). Revenue held at today's level of roughly $4.2-4.5 million with no growth credited, gross margin near 48%, cash operating costs of about $1.5 million, stock pay of about $400,000 a year, a little interest on the CEO's loan and minimal cash tax thanks to accumulated tax losses: about $150,000 a year for ten years. After that we fade it to nothing over the following decade. The brand has been on shelves continuously since 2015, which supports ten years; beyond that there is no evidence of a lasting advantage in a crowded category with much larger competitors and private-label products. The company's working capital (receivables and inventory, net of payables, about $1 million) is assumed to come back to owners when the story ends. Discounted at 6%, this is worth about $1.7 million, or $0.18 per share. Recent sales growth (29% in 2025) came from new shelf space and distribution; it is real, but gaining further distribution is not secured, so none of it is credited. Bull case ($0.43 per share). The first-half-2026 gross margin of about 54% holds on the last twelve months' revenue of about $4.5 million, with cash costs of about $1.6 million and stock pay of about $400,000, giving roughly $405,000 a year for ten years, then the same fade. This uses only margins and sales the company has already achieved; growth from new retailers would be additional but is not in hand. Bear case (minus $0.07 per share). Gross margin slips back toward 40%, where it was in 2022-2024 - freight, sourcing costs or the loss of one of the six customers that make up nearly all sales would each do it - while stock pay continues. The business returns to the pattern of 2016-2024, losing roughly $150,000 a year after stock compensation for a decade, with the losses effectively paid for by issuing shares to management rather than by cash. Recovering a haircut value of the working capital at the end does not fully offset those losses. The negative figure is not because the company owes more than it owns - its debts are small, about $560,000 at June 2026, mostly supplier payables and a loan from the CEO - but because a business that keeps paying its executives in new shares while earning nothing steadily transfers value away from outside shareholders. What else to watch. The CEO, Glenn Simpson, is both the largest recipient of stock awards and the company's lender (a $340,000 loan at 9.25%, repayable at $10,000 a month and callable on default; it had been paid down to $230,000 by March 2026). The company reports a material weakness in internal controls because of its tiny staff. Inventory nearly doubled to $950,000 in the first half of 2026, which held operating cash flow to $56,000 in a half-year where profits were much higher; this may be a stock-up ahead of demand, but it bears watching. The 2025 tax lines (a $141,800 provision offset by a $137,465 deferred tax benefit) could not be fully reconciled with the balance sheet, which showed no deferred tax asset at year end; the net effect on 2025 earnings was small. What the shares appear to be worth. Roughly $0.18 per share on the median case, with a range from slightly below zero to about $0.43. For our base case to prove too low, the company would need to keep its new, higher gross margins while adding retailers profitably and holding stock awards in check. For it to prove too high, margins would need to fall back to 2024 levels or a major customer would need to be lost.