What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-08-11 · 90 added, 97 removed, 354 unchanged (35% of the section changed)

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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

This sweet fruit and creamy yogurt smoothie contains four ounces of yogurt and a half-cup of fruit/fruit juice and comes in three different

flavors (Peach, Mango and Strawberry/Banana).

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

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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 $3,825,000 million and the issuance of 7,650,000

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

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In addition, holders of debt converted a total of $399,000 in principal and $234,410 in interest into 1,741,873

1,741,873 shares of common stock, debt in the amount of $840,000 was retired, and a PPP loan in the amount of $568,131 was forgiven,

leaving the Company with no debt except for a PPP loan in the amount of $568,131.

shares of common stock, debt in the amount of $840,000 was retired, and a PPP loan in the amount of $568,131 was forgiven, leaving the

Company with no debt except for a PPP loan in the amount of $568,131.

we have 14 employees and 3 consultants.

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of Operations

of Operation for Three Months Ended June 30, 2021 as Compared to the Three Months Ended June 30, 2020

of Operation for Three Months Ended September 30, 2021 as Compared to the Three Months Ended September 30, 2020

and cost of revenue

increased $1,222,936 (173%) from $707,610 in 2020 to $1,930,546 in 2021.

The overall revenue for the second quarter 2021 was higher due

The overall revenue for the third quarter 2021 was higher due

to growing “Twist & Go”™ revenue and the gradual return of single

serve demand.

serve and bulk demand.

of revenue for 2021 was $1,209,425 as compared to $423,942 in 2020.

Our gross profit was $561,375 (43%) and $115,306 (23%) for 2021 and

2020, respectively.

Gross margins increased in the second quarter primarily due to higher sales volume and product mix.

We anticipate

margins will improve based on improving Twist and Go margins and having a greater mix of higher margin bulk and single serve revenue.

Our gross profit was $721,121 (37.4%) and $278,553 (39.4%) for 2021

and 2020, respectively.

Gross margin percentages decreased in the third quarter primarily due to higher supply chain costs.

anticipate margins will improve based on improving Twist and Go margins and having a greater mix of higher margin bulk and single serve

As a result, the gross profit percentage for the remainder of 2021 is expected to be approximately 39%.

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

general and administrative expenses decreased slightly $66,676 (6%) from $1,084,040 in 2020 to $1,017,364 in 2021.

general and administrative expenses increased slightly $89,122 (9%) from $976,208 in 2020 to $1,065,330 in 2021.

Shipping and storage

costs were higher offset by lower legal and professional fees, and personnel costs.

The following is a breakdown of our general and administrative

expenses for the three months ended June 30, 2021 and 2020:

Three months ended June 30,

costs were significantly higher due to higher sales volume due to unprecedented market price and labor shortage, which offset lower

research and development, and personnel costs.

The following is a breakdown of our general and administrative expenses for the three

months ended September 30, 2021 and 2020:

three months ended

September 30, 2021

Personnel costs

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Research and development

Shipping and storage

Shipping expense and storage

Other expenses

cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes and continues to be our largest

cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes and continues to be one of

our largest costs.

Personnel cost decreased $20,440 (6%) from $370,010 to $349,570.

We had 17 full time employees at the end of the second quarter

of 2020, and we currently have 14 full time employees.

We had 17 full time employees at the end of the

third quarter of 2020, and we currently have 14 full time employees.

based compensation is used as an incentive to attract new employees and to compensate existing employees.

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Stock based compensation for the current quarter was $41,574, a decrease

of $10,943, or 20%, from the year ago quarter expense of $55,812.

The Company issues additional stock options to its employees from time

of $4,118, or (9%), from the year ago quarter expense of $45,692 The Company issues additional stock options to its employees from time

to time under its Equity Compensation Plan.

and professional fees decreased $106,323 (70%) from $151,035 in 2020 to $44,712 in 2021.

The decrease was primarily due to renegotiated

fees for legal services.

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

arrangements with existing service providers.

and professional fees increased $16,121 (54%) from $29,680 in 2020 to $45,801 in 2021.

The increase was primarily due to legal services

for up listing.

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

with existing service providers.

expenses decreased $1,801 (10%) from $17,331 in 2020 to $15,530 in 2021.

We anticipate that travel expenses for the remainder of this year

will gradually pick up and for the second half of 2021 comparable to 2019 trends.

expense remained flat for the three months ended June 30, 2020 compared to the three months ended June 30, 2021.

Rent expense is for

our location in Los Angeles, California.

We anticipate that travel expenses for the remainder of this

year will gradually pick up and for the second half of 2021 comparable to 2019 trends.

expense remained flat for the three months ended September 30, 2020 compared to the three months ended September 30, 2021.

is for our location in Los Angeles, California.

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.

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,

and selling expenses decreased $19,623 (36%) from $55,194 in 2020 to $35,571 in 2021.

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The need for future consulting services will be variable.

fees increased $22,870 (46%) from $50,000 in 2020 to $72,870 in 2021.

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

director of which six directors will be compensated in 2021.

fees are flat $50,000 in 2020 to $50,000 in 2021.

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

six directors will be compensated in 2021.

and development expenses decreased $113,284 (77%) from $147,738 in 2020 to $34,454 in 2021.

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a reduction in labor hours for our development staff.

and storage expense increased $140,978 (146%) from $96,425 in 2020 to $237,403 in 2021.

This is primarily due to higher sales volume,

higher fuel costs, and from relocating materials from one location to another.

We anticipate that shipping and storage expense as a percentage

of sales will reduce during the balance of the year, as the Company is able to take advantage of more efficient distribution arrangements

as well as an increased volume per load due to higher sales volume in 2021.

expenses decreased $21,064 (25%) from $84,381 in 2020 to $63,317 in 2021, primarily due to lower insurance expense and the results

and storage expense became our largest expense in third quarter 2021, it increased $208,677 (165%) from $126,737 in 2020 to $335,414

This is primarily due to higher sales volume, higher fuel costs, and from relocating materials from one location to another.

We anticipate that shipping and storage expense as a percentage of sales will reduce during the balance of the year, as the Company is

able to take advantage of more efficient distribution arrangements as well as an increased volume per load due to higher sales volume

expenses increased $11,846 (11%) from $105,008 in 2020 to $116,854 in 2021, primarily due to lower insurance expense and the results

of the cash and accrued expense reconciliations.

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We anticipate these expenses to be comparable to 2020 for the balance of the year.

had operating losses of $602,353 and $1,122,234 for the three-month periods ended June 30, 2021 and 2020, respectively.

The improvement

of $519,881 or 46%, was primarily due to higher sales volume and related product margin and lower General and Administrative expenses.

had operating losses of $506,660 and $836,384 for the three-month periods ended September 30, 2021 and 2020, respectively.

improvement of $329,724 or (39%), was primarily due to higher sales volume and related product margin.

change in the value of the derivative liability is based upon the Black-Scholes model from one period to another.

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The derivative liability was settled upon conversion and repayment of the convertible notes

PPP loan in the amount of $568,131 was forgiven and debt extinguished, resulting in other operating income of $568,131.

debt settlement in the quarter resulted in debt converted of $399,000 in principal and $280,610 in interest into 1,741,873 shares

of common stock, with debt in the amount of $840,000 repaid, resulted in a loss of $193,562.

expense for the three months ended June 30, 2021 was $68,973, as compared with $63,483 for the three months ended June 30, 2020.

relates to the unconverted portion of convertible debt of $1,071,000 that was issued on March 14, 2018, and in the unconverted portion

of convertible debt in the amount of $168,000 that was issued on November 30, 2018.

This compares to the unconverted portion of convertible

debt of $1,071,000 and in the unconverted portion of convertible debt of $235,200 as of June 30, 2020.

had net losses of $297,240 and $1,179,520 in the three-month periods ended June 30, 2021 and 2020, respectively.

of Operation for Six Months Ended June 30, 2021 as Compared to the Six Months Ended June 30, 2020

had net losses of $506,660 and $878,257 in the three-month periods ended September 30, 2021 and 2020, respectively.

of Operation for Nine Months Ended September 30, 2021 as Compared to the Nine Months Ended September 30, 2020

and cost of revenue

increased $2,298,842 (118%) from $1,947,766 in 2020 to $4,246,608 in 2021.

The overall revenue for the second quarter 2021 was higher

The overall revenue for the third quarter 2021 was higher

due to growing “Twist & Go”™ revenue and the gradual return of single

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of revenue for 2021 was $2,597,121 as compared to $1,142,391 in 2020.

Our gross profit was $910,693 (39%) and $512,105 (41%) for 2021 and

2020, respectively.

Gross margins decreased in the second quarter primarily due to product mix which includes “Twist

Our gross profit was $1,631,814 (38.4%) and $790,658 (40.6%) for

2021 and 2020, respectively.

Gross margins decreased in the third quarter primarily due to product mix which includes “Twist

& Go”™ at lower product margins.

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general and administrative expenses decreased $450,378 (14%) from $3,284,673 in 2020 to $2,834,295 in 2021, with the improvement primarily

driven by personnel and marketing and selling expenses resulting from lower headcount and the renegotiation of certain sales commission

agreements, lower stock based compensation, and legal and professional fees.

The following is a breakdown of our general and administrative

expenses for the six months ended June 30, 2021 and 2020:

Six months ended June 30,

driven by the following lower expenses:

personnel and marketing and selling expenses resulting from lower headcount and the renegotiation

of certain sales commission agreements, stock based compensation, research and development and legal and professional fees.

following is a breakdown of our general and administrative expenses for the nine months ended September 30, 2021 and 2020:

nine months ended

September 30,

nine months ended

September 30,

Personnel costs

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Personnel cost decreased $202,620 (17%) from $1,217,690 to $1,015,070.

We had 17 full time employees at the end of the second

quarter of 2020, and we currently have 14 full time employees.

We had 17 full time employees at the end of the third quarter

of 2020, and we currently have 14 full time employees.

based compensation is used as an incentive to attract new employees and to compensate existing employees.

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stock issued and options granted to employees and non-employees.

Stock based compensation for the six months ended June 30, 2021 was

$10,284, a decrease of $184,240, or 95%, from the year ago period expense of $194,524.

The Company issues additional stock options to

its employees from time to time under its Equity Compensation Plan.

Stock based compensation for the nine months ended September 30, 2021

was $51,857, a decrease of $188,359, or 78%, from the year ago period expense of $240,216.

The Company issues additional stock options

to its employees from time to time under its Equity Compensation Plan.

and professional fees decreased $118,989 (44%) from $273,177 in 2020 to $154,188 in 2021.

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travel expenses for the remainder of this year will gradually pick up and for the second half of 2021 be comparable to 2019 trends.

expense remained flat for the six months ended June 30, 2020 compared to the six months ended June 30, 2021.

Rent expense is for our

location in Los Angeles, California.

expense remained flat for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2021.

is for our location in Los Angeles, California.

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.

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,

and selling expenses decreased $74,570 (39%) from $192,006 in 2020 to $117,436 in 2021.

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as well as an increased volume per load due to higher sales volume in 2021.

expenses decreased $118,899 (53%) from $225,397 in 2020 to $106,498 in 2021, primarily due to lower insurance expense and the

results of the vendor, cash and accrued expenses reconciliation.

Other expenses consist of ordinary operating expenses such as investor

relations, office, telephone, insurance, and stock related costs.

We anticipate these expenses to be comparable to 2020 for the balance

had operating losses of $1,151,569 and $2,100,008 for the six-month periods ended June 30, 2021 and 2020, respectively.

expenses decreased $107,051 (32%) from $330,405 in 2020 to $223,354 in 2021, primarily due to lower insurance expense and the results

of the vendor, cash and accrued expenses reconciliation.

Other expenses consist of ordinary operating expenses such as investor relations,

office, telephone, insurance, and stock related costs.

We anticipate these expenses to be comparable to 2020 for the balance of the year.

had operating losses of $1,658,229 and $2,936,392 for the nine-month periods ended September 30, 2021 and 2020, respectively.

The improvement

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of common stock, with debt in the amount of $840,000 repaid, resulting in a loss of $193,562.

expense for the six months ended June 30, 2021 was $128,064, as compared with $358,877 for the six months ended June 30, 2020.

decreased $230,813 (64%) due to conversion and repayment of $2,005,366 in convertible notes during the first quarter of 2020.

had net losses of $888,759 and $1,922,586 in the six-month periods ended June 30, 2021 and 2020, respectively.

expense for the nine months ended September 30, 2021 was $128,064, as compared with $420,634 for the nine months ended September 30,

Interest decreased $292,570 (70%) due to conversion and repayment of $2,005,366 in convertible notes during the first quarter of

2020, and the debt is fully repaid in second quarter 2021.

had net losses of $1,395,419 and $2,800,843 in the nine-month periods ended September 30, 2021 and 2020, respectively.

and Capital Resources

of June 30, 2021, we had a working capital surplus of $6,745,351 as compared with a working capital surplus of $1,196,741 at December

The increase in working capital surplus is primarily due to the completion of the private placement of our common stock

which resulted in gross proceeds of $6,000,000, offset by the debt extinguishment of all convertible debt of which $840,000 of the principal

of September 30, 2021, we had a working capital surplus of $6,214,494 as compared with a working capital surplus of $1,196,741 at December

The increase in working capital surplus is primarily due to the completion of the private placement of our common stock which

resulted in gross proceeds of $6,000,000, offset by the debt extinguishment of all convertible debt of which $840,000 of the principal

debt was paid in cash.

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In addition, holders of debt converted a total of $399,000 in principal and $234,410 in interest into 1,741,873

1,741,873 shares of common stock and debt in the amount of $840,000 was retired, leaving the Company with no debt except for the PPP

loan in the amount of $568,131.

the six months ended June 30, 2021, we used cash of $651,255 in operations, $38,970 for the purchase of equipment, and $1,751 for patents

and trademarks.

shares of common stock and debt in the amount of $840,000 was retired, leaving the Company with no debt except for the PPP loan in the

amount of $568,131.

the nine months ended September 30, 2021, we used cash of $1,093,967 in operations, $137,405 for the purchase of equipment, and $4,374

for patents and trademarks.

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

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The aggregate minimum requirements

under the non-cancellable direct lease as of June 30, 2021 is $127,771.

under the non-cancellable direct lease as of September 30, 2021 is $111,180.

Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis