Barfresh(BRFH) - 2021 Q4 - Annual Report

Revenue and Profit - Revenue increased by $4,132,303, or 161%, from $2,567,547 in 2020 to $6,699,850 in 2021, driven by growing "Twist & Go"™ revenue and the return of single serve and bulk demand [146]. - Gross profit for 2021 was $2,507,045 (37%) compared to $764,072 (30%) in 2020, primarily due to improved margins from "Twist & Go"™ and a higher mix of bulk and single serve revenue [147]. - The company recorded a net loss of $1,265,147 in 2021, a reduction of $2,887,359 (56%) compared to a net loss of $4,152,506 in 2020, primarily driven by improvements in gross profit and operating expenses [165]. Expenses - General and administrative expenses decreased by $400,274 (9%) from $4,379,976 in 2020 to $3,979,702 in 2021, with significant increases in shipping and storage costs due to higher sales volume [150]. - Shipping and storage expenses increased by $565,717 (116%) from $488,465 in 2020 to $1,054,182 in 2021, attributed to higher sales volume and increased fuel costs [160]. - Research and development expenses decreased by $270,536 (53%) from $515,145 in 2020 to $244,609 in 2021, due to reduced product development activity [159]. - Consulting fees increased by $162,996 (215%) from $75,890 in 2020 to $238,886 in 2021, primarily for services to improve sales operations [157]. - Personnel costs decreased by $264,953 (17%) from $1,581,414 in 2020 to $1,316,461 in 2021, due to staffing vacancies [151]. - Stock-based compensation decreased by $184,682 (67%) from $276,641 in 2020 to $91,959 in 2021, reflecting changes in workforce and timing of equity grants [152]. - Legal and professional fees decreased by $103,809 (35%) from $300,047 in 2020 to $196,238 in 2021, due to reduced legal services required [153]. - Interest expense decreased by $349,376 (73%) from $479,144 in 2020 to $129,768 in 2021 due to the conversion and repayment of convertible notes [162]. Capital and Financing - As of December 31, 2021, the company had a working capital surplus of $6,170,701, an increase from $1,196,742 at the end of 2020, mainly due to a private placement that raised $6,000,000 [166]. - The company completed a private placement of 1,282,051 shares at $4.68 per share, resulting in gross proceeds of $6,000,000 [135]. - The company recognized a gain on extinguishment of PPP debt of $1,136,262 in 2021, following the forgiveness of a $568,131 loan [164][167]. Operational Challenges - Cash used in operations for the year ended December 31, 2021, was $1,861,633, with an additional $150,545 spent on equipment purchases and $840,000 on debt repayment [170]. - The company experienced disruptions in operations due to COVID-19, impacting sales channels and supply chains [174]. - Liquidity needs will depend on the company's ability to ramp up sales profitably and control operating expenses [173]. - The company has entered into a direct lease for new premises with minimum requirements of approximately $101,000 as of December 31, 2021 [176]. - The company has no off-balance sheet arrangements that materially affect its financial condition [177].