What changed in this filing

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Item 9A. Controls and Procedures

2022-03-10 compared with 2021-04-14 · 938 added, 1129 removed, 287 unchanged (88% of the section changed)

Controls and Procedures.

Management’s

Annual Report on Internal Control over Financial Reporting

Controls and Procedures

the supervision and with the participation of our management, including our Chief Executive Officer (who is presently also serving

as our interim principal financial officer) and our Controller, we conducted an evaluation of our disclosure controls and procedures,

as such term is defined under Securities and Exchange Act of 1934 Rule 15(d)-15(e).

Based on this evaluation, our Chief Executive

Officer and our Controller concluded that the Company’s disclosure controls and procedures were not effective as of December

31, 2020, due to inadequate segregation of duties.

Management’s

the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer,

we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act of 1934

Rule 13a-15(e).

Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that the Company’s

disclosure controls and procedures were not effective as of December 31, 2021, due to inadequate segregation of duties.

Annual Report on Internal Control over Financial Reporting

management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is

defined in Rule 15d-15(f) under the Exchange Act, for the Company.

management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined

in Rule 13a-15(f) under the Exchange Act, for the Company.

control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that,

in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(2) provide reasonable assurance

that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted

accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management

and directors;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use

or disposition of our assets that could have a material effect on the financial statements.

management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020.

The framework used by management in making that assessment was the criteria set forth in the document entitled “Internal

Control –

Integrated Framework”

issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)

the supervision and with the participation of our management, including our Chief Executive Officer and our Controller, we conducted

an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act of 1934 Rule

Based on this evaluation, our Chief Executive Officer and our Controller concluded that the Company’s disclosure

controls and procedures were not effective as of December 31, 2020.

(1) pertain to the maintenance of records that, in reasonable

detail, accurately and fairly reflect the transactions and dispositions of our assets;

(2) provide reasonable assurance that transactions

are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,

and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors;

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that

could have a material effect on the financial statements.

management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021.

The framework

used by management in making that assessment was the criteria set forth in the document entitled “Internal Control – Integrated

Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013.

the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer,

we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act of 1934

Rule 13a-15(e).

Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that the Company’s

disclosure controls and procedures were not effective as of December 31, 2021.

has identified the following material weakness in our internal control over financial reporting:

has concluded that there is a material weakness due to the control environment.

The control environment is impacted due to the

company’s inadequate segregation of duties.

the assessment of the effectiveness of our internal control over financial reporting did identify material weaknesses, management

considers its internal control over financial reporting to be ineffective.

The control environment is impacted due to the Company’s

inadequate segregation of duties.

In addition, we note that a different person was identified as our principal financial officer in

each of our last three annual reports on Form 10-K.

This lack of continuity and institutional knowledge has also affected internal control

over financial reporting.

the assessment of the effectiveness of our internal control over financial reporting did identify material weaknesses, management considers

its internal control over financial reporting to be ineffective.

recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective

internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or

detect material misstatements.

In addition, effective internal control at a point in time may become ineffective in future periods

because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

an effort to remediate the identified material weakness and enhance our internal control over financial reporting, we plan to

hire additional financial personnel to help ensure that we are able to properly implement internal control procedures.

report shall not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities

of that section, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof,

regardless of any general incorporation language in such filing.

internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect

material misstatements.

In addition, effective internal control at a point in time may become ineffective in future periods because of

changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

an effort to remediate the identified material weakness and enhance our internal control over financial reporting, we plan to hire additional

financial personnel to help ensure that we are able to properly implement internal control procedures.

report shall not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that

section, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless

of any general incorporation language in such filing.

in Internal Control over Financial Reporting

addition, we note that a different person was identified as our principal financial officer in each of our last three annual reports

on Form 10-K.

This lack of continuity and institutional knowledge has also affected internal control over financial reporting.

Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Directors, Executive Officers and Corporate Governance.

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Chief Executive Officer and Chairman

Financial Officer

Delle Coste has been the Chairman of our board of directors, President and Chief Executive Officer since January 10, 2012.

He has also been the President and Chief Executive Officer of Barfresh Inc., a Nevada corporation and our wholly owned subsidiary

(“Barfresh NV”), since its inception.

Delle Coste is the inventor of the patented technology and the creator of

Delle Coste developed a unique system using controlled pre-packaged portions to deliver a freshly made smoothie

that is quick, cost efficient, healthy and with no waste.

In building the business, he is responsible for securing new business

and maintaining key client relationships.

He is also responsible for the development of new product from testing to full-scale

production, establishment of the manufacturing facilities that have all necessary accreditations, technology development, product

improvement and research and development with new product launches.

Delle Coste also has over five years of investment banking

Delle Coste attended Macquarie University, Sydney, Australia while studying for a Bachelor of Commerce for 3.5

years but left to pursue business interests before receiving a degree.

has also been the President and Chief Executive Officer of Barfresh Inc., a Nevada corporation and our wholly owned subsidiary (“Barfresh

NV”), since its inception.

Delle Coste is the inventor of the patented technology and the creator of Barfresh.

developed a unique system using controlled pre-packaged portions to deliver a freshly made smoothie that is quick, cost efficient, healthy

and with no waste.

In building the business, he is responsible for securing new business and maintaining key client relationships.

is also responsible for the development of new product from testing to full-scale production, establishment of the manufacturing facilities

that have all necessary accreditations, technology development, product improvement and research and development with new product launches.

Delle Coste also has over five years of investment banking experience.

Delle Coste attended Macquarie University, Sydney, Australia

while studying for a Bachelor of Commerce for 3.5 years but left to pursue business interests before receiving a degree.

Qualifications :

Delle Coste has 18 years of experience within retail, hospitality and dairy manufacturing.

Roger was appointed on January 4, 2022 to serve as our Chief Financial Officer effective

January 17, 2022.

Roger previously served as the EVP Corporate Controller at FreshRealm, a fresh meals solution provider that partners

with retailers, from May 2021 to December 2021.

From March 2014 to May 2021, she held various positions with Fox Factory Inc., most recently

as the Vice President, Accounting and Tax.

Fox Factory Inc.

is a designer, manufacturer and marketer of products and systems used primarily

on bikes, side-by-sides, off-road vehicles and trucks, ATVs, snowmobiles, specialty vehicles and applications, motorcycles, and commercial

Roger holds a Bachelor of Arts degree in Economics and Business from University of California, Los Angeles and a Master of

Business Administration degree from University of California, Los Angeles Anderson Graduate School of Management, and is a Certified

Public Accountant in the State of California (inactive status).

Lang was appointed as Director of the Company on January 10, 2012.

He has also served as Secretary of Barfresh NV since

its inception.

He has also served as Secretary of Barfresh NV since its inception.

Prior to joining Barfresh NV, from 2003 to 2007, Mr.

Lang was a director of Vericap Finance Limited, a company

that specializes in providing advice to and investing in Australian companies with international growth potential.

1999, he served as a director of Babcock & Brown’s Australian operations where he was responsible for international

structured finance transactions.

Lang received a Bachelor of Commerce and a Bachelor of Laws from the University of New South

Wales in 1976 and a Master of Laws from the University of Sydney in 1984.

He has been a member of the Institute of Chartered Accountants

in Australia and was licensed to practice foreign law in New York.

Lang was a director of Vericap Finance Limited, a company that specializes in providing

advice to and investing in Australian companies with international growth potential.

From 1990 to 1999, he served as a director of Babcock

& Brown’s Australian operations where he was responsible for international structured finance transactions.

Lang received

a Bachelor of Commerce and a Bachelor of Laws from the University of New South Wales in 1976 and a Master of Laws from the University

of Sydney in 1984.

He has been a member of the Institute of Chartered Accountants in Australia and was licensed to practice foreign law

Qualifications :

Lang has over 40 years of experience in business, accounting, law and finance and served as Chairman of an Australian public

Lang has over 40 years of experience in business, accounting, law and finance and served as Chairman of an Australian public company.

Tinter was appointed as Director, Chief Financial Officer and Secretary of the Company on January 10, 2012.

resigned his position as Chief Financial Officer on May 18, 2015, and served temporarily as Principal Accounting Officer.

Tinter founded Corporate Finance Group, Inc., a consulting firm located in Denver, Colorado, in 1992, and is its President.

Finance Group, Inc., is involved in financial consulting in the areas of strategic planning, mergers and acquisitions and capital

He has been the chief financial officer and a director of other public companies In all of the companies his responsibilities

included oversight of all accounting functions, including SEC reporting, strategic planning and capital formation.

Since May 2015,

he has served as chief financial officer of Bambu Franchising LLC, LLC, a privately held company that is a franchisor of Vietnamese-themed

shoppes that serve drinks and desserts.

Tinter resigned

his position as Chief Financial Officer on May 18, 2015, and served temporarily as Principal Accounting Officer.

Tinter founded Corporate

Finance Group, Inc., a consulting firm located in Denver, Colorado, in 1992, and is its President.

Corporate Finance Group, Inc., is

involved in financial consulting in the areas of strategic planning, mergers and acquisitions and capital formation.

He has been the

chief financial officer and a director of other public companies In all of the companies his responsibilities included oversight of all

accounting functions, including SEC reporting, strategic planning and capital formation.

Since May 2015, he has served as chief financial

officer of Bambu Franchising LLC, LLC, a privately held company that is a franchisor of Vietnamese-themed shoppes that serve drinks and

Prior to 1990, Mr.

Tinter was chief executive officer of Source Venture Capital, a holding

company with investments in the gaming, printing and retail industries.

Tinter was chief executive officer of Source Venture Capital, a holding company with investments in the

gaming, printing and retail industries.

Tinter received a B.S.

degree in Accounting in 1967

Post College, Long Island University, and is licensed as a Certified Public Accountant in Colorado.

degree in Accounting in 1967 from C.W.

Post College, Long Island University,

and is licensed as a Certified Public Accountant in Colorado.

Qualifications:

Tinter has over 45 years of experience as a Certified Public Accountant and a financial consultant.

During his career he served

as a director of numerous public companies.

Cugine was appointed as Director of the Company on July 29, 2014 and on April 27, 2015, was appointed president of

our wholly owned subsidiary, Barfresh Corporation, Inc.

During his career he served as

a director of numerous public companies.

Cugine was appointed as Director of the Company on July 29, 2014, and served as president of our wholly owned subsidiary,

Barfresh Corporation, Inc., from April 27, 2015, to July 13, 2021.

Cugine is the owner and president of Cugine Foods and JC Restaurants,

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He is also president and owner of Restaurant Consulting Group LLC.

to owning and operating his own firms, Mr.

Cugine held a series of leadership roles with PepsiCo, lastly as chief customer officer

and senior vice president of PepsiCo’s Foodservice division.

Cugine also serves on the board of directors of The Chef’s

Warehouse, Inc., a publicly traded specialty food products distributor in the U.S., as well as Ridgefield Playhouse and R4 Technology.

He received his B.S.

Prior to owning

and operating his own firms, Mr.

Cugine held a series of leadership roles with PepsiCo, lastly as chief customer officer and senior vice

president of PepsiCo’s Foodservice division.

Cugine also serves on the board of directors of The Chef’s Warehouse, Inc.,

a publicly traded specialty food products distributor in the U.S., as well as Ridgefield Playhouse and R4 Technology.

He received his

degree from St.

Joseph’s University in Philadelphia.

Qualifications:

Cugine’s career in sales, marketing, operations and supply chain spans more than 25 years.

He has extensive industry

contacts and proven experience leading and advising numerous successful food distribution companies.

Cugine’s career in sales, marketing, operations and supply chain spans more than 25 years.

He has extensive industry contacts

and proven experience leading and advising numerous successful food distribution companies.

Ortiz-Cochet was appointed as director of the Company on December 16, 2016.

She is the Chief Investment Officer for Unibel,

parent company of Bel Group.

Bel is an international France-based group, a world leader in branded cheese business and fruit pouches,

with brands such as Laughing Cow, Mini-Babybel, Boursin or GoGo Squeez.

She is the Chief Investment Officer for Unibel, parent

company of Bel Group.

Bel is an international France-based group, a world leader in branded cheese business and fruit pouches, with brands

such as Laughing Cow, Mini-Babybel, Boursin or GoGo Squeez.

In that position since January 2016, Ms.

drives Unibel diversification strategy, and leads the investment portfolio development.

She was previously VP Strategic Development

at Bel Group Form September 2013 to December 2015.

From 2007 to 2013, based out of Bel’s New York office, Ms.

led the development of long term strategies in North and South America, as well as Marketing strategy in the region.

that position, she held a number of leadership positions in marketing and global strategy at Bel out of the Paris office, at French,

European and corporate levels.

Isabelle began her career with Kimberly Clark in France.

Isabelle earned a master’s degree

from ESSEC Business School in France, and an executive MBA from HEC Business School, France .

to the investor rights agreement between Barfresh and Unibel dated November 23, 2016, Unibel is entitled to appoint one director

to the board of directors of Barfresh, which director is entitled to sit on each committee of the board of directors selected

by the Unibel, unless Unibel has beneficial ownership of less than:

Ortiz-Cochet drives Unibel diversification

strategy, and leads the investment portfolio development.

She was previously VP Strategic Development at Bel Group Form September 2013

to December 2015.

From 2007 to 2013, based out of Bel’s New York office, Ms.

Ortiz-Cochet led the development of long term strategies

in North and South America, as well as Marketing strategy in the region.

Prior to that position, she held a number of leadership positions

in marketing and global strategy at Bel out of the Paris office, at French, European and corporate levels.

Isabelle began her career

with Kimberly Clark in France.

Isabelle earned a master’s degree from ESSEC Business School in France, and an executive MBA from

HEC Business School, France .

to the investor rights agreement between Barfresh and Unibel dated November 23, 2016, Unibel is entitled to appoint one director to the

board of directors of Barfresh, which director is entitled to sit on each committee of the board of directors selected by the Unibel,

unless Unibel has beneficial ownership of less than:

(i) 75.0% of its Shares;

and (ii) 5.0% of the company’s

issued and outstanding common stock.

and (ii) 5.0% of the company’s issued and outstanding

common stock.

Unibel has designated Isabelle Ortiz-Cochet as its board designee.

Barfresh has agreed to

call shareholder meetings whenever necessary to ensure Unibel’s designee is elected as a director.

At any time that Unibel’s

designee is not a director, Unibel’s designee will be entitled to be a board observer.

Riccardo Delle Coste, Steven Lang

and their respective affiliates have agreed to vote their shares in favor of Unibel’s designee.

Barfresh has agreed to call shareholder meetings whenever

necessary to ensure Unibel’s designee is elected as a director.

At any time that Unibel’s designee is not a director, Unibel’s

designee will be entitled to be a board observer.

Riccardo Delle Coste, Steven Lang and their respective affiliates have agreed to vote

their shares in favor of Unibel’s designee.

Ware was appointed as director of the company on July 13, 2016.

Since September 2018, Mr.

Ware has served as President

of Foodsby, Inc., a fast-growing meal ordering platform for office buildings.

Previously, he served as Interim President, Executive

Vice President and Chief Financial Officer of Buffalo Wild Wings from October 2016 to 2018.

Currently, Mr.

Ware serves as advisor to Foodsby, Inc.

From September 2018 to December 2021, Mr.

Ware served as President of Foodsby, Inc., a fast-growing meal ordering platform

for office buildings.

Previously, he served as Interim President, Executive Vice President and Chief Financial Officer of Buffalo Wild

Wings from October 2016 to 2018.

From 2012 through 2016, Mr.

Executive Chairman of MStar Holding Corporation (MicroStar), and had served as Interim Chief Executive Officer in 2013.

to MicroStar, he served as a Senior Advisor and previously as Executive Vice President of Strategic Development of Pohlad Companies,

a family office, from 2010 to 2015.

Starting in 1994, he served in increasing capacities at PepsiCo, then PepsiAmericas, Inc.

Ware was Executive Chairman of MStar Holding Corporation (MicroStar), and

had served as Interim Chief Executive Officer in 2013.

Prior to MicroStar, he served as a Senior Advisor and previously as Executive

Vice President of Strategic Development of Pohlad Companies, a family office, from 2010 to 2015.

Starting in 1994, he served in increasing

capacities at PepsiCo, then PepsiAmericas, Inc.

culminating as Executive Vice President and Chief Financial Officer from 2005 to 2010.

Previously, he was a Senior Associate at

Booz Allen Hamilton, Inc.

Previously, he was a Senior Associate at Booz Allen Hamilton, Inc.

from 1990 to 1994.

Ware received his Bachelor of Arts degree in Economics from Hampden-Sydney College

and his Master of Business Administration from the Darden Graduate School of Business at University of Virginia.

In addition to

Barfresh, Mr.

Ware currently serves on the board of MStar Holding Corporation and on the advisory board of Stonearch Capital.

Ware received his Bachelor of Arts degree in

Economics from Hampden-Sydney College and his Master of Business Administration from the Darden Graduate School of Business at University

In addition to Barfresh, Mr.

Ware currently serves on the board of MStar Holding Corporation and on the advisory board of

Stonearch Capital.

Qualifications :

Ware has specific and relevant industry experience in the production and marketing of beverages as well as the operations

and management of restaurants.

Ware has specific and relevant industry experience in the production and marketing of beverages as well as the operations and management

of restaurants.

In addition, Mr.

Ware has knowledge in the areas of strategic and financial planning, corporate

development, personnel management, resource allocation and distribution.

Ware has knowledge in the areas of strategic and financial planning, corporate development, personnel

management, resource allocation and distribution.

Borus was appointed as a Director of the Company on April 29, 2020.

Borus has approximately 20 years of capital markets

He has been the Chief Investment Officer of Ibex Investors, LLC, a firm focused on niche, differentiated strategies

including microcap companies for over 10 years.

Prior to joining Ibex, he worked in both the private equity and investment banking

groups at Bear, Stearns & Co.

Borus has approximately 20 years of capital markets expertise.

He has been the Chief Investment Officer of Ibex Investors, LLC, a firm focused on niche, differentiated strategies including microcap

companies for over 10 years.

Prior to joining Ibex, he worked in both the private equity and investment banking groups at Bear, Stearns

in New York and London.

Borus has served on the Board of Directors of several non-profits

including the Anti-Defamation League and Colorado Public Radio.

Borus has served on the Board of Directors of several non-profits including the Anti-Defamation

League and Colorado Public Radio.

Qualifications:

Borus brings over 20 years of capital markets expertise.

are appointed for a one-year term to hold office until the next annual general meeting of shareholders or until removed from office

in accordance with our bylaws.

Our officers are appointed by our board of directors and hold office until the earlier of resignation

use the definition of “independence”

standards as defined in the NASDAQ Stock Market Rule 5605(a)(2) provides that

an “independent director”

is a person other than an officer or employee of the Company or any other individual having

a relationship, which, in the opinion of the Company’s board of directors, would interfere with the exercise of independent

judgment in carrying out the responsibilities of a director.

We have determined that four of our seven directors are independent,

which constitutes a majority.

are appointed for a one-year term to hold office until the next annual general meeting of shareholders or until removed from office in

accordance with our bylaws.

Our officers are appointed by our board of directors and hold office until the earlier of resignation or

use the definition of “independence” standards as defined in the NASDAQ Stock Market Rule 5605(a)(2) provides that an “independent

director” is a person other than an officer or employee of the Company or any other individual having a relationship, which, in

the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the

responsibilities of a director.

We have determined that five of our seven directors are independent, which constitutes a majority.

currently have an audit committee, a compensation committee and a nominating and governance committee.

The members of the audit

committee are Arnold Tinter, Steven Lang and Alexander Ware.

The audit committee is primarily responsible for reviewing the services

performed by our independent auditors and evaluating our accounting policies and our system of internal controls.

Arnold Tinter, and Alexander Ware are independent members of the audit committee, as defined below.

The members of the compensation

committee are Arnold Tinter, Joe Cugine, and Riccardo Delle Coste.

The compensation committee is primarily responsible for reviewing

and approving our salary and benefits policies (including stock options) and other compensation of our executive officers.

members of the nominating committee are Arnold Tinter, Steven Lang, and Isabelle Ortiz-Cochet.

The nominating and governance committee

is primarily responsible for overseeing corporate governance and for identifying, evaluating and recommending individuals to serve

as directors of the company.

the best of our knowledge, none of our executive officers or directors are parties to any material proceedings adverse to the

Company, have any material interest adverse to the Company or have been subject to legal, administrative or judicial orders, proceedings

or decrees required to be disclosed.

Chief Executive Officer, and our Controller are bound by a Code of Ethics that complies with Item 406 of Regulation S-K of the

Exchange Act.

The members of the audit committee

are Arnold Tinter, Steven Lang and Alexander Ware.

The audit committee is primarily responsible for reviewing the services performed

by our independent auditors and evaluating our accounting policies and our system of internal controls.

Steven Lang, Arnold Tinter, and

Alexander Ware are independent members of the audit committee, as defined below.

The members of the compensation committee are Arnold

Tinter and Justin Borus.

The compensation committee is primarily responsible for reviewing and approving our salary and benefits policies

(including stock options) and other compensation of our executive officers.

The members of the nominating committee are Arnold Tinter,

Steven Lang, and Isabelle Ortiz-Cochet.

The nominating and governance committee is primarily responsible for overseeing corporate governance

and for identifying, evaluating and recommending individuals to serve as directors of the Company.

the best of our knowledge, none of our executive officers or directors are parties to any material proceedings adverse to the Company,

have any material interest adverse to the Company or have been subject to legal, administrative or judicial orders, proceedings or decrees

required to be disclosed.

Chief Executive Officer and our Chief Financial Officer are bound by a Code of Ethics that complies with Item 406 of Regulation S-K of

the Exchange Act.

16(a) Beneficial Ownership Reporting Compliance

16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires our directors and executive

officers and beneficial holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports

of changes in ownership of our equity securities.

our knowledge, based solely upon a review of Forms 3 and 4 and amendments thereto furnished to Barfresh under 17 CFR 240.16a-3(e)

during our most recent fiscal year and Forms 5 and amendments thereto furnished to Barfresh with respect to our most recent fiscal

year, we believe that during the fiscal year ended December 31, 2020 our directors, executive officers and persons who own more

than 10% of our common stock complied with all Section 16(a) filing requirements with the exception of the following:

16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires our directors and executive officers

and beneficial holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes

in ownership of our equity securities.

our knowledge, based solely upon a review of Forms 3 and 4 and amendments thereto furnished to Barfresh under 17 CFR 240.16a-3(e) during

our most recent fiscal year and Forms 5 and amendments thereto furnished to Barfresh with respect to our most recent fiscal year, we

believe that during the fiscal year ended December 31, 2021 our directors, executive officers and persons who own more than 10% of our

common stock complied with all Section 16(a) filing requirements with the exception of the following:

Riccardo Delle Coste, late filing of Form 4

Cugine, late filing of Form 4

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Lang, late filing of Form 4

Delle Coste, late filing of Form 4

late filing of Form 4

late filing reported one transaction unless otherwise indicated.

1 unchanged sentence

Executive Compensation.

following table sets forth information about the remuneration of our principal executive officer for services rendered during

our fiscal years ended December 31, 2020 and 2019, and our other executive officers that had total compensation of $100,000 or

more for our last completed full fiscal year (the “Named Officers”).

Certain tables and columns have been omitted

as no information was required to be disclosed under those tables or columns.

following table sets forth information about the remuneration of our principal executive officer for services rendered during our fiscal

years ended December 31, 2021 and 2020, and our other executive officers that had total compensation of $100,000 or more for our last

completed full fiscal year (the “Named Officers”).

Certain tables and columns have been omitted as no information was required

to be disclosed under those tables or columns.

COMPENSATION TABLE

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President Finance (5)

the salary earned in 2020, $213,648 was paid and $136,352 was deferred.

In 2019 $232,835 was paid and $117,165 was deferred.

a stock option grant of 250,000 option shares issued 04/27/2020 with an exercise price

of $0.38, which vests in equal increments on each of the first, second and third anniversaries

of the date of grant.

the salary earned in 2021, 397,031 was paid and none was deferred.

In 2020, $213,648 was paid and $136,352 was

Represents a stock option grant of 19,233 option shares

issued 4/27/21 with an exercise price of $5.72, which vests in equal increments on each of the first, second and third anniversaries

of the grant date.

a stock option grant of 19,231 option shares issued 04/27/2020 with an exercise price of $4.94, which vests in equal increments on

each of the first, second and third anniversaries of the date of grant.

the car allowance paid to Mr.

a stock option grant of 250,000 options shares issued 5/20/19 with an exercise price of $0.45, which vests in equal increments

on each of the first, second and third anniversaries of the date of grant.

a stock option grant of 100,000 shares issued 01/06/2020 with an exercise price of $0.37,

which vests 3 years after the date of grant (cliff vesting).

a stock option grant of 150,000 shares issued 7/29/19 with an exercise price of $0.45 which vests ratably according to the

option schedule on each anniversary over the next three years and are exercisable until 7/29/27.

Loussararian served as Vice President Finance from July 29, 2019 to January 6, 2021.

a stock option grant of 11,539 shares issued 01/06/2020 with an exercise price of $4.81, which vests 3 years after the date of grant

(cliff vesting).

April 27, 2015, Smoothie, Inc.

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Pursuant to the employment agreement,

he receives a base salary of $350,000 and performance bonuses of 75% of his base salary based on mutually agreed upon performance

he receives a base salary of $350,000 and performance bonuses of 75% of his base salary based on mutually agreed upon performance targets.

In addition, Mr.

Delle Coste receives up to an additional 38,462 performance options, on an annual basis.

granted under the employment agreement are subject to the Company’s 2015 Equity Incentive Plan.

Company entered into an executive employment agreement with Raffi Loussararian on July 29, 2019, to which he agreed to serve as

Vice President, Finance.

All options granted under the

employment agreement are subject to the Company’s 2015 Equity Incentive Plan.

Company entered into an executive employment agreement with Raffi Loussararian on July 29, 2019, to which he agreed to serve as Vice

President, Finance.

Pursuant to the employment agreement, Mr.

Loussararian received a base salary of $175,000 and performance

bonuses of 25% of his base salary, based upon performance targets determined by the Board of Directors.

Loussararian received a base salary of $175,000 and performance bonuses

of 25% of his base salary, based upon performance targets determined by the Board of Directors.

In addition, Mr.

was granted 3-year options to purchase up to 150,000 shares of common stock of Barfresh.

Option grants vest ratably on each anniversary

Loussararian was granted

3-year options to purchase up to 11,539 shares of common stock of Barfresh.

The option grant was to vest ratably on each anniversary

of the date of commencement of Mr.

Loussararian’s employment.

All options granted under the employment agreement are subject

to the Company’s 2015 Equity Incentive Plan.

Loussararian left the Company in January 2021.

Loussararian’s employment.

All options granted under the employment agreement are subject to

the Company’s 2015 Equity Incentive Plan.

Loussararian left the Company in January 2021, thereby terminating his options.

following table sets forth information with respect to outstanding equity awards for the Named Officers:

EQUITY AWARDS AT FISCAL YEAR-END

of securities underlying unexercised options (#) exercisable

of securities underlying unexercised options (#) unexercisable

exercise price ($)

expiration date

Option Awards

Number of securities underlying unexercised options (#) exercisable

Number of securities underlying unexercised options (#) unexercisable

Option expiration

Riccardo Delle Coste

ratably in equal increments on the first, second and third anniversary of the date of grant of the option.

on the third anniversary of date of grant of the option.

following table summarizes the compensation paid to our directors that were not employees for the fiscal year ended December 31, 2021.

A director who is a Company employee does not receive any compensation for service as a director.

The compensation received

by directors that are employees of the Company is shown above in the summary compensation table.

We reimburse all directors for

expenses incurred in their capacity as directors.

earned or paid in

Borus became a director on April 29, 2020.

The compensation received by directors

that are employees of the Company is shown above in the summary compensation table.

We reimburse all directors for expenses incurred

in their capacity as directors.

Fees earned or paid in

Stock awards ($)

Option awards ($)

Arnold Tinter

Isabelle Ortiz-Cochet

Joseph Cugine

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Ownership of Certain Beneficial Owners and Management

following table sets forth certain information regarding our shares of common stock beneficially owned as of March 15, 2021 for

(i) each shareholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each named

executive officer and director, and (iii) all executive officers and directors as a group.

A person is considered to beneficially

own any shares:

(i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii)

of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options

or warrants or otherwise.

Unless otherwise indicated, voting and investment power relating to the shares shown in the table for

our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s

spouse or children.

purposes of this table, a person or group of persons is deemed to have “beneficial ownership”

of any shares of common

stock that such person has the right to acquire within 60 days of March 15, 2021.

As of March 15, 2021, the Company had 149,133,372

shares of common stock outstanding.

For purposes of computing the percentage of outstanding shares of our common stock held by

each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days of

March 15, 2021 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership

of any other person.

The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial

and address of beneficial owner (1)

following table sets forth certain information regarding our shares of common stock beneficially owned as of March 3, 2022, for (i) each

shareholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each named executive officer

and director, and (iii) all executive officers and directors as a group.

A person is considered to beneficially own any shares:

which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the

right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants or otherwise.

otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is

exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.

purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock

that such person has the right to acquire within 60 days of March 3, 2022.

As of March 3, 2022, the Company had 12,917,246 shares of

common stock outstanding.

For purposes of computing the percentage of outstanding shares of our common stock held by each person or group

of persons named above, any shares that such person or persons has the right to acquire within 60 days of March 31, 2022 is deemed to

be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

The inclusion

herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.

Name and address of beneficial owner (1)

Amount and nature

of beneficial

Delle Coste (2) (3) (4) (5) (6)

Lang (7) (8) (9) (10) (11)

Cugine (13) (14) (15)

Ware (16) (17) (18)

2 Allee De Longchamp Suresnes, France (19) (20)

Borus (21) (22) (23)

directors and officers as a group (8 persons)

Riccardo Delle Coste (2) (3) (4) (5)

Justin Borus (6) (7) (8)

Steven Lang (9) (10) (11) (12)

Joe Cugine (13) (14) (15)

Arnold Tinter (16)

Alexander Ware (17) (18)

Isabelle Ortiz-Cochet

2 Allee De Longchamp Suresnes, France (19) (20)

Investors LLC (fka) Lazarus Investment Partners LLLP (27)

Cherry Creek South Drive Suite 670 Denver, CO 80209

Lisa Roger (21)

All directors and officers as a group (8 persons)

Unibel, 2 Allee De Longchamp Suresnes, France 92150 (22)

IBEX Investors LLC

260 N Josephine Street, Suite 300, Denver, CO 80206 (23)

Bleichroeder LP

1345 Avenue of the Americas, 47th Floor, New York, NY 10105 (24)

Brian L Pessin;

Sandra F Pessin

370 Lexington Ave, Suite 704, New York, NY 10017

address of those listed, except as noted is c/o Barfresh Food Group Inc., 3600 Wilshire Blvd., Suite 1720 Los Angeles CA 90010.

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137,824 shares issuable under exercisable options granted.

131,679 shares underlying warrants issued in connection with promissory notes, the holder of which is Riccardo Delle Coste

Capital Holdings PTY Ltd., and of which Riccardo Delle Coste is deemed to be a beneficial owner.

50,000 shares underlying convertible debt held by R.D.

Capital Holdings PTY Ltd.

6,223 shares underlying warrants issued in connection with promissory notes the holder of which is Riccardo Delle Coste or R.D.

Holdings PTY Ltd.

and of which Riccardo Delle Coste is deemed to be a beneficial owner and 56,280 shares underlying warrants issued

in connection with deferred compensation.

Borus is a Director of the Company.

1,110,982 shares owned by Ibex Microcap Fund LLLP, of which Justin Borus is the manager of the investment manager and general partner,

respectively, and deemed to be a beneficial owner.

138,462 shares underlying warrants issued to Ibex Microcap Fund LLLP in connection with the purchase of common stock.

Lang is a Director of the Company.

19,127,177 shares owned by Sidra Pty Limited and 516,236 shares owned by Hodumo Pty Ltd, of which Steven Lang is deemed to

be a beneficial owner.

1,471,323 shares owned by Sidra Pty Limited and 43,852 shares by Hodumo Pty Ltd of which Steven Lang is deemed to be a beneficial

35,098 shares underlying options granted.

722,371 and 44,082 shares underlying warrants issued in connection with promissory notes, the holder of which is Hodumo Pty

Ltd and Sidra Pty Ltd, respectively, of which Steven Lang is deemed to be a beneficial owner.

300,000 shares underlying convertible debt held by Hodumo Pty Ltd.

Tinter is the Secretary and a Director of the Company.

37,331 shares underlying warrants issued in connection with promissory notes the holder of which is Hodumo Pty Limited, of which

Steven Lang is deemed to be a beneficial owner.

Cugine is a Director of the Company.

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27,944 shares underlying warrants issued in connection with purchase of common shares.

Tinter is the Secretary and a Director of the Company.

Ware is a Director of the Company.

1 unchanged sentence

Ware is deemed to be a beneficial owner.

78,125 shares underlying warrants issued to The Alexander Ware Revocable Trust in connection with purchase of common shares.

Ortiz-Cochet was a Director of the Company

Ortiz-Cochet is a Director of the Company

53,356 shares underlying options granted.

Borus is a Director of the Company.

14,442,776 shares owned by Ibex Investors LLC and 3,000 shares owned by Lazarus Macro Micro Partners LLLP, of which Justin

Borus is the manager of the investment manager and general partner, respectively, and deemed to be a beneficial owner.

1,800,000 shares underlying warrants issued to Ibex Investors LLC and 2,142,857 shares underlying warrants issued to Mr.

7,812,500 shares underlying warrants issued in connection with the purchase of common stock.

671,098 shares underlying warrants issued in connection with a convertible promissory note.

1,252,274 shares underlying warrants issued in connection with the purchase of common stock

Roger is the Chief Financial Officer of the Company.

137,613 shares underlying warrants issued in connection with the conversion of a promissory note.

138,462 shares underlying warrants issued in connection with the purchase of common stock

LP is deemed to be the beneficial owner of these shares as a result of acting as investment adviser to various clients.

Bleichroeder have the right to receive and the ultimate power to direct the receipt of dividends from, or the proceeds of the sale

of, such securities.

Certain Relationships and Related Transactions, and Director Independence.

Relationships and Related Transactions

following includes a summary of transactions since the beginning of fiscal 2020 or any currently proposed transaction, in which

we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average

of our total assets at year-end for the last two completed fiscal years and in which any related person had or will have a direct

or indirect material interest (other than compensation described under “Executive Compensation”).

We believe the terms

obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable

to or better than terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

Company’s policy with regard to related party transactions requires any related party loans that are (i) non-interest bearing

and in excess of $100,000 or (ii) interest bearing, irrespective of amount, must be approved by the Company’s board of directors.

All issuances of securities by the Company must be approved by the board of directors, irrespective of whether the recipient is

a related party.

following includes a summary of transactions since the beginning of fiscal 2021 or any currently proposed transaction, in which we were

or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total

assets at year-end for the last two completed fiscal years and in which any related person had or will have a direct or indirect material

interest (other than compensation described under “Executive Compensation”).

We believe the terms obtained or consideration

that we paid or received, as applicable, in connection with the transactions described below were comparable to or better than terms

available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

Company’s policy with regard to related party transactions requires any related party loans that are (i) non-interest bearing and

in excess of $100,000 or (ii) interest bearing, irrespective of amount, must be approved by the Company’s board of directors.

issuances of securities by the Company must be approved by the board of directors, irrespective of whether the recipient is a related

Each of the foregoing transactions, if required by its terms, was approved in this manner.

use the definition of “independence”

standards as defined in the NASDAQ Stock Market Rule 5605(a)(2) provides that

an “independent director”

is a person other than an officer or employee of the company or any other individual having

a relationship, which, in the opinion of the Company’s board of directors, would interfere with the exercise of independent

judgment in carrying out the responsibilities of a director.

We have determined as of December 31, 2020 that four of our six directors

are independent, which constitutes a majority.

use the definition of “independence” standards as defined in the NASDAQ Stock Market Rule 5605(a)(2) provides that an “independent

director” is a person other than an officer or employee of the company or any other individual having a relationship, which, in

the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the

responsibilities of a director.

We have determined as of December 31, 2021 that five of our seven directors are independent, which constitutes

Principal Accounting Fees and Services.

1 unchanged sentence

were as follows.

defined by the SEC, (i) “audit fees”

are fees for professional services rendered by our principal accountant for the

audit of our annual financial statements and review of financial statements included in our Form 10-K, or for services that are

normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years;

(ii) “audit-related fees”

are fees for assurance and related services by our principal accountant that are reasonably

related to the performance of the audit or review of our financial statements and are not reported under “audit fees;”

(iii) “tax fees”

are fees for professional services rendered by our principal accountant for tax compliance, tax advice,

and tax planning;

and (iv) “all other fees”

are fees for products and services provided by our principal accountant,

other than the services reported under “audit fees,”

“audit-related fees,”

and “tax fees.”

The aggregate fees billed for the years end December 31, 2020 and December 31, 2019 were for the audits of our financial

statements and reviews of our interim financial statements included in our annual and quarterly reports.

Audit related fees

All other fees

defined by the SEC, (i) “audit fees” are fees for professional services rendered by our principal accountant for the audit

of our annual financial statements and review of financial statements included in our Form 10-K, or for services that are normally provided

by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years;

(ii) “audit-related

fees” are fees for assurance and related services by our principal accountant that are reasonably related to the performance of

the audit or review of our financial statements and are not reported under “audit fees;” (iii) “tax fees” are

fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax planning;

and (iv) “all

other fees” are fees for products and services provided by our principal accountant, other than the services reported under “audit

fees,” “audit-related fees,” and “tax fees.”

The aggregate fees billed for the years ended December 31, 2021 and 2020 were for the audits of our financial statements and

reviews of our interim financial statements included in our annual and quarterly reports.

Related Fees.

1 unchanged sentence

2020, that are not reported under Audit Fees.

The aggregate tax fees billed for the years end December 31, 2020 and 2019 related to the preparation of corporate income

Eide Bailly LLP did not provide us with professional services related to “Other Fees”

for the years

ended December 31, 2020 or December 31, 2019.

The aggregate tax fees billed for the years end December 31, 2021 and 2020 related to the preparation of corporate income tax

Eide Bailly LLP did not provide us with professional services related to “Other Fees” for the years ended

December 31, 2021 or December 31, 2020.

Committee Pre-Approval Policies and Procedures

the SEC’s rules, an audit committee is required to pre-approve the audit and non-audit services performed by the independent

registered public accounting firm in order to ensure that they do not impair the auditors’

independence.

The SEC’s

rules specify the types of non-audit services that an independent auditor may not provide to its audit client and establish the

audit committee’s responsibility for administration of the engagement of the independent registered public accounting firm.

The Company has established an Audit Committee.

Accordingly, audit services and non-audit services described in this Item 14 were

pre-approved by an Audit Committee.

were no hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for

the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time,

permanent employees.

the SEC’s rules, an audit committee is required to pre-approve the audit and non-audit services performed by the independent registered

public accounting firm in order to ensure that they do not impair the auditors’ independence.

The SEC’s rules specify the

types of non-audit services that an independent auditor may not provide to its audit client and establish the audit committee’s

responsibility for administration of the engagement of the independent registered public accounting firm.

The Company has established

an Audit Committee.

Accordingly, audit services and non-audit services described in this Item 14 were pre-approved by an Audit Committee.

were no hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most

recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent

Exhibits and Financial Statements.

2 unchanged sentences

Financial Statement Schedules

other financial statement schedules have been omitted because they are either not applicable or the required information is shown

in the financial statements or notes thereto.

other financial statement schedules have been omitted because they are either not applicable or the required information is shown in

the financial statements or notes thereto.

the Exhibit Index, which follows the signature page of this Annual Report on Form 10-K, which is incorporated herein by reference.

3 unchanged sentences

Form 10-K Summary.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

FOOD GROUP INC.

April 14, 2021

March 10, 2022

Riccardo Delle Coste

1 unchanged sentence

Executive Officer)

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

of the registrant and in the capacities and on the dates indicated.

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

Riccardo Delle Coste

Executive Officer and Director

Executive Officer and interim Principal Financial Officer)

Eric Narimatsu

Accounting Officer)

Executive Officer

Financial Officer

Financial Officer)

Arnold Tinter

9 unchanged sentences

dated February 16, 2012 (incorporated by reference to Exhibit 3.2 to Current Report on Form 8-K as filed February 17, 2012)

Form of Series A Warrant (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K as filed January 17, 2012)

Form of Series B Warrant (incorporated by reference to Exhibit 4.2 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014)

Form of Series C Warrant (incorporated by reference to Exhibit 4.3 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014)

Form of Series D Warrant (incorporated by reference to Exhibit 4.4 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014)

Form of Series PA Warrant (incorporated by reference to Exhibit 4.5 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014)

Form of Series CN Warrant (incorporated by reference to Exhibit 4.6 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014)

Form of Series EN Warrant (incorporated by reference to Exhibit 4.7 to Registration Statement on Form S-1 (Registration No.

333-211019) as filed April 29, 2016)

Form of Series E Warrant (Incorporated by reference to Exhibit 3.8 to Registration Statement on Form S-1 (Registration No.

333-203340) as filed April 10, 2015)

Form of Series G Warrant (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K as filed February 16, 2015)

Form of Series H Warrant (incorporated by reference to Exhibit 4.10 to Registration Statement on Form S-1 (Registration No.

333-211019) as filed April 29, 2016)

Form of Series I Warrant (incorporated by reference to Exhibit 4.11 to Registration Statement on Form S-1 (Registration No.

333-211019) as filed April 29, 2016)

Form of Convertible Promissory Note dated January 29, 2016 by Barfresh Food Group Inc.

in favor of certain investors (incorporated by reference to Exhibit 4.12 to Registration Statement on Form S-1 (Registration No.

333-211019) as filed April 29, 2016)

Form of warrant dated December 1, 2013 (incorporated by reference to Exhibit 4.13 to Registration Statement on Form S-1 (Registration No.

333-211019) as filed April 29, 2016)

Form of Series K Warrant (incorporated by reference to Exhibit 4.14 to Registration Statement on Form S-1 (Registration No.

333-333-215322) as filed December 23, 2016)

Form of Series J Warrant (incorporated by reference to Exhibit 4.15 to Registration Statement on Form S-1 (Registration No.

333-333-215322) as filed December 23, 2016)

Repayment of Debt Agreement dated July 26, 2018 by and between Barfresh Food Group, Inc.

and Ibex Investors LLC (incorporated by reference to Exhibit 4.16 to Registration Statement on Form S-1, No.

Form of Series L Warrant (incorporated by reference to Exhibit 4.17 to Registration Statement on Form S-1, No.

Form of 10% Convertible Promissory Note dated March 5, 2018 issued by Barfresh Food Group Inc.

in favor of Ibex Investors LLC (incorporated by reference to Exhibit 4.18 to Registration Statement on Form S-1, No.

Form of 12% Convertible Promissory Note issued by Barfresh Food Group, Inc.

in favor of certain investors in February 2018 (incorporated by reference to Exhibit 4.19 to Registration Statement on Form S-1, No.

Certificate of Amendment of Certificate of Incorporation of Barfresh Food Group Inc.

dated December 17, 2021 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K as filed December 29, 2021)

Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.20 to Annual Report on Form 10-K for the year ended December 31, 2019, as filed April 13, 2020)

Form of Series O Warrant (incorporated by reference to Exhibit 4.21 to Annual Report on Form 10-K for the year ended December 31, 2019, as filed April 13, 2020)

Form of Registration Rights Agreement dated February 16, 2016 (incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-1 (Registration No.

333-211019) as filed April 29, 2016)

Intellectual Property Sale Deed by and between National Australia Bank Limited and Barfresh Inc.

dated October 15, 2013 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q as filed November 20, 2013)

Form of Securities Purchase Agreement dated February 16, 2016 by and between Barfresh Food Group Inc.

and certain investors.

(incorporated by reference to Exhibit 10.3 to Registration Statement on Form S-1 (Registration No.

333-211019) as filed April 29, 2016)

Form of Investor Rights Agreement dated November 23, 2016 by and between Barfresh Food Group, Inc.

and Unibel (Incorporated by reference to Exhibit 10.4 to Registration Statement on Form S-1 No.

Form of Securities Purchase Agreement dated November 23, 2016 by and between Barfresh Food Group, Inc.

and Unibel (incorporated by reference to Exhibit 10.5 to Registration Statement on Form S-1 (Registration No.

333-215322) as filed December 23, 2016)

Form of Securities Purchase Agreement dated September 28, 2016 by and between Barfresh Food Group, Inc.

and certain investors (incorporated by reference to Exhibit 10.6 to Registration Statement on Form S-1 (Registration No.

333-215322) as filed December 23, 2016)

Form of Registration Rights Agreement dated September 28, 2016 by and between Barfresh Food Group, Inc.

and certain investors (incorporated by reference to Exhibit 10.7 to Registration Statement on Form S-1 (Registration No.

333-215322) as filed December 23, 2016)

Barfresh Food Group, Inc.

2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 to Annual Report Form 10-K filed June 30, 2014)+

Barfresh Food Group, Inc.

2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 to Annual Report Form 10-K filed July 7, 2015)+

1 unchanged sentence

and Riccardo Delle Coste dated April 27, 2015 (incorporated by reference to Exhibit 10.11 to Annual Report Form 10-K filed July 7, 2015)+

Executive Employment Agreement by and between Smoothie, Inc.

and Joseph M.

Cugine dated April 27, 2015 (incorporated by reference to Exhibit 10.12 to Annual Report Form 10-K filed July 7, 2015)+

Form of Series D Warrant Exercise Offer dated July 25, 2018 (incorporated by reference to Exhibit 10.13 to Registration Statement on Form S-1, No.

Form of Securities Purchase Agreement dated February 14, 2018 by and between Barfresh Food Group, Inc.

and certain investors (incorporated by reference to Exhibit 10.14 to Registration Statement on Form S-1, No.

Form of Securities Purchase Agreement dated March 15, 2020 by and between Barfresh Food Group, Inc.

1 unchanged sentence

Subsidiaries (incorporated by reference to Exhibit 21.1 to Annual Report on Form 10-K for the year ended December 31, 2019, filed April 13 2020)

15d-14(a) Certification*

Certification

Pursuant to 18 U.S.C.

Rule 13a-14(a) Certification of Principal Executive Officer*

Rule 13a-14(a) Certification of Principal Financial Officer

Certification Pursuant to 18 U.S.C.

Section 1350*

Certification Pursuant to 18 U.S.C.

Presentation.

Page Interactive Data File (embedded within the Inline XBRL document)

accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement

or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of

Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section

18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

Food Group Inc.

to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

Balance Sheets as of December 31, 2020 and 2019

Statements of Operations for the Years Ended December 31, 2020 and 2019

Statements of Stockholders’

Equity for the Years Ended December 31, 2020 and 2019

Statements of Cash Flows for the Years Ended December 31, 2020 and 2019

to Consolidated Financial Statements

the accompanying notes to the consolidated financial statements.

of Independent Registered Public Accounting Firm (Eide Bailly LLP, Denver, Colorado, PCAOB ID 286 )

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

Notes to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

4 unchanged sentences

have audited the accompanying consolidated balance sheets of Barfresh Food Group, Inc.

(the “Company”) as of December

(the “Company”) as of December 31,

2021 and 2020, and the related consolidated statements of operations ,

stockholders’

equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of Barfresh Food Group, Inc.

as of December 31, 2020 and 2019, and the results of its operations and its cash flows for

the years then ended, in conformity with accounting principles generally accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an

opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to Barfresh

Food Group, Inc.

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position

of Barfresh Food Group, Inc.

as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then

ended, in conformity with accounting principles generally accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to Barfresh Food Group, Inc.

accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits

to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether

due to error or fraud.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Barfresh Food Group Inc.

is not required to have, nor were we engaged to perform, an audit of its internal

control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial

reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial

Accordingly, we express no such opinion.

audits included performing procedures to assess the risk of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis,

evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting

principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated

financial statements.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose

of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

Accordingly, we express

no such opinion.

audits included performing procedures to assess the risk of material misstatement of the consolidated financial statements, whether due

to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used

and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was

communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material

to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of

critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by

communicating the critical audit matters below, providing a separate opinion on the critical audit matter or on the accounts or

disclosures to which they relate.

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated

or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

and Equity Transactions

discussed in Notes 7, 8 and 10 to the consolidated financial statements, the Company has entered into debt and equity agreements

which include stock-based compensation, debt modification and derivative liabilities.

These agreements include transactions, including

the issuance of warrants and stock options, that are required to be recorded at estimated fair value.

These transactions resulted

in recording of stock-based compensation expense of $276,641 and a gain on debt extinguishment of $379,200 for the year ended

December 31, 2020, and the recording of a derivative liability of $41,475 as of December 31, 2020.

Company’s determination of the estimated fair value involves the identification of related financial instruments and a clear

understanding of the terms of the agreements.

Auditing management’s estimates of fair value requires a high degree of auditor

judgment and an increased extent of effort, including the need to carefully examine to understand the true nature of the related

discussed in Notes 7, 8 and 10 to the consolidated financial statements, the Company has entered into debt and equity agreements which

include stock-based compensation, debt modification and derivative liabilities.

These agreements include transactions, including the

issuance of stock options, that are required to be recorded at estimated fair value.

These transactions resulted in recording of stock-based

compensation expense of $91,959 and a loss on debt extinguishment of $193,562 for the year ended December 31, 2021, and the valuation

of a derivative liability of $25,170 as of May 26, 2021.

Company’s determination of the estimated fair values involves the identification of related financial instruments and a clear understanding

of the terms of the agreements.

Auditing management’s estimates of fair value requires a high degree of auditor judgment and an

increased extent of effort, including the need to carefully examine to understand the true nature of the related agreements.

audit procedures related to determination of the estimated fair values of these debt and equity transactions included the following,

among others:

gained an understanding of management’s process and methodology to develop the estimates

obtained an understanding of management’s process and methodology to develop the estimates.

obtained an understanding of the internal controls relating to the methodology, reliability

and accuracy of the information used in the calculation and management’s review and

approval for the transactions.

examined signed contracts and amendments.

evaluated the reasonableness of the inputs and assumptions used by management in developing the estimates.

evaluated the reasonableness of the inputs and assumptions used by management in developing

the estimates.

evaluated the adequacy of the disclosures related to these fair value measurements.

Eide Bailly LLP

have served as Barfresh Food Group Inc.’s auditor since 2012.

Food Group Inc.

1 unchanged sentence

31, 2021 and 2020

receivable, net

expenses and other current assets

Current assets:

plant and equipment, net of depreciation

lease right-of-use assets, net

assets, net of amortization

And Stockholders’

payable –

Paycheck Protection Program

note, net of discount

Restricted cash

Accounts receivable, net

Inventory, net

Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net of depreciation

Operating lease right-of-use assets, net

Intangible assets, net of amortization

Liabilities and Stockholders’ Equity

Current liabilities:

term liabilities:

payable –

Paycheck Protection Program

note - related party, net of discount

note, net of discount

and contingencies (Note 6,7,8 and 13)

Stockholders’

stock, $0.000001 par value, 5,000,000 shares authorized, none issued or outstanding

stock, $0.000001 par value;

Accounts payable

Accrued expenses

Advance payment

Accrued payroll and employee related

Accrued interest

Lease liability

Loan payable - Paycheck Protection Program

Convertible note, net of discount

Derivative liabilities

Total current liabilities

Long term liabilities:

Accrued interest

Lease liability

Loan payable - Paycheck Protection Program

Convertible note - related party, net of discount

Convertible note, net of discount

Total liabilities

Commitments and contingencies (Note 9)

Stockholders’ equity:

Preferred stock, $ 0.000001 par value, 5,000,000 shares authorized, none issued or outstanding

Common stock, $ 0.000001

295,000,000 shares authorized;

149,133,372 and 130,341,737 shares issued and outstanding

at December 30, 2020and 2019, respectively

paid in capital

12,905,112 and 11,471,797

shares issued and outstanding at December 31, 2021 and 2020, respectively

Additional paid in capital

Accumulated deficit

( 52,164,775 )

stockholders’

Liabilities and Stockholders’

( 50,899,628 )

Total stockholders’ equity

Total liabilities and stockholders’ equity

the accompanying notes to the consolidated financial statements.

3 unchanged sentences

Cost of revenue

of manufacturing equipment

and administrative

and amortization

Depreciation of manufacturing equipment

Operating expenses:

(income)/expenses

from derivative liability

from debt extinguishment

other (income) expense

General and administrative

Depreciation and Amortization

Total operating expenses

Operating loss

( 2,094,384 )

( 4,209,102 )

share information - basic and fully diluted:

average shares outstanding

(loss) per share

Other (income)/expenses

Gain from derivative liability

Gain from debt extinguishment - Paycheck Protection Program

( 1,136,262 )

Loss (gain) on debt extinguishment

Total other income

$ ( 1,265,147 )

$ ( 4,152,506 )

Per share information - basic and fully diluted:

Weighted average shares outstanding

Net loss per share

the accompanying notes to the consolidated financial statements.

Food Group, Inc.

of Stockholders’

of Stockholders’ Equity

the years ended December 31, 2021 and 2020

January 1, 2019

Balance January 1, 2020

$ ( 46,747,122 )

of stock and options for services

based compensation

issued to Management

of stock for capital raise

(loss) for the year

Issuance of stock for capital raise, net of offering costs of $ 27,200

Conversion of debt

Interest paid in shares

Issuance of stock for services

Equity based compensation

Warrants issued to management

Warrant modification

Warrant issued for note extension

Restricted stock issuance

Net (loss) for the year

( 4,152,506 )

Balance December 31, 2020

$ ( 50,899,628 )

of stock for capital raise, net of offering costs of $27,200

paid in shares

of stock for services

based compensation

issued to management

issued for note extension

stock issuance

(loss) for the year

December 31, 2020

Issuance of stock for capital raise

Conversion of debt and accrued interest

Interest paid in shares

Issuance of stock for services

Equity based compensation

Net (loss) for the year

( 1,265,147 )

Balance December 31, 2021

$ ( 52,164,775 )

the accompanying notes to the consolidated financial statements.

Food Group Inc.

Statements of Cash Flows

Consolidated Statements of Cash Flows

the years ended December 31, 2021 and 2020

Adjustments to reconcile net loss to net cash

used for operating activities

Amortization of right

Change in allowance

for doubtful accounts

Change in inventory

Interest expense

related to debt discount

Warrant modification

( 1,265,147 )

( 4,152,506 )

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation and amortization

Interest expense related to debt discount

Stock-based compensation

Stock and options

issued for services

Stock and options issued for services

Gain on debt extinguishment - Paycheck Protection Program

( 1,136,262 )

Gain on derivative

Gain on debt extinguishment

Loss (gain) on debt extinguishment

Changes in assets and liabilities

Accounts receivable

Prepaid expenses

and other assets

Prepaid expenses and other assets

Accounts payable

1 unchanged sentence

Advanced payments

Net Cash (used for) operating activities

Accrued interest

Net cash used in operating activities

( 1,861,633 )

( 3,269,000 )

Investing activities

Purchase of property

and equipment

of intangibles

Net Cash (used for) investing activities

Purchase of property and equipment

Net cash used in investing activities

Financing activities

Cash received for

warrant exercises

Cash received for

stock, net of offering costs

Repayments of convertible

Proceeds from note

Cash received for stock, net of offering costs

Proceeds from note payable

Repayment of convertible notes

Debt issuance costs

of operating leases

Net cash from financing activities

Net change in cash and restricted cash

Cash and restricted

cash, beginning of year

Cash and restricted

cash, end of year

Cash payments

Non-cash financing and investing activities

property and equipment included in accounts payable

Debt discount

warrant and derivative liability

notes principal and interest settled through warrant exercise

lease right-of-use asset

compensation settled through issuance of warrants

carrying value of convertible notes and accrued interest settled through issuance of stock (debt extinguishment)

interest settled through issuance of stock

the accompanying notes to the consolidated financial statements.

Cash and restricted cash, beginning of year

Cash and restricted cash, end of year

the accompanying notes to the condensed consolidated financial statements.

food Group Inc.

1 unchanged sentence

Summary of Significant Accounting Policies

Food Group Inc., (“we,”

“us,”

“our,”

and the “Company”) was incorporated on February

Food Group Inc., (“we,” “us,” “our,” and the “Company”) was incorporated on February

25, 2010 in the State of Delaware.

We are engaged in the manufacturing and distribution of ready to blend beverages, particularly,

smoothies, shakes and frappes.

accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted

in the United States of America (“GAAP”).

We are engaged in the manufacturing and distribution of ready-to-drink and ready-to-blend beverages,

particularly, smoothies, shakes and frappes.

of Presentation

accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the

United States of America (“GAAP”).

Certain reclassifications have been made to the 2020 consolidated statement of cash flows

to conform to the 2021 presentation.

December 29, 2021, the Company amended its certificate of incorporation to implement a 1-for-13 reverse stock split of its issued and

outstanding shares of common stock.

All the share numbers, share prices, exercise prices and other per share information throughout these

financial statements have been adjusted, on a retroactive basis, to reflect the 1-for-13 reverse stock split.

of Consolidation

consolidated financial statements include the financial statements of the Company and our wholly owned subsidiaries, Barfresh

and Barfresh Corporation Inc.

consolidated financial statements include the financial statements of the Company and our wholly owned subsidiaries, Barfresh Inc.

Barfresh Corporation Inc.

(formerly known as Smoothie, Inc.).

All inter-company balances and transactions among the companies

have been eliminated upon consolidation.

preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported.

results may differ from these estimates.

All inter-company balances and transactions among the companies have been

eliminated upon consolidation.

preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported.

Actual results may differ

from these estimates.

Concentration

1 unchanged sentence

amount of cash on deposit with financial institutions exceeds the $ 250,000 federally insured limit at December 31, 2021 and 2020.

However, we believe that cash on deposit that exceeds $250,000 in the financial institutions is financially sound and the risk

of loss is minimal.

December 31, 2020, the Company had $142,382 and $91,385, respectively, in restricted cash related to our co-packing agreement.

we believe that cash on deposit that exceeds $ 250,000 in the financial institutions is financially sound and the risk of loss is minimal.

both December 31, 2021 and 2020, the Company had $ 142,382 in restricted cash related to our co-packing agreement.

food Group Inc.

to Consolidated Financial Statements

Value Measurement

Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value

Measurements and Disclosures (“ASC 820”), provides a comprehensive framework for measuring fair value and expands

disclosures which are required about fair value measurements.

Specifically, ASC 820 sets forth a definition of fair value and

establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active

markets for identical assets and liabilities and the lowest priority to unobservable value inputs.

ASC 820 defines the hierarchy

Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements

and Disclosures (“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which

are required about fair value measurements.

Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing

the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities

and the lowest priority to unobservable value inputs.

ASC 820 defines the hierarchy as follows:

1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

The types of assets

and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed

on the New York Stock Exchange.

The types of assets and

liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the

New York Stock Exchange.

2 - Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported

The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts

or priced with models using highly observable inputs.

The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced

with models using highly observable inputs.

3 - Significant inputs to pricing that are unobservable as of the reporting date.

The types of assets and liabilities included

in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models

and forecasts used to determine the fair value of financial transmission rights.

food Group Inc.

to Consolidated Financial Statements

The types of assets and liabilities included in Level

3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts

used to determine the fair value of financial transmission rights.

financial instruments consist of cash, accounts receivable, accounts payable, advanced payments, derivative liabilities, convertible

notes, restricted cash, and PPP loan payable.

The carrying value of our financial instruments approximates their fair value,

except for the derivative liability in which carrying value is fair value.

notes, restricted cash, and Paycheck Protection Plan (“PPP”) loan payable.

The carrying value of our financial instruments

approximates their fair value, except for the derivative liability in which carrying value is fair value.

receivable are typically unsecured.

Our credit policy calls for payment generally within 30 days.

The credit worthiness of a customer

is evaluated prior to a sale.

As of December 31, 2020, and 2019, the company’s allowance for doubtful accounts was $133,424

and $141,788 respectively.

There was $133,424 of bad debt expense recorded for the year ended December 31, 2020 and $89,397 of

The Company’s credit policy calls for payment generally within 30 days.

The credit worthiness

of a customer is evaluated prior to a sale.

As of December 31, 2021, and 2020, the Company’s allowance for doubtful accounts

was $ 121,230

and $ 133,424

respectively.

There was ($ 7,000 )

of bad debt recoveries recorded for the year

ended December 31, 2021, and $ 133,424 of

bad debt expense for the year ended December 31, 2020.

The allowance was applied to certain receivable accounts which are over

The allowance was applied to certain receivable accounts which are over 95 days.

consists of finished goods and is carried at the lower of cost or net realizable value on a first in first out basis.

monitors the remaining useful life of its inventory and establishes a reserve of obsolescence where appropriate.

As of December

31, 2020 and 2019, the Company’s inventory reserve was $59,093 and $100,651 respectively.

assets are comprised of patents, net of amortization and trademarks.

The patent costs are being amortized over the life of the

patent, which is twenty years from the date of filing the patent application.

In accordance with ASC Topic 350 Intangibles

- Goodwill and Other (“ASC 350”), the costs of internally developing other intangible assets, such as patents,

are expensed as incurred.

However, as allowed by ASC 350, costs associated with the acquisition of patents from third parties,

legal fees and similar costs relating to patents have been capitalized.

The patent costs are being amortized over the life of the patent,

which is twenty years from the date of filing the patent application.

In accordance with ASC Topic 350 Intangibles - Goodwill and

Other (“ASC 350”), the costs of internally developing other intangible assets, such as patents, are expensed as incurred.

However, as allowed by ASC 350, costs associated with the acquisition of patents from third parties, legal fees and similar costs relating

to patents have been capitalized.

accordance with ASC 350 legal costs related to trademarks have been capitalized.

2 unchanged sentences

Assets and Other Acquired Intangible Assets

evaluate the recoverability of property and equipment and finite-lived intangible assets for possible impairment whenever events

or circumstances indicate that the carrying amount of such assets may not be recoverable.

The evaluation is performed at the lowest

level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Recoverability

of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected

If such review indicates that the carrying amount of property and equipment and intangible assets is not recoverable,

the carrying amount of such assets is reduced to fair value.

evaluate the recoverability of property and equipment and finite-lived intangible assets for possible impairment whenever events or circumstances

indicate that the carrying amount of such assets may not be recoverable.

The evaluation is performed at the lowest level for which identifiable

cash flows are largely independent of the cash flows of other assets and liabilities.

Recoverability of these assets is measured by a

comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate.

If such review indicates

that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets is reduced

to fair value.

We have not recorded any impairment charges during the years presented.

food Group Inc.

to Consolidated Financial Statements

Plant, and Equipment

plant, and equipment is stated at cost less accumulated depreciation and accumulated impairment loss, if any.

Depreciation is

calculated on a straight-line basis over the estimated useful lives of the assets.

Leasehold improvements are being amortized

over the shorter of the useful life of the asset or the lease term that includes any expected renewal periods that are deemed

to be reasonably assured.

The estimated useful lives used for financial statement purposes are:

Depreciation is calculated

on a straight-line basis over the estimated useful lives of the assets.

Leasehold improvements are being amortized over the shorter of

the useful life of the asset or the lease term that includes any expected renewal periods that are deemed to be reasonably assured.

estimated useful lives used for financial statement purposes are:

of Estimated Useful Lives of Assets

and fixtures:

2 unchanged sentences

years to 7 years

food Group Inc.

to Consolidated Financial Statements

accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains ownership of promised

The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange

for these goods.

accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains ownership of promised goods.

The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these

The Company applies the following five steps:

the contract with a customer

contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each

party’s rights, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially

all consideration for goods or services that are transferred is probable.

For the Company, the contract is the approved sales

order, which may also be supplemented by other agreements that formalize various terms and conditions with customers.

contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s

rights, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration

for goods or services that are transferred is probable.

For the Company, the contract is the approved sales order, which may also

be supplemented by other agreements that formalize various terms and conditions with customers.

the performance obligation in the contract

obligations promised in a contract are identified based on the goods or services that will be transferred to the customer.

For the Company, this consists of the delivery of frozen beverages, which provide immediate benefit to the customer.

Company, this consists of the delivery of frozen beverages, which provide immediate benefit to the customer.

the transaction price

transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring

goods and is generally stated on the approved sales order.

Variable consideration, which typically includes volume-based rebates

or discounts, are estimated utilizing the most likely amount method.

transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods

and is generally stated on the approved sales order.

Variable consideration, which typically includes volume-based rebates or discounts,

are estimated utilizing the most likely amount method.

the transaction price to performance obligations in the contract

our contracts contain a single performance obligation, delivery of frozen beverages, the transaction price is allocated

to that single performance obligation.

our contracts contain a single performance obligation, delivery of frozen beverages, the transaction price is allocated to that single

performance obligation.

Revenue when or as the Company satisfies a performance obligation

Company recognizes revenue from the sale of frozen beverages when title and risk of loss

passes and the customer accepts the goods, which generally occurs at the time of delivery

to a customer warehouse.

Customer sales incentives such as volume-based rebates or discounts

are treated as a reduction of sales at the time the sale is recognized.

handling costs are treated as fulfillment costs and presented in distribution, selling

and administrative costs.

Company recognizes revenue from the sale of frozen beverages when title and risk of loss passes and the customer accepts the goods,

which generally occurs at the time of delivery to a customer warehouse.

Customer sales incentives such as volume-based rebates or

discounts are treated as a reduction of sales at the time the sale is recognized.

Shipping and handling costs are treated as fulfillment

costs and presented in distribution, selling and administrative costs.

that are received before performance obligations are recorded are shown as current liabilities.

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

single product, frozen beverages.

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

product, frozen beverages.

food Group Inc.

to Consolidated Financial Statements

and Development

for research activities relating to product development and improvement are charged to expense as incurred.

We incurred $515,145

and $538,391, in research and development expenses for the years ended December 31, 2020 and 2019, respectively.

We incurred $ 244,609 and

$ 515,145 , in research and development expenses for the years ended December 31, 2021 and 2020, respectively.

and Storage Costs

and handling costs are included in general and administrative expenses.

and Storage costs are included in general and administrative expenses.

For the years ended December 31, 2021 and 2020, shipping

and handling costs totaled $488,465 and $751,237, respectively.

food Group Inc.

to Consolidated Financial Statements

and handling costs totaled $ 1,054,182

and $ 488,465 ,

respectively.

determine if an arrangement is a lease upon inception.

A contract is or contains a lease if the contract conveys the right to

control the use of an identified asset for a period of time in exchange for consideration.

The right to control the use of an

asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct

how and for what purpose the asset is used.

After adoption of ASU 2016-02 and related standards, operating lease right-of-use

assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

expense is recognized on a straight-line basis over the lease term.

A contract is or contains a lease if the contract conveys the right to control

the use of an identified asset for a period of time in exchange for consideration.

The right to control the use of an asset includes

the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose

the asset is used.

After adoption of ASU 2016-02 and related standards, operating lease right-of-use assets and liabilities are recognized

at commencement date based on the present value of lease payments over the lease term.

Lease expense is recognized on a straight-line

basis over the lease term.

As a lessee, the Company leases office space.

provision for income taxes is determined in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes

(“ASC 740”).

Under this method, deferred tax assets and liabilities are recognized for the future tax consequences

attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective

Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income

in the years in which those temporary differences are expected to be recovered or settled.

Any effect on deferred tax assets and

liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

provision for income taxes is determined in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes (“ASC

Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences

between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.

Deferred tax assets

and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary

differences are expected to be recovered or settled.

Any effect on deferred tax assets and liabilities of a change in tax rates is recognized

in income in the period that includes the enactment date.

740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements,

uncertain tax positions taken or expected to be taken on a tax return.

Under ASC 740, tax positions must initially be recognized

in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.

Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50%

likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant

740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more

than likely than not that some portion or all of the deferred tax assets will not be recognized.

the years ended December 31, 2020 and 2019 we did not have any interest and penalties or any significant unrecognized uncertain

tax positions.

Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded

components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and

Hedging.”

The result of this accounting treatment is that the fair value of any derivative is marked-to-market each balance

sheet date and recorded as a liability.

In the event that the fair value is recorded as a liability, the change in fair value

is recorded in the statement of operations as gain/loss from derivative liability.

Upon conversion or exercise of a derivative

instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.

We analyzed the derivative financial instruments in accordance with ASC 815.

The objective is to provide guidance for determining

whether an equity-linked financial instrument is indexed to an entity’s own stock.

This determination is needed for a scope

exception which would enable a derivative instrument to be accounted for under the accrual method.

The classification of a non-derivative

instrument that falls within the scope of ASC 815-40-05 “Accounting for Derivative Financial Instruments Indexed to, and

Potentially Settled in, a Company’s Own Stock”

also hinges on whether the instrument is indexed to an entity’s

A non-derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must

be accounted for as a liability.

There is a two-step approach in determining whether an instrument or embedded feature is indexed

to an entity’s own stock.

First, the instrument’s contingent exercise provisions, if any, must be evaluated, followed

by an evaluation of the instrument’s settlement provisions.

The Company utilized the fair value standard set forth by the

Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred) or

sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

Under ASC 740, tax positions must initially be recognized in the

financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.

positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of

being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely

than not that some portion or all of the deferred tax assets will not be recognized.

the years ended December 31, 2021 and 2020 we did not have any interest and penalties or any significant unrecognized uncertain tax positions.

Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components

of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.”

The result of this accounting treatment is that the fair value of any derivative is marked-to-market each balance sheet date and recorded

as a liability.

In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of

operations as gain/loss from derivative liability.

Upon conversion or exercise of a derivative instrument, the instrument is marked to

fair value at the conversion date and then that fair value is reclassified to equity.

We analyzed the derivative financial instruments

in accordance with ASC 815.

The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed

to an entity’s own stock.

This determination is needed for a scope exception which would enable a derivative instrument to be accounted

for under the accrual method.

The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting

for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether

the instrument is indexed to an entity’s own stock.

A non-derivative instrument that is not indexed to an entity’s own stock

cannot be classified as equity and must be accounted for as a liability.

There is a two-step approach in determining whether an instrument

or embedded feature is indexed to an entity’s own stock.

First, the instrument’s contingent exercise provisions, if any,

must be evaluated, followed by an evaluation of the instrument’s settlement provisions.

The Company utilized the fair value standard

set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred)

or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

food Group Inc.

1 unchanged sentence

calculate net loss per share in accordance with ASC Topic 260, Earnings per Share .

Basic net loss per share is computed

by dividing net loss by the weighted average number of shares of common stock outstanding for the period, and diluted earnings

per share is computed by including common stock equivalents outstanding for the period in the denominator.

At December 31, 2020

and 2019 any equivalents would have been anti-dilutive as we had losses for the years then ended.

Basic net loss per share is computed by dividing

net loss by the weighted average number of shares of common stock outstanding for the period, and diluted earnings per share is computed

by including common stock equivalents outstanding for the period in the denominator.

At December 31, 2021 and 2020 any equivalents would

have been anti-dilutive as we had losses for the years then ended.

Extinguishment

Company evaluates its convertible instruments in accordance with ASC 470-50, “Debt Modifications and Extinguishments.” For

all extinguishments of debt, ASC 470-50 requires the difference between the reacquisition price (including any premium) and the net carrying

amount of the debt being extinguished (including any deferred debt issuance costs) to be recognized as a gain or loss when the debt is

extinguished.

Accordingly, the Company recorded a net loss of $ 193,562

and net gain of $ 379,200 ,

respectively, non-cash gain/loss on extinguishment of debt in its statements of operations for the years ended December 31, 2021

and 2020, respectively.

Based Compensation

calculate stock compensation in accordance with ASC Topic 718, Compensation-Stock Based Compensation (“ASC 718”).

ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the financial statements and

establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities

to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees except for equity

instruments held by employee stock ownership plans.

calculate stock compensation in accordance with ASC Topic 718, Compensation-Stock Based Compensation (“ASC 718”).

ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the financial statements and establishes

fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based

measurement method in accounting for share-based payment transactions with employees.

pronouncements

time to time, new accounting pronouncements are issued that we adopt as of the specified effective date.

We have not determined

if the impact of recently issued standards that are not yet effective will have an impact on our results of operations and financial

We have not determined if the

impact of recently issued standards that are not yet effective will have an impact on our results of operations and financial position.

consists of the following at December 31:

Raw materials

Finished goods

Inventory, net

food Group Inc.

to Consolidated Financial Statements

Property Plant and Equipment

classes of property and equipment at December 31, 2021 and 2020 consist of the following:

Manufacturing

Equipment and customer equipment

of Major Classes of Property and Equipment

Furniture and fixtures

Manufacturing equipment and customer equipment

Leasehold improvements

accumulated depreciation

not yet placed in service

and equipment, net of depreciation

food Group Inc.

to Consolidated Financial Statements

recorded depreciation expense related to these assets of $529,385 and $586,237 for the years ended December 31, 2020 and 2019,

respectively.

Depreciation expense in Cost of Goods Sold was $18,938 and $65,366 for the years ended December 31, 2020 and 2019

respectively.

( 2,894,632 )

( 2,331,034 )

Equipment not yet placed in service

Property and equipment, net of depreciation

recorded depreciation expense related to these assets of $ 557,306 and $ 529,385 for the years ended December 31, 2021 and 2020, respectively.

Depreciation expense in cost of goods sold was $ 17,673 and $ 18,938 for the years ended December 31, 2021 and 2020 respectively.

Intangible Assets

of December 31, 2020, intangible assets consist of patent costs of $768,138, trademarks of $119,911 and accumulated amortization

of December 31, 2019, intangible assets consist of patent costs of $764,891, trademarks of $108,632 and accumulated amortization

amounts carried on the balance sheet represent cost to acquire, legal fees and similar costs relating to the patents incurred

by the Company.

Amortization is calculated through the expiration date of the patent, which is December 2025.

The amount charged

to expenses for amortization of the patent costs was $63,813 and $63,610 for the years ended December 31, 2020 and 2019, respectively.

of December 31, 2021, intangible assets consist of patent costs of $ 768,138 ,

trademarks of $ 124,395 and

accumulated amortization of $ 522,255 .

of December 31, 2020, intangible assets consist of patent costs of $ 768,138 , trademarks of $ 119,911 and accumulated amortization of $ 457,833 .

amounts carried on the balance sheet represent cost to acquire, legal fees and similar costs relating to the patents incurred by the

Amortization is calculated through the expiration date of the patent.

The amount charged to expenses for amortization of the

patent costs was $ 64,422 and $ 63,813 for the years ended December 31, 2021 and 2020, respectively.

future amortization expense related to patents as of December 31, 2021, is as follows:

ending December 31,

of Estimated Future Amortization Expense Related to Intangible Property

Total Amortization

Years ending December 31,

asset, net of amortization

Related Parties

disclosed below in Note 7, members of management and directors invested in company’s convertible notes;

and in Note 10,

members of management and directors have received shares of stock and options in exchange for services.

Paycheck Protection Program (PPP) loan

Company was granted a $568,131 loan under the PPP administered by a Small Business Administration (SBA) approved partner.

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 forgiven.

has applied for and anticipates the loan to be forgiven in 2021.

of management and directors invested in the Company’s convertible notes (Note 7).

Additionally, members of management and directors

have received shares of stock and options in exchange for services (Note 10).

food Group Inc.

to Consolidated Financial Statements

Paycheck Protection Program (PPP) Loan

PPP was established to provide federally guaranteed, uncollateralized loans to assist businesses during the Covid-10 pandemic.

are administered by a Small Business Administration (SBA) approved partners.

May 7, 2020 the Company was granted a $ 568,131 loan which was to mature in two years .

On January 27, 2021, the Company was granted a

second $ 568,131 loan which was to mature in five years .

The Company was eligible for loan forgiveness of up to 100 % of the loans, upon

meeting certain requirements.

May 20, 2021 and December 22, 2021, respectively, the loans were legally released and forgiven by the SBA.

Loan forgiveness income of

$ 1,136,262 has been recorded for the year ended December 31, 2021.

Convertible Notes (Related and Unrelated Party)

March 2018, we closed an offering of $2,527,500 in convertible notes, Series CN Note 1 of 2, of which, management, directors and

significant shareholders have invested $840,000.

The convertible notes bear 10% interest per annum and are due and payable on

March 14, 2020.

The notes are convertible at any time prior to the due date into our common stock at conversion price of $0.88

per share or 85% of the average closing price of the common stock over the twenty consecutive trading days immediately preceding

the date of note holders’

but in no event lower than $0.60 per share.

In addition, the interest is convertible

at any time prior to the due dates into our common stock at conversion price of 85% of the average closing price of the common

stock over the twenty consecutive trading days immediately preceding the date of note holders’

but in no event

lower than $0.60 per share.

There were 1,331,583 warrants issued, in conjunction with the convertible note offering.

fair value of the warrants, $0.17 per share ($220,548 in the aggregate), was calculated using the Black-Scholes option pricing

model using the following assumptions:

life (in years)

(based on a comparable company)

Free interest rate

yield (on common stock)

value of $220,548 was recorded as a debt discount related to the issuance of the warrants.

April 2018, we offered investors in our March 2018 Convertible Note (“Series CN Notes”) the opportunity to accelerate

the issuance of certain warrants associated with the CN Notes.

Pursuant to the acceleration offer, Series CN Notes investors who

invested an additional 10% to 20% of the Series CN Note amount, immediately received an additional 25% warrant coverage on their

initial CN Note investment, which would otherwise have been issued after one year.

During April 2018, we closed the CN Note acceleration

offer in the amount of $177,300 in convertible notes, of which, management, directors and significant shareholders have invested

The CN Note acceleration offer convertible notes bear 10% interest per annum and are due and payable on March 14, 2020.

The notes are convertible at any time prior to the due date into our common stock at conversion price of $0.88 per share or 85%

of the average closing price of the common stock over the twenty consecutive trading days immediately preceding the date of note

holders’

but in no event lower than $0.60 per share.

In addition, the interest is convertible at any time prior

to the due dates into our common stock at conversion price of 85% of the average closing price of the common stock over the twenty

consecutive trading days immediately preceding the date of note holders’

but in no event lower than $0.60 per

There were 937,373 warrants issued in conjunction with the Series CN Note acceleration offer convertible note offering.

fair value of the warrants, $0.25 per share ($235,519 in the aggregate), was calculated using the Black-Scholes option pricing

model using the following assumptions:

life (in years)

(based on a comparable company)

Free interest rate

yield (on common stock)

value of $105,199 was recorded as a debt discount related to the issuance of the warrants as using the fair value would cause

the debt discount to exceed the gross proceeds received.

food Group Inc.

to Consolidated Financial Statements

March 2019, an investor elected to exercise I-Warrants by using part of the investor’s convertible note.

The total debt

settled was $350,634 of principal and $33,929 of accrued interest.

March 20, 2020, we completed a Private Placement offering of $3,825,000 of common stock.

In connection with the transaction, the

Company offered the Convertible Noteholders of Series CN Note 1 and 2 to participate in the equity offering.

A total of $720,000

principal balance of Series CN 1 was converted into common stock [$630,000 from related parties].

The Series CN Note 1 Noteholders

were offered bonus interest equivalent to 20% of their outstanding principal which was converted to common stock.

For $1,071,000

of the remaining $1,186,167 Series CN Note 1 Noteholders that chose not to participate in the equity offering, the terms of the

Series CN Note 1 were amended to increase the interest rate to 15% per annum and to extend the maturity of the outstanding principal

balance by 24 months to March 20, 2022.

The notes are convertible at any time prior to the maturity into our common stock at a

conversion price of $0.50 per share.

If the six month price is less than the $0.50 per share, the principal conversion price will

be automatically reduced to the $0.50 per share, but in no event less than $0.35 per Share, in which case the Company shall issue

to each purchaser, based on such purchaser’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 $0.50 per share and (b) warrants in a quantity that equals fifty percent (50%) of 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 $0.50 per share, with an exercise price that equals the sum of $0.10 per share and the $0.50 per share, but in no event

less than $0.45 per share.

The exercise price per share for the Convertible Note Warrants and the Bonus Warrant issued at closing

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

There were 864,000 O warrants issued to the Series CN Note 1 Noteholders for participating in the common stock offering.

March 20, 2020, 1,082,727 of the original L Warrants related to the Series CN Note 1 Noteholders had their terms modified, whereby

the exercise price was reduced from $0.70 to $0.50 per share.

In addition, the Series CN Note 1 Noteholders that chose to extend

their notes for 24 months were granted 1,071,000 Series P warrants.

The fair value of the warrants, ($92,266 in the aggregate

which consists of the L and P Warrants), were calculated using the Black-Scholes option pricing model using the following assumptions:

life (in years)

Free interest rate

yield (on common stock)

food Group Inc.

to Consolidated Financial Statements

on the relative fair value, we recorded a debt discount of $75,184 related to the issue of P Warrants to CN 1 and CN 2 Noteholders.

The modification of the L Warrants resulted in an incremental increase in fair value of $17,082, which was recorded as a debt

convertible notes consist of the following components as of December 31, 2020 and December 31, 2019:

Debt discount (warrant value)

Debt discount (derivative value) (Note 8)

Debt discount (issuance costs paid)

Note repayments/conversion

Debt discount amortization

December 2018, we closed an offering of $1,363,200 in convertible notes, Series CN 2 of 2, of which, management, directors and

significant shareholders have invested $560,000.

The convertible notes bear 10% interest per annum and are due and payable on

November 30, 2020.

The notes are convertible at any time prior to the due date into our common stock at conversion price of $0.88

per share or 85% of the average closing price of the common stock over the twenty consecutive trading days immediately preceding

the date of note holders’

but in no event lower than $0.60 per share.

In addition, the interest is convertible

at any time prior to the due dates into our common stock at conversion price of 85% of the average closing price of the common

stock over the twenty consecutive trading days immediately preceding the date of note holders’

but in no event

lower than $0.60 per share.

There were 678,864 warrants issued, in conjunction with the convertible note offering.

fair value of the warrants, $0.31 per share ($212,763 in the aggregate), was calculated using the Black-Scholes option pricing

model using the following assumptions:

life (in years)

(based on a comparable company)

Free interest rate

yield (on common stock)

value of $212,763 was recorded as a debt discount related to the issuance of the warrants.

March 20, 2020, a total of $1,128,000 principal balance of Series CN Note 2 was converted into common stock [$560,000 from related

The Noteholders were offered bonus interest equivalent to 20% of their outstanding principal and converted their accrued

interest into common stock.

For $168,000 of the remaining $235,200 Series CN Note 2 Noteholders that chose not to participate

in the equity offering, the terms of the Series CN Note 2 were amended to extend the maturity of the outstanding principal balance

by 12 months to November 30, 2021.

The notes are convertible at any time prior to the maturity into our common stock at a conversion

price of $0.60 per share.

There were 1,501,012 O warrants issued to the Series CN Note 2 Noteholders for participating in the

common stock offering.

fair value of the modified L warrants, ($4,279 prior to modification, and $6,096 post modification), was calculated using the

Black-Scholes option pricing model using the following assumptions:

life (in years)

Free interest rate

yield (on common stock)

incremental value of $1,817 was recorded as a debt discount related to the modification of existing L warrants.

2018, the Company issued Milestone I and Milestone II Convertible Notes.

March 20, 2020, 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 $ 6.50 per share.

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

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.

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.

The Company accounted for the modification in accordance with ASC 470-50, Modifications and Extinguishments

(“ASC 470-50”), which states that for all extinguishments of debt, the difference between the reacquisition price (including

any premium) and the net carrying amount of the debt being extinguished (including any deferred debt issuance costs) should be recognized

as a gain or loss when the debt is extinguished.

Accordingly, the Company recorded a net gain on extinguishment of debt of $ 379,200 which

was comprised of a gain of $ 437,201 related to notes that were converted to 366,925 shares of common stock and a loss of $ 58,001 related

to convertible notes that were extended by either 24 months for Milestone I Convertible Notes, or 12 months for Milestone II Convertible

the year ended December 31, 2021, the Company settled the remaining Milestone I Convertible Notes by issuing 89,173 shares of common

stock in exchange for $ 231,000 ($ 30,000 related party) and $ 192,663 ($ 37,689 related party) in principal and interest, respectively,

and repaying $ 840,000 ($ 180,000 related party) in cash.

Additionally, the Company settled the remaining amounts due under Milestone II

Convertible Notes by issuing 44,818 shares of common stock in exchange for $ 168,000 and $ 41,747 of principal and interest, respectively.

In accordance with ASC 470-50, the Company recorded a loss of $ 193,562 upon extinguishment of the Milestone I and Milestone II Convertible

note balances outstanding consisted of the following components:

of Convertible Notes

Convertible notes, net

current portion convertible notes, net

related party convertible notes, net

Long term convertible notes, net

Milestone I Convertible Notes, net of unamortized discount of $ 60,097 at December 31, 2020

Milestone II Convertible Notes, net of unamortized discount of $ 11,862 at December 31, 2020

Convertible notes, net

current portion convertible notes, net

related party convertible notes, net

Long term convertible notes, net

food Group Inc.

to Consolidated Financial Statements

convertible notes consist of the following components as of December 31, 2020 and December 31, 2019:

Debt discount (warrant value)

Debt discount (derivative value) (Note 8)

Debt discount (issuance costs paid)

Note repayments

Debt discount amortization

total of the two tables above at December 31, 2020, net of discount, equals $1,167,042 which is presented on the consolidated

balance sheet as, $158,243 Convertible Note, net of discount, Current Liabilities, $197,804 Convertible Note, Related Party, Net

of Discount, Long-Term Liabilities and $810,995 Convertible Note, Net of Discount, Long-term Liabilities.

The total of $2,740,561

shown in the two tables above at December 31, 2019, are presented in the balance sheet as Long-Term Liabilities:

Convertible Note

related party net of discount, of $1,181,942, Convertible Note –

net of Discount of $1,407,877, and Current Liabilities:

Convertible Note –

net of Discount $150,742.

maturity of convertible notes at face value before effect of all discount, are as follow:

Ending December 31,

Convertible Notes

March 20, 2020, the Company and the Holders of the Series CN Note 1 and Note 2 mutually agreed to amend its terms to change the

maturity date to March 20, 2022 and November 30, 2021, respectively.

The Company accounted for the modification in accordance

with ASC 470-50, Modifications and Extinguishments, which states that for all extinguishments of debt, the difference between

the reacquisition price (including any premium) and the net carrying amount of the debt being extinguished (including any deferred

debt issuance costs) should be recognized as a gain or loss when the debt is extinguished.

Accordingly, 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.

of $437,201 related to the portion of Convertible Notes that were converted to common stock on March 20, 2020.

The loss on extinguishment

of debt of $58,001 related to the portion of Convertible Notes that were extended by either 24 months for CN I, or 12 months for

Derivative Liabilities

discussed in Note 7, Convertible Notes, the Company issued Series CN Note acceleration offer convertible notes payable

that provide variable conversion provisions.

The conversion terms of the convertible notes are variable based on certain factors,

such as the future price of the Company’s common stock.

The number of shares of common stock to be issued is based on the

future price of the Company’s common stock, therefore the number of shares of common stock issuable upon conversion of the

promissory note is indeterminate.

fair values of the Company’s derivative liabilities are estimated at the issuance date and are revalued at each subsequent

The derivative liability was revalued at December 31, 2019 with a value of $211,028, which resulted in a gain

of $1,114,625 for the year then ended.

food Group Inc.

to Consolidated Financial Statements

discussed in Note 7, there was a portion of the CN1 and CN2 notes that was not modified.

The Company continued to revalue the

derivative liability for each reporting period in 2020.

At December 31, 2020, there was no value as the Company settled the derivative

liability through repayment of the outstanding principal upon maturity.

On March 20, 2020, the Company determined the fair value

of the derivative liability related to CN1 and CN2 notes that were converted and extended.

The derivative liability values of

$23,100 (CN converted) and $3,440 (CN extended) were used to determine the debt extinguishment gain or loss.

fair value of the derivative liability for CN notes that were converted and CN notes that were extended was calculated using the

Black-Scholes model using the following assumptions:

life (in years)

Risk Free interest

Dividend yield (on

common stock)

the variable conversion provisions were not modified for $168,000 of CN2 notes that were extended to November 2021, the Company

valued the derivative liability as of March 20, 2020.

As of March 20, 2020, the initial value of the derivative liability was

fair value of the derivative liability for CN2 notes that were extended was calculated using the Black-Scholes model using the

following assumptions:

life (in years)

Risk Free interest

Dividend yield (on

common stock)

fair value of the derivative liabilities for CN Convertible Note 2 of 2 was calculated using the Black-Scholes model using the

following assumptions.

Free interest rate

yield (on common stock)

Reconciliation

of the derivative liability measured at fair value on a recurring basis with the use of significant unobservable inputs (level

3) from December 31, 2018 to December 31, 2019:

from change in value

the period ended December 31, 2019

food Group Inc.

to Consolidated Financial Statements

Reconciliation

of the derivative liabilities measured at fair value on a recurring basis with the use of significant unobservable inputs (level

3) from December 31, 2019 to December 31, 2020:

Extinguishment

change in derivative from conversion

Extinguishment

change in derivative from extension

Initial derivative

value –

March 20, 2020

gain from change in value

the period ended December 31, 2020

following table presents the Company’s fair value hierarchy for applicable assets and liabilities measured at fair value

as of December 31, 2019 and December 31, 2020:

Liability December 31, 2019

Liability December 31, 2020

II Convertible Notes (Note 7) contained variable conversion provisions based on the future price of the Company’s common stock,

resulting in the potential issuance of an indeterminate number of shares of common stock upon conversion.

The Company measured the fair

value of the derivative resulting from the variable conversion provisions each reporting period.

The fair value was reported as a derivative

liability in the accompanying consolidated balance sheets and the change in value was recorded as a gain or loss in the accompanying

consolidated statements of operations.

May 26, 2021, the Milestone II Convertible Notes were settled.

Upon extinguishment, the derivative liability was revalued to $ 25,170 ,

which resulted in a gain of $ 16,305 for the year ended December 31, 2021.

fair value of the derivative liabilities for Milestone II Convertible Notes was calculated using the Black-Scholes model using the following

of Fair Value of the Derivative Liability

Expected life

Volatility (based on comparable company)

Risk Free interest rate

Dividend yield (on common stock)

following table provides a reconciliation of the beginning and ending balances for the Company’s derivative liabilities measured

at fair value on a recurring basis using Level 3 inputs:

of Derivative Liability Measured at Fair Value on a Recurring Basis

December 31, 2019

Initial derivative value - March 20, 2020

Extinguishment of derivative upon debt conversion and extension

Net gain from change in fair value

December 31, 2020

Extinguishment of derivative upon debt settlement

Net gain from change in fair value

December 31, 2021

following table presents the Company’s fair value hierarchy for applicable assets and liabilities measured at fair value as of

December 31, 2021 and December 31, 2020:

of Fair Value Hierarchy of Assets and Liabilities

Derivative Liability December 31, 2021

Derivative Liability December 31, 2020

Commitments and Contingencies

lease office space under non-cancelable operating lease which expires on March 31, 2023.

lease office space under a non-cancelable operating lease which expires on March

We incurred lease expense of $ 79,267

and $92,608 for the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, our right of use asset and

related liability was $147,947 and $159,177, respectively.

for the years ended December 31, 2021 and 2020,

respectively.

As of December 31, 2021, our right of use asset and related liability was $ 87,391

and $ 94,996 ,

respectively.

food Group Inc.

to Consolidated Financial Statements

determining the present value of our operating lease right-of-use asset and liability, we used a 10 % discount rate (which approximates

2 unchanged sentences

following table presents the future operating lease payment as of December 31, 2021:

Lease payments

imputed interest

lease liability

of Estimate Future Maturities of Lease Liabilities

Total lease payments

Less:imputed interest

Total lease liability

time to time, various lawsuits and legal proceedings may arise in the ordinary course of business.

However, litigation is subject

to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business.

We are currently the defendant in one legal proceeding for an amount less than $100,000.

Our legal counsel and management believe

a material unfavorable outcome to be remote.

food Group Inc.

to Consolidated Financial Statements

Stockholders’

the year ended December 31, 2019, we issued 282,944 shares of common stock, valued at $169,040 for services.

We also issued 91,653

shares of our common stock, with a value of $50,000, to a member of our Board of Directors in lieu of cash payments for Director

In addition, we issued 281,343 options to purchase our common stock to certain member of the Board of Directors in lieu

of cash payments for Director fees valued at $116,874.

The exercise price of the options ranged from $0.47 to $0.65 per share,

vest immediately, and are exercisable for periods of 8 years.

In addition, we issued 875,000 options to purchase our common stock

to employees and executives.

The exercise price of the options ranged from $0.45 to $0.73 per share, vest after 3 years, and are

exercisable for periods of 8 years.

fair value of the options issued ($237,850, in the aggregate) was calculated using the Black-Sholes option pricing model, based

on the criteria shown below.

life (in years)

(based on a comparable company)

Free interest rate

yield (on common stock)

the same period, we cancelled 1,387,333 options to purchase our common stock, which was primarily driven by the resignation of

Holders of 2,841,454 warrants elected to exercise those warrant on a cash basis of $1,320,313 and cashless basis of $384,563 to

offset convertible note and accrued interest;

and received 2,841,454 shares of our common stock.

Holder of 300,000 warrants elected to exercise those warrant on a cash basis of $180,000 and received 300,000 shares of our common

the year ended December 31, 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 proceeds in the amount of $2.4 million and the issuance of 4,000,000 shares.

addition, the Company settled certain Executive Deferred Compensation payments with a combination of cash and warrants.

amount of Deferred Executive compensation settled is $771,113.

One-third of that total or $243,623, was paid in cash.

The remaining

balance of $487,246 was settled by granting the Executives warrants exercisable for five years to purchase the Company’s

stock at an exercise price of $0.70 per share.

the year ended December 31, 2020, the Company completed a funding, including a Private Placement Offering for common shares priced

at $0.50 per share (subject to adjustment) in the amount of $3,825,000 and the issuance of 7,650,000 shares.

The investors of

this Private Placement Offering were 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).

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.

However, litigation is subject to

inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business.

currently the defendant in one legal proceeding for an amount less than $ 100,000 .

Our legal counsel and management believe a material

unfavorable outcome to be remote.

Stockholders’ Equity

the year ended December 31, 2020, the Company completed a funding, including a Private Placement Offering for common shares priced at

$ 6.50 per share (subject to adjustment) in the amount of $ 3,825,000 and the issuance of 588,462 shares.

The investors of this Private

Placement Offering were granted 294,231 O warrants, exercisable for a period of 3 years at an exercise price of $ 7.80 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 $6.50 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.

reduced to the Six Month Price, but in no event less than $4.55 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;

(b) a warrant for 0.50 shares for each additional share issued, with an exercise price equal to the sum of $1.30 per share and the Six

Month Price, but in no event less than $5.85 per share.

On September 28, 2020, the Company issued 409,451 additional shares in accordance

with provisions of the Private Placement Offering and an additional 204,726 warrants exercisable at $ 5.85 per share.

2020, the Company issued 366,925 shares of common stock in exchange for convertible notes and 35,308 warrants to convertible noteholders

that extended the term of their convertible notes (Note 7).

2020, the Company, at its option, issued 50,358

shares of common stock to pay interest due

of $ 392,789 .

2020, the Company issued 20,966 shares of common stock, valued between $ 3.25 - $ 6.50 per share, for services rendered.

2020, the Company settled deferred executive compensation liabilities with the issuance of 121,076 warrants exercisable at $ 3.51 per

The fair value of the warrants totaled $ 251,837 , resulting in $ 83,945 of additional stock-based compensation.

June 1, 2021, the Company completed a private placement of 1,282,051 shares of its common stock at $ 4.68 per share, resulting in gross

proceeds of $ 6,000,000 .

2021, holders of debt converted a total of $ 399,000 in principal and $ 234,410 in interest into 133,991 shares of common stock, and debt

in the amount of $ 840,000 was retired (Note 7).

food Group Inc.

to Consolidated Financial Statements

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.

the Company issued an additional 459,000 Warrants for convertible noteholders that extended their convertible notes.

addition, at the Company’s option, we issued 654,651 shares of our Common Stock to pay interest due of $392,789.

issued 272,559 shares of our Common Stock for services rendered.

The shares of our common stock were valued between $0.25 - $0.50

the year ended December 31, 2020, we issued 870,000 options to purchase our common stock to employees and 199,358 options to a

Board Member.

The exercise price of the options was between $0.34 and $0.44 per share, with both cliff and graded vesting over

3 years, and are exercisable for a period of 8 years.

fair value of the options issued ($217,650, in the aggregate) was calculated using the Black-Sholes option pricing model,

based on the criteria shown below.

life (in years)

(based on a comparable company)

Free interest rate

yield (on common stock)

the year ended December 31, 2020, 625,423 options expired or were cancelled.

the first quarter of 2020, the Company settled certain Executive Deferred Compensation payments with the issuance of 1,573,988

The fair value of the warrants totaled $251,837.

The total executive Deferred Compensation that was settled with the

issuance of the warrants was $167,892.

The difference between the fair value of the warrants and the Executive Deferred Compensation

settled of $83,945 was recorded as stock-based compensation during the year ended December 31, 2020.

total amount of equity-based compensation included in additional paid in capital was $276,641 and $225,026 for the years

ended December 31, 2020 and 2019.

following is a summary of outstanding stock options issued to employees and directors as of December 31, 2020:

2021, the Company issued 17,273 shares of common stock, valued between $ 4.94 - $ 10.15 per share, for services rendered.

2021, the Company issued a warrant to purchase 10,550 shares of common stock at exercise prices ranging from $ 3.25 - $ 5.46 (weighted

average $ 4.15 ) in exchange for services rendered.

following is a summary of changes in warrants outstanding for the years ended December 31, 2021 and 2020:

of Changes in Warrants Outstanding

Number of warrants

Outstanding at December 31,2019

Outstanding at December 31, 2020

Outstanding at December 31, 2021

following is a summary of all outstanding warrants as of December 31, 2021:

of Outstanding Warrants

issuance event

average exercise price

price per share

term in years

value at date

January 1, 2019

December 31, 2019

Cancelled/Expired

December 31, 2020

December 31 2020

of December 31, 2020, the Company has $175,847 of total unrecognized share-based compensation expense related to unvested

options, which is expected to be amortized over the remaining weighted average period of 1.51 years.

value at date of grant

placements of common stock

placement of notes

of deferred compensation

Incentive Plan

the 2015 Equity Incentive Plan (the “2015 Plan”), the Company has reserved 1,153,846 shares for equity incentive awards for

issuance to employees, members of the board of directors and other service providers.

Awards may take the form of options, restricted

stock, restricted stock units, performance shares and stock appreciation rights.

The Company has only issued options with no intrinsic

value through December 31, 2021, and issues new shares upon exercise of options.

As of December 31, 2021, there were 435,750 shares available

for the issuance of awards under the 2015 Plan.

food Group Inc.

to Consolidated Financial Statements

Outstanding Warrants

following is a summary of all outstanding warrants as of December 31, 2020:

issued in connection with private placements of common stock

issued in connection with private placement of notes

issued in connection with settlement of deferred compensation

following summarizes activity related to stock options for the years ended December 31, 2021 and 2020:

of Stock Options Activity

Number of Options

Exercise price per share

Remaining term in years

Outstanding January 1, 2020

Cancelled/expired

Outstanding on December 31, 2020

Cancelled/expired

Outstanding on December 31, 2021

Exercisable, December 31, 2021

fair value of the options issued was calculated using the Black-Sholes option pricing model, based on the criteria shown below:

of Fair Value of Options Using Black-Sholes Option Pricing Model

Expected term (in years)

Expected volatility

Risk-free interest rate

Expected dividends

Weighted average grant date fair value per share

total amount of equity-based compensation included in general and administrative expense in the accompanying consolidated statements

of operations was $ 91,959 and $ 276,641 for the years ended December 31, 2021 and 2020.

of December 31, 2021, the Company has $ 148,398 of total unrecognized share-based compensation expense related to unvested options, which

is expected to be amortized over the remaining weighted average period of 1.5 years.

tax provision (benefit) for the years ended December 31, 2021 and 2020 is summarized below:

in valuation allowance

provision for income taxes differs from the amount computed by applying the statutory federal income tax rate before provision

for income taxes.

of Income Tax Provision (Benefit)

( 1,001,707 )

Change in valuation allowance

Provision for income taxes

food Group Inc.

to Consolidated Financial Statements

provision for income taxes differs from the amount computed by applying the statutory federal income tax rate before provision for income

The sources and tax effect of the differences are as follows:

tax provision at the federal statutory rate

income taxes, net of federal benefit

of rate change

of change in valuation allowance

of Statutory Federal Income Tax Rate Before Provision for Income Taxes

Statutory federal income tax rate

Permanent differences

Change in valuation allowance

Total Income tax

of the net deferred income tax assets at December 31, 2021 and 2020 were as follows:

operating loss carryover

of Components of Net Deferred Income Tax Assets

Net operating loss carryover

Valuation allowance

( 12,669,000 )

( 11,345,000 )

food Group Inc.

to Consolidated Financial Statements

740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more

than likely than not that some portion or all of the deferred tax assets will not be recognized.

After consideration of all the

evidence, both positive and negative, management has determined that a $11,345,000 and $10,395,000 allowance at December 31, 2020

Deferred Tax Assets, Net

740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely

than not that some portion or all of the deferred tax assets will not be recognized.

After consideration of all the evidence, both positive

and negative, management has determined that a $ 12,669,000

and $ 11,345,000

allowance at December

31, 2021 and 2020, respectively, is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized.

The increase in the valuation allowance for the current period is $ 1,324,000

of December 31, 2020, we have a net operating loss carry forward of approximately $40,664,400.

The loss will be available to offset

future taxable income.

If not used, this carry forward will expire as follows:

2020 and 2019 net operating loss carry forward of $3,404,600 and $4,464,500 does not expire under the Tax Cut and Job Act of 2017.

resulting for current

year tax losses, including the 2021 loss adjusted for the PPP loan forgiveness and the true up of prior year net operating loss carryforwards.

of December 31, 2021, the Company has a net operating loss carry forward to offset future taxable income of approximately $ 45,272,000 ,

$ 28,482,000 of which begins to expire in 2033.

Net operating loss carry forwards of $ 16,790,000 may be carried forward indefinitely.

Business Segments and Customer Concentrations

the years ended December 31, 2020 and 2020, we operated in one segment.

following is a breakdown of customers representing more than 10% of sales for the year ended December 31, 2020:

following is a breakdown of customers representing more than 10% of sales for the year ended December 31, 2019:

Company operates in one business segment.

Sales to the following customers represented more than 10% of total sales for the years ended

December 31, 2021 and 2020:

of Revenue by Major Customers by Reporting Segments

food Group Inc.

to Consolidated Financial Statements

have a history of operating losses and negative cash flow from operations.

These conditions raise substantial doubt over the Company’s

ability to meet all of its obligations over the twelve months following the filing of this Form 10-K.

Management has evaluated

these conditions, and concluded that current plans will alleviate this concern.

As of December 31, 2020, we had $1,959,269 of

cash and restricted cash on the balance sheet.

We have continued to significantly reduce core operating expenses, reducing total

General and Administrative Expense in 2020 by $2,470,590 or 36%, as compared with 2019.

In January 2021, the company secured $568,131

in proceeds from the second PPP loan.

Company is expecting an increase in revenue bouncing back from Covid-19 and its new Twist & Go products.

believes this will provide sufficient cash to cover operating expenses and $1,139,000 in debt due over the next 12 months.

there are not sufficient cash flows to cover the debt repayment the company believes that the debt could be satisfied through

refinancing including conversion, raising additional proceeds through issuance of stock or new debt.

With the lean initiatives

implemented by the business in 2020, liquidity is expected to remain stable with very little change from 2020.

has concluded that these actions have alleviated the substantial doubt of our ability to continue as a going concern.

the Company cannot predict, with certainty, the outcome of its action to generate liquidity, including the availability of additional

financing, or whether such actions would generate the expected liquidity as planned.

Subsequent Events

January 27, 2021, the Company was granted a $568,131 loan under the PPP administered by a Small Business Administration (SBA)

approved partner.

The loan, which matures in five years, at an interest rate of 1%, and is uncollateralized and is fully guaranteed

by the Federal government.

The deferral period is 24 weeks plus 10 months from the loan note date.

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.

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 forgiven.

Supplemental Cash Flow Information

cash flow information for the years ended December 31, 2021 and 2020 is as follows:

of Cash Flow Supplemental Information

Cash paid during the period for:

Cash paid for amounts included in the measurement of lease liabilities

Non-cash financing and investing activities:

Net carrying value of convertible notes and accrued interest settled through

issuance of stock (debt extinguishment)

Accrued interest settled through issuance of stock

Deferred compensation settled through issuance of warrants

Debt discount warrant and derivative liability

Extinguishment of derivative liability

Equipment included in accounts payable and accrued liability

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-K

Item 9A. Controls and Procedures