Revenue and Profitability - Revenue increased by $197,000, or 8%, from $2,406,000 in Q3 2022 to $2,603,000 in Q3 2023, despite a 14% decrease in product shipped[93] - Gross profit improved to $2,242,000 (36%) in 2023 from $924,000 (12%) in 2022, reflecting favorable product mix and pricing actions[109] - Net loss for Q3 2023 was approximately $476,000, a decrease of $2,211,000 compared to a net loss of $2,687,000 in Q3 2022[105] - Revenue for the nine months ended September 30, 2023, was $6,205,000, a decrease of $1,526,000, or 20%, compared to $7,731,000 in 2022[106] Expenses and Cost Management - Cost of revenue decreased by $1,912,000, or 33%, from $5,875,000 in 2022 to $3,963,000 in 2023, excluding the impact of a $932,000 inventory write-off[108] - Selling, marketing, and distribution expenses decreased by approximately $246,000 (-11%) from $2,236,000 in 2022 to $1,990,000 in 2023[111] - General and administrative expenses decreased by approximately $572,000 (-22%) from $2,637,000 in 2022 to $2,065,000 in 2023[116] - Research and development expenses decreased by approximately $259,000 (-75%) from $347,000 in 2022 to $88,000 in 2023, as activities were minimized to conserve working capital[119] - Stock-based compensation increased by approximately $76,000 (21%) from $355,000 to $431,000 due to the conversion of directors' fees to stock-based compensation[118] Working Capital and Liquidity - As of September 30, 2023, the company had working capital of $541,000, a decrease from $1,801,000 at December 31, 2022, primarily due to an operating loss for the nine months ended September 30, 2023[122] - The company has no debt as of the latest report, following the retirement of $840,000 in debt and conversion of $399,000 in principal and $234,000 in interest into common stock[124] - The company’s liquidity needs will depend on the ability to profitably ramp up sales and control operating expenses[125] Manufacturing and Production Capacity - The company expects expanded smoothie bottle manufacturing capacity to become available in early 2024, subject to risks associated with contracting and pre-production activities[93] - The company has identified and is actively working to develop additional smoothie bottle manufacturing capacity, expected to be available in early 2024[125] Supply Chain and Operational Challenges - The company experienced disruptions in supply chain due to COVID-19, impacting product availability and sales channels, although the business climate appears to have stabilized in 2023[123] - The introduction of carton packaging has mitigated supply loss, but acceptance varies among customers[125] Internal Controls and Management Assessment - Management has concluded that as of September 30, 2023, the company's disclosure controls and procedures are not effective[128] - The company has identified material weaknesses in internal control over financial reporting, which management believes did not affect financial results[136][138] Cash Flow and Financing Activities - During the nine months ended September 30, 2023, the company used $2,008,000 in operations[129] - From July to October 2023, the company executed subscription agreements for $1,880,000 of a $2,000,000 privately placed convertible debt offering, with $1,390,000 of convertible notes issued on October 23, 2023[131]

Financial Data and Key Metrics Changes - Revenue for Q2 2023 was $1.5 million, down from $2.8 million in Q2 2022, primarily due to limited supply from the loss of the largest bottle manufacturer [33] - The net loss for Q2 2023 was $742,000 compared to a net loss of $716,000 in Q2 2022 [34] - Adjusted EBITDA for Q2 2023 was a loss of approximately $617,000, compared to a loss of approximately $431,000 in Q2 2022 [36] - The company expects to achieve approximately adjusted EBITDA breakeven for Q3 2023 and positive adjusted EBITDA for Q4 2023 [36] Business Line Data and Key Metrics Changes - The company has secured over $1.6 million in revenue for Q3 2023 and expects to end the quarter with revenue between $2.6 million and $3 million [8][11] - The gross margins for Q2 2023 were similar to the prior year at 31%, with expectations for modest margin improvement in the latter half of the year as smoothie carton sales increase [34][31] Market Data and Key Metrics Changes - The company has been added back to a significant number of school menus for the 2023-2024 school year, regaining previous customers and acquiring new ones [19][30] - The bulk and single-serve segments of the business are starting to recover, with an increase in bulk sales noted [20] Company Strategy and Development Direction - The company aims to ramp up production capacity for the smoothie carton format to 25 million to 30 million units annually by the end of fiscal year 2023 [31][62] - A new bottle co-manufacturer is expected to be operational by January 2024, which will enhance production capabilities and customer service [9][37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sequential and year-over-year improvement in revenue and margins as production capacity increases [16][31] - The company believes it is turning a corner with customers returning and new capacity coming online, setting the stage for a strong finish to the year [37][24] Other Important Information - As of June 30, 2023, the company had approximately $1 million in cash and $1 million in inventory, down from $3 million in cash at the end of 2022 [63] - The company has secured funds through a convertible debt offering to support its equity balance if needed for NASDAQ compliance [60] Q&A Session Summary Question: Updates on contracts for the upcoming school year - Management indicated that many school districts prefer not to disclose contracts publicly, but they have been awarded numerous bids and are optimistic about the new school year [43][44] Question: Expectations for Q4 growth - Management expects sales to increase from Q3 to Q4 and anticipates continued growth into Q1 of the following year due to the new bottle manufacturer coming online [55] Question: Cash flow and operational model - The company believes it will be cash flow positive in Q4 and has a short operating cycle, minimizing concerns about working capital as it grows [56]

Item 1. Legal Proceedings. 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. Not required because we are a smaller reporti ...

Financial Data and Key Metrics Changes - Revenue for Q1 2023 was $2.1 million, a 46% sequential increase from $1.4 million in Q4 2022, but a decline from $2.5 million in Q1 2022 due to the loss of the largest bottle manufacturer [3][23] - Gross margins improved to 41% in Q1 2023 from 30% in Q1 2022 and 36% in Q4 2022, attributed to product mix changes and pricing actions [5][21] - Adjusted EBITDA loss was approximately $544,000 in Q1 2023, slightly better than a loss of $546,000 in Q1 2022 and $833,000 in Q4 2022 [24] Business Line Data and Key Metrics Changes - The new smoothie carton format contributed to revenue growth, with increased orders noted since its rollout in Q4 2022 [23] - The company is working to replace lost bottle manufacturing capacity and is exploring partnerships to enhance production capabilities [4] Market Data and Key Metrics Changes - The company has expanded its national sales network by adding brokers specializing in the school market, which is expected to enhance customer acquisition in the education channel [34] Company Strategy and Development Direction - The company aims for record revenue in fiscal year 2023, driven by increased capacity and sales of the smoothie carton format [21][26] - There is a focus on securing a new bottle manufacturer to restore supply and expand the customer base [38][47] Management Comments on Operating Environment and Future Outlook - Management anticipates sequential improvements in adjusted EBITDA and gross margins throughout 2023, with expectations of softening raw material costs in the latter half of the year [6][12] - The company acknowledges challenges due to the loss of customers but is optimistic about regaining and surpassing previous customer levels with the new product formats [10][22] Other Important Information - G&A expenses increased to $994,000 in Q1 2023 from $823,000 in the same period last year, primarily due to personnel costs and stock-based compensation [24] - As of March 31, 2023, the company had approximately $1.8 million in cash and $1.1 million in inventory [37] Q&A Session Summary Question: Update on discussions with new potential bottle manufacturers - The company is close to finalizing a contract with a new bottle manufacturer and expects to have something solidified before the end of the year [40] Question: Impact of customer loss due to supply issues - Management indicated that many customers have replaced the product due to supply interruptions, but they are hopeful to regain some of these accounts in the future [41][28] Question: Expectations for margin improvement - Management confirmed expectations for continued margin improvement throughout the year, with gross margins expected to remain around the current level with slight improvements [42]

Revenue Performance - Revenue decreased by $435,000, or 17%, from $2,526,000 in Q1 2022 to $2,091,000 in Q1 2023 due to limited supply from product withdrawal related to quality complaints[88]. Expenses - Research and development expenses were approximately $21,000 for Q1 2023, a decrease of $10,000 (32%) from $31,000 in Q1 2022[94]. - Personnel costs increased by approximately $180,000 (58%) from $309,000 in Q1 2022 to $489,000 in Q1 2023, primarily due to modifications in the performance stock unit program[93]. - Stock-based compensation rose by approximately $124,000 (146%) from $85,000 in Q1 2022 to $209,000 in Q1 2023[93]. - Selling, marketing, and distribution expenses decreased by approximately $8,000 (1%) from $675,000 in Q1 2022 to $667,000 in Q1 2023[91]. - Storage and outbound freight expenses decreased by approximately $75,000 (19%) from $386,000 in Q1 2022 to $311,000 in Q1 2023[92]. Cash Flow and Working Capital - The company incurred cash used for operations of $1,242,000 during Q1 2023, reflecting a history of operating losses and negative cash flow[76]. - Working capital decreased to $1,250,000 as of March 31, 2023, compared to $1,801,000 at December 31, 2022, primarily due to operating losses[95]. Supply Chain Risks - The company faced supply risk due to reliance on a limited number of contract manufacturers, with one manufacturer providing approximately 52% of products in 2022[67]. - The company has an ongoing dispute with a manufacturer regarding product quality, which may impact future supply and revenue[137].

The challenges of competing with the many food services businesses may result in reductions in our revenue and operating margins. In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, customers, economies, and financial markets globally, potentially leading to an economic downturn. It has also disrupted the normal opera ...

Revenue Growth - Revenue increased by approximately $476,000 (25%) from approximately $1,930,000 in 2021 to approximately $2,406,000 in 2022, driven by growth in "Twist & Go"™ revenue[81] - Revenue for the nine months ended September 30, 2022, increased by approximately $3,485,000 (82%) from approximately $4,246,000 in 2021 to approximately $7,731,000 in 2022[94] Cost of Revenue - Cost of revenue for 2022 was approximately $3,129,000 compared to approximately $1,209,000 in 2021, with a gross profit of approximately ($723,000) (-30%) for 2022[82] - Cost of revenue for the nine months ended September 30, 2022, was approximately $6,807,000 compared to approximately $2,614,000 in 2021, resulting in a gross profit of approximately $924,000 (12%) for 2022[95] Operating Expenses - Selling and marketing expense increased approximately $201,000 (123%) from approximately $164,000 in 2021 to $365,000 in 2022, primarily due to hiring new employees and increased participation in trade shows[84] - General and administrative expense increased by 81%, or approximately $472,000, from approximately $586,000 in 2021 to approximately $1,058,000 in 2022, driven by research and development and personnel costs[87] - General and administrative expense for the nine months ended September 30, 2022, increased by 71%, or approximately $1,138,000, from approximately $1,598,000 in 2021 to approximately $2,736,000 in 2022[100] - Stock-based compensation for the three months ended September 30, 2022, was approximately $118,000 compared to $42,000 for the same period in 2021, reflecting an increase due to staffing and a performance-based program[89] - Stock-based compensation increased to approximately $211,000 for the nine months ended September 30, 2022, up from $52,000 in the same period of 2021, reflecting a staffing increase and a new performance-based program[102] - Legal, professional, and consulting fees rose by approximately $98,000 (40%) from $244,000 in 2021 to $342,000 in 2022, primarily due to corporate development activities[103] Research and Development - Research and development expense increased approximately $186,000 (547%) from approximately $34,000 in 2021 to $220,000 in 2022, due to materials consumed in pre-production runs[90] - Research and development expenses increased by approximately $174,000 (101%) from $173,000 in 2021 to $347,000 in 2022, mainly due to materials for pre-production runs of the new Twist & Go™ product[104] Operating Losses - Operating loss for the three-month period ended September 30, 2022, was approximately $2,708,000, an increase of approximately $2,200,000 (433%) compared to the same period in 2021[92] - Operating losses were approximately $4,339,000 for the nine months ended September 30, 2022, compared to $1,658,000 in 2021, an increase of approximately $2,681,000 (162%) due to product quality issues and rising operating expenses[106] Net Losses - Net losses were approximately $4,339,000 for the nine months ended September 30, 2022, compared to $1,396,000 in 2021, with the primary change attributed to a $568,000 gain on forgiveness of the PPP loan in 2021[111] Working Capital and Cash Flow - Working capital decreased to approximately $2,619,000 as of September 30, 2022, from approximately $6,172,000 at December 31, 2021, primarily due to operating losses[112] - Cash used in operations during the nine months ended September 30, 2022, was approximately $2,619,000, with an additional $13,000 spent on equipment purchases[113] Other Financial Information - The company incurred approximately $175,000 in one-time costs related to the uplisting of its common stock to the NASDAQ in 2022[105] - Interest expense was approximately $128,000 for the nine months ended September 30, 2021, but no interest expense was incurred in the same period of 2022[110] - The company has no off-balance sheet arrangements that could materially affect its financial condition[116]

Financial Data and Key Metrics Changes - Revenue for Q3 2022 increased 25% to $2.4 million compared to $1.9 million in Q3 2021, while revenue for the first nine months of 2022 increased 82% to $7.7 million compared to $4.2 million for the same period last year [18][15] - Net loss for Q3 2022 was $2.7 million compared to a loss of $0.5 million in Q3 2021, and net loss for the first nine months of 2022 was $4.3 million compared to a loss of $1.4 million in the same period last year [24] - Adjusted EBITDA for Q3 2022 was a loss of approximately $637,000 compared to a loss of approximately $597,000 for Q3 2021 [24] Business Line Data and Key Metrics Changes - The company experienced growth in sales across all channels, particularly in the school channel for the Twist & Go product, which contributed to the overall revenue increase [18] - The gross margin for Q3 2022 was negative 30% compared to 37% for the same period last year, primarily due to costs related to a product withdrawal [19] - Selling, marketing, and distribution expenses for Q3 2022 increased to $0.8 million from $0.5 million in Q3 2021, driven by increased sales and marketing personnel and outbound freight costs [21] Market Data and Key Metrics Changes - The company is actively working to replace lost manufacturing capacity, which accounted for 58% of all inventory purchases, impacting revenue significantly until resolved [10] - The new carton format for Twist & Go is expected to align with emerging trends in schools towards environmentally friendly products, potentially expanding the customer base [13] Company Strategy and Development Direction - The company plans to launch the Twist & Go in a new carton format, which is expected to be economically and ecologically friendlier than the bottle format [11] - There is an emphasis on expanding manufacturing capacity and customer base, with plans to triple capacity and pursue high-volume accounts [16][27] - The management believes the current setback is temporary and that the company is on a path to consistent profitability once manufacturing issues are resolved [17][27] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the manufacturing issue but highlighted significant progress made throughout the year, indicating confidence in long-term growth [26][28] - The company expects revenue for the second half of the year to exceed the first half and to be greater than the full year of 2021, indicating a strong growth trajectory prior to the setback [16] Other Important Information - The company had approximately $3 million in cash and $600,000 in inventory as of September 30, 2022, and does not expect to raise cash to navigate the current setback [25] Q&A Session Summary Question: What sort of capacity do you have right now for the carton Twist & Go? - The company has just launched the new carton product and expects to move into about 20 million units a year with that capacity, aiming for a $20 million annual run rate [29] Question: Do you see that the gross margins for that product being higher than your historical gross margins? - Management confirmed that the new carton product is expected to have a significant positive impact on gross margins compared to historical performance [30]

W H I R L • C L A S S ® B Investor Presentation Premeasured I Prepackaged I Perfection Forward Looking Statements 2 This Descriptive Presentation (the "Presentation") is being furnished solely for use by prospective parties in connection with their consideration of a potential transaction with Barfresh Food Group Inc. (the "Company"). Prospective parties are not entitled to rely on the accuracy or completeness of the Presentation and are entitled to rely solely on only those particular representations and w ...

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, 2022 ☐ 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: 000-55131 BARFRESH FOOD GROUP INC. (Exact name of registrant as specified in its charter) Delaware 27-1994406 ...