Barfresh(BRFH) - 2024 Q1 - Quarterly Report

Financial Performance - Revenue for Q1 2024 was $2,829,000, a 35.3% increase from $2,091,000 in Q1 2023[10] - Gross profit for Q1 2024 was $1,170,000, compared to $855,000 in Q1 2023, reflecting a gross margin improvement[10] - Net loss for Q1 2024 was $(449,000), significantly reduced from $(889,000) in Q1 2023, indicating improved operational efficiency[10] - Revenue increased by $738,000, or 35%, to $2,829,000 for the three months ended March 31, 2024, compared to $2,091,000 in 2023[89] - Gross profit for the same period was $1,170,000, representing a gross margin of 41.4%, up from $855,000 and 40.9% in 2023[90] - Net losses decreased to approximately $449,000 in Q1 2024 from $889,000 in Q1 2023, reflecting improved revenue and reduced operating expenses[94] Cash Flow and Liquidity - Cash and cash equivalents at the end of Q1 2024 were $1,167,000, down from $1,891,000 at the end of Q1 2023[25] - The company reported net cash used in operating activities of $1,224,000 for the three months ended March 31, 2024, unchanged from the same period in 2023[42] - Cash used for operations was $769,000 during the three months ended March 31, 2024, with ongoing challenges in achieving positive cash flow due to supply constraints[84] - The company has $1,167,000 in cash as of March 31, 2024, indicating liquidity needs will depend on sales ramp-up and expense control[107] Expenses and Cost Management - Total operating expenses for the three months ended March 31, 2024, were $1,744,000, down from $1,765,000 in the previous year, reflecting a decrease of approximately 1.2%[42] - Selling, marketing, and distribution expenses increased by $27,000 (4%) to $667,000, while sales and marketing expenses decreased by $26,000 (-7%) to $330,000[91] - Personnel costs decreased by approximately $227,000 (-46%) to $262,000, while stock-based compensation increased by approximately $94,000 (45%) to $303,000[92] - General and administrative expenses decreased by approximately $136,000 (14%) from $994,000 in 2023 to $858,000 in 2024[115] Assets and Liabilities - Total current liabilities decreased to $2,086,000 in Q1 2024 from $2,307,000 in Q1 2023[8] - The company’s total assets decreased to $4,748,000 in Q1 2024 from $4,810,000 in Q1 2023[25] - Working capital increased to $1,981,000 as of March 31, 2024, compared to $1,846,000 at December 31, 2023[118] Inventory and Production - The company’s inventory increased to $1,284,000 in Q1 2024 from $1,214,000 in Q1 2023, reflecting growth in production capacity[25] - Inventory as of March 31, 2024, totaled $1,284,000, an increase from $1,214,000 as of December 31, 2023, representing a growth of approximately 5.8%[58] Legal and Compliance - The company is currently involved in legal proceedings related to a contract manufacturer, with potential economic damages sought[46] - Legal, professional, and consulting fees increased by $42,000 (37%) due to legal expenses related to a claim against the Manufacturer[133] Stock and Compensation - The company reported stock-based compensation of $366,000 in Q1 2024, up from $268,000 in Q1 2023[29] - The company has $77,000 of total unrecognized share-based compensation expense expected to be recognized over a remaining weighted average period of 1.1 years[70] - The company granted approximately 445,000 PSUs under the 2024 PSU program, incurring $125,000 in expense for this program[105] - As of March 31, 2024, the company had 630,786 stock options outstanding with a weighted average exercise price of $6.15 per share[71] Supply Chain and Operational Challenges - The company experienced a supply disruption due to quality issues with a contract manufacturer, which has adversely impacted operations and cash flow[62] - The company has mitigated supply disruption impacts by introducing single-serve smoothie cartons, although acceptance has varied among customers[62] Future Outlook - The company expects expanded manufacturing capacity to become available in 2024, subject to risks associated with contracting and pre-production activities[89] - The estimated effective tax rate for 2024 was zero, with a valuation allowance placed on all deferred tax assets[82]