Barfresh(BRFH) - 2020 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements Presents unaudited condensed financial statements showing a revenue decrease and net loss due to COVID-19 Condensed Consolidated Balance Sheet Summary (Unaudited) | Account | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and Restricted Cash | $2,743,523 | $1,091,374 | | Total Current Assets | $4,088,703 | $2,028,394 | | Total Assets | $6,755,264 | $5,125,805 | | Liabilities & Equity | | | | Total Current Liabilities | $1,142,959 | $1,882,057 | | Total Liabilities | $3,154,280 | $4,842,081 | | Total Stockholders' Equity | $3,600,984 | $283,724 | | Total Liabilities and Stockholders' Equity | $6,755,264 | $5,125,805 | Condensed Consolidated Statements of Operations Summary (Unaudited) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $707,610 | $1,565,176 | $1,947,766 | $3,782,375 | | Gross Profit | $278,553 | $851,207 | $790,658 | $2,136,957 | | Operating Loss | ($836,384) | ($949,789) | ($2,936,392) | ($3,810,354) | | Net Loss | ($878,257) | ($528,700) | ($2,800,843) | ($3,949,878) | | Net Loss Per Share | ($0.01) | $0.00 | ($0.02) | ($0.03) | Condensed Consolidated Statements of Cash Flows Summary (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net Cash used for Operating Activities | ($2,517,269) | ($3,191,642) | | Net Cash used for Investing Activities | ($52,495) | ($419,341) | | Net Cash from Financing Activities | $4,221,913 | $3,887,528 | | Net Change in Cash and Restricted Cash | $1,652,149 | $276,545 | - The company's business has been significantly impacted by COVID-19, affecting sales, though it obtained a $568,000 PPP loan to mitigate the impact[103] Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes a significant revenue decline from COVID-19, narrowed operating losses, and recent capital raising efforts - Revenue for Q3 2020 decreased 55% YoY to $707,610, and for the nine months decreased 49% YoY to $1.95 million due to COVID-19 impacts[135][154] - Gross profit margin decreased to 39.4% in Q3 2020 from 54.4% in Q3 2019, attributed to a new lower-margin product mix[136][155] General & Administrative Expenses Breakdown (Nine Months Ended Sep 30) | Expense Category | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Personnel costs | $1,217,690 | $2,286,415 | ($1,068,725) | | Stock based compensation | $240,216 | $338,683 | ($98,467) | | Travel | $69,167 | $282,834 | ($213,667) | | Marketing and selling | $192,006 | $366,937 | ($174,931) | | Shipping and Storage | $356,270 | $616,862 | ($260,592) | | Total G&A | $3,284,673 | $5,450,522 | ($2,165,849) | - As of September 30, 2020, the company had $2.74 million in cash, and management believes it has mitigated substantial doubt about its going concern status[173][174] Quantitative and Qualitative Disclosures About Market Risk This section is not required as the company qualifies as a smaller reporting company - The company is a smaller reporting company and is not required to provide these disclosures[177] Controls and Procedures Management concluded that disclosure controls were not effective due to a material weakness in segregation of duties - Disclosure controls and procedures were concluded to be not effective as of September 30, 2020[179] - A material weakness was identified in internal control related to inadequate segregation of duties due to insufficient personnel[180] - No material changes were made to internal controls during the nine months ended September 30, 2020[182] PART II - OTHER INFORMATION Legal Proceedings The company reports no material pending legal proceedings - The company is not a party to any material pending legal proceedings[185] Risk Factors This disclosure is not required as the company is a smaller reporting company - Disclosure is not required because the company is a smaller reporting company[186] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were made that were not previously reported - No unregistered sales of equity securities were made during the period that were not already reported on a Form 8-K[187] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[189] Mine Safety Disclosures This section is not applicable to the company - Not applicable[191] Other Information Discloses the resignation of the President of its subsidiary, Barfresh Corporation, Inc - On November 12, 2020, Joseph Cugine resigned as President of the subsidiary, Barfresh Corporation, Inc, but remains a director[192] Exhibits This section lists the exhibits filed with the report, including officer certifications and XBRL data - The report includes officer certifications and furnished XBRL data files[194][195] Signatures - The report was signed on November 16, 2020, by the CEO and Vice President of Finance[199]