BRFH Barfresh Food Group Inc

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2023

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________________ to ___________________

 

Commission File Number: 001-41228

 

BARFRESH FOOD GROUP INC.

(Exact name of registrant as specified in its charter)

 

Delaware		27-1994406
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
3600 Wilshire Blvd., Suite 1720, Los Angeles, California		90010
(Address of principal executive offices)		(Zip Code)

 

310-598-7113

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, $0.000001 par value		BRFH		The Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☒

 

If an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 13,037,948 shares as of August 9, 2023.

 

 

 

TABLE OF CONTENTS

 

		Page Number
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	19
Item 4.	Controls and Procedures.	19
PART II - OTHER INFORMATION		20
Item 1.	Legal Proceedings.	20
Item 1A.	Risk Factors.	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	20
Item 3.	Defaults Upon Senior Securities.	20
Item 4.	Mine Safety Disclosures.	20
Item 5.	Other Information.	20
Item 6.	Exhibits.	21
SIGNATURES		22

 

 

Item 1. Financial Statements.

 

Barfresh Food Group Inc.

Condensed Consolidated Balance Sheets

 

		June 30, 2023				December 31, 2022
		(unaudited)				(restated)
Assets
Current assets:
Cash		$	952,000			$	2,808,000
Restricted cash			-				211,000
Trade accounts receivable, net			362,000				126,000
Other receivables			108,000				101,000
Inventory, net			970,000				1,048,000
Prepaid expenses and other current assets			99,000				79,000
Total current assets			2,491,000				4,373,000
Property, plant and equipment, net of depreciation			627,000				801,000
Operating lease right-of-use assets, net			-				18,000
Intangible assets, net of amortization			275,000				306,000
Deposits			7,000				7,000
Total assets		$	3,400,000			$	5,505,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	775,000			$	1,534,000
Disputed co-manufacturer accounts payable (Note 5)			499,000				499,000
Accrued expenses			340,000				286,000
Accrued payroll and employee related			323,000				233,000
Lease liability			-				20,000
Total current liabilities			1,937,000				2,572,000
Total liabilities			1,937,000				2,572,000
Commitments and contingencies (Note 5)			-				-
Stockholders’ equity:
Preferred stock, $0.000001 par value, 400,000 shares authorized, none issued or outstanding			-				-
Common stock, $0.000001 par value; 23,000,000 shares authorized; 13,002,603 and 12,934,741 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively			-				-
Additional paid in capital			61,082,000				60,905,000
Accumulated deficit			(59,619,000	)			(57,972,000	)
Total stockholders’ equity			1,463,000				2,933,000
Total liabilities and stockholders’ equity		$	3,400,000			$	5,505,000

 

See the accompanying notes to the consolidated financial statements

 

 

Barfresh Food Group Inc.

Condensed Consolidated Statements of Operations

For the three and six months ended June 30, 2023 and 2022

(Unaudited)

 

		For the three months ended June 30,								For the six months ended June 30,
		2023				2022 (restated)				2023				2022 (restated)
Revenue		$	1,511,000			$	2,799,000			$	3,602,000			$	5,325,000
Cost of revenue			1,037,000				1,916,000				2,273,000				3,678,000
Gross profit			474,000				883,000				1,329,000				1,647,000
Operating expenses:
Selling, marketing and distribution			625,000				701,000				1,293,000				1,376,000
General and administrative			493,000				802,000				1,487,000				1,624,000
Depreciation and amortization			98,000				96,000				196,000				236,000
Total operating expenses			1,216,000				1,599,000				2,976,000				3,236,000
Net loss		$	(742,000	)		$	(716,000	)		$	(1,647,000	)		$	(1,589,000	)
Per share information - basic and fully diluted:
Weighted average shares outstanding			13,003,000				12,915,000				12,990,000				12,915,000
Weighted average shares outstanding - basic			13,003,000				12,915,000				12,990,000				12,915,000
Net loss per share		$	(0.06	)		$	(0.06	)		$	(0.13	)		$	(0.12	)
Net loss per share - Basic		$	(0.06	)		$	(0.06	)		$	(0.13	)		$	(0.12	)

 

See the accompanying notes to the consolidated financial statements

 

 

Barfresh Food Group Inc.

Consolidated Statements of Cash Flows

For the six months ended June 30, 2023 and 2022

 

		2023				2022 (restated)
Net loss		$	(1,647,000	)		$	(1,589,000	)
Adjustments to reconcile net loss
to net cash used in operating activities
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization			205,000				244,000
Stock-based compensation			118,000				93,000
Stock and options issued for services			83,000				98,000
Changes in assets and liabilities
Accounts receivable			(236,000	)			(22,000	)
Other receivables			(7,000	)			(148,000	)
Inventories			78,000				(865,000	)
Prepaid expenses and other assets			(22,000	)			11,000
Accounts payable			(759,000	)			303,000
Accrued expenses			120,000				(48,000	)
Net cash used in operating activities			(2,067,000	)			(1,923,000	)
Investing activities
Purchase of property and equipment			-				(13,000	)
Net cash used in investing activities			-				(13,000	)
Financing activities
Proceeds from issuance of stock			-				5,000
Net cash provided by financing activities			-				5,000
Net decrease in cash and restricted cash			(2,067,000	)			(1,931,000	)
Cash and restricted cash, beginning of period			3,019,000				5,675,000
Cash and restricted cash, end of period		$	952,000			$	3,744,000
Cash paid during the year for:
Amounts included in the measurement of lease liabilities		$	20,000			$	20,000
Non-cash financing and investing activities:
Value of shares relinquished in modification of stock-based compensation awards (Note 6)		$	24,000			$	-

 

See the accompanying notes to the consolidated financial statements

 

 

Barfresh Food Group Inc.

Notes to Condensed Consolidated Financial Statements

June 30, 2023

(Unaudited)

 

Note 1. Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies

 

Barfresh Food Group Inc., (“we,” “us,” “our,” and the “Company”) was incorporated on February 25, 2010 in the State of Delaware. The Company is engaged in the manufacturing and distribution of ready-to-drink and ready-to-blend beverages, particularly, smoothies, shakes and frappes.

 

Basis of Presentation

 

The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 2, 2023. In management’s opinion, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, that are necessary for a fair presentation of financial results for the interim periods presented. Operating results for any quarter are not necessarily indicative of the results for the full fiscal year.

 

Principles of Consolidation

 

The consolidated financial statements include the financial statements of the Company and our wholly owned subsidiaries, Barfresh Inc. and Barfresh Corporation Inc. (formerly known as Smoothie, Inc.). All inter-company balances and transactions among the companies have been eliminated upon consolidation.

 

Use of Estimates

 

The 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.

 

Vendor Concentrations

 

The Company is exposed to supply risk as a result of concentrations in its vendor base resulting from the use of a limited number of contract manufacturers. Purchases from the Company’s significant contract manufacturers as a percentage of all finished goods purchased were as follows:

  

Schedule of Company’s Contract Manufacturers of Finished Goods

		For the three months ended June 30,								For the six months ended June 30,
		2023				2022				2023				2022
Manufacturer A			50	%			25	%			49	%			27	%
Manufacturer B			34	%			0	%			41	%			0	%
Manufacturer C			16	%			4	%			10	%			6	%
Manufacturer D			0	%			59	%			0	%			59	%
Manufacturer E			0	%			12	%			0	%			8	%

 

6

 

Summary of Significant Accounting Policies

 

There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 2, 2023 that have had a material impact on our condensed consolidated financial statements and related notes.

 

Fair Value Measurement and Financial Instruments

 

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), that requires the valuation of assets and liabilities permitted to be either recorded or disclosed at fair value based on a hierarchy of available inputs as follows:

 

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

 

Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value and unobservable (i.e., supported by little or no market activity).

 

The Company’s financial instruments consist of cash, restricted cash, accounts receivable and accounts payable. The carrying value of the Company’s financial instruments approximates their fair value.

 

Restricted Cash

 

At December 31, 2022, the Company had approximately $211,000 in restricted cash related to a co-packing agreement. The restrictions were released in June 2023.

 

Accounts Receivable and Allowances

 

Accounts receivable are recorded and carried at the original invoiced amount less allowances for credits and for any potential uncollectible amounts due to credit losses. We make estimates of the expected credit and collectability trends for the allowance for credit losses based on our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, and other factors that may affect our ability to collect from our customers. Expected credit losses are recorded as general and administrative expenses on our condensed consolidated statements of operations. As of June 30, 2023 and December 31, 2022, there was no allowance for expected credit losses.

 

Other Receivables

 

Other receivables consist of the Company’s 2021 Employer Retention Tax Credit claim, amounts due from vendors for materials acquired on their behalf for use in manufacturing the Company’s products, vendor rebates and freight claims.

 

7

 

Revenue Recognition

 

In 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 goods. The Company applies the following five steps:

 

	1)	Identify the contract with a customer
		A 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.
	2)	Identify the performance obligation in the contract
		Performance 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.
	3)	Determine the transaction price
		The 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 rebates or discounts, are estimated utilizing the most likely amount method. Provisions for refunds are generally provided for in the period the related sales are recorded, based on management’s assessment of historical and projected trends.
	4)	Allocate the transaction price to performance obligations in the contract   Since the Company’s contracts contain a single performance obligation, delivery of frozen beverages, the transaction price is allocated to that single performance obligation.
	5)	Recognize revenue when or as the Company satisfies a performance obligation
		The 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 fulfilment costs and presented in distribution, selling and administrative costs.   Payments that are received before performance obligations are recorded are shown as current liabilities.
		The Company evaluated the requirement to disaggregate revenue and concluded that substantially all of its revenue comes from a single product, frozen beverages.

 

8

 

Storage and Shipping Costs

 

Storage and outbound freight costs are included in selling, marketing and distribution expense. For the three months ending June 30, 2023 and 2022, storage and outbound freight totaled approximately $251,000 and $319,000, respectively. For the six months ending June 30, 2023 and 2022, storage and outbound freight totaled approximately $562,000 and $768,000, respectively.

 

Research and Development

 

Expenditures for research activities relating to product development and improvement are charged to expense as incurred. The Company incurred approximately $35,000 and $96,000, in research and development expense for the three months ending June 30, 2023 and 2022, respectively. For the six months ending June 30, 2023 and 2022, the Company incurred approximately $56,000 and $126,000, respectively.

 

Loss Per Share

 

For the three and six months ended June 30, 2023 and 2022 common stock equivalents have not been included in the calculation of net loss per share as their effect is anti-dilutive as a result of losses incurred.

 

Reclassifications

 

Certain reclassifications have been made to the 2022 financial statements to conform to the 2023 presentation, namely the presentation of selling, marketing and distribution expense apart from general and administrative expense in the consolidated statement of operations, the reclassification of materials shipping from selling, marketing and distribution to cost of revenue, and the presentation of the components of cash used in operations.

 

Recent Pronouncements

 

From 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 position.

 

Note 2. Restatement of Prior Financial Information

 

This Company’s previously filed unaudited statement of operations and cash flow statement and audited balance sheets have been restated to correct errors in calculating depreciation. From a quantitative and qualitative perspective, the Company determined that correcting the previously filed financial statements would not require amendment to its previously filed reports on Form 10-Q and 10-K. The effect of the correction of previously issued financial statements is summarized below:

 Schedule of Prior Financial Information

		December 31, 2022
		As Previously Reported				Adjustment				Restated
Consolidated Balance Sheet
Property, plant and equipment, net of depreciation		$	389,000			$	412,000			$	801,000
Total assets		$	5,093,000			$	412,000			$	5,505,000
Accumulated deficit		$	(58,384,000	)		$	412,000			$	(57,972,000	)
Total stockholders’ equity		$	2,521,000			$	412,000			$	2,933,000
Total liabilities and stockholders’ equity		$	5,093,000			$	412,000			$	5,505,000

 

9

 

		Three-months ended June 30, 2022
		As Previously Reported				Adjustment				Restated
Consolidated Statement of Operations
Depreciation and amortization		$	117,000			$	(21,000	)		$	96,000
Total operating expenses		$	1,620,000			$	(21,000	)		$	1,599,000
Net loss		$	(737,000	)		$	21,000			$	(716,000	)

 

		Six-months ended June 30, 2022
		As Previously Reported				Adjustment				Restated
Consolidated Statement of Operations
Depreciation and amortization		$	278,000			$	(42,000	)		$	236,000
Total operating expenses		$	3,278,000			$	(42,000	)		$	3,236,000
Net loss		$	(1,631,000	)		$	42,000			$	(1,589,000	)
Consolidated Statement of Cash Flows
Net loss		$	(1,631,000	)		$	42,000			$	(1,589,000	)
Depreciation and amortization		$	286,000			$	(42,000	)		$	244,000
Net cash used in operating activities		$	(1,923,000	)		$	-			$	(1,923,000	)

 

Note 3. Inventory

 

Inventory consists of the following:

 

Schedule of Inventory

		June 30, 2023				December 31, 2022
Raw materials		$	25,000			$	65,000
Finished goods			945,000				983,000
Inventory, net		$	970,000			$	1,048,000

 

10

 

Note 4. Property Plant and Equipment

 

Property and equipment, net consist of the following:

 

Schedule of Property and Equipment, Net

		June 30, 2023				December 31, 2022
		June 30, 2023				December 31, 2022
Manufacturing equipment		$	1,618,000			$	1,618,000
Customer equipment			1,417,000				1,417,000
Property and equipment, gross			3,035,000				3,035,000
Less: accumulated depreciation			(2,408,000	)			(2,234,000	)
Property and equipment, net of depreciation		$	627,000			$	801,000

 

Depreciation expense related to these assets was approximately $87,000 and $90,000 each of the three months ended June 30, 2023 and 2022, respectively, and $174,000 and $212,000, respectively, for the six months ended June 30, 2023 and 2022. Depreciation expense in cost of revenue was $5,000 and $10,000 for the three months ended June 30, 2023 and 2022, respectively, and $10,000 for each of the six months ended June 30, 2023 and 2022, respectively.

 

Note 5. Commitments and Contingencies

 

Lease Commitments

 

The Company leases office space under a non-cancellable operating lease which expired on March 31, 2023, and was extended through September 30, 2023. The Company’s periodic lease cost was approximately $20,000 for each of the three months ended June 30, 2023 and 2022 and $40,000 for each of the six months ended June 30, 2023 and 2022.

 

Legal Proceedings

 

Schreiber Dispute

 

The Company’s products are produced to its specifications through several contract manufacturers. One of the Company’s contract manufacturers (the “Manufacturer”) provided approximately 52% and 42% of the Company’s products in the years ended December 31, 2022 and 2021, respectively, under a Supply Agreement with an initial term through September 2025.

 

Over the course of 2022, the Company experienced numerous quality issues with the case packaging utilized by the Manufacturer. In addition, in July of 2022, the Company began receiving customer complaints about the texture of the Company’s smoothie products produced by the Manufacturer. In response, the Company withdrew product from the market and destroyed on-hand inventory, withholding $499,000 in payments due to the Manufacturer.

 

The Company attempted to resolve the issues based on the contractual procedures described in the Supply Agreement. However, on November 4, 2022, in response to a formal proposal of alternate resolutions, the Company received notification from the Manufacturer that it was denying any responsibility for the defective manufacture of the product. In response, on November 10, 2022, the Company filed a complaint in the United States District Court for the Central District of California, Western Division (the “Complaint”), claiming that the Manufacturer had not met its obligations under the Supply Agreement, and seeking economic damages. In response, the Manufacturer terminated the Supply Agreement. On January 20, 2023, the Company filed a voluntary dismissal of the Complaint which allows the parties to reach a potential resolution outside of the court system. However, if the parties are once again unable to come to an agreement, the Company has informed the Manufacturer that it intends to re-file the Complaint in California State Court by the end of August, 2023.

 

Due to the uncertainties surrounding the claim, the Company is not able to predict either the outcome or a range of reasonably possible recoveries that could result from its actions against the Manufacturer, and no gain contingencies have been recorded. The disruption in its supply resulting from the dispute has and will continue to adversely impact the Company’s results of operations and cash flow until a suitable resolution is reached or new sources of reliable supply at sufficient volume can be identified and developed, the timing of which is uncertain. The Company has partially mitigated the impact of the supply disruption with the introduction of its single-serve smoothie cartons.

 

11

 

Other legal matters

 

From 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 the probability of a material unfavorable outcome is remote.

 

Note 6. Stockholders’ Equity

 

The following are changes in stockholders’ equity for the six months ended June 30, 2022 and 2023:

 

Schedule of Changes in Stockholders' Equity

										Additional
		Common Stock								paid in				Accumulated
		Shares				Amount				Capital				(Deficit)				Total
Balance December 31, 2021			12,905,112			$	-			$	60,341,000			$	(51,838,000	)		$	8,503,000
Shares issued for warrant exercise			986				-				5,000				-				5,000
Equity-based compensation			-				-				93,000				-				93,000
Issuance of stock and options for services			13,801				-				98,000				-				98,000
Net loss			-				-				-				(1,589,000	)			(1,589,000	)
Balance June 30, 2022			12,919,899			$	-			$	60,537,000			$	(53,427,000	)		$	7,110,000

 

										Additional
		Common Stock								paid in				Accumulated
		Shares				Amount				Capital				(Deficit)				Total
Balance December 31, 2022			12,934,741			$	-			$	60,905,000			$	(57,972,000	)		$	2,933,000
Balance			12,934,741			$	-			$	60,905,000			$	(57,972,000	)		$	2,933,000
Equity-based compensation			35,659				-				118,000				-				118,000
Cash settlement of equity-based compensation			-				-				(24,000	)			-				(24,000	)
Issuance of stock and options for services			32,203				-				83,000				-				83,000
Net loss			-				-				-				(1,647,000	)			(1,647,000	)
Balance June 30, 2023			13,002,603			$	-			$	61,082,000			$	(59,619,000	)		$	1,463,000
Balance			13,002,603			$	-			$	61,082,000			$	(59,619,000	)		$	1,463,000

 

Warrants

 

During the six months ended June 30, 2023, 684,639 warrants at a weighted average exercise price of $5.85 per share expired.

 

Equity Incentive Plan

 

Through 2022, the Company issued equity awards under the 2015 Equity Incentive Plan (the “2015 Plan”) and outside the Plan. In June 2023, the Company’s stockholders adopted the 2023 Equity Incentive Plan (the “2023 Plan”), reserving 650,000 shares for future issuance. The Board of Directors discontinued further grants under the 2015 Plan.

 

As of June 30, 2023, the Company has $194,000 of total unrecognized share-based compensation expense relative to unvested options, stock awards and stock units, which is expected to be recognized over the remaining weighted average period of 1.7 years.

 

12

 

Stock Options

 

The following is a summary of stock option activity for the six months ended June 30, 2023:

Summary of Stock Options Activity 

		Number of Options				Weighted average exercise price per share				Remaining term in years
Outstanding on December 31, 2022			682,939			$	7.30				3.2
Issued			42,045			$	1.48				8.0
Cancelled/expired			(108,871	)		$	8.38
Outstanding on June 30, 2023			616,113			$	6.71				3.6
Exercisable, June 30, 2023			554,902			$	6.96				2.8

 

The fair value of the options issued was calculated using the Black-Scholes option pricing model, based on the following:

Summary of Fair Value of Options Using Black-Sholes Option Pricing Model 

		2023
Expected term (in years)			8.0
Expected volatility			84.4	%
Risk-free interest rate			3.6	%
Expected dividends		$	-
Weighted average grant date fair value per share		$	1.19

 

Restricted Stock

 

The following is a summary of restricted stock award and restricted stock unit activity for the six months ended June 30, 2023:

Summary of Restricted Stock Award and Restricted Stock Unit Activity 

		Number of shares				Weighted average grant date fair value
Unvested at January 1, 2023			41,923			$	4.92
Granted			5,000			$	1.25
Vested			(4,386	)		$	5.06
Forfeited			(9,931	)		$	3.33
Unvested at June 30, 2023			32,606			$	4.82

 

Performance Stock Units

 

During 2022 and 2023, the Company issued performance share units (“PSUs”) that represented shares potentially issuable based upon Company and individual performance in the years of issuance.

 

13

 

The following table summarizes the activity for the Company’s unvested PSUs for the three months ended June 30, 2023:

Summary of Performance Stock Unit Activity 

		Number of shares				Weighted average grant date fair value
Unvested at January 1, 2023			17,678			$	4.50
Cash settled			(17,678	)		$	4.50
Granted			281,934			$	1.58
Vested			(45,251	)		$	1.36
Unvested at June 30, 2023			236,683			$	1.63

 

In February 2023, the unvested awards issued for individual performance and outstanding at January 1, 2023 were modified to cash-settle the original grant-date fair value of approximately $80,000, resulting in incremental compensation of $56,000 after considering the $24,000 fair value of the vested shares at the date of the modification. Additionally, the Company performance targets were modified to allow approximately 71,000 PSU to vest, with an additional time-based vesting requirement for approximately 26,000 of the PSU. Because the awards did not vest based on the original terms, the modification was considered a new grant, resulting in $64,000 in compensation expense in the six-months ended June 30, 2023.

 

The Company adopted a 2023 PSU program in April 2023, granting approximately 211,000 PSUs at target performance. The results for the three-month period ended June 30, 2023 include the reversal of $67,000 in stock-based compensation expense recorded in the three months ended March 31, 2023, as management does not anticipate at this time that 2023 performance will be achieved. The results of operations for the six months ended June 30, 2023 includes no expense for the 2023 PSU program. Estimates of expense associated with 2023 performance will be reassessed each quarter through the performance period.

 

Note 7. Income Taxes

 

ASC 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 the deferred tax assets will not be recognized. Accordingly, at this time the Company has placed a valuation allowance on all tax assets. As of June 30, 2023, the estimated effective tax rate for 2023 was zero.

 

There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2018 through the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statement of operations.

 

For the three and six months ended June 30, 2023 and 2022, the Company did not incur any interest and penalties associated with tax positions. As of June 30, 2023, the Company did not have any significant unrecognized uncertain tax positions.

 

Note 8. Subsequent Event

 

In August 2023, the Company received subscriptions of approximately $1,130,000 of a $2,000,000 privately placed convertible debt offering. The debt may be drawn in 25% increments, matures on the anniversary of the draw, bears interest at 10% per annum for the term, regardless of earlier payment or conversion, and is mandatorily convertible as to principal and interest into shares of the Company’s common stock at any time prior to maturity at the greater of $1.20 or 85% of the volume-weighted average price of the common stock for the ten trading days immediately preceding the written notice of the conversion (the “Conversion Price”). If the Company has not exercised the mandatory conversion, the holder of the debt has the option after six months and on up to four occasions to convert all or any portion of the principal and interest into shares of the Company’s common stock at the Conversion Price.

  

Note 9. Liquidity

 

During the six months ended June 30, 2023, the Company used cash for operations of $2,067,000. The Company has a history of operating losses and negative cash flow, which were expected to improve with growth, offset by working capital required to achieve such growth. As described more fully in Note 5, the dispute and subsequent contract termination with the Manufacturer has resulted in uncertainty around our ability to procure product, which in turn may inhibit our ability to achieve positive cash flow. Additionally, management has considered that dispute resolution, including litigation, is costly and will require the outlay of cash.

 

However, as of June 30, 2023, the Company has $952,000 of cash and in August 2023, obtained a funding commitment of approximately $1,130,000 as more fully described in Note 8. As such, even though management has identified certain indicators, these indicators do not raise substantial doubt regarding the Company’s ability to continue as a going concern. However, management cannot predict, with certainty, the outcome of its potential actions to generate liquidity, including the availability of additional financing, or whether such actions would generate the expected liquidity as planned.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion should be read in conjunction with the financial information included elsewhere in this Quarterly Report on Form 10-Q (this “Report”), including our unaudited condensed consolidated financial statements and the related notes and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 2, 2023, and other reports that we file with the SEC from time to time.

 

References in this Quarterly Report on Form 10-Q to “us”, “we”, “our” and similar terms refer to Barfresh Food Group Inc.

 

Cautionary Note Regarding Forward-Looking Statements

 

This discussion includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as “anticipate”, “estimate”, “plan”, “continuing”, “ongoing”, “expect”, “believe”, “intend”, “may”, “will”, “should”, “could” and similar expressions are used to identify forward-looking statements.

 

We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.

 

Critical Accounting Policies

 

Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

 

Results of Operations

 

Results of Operation for the Three Months Ended June 30, 2023 as Compared to the Three Months Ended June 30, 2022

 

Revenue and cost of revenue

 

Revenue decreased $1,288,000, or 46%, from $2,799,000 in 2022 to $1,511,000 in 2023. The decline in revenue was due to limited supply caused by our product withdrawal resulting from the quality complaints with product purchased from the Manufacturer. We anticipate that our revenues will be adversely impacted as a result of the dispute unless and until new sources of reliable supply at sufficient volume can be identified and developed, the timing of which is uncertain.

 

Cost of revenue for 2023 was $1,037,000 as compared to $1,916,000 in 2022. Our gross profit was $474,000 (31%) and $883,000 (32%) for 2023 and 2022, respectively. Cost of revenue declined as a result of the 46% decrease in revenue as well as a shift in product mix resulting from the limited supply of smoothie bottles, partially offset by additional inventory reserves, resulting from the quality complaints.

 

 

Selling, marketing and distribution expense

 

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

 

		Three months ended June 30, 2023				Three months ended June 30, 2022				Change				Percent
Sales and marketing		$	374,000			$	382,000			$	(8,000	)			-2	%
Storage and outbound freight			251,000				319,000				(68,000	)			-21	%
		$	625,000			$	701,000			$	(76,000	)			-11	%

 

Selling, marketing and distribution expense decreased approximately $76,000 (11%) from approximately $701,000 in 2022 to $625,000 in 2023.

 

Sales and marketing expense decreased approximately $8,000 (2%) from approximately $382,000 in 2022 to $374,000 in 2023.

 

Storage and outbound freight expense decreased approximately $68,000 (21%) from approximately $319,000 in 2022 to $251,000 in 2023. The decrease was the result of the 46% decrease in revenue, offset by higher costs resulting from product mix and inefficiencies due to production transitions.

 

General and administrative expense

 

		Three months ended June 30, 2023				Three months ended June 30, 2022				Change				Percent
Personnel costs		$	244,000			$	362,000			$	(118,000	)			-33	%
Stock based compensation			(15,000	)			114,000				(129,000	)			-113	%
Legal, professional and consulting fees			59,000				52,000				7,000				13	%
Director fees paid in cash			25,000				25,000				-				0	%
Research and development			35,000				96,000				(61,000	)			-64	%
Other general and administrative expenses			145,000				153,000				(8,000	)			-5	%
		$	493,000			$	802,000			$	(309,000	)			-39	%

 

General and administrative expense decreased approximately $309,000 (39%) from approximately $802,000 in 2022 to $493,000 in 2023.

 

Personnel cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes and continues to be our largest cost. Personnel cost decreased by approximately $118,000 (33%) from approximately $362,000 to $244,000 and stock-based compensation decreased by approximately $129,000 (113%) from $114,000 to ($15,000). The decrease in personnel cost and stock-based compensation resulted primarily from the confirmation and recognition of our 2021 COVID-related tax credit, reduction in headcount, and reversal of previously recognized compensation under our 2023 performance stock unit program, as management does not currently expect that performance criteria will be achieved.

 

Research and development expense decreased approximately $61,000 (64%) from approximately $96,000 in 2022 to $35,000 in 2023 as activities were minimized to conserve working capital.

 

 

Net loss

 

We had net losses of approximately $742,000 and $716,000 for the three-month periods ended June 30, 2023 and 2022, respectively. The increase of approximately $26,000, was the result of the aforementioned changes in revenue, partially offset by reductions in cost and expenses.

 

Results of Operation for the Six Months Ended June 30, 2023 as Compared to the six Months Ended June 30, 2022

 

Revenue and cost of revenue

 

Revenue decreased $1,723,000, or 32%, from $5,325,000 in 2022 to $3,602,000 in 2023. The decline in revenue was due to limited supply caused by our product withdrawal resulting from quality complaints with product purchased from the Manufacturer. We anticipate that our revenues will be adversely impacted as a result of the dispute unless and until new sources of reliable supply at sufficient volume can be identified and developed, the timing of which is uncertain.

 

Cost of revenue for 2023 was $2,273,000 as compared to $3,678,000 in 2022. Our gross profit was $1,329,000 (37%) and $1,647,000 (31%) for 2023 and 2022, respectively. Cost of revenue declined as a result of the 32% decrease in revenue as well as a shift in product mix resulting from the limited supply of smoothie bottles, partially offset by additional inventory reserves resulting from the quality complaints.

 

Selling, marketing and distribution expense

 

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

 

		Six months ended June 30,				Six months ended June 30,
		2023				2022				Change				Percent
Sales and marketing		$	731,000			$	608,000			$	123,000				20	%
Storage and outbound freight			562,000				768,000				(206,000	)			-27	%
		$	1,293,000			$	1,376,000			$	(83,000	)			-6	%

 

Selling, marketing and distribution expense decreased approximately $83,000 (6%) from approximately $1,376,000 in 2022 to $1,293,000 in 2023.

 

Sales and marketing expense increased approximately $123,000 (20%) from approximately $608,000 in 2022 to $731,000 in 2023, primarily due to product sampling of smoothie carton products and equipment maintenance incurred to relaunch bulk product sales in locations that had been non-operational as a result of COVID shutdowns and subsequent labor shortages.

 

Storage and outbound freight expense decreased approximately $206,000 (27%) from approximately $768,000 in 2022 to $562,000 in 2023. The decrease was the result of the 32% decrease in revenue, offset by higher costs resulting from product mix and inefficiencies due to production transitions.

 

 

General and administrative expense

 

		Six months ended June 30, 2023				Six months ended June 30, 2022				Change				Percent
Personnel costs		$	733,000			$	670,000			$	63,000				9	%
Stock based compensation			191,000				199,000				(8,000	)			-4	%
Legal, professional and consulting fees			173,000				213,000				(40,000	)			-19	%
Director fees paid in cash			50,000				50,000				-				0	%
Research and development			56,000				126,000				(70,000	)			-56	%
Other general and administrative expenses			284,000				366,000				(82,000	)			-22	%
		$	1,487,000			$	1,624,000			$	(137,000	)			-8	%

 

General and administrative expense decreased approximately $137,000 (8%) from approximately $1,624,000 in 2022 to $1,487,000 in 2023.

 

Personnel cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes and continues to be our largest cost. Personnel cost increased by approximately $63,000 (9%) from approximately $670,000 to $733,000. The increase in personnel cost resulted primarily from an increase in headcount during the first quarter of 2023, partially offset by the confirmation and recognition of our 2021 COVID-related tax credit, and a reduction in headcount in the second quarter of 2023.

 

Research and development expense decreased approximately $70,000 (56%) from approximately $126,000 in 2022 to $56,000 in 2023 as activities were minimized to conserve working capital.

 

Other general and administrative expenses decreased approximately $82,000 (22%) from approximately $366,000 in 2022 to $284,000 in 2023 primarily as a result of non-recurring costs related to our uplisting to the NASDAQ stock exchange in 2022, partially offset by costs related by our dispute with the Manufacturer.

 

Net loss

 

We had net losses of approximately $1,647,000 and $1,589,000 for the six-month periods ended June 30, 2023 and 2022, respectively. The increase of approximately $58,000, was the result of the aforementioned changes in revenue, partially offset by reductions in cost and expenses.

 

Liquidity and Capital Resources

 

As of June 30, 2023, we had working capital of $554,000 compared with $1,801,000 at December 31, 2022. The decrease in working capital is primarily due to the operating loss for the six months ended June 30, 2023.

 

During the six months ended June 30, 2023, we used $2,067,000 in operations.

 

The impact of COVID-19 on the Company is constantly evolving. The direct impact to our operations had begun to take effect at the close of the first quarter ended March 31, 2020. Specifically, our business was impacted by dining bans targeted at restaurants to reduce the size of public gatherings. Such bans precluded our single serve products from being served at those establishments for a number of weeks, and in some instances, resulted in abandoned product launches. Furthermore, many school districts closed regular attendance for a period of time thereby disrupting sales of product into that channel. More recently, we have experienced a disruption in the supply chain for manufacturing our products due to COVID-19. While further developments surrounding COVID-19 may arise, the business climate appears to have stabilized in 2023.

 

On 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. In addition, holders of debt converted a total of $399,000 in principal and $234,000 in interest into 133,991 shares of common stock and debt in the amount of $840,000 was retired, leaving the Company with no debt.

 

 

In August 2023, the Company received subscriptions of approximately $1,130,000 of a $2,000,000 privately placed convertible debt offering. The debt may be drawn in 25% increments, matures on the anniversary of the draw, bears interest at 10% per annum for the term, regardless of earlier payment or conversion, and is mandatorily convertible as to principal and interest into shares of the Company’s common stock at any time prior to maturity at the greater of $1.20 or 85% of the volume-weighted average price of the common stock for the ten trading days immediately preceding the written notice of the conversion (the “Conversion Price”). If the Company has not exercised the mandatory conversion, the holder of the debt has the option after six months and on up to four occasions to convert all or any portion of the principal and interest into shares of the Company’s common stock at the Conversion Price.

 

Our liquidity needs will depend on how quickly we are able to profitably ramp up sales, as well as our ability to control and reduce variable operating expenses, and to continue to control and reduce fixed overhead expense. Our recent business developments with the Manufacturer impact our supply chain and will result in increased legal cost and are expected to have a negative impact on our financial position, results of operations and cash flow.

 

Our operations to date have been financed by the sale of securities, the issuance of convertible debt and the issuance of short-term debt, including related party advances. If we are unable to generate sufficient cash flow from operations with the capital raised we will be required to raise additional funds either in the form of equity or in the form of debt. There are no assurances that we will be able to generate the necessary capital to carry out our current plan of operations.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expense, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not required because we are a smaller reporting company.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Under 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 13(a)-15(e). Disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act has been appropriately recorded, processed, summarized and reported on a timely basis and are effective in ensuring that such information is accumulated and communicated to the Company’s management, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that as of June 30, 2023, our disclosure controls and procedures are not effective.

 

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

 

Management has concluded that there is a material weakness due to the control environment which led to a restatement in the current quarter. The control environment is impacted due to the company’s inadequate segregation of duties, including information technology control activities.

 

 

Since 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.

 

In an effort to remediate the identified material weakness and enhance our internal control over financial reporting, we have hired additional personnel to help ensure that we are able to properly implement internal control procedures.

 

Management believes that the material weakness set forth above did not have an effect on our financial results.

 

Changes in Internal Control over Financial Reporting

 

None

 

PART II- OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

As described in Note 5, the Company has an on-going dispute with the Manufacturer, the outcome of which cannot be predicted at this time.

 

From 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.

 

Item 1A. Risk Factors.

 

Not required because we are a smaller reporting company.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

 

Item 6. Exhibits.

 

Exhibit No.		Description
31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) (filed herewith)
31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) (filed herewith)
32.1		Certification pursuant to 18 U.S.C. Section 1350 (furnished herewith)
101.INS		Inline XBRL Instance Document*
101.SCH		Inline XBRL Taxonomy Extension Schema Document*
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)
		*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.
		In accordance with SEC Release 33-8238, Exhibit 32.1 is furnished and not filed.

 

 

SIGNATURES

 

Pursuant to the requirements 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.

 

	BARFRESH FOOD GROUP INC.
Date: August 14, 2023	By:	/s/ Riccardo Delle Coste
		Riccardo Delle Coste
		Chief Executive Officer
		(Principal Executive Officer)
Date: August 14, 2023	By:	/s/ Lisa Roger
		Chief Financial Officer
		(Principal Financial Officer)

 

 

 

Exhibit 31.1

 

RULE 13a-14(a) CERTIFICATION

 

I, Riccardo Delle Coste, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Barfresh Food Group Inc., a Delaware corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

August 14, 2023

 

By:	/s/ Riccardo Delle Coste
Name:	Riccardo Delle Coste
Title:	Principal Executive Officer

 

 

 

Exhibit 31.2

 

RULE 13a-14(a) CERTIFICATION

 

I, Lisa Roger, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Barfresh Food Group Inc., a Delaware corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

August 14, 2023

 

By:	/s/ Lisa Roger
Name:	Lisa Roger
Title:	Principal Financial Officer

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

 

The undersigned hereby certify, pursuant to the requirements set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in their capacities as officers of Barfresh Food Group Inc. (the “Company”), that, to their knowledge, the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such report fairly represents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such report.

 

Date: August 14, 2023

 

By:	/s/ Riccardo Delle Coste
Name: Title:	Riccardo Delle Coste Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Lisa Roger
Name:	Lisa Roger
Title:	Chief Financial Officer
	(Principal Financial Officer)

 

 

 

v3.23.2

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 09, 2023
Cover [Abstract]
Document Type	10-Q
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Document Quarterly Report	true
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Document Period End Date	Jun. 30, 2023
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	001-41228
Entity Registrant Name	BARFRESH FOOD GROUP INC.
Entity Central Index Key	0001487197
Entity Tax Identification Number	27-1994406
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	3600 Wilshire Blvd.
Entity Address, Address Line Two	Suite 1720
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90010
City Area Code	310
Local Phone Number	598-7113
Title of 12(b) Security	Common stock, $0.000001 par value
Trading Symbol	BRFH
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
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Entity Shell Company	false
Entity Common Stock, Shares Outstanding		13,037,948
Entity Information, Former Legal or Registered Name	Not Applicable

v3.23.2

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash	$ 952,000	$ 2,808,000
Restricted cash		211,000
Trade accounts receivable, net	362,000	126,000
Other receivables	108,000	101,000
Inventory, net	970,000	1,048,000
Prepaid expenses and other current assets	99,000	79,000
Total current assets	2,491,000	4,373,000
Property, plant and equipment, net of depreciation	627,000	801,000
Operating lease right-of-use assets, net		18,000
Intangible assets, net of amortization	275,000	306,000
Deposits	7,000	7,000
Total assets	3,400,000	5,505,000
Current liabilities:
Accounts payable	775,000	1,534,000
Disputed co-manufacturer accounts payable (Note 5)	499,000	499,000
Accrued expenses	340,000	286,000
Accrued payroll and employee related	323,000	233,000
Lease liability		20,000
Total current liabilities	1,937,000	2,572,000
Total liabilities	1,937,000	2,572,000
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock, $0.000001 par value, 400,000 shares authorized, none issued or outstanding
Common stock, $0.000001 par value; 23,000,000 shares authorized; 13,002,603 and 12,934,741 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively
Additional paid in capital	61,082,000	60,905,000
Accumulated deficit	(59,619,000)	(57,972,000)
Total stockholders’ equity	1,463,000	2,933,000
Total liabilities and stockholders’ equity	$ 3,400,000	$ 5,505,000

v3.23.2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.000001	$ 0.000001
Preferred stock, shares authorized	400,000	400,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.000001	$ 0.000001
Common stock, shares authorized	23,000,000	23,000,000
Common stock, shares issued	13,002,603	12,934,741
Common stock, shares outstanding	13,002,603	12,934,741

v3.23.2

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Revenue	$ 1,511,000	$ 2,799,000	$ 3,602,000	$ 5,325,000
Cost of revenue	1,037,000	1,916,000	2,273,000	3,678,000
Gross profit	474,000	883,000	1,329,000	1,647,000
Operating expenses:
Selling, marketing and distribution	625,000	701,000	1,293,000	1,376,000
General and administrative	493,000	802,000	1,487,000	1,624,000
Depreciation and amortization	98,000	96,000	196,000	236,000
Total operating expenses	1,216,000	1,599,000	2,976,000	3,236,000
Net loss	$ (742,000)	$ (716,000)	$ (1,647,000)	$ (1,589,000)
Per share information - basic and fully diluted:
Weighted average shares outstanding - basic	13,003,000	12,915,000	12,990,000	12,915,000
Weighted average shares outstanding - Diluted	13,003,000	12,915,000	12,990,000	12,915,000
Net loss per share - Basic	$ (0.06)	$ (0.06)	$ (0.13)	$ (0.12)
Net loss per share - diluted	$ (0.06)	$ (0.06)	$ (0.13)	$ (0.12)

v3.23.2

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Statement of Cash Flows [Abstract]
Net loss	$ (1,647,000)	$ (1,589,000)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	205,000	244,000
Stock-based compensation	118,000	93,000
Stock and options issued for services	83,000	98,000
Changes in assets and liabilities
Accounts receivable	(236,000)	(22,000)
Other receivables	(7,000)	(148,000)
Inventories	78,000	(865,000)
Prepaid expenses and other assets	(22,000)	11,000
Accounts payable	(759,000)	303,000
Accrued expenses	120,000	(48,000)
Net cash used in operating activities	(2,067,000)	(1,923,000)
Investing activities
Purchase of property and equipment		(13,000)
Net cash used in investing activities		(13,000)
Financing activities
Proceeds from issuance of stock		5,000
Net cash provided by financing activities		5,000
Net decrease in cash and restricted cash	(2,067,000)	(1,931,000)
Cash and restricted cash, beginning of period	3,019,000	5,675,000
Cash and restricted cash, end of period	952,000	3,744,000
Cash paid during the year for:
Amounts included in the measurement of lease liabilities	20,000	20,000
Non-cash financing and investing activities:
Value of shares relinquished in modification of stock-based compensation awards (Note 6)	$ 24,000

v3.23.2

Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies	Note 1. Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies   Barfresh Food Group Inc., (“we,” “us,” “our,” and the “Company”) was incorporated on February 25, 2010 in the State of Delaware. The Company is engaged in the manufacturing and distribution of ready-to-drink and ready-to-blend beverages, particularly, smoothies, shakes and frappes.   Basis of Presentation   The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 2, 2023. In management’s opinion, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, that are necessary for a fair presentation of financial results for the interim periods presented. Operating results for any quarter are not necessarily indicative of the results for the full fiscal year.   Principles of Consolidation   The consolidated financial statements include the financial statements of the Company and our wholly owned subsidiaries, Barfresh Inc. and Barfresh Corporation Inc. (formerly known as Smoothie, Inc.). All inter-company balances and transactions among the companies have been eliminated upon consolidation.   Use of Estimates   The 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.   Vendor Concentrations   The Company is exposed to supply risk as a result of concentrations in its vendor base resulting from the use of a limited number of contract manufacturers. Purchases from the Company’s significant contract manufacturers as a percentage of all finished goods purchased were as follows:    Schedule of Company’s Contract Manufacturers of Finished Goods     For the three months ended June 30,     For the six months ended June 30,       2023     2022     2023     2022   Manufacturer A     50 %     25 %     49 %     27 % Manufacturer B     34 %     0 %     41 %     0 % Manufacturer C     16 %     4 %     10 %     6 % Manufacturer D     0 %     59 %     0 %     59 % Manufacturer E     0 %     12 %     0 %     8 %     Summary of Significant Accounting Policies   There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 2, 2023 that have had a material impact on our condensed consolidated financial statements and related notes.   Fair Value Measurement and Financial Instruments   Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), that requires the valuation of assets and liabilities permitted to be either recorded or disclosed at fair value based on a hierarchy of available inputs as follows:   Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;   Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and   Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value and unobservable (i.e., supported by little or no market activity).   The Company’s financial instruments consist of cash, restricted cash, accounts receivable and accounts payable. The carrying value of the Company’s financial instruments approximates their fair value.   Restricted Cash   At December 31, 2022, the Company had approximately $211,000 in restricted cash related to a co-packing agreement. The restrictions were released in June 2023.   Accounts Receivable and Allowances   Accounts receivable are recorded and carried at the original invoiced amount less allowances for credits and for any potential uncollectible amounts due to credit losses. We make estimates of the expected credit and collectability trends for the allowance for credit losses based on our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, and other factors that may affect our ability to collect from our customers. Expected credit losses are recorded as general and administrative expenses on our condensed consolidated statements of operations. As of June 30, 2023 and December 31, 2022, there was no allowance for expected credit losses.   Other Receivables   Other receivables consist of the Company’s 2021 Employer Retention Tax Credit claim, amounts due from vendors for materials acquired on their behalf for use in manufacturing the Company’s products, vendor rebates and freight claims.     Revenue Recognition   In 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 goods. The Company applies the following five steps:     1) Identify the contract with a customer           A 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.         2) Identify the performance obligation in the contract           Performance 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.         3) Determine the transaction price           The 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 rebates or discounts, are estimated utilizing the most likely amount method. Provisions for refunds are generally provided for in the period the related sales are recorded, based on management’s assessment of historical and projected trends.         4) Allocate the transaction price to performance obligations in the contract   Since the Company’s contracts contain a single performance obligation, delivery of frozen beverages, the transaction price is allocated to that single performance obligation.         5) Recognize revenue when or as the Company satisfies a performance obligation           The 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 fulfilment costs and presented in distribution, selling and administrative costs.   Payments that are received before performance obligations are recorded are shown as current liabilities.           The Company evaluated the requirement to disaggregate revenue and concluded that substantially all of its revenue comes from a single product, frozen beverages.     Storage and Shipping Costs   Storage and outbound freight costs are included in selling, marketing and distribution expense. For the three months ending June 30, 2023 and 2022, storage and outbound freight totaled approximately $251,000 and $319,000, respectively. For the six months ending June 30, 2023 and 2022, storage and outbound freight totaled approximately $562,000 and $768,000, respectively.   Research and Development   Expenditures for research activities relating to product development and improvement are charged to expense as incurred. The Company incurred approximately $35,000 and $96,000, in research and development expense for the three months ending June 30, 2023 and 2022, respectively. For the six months ending June 30, 2023 and 2022, the Company incurred approximately $56,000 and $126,000, respectively.   Loss Per Share   For the three and six months ended June 30, 2023 and 2022 common stock equivalents have not been included in the calculation of net loss per share as their effect is anti-dilutive as a result of losses incurred.   Reclassifications   Certain reclassifications have been made to the 2022 financial statements to conform to the 2023 presentation, namely the presentation of selling, marketing and distribution expense apart from general and administrative expense in the consolidated statement of operations, the reclassification of materials shipping from selling, marketing and distribution to cost of revenue, and the presentation of the components of cash used in operations.   Recent Pronouncements   From 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 position.

v3.23.2

Restatement of Prior Financial Information	6 Months Ended
	Jun. 30, 2023
Accounting Changes and Error Corrections [Abstract]
Restatement of Prior Financial Information	Note 2. Restatement of Prior Financial Information   This Company’s previously filed unaudited statement of operations and cash flow statement and audited balance sheets have been restated to correct errors in calculating depreciation. From a quantitative and qualitative perspective, the Company determined that correcting the previously filed financial statements would not require amendment to its previously filed reports on Form 10-Q and 10-K. The effect of the correction of previously issued financial statements is summarized below:  Schedule of Prior Financial Information                         December 31, 2022       As Previously Reported     Adjustment     Restated   Consolidated Balance Sheet                         Property, plant and equipment, net of depreciation   $ 389,000     $ 412,000     $ 801,000   Total assets   $ 5,093,000     $ 412,000     $ 5,505,000   Accumulated deficit   $ (58,384,000 )   $ 412,000     $ (57,972,000 ) Total stockholders’ equity   $ 2,521,000     $ 412,000     $ 2,933,000   Total liabilities and stockholders’ equity   $ 5,093,000     $ 412,000     $ 5,505,000                               Three-months ended June 30, 2022       As Previously Reported     Adjustment     Restated   Consolidated Statement of Operations                   Depreciation and amortization   $ 117,000     $ (21,000 )   $ 96,000   Total operating expenses   $ 1,620,000     $ (21,000 )   $ 1,599,000   Net loss   $ (737,000 )   $ 21,000     $ (716,000 )                           Six-months ended June 30, 2022       As Previously Reported     Adjustment     Restated   Consolidated Statement of Operations                   Depreciation and amortization   $ 278,000     $ (42,000 )   $ 236,000   Total operating expenses   $ 3,278,000     $ (42,000 )   $ 3,236,000   Net loss   $ (1,631,000 )   $ 42,000     $ (1,589,000 )                           Consolidated Statement of Cash Flows                         Net loss   $ (1,631,000 )   $ 42,000     $ (1,589,000 ) Depreciation and amortization   $ 286,000     $ (42,000 )   $ 244,000   Net cash used in operating activities   $ (1,923,000 )   $ -     $ (1,923,000 )

v3.23.2

Inventory	6 Months Ended
	Jun. 30, 2023
Inventory Disclosure [Abstract]
Inventory	Note 3. Inventory   Inventory consists of the following:   Schedule of Inventory     June 30, 2023     December 31, 2022   Raw materials   $ 25,000     $ 65,000   Finished goods     945,000       983,000   Inventory, net   $ 970,000     $ 1,048,000

v3.23.2

Property Plant and Equipment	6 Months Ended
	Jun. 30, 2023
Property, Plant and Equipment [Abstract]
Property Plant and Equipment	Note 4. Property Plant and Equipment   Property and equipment, net consist of the following:   Schedule of Property and Equipment, Net     June 30, 2023     December 31, 2022                 June 30, 2023     December 31, 2022   Manufacturing equipment   $ 1,618,000     $ 1,618,000   Customer equipment     1,417,000       1,417,000   Property and equipment, gross     3,035,000       3,035,000   Less: accumulated depreciation     (2,408,000 )     (2,234,000 ) Property and equipment, net of depreciation   $ 627,000     $ 801,000     Depreciation expense related to these assets was approximately $87,000 and $90,000 each of the three months ended June 30, 2023 and 2022, respectively, and $174,000 and $212,000, respectively, for the six months ended June 30, 2023 and 2022. Depreciation expense in cost of revenue was $5,000 and $10,000 for the three months ended June 30, 2023 and 2022, respectively, and $10,000 for each of the six months ended June 30, 2023 and 2022, respectively.

v3.23.2

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 5. Commitments and Contingencies   Lease Commitments   The Company leases office space under a non-cancellable operating lease which expired on March 31, 2023, and was extended through September 30, 2023. The Company’s periodic lease cost was approximately $20,000 for each of the three months ended June 30, 2023 and 2022 and $40,000 for each of the six months ended June 30, 2023 and 2022.   Legal Proceedings   Schreiber Dispute   The Company’s products are produced to its specifications through several contract manufacturers. One of the Company’s contract manufacturers (the “Manufacturer”) provided approximately 52% and 42% of the Company’s products in the years ended December 31, 2022 and 2021, respectively, under a Supply Agreement with an initial term through September 2025.   Over the course of 2022, the Company experienced numerous quality issues with the case packaging utilized by the Manufacturer. In addition, in July of 2022, the Company began receiving customer complaints about the texture of the Company’s smoothie products produced by the Manufacturer. In response, the Company withdrew product from the market and destroyed on-hand inventory, withholding $499,000 in payments due to the Manufacturer.   The Company attempted to resolve the issues based on the contractual procedures described in the Supply Agreement. However, on November 4, 2022, in response to a formal proposal of alternate resolutions, the Company received notification from the Manufacturer that it was denying any responsibility for the defective manufacture of the product. In response, on November 10, 2022, the Company filed a complaint in the United States District Court for the Central District of California, Western Division (the “Complaint”), claiming that the Manufacturer had not met its obligations under the Supply Agreement, and seeking economic damages. In response, the Manufacturer terminated the Supply Agreement. On January 20, 2023, the Company filed a voluntary dismissal of the Complaint which allows the parties to reach a potential resolution outside of the court system. However, if the parties are once again unable to come to an agreement, the Company has informed the Manufacturer that it intends to re-file the Complaint in California State Court by the end of August, 2023.   Due to the uncertainties surrounding the claim, the Company is not able to predict either the outcome or a range of reasonably possible recoveries that could result from its actions against the Manufacturer, and no gain contingencies have been recorded. The disruption in its supply resulting from the dispute has and will continue to adversely impact the Company’s results of operations and cash flow until a suitable resolution is reached or new sources of reliable supply at sufficient volume can be identified and developed, the timing of which is uncertain. The Company has partially mitigated the impact of the supply disruption with the introduction of its single-serve smoothie cartons.     Other legal matters   From 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 the probability of a material unfavorable outcome is remote.

v3.23.2

Stockholders’ Equity	6 Months Ended
	Jun. 30, 2023
Equity [Abstract]
Stockholders’ Equity	Note 6. Stockholders’ Equity   The following are changes in stockholders’ equity for the six months ended June 30, 2022 and 2023:   Schedule of Changes in Stockholders' Equity                                                 Additional                   Common Stock     paid in     Accumulated             Shares     Amount     Capital     (Deficit)     Total   Balance December 31, 2021     12,905,112     $ -     $ 60,341,000     $ (51,838,000 )   $ 8,503,000   Shares issued for warrant exercise     986       -       5,000       -       5,000   Equity-based compensation     -       -       93,000       -       93,000   Issuance of stock and options for services     13,801       -       98,000       -       98,000                                             Net loss     -       -       -       (1,589,000 )     (1,589,000 ) Balance June 30, 2022     12,919,899     $ -     $ 60,537,000     $ (53,427,000 )   $ 7,110,000                     Additional                   Common Stock     paid in     Accumulated             Shares     Amount     Capital     (Deficit)     Total   Balance December 31, 2022     12,934,741     $ -     $ 60,905,000     $ (57,972,000 )   $ 2,933,000   Balance     12,934,741     $ -     $ 60,905,000     $ (57,972,000 )   $ 2,933,000                                             Equity-based compensation     35,659       -       118,000       -       118,000   Cash settlement of equity-based compensation     -       -       (24,000 )     -       (24,000 ) Issuance of stock and options for services     32,203       -       83,000       -       83,000   Net loss     -       -       -       (1,647,000 )     (1,647,000 ) Balance June 30, 2023     13,002,603     $ -     $ 61,082,000     $ (59,619,000 )   $ 1,463,000   Balance     13,002,603     $ -     $ 61,082,000     $ (59,619,000 )   $ 1,463,000     Warrants   During the six months ended June 30, 2023, 684,639 warrants at a weighted average exercise price of $5.85 per share expired.   Equity Incentive Plan   Through 2022, the Company issued equity awards under the 2015 Equity Incentive Plan (the “2015 Plan”) and outside the Plan. In June 2023, the Company’s stockholders adopted the 2023 Equity Incentive Plan (the “2023 Plan”), reserving 650,000 shares for future issuance. The Board of Directors discontinued further grants under the 2015 Plan.   As of June 30, 2023, the Company has $194,000 of total unrecognized share-based compensation expense relative to unvested options, stock awards and stock units, which is expected to be recognized over the remaining weighted average period of 1.7 years.     Stock Options   The following is a summary of stock option activity for the six months ended June 30, 2023: Summary of Stock Options Activity      Number of Options     Weighted average exercise price per share     Remaining term in years   Outstanding on December 31, 2022     682,939     $ 7.30       3.2   Issued     42,045     $ 1.48       8.0   Cancelled/expired     (108,871 )   $ 8.38           Outstanding on June 30, 2023     616,113     $ 6.71       3.6                             Exercisable, June 30, 2023     554,902     $ 6.96       2.8     The fair value of the options issued was calculated using the Black-Scholes option pricing model, based on the following: Summary of Fair Value of Options Using Black-Sholes Option Pricing Model      2023   Expected term (in years)     8.0   Expected volatility     84.4 % Risk-free interest rate     3.6 % Expected dividends   $ -   Weighted average grant date fair value per share   $ 1.19     Restricted Stock   The following is a summary of restricted stock award and restricted stock unit activity for the six months ended June 30, 2023: Summary of Restricted Stock Award and Restricted Stock Unit Activity      Number of shares     Weighted average grant date fair value   Unvested at January 1, 2023     41,923     $ 4.92   Granted     5,000     $ 1.25   Vested     (4,386 )   $ 5.06   Forfeited     (9,931 )   $ 3.33   Unvested at June 30, 2023     32,606     $ 4.82     Performance Stock Units   During 2022 and 2023, the Company issued performance share units (“PSUs”) that represented shares potentially issuable based upon Company and individual performance in the years of issuance.     The following table summarizes the activity for the Company’s unvested PSUs for the three months ended June 30, 2023: Summary of Performance Stock Unit Activity      Number of shares     Weighted average grant date fair value   Unvested at January 1, 2023     17,678     $ 4.50   Cash settled     (17,678 )   $ 4.50   Granted     281,934     $ 1.58   Vested     (45,251 )   $ 1.36   Unvested at June 30, 2023     236,683     $ 1.63     In February 2023, the unvested awards issued for individual performance and outstanding at January 1, 2023 were modified to cash-settle the original grant-date fair value of approximately $80,000, resulting in incremental compensation of $56,000 after considering the $24,000 fair value of the vested shares at the date of the modification. Additionally, the Company performance targets were modified to allow approximately 71,000 PSU to vest, with an additional time-based vesting requirement for approximately 26,000 of the PSU. Because the awards did not vest based on the original terms, the modification was considered a new grant, resulting in $64,000 in compensation expense in the six-months ended June 30, 2023.   The Company adopted a 2023 PSU program in April 2023, granting approximately 211,000 PSUs at target performance. The results for the three-month period ended June 30, 2023 include the reversal of $67,000 in stock-based compensation expense recorded in the three months ended March 31, 2023, as management does not anticipate at this time that 2023 performance will be achieved. The results of operations for the six months ended June 30, 2023 includes no expense for the 2023 PSU program. Estimates of expense associated with 2023 performance will be reassessed each quarter through the performance period.

v3.23.2

Income Taxes	6 Months Ended
	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Note 7. Income Taxes   ASC 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 the deferred tax assets will not be recognized. Accordingly, at this time the Company has placed a valuation allowance on all tax assets. As of June 30, 2023, the estimated effective tax rate for 2023 was zero.   There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2018 through the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statement of operations.   For the three and six months ended June 30, 2023 and 2022, the Company did not incur any interest and penalties associated with tax positions. As of June 30, 2023, the Company did not have any significant unrecognized uncertain tax positions.

v3.23.2

Subsequent Event	6 Months Ended
	Jun. 30, 2023
Subsequent Events [Abstract]
Subsequent Event	Note 8. Subsequent Event   In August 2023, the Company received subscriptions of approximately $1,130,000 of a $2,000,000 privately placed convertible debt offering. The debt may be drawn in 25% increments, matures on the anniversary of the draw, bears interest at 10% per annum for the term, regardless of earlier payment or conversion, and is mandatorily convertible as to principal and interest into shares of the Company’s common stock at any time prior to maturity at the greater of $1.20 or 85% of the volume-weighted average price of the common stock for the ten trading days immediately preceding the written notice of the conversion (the “Conversion Price”). If the Company has not exercised the mandatory conversion, the holder of the debt has the option after six months and on up to four occasions to convert all or any portion of the principal and interest into shares of the Company’s common stock at the Conversion Price.

v3.23.2

Liquidity	6 Months Ended
	Jun. 30, 2023
Liquidity
Liquidity	Note 9. Liquidity   During the six months ended June 30, 2023, the Company used cash for operations of $2,067,000. The Company has a history of operating losses and negative cash flow, which were expected to improve with growth, offset by working capital required to achieve such growth. As described more fully in Note 5, the dispute and subsequent contract termination with the Manufacturer has resulted in uncertainty around our ability to procure product, which in turn may inhibit our ability to achieve positive cash flow. Additionally, management has considered that dispute resolution, including litigation, is costly and will require the outlay of cash.   However, as of June 30, 2023, the Company has $952,000 of cash and in August 2023, obtained a funding commitment of approximately $1,130,000 as more fully described in Note 8. As such, even though management has identified certain indicators, these indicators do not raise substantial doubt regarding the Company’s ability to continue as a going concern. However, management cannot predict, with certainty, the outcome of its potential actions to generate liquidity, including the availability of additional financing, or whether such actions would generate the expected liquidity as planned.

v3.23.2

Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation   The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 2, 2023. In management’s opinion, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, that are necessary for a fair presentation of financial results for the interim periods presented. Operating results for any quarter are not necessarily indicative of the results for the full fiscal year.
Principles of Consolidation	Principles of Consolidation   The consolidated financial statements include the financial statements of the Company and our wholly owned subsidiaries, Barfresh Inc. and Barfresh Corporation Inc. (formerly known as Smoothie, Inc.). All inter-company balances and transactions among the companies have been eliminated upon consolidation.
Use of Estimates	Use of Estimates   The 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.
Vendor Concentrations	Vendor Concentrations   The Company is exposed to supply risk as a result of concentrations in its vendor base resulting from the use of a limited number of contract manufacturers. Purchases from the Company’s significant contract manufacturers as a percentage of all finished goods purchased were as follows:    Schedule of Company’s Contract Manufacturers of Finished Goods     For the three months ended June 30,     For the six months ended June 30,       2023     2022     2023     2022   Manufacturer A     50 %     25 %     49 %     27 % Manufacturer B     34 %     0 %     41 %     0 % Manufacturer C     16 %     4 %     10 %     6 % Manufacturer D     0 %     59 %     0 %     59 % Manufacturer E     0 %     12 %     0 %     8 %
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies   There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 2, 2023 that have had a material impact on our condensed consolidated financial statements and related notes.
Fair Value Measurement and Financial Instruments	Fair Value Measurement and Financial Instruments   Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), that requires the valuation of assets and liabilities permitted to be either recorded or disclosed at fair value based on a hierarchy of available inputs as follows:   Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;   Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and   Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value and unobservable (i.e., supported by little or no market activity).   The Company’s financial instruments consist of cash, restricted cash, accounts receivable and accounts payable. The carrying value of the Company’s financial instruments approximates their fair value.
Restricted Cash	Restricted Cash   At December 31, 2022, the Company had approximately $211,000 in restricted cash related to a co-packing agreement. The restrictions were released in June 2023.
Accounts Receivable and Allowances	Accounts Receivable and Allowances   Accounts receivable are recorded and carried at the original invoiced amount less allowances for credits and for any potential uncollectible amounts due to credit losses. We make estimates of the expected credit and collectability trends for the allowance for credit losses based on our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, and other factors that may affect our ability to collect from our customers. Expected credit losses are recorded as general and administrative expenses on our condensed consolidated statements of operations. As of June 30, 2023 and December 31, 2022, there was no allowance for expected credit losses.
Other Receivables	Other Receivables   Other receivables consist of the Company’s 2021 Employer Retention Tax Credit claim, amounts due from vendors for materials acquired on their behalf for use in manufacturing the Company’s products, vendor rebates and freight claims.
Revenue Recognition	Revenue Recognition   In 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 goods. The Company applies the following five steps:     1) Identify the contract with a customer           A 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.         2) Identify the performance obligation in the contract           Performance 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.         3) Determine the transaction price           The 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 rebates or discounts, are estimated utilizing the most likely amount method. Provisions for refunds are generally provided for in the period the related sales are recorded, based on management’s assessment of historical and projected trends.         4) Allocate the transaction price to performance obligations in the contract   Since the Company’s contracts contain a single performance obligation, delivery of frozen beverages, the transaction price is allocated to that single performance obligation.         5) Recognize revenue when or as the Company satisfies a performance obligation           The 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 fulfilment costs and presented in distribution, selling and administrative costs.   Payments that are received before performance obligations are recorded are shown as current liabilities.           The Company evaluated the requirement to disaggregate revenue and concluded that substantially all of its revenue comes from a single product, frozen beverages.
Storage and Shipping Costs	Storage and Shipping Costs   Storage and outbound freight costs are included in selling, marketing and distribution expense. For the three months ending June 30, 2023 and 2022, storage and outbound freight totaled approximately $251,000 and $319,000, respectively. For the six months ending June 30, 2023 and 2022, storage and outbound freight totaled approximately $562,000 and $768,000, respectively.
Research and Development	Research and Development   Expenditures for research activities relating to product development and improvement are charged to expense as incurred. The Company incurred approximately $35,000 and $96,000, in research and development expense for the three months ending June 30, 2023 and 2022, respectively. For the six months ending June 30, 2023 and 2022, the Company incurred approximately $56,000 and $126,000, respectively.
Loss Per Share	Loss Per Share   For the three and six months ended June 30, 2023 and 2022 common stock equivalents have not been included in the calculation of net loss per share as their effect is anti-dilutive as a result of losses incurred.
Reclassifications	Reclassifications   Certain reclassifications have been made to the 2022 financial statements to conform to the 2023 presentation, namely the presentation of selling, marketing and distribution expense apart from general and administrative expense in the consolidated statement of operations, the reclassification of materials shipping from selling, marketing and distribution to cost of revenue, and the presentation of the components of cash used in operations.
Recent Pronouncements	Recent Pronouncements   From 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 position.

v3.23.2

Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
Schedule of Company’s Contract Manufacturers of Finished Goods	Schedule of Company’s Contract Manufacturers of Finished Goods     For the three months ended June 30,     For the six months ended June 30,       2023     2022     2023     2022   Manufacturer A     50 %     25 %     49 %     27 % Manufacturer B     34 %     0 %     41 %     0 % Manufacturer C     16 %     4 %     10 %     6 % Manufacturer D     0 %     59 %     0 %     59 % Manufacturer E     0 %     12 %     0 %     8 %

v3.23.2

Restatement of Prior Financial Information (Tables)	6 Months Ended
	Jun. 30, 2023
Accounting Changes and Error Corrections [Abstract]
Schedule of Prior Financial Information	Schedule of Prior Financial Information                         December 31, 2022       As Previously Reported     Adjustment     Restated   Consolidated Balance Sheet                         Property, plant and equipment, net of depreciation   $ 389,000     $ 412,000     $ 801,000   Total assets   $ 5,093,000     $ 412,000     $ 5,505,000   Accumulated deficit   $ (58,384,000 )   $ 412,000     $ (57,972,000 ) Total stockholders’ equity   $ 2,521,000     $ 412,000     $ 2,933,000   Total liabilities and stockholders’ equity   $ 5,093,000     $ 412,000     $ 5,505,000                               Three-months ended June 30, 2022       As Previously Reported     Adjustment     Restated   Consolidated Statement of Operations                   Depreciation and amortization   $ 117,000     $ (21,000 )   $ 96,000   Total operating expenses   $ 1,620,000     $ (21,000 )   $ 1,599,000   Net loss   $ (737,000 )   $ 21,000     $ (716,000 )                           Six-months ended June 30, 2022       As Previously Reported     Adjustment     Restated   Consolidated Statement of Operations                   Depreciation and amortization   $ 278,000     $ (42,000 )   $ 236,000   Total operating expenses   $ 3,278,000     $ (42,000 )   $ 3,236,000   Net loss   $ (1,631,000 )   $ 42,000     $ (1,589,000 )                           Consolidated Statement of Cash Flows                         Net loss   $ (1,631,000 )   $ 42,000     $ (1,589,000 ) Depreciation and amortization   $ 286,000     $ (42,000 )   $ 244,000   Net cash used in operating activities   $ (1,923,000 )   $ -     $ (1,923,000 )

v3.23.2

Inventory (Tables)	6 Months Ended
	Jun. 30, 2023
Inventory Disclosure [Abstract]
Schedule of Inventory	Inventory consists of the following:   Schedule of Inventory     June 30, 2023     December 31, 2022   Raw materials   $ 25,000     $ 65,000   Finished goods     945,000       983,000   Inventory, net   $ 970,000     $ 1,048,000

v3.23.2

Property Plant and Equipment (Tables)	6 Months Ended
	Jun. 30, 2023
Property, Plant and Equipment [Abstract]
Schedule of Property and Equipment, Net	Property and equipment, net consist of the following:   Schedule of Property and Equipment, Net     June 30, 2023     December 31, 2022                 June 30, 2023     December 31, 2022   Manufacturing equipment   $ 1,618,000     $ 1,618,000   Customer equipment     1,417,000       1,417,000   Property and equipment, gross     3,035,000       3,035,000   Less: accumulated depreciation     (2,408,000 )     (2,234,000 ) Property and equipment, net of depreciation   $ 627,000     $ 801,000

v3.23.2

Stockholders’ Equity (Tables)	6 Months Ended
	Jun. 30, 2023
Equity [Abstract]
Schedule of Changes in Stockholders' Equity	The following are changes in stockholders’ equity for the six months ended June 30, 2022 and 2023:   Schedule of Changes in Stockholders' Equity                                                 Additional                   Common Stock     paid in     Accumulated             Shares     Amount     Capital     (Deficit)     Total   Balance December 31, 2021     12,905,112     $ -     $ 60,341,000     $ (51,838,000 )   $ 8,503,000   Shares issued for warrant exercise     986       -       5,000       -       5,000   Equity-based compensation     -       -       93,000       -       93,000   Issuance of stock and options for services     13,801       -       98,000       -       98,000                                             Net loss     -       -       -       (1,589,000 )     (1,589,000 ) Balance June 30, 2022     12,919,899     $ -     $ 60,537,000     $ (53,427,000 )   $ 7,110,000                     Additional                   Common Stock     paid in     Accumulated             Shares     Amount     Capital     (Deficit)     Total   Balance December 31, 2022     12,934,741     $ -     $ 60,905,000     $ (57,972,000 )   $ 2,933,000   Balance     12,934,741     $ -     $ 60,905,000     $ (57,972,000 )   $ 2,933,000                                             Equity-based compensation     35,659       -       118,000       -       118,000   Cash settlement of equity-based compensation     -       -       (24,000 )     -       (24,000 ) Issuance of stock and options for services     32,203       -       83,000       -       83,000   Net loss     -       -       -       (1,647,000 )     (1,647,000 ) Balance June 30, 2023     13,002,603     $ -     $ 61,082,000     $ (59,619,000 )   $ 1,463,000   Balance     13,002,603     $ -     $ 61,082,000     $ (59,619,000 )   $ 1,463,000
Summary of Stock Options Activity	The following is a summary of stock option activity for the six months ended June 30, 2023: Summary of Stock Options Activity      Number of Options     Weighted average exercise price per share     Remaining term in years   Outstanding on December 31, 2022     682,939     $ 7.30       3.2   Issued     42,045     $ 1.48       8.0   Cancelled/expired     (108,871 )   $ 8.38           Outstanding on June 30, 2023     616,113     $ 6.71       3.6                             Exercisable, June 30, 2023     554,902     $ 6.96       2.8
Summary of Fair Value of Options Using Black-Sholes Option Pricing Model	The fair value of the options issued was calculated using the Black-Scholes option pricing model, based on the following: Summary of Fair Value of Options Using Black-Sholes Option Pricing Model      2023   Expected term (in years)     8.0   Expected volatility     84.4 % Risk-free interest rate     3.6 % Expected dividends   $ -   Weighted average grant date fair value per share   $ 1.19
Summary of Restricted Stock Award and Restricted Stock Unit Activity	The following is a summary of restricted stock award and restricted stock unit activity for the six months ended June 30, 2023: Summary of Restricted Stock Award and Restricted Stock Unit Activity      Number of shares     Weighted average grant date fair value   Unvested at January 1, 2023     41,923     $ 4.92   Granted     5,000     $ 1.25   Vested     (4,386 )   $ 5.06   Forfeited     (9,931 )   $ 3.33   Unvested at June 30, 2023     32,606     $ 4.82
Summary of Performance Stock Unit Activity	The following table summarizes the activity for the Company’s unvested PSUs for the three months ended June 30, 2023: Summary of Performance Stock Unit Activity      Number of shares     Weighted average grant date fair value   Unvested at January 1, 2023     17,678     $ 4.50   Cash settled     (17,678 )   $ 4.50   Granted     281,934     $ 1.58   Vested     (45,251 )   $ 1.36   Unvested at June 30, 2023     236,683     $ 1.63

v3.23.2

Schedule of Company’s Contract Manufacturers of Finished Goods (Details) - Customer Concentration Risk [Member] - Vendor [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Manufacturer A [Member]
Product Information [Line Items]
Manufacturer percentage	50.00%	25.00%	49.00%	27.00%
Manufacturer B [Member]
Product Information [Line Items]
Manufacturer percentage	34.00%	0.00%	41.00%	0.00%
Manufacturer C [Member]
Product Information [Line Items]
Manufacturer percentage	16.00%	4.00%	10.00%	6.00%
Manufacturer D [Member]
Product Information [Line Items]
Manufacturer percentage	0.00%	59.00%	0.00%	59.00%
Manufacturer E [Member]
Product Information [Line Items]
Manufacturer percentage	0.00%	12.00%	0.00%	8.00%

v3.23.2

Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Accounting Policies [Abstract]
Restricted cash					$ 211,000
Allowance for doubtful accounts	0		0		$ 0
Shipping and handling costs	251,000	$ 319,000	562,000	$ 768,000
Research and development expenses	$ 35,000	$ 96,000	$ 56,000	$ 126,000

v3.23.2

Schedule of Prior Financial Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Property, plant and equipment, net of depreciation	$ 627,000		$ 627,000		$ 801,000
Total assets	3,400,000		3,400,000		5,505,000
Accumulated deficit	(59,619,000)		(59,619,000)		(57,972,000)
Total stockholders’ equity	1,463,000	$ 7,110,000	1,463,000	$ 7,110,000	2,933,000	$ 8,503,000
Total liabilities and stockholders’ equity	3,400,000		3,400,000		5,505,000
Depreciation and amortization	98,000	96,000	196,000	236,000
Total operating expenses	1,216,000	1,599,000	2,976,000	3,236,000
Net loss	$ (742,000)	(716,000)	(1,647,000)	(1,589,000)
Depreciation and amortization			205,000	244,000
Net cash used in operating activities			$ (2,067,000)	(1,923,000)
Previously Reported [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Property, plant and equipment, net of depreciation					389,000
Total assets					5,093,000
Accumulated deficit					(58,384,000)
Total stockholders’ equity					2,521,000
Total liabilities and stockholders’ equity					5,093,000
Depreciation and amortization		117,000		278,000
Total operating expenses		1,620,000		3,278,000
Net loss		(737,000)		(1,631,000)
Depreciation and amortization				286,000
Net cash used in operating activities				(1,923,000)
Revision of Prior Period, Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Property, plant and equipment, net of depreciation					412,000
Total assets					412,000
Accumulated deficit					412,000
Total stockholders’ equity					412,000
Total liabilities and stockholders’ equity					$ 412,000
Depreciation and amortization		(21,000)		(42,000)
Total operating expenses		(21,000)		(42,000)
Net loss		$ 21,000		42,000
Depreciation and amortization				(42,000)
Net cash used in operating activities

v3.23.2

Schedule of Inventory (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw materials	$ 25,000	$ 65,000
Finished goods	945,000	983,000
Inventory, net	$ 970,000	$ 1,048,000

v3.23.2

Schedule of Property and Equipment, Net (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 3,035,000	$ 3,035,000
Less: accumulated depreciation	(2,408,000)	(2,234,000)
Property and equipment, net of depreciation	627,000	801,000
Manufacturing Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,618,000	1,618,000
Customer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,417,000	$ 1,417,000

v3.23.2

Property Plant and Equipment (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 87,000	$ 90,000	$ 174,000	$ 212,000
Depreciation expense in cost of revenue	$ 5,000	$ 10,000	$ 10,000	$ 10,000

v3.23.2

Commitments and Contingencies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Jul. 31, 2022
Defined Benefit Plan Disclosure [Line Items]
Lease expiration date			Mar. 31, 2023
Operating lease extension description			extended through September 30, 2023
Operating lease expense	$ 20,000	$ 20,000	$ 40,000	$ 40,000
Companies product holdings					52.00%	42.00%
Payment due	$ 775,000		$ 775,000		$ 1,534,000
Related Party [Member]
Defined Benefit Plan Disclosure [Line Items]
Payment due							$ 499,000

v3.23.2

Schedule of Changes in Stockholders' Equity (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance			$ 2,933,000	$ 8,503,000
Shares issued for warrant exercise				5,000
Equity-based compensation			118,000	93,000
Issuance of stock and options for services			83,000	98,000
Net loss	$ (742,000)	$ (716,000)	(1,647,000)	(1,589,000)
Balance	1,463,000	7,110,000	1,463,000	7,110,000
Cash settlement of equity-based compensation			(24,000)
Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance
Balance, shares			12,934,741	12,905,112
Shares issued for warrant exercise
Shares issued for warrant exercise, shares				986
Equity-based compensation
Equity-based compensation, shares			35,659
Issuance of stock and options for services
Issuance of stock and options for services, shares			32,203	13,801
Net loss
Balance
Balance, shares	13,002,603	12,919,899	13,002,603	12,919,899
Cash settlement of equity-based compensation
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance			60,905,000	$ 60,341,000
Shares issued for warrant exercise				5,000
Equity-based compensation			118,000	93,000
Issuance of stock and options for services			83,000	98,000
Net loss
Balance	$ 61,082,000	$ 60,537,000	61,082,000	60,537,000
Cash settlement of equity-based compensation			(24,000)
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance			(57,972,000)	(51,838,000)
Shares issued for warrant exercise
Equity-based compensation
Issuance of stock and options for services
Net loss			(1,647,000)	(1,589,000)
Balance	$ (59,619,000)	$ (53,427,000)	(59,619,000)	$ (53,427,000)
Cash settlement of equity-based compensation

v3.23.2

Summary of Stock Options Activity (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Equity [Abstract]
Number of Options, Outstanding, Beginning	682,939
Weighted average exercise price per share, Outstanding, Beginning	$ 7.30
Remaining term in years, Outstanding	3 years 7 months 6 days	3 years 2 months 12 days
Number of Options, Issued	42,045
Weighted average exercise price per share, Issued	$ 1.48
Remaining term in years, Issued	8 years
Number of Options, Cancelled/Expired	(108,871)
Weighted average exercise price per share, Cancelled/Expired	$ 8.38
Number of Options, Outstanding, Ending	616,113	682,939
Weighted average exercise price per share, Outstanding, ending balance	$ 6.71	$ 7.30
Number of Options, Exercisable	554,902
Weighted average exercise price per share, Exercisable	$ 6.96
Remaining term in years, Exercisable	2 years 9 months 18 days

v3.23.2

Summary of Fair Value of Options Using Black-Sholes Option Pricing Model (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares
Equity [Abstract]
Expected life (in years)	8 years
Expected volatility	84.40%
Risk-free interest rate	3.60%
Expected dividends
Weighted average grant date fair value per share	$ 1.19

v3.23.2

Summary of Restricted Stock Award and Restricted Stock Unit Activity (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Equity [Abstract]
Number of shares, Unvested | shares	41,923
Weighted average grant date fair value, Unvested | $ / shares	$ 4.92
Number of shares, Granted | shares	5,000
Weighted average grant date fair value, Granted | $ / shares	$ 1.25
Number of shares, Vested | shares	(4,386)
Weighted average grant date fair value, Vested | $ / shares	$ 5.06
Number of shares, Forfeited | shares	(9,931)
Weighted average grant date fair value, Forfeited | $ / shares	$ 3.33
Number of shares, Unvested | shares	32,606
Weighted average grant date fair value, Unvested | $ / shares	$ 4.82

v3.23.2

Summary of Performance Stock Unit Activity (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares, Unvested | shares	41,923
Weighted average grant date fair value, Unvested | $ / shares	$ 4.92
Number of shares, Granted | shares	5,000
Weighted average grant date fair value, Granted | $ / shares	$ 1.25
Number of shares, Vested | shares	(4,386)
Weighted average grant date fair value, Vested | $ / shares	$ 5.06
Number of shares, Unvested | shares	32,606
Weighted average grant date fair value, Unvested | $ / shares	$ 4.82
Performance Shares [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares, Unvested | shares	17,678
Weighted average grant date fair value, Unvested | $ / shares	$ 4.50
Number of shares, Cash settled | shares	(17,678)
Weighted average grant date fair value, Cash Settled | $ / shares	$ 4.50
Number of shares, Granted | shares	281,934
Weighted average grant date fair value, Granted | $ / shares	$ 1.58
Number of shares, Vested | shares	(45,251)
Weighted average grant date fair value, Vested | $ / shares	$ 1.36
Number of shares, Unvested | shares	236,683
Weighted average grant date fair value, Unvested | $ / shares	$ 1.63

v3.23.2

Stockholders’ Equity (Details Narrative) - USD ($)	1 Months Ended		3 Months Ended	6 Months Ended
	Apr. 30, 2023	Feb. 28, 2023	Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants issued			684,639	684,639
Exercise price			$ 5.85	$ 5.85
Unrecognized stock based compensation			$ 194,000	$ 194,000
Unrecognized share-based compensation weighted average period				1 year 8 months 12 days
Grant date fair value		$ 24,000
Stock-based compensation				$ 118,000	$ 93,000
Shares granted				5,000
Performance Shares [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Grant date fair value		80,000
Incremental compensation		$ 56,000
Modified to vest				71,000
Stock-based compensation				$ 64,000
Shares granted				281,934
Stock-based compensation			$ 67,000	$ 0
Performance Shares [Member] | Time-Based Vesting [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Modified to vest				26,000
2023 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Reserve shares for future issuance			650,000	650,000
2023 Plan [Member] | Performance Shares [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares granted	211,000

v3.23.2

Income Taxes (Details Narrative)	6 Months Ended
	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Estimated effective tax rate	0.00%

v3.23.2

Subsequent Event (Details Narrative) - Subsequent Event [Member]	Aug. 31, 2023 USD ($)
Subsequent Event [Line Items]
Subscription received	$ 1,130,000
Convertible debt	$ 2,000,000
Debt instrument, description	The debt may be drawn in 25% increments, matures on the anniversary of the draw, bears interest at 10% per annum for the term, regardless of earlier payment or conversion, and is mandatorily convertible as to principal and interest into shares of the Company’s common stock at any time prior to maturity at the greater of $1.20 or 85% of the volume-weighted average price of the common stock for the ten trading days immediately preceding the written notice of the conversion (the “Conversion Price”).

v3.23.2

Liquidity (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Liquidity
Cash for operations	$ 2,067,000	$ 1,923,000
Cash	952,000		$ 2,808,000
Subscription receivable	$ 1,130,000

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