Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 21, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Period Focus | Q1 | |
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, $0.000001 par value | |
Trading Symbol | BRFH | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 13,002,603 | |
Entity Information, Former Legal or Registered Name | Not Applicable |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 1,566,000 | $ 2,808,000 |
Restricted cash | 211,000 | 211,000 |
Trade accounts receivable, net | 571,000 | 126,000 |
Other receivables | 11,000 | 101,000 |
Inventory, net | 1,055,000 | 1,048,000 |
Prepaid expenses and other current assets | 169,000 | 79,000 |
Total current assets | 3,583,000 | 4,373,000 |
Property, plant and equipment, net of depreciation | 297,000 | 389,000 |
Operating lease right-of-use assets, net | 18,000 | |
Intangible assets, net of amortization | 291,000 | 306,000 |
Deposits | 7,000 | 7,000 |
Total assets | 4,178,000 | 5,093,000 |
Current liabilities: | ||
Accounts payable | 1,306,000 | 1,534,000 |
Disputed co-manufacturer accounts payable (Note 4) | 499,000 | 499,000 |
Accrued expenses | 255,000 | 286,000 |
Accrued payroll and employee related | 273,000 | 233,000 |
Lease liability | 20,000 | |
Total current liabilities | 2,333,000 | 2,572,000 |
Total liabilities | 2,333,000 | 2,572,000 |
Commitments and contingencies (Note 4) | ||
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 March 31, 2023 and December 31, 2022, respectively | ||
Additional paid in capital | 61,139,000 | 60,905,000 |
Accumulated deficit | (59,294,000) | (58,384,000) |
Total stockholders’ equity | 1,845,000 | 2,521,000 |
Total liabilities and stockholders’ equity | $ 4,178,000 | $ 5,093,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 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 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 2,091,000 | $ 2,526,000 |
Cost of revenue | 1,236,000 | 1,762,000 |
Gross profit | 855,000 | 764,000 |
Operating expenses: | ||
Selling, marketing and distribution | 667,000 | 675,000 |
General and administrative | 994,000 | 823,000 |
Depreciation and amortization | 104,000 | 161,000 |
Total operating expenses | 1,765,000 | 1,659,000 |
Net loss | $ (910,000) | $ (895,000) |
Per share information - basic and fully diluted: | ||
Weighted average shares outstanding | 12,977,000 | 12,909,000 |
Net loss per share | $ (0.07) | $ (0.07) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (910,000) | $ (895,000) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 107,000 | 161,000 |
Stock-based compensation | 175,000 | 28,000 |
Stock and options issued for services | 83,000 | 98,000 |
Changes in assets and liabilities | ||
Accounts receivable | (445,000) | (497,000) |
Other receivables | 90,000 | (232,000) |
Inventories | (7,000) | (145,000) |
Prepaid expenses and other assets | (92,000) | (39,000) |
Accounts payable | (228,000) | 404,000 |
Accrued expenses | (15,000) | (15,000) |
Net cash used in operating activities | (1,242,000) | (1,132,000) |
Investing activities | ||
Purchase of property and equipment | (14,000) | |
Net cash used in investing activities | (14,000) | |
Financing activities | ||
Proceeds from issuance of stock | 5,000 | |
Net cash provided by financing activities | 5,000 | |
Net decrease in cash and restricted cash | (1,242,000) | (1,141,000) |
Cash and restricted cash, beginning of period | 3,019,000 | 5,675,000 |
Cash and restricted cash, end of period | 1,777,000 | 4,534,000 |
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 5) | $ 24,000 |
Description of the Business, Ba
Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 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 March 31, 2023 2022 Manufacturer A 49 % 31 % Manufacturer B 46 % 0 % Manufacturer C 0 % 59 % 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 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 each of March 31, 2023 and December 31, 2022, the Company had approximately $ 211,000 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 March 31, 2023 and December 31, 2022, there was no Other Receivables Other receivables consist of 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 March 31, 2023 and 2022, storage and outbound freight totaled approximately $ 311,000 386,000 Research and Development Expenditures for research activities relating to product development and improvement are charged to expense as incurred. The Company incurred approximately $ 21,000 31,000 Loss Per Share For the three months ended March 31, 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 and marketing expense apart from general and administrative expense in the consolidated statement of operations, the reclassification of materials shipping 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. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 2. Inventory Inventory consists of the following: Schedule of Inventory March 31, December 31, 2023 2022 Raw materials $ 49,000 $ 65,000 Finished goods 1,006,000 983,000 Inventory, net $ 1,055,000 $ 1,048,000 |
Property Plant and Equipment
Property Plant and Equipment | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property Plant and Equipment | Note 3. Property Plant and Equipment Property and equipment, net consist of the following: Schedule of Property and Equipment, Net March 31, December 31, 2023 2022 Manufacturing and customer equipment $ 3,637,000 $ 3,637,000 Other property 69,000 69,000 Property and equipment, gross 3,706,000 3,706,000 Less: accumulated depreciation (3,409,000 ) (3,317,000 ) Property and equipment, net of depreciation $ 297,000 $ 389,000 Depreciation expense related to these assets was approximately $ 92,000 145,000 4,000 no |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 4. Commitments and Contingencies Lease Commitments The Company leases office space under a non-cancellable operating lease which expired on March 31, 2023 extended through June 30, 2023 20,000 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 42 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 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 the right to refile the Complaint in California State Court. 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 its 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. 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 |
Stockholders_ Equity
Stockholders’ Equity | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Stockholders’ Equity | Note 5. Stockholders’ Equity The following are changes in stockholders’ equity for the three months ended March 31, 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 $ (52,165,000 ) $ 8,176,000 Shares issued for warrant exercise 986 - 5,000 - 5,000 Equity-based compensation - - 28,000 - 28,000 Issuance of stock and options for services 13,801 - 98,000 - 98,000 Cash settlement of equity-based compensation Net loss - - - (895,000 ) (895,000 ) Balance March 31, 2022 12,919,899 $ - $ 60,472,000 $ (53,060,000 ) $ 7,412,000 Additional Common Stock paid in Accumulated Shares Amount Capital (Deficit) Total Balance December 31, 2022 12,934,741 $ - $ 60,905,000 $ (58,384,000 ) $ 2,521,000 Beginning balance 12,934,741 $ - $ 60,905,000 $ (58,384,000 ) $ 2,521,000 Equity-based compensation 35,659 - 175,000 - 175,000 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 - - - (910,000 ) $ (910,000 ) Balance March 31, 2023 13,002,603 $ - $ 61,139,000 $ (59,294,000 ) 1,845,000 Ending balance 13,002,603 $ - $ 61,139,000 $ (59,294,000 ) 1,845,000 Warrants During the three months ended March 31, 2023, 684,639 5.85 Equity Incentive Plan Through 2022, the Company issued equity awards under the 2015 Equity Incentive Plan (the “2015 Plan”) and outside the Plan. In March 2023, the Board of Directors adopted the 2023 Equity Incentive Plan (the “2023 Plan”), reserving 650,000 As of March 31, 2023, the Company has $ 227,000 1.8 Stock Options The following is a summary of stock option activity for the three months ended March 31, 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 20,891 $ 1.62 8.0 Cancelled/expired (4,000 ) $ 5.65 Outstanding on March 31, 2023 699,830 $ 7.14 3.1 Exercisable, March 31, 2023 638,110 $ 7.26 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 3.5 % Expected dividends $ - Weighted average grant date fair value per share $ 1.31 Restricted Stock The following is a summary of restricted stock award and restricted stock unit activity for the three months ended March 31, 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 (4,054 ) $ 5.39 Unvested at March 31, 2023 38,483 $ 4.37 Performance Stock Units During 2022, the Company issued performance share units (“PSUs”) that represented shares potentially issuable based upon Company and individual performance in 2022. The following table summarizes the activity for the Company’s unvested PSUs for the three months ended March 31, 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 71,265 $ 1.36 Vested (45,251 ) $ 1.36 Unvested at March 31, 2023 26,014 $ 1.36 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 56,000 24,000 71,000 26,000 64,000 The Company adopted a 2023 PSU program in April 2023, granting approximately 172,000 67,000 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 6. 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 March 31, 2023, the estimated effective tax rate for the 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 months ended March 31, 2023 and 2022, the Company did not incur any interest and penalties associated with tax positions. As of March 31, 2023, the Company did not have any significant unrecognized uncertain tax positions. |
Liquidity
Liquidity | 3 Months Ended |
Mar. 31, 2023 | |
Liquidity | |
Liquidity | Note 7. Liquidity During the three months ended March 31, 2023, the Company used cash for operations of $ 1,242,000 However, as of March 31, 2023, the Company has $ 1,777,000 |
Description of the Business, _2
Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 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 March 31, 2023 2022 Manufacturer A 49 % 31 % Manufacturer B 46 % 0 % Manufacturer C 0 % 59 % |
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 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 each of March 31, 2023 and December 31, 2022, the Company had approximately $ 211,000 |
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 March 31, 2023 and December 31, 2022, there was no |
Other Receivables | Other Receivables Other receivables consist of 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 March 31, 2023 and 2022, storage and outbound freight totaled approximately $ 311,000 386,000 |
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 $ 21,000 31,000 |
Loss Per Share | Loss Per Share For the three months ended March 31, 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 and marketing expense apart from general and administrative expense in the consolidated statement of operations, the reclassification of materials shipping 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. |
Description of the Business, _3
Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 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 March 31, 2023 2022 Manufacturer A 49 % 31 % Manufacturer B 46 % 0 % Manufacturer C 0 % 59 % |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consists of the following: Schedule of Inventory March 31, December 31, 2023 2022 Raw materials $ 49,000 $ 65,000 Finished goods 1,006,000 983,000 Inventory, net $ 1,055,000 $ 1,048,000 |
Property Plant and Equipment (T
Property Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 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 March 31, December 31, 2023 2022 Manufacturing and customer equipment $ 3,637,000 $ 3,637,000 Other property 69,000 69,000 Property and equipment, gross 3,706,000 3,706,000 Less: accumulated depreciation (3,409,000 ) (3,317,000 ) Property and equipment, net of depreciation $ 297,000 $ 389,000 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Schedule of Changes in Stockholders' Equity | The following are changes in stockholders’ equity for the three months ended March 31, 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 $ (52,165,000 ) $ 8,176,000 Shares issued for warrant exercise 986 - 5,000 - 5,000 Equity-based compensation - - 28,000 - 28,000 Issuance of stock and options for services 13,801 - 98,000 - 98,000 Cash settlement of equity-based compensation Net loss - - - (895,000 ) (895,000 ) Balance March 31, 2022 12,919,899 $ - $ 60,472,000 $ (53,060,000 ) $ 7,412,000 Additional Common Stock paid in Accumulated Shares Amount Capital (Deficit) Total Balance December 31, 2022 12,934,741 $ - $ 60,905,000 $ (58,384,000 ) $ 2,521,000 Beginning balance 12,934,741 $ - $ 60,905,000 $ (58,384,000 ) $ 2,521,000 Equity-based compensation 35,659 - 175,000 - 175,000 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 - - - (910,000 ) $ (910,000 ) Balance March 31, 2023 13,002,603 $ - $ 61,139,000 $ (59,294,000 ) 1,845,000 Ending balance 13,002,603 $ - $ 61,139,000 $ (59,294,000 ) 1,845,000 |
Summary of Stock Options Activity | The following is a summary of stock option activity for the three months ended March 31, 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 20,891 $ 1.62 8.0 Cancelled/expired (4,000 ) $ 5.65 Outstanding on March 31, 2023 699,830 $ 7.14 3.1 Exercisable, March 31, 2023 638,110 $ 7.26 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 3.5 % Expected dividends $ - Weighted average grant date fair value per share $ 1.31 |
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 three months ended March 31, 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 (4,054 ) $ 5.39 Unvested at March 31, 2023 38,483 $ 4.37 |
Summary of Performance Stock Unit Activity | The following table summarizes the activity for the Company’s unvested PSUs for the three months ended March 31, 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 71,265 $ 1.36 Vested (45,251 ) $ 1.36 Unvested at March 31, 2023 26,014 $ 1.36 |
Schedule of Company_s Contract
Schedule of Company’s Contract Manufacturers of Finished Goods (Details) - Customer Concentration Risk [Member] - Vendor [Member] | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Manufacturer A [Member] | ||
Product Information [Line Items] | ||
Manufacturer percentage | 49% | 31% |
Manufacturer B [Member] | ||
Product Information [Line Items] | ||
Manufacturer percentage | 46% | 0% |
Manufacturer C [Member] | ||
Product Information [Line Items] | ||
Manufacturer percentage | 0% | 59% |
Description of the Business, _4
Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | |||
Restricted cash | $ 211,000 | $ 211,000 | |
Allowance for doubtful accounts | 0 | $ 0 | |
Shipping and handling costs | 311,000 | $ 386,000 | |
Research and development expenses | $ 21,000 | $ 31,000 |
Schedule of Inventory (Details)
Schedule of Inventory (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 49,000 | $ 65,000 |
Finished goods | 1,006,000 | 983,000 |
Inventory, net | $ 1,055,000 | $ 1,048,000 |
Schedule of Property and Equipm
Schedule of Property and Equipment, Net (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 3,706,000 | $ 3,706,000 |
Less: accumulated depreciation | (3,409,000) | (3,317,000) |
Property and equipment, net of depreciation | 297,000 | 389,000 |
Manufacturing and Customer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 3,637,000 | 3,637,000 |
Other Property [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 69,000 | $ 69,000 |
Property Plant and Equipment (D
Property Plant and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 92,000 | $ 145,000 |
Depreciation expense in cost of revenue | $ 4,000 | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 31, 2022 | |
Related Party Transaction [Line Items] | |||||
Lease expiration date | Mar. 31, 2023 | ||||
Operating lease extension description | extended through June 30, 2023 | ||||
Operating lease expense | $ 20,000 | $ 20,000 | |||
Companies product holdings | 52% | 42% | |||
Payment due | 1,306,000 | $ 1,534,000 | |||
Legal proceeding amount | $ 100,000 | ||||
Related Party [Member] | |||||
Related Party Transaction [Line Items] | |||||
Payment due | $ 499,000 |
Schedule of Changes in Stockhol
Schedule of Changes in Stockholders' Equity (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | $ 2,521,000 | $ 8,176,000 |
Shares issued for warrant exercise | 5,000 | |
Equity-based compensation | 175,000 | 28,000 |
Issuance of stock and options for services | 83,000 | 98,000 |
Cash settlement of equity-based compensation | (24,000) | |
Net loss | (910,000) | (895,000) |
Ending balance | 1,845,000 | 7,412,000 |
Common Stock [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | ||
Beginning 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 |
Cash settlement of equity-based compensation | ||
Net loss | ||
Ending balance | ||
Ending balance, shares | 13,002,603 | 12,919,899 |
Additional Paid-in Capital [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | $ 60,905,000 | $ 60,341,000 |
Shares issued for warrant exercise | 5,000 | |
Equity-based compensation | 175,000 | 28,000 |
Issuance of stock and options for services | 83,000 | 98,000 |
Cash settlement of equity-based compensation | (24,000) | |
Net loss | ||
Ending balance | 61,139,000 | 60,472,000 |
Retained Earnings [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | (58,384,000) | (52,165,000) |
Shares issued for warrant exercise | ||
Equity-based compensation | ||
Issuance of stock and options for services | ||
Cash settlement of equity-based compensation | ||
Net loss | (910,000) | (895,000) |
Ending balance | $ (59,294,000) | $ (53,060,000) |
Summary of Stock Options Activi
Summary of Stock Options Activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 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 1 month 6 days | 3 years 2 months 12 days |
Number of Options, Issued | 20,891 | |
Weighted average exercise price per share, Issued | $ 1.62 | |
Remaining term in years, Issued | 8 years | |
Number of Options, Cancelled/Expired | (4,000) | |
Weighted average exercise price per share, Cancelled/Expired | $ 5.65 | |
Number of Options, Outstanding, Ending | 699,830 | 682,939 |
Weighted average exercise price per share, Outstanding, ending balance | $ 7.14 | $ 7.30 |
Number of Options, Exercisable | 638,110 | |
Weighted average exercise price per share, Exercisable | $ 7.26 | |
Remaining term in years, Exercisable | 2 years 9 months 18 days |
Summary of Fair Value of Option
Summary of Fair Value of Options Using Black-Sholes Option Pricing Model (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares | |
Equity [Abstract] | |
Expected life (in years) | 8 years |
Expected volatility | 84.40% |
Risk-free interest rate | 3.50% |
Expected dividends | |
Weighted average grant date fair value per share | $ 1.31 |
Summary of Restricted Stock Awa
Summary of Restricted Stock Award and Restricted Stock Unit Activity (Details) | 3 Months Ended |
Mar. 31, 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 | (4,054) |
Weighted average grant date fair value, Forfeited | $ / shares | $ 5.39 |
Number of shares, Unvested | shares | 38,483 |
Weighted average grant date fair value, Unvested | $ / shares | $ 4.37 |
Summary of Performance Stock Un
Summary of Performance Stock Unit Activity (Details) | 3 Months Ended |
Mar. 31, 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 | 38,483 |
Weighted average grant date fair value, Unvested | $ / shares | $ 4.37 |
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 | 71,265 |
Weighted average grant date fair value, Granted | $ / shares | $ 1.36 |
Number of shares, Vested | shares | (45,251) |
Weighted average grant date fair value, Vested | $ / shares | $ 1.36 |
Number of shares, Unvested | shares | 26,014 |
Weighted average grant date fair value, Unvested | $ / shares | $ 1.36 |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Apr. 30, 2023 | Feb. 28, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Warrants issued | 684,639 | |||
Exercise price | $ 5.85 | |||
Unrecognized stock based compensation | $ 227,000 | |||
Unrecognized share-based compensation weighted average period | 1 year 9 months 18 days | |||
Grant date fair value | $ 24,000 | |||
Stock-based compensation | $ 175,000 | $ 28,000 | ||
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 | 71,265 | |||
Stock-based compensation | $ 67,000 | |||
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 | |||
2023 Plan [Member] | Performance Shares [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Shares granted | 172,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Estimated effective tax rate | 0% |
Liquidity (Details Narrative)
Liquidity (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Liquidity | ||
Cash for operations | $ 1,242,000 | $ 1,132,000 |
Cash and restricted cash | $ 1,777,000 |