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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
| ☒ |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended June 30, 2025
| ☐ |
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: 001-41228
BARFRESH
FOOD GROUP INC.
(Exact
name of registrant as specified in its charter)
| Delaware |
|
27-1994406 |
(State
or other jurisdiction of
incorporation
or organization) |
|
(I.R.S.
Employer
Identification
No.) |
| |
|
|
3600
Wilshire Blvd., Suite 1720,
Los
Angeles, California |
|
90010 |
| (Address of principal executive
offices) |
|
(Zip Code) |
310-598-7113
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name, former address and former fiscal year, if changed since last report)
Securities
registered pursuant to Section 12(b) of the Act:
| Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
| Common stock, $0.000001
par value |
|
BRFH |
|
The Nasdaq Capital Market
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “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 ☐ |
| Non-accelerated filer ☐ |
Smaller reporting company ☒ |
| |
Emerging growth company ☐ |
If
an emerging growth company, indicate by the 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 ☒
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 15,940,261
shares as of August 11, 2025.
TABLE
OF CONTENTS
| |
|
Page
Number |
| PART I - FINANCIAL INFORMATION |
|
| |
|
|
| Item 1. |
Financial Statements. |
3 |
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
14 |
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk. |
18 |
| Item 4. |
Controls and Procedures. |
18 |
| |
|
|
| PART II - OTHER INFORMATION |
19 |
| |
|
|
| Item 1. |
Legal Proceedings. |
19 |
| Item 1A. |
Risk Factors. |
19 |
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds. |
19 |
| Item 3. |
Defaults Upon Senior Securities. |
19 |
| Item 4. |
Mine Safety Disclosures. |
19 |
| Item 5. |
Other Information. |
19 |
| Item 6. |
Exhibits. |
19 |
| |
|
|
| SIGNATURES |
20 |
Item
1. Financial Statements.
Barfresh
Food Group Inc.
Condensed
Consolidated Balance Sheets
| | |
June 30, | | |
December 31, | |
| | |
2025 | | |
2024 | |
| | |
(unaudited) | | |
(audited) | |
| Assets | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash | |
$ | 712,000 | | |
$ | 235,000 | |
| Trade accounts receivable, net | |
| 551,000 | | |
| 829,000 | |
| Other receivables | |
| 22,000 | | |
| 55,000 | |
| Inventory, net | |
| 1,842,000 | | |
| 1,500,000 | |
| Prepaid expenses and other current assets | |
| 126,000 | | |
| 104,000 | |
| Total current assets | |
| 3,253,000 | | |
| 2,723,000 | |
| Property, plant and equipment, net of depreciation | |
| 320,000 | | |
| 333,000 | |
| Intangible assets, net of amortization | |
| 136,000 | | |
| 178,000 | |
| Other non-current assets | |
| 58,000 | | |
| 84,000 | |
| Total assets | |
$ | 3,767,000 | | |
$ | 3,318,000 | |
| | |
| | | |
| | |
| Liabilities and Stockholders’ Equity | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Line of credit | |
$ | - | | |
$ | 609,000 | |
| Accounts payable | |
| 900,000 | | |
| 1,200,000 | |
| Disputed co-manufacturer accounts payable (Note 4) | |
| 499,000 | | |
| 499,000 | |
| Accrued expenses | |
| 64,000 | | |
| 142,000 | |
| Accrued payroll and employee related expenses | |
| 81,000 | | |
| 67,000 | |
| Financing agreements - current | |
| 107,000 | | |
| 99,000 | |
| Total current liabilities | |
| 1,651,000 | | |
| 2,616,000 | |
| Financing agreements | |
| 69,000 | | |
| 124,000 | |
| Total liabilities | |
| 1,720,000 | | |
| 2,740,000 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| - | | |
| - | |
| | |
| | | |
| | |
| Stockholders’ equity: | |
| | | |
| | |
| Preferred stock, $0.000001 par value, 400,000 shares authorized, none issued or outstanding | |
| - | | |
| - | |
| Common stock, $0.000001 par value; 23,000,000 shares authorized; 15,940,261 and 14,746,172 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively | |
| - | | |
| - | |
| Additional paid in capital | |
| 67,309,000 | | |
| 64,199,000 | |
| Accumulated deficit | |
| (65,262,000 | ) | |
| (63,621,000 | ) |
| Total stockholders’ equity | |
| 2,047,000 | | |
| 578,000 | |
| Total liabilities and stockholders’ equity | |
$ | 3,767,000 | | |
$ | 3,318,000 | |
See the accompanying notes to the condensed consolidated financial statements
Barfresh
Food Group Inc.
Condensed
Consolidated Statements of Operations
For
the three and six months ended June 30, 2025 and 2024
(Unaudited)
| | |
2025 | | |
2024 | | |
2025 | | |
2024 | |
| | |
For the three
months ended June 30, | | |
For the six
months ended June 30, | |
| | |
2025 | | |
2024 | | |
2025 | | |
2024 | |
| Revenue | |
$ | 1,625,000 | | |
$ | 1,464,000 | | |
$ | 4,555,000 | | |
$ | 4,293,000 | |
| Cost of revenue | |
| 1,119,000 | | |
| 955,000 | | |
| 3,149,000 | | |
| 2,614,000 | |
| Gross profit | |
| 506,000 | | |
| 509,000 | | |
| 1,406,000 | | |
| 1,679,000 | |
| Operating expenses: | |
| | | |
| | | |
| | | |
| | |
| Selling, marketing and distribution | |
| 634,000 | | |
| 583,000 | | |
| 1,458,000 | | |
| 1,279,000 | |
| General and administrative | |
| 673,000 | | |
| 865,000 | | |
| 1,420,000 | | |
| 1,717,000 | |
| Depreciation and amortization | |
| 67,000 | | |
| 66,000 | | |
| 134,000 | | |
| 133,000 | |
| Total operating expenses | |
| 1,374,000 | | |
| 1,514,000 | | |
| 3,012,000 | | |
| 3,129,000 | |
| Loss from operations | |
| (868,000 | ) | |
| (1,005,000 | ) | |
| (1,606,000 | ) | |
| (1,450,000 | ) |
| Interest expense | |
| 12,000 | | |
| 6,000 | | |
| 35,000 | | |
| 10,000 | |
| Net loss | |
$ | (880,000 | ) | |
$ | (1,011,000 | ) | |
$ | (1,641,000 | ) | |
$ | (1,460,000 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Per share information - basic and fully diluted: | |
| | | |
| | | |
| | | |
| | |
| Weighted average shares outstanding | |
| 15,664,000 | | |
| 14,722,000 | | |
| 15,664,000 | | |
| 14,611,000 | |
| Net loss per share | |
$ | (0.06 | ) | |
$ | (0.07 | ) | |
$ | (0.10 | ) | |
$ | (0.10 | ) |
See the accompanying notes to the condensed consolidated financial statements
Barfresh
Food Group Inc.
Condensed
Consolidated Statements of Cash Flows
For
the six months ended June 30, 2025 and 2024
(Unaudited)
| | |
2025 | | |
2024 | |
| Net loss | |
$ | (1,641,000 | ) | |
$ | (1,460,000 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities | |
| | | |
| | |
| | |
| | | |
| | |
| Stock-based compensation | |
| 297,000 | | |
| 517,000 | |
| Depreciation and amortization | |
| 149,000 | | |
| 144,000 | |
| Gain on asset disposal | |
| - | | |
| - | |
| Amortization of line of credit discount | |
| 11,000 | | |
| - | |
| Changes in assets and liabilities | |
| | | |
| | |
| Accounts receivable | |
| 278,000 | | |
| 150,000 | |
| Other receivables | |
| 33,000 | | |
| 141,000 | |
| Inventories | |
| (342,000 | ) | |
| (320,000 | ) |
| Prepaid expenses and other assets | |
| 4,000 | | |
| 14,000 | |
| Accounts payable | |
| (300,000 | ) | |
| (756,000 | ) |
| Accrued expenses | |
| (64,000 | ) | |
| 21,000 | |
| Net cash used in operating activities | |
| (1,575,000 | ) | |
| (1,549,000 | ) |
| | |
| | | |
| | |
| Investing activities | |
| | | |
| | |
| Purchase of property and equipment | |
| (94,000 | ) | |
| (4,000 | ) |
| Net cash used in investing activities | |
| (94,000 | ) | |
| (4,000 | ) |
| | |
| | | |
| | |
| Financing activities | |
| | | |
| | |
| Borrowings under line of credit | |
| 782,000 | | |
| - | |
| Repayment of line of credit | |
| (1,402,000 | ) | |
| - | |
| Issuance of convertible debt | |
| - | | |
| 65,000 | |
| Financing agreement payments | |
| (47,000 | ) | |
| - | |
| Issuance of common stock, net of $26,000 issuance cost | |
| 2,974,000 | | |
| - | |
| Shares repurchased for income tax withholding under stock compensation program | |
| (161,000 | ) | |
| (20,000 | ) |
| Net cash provided by financing activities | |
| 2,146,000 | | |
| 45,000 | |
| | |
| | | |
| | |
| Net increase (decrease) in cash | |
| 477,000 | | |
| (1,508,000 | ) |
| Cash, beginning of period | |
| 235,000 | | |
| 1,891,000 | |
| Cash, end of period | |
$ | 712,000 | | |
$ | 383,000 | |
| | |
| | | |
| | |
| Non-cash financing and investing activities: | |
| | | |
| | |
| Convertible notes issued in exchange for trade payables | |
$ | - | | |
$ | 71,000 | |
| Conversion of debt and interest to equity | |
$ | - | | |
$ | 136,000 | |
| Financed acquisition of long-term assets | |
$ | - | | |
$ | 154,000 | |
| | |
| | | |
| | |
| Cash paid for interest | |
$ | 24,000 | | |
$ | 7,000 | |
See the accompanying notes to the condensed consolidated financial statements
Barfresh
Food Group Inc.
Notes
to Condensed Consolidated Financial Statements
June
30, 2025
(Unaudited)
Note
1. Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies
Barfresh
Food Group Inc., (“we,” “us,” “our,” and the “Company”) was incorporated on February
25, 2010 in the State of Delaware. The Company is engaged in the manufacturing and distribution of ready-to-drink and ready-to-blend
beverages, particularly, smoothies, shakes and frappes.
Basis
of Presentation
The
accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements
have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and
applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting.
Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been
condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2024 included in the
Company’s Annual Report on Form 10-K, as filed with the SEC on March 27, 2025. In management’s opinion, the unaudited interim
condensed consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, that are necessary for
a fair presentation of financial results for the interim periods presented. Operating results for any quarter are not necessarily indicative
of the results for the full fiscal year.
Principles
of Consolidation
The
consolidated financial statements include the financial statements of the Company and our wholly owned subsidiaries, Barfresh Inc. and
Barfresh Corporation Inc. (formerly known as Smoothie, Inc.). All inter-company balances and transactions among the companies have been
eliminated upon consolidation.
Use
of Estimates
The
preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ
from these estimates.
Vendor
Concentrations
The
Company is exposed to supply risk as a result of concentration in its vendor base resulting from the use of a limited number of contract
manufacturers. Purchases from the Company’s significant contract manufacturers as a percentage of all finished goods purchased
were as follows:
Schedule of Contract Manufacturers Percentage of Finished Goods
| | |
2025 | | |
2024 | | |
2025 | | |
2024 | |
| | |
For the three
months ended June 30, | | |
For the six
months ended June 30, | |
| | |
2025 | | |
2024 | | |
2025 | | |
2024 | |
| Manufacturer A | |
| 44 | % | |
| 45 | % | |
| 48 | % | |
| 56 | % |
| Manufacturer B | |
| 44 | % | |
| 49 | % | |
| 41 | % | |
| 41 | % |
| Other Manufacturers | |
| 12 | % | |
| 6 | % | |
| 11 | % | |
| 3 | % |
Manufacturer A has notified the Company that it will
cease supplying the Twist & Go smoothie bottles in February 2026. Manufacturer B, which currently makes Twist & Go smoothie cartons,
is currently installing bottling equipment which is expected to be operational in January 2026 with approximately 400% additional capacity
over Manufacturer A. The Company continues to explore other arrangements to further secure its supply.
Summary
of Significant Accounting Policies
There
have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31,
2024, as filed with the SEC on March 27, 2025 that have had a material impact on our condensed consolidated financial statements and
related notes.
Financial
Instruments
The
Company’s financial instruments consist of cash, accounts receivable and accounts payable. The carrying value of the Company’s
financial instruments approximates their fair value.
Accounts
Receivable and Allowances
Accounts
receivable are recorded and carried at the original invoiced amount less allowances for credits and for any potential uncollectible amounts
due to credit losses. We make estimates of the expected credit and collectability trends for the allowance for credit losses based on
our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our
customers, current economic conditions, and other factors that may affect our ability to collect from our customers. Expected credit
losses are recorded as general and administrative expenses on our condensed consolidated statements of operations. As of June 30, 2025
and December 31, 2024, there was no allowance for credit losses. There was no credit loss expense for the three and six months ended
June 30, 2025 and 2024.
Revenue
Recognition
In
accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains ownership of promised goods.
The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these
goods. The Company applies the following five steps:
| |
1) |
Identify the contract with a customer |
A
contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s
rights, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration
for goods or services that are transferred is probable. For the Company, the contract is the approved sales order, which may also be
supplemented by other agreements that formalize various terms and conditions with customers.
| |
2) |
Identify the performance obligation in the contract |
Performance
obligations promised in a contract are identified based on the goods or services that will be transferred to the customer. For the Company,
this consists of the delivery of frozen beverages, which provide immediate benefit to the customer.
| |
3) |
Determine the transaction price |
The
transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and
is generally stated on the approved sales order. Variable consideration, which typically includes rebates or discounts, are estimated
utilizing the most likely amount method. Provisions for refunds are generally provided for in the period the related sales are recorded,
based on management’s assessment of historical and projected trends.
| |
4) |
Allocate the transaction price to performance obligations
in the contract |
Since
the Company’s contracts contain a single performance obligation, delivery of frozen beverages, the transaction price is allocated
to that single performance obligation.
| |
5) |
Recognize revenue when or as the Company satisfies a performance
obligation |
The
Company recognizes revenue from the sale of frozen beverages when title and risk of loss passes and the customer accepts the goods, which
generally occurs at the time of delivery to a customer warehouse. Customer sales incentives such as volume-based rebates or discounts
are treated as a reduction of sales at the time the sale is recognized. Shipping and handling costs are treated as fulfilment costs and
presented in distribution, selling and administrative costs.
Payments
that are received before performance obligations are recorded are shown as current liabilities.
The Company evaluated the requirement to disaggregate revenue and concluded that substantially all of its revenue comes from a single product, frozen beverages.
Storage
and Shipping Costs
Storage
and outbound freight costs are included in selling, marketing and distribution expense. For the three months ending June 30, 2025 and
2024, storage and outbound freight totaled approximately $276,000 and $217,000, respectively. For the six months ended June 30, 2025
and 2024, storage and outbound freight totaled approximately $667,000 and $581,000, respectively.
Research
and Development
Expenditures
for research activities relating to product development and improvement are charged to expense as incurred. The Company incurred approximately
$31,000 and $17,000 in research and development expense for the three months ended June 30, 2025 and 2024, respectively, and $49,000
and $47,000 for the six months ended June 30, 2025 and 2024, respectively.
Loss
Per Share
For
the three and six months ended June 30, 2025 and 2024 common stock equivalents have not been included in the calculation of net loss
per share as their effect is anti-dilutive as a result of losses incurred.
Recent
Pronouncements
From
time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We have not determined if the
impact of recently issued standards that are not yet effective will have an impact on our results of operations and financial position.
Note
2. Inventory
Inventory
consists of the following:
Schedule of Inventory
| | |
June 30, | | |
December 31, | |
| | |
2025 | | |
2024 | |
| Raw materials and packaging | |
$ | 470,000 | | |
$ | 505,000 | |
| Finished goods | |
| 1,372,000 | | |
| 995,000 | |
| Inventory, net | |
$ | 1,842,000 | | |
$ | 1,500,000 | |
Note
3. Property Plant and Equipment
Property
and equipment, net consist of the following:
Schedule of Property and Equipment, Net
| | |
June 30, | | |
December 31, | |
| | |
2025 | | |
2024 | |
| Manufacturing equipment | |
$ | 1,556,000 | | |
$ | 1,376,000 | |
| Customer equipment | |
| 1,398,000 | | |
| 1,398,000 | |
| Construction in progress | |
| 66,000 | | |
| 152,000 | |
| Property and equipment, gross | |
| 3,020,000 | | |
| 2,926,000 | |
| Less: accumulated depreciation | |
| (2,700,000 | ) | |
| (2,593,000 | ) |
| Property and equipment, net of depreciation | |
$ | 320,000 | | |
$ | 333,000 | |
Depreciation
expense related to these assets was approximately $54,000 and $56,000 for the three months ended June 30, 2025 and 2024, respectively,
and $107,000 and $113,000 for the six months ended June 30, 2025 and 2024, respectively. Depreciation expense in cost of revenue was
$9,000 and $6,000 for the three months ended June 30, 2025 and 2024, respectively, and $16,000 and $13,000 for the six months ended June
30, 2025 and 2024, respectively.
Note
4. Commitments and Contingencies
Lease
Commitments
The
Company leases office space under a non-cancellable operating lease which expired on March 31, 2023, and was extended in a series of
amendments through September 30, 2025. The Company’s periodic lease cost was approximately $20,000 for each of the three months
ended June 30, 2025 and 2024 and $40,000 for each of the six months ended June 30, 2025 and 2024.
Legal
Proceedings
Schreiber
Dispute
The
Company’s products are produced to its specifications through several contract manufacturers. One of the Company’s contract
manufacturers (the “Manufacturer”) provided approximately 52% and 42% of the Company’s products in the years ended
December 31, 2022 and 2021, respectively, under a Supply Agreement with an initial term through September 2025.
Over
the course of 2022, the Company experienced numerous quality issues with the case packaging utilized by the Manufacturer. In addition,
in July of 2022, the Company began receiving customer complaints about the texture of the Company’s smoothie products produced
by the Manufacturer. In response, the Company withdrew product from the market and destroyed on-hand inventory, withholding $499,000
in payments due to the Manufacturer.
The
Company attempted to resolve the issues based on the contractual procedures described in the Supply Agreement. However, on November 4,
2022, in response to a formal proposal of alternate resolutions, the Company received notification from the Manufacturer that it was
denying any responsibility for the defective manufacture of the product. In response, on November 10, 2022, the Company filed a complaint
in the United States District Court for the Central District of California, Western Division (the “Complaint”), claiming
that the Manufacturer had not met its obligations under the Supply Agreement, and seeking economic damages. In response, the Manufacturer
terminated the Supply Agreement. On January 20, 2023, the Company filed a voluntary dismissal of the Complaint which allowed the parties
to reach a potential resolution outside of the court system. However, as the parties were once again unable to come to an agreement,
the Company re-filed the Complaint in California State Court in August 2023 and continues to progress through the court system.
In
May 2024, the Company entered into a non-recourse litigation financing arrangement which is expected to be adequate to pursue the Complaint
to conclusion.
Due
to the uncertainties surrounding the claim, the Company is not able to predict either the outcome or a range of reasonably possible recoveries
that could result from its actions against the Manufacturer, and no gain contingencies have been recorded. The disruption in its supply
resulting from the dispute has and will continue to adversely impact the Company’s results of operations and cash flow until a
suitable resolution is reached or new sources of reliable supply at sufficient volume can be identified and developed, the timing of
which is uncertain. The Company has mitigated the impact of the supply disruption with the introduction of its single-serve smoothie
cartons; however the product format has not been accepted by some customers or as a substitute for the bottle product in all use cases.
Other
legal matters
From
time to time, various lawsuits and legal proceedings may arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are
currently the defendant in one legal proceeding for an amount less than $100,000. Our legal counsel and management believe the probability
of a material unfavorable outcome is remote.
Note
5. Debt
Line
of Credit
In
August 2024, the Company secured receivables financing of $1,500,000 (the “Facility”). Under the Facility, the Company may
borrow up to 90% of eligible customer account balances. Amounts outstanding bear interest at a rate prime plus 1.2% and collateral fees
of 0.15% and are secured by accounts receivable and inventory. The Facility expires on September 5, 2025, and renews automatically, unless
notice is given or received. As of June 30, 2025, there were no borrowings under the Facility. Unamortized deferred financing cost amounted
to $3,000 and are included in prepaid expenses and other current assets on the accompanying June 30, 2025 consolidated balance sheet.
Financing
Agreements
In
2024, the Company entered into financing agreements to purchase equipment and software as a service, with imputed or stated interest
of 15-19%.
Amounts
due under the agreements are as follows as of June 30, 2025:
Schedule of Financing Agreements
| | |
| | |
| 2025 (6 months) | |
$ | 64,000 | |
| 2026 | |
| 136,000 | |
| Total payments due | |
| 200,000 | |
| Less: interest | |
| (24,000 | ) |
| Financing agreements | |
| 176,000 | |
| Less: current portion | |
| (107,000 | ) |
| Financing agreements | |
$ | 69,000 | |
Convertible
Notes
From
July 2023 to March 2024, the Company executed subscription agreements for substantially all of a $2,000,000 privately placed convertible
debt offering. The debt was available to be drawn in 25% increments, maturing on the anniversary of the draw, bearing interest at 10%
per annum for the term, regardless of earlier payment or conversion, and was mandatorily convertible as to principal and interest into
shares of the Company’s common stock at any time prior to maturity at the greater of $1.20 or 85% of the volume-weighted average
price of the common stock for the ten trading days immediately preceding the written notice of the conversion (the “Conversion
Price”). If the Company had not exercised the mandatory conversion, the holder of the debt had the option after six months and
on up to four occasions to convert all or any portion of the principal and interest into shares of the Company’s common stock at
the Conversion Price.
On
October 23, 2023, the Company drew down $1,390,000 in convertible debt and converted a total of $1,207,000 of principal into 820,160
shares of common stock. Additionally, on December 19, 2023, the Company drew down $470,000 in convertible debt and converted a total
of $653,000 of principal and $4,000 of accrued interest into 495,331 shares of common stock. Finally, on March 27 and 29, 2024 the Company
drew down $136,000 in convertible debt and converted the total drawn into 124,208 shares, settling all debt. Debt drawdowns included
the non-cash settlement of $30,000 and $71,000 in 2023 and 2024, respectively.
Note
6. Stockholders’ Equity
The
following are changes in stockholders’ equity for the six months ended June 30, 2024 and 2025:
Schedule of Changes in Stockholders’ Equity
| | |
Shares | | |
Amount | | |
Capital | | |
(Deficit) | | |
Total | |
| | |
| | |
| | |
Additional | | |
| | |
| |
| | |
Common Stock | | |
paid in | | |
Accumulated | | |
| |
| | |
Shares | | |
Amount | | |
Capital | | |
(Deficit) | | |
Total | |
| Balance December 31, 2023 | |
| 14,420,105 | | |
$ | - | | |
$ | 63,299,000 | | |
$ | (60,796,000 | ) | |
$ | 2,503,000 | |
| Issuance of common stock for equity compensation, net of shares repurchased for income tax withholding | |
| 179,593 | | |
| - | | |
| (20,000 | ) | |
| - | | |
| (20,000 | ) |
| Equity-based compensation expense | |
| - | | |
| - | | |
| 517,000 | | |
| - | | |
| 517,000 | |
| Conversion of debt and interest (Note 5) | |
| 124,208 | | |
| - | | |
| 136,000 | | |
| - | | |
| 136,000 | |
| Registered issuance of common stock | |
| - | | |
| | | |
| | | |
| | | |
| | |
| Registered issuance of common stock, shares | |
| - | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| - | | |
| - | | |
| - | | |
| (1,460,000 | ) | |
| (1,460,000 | ) |
| Balance June 30, 2024 | |
| 14,723,906 | | |
$ | - | | |
$ | 63,932,000 | | |
$ | (62,256,000 | ) | |
$ | 1,676,000 | |
| | |
| | |
| | |
Additional | | |
| | |
| |
| | |
Common Stock | | |
paid in | | |
Accumulated | | |
| |
| | |
Shares | | |
Amount | | |
Capital | | |
(Deficit) | | |
Total | |
| | |
| | |
| | |
| | |
| | |
| |
| Balance December 31, 2024 | |
| 14,746,172 | | |
$ | - | | |
$ | 64,199,000 | | |
$ | (63,621,000 | ) | |
$ | 578,000 | |
| Balance | |
| 14,746,172 | | |
$ | - | | |
$ | 64,199,000 | | |
$ | (63,621,000 | ) | |
$ | 578,000 | |
| Issuance of common stock for equity compensation, net of shares repurchased for income tax withholding | |
| 141,296 | | |
| - | | |
| (161,000 | ) | |
| - | | |
| (161,000 | ) |
| Equity-based compensation expense | |
| - | | |
| - | | |
| 297,000 | | |
| - | | |
| 297,000 | |
| Registered issuance of common stock | |
| 1,052,793 | | |
| | | |
| 2,974,000 | | |
| | | |
| 2,974,000 | |
| Net loss | |
| - | | |
| - | | |
| - | | |
| (1,641,000 | ) | |
| (1,641,000 | ) |
| Balance June 30, 2025 | |
| 15,940,261 | | |
$ | - | | |
$ | 67,309,000 | | |
$ | (65,262,000 | ) | |
$ | 2,047,000 | |
| Balance | |
| 15,940,261 | | |
$ | - | | |
$ | 67,309,000 | | |
$ | (65,262,000 | ) | |
$ | 2,047,000 | |
On
February 5, 2025, the Company entered into securities purchase agreements with several investors, pursuant to which the Company sold
an aggregate of 1,052,793 shares of common stock at a price of $2.85 per share in a registered direct offering.
Warrants
There
are no warrants outstanding as of June 30, 2025.
Equity
Incentive Plan
As
of June 30, 2025, the Company has $867,000 of total unrecognized share-based compensation expense relative to unvested options, stock
awards and stock units, which is expected to be recognized over the remaining weighted average period of 2.2 years.
Stock
Options
The
following is a summary of stock option activity for the six months ended June 30, 2025:
Schedule of Stock Options Activity
| | |
Number of
Options | | |
Weighted
average exercise
price per share | | |
Remaining
term in years | |
| Outstanding on December 31, 2024 | |
| 710,323 | | |
$ | 5.04 | | |
| 5.5 | |
| Issued | |
| 84,056 | | |
$ | 2.70 | | |
| | |
| Forfeited | |
| - | | |
| | | |
| | |
| Expired | |
| (7,719 | ) | |
$ | 7.65 | | |
| | |
| Outstanding on June 30, 2025 | |
| 786,660 | | |
$ | 4.76 | | |
| 5.5 | |
| | |
| | | |
| | | |
| | |
| Exercisable, June 30, 2025 | |
| 560,559 | | |
$ | 5.59 | | |
| 4.0 | |
The
fair value of the options issued was calculated using the Black-Scholes option pricing model, based on the following:
Schedule of Fair Value of Options Using Black-Sholes Option Pricing Model
| | |
2025 | |
| Expected term (in years) | |
| 8.0 | |
| Expected volatility | |
| 97.9 | % |
| Risk-free interest rate | |
| 4.2 | % |
| Expected dividends | |
$ | - | |
| Weighted average grant date fair value per share | |
$ | 2.36 | |
Restricted
Stock
The
following is a summary of restricted stock award and restricted stock unit activity for the six months ended June 30, 2025:
Schedule of Restricted Stock Award and Restricted Stock Unit Activity
| | |
Number of
shares | | |
Weighted
average grant date
fair value | |
| Unvested at January 1, 2025 | |
| 61,873 | | |
$ | 2.72 | |
| Granted | |
| 119,169 | | |
$ | 2.62 | |
| Forfeited | |
| (24,960 | ) | |
$ | 1.67 | |
| Vested | |
| (39,293 | ) | |
$ | (3.67 | ) |
| Unvested at June 30, 2025 | |
| 116,789 | | |
$ | 2.45 | |
Performance
Share Units
During
2023 and 2024, the Company issued performance share units (“PSUs”) that represented shares potentially issuable based upon
Company and individual performance in the years of issuance.
The
following table summarizes the activity for the Company’s unvested PSUs for the six months ended June 30, 2025:
Schedule of Performance Stock Unit Activity
| | |
Number of
shares | | |
Weighted
average grant
date
fair value | |
| Unvested January 1, 2025 | |
| 157,694 | | |
$ | 1.20 | |
| Vested | |
| (155,157 | ) | |
$ | 1.20 | |
| Issued | |
| 20,490 | | |
$ | 3.00 | |
| Unvested at June 30, 2025 | |
| 23,027 | | |
$ | 2.70 | |
Note
7. Income Taxes
ASC
740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely
than not that some portion or all the deferred tax assets will not be recognized. Accordingly, at this time the Company has placed a
valuation allowance on all tax assets. As of June 30, 2025, the estimated effective tax rate for 2025 was zero.
There
are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2019 through
the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statement of
operations.
For
the three and six months ended June 30, 2025 and 2024, the Company did not incur any interest and penalties associated with tax positions.
As of June 30, 2025, the Company did not have any significant unrecognized uncertain tax positions.
Note
8. Liquidity
During
the six months ended June 30, 2025, the Company used $1,575,000 in operations. As of June 30, 2025, the Company had $2,101,000 of working
capital, including $712,000 in cash.
The
Company has a history of operating losses and negative cash flow, which are expected to improve with growth. As described more fully
in Note 4, the dispute and subsequent contract termination with the Manufacturer has resulted in limitations in the Company’s ability
to procure certain products necessary to achieve our growth projections and in elevated legal costs.
To
mitigate the impact of procurement constraints, the Company builds inventory in anticipation of third quarter seasonal requirements,
and has invested in materials necessary to carry out trials and initial production runs at new co-manufacturers. The Company secured
a receivables-based line of credit in August 2024 of $1,500,000,
with no
outstanding borrowing as of June 30, 2025. Management expects that the cash cycle will shorten as additional contracted capacity
improves production volume and efficiency in the second half of 2025. Additionally, in May 2024, the Company obtained non-recourse
litigation financing to allow vigorous pursuit of the complaint against the Manufacturer without further expense to the Company.
Finally, as described in Note 6, the Company raised $3,000,000
through the sale of the Company’s common stock in February 2025.
The
financial position at June 30, 2025 and historical results raise substantial doubt about the Company’s ability to continue as a
going concern. As described, the Company has completed steps to mitigate dispute related issues and raise capital. The actions taken
have resulted in the alleviation of the substantial doubt about the Company’s ability to continue as a going concern.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The
following discussion should be read in conjunction with the financial information included elsewhere in this Quarterly Report on Form
10-Q (this “Report”), including our unaudited condensed consolidated financial statements and the related notes and with
our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December
31, 2024, as filed with the SEC on March 27, 2025, and other reports that we file with the SEC from time to time.
References
in this Quarterly Report on Form 10-Q to “us”, “we”, “our” and similar terms refer to Barfresh Food
Group Inc.
Cautionary
Note Regarding Forward-Looking Statements
This
discussion includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations
that involve risks and uncertainties, such as plans, objectives, expectations, and intentions. Actual results and the timing of events
could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as
“anticipate”, “estimate”, “plan”, “continuing”, “ongoing”, “expect”,
“believe”, “intend”, “may”, “will”, “should”, “could” and similar
expressions are used to identify forward-looking statements.
We
caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks
and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon
which the statements are based. Any one or more of these uncertainties, risks and other influences could materially affect our results
of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and
achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation
to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
Critical
Accounting Policies
Our
consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States
of America (“GAAP”).
Results
of Operations
Results
of Operation for the Three Months Ended June 30, 2025 as Compared to the Three Months Ended June 30, 2024
Revenue
and cost of revenue
Revenue
increased $161,000, or 11%, to $1,625,000 in 2025 as compared to $1,464,000 in 2024.
We
have been able to expand our capacity on a limited basis at our existing smoothie bottle manufacturer and have been developing an
additional manufacturer relationship since the fourth quarter of 2024, after the candidate we contracted with in July 2024 was
unable to produce product due to insufficient labor and inadequate equipment, and a second candidate was in production trials and
only able to package product made at other locations until new equipment that had been ordered arrived and was installed. We expect
expanded capacity to become available in the second half of 2025, subject to the risks and uncertainties associated with
early-stage production activities, which, along with other contracting and investing activities, including
additional capacity from new bottling equipment installed at an existing manufacturer of smoothie cartons, are expected to offset the
loss of our existing manufacturer in February 2026
Cost
of revenue increased $164,000, or 17%, to $1,119,000 in 2025 as compared to $955,000 in 2024. Cost of revenue increased at a higher rate
compared to revenue due to trial costs at our new manufacturer and elevated costs to supply product in a sub-optimal manner while the
production process at a new manufacturer is under development.
Our
gross profit was $506,000 (31.1%) and $509,000 (34.8%) for 2025 and 2024, respectively. Excluding production relocation costs, our gross
profit was $514,000 in 2024 (35.1%). The reduction in gross margin is a result of product mix and new manufacturer trial and development
costs.
Selling,
marketing and distribution expense
Our
operations were primarily directed towards increasing sales and expanding our distribution network.
| | |
Three months ended
June 30, | | |
Three months ended
June 30, | | |
| | |
| |
| | |
2025 | | |
2024 | | |
Change | | |
Percent | |
| Sales and marketing | |
$ | 358,000 | | |
$ | 366,000 | | |
$ | (8,000 | ) | |
| -2 | % |
| Storage and outbound freight | |
| 276,000 | | |
| 217,000 | | |
| 59,000 | | |
| 27 | % |
| | |
$ | 634,000 | | |
$ | 583,000 | | |
$ | 51,000 | | |
| 9 | % |
Our
operations in 2025 were primarily directed towards increasing sales and expanding our distribution network.
Selling,
marketing and distribution expense increased approximately $51,000 (9%) from approximately $583,000 in 2024 to $634,000 in 2025.
Sales
and marketing expense decreased approximately $8,000 (2%) from approximately $366,000 in 2024 to $358,000 in 2025.
Storage
and outbound freight expense increased approximately $59,000 (27%) from approximately $217,000 in 2024 to $276,000 in 2025, primarily
because our product mix was more heavily weighted toward categories with less concentrated distribution.
General
and administrative expense
| | |
Three months ended
June 30, | | |
Three months ended
June 30, | | |
| | |
| |
| | |
2025 | | |
2024 | | |
Change | | |
Percent | |
| Personnel costs | |
$ | 292,000 | | |
$ | 341,000 | | |
$ | (49,000 | ) | |
| -14 | % |
| Stock-based compensation | |
| 139,000 | | |
| 214,000 | | |
| (75,000 | ) | |
| -35 | % |
| Legal, professional and consulting fees | |
| 30,000 | | |
| 59,000 | | |
| (29,000 | ) | |
| -49 | % |
| Research and development | |
| 31,000 | | |
| 17,000 | | |
| 14,000 | | |
| 82 | % |
| Other general and administrative expenses | |
| 181,000 | | |
| 234,000 | | |
| (53,000 | ) | |
| -23 | % |
| | |
$ | 673,000 | | |
$ | 865,000 | | |
$ | (192,000 | ) | |
| -22 | % |
General
and administrative expenses decreased approximately $192,000 (22%) from approximately $865,000 in 2024 to $673,000 in 2025.
Personnel
cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes. Personnel cost decreased by
approximately $49,000 (14%) from approximately $341,000 in 2024 to $292,000 in 2025. The decrease in personnel cost resulted from a decreased
head count.
Stock-based
compensation decreased by approximately $75,000 from $214,000 in 2024 to $139,000 in 2025 as a result of lower expected attainment under
our performance stock unit program and a reduction in the size of our board of directors.
Legal,
professional and consulting fees decreased by approximately $29,000 (49%) from $59,000 in 2024 to $30,000 in 2025 due to funding the
Schrieber litigation through non-recourse litigation funding starting in Q3, 2024.
Other
general and administrative expenses decreased by approximately $53,000 (23%) due to the non-recurrence of recruitment costs incurred
in the second quarter of 2024.
Net
loss
We
had net losses of approximately $880,000 and $1,011,000 for the three-month periods ended June 30, 2025 and 2024, respectively. The decrease
in net loss of approximately $131,000 was primarily due to the reduction in general and administrative expense, partially offset by
increased storage and freight costs. Gross profit was relatively flat, as the 3.6 percentage point reduction in gross margin offset the
increase in revenue. We expect our gross margin to normalize in the second half of 2025 as new co-manufacturers are operating at full
capacity and capability, improving our supply and cost structure.
Results
of Operation for the Six Months Ended June 30, 2025 as Compared to the Six Months Ended June 30, 2024
Revenue
and cost of revenue
Revenue
increased $262,000, or 6%, to $4,555,000 in 2025 as compared to $4,293,000 in 2024.
Cost
of revenue increased $535,000, or 20%, to $3,149,000 in 2025 as compared to $2,614,000 in 2024. Cost of revenue increased at a higher
rate compared to revenue due to trial costs at our new manufacturer and elevated costs to supply product in a sub-optimal manner while
the production process at a new manufacturer is under development.
Our
gross profit was $1,406,000 (30.9%) and $1,679,000 (39.1%) for 2025 and 2024, respectively. Excluding production relocation costs, our
gross profit was $1,729,000 in 2024 (40.3%). The reduction in gross margin is a result of product mix and new manufacturer trial and
development costs.
Selling,
marketing and distribution expense
| | |
Six months ended
June 30, | | |
Six months ended
June 30, | | |
| | |
| |
| | |
2025 | | |
2024 | | |
Change | | |
Percent | |
| Sales and marketing | |
$ | 791,000 | | |
$ | 698,000 | | |
$ | 93,000 | | |
| 13 | % |
| Storage and outbound freight | |
| 667,000 | | |
| 581,000 | | |
| 86,000 | | |
| 15 | % |
| | |
$ | 1,458,000 | | |
$ | 1,279,000 | | |
$ | 179,000 | | |
| 14 | % |
Selling,
marketing and distribution expense increased approximately $179,000 (14%) from approximately $1,279,000 in 2024 to $1,458,000 in 2025.
Sales
and marketing expense increased approximately $93,000 (13%) from approximately $698,000 in 2024 to $791,000 in 2025. The increase is
a result of personnel costs and broker commissions. Additionally, sample expense increased as a result of the launch of our Pop &
Go product.
Storage
and outbound freight expense increased approximately $86,000 (15%) from approximately $581,000 in 2024 to $667,000 in 2025, primarily
because our product mix was more heavily weighted toward categories with less concentrated distribution. Additionally, shortages of Twist
& Go bottles resulted in freight inefficiencies in an effort to mitigate late deliveries to the extent possible.
General
and administrative expense
| | |
Six months ended
June 30, | | |
Six months ended
June 30, | | |
| | |
| |
| | |
2025 | | |
2024 | | |
Change | | |
Percent | |
| Personnel costs | |
$ | 665,000 | | |
$ | 603,000 | | |
$ | 62,000 | | |
| 10 | % |
| Stock based compensation | |
| 297,000 | | |
| 517,000 | | |
| (220,000 | ) | |
| -43 | % |
| Legal, professional and consulting fees | |
| 111,000 | | |
| 215,000 | | |
| (104,000 | ) | |
| -48 | % |
| Research and development | |
| 49,000 | | |
| 47,000 | | |
| 2,000 | | |
| 4 | % |
| Other general and administrative expenses | |
| 298,000 | | |
| 335,000 | | |
| (37,000 | ) | |
| -11 | % |
| | |
$ | 1,420,000 | | |
$ | 1,717,000 | | |
$ | (297,000 | ) | |
| -17 | % |
General
and administrative expenses decreased approximately $297,000 (17%) from approximately $1,717,000 in 2024 to $1,420,000 in 2025.
Personnel
cost increased by approximately $62,000 (10%) from approximately $603,000 in 2024 to $665,000 in 2025. The increase in personnel cost
resulted from increased head count, and the non-recurrence of settling paid time off obligations in stock in 2024.
Stock-based
compensation decreased by approximately $220,000 from $517,000 in 2024 to $297,000 in 2025 as a result of lower expected attainment under
our performance stock unit program and a reduction in the size of our board of directors.
Legal,
professional and consulting fees decreased by approximately $104,000 (48%) from $215,000 in 2024 to $111,000 in 2025 due to funding the
Schrieber litigation through non-recourse litigation funding starting in Q3, 2024.
Other
general and administrative expenses decreased by approximately $37,000 (11%) due to due to the non-recurrence of recruitment costs incurred
in the second quarter of 2024, partially offset by $46,000 in business development costs.
Net
loss
We
had net losses of approximately $1,641,000 and $1,460,000 for the six-month periods ended June 30, 2025 and 2024, respectively. While
revenue increased 6%, the increase in net loss of approximately $181,000 was primarily the result of an 8.2 percentage point decrease
in gross margin and a 14% increase in selling, marketing and distribution cost, partially offset by lower general and administrative
costs. We expect our gross margin to normalize in the second half of 2025 as new co-manufacturers are operating at full capacity and
capability, improving our supply and cost structure.
Liquidity
and Capital Resources
From
July 2023 to March 2024, we executed subscription agreements for substantially all of a $2,000,000 privately placed convertible debt
offering. The debt was available to be drawn in 25% increments, maturing on the anniversary of the draw, bearing interest at 10% per
annum for the term, regardless of earlier payment or conversion, and was mandatorily convertible as to principal and interest into shares
of our common stock at any time prior to maturity at the greater of $1.20 or 85% of the volume-weighted average price of the common stock
for the ten trading days immediately preceding the written notice of the conversion (the “Conversion Price”). If we had not
exercised the mandatory conversion, the holder of the debt had the option after six months and on up to four occasions to convert all
or any portion of the principal and interest into shares of our common stock at the Conversion Price. On October 23, 2023, we issued
$1,390,000 of convertible notes pursuant to the subscription agreements, and immediately converted $1,207,000 of principal and interest
into approximately 820,000 shares of common stock. Additionally, on December 19, 2023, we drew down $470,000 in convertible debt and
converted a total of $653,000 of principal and $4,000 of accrued interest into 495,331 shares of common stock. Finally, on March 27 and
29, 2024, we drew down $136,000 in convertible debt and converted the total drawn into 124,208 shares, settling all debt.
On
February 5, 2025, we entered into securities purchase agreements with several investors, pursuant to which we sold an aggregate of 1,052,793
shares of common stock at a price of $2.85 per share in a registered direct offering.
During
the six months ended June 30, 2025, we used $1,575,000 in operations. Our net loss adjusted for non-cash operating expenses was a loss
of $1,184,000, while changes in current assets and liabilities used $391,000 primarily because of an investment of $342,000 in inventory
and decreases of $364,000 in accounts payable and accrued expenses, partially offset by an decrease in accounts receivable of $278,000.
The changes reflect the build of inventory in an effort to minimize the impact of production capacity constraints and the collection
of receivables from higher revenue volume at the education channel’s seasonal low point.
As
of June 30, 2025, we had working capital of $2,101,000 compared with $606,000 at December 31, 2024, both excluding disputed accounts
payable of $499,000 resulting from our dispute with the Manufacturer. The increase in working capital is primarily due to capital raised
in the six months ended June 30, 2025 through the sale of common stock, partially offset by losses incurred in the six months ended June
30, 2025.
Our
liquidity needs will depend on how quickly we are able to profitably ramp up sales, as well as our ability to control and reduce variable
operating expenses, and to continue to control fixed overhead expense.
Our
operations to date have been financed by the sale of securities, the issuance of convertible debt and the issuance of short-term debt.
If we are unable to generate sufficient cash flow from operations with the capital raised we will be required to raise additional funds
either in the form of equity or in the form of debt. There are no assurances that we will be able to generate the necessary capital to
carry out our current plan of operations.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expense, results of operations, liquidity, capital expenditures or capital resources that
are material to stockholders.
Item
3. Quantitative and Qualitative Disclosures About Market Risk.
Not
required because we are a smaller reporting company.
Item
4. Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
Under
the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer,
we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act of 1934
Rule 13(a)-15(e). Disclosure controls and procedures are designed to provide reasonable assurance that the information required to be
disclosed in the reports that we file or submit under the Exchange Act has been appropriately recorded, processed, summarized, and reported
on a timely basis and are effective in ensuring that such information is accumulated and communicated to the Company’s management,
as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures
as of June 30, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls
and procedures were effective at the reasonable assurance level.
Changes
in Internal Control over Financial Reporting
None.
PART
II- OTHER INFORMATION
Item
1. Legal Proceedings.
As
described in Note 4, the Company has an on-going dispute with the Manufacturer, the outcome of which cannot be predicted at this time.
From
time to time, various lawsuits and legal proceedings may arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are
currently the defendant in one legal proceeding for an amount less than $100,000. Our legal counsel and management believe a material
unfavorable outcome to be remote.
Item
1A. Risk Factors.
Our risk factors are described in our Annual Report
on Form 10-K, as filed with the SEC on March 27, 2025, as updated below.
Disruption within
our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial condition and
results of operations.
Our ability, through our suppliers, business partners,
contract manufacturers, independent distributors and retailers, to produce, transport, distribute and sell products is critical to our
success.
Damage or disruption to our suppliers or to manufacturing
or distribution capabilities due to weather, natural disaster, fire or explosion, terrorism, pandemics such as COVD-19 and influenza,
labor strikes or other reasons, could impair the manufacture, distribution and sale of our products. Many of these events are outside
of our control. Failure to take adequate steps to protect against or mitigate the likelihood or potential impact of such events, or to
effectively manage such events if they occur, could adversely affect our business, financial condition and results of operations.
Our experience with the Manufacturer demonstrates
how our reliance on a limited number of manufacturers and suppliers further increases this risk. Most of our suppliers and manufacturers
produce similar products for other companies, and our products may represent a small portion of their businesses. Further, it takes a
newly engaged manufacturer typically up to nine months of retrofitting/ preparation before it can begin producing our products. In 2023
and 2024 we did not have contracts in place to produce sufficient units to meet projected demand. If one of our manufacturers fails to
perform or renew our contract, we could be faced with a significant interruption in our supply chain. If one of our manufacturers or suppliers
fails to perform or deliver products or renew our contract, for any reason, our sales and results of operations could be adversely affected.
Furthermore, if we are unable to meet our customers’ demands due to a disruption in our supply chain, we may lose that customer
which could adversely affect our business, financial condition and results of operations.
We have received notification that a contract manufacturer of our Twist
& Go smoothie bottles will not renew our contract and will cease providing product on February 1, 2026. We are working with both
new and existing manufacturers to replace and increase that volume. However, there can be no assurance that our plans to replace the
lost volume will be successful.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended June 30, 2025, the Company issued 19,920
to two members of its board of directors in settlement of vested restricted stock units for services valued at $50,000. The Company relied
upon the exemption from registration contained in Rule 506(b) and Section 4(a)(2) of the Securities Act, and corresponding provisions
of state securities laws, on the basis that (i) offers were made to a limited number of persons, (ii) each offer was made through direct
communication with the offerees by the Company, (iii) each of the offerees had the requisite sophistication and financial ability to bear
risks of investing in the Company’s common stock, (iv) the Company provided disclosure to the offerees, and (v) there was no general
solicitation and no commission or remuneration was paid in connection with the offers.
Item
3. Defaults Upon Senior Securities.
None.
Item
4. Mine Safety Disclosures.
Not
applicable.
Item
5. Other Information.
None.
Item
6. Exhibits.
| Exhibit
No. |
|
Description |
| |
|
|
| 31.1 |
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) (filed herewith) |
| |
|
|
| 31.2 |
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) (filed herewith) |
| |
|
|
| 32.1 |
|
Certification pursuant to 18 U.S.C. Section 1350 (furnished herewith) |
| |
|
|
| 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) |
| |
|
|
| |
|
*XBRL
(Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus
for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
| |
|
|
| |
|
In
accordance with SEC Release 33-8238, Exhibit 32.1 is furnished and not filed. |
SIGNATURES
Pursuant
to 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.
| |
BARFRESH
FOOD GROUP INC. |
| |
|
|
| Date:
August 13, 2025 |
By: |
/s/
Riccardo Delle Coste |
| |
|
Riccardo
Delle Coste |
| |
|
Chief
Executive Officer |
| |
|
(Principal
Executive Officer) |
| Date:
August 13, 2025 |
By: |
/s/
Lisa Roger |
| |
|
Chief
Financial Officer |
| |
|
(Principal
Financial Officer) |
