BARFRESH FOOD GROUP INC.

Previous wording

Revenue increased $1,034,000, or 40%, to $3,637,000 in 2024 as compared to $2,603,000 in 2023. Our revenue in 2024 benefited from increased sales of our bottled Twist & Go smoothies due to improved availability resulting from inventory built over the months prior to the commencement of the school year, continued acceptance of Twist & Go smoothies provided in cartons, and improvements in bulk sales due to the reintroduction of our WHIRLZ 100% juice product in the fourth quarter of 2023.

Current wording

Revenue increased $101,000, or 4%, to $2,930,000 in 2025 as compared to $2,829,000 in 2024. Our revenue in 2025 benefited from increased sales of our bottled Twist & Go smoothies.

Previous wording

We have been able to expand our capacity on a limited basis at our existing smoothie bottle manufacturer and in July 2024 contracted with an additional manufacturer. We expect expanded capacity to become available in the fourth quarter of 2024, subject to the risks and uncertainties associated with pre-production activities.

Current wording

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 successfully produce product at scale. We expect expanded capacity to become available in the second half of 2025, subject to the risks and uncertainties associated with pre-production activities.

Previous wording

Our gross profit was $1,260,000 (35%) and $913,000 (35%) for 2024 and 2023, respectively. Excluding production relocation costs, our gross profit was $1,386,000 in 2024 (38%). The improvement in gross margin is a result of favorable product mix, pricing actions, and a slight improvement in the cost of supply chain components.

Current wording

Our gross profit was $900,000 (31%) and $1,170,000 (41%) for 2025 and 2024, respectively. Excluding production relocation costs, our gross profit was $1,215,000 in 2024 (43%). The reduction in gross margin is a result of product mix and new manufacturer trial and developments costs.

Previous wording

Our operations were primarily directed towards increasing sales and expanding our distribution network.

Current wording

Our operations in 2025 were primarily directed towards increasing sales and expanding our distribution network.

Previous wording

Sales and marketing expense increased approximately $183,000 (56%) from approximately $327,000 in 2023 to $510,000 in 2024. The increase is a result of higher personnel cost, travel and broker commissions due to expansion of the broker network.

Current wording

Sales and marketing expense increased approximately $103,000 (31%) from approximately $330,000 in 2024 to $433,000 in 2025. The increase is a result of higher personnel costs and broker commissions due to expansion of the broker network, as well as an increase in sample expense due to the introduction of our Pop & Go freeze pops.

Previous wording

Storage and outbound freight expense increased approximately $110,000 (30%) from approximately $370,000 in 2023 to $480,000 in 2024, lower than the 40% rate of increase in revenue primarily because of freight efficiencies, and lower storage and inventory management cost in 2024.

Current wording

Storage and outbound freight expense increased approximately $27,000 (7%) from approximately $364,000 in 2024 to $391,000 in 2024, slightly higher than the 4% rate of increase in revenue primarily because of freight inefficiencies resulting from supply constraints.

Previous wording

Personnel cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes. Personnel cost increased by approximately $116,000 (59%) from approximately $196,000 in 2023 to $312,000 in 2024. The increase in personnel cost resulted from the non-recurrence of the 2023 reversal of cash bonuses in favor of increased performance-based stock compensation in the third quarter, increased head count and higher staff utilization, and resulting deferral of paid time off. Similarly, director fees paid in cash decreased as a result of a shift to stock-based compensation in the third quarter of 2023.

Current wording

Personnel cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes. Personnel cost increased by approximately $110,000 (42%) from approximately $262,000 in 2024 to $372,000 in 2025. The increase in personnel cost resulted from increased head count, and acceleration of employer payroll taxes due to vesting of stock-based compensation.

Previous wording

Other general and administrative expenses increased by approximately $28,000 (29%) due to increased information technology costs and the non-recurrence of certain 2023 adjustments to estimates.

Current wording

Other general and administrative expenses increased by approximately $14,000 (14%) due to increased information technology costs.

Previous wording

During the nine months ended September 30, 2024, we used $1,544,000 in operations. Our net loss adjusted for non-cash operating expenses was a loss of $982,000, while changes in non-cash current assets and liabilities consumed $562,000 primarily because of increased accounts receivable resulting from our 40% increase in revenue compared to the nine months ended September 30, 2024. Additionally, our accounts payable decreased as we improved adherence with vendor terms. These changes were partially offset by a $444,000 reduction in inventory.

Current wording

During the three months ended March 31, 2025, we used $506,000 in operations. Our net loss adjusted for non-cash operating expenses was a loss of $525,000, while changes in current assets and liabilities generated $19,000 primarily because of a reduction of $372,000 in inventory and increases in accounts payable and accrued expense of $222,000 and $218,000, respectively, partially offset by an increase in accounts receivable of $670,000.

Previous wording

As of September 30, 2024, we had working capital of $1,371,000 compared with $2,345,000 at December 31, 2023, both excluding disputed accounts payable of $499,000 resulting from our dispute with the Manufacturer. The decrease in working capital is primarily due to losses incurred in the nine months ended September 30, 2024, partially offset by capital raised in the nine months ended September 30, 2024 through the sale of convertible notes and the conversion of those notes and other current liabilities to equity.

Current wording

As of March 31, 2025, we had working capital of $2,848,000 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 three months ended March 31, 2025 through the sale of common stock, partially offset by losses incurred in the three months ended March 31, 2025.

Previous wording

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 current dispute with the Manufacturer and the resulting loss of product supply and legal expense have negatively impacted our financial position, results of operations and cash flow. While the introduction of our carton packaging format in 2023 has mitigated the loss of supply, the product offering has not been accepted by some customers or as a substitute for the bottle product in all use cases. We have contracted with a co-manufacturer for additional smoothie bottle manufacturing capacity. We expect expanded capacity to become available in the fourth quarter of 2024, subject to the risks and uncertainties associated with pre-production activities. Additionally, we have taken other measures to reduce our liquidity requirements, including compensating our directors and employees with equity to reduce cash compensation requirements, obtaining non-recourse litigation financing, and securing receivables financing in the third quarter of 2024.

Current wording

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.