What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2021-04-14 compared with 2020-04-13 · 210 added, 264 removed, 282 unchanged (63% of the section changed)

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or commissions and may not necessarily represent actual transactions.

Bid Quotation

Financial Quarter Ended

December 31, 2019

September 30, 2019

Quarter Ended

June 30, 2020

March 31, 2019

December 31, 2018

September 30, 2018

June 30, 2019

March 31, 2018

April 6, 2020, there were 143,247,603 shares of our common stock outstanding.

March 15, 2021, there were 149,133,372 shares of our common stock outstanding.

Our shares of common stock are held by 99 stockholders

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our equity compensation plans:

Plan Category

Securities to be

of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)

Weighted-Average

Exercise Price of

Options, Warrants

Available for

Future Issuance

Plans (excluding

securities reflected

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Exercise Price of Outstanding Options, Warrants and Rights (b)

of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in Column

compensation plans approved by security holders

compensation plans not approved by security holders

transfer agent, Action Stock Transfer, is located at 2469 E.

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discussion of forward-looking statements and the significance of such statements in the context of this Annual Report.

is a leader in the creation, manufacturing and distribution of ready to blend frozen beverages.

The current portfolio of products

includes smoothies, shakes and frappes.

Products are packaged in two distinct formats.

Company’s original single serve format features portion controlled and ready to blend beverage ingredient packs or “beverage

packs”.

The beverage packs contain all of the solid ingredients necessary to make the beverage, including the base (either

sorbet, frozen yogurt or ice cream), real fruit pieces, juices and ice –

five ounces of water are added before blending.

Company’s bulk “Easy Pour”

format also contains all of the solid ingredients necessary to make the beverage,

packaged in gallon containers in a concentrated formula that is mixed “one to one”

The Company has a “no

sugar added”

version of the bulk “Easy Pour”

format that is specifically targeted for the USDA national school

meal program, including the School Breakfast Program, the National School Lunch Program, and Smart Snacks in Schools Program.

The Company is currently in contract to sell its bulk Easy Pour products into over three hundred schools.

In addition, the Company

received approval from the United States Defense Logistics Agency (“DLA”) to sell its smoothie products into all branches

Armed Forces, and is currently in contract to sell its bulk Easy Pour products into over one hundred military bases

in the United States and abroad.

Company’s products are made in four formats.

The first is in portion controlled single serving beverage ingredient packs,

suitable for smoothies, shakes and frappes that can also be utilized for cocktails and mocktails.

These packs contain all of the

ingredients necessary to make a smoothie, shake or frappe, including the ice.

Simply add water, empty the packet into a blender,

blend and serve.

The second format is the bulk “Easy Pour”

The Company’s bulk “Easy Pour”

format also contains all of the solid ingredients necessary to make the beverage, packaged in gallon containers in a concentrated

formula that is mixed “one to one”

The third format is the Company’s

new WHIRLZ 100% Juice Concentrates.

These new 5:1 juice concentrates are a perfect complement to the company’s current existing

1:1 bulk Easy Pour products used in beverage dispensing equipment.

The fourth format is the Company’s new

ready-to-drink bottled smoothie, “Twist & Go”™, This sweet fruit and creamy yogurt smoothie contains four

ounces of yogurt and a half-cup of fruit/fruit juice and comes in two different flavors.

and international patents and patents pending are owned by Barfresh, as well as related trademarks for all of the single serve

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foodservice operators, for exclusive distribution of four Barfresh single serve skus.

On November 14, 2018, the Company

announced that it had received approval for multiple products to be rolled out to a national restaurant chain with over 2,500

On November 14, 2018, the Company announced

that it had received approval for multiple products to be rolled out to a national restaurant chain with over 2,500 locations.

October 26, 2015, Barfresh signed a five-year agreement with PepsiCo North America Beverages, a division of PepsiCo, to become

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have become part of PepsiCo’s customer presentations at national trade shows and similar venues.

On May 30, 2019, the Company

amended its agreement with Pepsi which included a reduction in the commission fee and a clause which allows either party the right

to terminate the agreement upon 90 days written notice.

Neither party has exercised its right to terminate the agreement.

utilizes contract manufacturers to manufacture all of the products in the United States.

Production lines are currently operational

at two locations.

The first location is in Salt Lake City, which currently produces both bulk easy pour and single serve products.

Annual production capacity with this contract manufacturer is 14 million units per year.

The second location is with Yarnell Operations,

LLC., a subsidiary of Schulze & Burch, located in Arkansas.

The Yarnell’s agreement, which was signed during February

2016, and secures the capacity to ramp up to an incremental production capacity of 100 million units.

Yarnell’s location

enhances the company’s ability to efficiently move product throughout the supply chain to destinations in the eastern United

States, home to many of the country’s large foodservice outlets.

November 2016, the Company received an equity investment from Unibel, the majority shareholder of the Bel Group (“Unibel”).

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The balance of the proceeds of the N warrant exercise, in the amount of $153,082 were received by the Company.

the first quarter of 2019, the Company completed additional funding, including a Private Placement Offering for common

shares priced at $0.60 per share, resulting in the receipt of capital investment in the amount of $2.4 million and the issuance

of 4,000,000 shares.

In addition, during the first quarter of 2019 the Company offered to reduce the exercise price on its I Warrants

from $1 to $0.60, for a limited time.

the first quarter of 2019, the Company completed additional funding, including a Private Placement Offering for common shares

priced at $0.60 per share, resulting in the receipt of capital investment in the amount of $2.4 million and the issuance of 4,000,000

In addition, during the first quarter of 2019 the Company offered to reduce the exercise price on its I Warrants from

$1 to $0.60, for a limited time.

During the time this offer was open, I Warrant holders converted 2,841,454 warrants at $0.60,

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March 23, 2020, the Company completed additional funding, including a Private Placement Offering for common shares priced at $0.50

per share (subject to adjustment) resulting in the receipt of proceeds in the amount of $3.825 million and the issuance

of 7,650,000 shares.

The investors of this Private Placement Offering will be granted O warrants to be eligible to purchase an

additional 0.50 shares for every share issued to each purchaser, exercisable for a period of 3 years at an exercise price of $0.60

per share (subject to adjustment).

If the volume-weighted average trading price for the 20 consecutive trading

days that conclude upon 6 months after the initial closing (the “Six Month Price”) exceeds or equals $0.50 per share

(the “Target Price”), the per share purchase price will not be adjusted.

If the Six Month Price is less than the Target

Price, the per share purchase price will be automatically reduced to the Six Month Price, but in no event less than $0.35 per

share, in which case the Company shall issue to each investor, pro-rata based on such investor’s investment:

in a quantity that equals the difference between the number of shares issued to such purchaser at closing and the number of shares

that would have been issued to such purchaser at closing at the Six Month Price;

and (b) a warrant for a number of shares of common

stock equal to 50% of the difference between the number of shares issued to such investor at closing and the number of shares

that would have been issued to such investor at closing at the Six Month Price, with an exercise price equal to the sum of $0.10

per share and the Six Month Price, but in no eventless than $0.45 per share.

The exercise price per share for each warrant will

automatically adjust to the sum of $0.10 per share and the Six-Month Price, but in no event less than $0.45 per share.

In addition, the Company obtained a 24 month extension on $1,071,000

in principal, and conversion of $720,000 of principal of the Milestone I Convertible Notes at a conversion price of $0.50 per

The remaining $110,166 was extended for thirty days.

The interest rate on the principal balance of the extended Milestone

I Convertible Notes was amended to 15%.

Furthermore, the Company obtained a 12 month extension on $168,000 in principal, and conversion

of $1,128,000 in principal of the Milestone II Convertible Notes.

per share (subject to adjustment) resulting in the receipt of proceeds in the amount of $3,825,000 million and the issuance of

7,650,000 shares.

The investors of this Private Placement Offering were granted O warrants which are eligible to purchase an additional

0.50 shares for every share issued to each purchaser, exercisable for a period of 3 years at an exercise price of $0.60 per share

(subject to adjustment).

If the volume-weighted average trading price for the 20 consecutive trading days that conclude upon 6

months after the initial closing (the “Six Month Price”) exceeds or equals $0.50 per share (the “Target Price”),

the per share purchase price will not be adjusted.

If the Six Month Price is less than the Target Price, the per share purchase

price will be automatically reduced to the Six Month Price, but in no event less than $0.35 per share, in which case the Company

shall issue to each investor, pro-rata based on such investor’s investment:

(a) shares in a quantity that equals the difference

between the number of shares issued to such purchaser at closing and the number of shares that would have been issued to such

purchaser at closing at the Six Month Price;

and (b) a warrant for a number of shares of common stock equal to 50% of the difference

between the number of shares issued to such investor at closing and the number of shares that would have been issued to such investor

at closing at the Six Month Price, with an exercise price equal to the sum of $0.10 per share and the Six Month Price, but in

no eventless than $0.45 per share.

The exercise price per share for each warrant will automatically adjust to the sum of $0.10

per share and the Six-Month Price, but in no event less than $0.45 per share.

On September 28, 2020, the Company determined the

volume-weighted average price was below the $0.35 per share and consequently issued 5,322,868 additional shares in accordance

with provisions of the Private Placement Offering.

Similarly, the Company issued an additional 2,652,868 Warrants to investors

that contributed capital or exercised the conversion of their convertible note.

Lastly, the Company issued an additional 459,000

Warrants for convertible noteholders that extended their convertible notes.

addition, the Company obtained a 24 month extension on $1,071,000 in principal, and conversion of $720,000 of principal of the

Milestone I Convertible Notes at a conversion price of $0.50 per share.

The remaining $110,166 was extended for thirty days.

The Convertible

Noteholders of the Milestone I and II Convertible Notes were granted additional interest depending upon their election to convert

or extend their Convertible Notes.

interest rate on the principal balance of the extended Milestone I Convertible Notes was amended to 15%.

Furthermore, the Company

obtained a 12 month extension on $168,000 in principal, and conversion of $1,128,000 in principal of the Milestone II Convertible

The Convertible Noteholders of the Milestone I and II Convertible Notes were granted additional interest depending upon

their election to convert or extend their Convertible Notes.

we have 12 employees and 3 consultants.

There are currently 12 employees selling our products.

Accounting Policies

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treated as fulfillment costs and presented in distribution, selling and administrative costs.

company evaluated the requirement to disaggregate revenue and concluded that substantially all of its revenue comes from a

single product, frozen beverages.

account for share-based employee compensation plans under the fair value recognition and measurement provisions in accordance

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and cost of revenue

increased $71,626, or 2%, from $4,235,159 in 2018 to $4,306,785 in 2019.

Our products continue to be distributed through all 72

of Sysco’s U.S.

mainland distribution centers, as well as through new customers beyond the Sysco distribution network.

decreased $1,739,238, or -40%, from $4,306,785 in 2019 to $2,567,547 in 2020.

The overall revenue for 2020 was lower due to decreased

sales of both single serve and bulk product which was directly impacted by COVID-19.

of revenue for 2020 was $1,784,537 as compared to $1,928,210 in 2019.

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for 2020 and 2019, respectively.

This improvement was driven by a number of factors, including leverage due to larger scale of

production and product mix.

We anticipate that our gross profit percentage for 2020 will be comparable to that of 2019.

from manufacturing equipment was $65,366 and $57,099 for December 31, 2019 and 2018, respectively.

This decline was mainly driven by the COVID 19 pandemic in 2020.

In addition, gross margins were

lower due to product mix which included the launch of the new 8oz bottle and 5:1 juice concentrate.

Also contributing to the lower

gross profit were inventory price and quantity adjustments along with higher customer rebates.

Depreciation from manufacturing

equipment was $18,938 and $65,366 for December 31, 2020 and 2019, respectively.

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

general and administrative expenses decreased $2,470,590 (36%) from $6,850,566 in 2019 to $4,379,976 in 2020, with the improvement

driven by lower personnel expenses resulting from reduced headcount, reduced stock-based compensation expense from terminated

employees, and reduced marketing and selling expense from a renegotiated distribution agreement.

The following is a breakdown

of our general and administrative expenses for the years 2019 and 2018.

December 31, 2019

December 31, 2018

Personnel costs

Stock based compensation/options

Legal and professional fees

Marketing and selling

Consulting fees

Director fees

Research and development

Shipping Expense and storage

Other expenses

driven by lower personnel expenses resulting from reduced headcount, reduced marketing and selling expense from a renegotiated

distribution agreement.

The following is a breakdown of our general and administrative expenses for the years 2020 and 2019.

based compensation/options

and professional fees

and development

cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes for the years 2020 and

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Personnel cost decreased $1,256,271 (44%) from $2,837,685 to $1,581,414.

At year end 2018

2019 we had 17 full time employees, and we currently have 12 full time employees.

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includes stock issued and options granted to employees.

Stock compensation for the current year was $225,026, a decrease of $273,742,

or 55%, from the year ago expense of $498,768.

The decrease is primarily due to reductions in our workforce and the timing of

equity grants.

The Company issues additional stock options to its employees from time to time under its Equity Compensation Plan.

Stock compensation for the year ended December 31, 2020 was $276,641,

an increase of $51,615, or 23%, from the year ended December 31, 2019 expense of $225,026.

The increase is primarily due to changes

in our workforce and the timing of equity grants.

The Company issues additional stock options to its employees from time to time

under its Equity Compensation Plan.

and professional fees decreased 2%, or $5,108, from $305,155 in 2019 to $300,047 in 2020.

The decrease was primarily due to

reduced legal services required.

We anticipate legal fees related to our business and financing activities to decrease as we have

renegotiated arrangements with existing service providers.

The decrease was primarily due to reduced

legal services required.

We anticipate legal fees related to our business and financing activities to decrease as we have renegotiated

arrangements with existing service providers.

expenses decreased $271,886 (76%) from $358,455 in 2019 to $86,569 in 2020.

The decrease is primarily due to reduced travel associated

with terminated employees.

We anticipate that travel expenses for 2020 will be comparable to the current year.

expense is primarily for our location in Los Angeles, California.

Rent expense for the Los Angeles office is approximately $6,500

During 2018 we leased office space at 8383 Wilshire Boulevard, Beverly Hills, California pursuant to a lease that commenced

on November 1, 2016 and expired March 31, 2019, with monthly rent expense of $14,488.

Effective April 1, 2019, we have entered

into a new lease for office space located at 3600 Wilshire Boulevard Suite 1720, Los Angeles, 90010.

with terminated employees and COVID restrictions.

We anticipate that travel expenses for 2021 will increase compared to the current

year as business resume after COVID restriction lifted.

expense decreased $10,414 (11%), from $92,608 in 2019, to $82,194 in 2020.

Rent expense is primarily for our location in Los Angeles,

Rent expense for the Los Angeles office is approximately $6,500 per month.

We lease office space at 3600 Wilshire

Boulevard, Los Angeles, California pursuant to a new lease that commenced on April 1, 2019 and expires March 31, 2023.

and selling expenses decreased $363,057 (64%) from $568,107 in 2019 to $205,050 in 2020.

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were primarily due to lower percentage commission associated with a renegotiated distribution agreement.

fees increased $58,612 (97%), from $60,359 in 2018, to $118,971 in 2019.

The increase was due primarily to services related to

fees decreased $43,081 (36%), from $118,971 in 2019, to $75,890 in 2020.

The decrease was due primarily to services related to

consulting to improve sales operations.

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We engaged consultants in the areas of sales

operations during the both 2019 and 2018.

operations during both 2020 and 2019.

The need for future consulting services will be variable.

fees increased $4,386, or 2%, from $241,000 in 2018 to $245,386 in 2019 due to director and officer insurance premiums.

Annual director fees are anticipated at $50,000 per non-employee director.

and development expenses decreased $135,833, (20%) from $674,224 in 2018 to $538,391 in 2019 due to reduced product development

activity with national accounts and fewer market tests.

fees decreased $57,886, or 24%, from $245,386 in 2019 to $187,500 in 2020 due to director and officer insurance premiums.

director fees are anticipated at $50,000 per non-employee director.

and development expenses decreased $23,246 (4%) from $538,391 in 2019 to $515,145 in 2020 due to reduced product development activity

with national accounts and fewer market tests.

These expenses relate to the services performed by our Director of Manufacturing

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and storage expense decreased $262,772 (35%) from $751,237 in 2019 to $488,465 in 2020.

Shipping and storage expense as a percentage

of revenue decreased from 20% in 2018 to 17% in 2019.

This improvement is primarily due to the growth of the scale of our business,

and the corresponding cost savings associated with freight movement.

We anticipate that shipping and storage expense as a percentage

of sales will continue to reduce in the future, as the Company continues to take advantage of more efficient distribution arrangements.

This improvement is primarily due to the

growth of the scale of our business, and the corresponding cost savings associated with freight movement.

We anticipate that shipping

and storage expense as a percentage of sales will continue to reduce in the future, as the Company continues to take advantage

of more efficient distribution arrangements.

expenses consist of ordinary operating expenses such as investor relations, office, telephone, insurance, and stock related costs.

Other expense increased $210,180, from $599,364 in 2018 to $809,544 in 2019, driven mainly by equipment repair, recruiting,

Other expense decreased $228,485, from $809,545 in 2019 to $581,061 in 2020, driven mainly by equipment repair, recruiting,

and insurance expense.

had operating losses of $5,187,204 in 2019 and $6,180,080 in 2018.

The improvement of $992,876 or 16%, was primarily due to higher

gross profit margin, and lower G&A expenses.

expense for 2019 is $1,213,263 relates to “Milestone 1”

convertible debt in the amount of $2,704,800 that was issued

on March 14, 2018, which bears interest at 10%, “Milestone 2”

convertible debt in the amount of $1,363,200 that was

issued on November 30, 2018, which bears interest at 10%.

Of the Milestone 1 convertible debt, $453,000 of principal, and the

accrued interest thereon, was converted into stock during the fourth quarter of 2018.

The principal and accrued interest on the

Note Payable in the amount of $250,000 was repaid during the fourth quarter of 2018.

Interest expense for 2019 includes amortization

of $881,871 of the value of warrants issued with the Milestone 1 and Milestone 2 convertible debt.

change in fair value of the derivative liability resulted in a gain of $1,114,625 for the year ended December 31, 2019.

was driven by the decrease in the stock price of the Company.

(income)/expenses

expense decreased $734,119 (60%) from $1,213,263 in 2019 to $479,144 in 2020.

This decrease is due to the conversion and repayment

of $2,005,366 of convertible notes during 2020.

change in fair value of the derivative liability resulted in gains of $156,540 and $1,114,625 for the years ended December 31,

2020 and 2019, respectively.

The gain was driven by the decrease in the stock price of the Company.

recorded a net gain on extinguishment of debt of $379,200 which was comprised of a gain of $437,201, offset by a loss of $58,001.

The gain of $437,201 related to the portion of convertible notes that were converted to common stock on March 20, 2020.

on extinguishment of debt of $58,001 related to the portion of convertible notes that were extended by either 24 months for Milestone

I, or 12 months for Milestone II.

warrant modification was revalued at February 22, 2019 with a value of $849,505.

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and after the modification of the warrant resulted in a loss of $307,460.

There was no warrant modification in 2020.

had net losses of $4,152,506 and $5,593,302 for the years 2020 and 2019, respectively.

This reduction in net loss, in the amount

of $1,729,521, or 24%, is primarily attributable to the same factors that drove the improvement in operating losses, partially

offset by certain non-cash charges, including higher interest, warrant modification, and gain from derivative liability, in 2019.

This reduction in net loss, in the

amount of $1,440,796, or 26%, is primarily attributable to the same factors that drove the improvement in operating losses,

partially offset by certain non-cash charges, including higher interest, warrant modification, and gain from derivative liability,

Also due to COVID-19, there were reductions in personnel, travel, marketing and selling costs.

and Capital Resources

of December 31, 2019, we had a working capital surplus of $146,337 as compared with a working capital surplus of $652,360 at December

The reduction in working capital surplus is primarily due to the reduction in inventory and an increase in accrued interest,

partially offset by a reduction in accrued liabilities.

the twelve-month period ended December 31, 2019, we used cash of $3,353,326 in operations, $466,216 for the purchase of equipment,

and $5,324 for patents and trademarks.

The Company received $1,500,357 in cash for warrant exercises, $2,400,000 in cash for issuance

of stock and paid $25,686 in operating leases.

of December 31, 2020, we had a working capital surplus of $1,196,741 as compared with a working capital surplus of $146,337 at

December 31, 2019.

The increase in working capital surplus is primarily due to higher available cash with the issuance of stock

for capital raise of $3,825,000 and the Paycheck Protection Program loan proceeds of $568,131, and increased accrued expenses,

offset by higher inventory and account receivables.

Company was granted a $568,131 loan under the Paycheck Protection Program (PPP) administered by a Small Business Administration

(SBA) approved partner.

The loan, which matures in two years, is uncollateralized and is fully guaranteed by the Federal government.

The Company is eligible for loan forgiveness of up to 100% of the loan, upon meeting certain requirements.

The Company has recorded

a note payable and will record the forgiveness upon being legally released from the loan obligation by the SBA.

No forgiveness

income has been recorded for the year ended December 31, 2020.

The Company will be required to repay any remaining balance, plus

interest accrued at 1 percent, in monthly payments commencing upon notification that the loan will not be forgiven or only partially

Subsequent to December 31, 2020 the Company received an addition loan of $568,131 which is not reflected in our consolidated

financial statements.

the year ended December 31, 2020, we used cash of $3,197,782 in operations, $59,662 for the purchase of equipment, and

$14,526 for patents and trademarks.

The Company received $3,797,800 in cash for issuance of stock, $568,131 for an SBA PPP loan,

and paid $56,692 in operating leases, $12,008 in debt issuance costs, and $157,366 in short term debt.

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 and reduce fixed overhead expense.

February 14, 2018, the Company announced the private placement of convertible notes with gross proceeds of $4.1 million The closing

of the first 60% of this amount occurred between March 12 and 22, 2018, after notice was issued by the Company that it had entered

into a material agreement or series of related agreements with a national account for the sale of its products into approximately

1,000 new locations.

The remaining 40% of the principal amount was to be received upon achieving a second milestone, which is

entering into a material agreement or series of related agreements with a national account for the sale of its products into approximately

2,500 new locations.

During November of 2018 the Company and several of the Convertible Note investors agreed to amend the definition

of Milestone 2 to allow for the funding the remaining 40% of the principal amount upon the Company receiving approval from a National

Restaurant Chain with over 2,500 for the rollout of its products.

Such approval was received during the fourth quarter of 2018,

and the Company received an additional $1.4 million of convertible note proceeds.

convertible notes are unsecured and have (i) a two-year term, (ii) a 10% annual coupon to be paid in cash or stock at the Company’s

discretion at a conversion price equal to 85% of the average closing bid prices of the Common Stock over the twenty (20) consecutive

trading day period immediately preceding the payment date, but in no event lower than sixty cents ($0.60) per share of Common

The investor’s may elect to convert their principal into common stock at a conversion price equal to the lower of:

(i) $0.88 per share of Common Stock, or (ii) 85% of the average closing bid prices of the Common Stock over the twenty (20) consecutive

trading day period immediately preceding the date of investor’s election to convert;

but in no event lower than $0.60 per

share of Common Stock.

Investors also received warrant coverage of 25% of the number of shares that would be issuable upon a full

conversion of the principal amount at an average of the twenty consecutive trading day period immediately preceding the applicable

closing date.

If any principal amount remains outstanding after the one-year anniversary of the closing, investors will be granted

an additional warrant with identical terms.

The warrants are exercisable for a period of three years for cash at the greater of

120% of the closing price or $0.70 per share of common stock.

After the initial private placement, investors were offered the

opportunity to accelerate the issuance of the additional warrant by increasing their convertible note investment by 10% to 20%.

After the close of the first quarter of 2018, a number of investors took advantage of this acceleration opportunity, resulting

in an increase in the amount of the total convertible note by $177,300 and the issuance of 930,332 additional warrants.

the fourth quarter of 2018, four of the convertible note investors elected to convert their notes into stock, with a total of

$453,000 of convertible debt, plus accrued interest being converted into stock.

the fourth quarter of 2018, one investor exercised 833,333 N warrants for cash, at $0.45 per share.

$221,918 of the proceeds of

that transaction were used to pay down a short term note payable, held by the same investor, in the amount of $200,000, plus accrued

The balance of the proceeds of the N warrant exercise, in the amount of $153,082 were received by the Company.

the first quarter of 2019, the Company completed additional funding including a Private Placement Offering for common

shares priced at $0.60 per share, resulting in the receipt of capital investment in the amount of $2.4 million and the issuance

of 4,000,000 shares.

In addition, during the first quarter of 2019 the Company offered to reduce the exercise price on its I Warrants

from $1 to $0.60, for a limited time.

the first quarter of 2019, the Company completed additional funding including a Private Placement Offering for common shares priced

at $0.60 per share, resulting in the receipt of capital investment in the amount of $2.4 million and the issuance of 4,000,000

In addition, during the first quarter of 2019 the Company offered to reduce the exercise price on its I Warrants from

$1 to $0.60, for a limited time.

During the time this offer was open, I Warrant holders converted 2,841,454 warrants at $0.60,

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March 23, 2020, the Company completed additional funding, including a Private Placement Offering for common shares priced at $0.50

per share (subject to adjustment), resulting in the receipt of proceeds in the amount of $3.825 million and the issuance

of 7,650,000 shares.

The investors of this Private Placement Offering will be granted O warrants to be eligible to purchase an

additional 0.50 shares for every share issued to each purchaser, exercisable for a period of 3 years at an exercise price of $0.60

per share (subject to adjustment) but in no event less than $0.45 per share.

If the volume-weighted average trading

price for the 20 consecutive trading days that conclude upon 6 months after the initial closing (the “Six Month Price”)

exceeds or equals $0.50 per share (the “Target Price”), the per share purchase price will not be adjusted.

Six Month Price is less than the Target Price, the per share purchase price will be automatically reduced to the Six Month Price,

but in no event less than $0.35 per share, in which case the Company shall issue to each investor, pro-rata based on such investor’s

(a) shares in a quantity that equals the difference between the number of shares issued to such purchaser at closing

and the number of shares that would have been issued to such purchaser at closing at the Six Month Price;

and (b) a warrant for

a number of shares of common stock equal to 50% of the difference between the number of shares issued to such investor at closing

and the number of shares that would have been issued to such investor at closing at the Six Month Price, with an exercise price

equal to the sum of $0.10 per share and the Six Month Price, but in no eventless than $0.45 per share.

The exercise price per

share for each warrant will automatically adjust to the sum of $0.10 per share and the Six-Month Price, but in no event less than

$0.45 per share.

In addition, the Company obtained a 24 month extension on $1,071,000 in principal, and conversion of $720,000

of principal of the Milestone I Convertible Notes at a conversion price of $0.50 per share.

The remaining $110,166 was extended

for thirty days.

The interest rate on the principal balance of the extended Milestone I Convertible Notes was amended to 15%.

Furthermore, the Company obtained a 12 month extension on $168,000 in principal, and conversion of $1,128,000 in principal of

the Milestone II Convertible Notes.

per share (subject to adjustment) resulting in the receipt of proceeds in the amount of $3.825 million and the issuance of 7,650,000

The investors of this Private Placement Offering were granted O warrants which are eligible to purchase an additional

0.50 shares for every share issued to each purchaser, exercisable for a period of 3 years at an exercise price of $0.60 per share

(subject to adjustment).

If the volume-weighted average trading price for the 20 consecutive trading days that conclude upon 6

months after the initial closing (the “Six Month Price”) exceeds or equals $0.50 per share (the “Target Price”),

the per share purchase price will not be adjusted.

If the Six Month Price is less than the Target Price, the per share purchase

price will be automatically reduced to the Six Month Price, but in no event less than $0.35 per share, in which case the Company

shall issue to each investor, pro-rata based on such investor’s investment:

(a) shares in a quantity that equals the difference

between the number of shares issued to such purchaser at closing and the number of shares that would have been issued to such

purchaser at closing at the Six Month Price;

and (b) a warrant for a number of shares of common stock equal to 50% of the difference

between the number of shares issued to such investor at closing and the number of shares that would have been issued to such investor

at closing at the Six Month Price, with an exercise price equal to the sum of $0.10 per share and the Six Month Price, but in

no eventless than $0.45 per share.

The exercise price per share for each warrant will automatically adjust to the sum of $0.10

per share and the Six-Month Price, but in no event less than $0.45 per share.

On September 28, 2020, the Company determined the

volume-weighted average price was below the $0.35 per share and consequently issued 5,322,868 additional shares in accordance

with provisions of the Private Placement Offering.

Similarly, the Company issued an additional 2,652,868 Warrants to investors

that contributed capital or exercised the conversion of their convertible note.

Lastly, the Company issued an additional 459,000

Warrants for convertible noteholders that extended their convertible notes.

addition, the Company obtained a 24 month extension on $1,071,000 in principal, and conversion of $720,000 of principal of the

Milestone I Convertible Notes at a conversion price of $0.50 per share.

The remaining $110,166 was extended for thirty days.

The Convertible Noteholders of the Milestone

I and II Convertible Notes were granted additional interest depending upon their election to convert or extend their Convertible

interest rate on the principal balance of the extended Milestone I Convertible Notes was amended to 15%.

Furthermore, the Company

obtained a 12 month extension on $168,000 in principal, and conversion of $1,128,000 in principal of the Milestone II Convertible

The remaining $67,200 was extended for thirty days.

The Convertible Noteholders of the Milestone I and II Convertible Notes

were granted additional interest depending upon their election to convert or extend their Convertible Notes.

impact of COVID-19 on the Company is evolving rapidly with events unfolding on a daily and weekly basis.

The direct impact to

our operations has begun to take affect at the close of the first quarter ended March 31, 2020.

Specifically, our business has

been impacted by dining bans targeted at restaurants to reduce the size of public gatherings.

We have noted restaurant chains

have closed operations and furloughed employees which would preclude our single serve products from being served at those establishments

for a number of weeks.

Furthermore, many school districts have closed regular attendance which could conceivably last to the end

of the school year.

This will directly impact the sales of our Bulk Product into that sales channel.

Our headquarters are located

in Los Angeles, California, where the entire state has been issued a “shelter in place”

order from the Governor of

Consequently, our staff in the headquarter office are working remotely until further notice.

At this point, we have

not experienced a disruption in the supply chain for manufacturing our products.

The developments surrounding COVID-19 remain

fluid and dynamic, and consequently, will require the Company to continue to monitor news headlines from government and health

officials, as well as, the business community.

our operations began to take effect at the close of the first quarter ended March 31, 2020.

Specifically, our business

was impacted by the dining bans targeted at restaurants to reduce the size of public gatherings.

restaurant chains have closed operations and furloughed employees which precluded our single serve products from being

served at those establishments for extended periods of time throughout 2020 and still in part in many locations.

many school districts closed regular attendance for most of the school year.

This directly impacted the sales of

our Bulk Product into that sales channel.

We have begun to see various channels begin to open up at varying degrees due to

local restrictions, although it is still a long way from pre-COVID levels of operation.

As the market begins to come back online,

we are beginning to experience some disruption in the supply chain and freight for manufacturing and distribution

of our products.

The developments surrounding COVID-19 remain fluid and dynamic, and consequently, will require the Company

to continue to monitor news headlines from government and health officials, as well as the business community.

operations to date have been financed by the sale of securities, the issuance of convertible debt and the issuance of short-term

2 unchanged sentences

we will be required to raise additional funds either in the form of equity or in the form of debt.

There are no assurances

that we will be able to generate the necessary capital to carry out our current plan of operations.

There are no assurances that

we will be able to generate the necessary capital to carry out our current plan of operations.

have entered into a direct lease for new premises covering the period April 1, 2019 to March 31, 2023.

The aggregate minimum requirements

under the non-cancellable direct lease as of December 31, 2019 is $254,368.

The aggregate minimum

requirements under the non-cancellable direct lease as of December 31, 2020 is $178,620.

Sheet Arrangements

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What changed 10-K

Item 5. Market for Registrant’s Common Equity