BRFH 10-K & 10-Q changes, risk factors and insider trading
Barfresh Food Group Inc. · Nasdaq · Canned, Frozen & Preservd Fruit, Veg & Food Specialties · CIK 1487197 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We completed our first acquisition in the fourth quarter of 2025. Growth by acquisitions involves risks, and we may not be able to effectively integrate the business we acquired to achieve the objectives of the acquisition or implement the contract manufacturing agreement.”
New heading “By acquiring Arps Dairy, we are now exposed to operational risk in dairy processing.”
New heading “Our operations depend on the consistent availability and quality of raw milk.”
New heading “Dairy processing facilities are subject to extensive regulation.”
New heading “Our dairy processing operations are dependent on reliable performance of our equipment.”
New heading “We require reliable and trained personnel for our dairy operations.”
New heading “Disruption within our supply chain, contract manufacturing or distribution channels has had and may continue to have an adverse effect on our business, financial condition and results of operations.”
New heading “Failure to complete the New Facility within the projected budget and timeframe will likely impact negatively our projected new revenue and adjusted EBITDA estimates.”
Removed heading “Disruption within our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial condition and results of operations.”
Removed heading “Our dependence on independent contract manufacturers could make management of our manufacturing and distribution efforts inefficient or unprofitable.”
Largest changes
“Operating a dairy processing plant involves significant operational, regulatory, and market-related risks. The plant is highly dependent on a consistent supply of raw milk, which may be affected by factors outside of our control. In addition, dairy processing facilities must comply with stringent food safety, environmental, and occupational health regulations; failure to maintain compliance could result in fines, recalls, suspension of operations, or reputational damage. …”see in full comparison
“Our dairy processing facility will need to comply with regulations by federal, state, and local authorities, including requirements related to food safety, sanitation, labeling, environmental protection, and occupational health and safety. Failure to comply with applicable laws and regulations could result in fines, mandatory product recalls, product seizures, suspension of operations, reputational harm, and liability for damages. Compliance costs may also increase over time as regulations become more stringent. …”see in full comparison
“Disruption within our supply chain, contract manufacturing or distribution channels has had and may continue to have an adverse effect on our business, financial condition and results of operations.”see in full comparison
“Disruption within our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial condition and results of operations.”see in full comparison
“Beginning in March 2020, the COVID-19 pandemic had a significant impact on the Company. 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 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. …”see in full comparison
“Damage or disruption to our suppliers or to manufacturing or distribution capabilities due to weather, natural disaster, fire or explosion, terrorism, pandemics such as COVD-19 and influenza, labor strikes or other reasons, could impair the manufacture, distribution and sale of our products. Many of these events are outside of our control. Failure to take adequate steps to protect against or mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial condition and results of operations.”see in full comparison
Full comparison: every changed paragraph (38)
Beginning
in March 2020, the COVID-19 pandemic had a significant impact on the Company. 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 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. In 2022 and 2023, we experienced supply chain interruptions
and inflation for component and transportation costs. We believe that the impact of the pandemic has substantially abated, but will continue
to monitor and assess developments.
We completed our first acquisition in the fourth quarter of 2025. Growth by acquisitions involves risks, and we may not be able to effectively integrate the business we acquired to achieve the objectives of the acquisition or implement the contract manufacturing agreement.
We completed the acquisition of Arps Dairy in October 2025. The Acquisition is subject to various risks and uncertainties and could have a negative impact on our business, financial condition, and/or results of operations. These risks include the inability to integrate effectively the operations, products, and personnel of the acquired company which is located a significant distance from our existing business, the inability to complete construction that was in progress on the New Facility at the time of the Acquisition within the anticipated timeframe and budget, the inability to achieve anticipated cost savings or operating synergies, the management of risks associated with manufacturing operations including product quality and safety, and the risk we may not be able to effectively manage our operations at an increased scale of operations resulting from the Acquisition.
By acquiring Arps Dairy, we are now exposed to operational risk in dairy processing.
Operating a dairy processing plant involves significant operational, regulatory, and market-related risks. The plant is highly dependent on a consistent supply of raw milk, which may be affected by factors outside of our control. In addition, dairy processing facilities must comply with stringent food safety, environmental, and occupational health regulations; failure to maintain compliance could result in fines, recalls, suspension of operations, or reputational damage. Equipment breakdowns, labor shortages, or disruptions in energy and water supply could materially impact production capacity and increase costs. Moreover, given the perishable nature of dairy products, disruptions in transportation or refrigeration systems pose heightened risks of spoilage and product loss. These factors, individually or in combination, may adversely affect the plant’s operational performance, profitability, and long-term viability.
Our operations depend on the consistent availability and quality of raw milk.
The supply and cost of raw milk are influenced by factors outside of our control, including seasonal fluctuations, weather conditions, feed and fuel costs, disease outbreaks, and general agricultural market conditions. Interruptions in raw milk supply or significant increases in input costs could materially and adversely affect our ability to produce and sell dairy products, and could negatively impact our operating results.
Dairy processing facilities are subject to extensive regulation.
Our dairy processing facility will need to comply with regulations by federal, state, and local authorities, including requirements related to food safety, sanitation, labeling, environmental protection, and occupational health and safety. Failure to comply with applicable laws and regulations could result in fines, mandatory product recalls, product seizures, suspension of operations, reputational harm, and liability for damages. Compliance costs may also increase over time as regulations become more stringent. Any such outcomes could have a material adverse effect on our business and financial performance.
Our dairy processing operations are dependent on reliable performance of our equipment.
The operations at Arps Dairy rely on specialized processing equipment, refrigeration systems, and a reliable supply of utilities such as water and energy. Equipment breakdowns, malfunctions, or prolonged utility outages could disrupt our production and distribution activities, cause product spoilage, and increase operating costs. Because dairy products are perishable, even brief disruptions in equipment or infrastructure can result in significant product loss and revenue reduction.
We require reliable and trained personnel for our dairy operations.
Our success depends on maintaining a trained and reliable workforce to operate our dairy processing facilities. Labor shortages, increased wage pressures, or work stoppages could impair our ability to operate efficiently. In addition, recruiting and retaining qualified personnel in rural or specialized markets may be difficult. Labor-related challenges could increase costs, reduce production capacity, or negatively impact product quality and safety.
In
addition to the financial damage from the product withdrawal, we mustwere forced to obtain suitable replacement contract manufacturers and
regain the
confidence of our customers and investing public, all while seeking a resolution with the Manufacturer. These tasks haverequired
substantial required substantial
amounts of personnel and capital resources in 20232023, 2024, and 2024,2025, including production trial and other start-up costs, with ongoing activities
expected in 2025.costs.
Disruption within our supply chain, contract manufacturing or distribution channels has had and may continue to have an adverse effect on our business, financial condition and results of operations.
In the past, damage or disruption to our suppliers or to manufacturing or distribution capabilities due to weather, natural disaster, fire or explosion, terrorism, pandemics such as COVD-19 and influenza, labor strikes or other reasons, has impaired the manufacture, distribution and sale of our products. Many of these events were outside of our control.
Our experience with the Manufacturer demonstrated how our reliance on a limited number of manufacturers and suppliers increased this risk. Most of our suppliers and manufacturers produce similar products for other companies, and our products may represent a small portion of their businesses. Further, it takes a newly engaged manufacturer typically up to nine months of retrofitting/ preparation before it can begin producing our products. Starting in 2023 and continuing through the third quarter of 2025 we did not have contracts in place to produce sufficient units to meet projected demand. If one of our manufacturers failed to perform, we were faced with a significant interruption in our supply chain. If one of our manufacturers or suppliers failed to perform or deliver products, for any reason, our sales and results of operations were adversely affected, and led to the possible loss of customers.
Our contract manufacturer that supplied 54% of our product in 2024 and 43% in 2025 (“Manufacturer A”) gave notice that it would not renew our contract when it concluded in February 2026. Additionally, in December 2025, our manufacturer that supplied 38% of our product in 2024 and 40% in 2025 (“Manufacturer B”) discontinued manufacturing our products.
The Acquisition is a significant step towards protecting against or mitigating the likelihood or potential impact of such events, and their adverse effect on our business, financial condition and results of operations. Since the Acquisition, Arps Dairy is now producing virtually all of our product lines, manufacturing 18% of cases produced in the fourth quarter of 2025.
We need financing to complete the New Facility and may need additional financing in the future, which may not be available when needed or may be costly and dilutive.
Completion of the New Facility, including the installation of equipment and the buildout of production lines is required in the near term.
We
may require additional financing to support our capital expenditure and working capital needs in the future. The amount of additional
capital we may require,
the timing of our capital needs and the availability of financing to fund those needs will depend on a number
of factors, including our
strategic initiatives and operating plans, the performance of our business and the market conditions for debt
or equity financing. Additionally,
the amount of capital required will depend on our ability to meet our case sales goals and otherwise
successfully execute our operating
plan. We believe it is imperative to meet these sales objectives in order to lessen our reliance on
external financing in the future.
Although we believe various debt and equity financing alternatives will be available to us to support
our ourcapital expenditure and working capital needs, financing
arrangements on acceptable terms may not be available to us when needed.
Additionally, these alternatives may require significant cash
payments for interest and other costs or could be highly dilutive to our
existing shareholders. Any such financing alternatives may not
provide us with sufficient funds to meet our long-term capital requirements.
If necessary, we may explore strategic transactions that
we consider to be in the best interest of the Company and our shareholders,
which may include, without limitation, public or private
offerings of debt or equity securities, and other strategic alternatives; however,
these options may not ultimately be available or feasible.
Failure to complete the New Facility within the projected budget and timeframe will likely impact negatively our projected new revenue and adjusted EBITDA estimates.
Our ability to achieve our projected growth, including the timing of new revenue and adjusted EBITDA estimates, depends in large part on the successful execution of the completion of the New Facility and installation of the production lines. These projects involve significant capital expenditures and are subject to numerous risks, many of which are outside of our control.
Construction costs may exceed current estimates due to factors such as labor shortages, increased wage rates, supply chain disruptions, availability and pricing of materials, changes in scope, contractor performance issues, or unforeseen site conditions. In addition, delays or complications in obtaining required zoning approvals, building permits, inspections, or other governmental approvals could adversely affect project timelines and increase costs. Project schedules may also be impacted by adverse weather conditions, labor availability, contractor capacity, or logistical challenges, any of which could delay completion or commencement of operations. If construction is delayed or costs exceed budgeted amounts, we may be required to deploy additional capital, defer or modify other planned investments, or seek alternative financing on less favorable terms.
Any material delays in project completion or cost overruns could postpone the realization of anticipated revenues, reduce near-term margins, and negatively impact the Company’s projected or guided adjusted EBITDA. There can be no assurance that current cost estimates, construction schedules, or expected financial returns will be achieved, and any such variances could have a material adverse effect on the Company’s financial condition, results of operations, and cash flows.
We
compete with many well-established companies, food service and otherwise, on the basis of taste, quality and price of product offered,
customer service, and overall experience. Our success depends, in part, upon the popularity of our products and our ability to develop
new menu items that appeal to consumers across all four day parts. Shifts in consumer preferences away from our products, our inability
to develop new menu items that appeal to consumers across all day parts, or changes in our menu that eliminate items popular with some
consumers could harm our business. We compete primarily with other food manufacturers that participate in the K-12 market. Many of our
competitors or potential competitors have substantially greater financial and other resources than we do, which may allow them to react
to changes in the market quickermore quickly than we can. In addition, aggressive pricing by our competitors or the entrance of new competitors
into into
our markets, could reduce our revenue and operating margins. We also compete with other employers in our markets for workers and
may may
become subject to higher labor costs as a result of such competition.
Disruption
within our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial condition
and results of operations.
Damage
or disruption to our suppliers or to manufacturing or distribution capabilities due to weather, natural disaster, fire or explosion,
terrorism, pandemics such as COVD-19 and influenza, labor strikes or other reasons, could impair the manufacture, distribution and sale
of our products. Many of these events are outside of our control. Failure to take adequate steps to protect against or mitigate the likelihood
or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial
condition and results of operations.
Our
experience with the Manufacturer demonstrates how our reliance on a limited number of manufacturers and suppliers further increases this
risk. Most of our suppliers and manufacturers produce similar products for other companies, and our products may represent a small portion
of their businesses. Further, it takes a newly engaged manufacturer typically up to nine months of retrofitting/ preparation before it
can begin producing our products. In 2023 and 2024 we did not have contracts in place to produce sufficient units to meet projected demand.
If one of our manufacturers fails to perform, we would be faced with a significant interruption in our supply chain. If one of our manufacturers
or suppliers fails to perform or deliver products, for any reason, our sales and results of operations could be adversely affected. Furthermore,
if we are unable to meet our customers’ demands due to a disruption in our supply chain, we may lose that customer which could
adversely affect our business, financial condition and results of operations.
Our
dependence on independent contract manufacturers could make management of our manufacturing and distribution efforts inefficient or unprofitable.
We
are expected to arrange for our contract manufacturing needs sufficiently in advance of anticipated requirements, which is customary
in the contract manufacturing industry for comparably sized companies. Based on the cost structure and forecasted demand for the particular
geographic area where our contract manufacturers are located, we continually evaluate which of our contract manufacturers to use. To
the extent demand for our products exceeds available inventory or the production capacity of our contract manufacturing arrangements,
or orders are not submitted on a timely basis, we will be unable to fulfill distributor orders on demand. Conversely, we may produce
more product inventory than warranted by the actual demand for it, resulting in higher storage costs and the potential risk of inventory
spoilage. Our failure to accurately predict and manage our contract manufacturing requirements and our inventory levels may impair relationships
with our independent distributors and key accounts, which, in turn, would likely have a material adverse effect on our ability to maintain
effective relationships with those distributors and key accounts. At present, we must replace the Manufacturer with one or more new contract
manufacturers and/or arrange for increased production from our existing contract manufacturers, all of which require several months to
implement.
Packaging
costs such as paper and aluminum cans have experienced industry-wide price increases in the past and there is always the risk that the
Company’sCompany contractmay manufacturers increase their toll rates based on increases in their fixed and variable costs. If the Company
isbe unable to pass on these costs, thereby significantly impacting the gross margin will be significantly impacted.margin.
Supplies
and prices of the various ingredients that we are goingused toin usethe manufacture of our products can be affected by a variety of factors, such
as weather, seasonal fluctuations,
demand, politics and economics in the producing countries.
Continuity
of business applications and services has been, and may in the future be, disrupted by events such as infection by viruses or malware;
other cybersecurity attacks; issues with or errors in systems’ maintenance or security; power outages; hardware or software failures;
denial of service attacks; telecommunication failures; natural disasters; terrorist attacks; and other catastrophic occurrences. Our
use of new and emerging technologies such as cloud-based services and mobile applications continues to evolve, presenting new and additional
risks in managing access to our data, relying on third parties to manage and safeguard data, ensuring access to our systems and availability
of third-party systems. In addition, we are experiencing new and more frequent attempts by third parties to gain access to our systems,
such as through increased email phishing of our workforce We
leverage third parties for various technology and business services who may experience cybersecurity breaches, whether from circumvention
of security systems, denial-of-service attacks or other cyberattacks such as hacking, phishing attacks, computer viruses, ransomware
or malware, cyber extortion, employee or insider error, malfeasance, social engineering, physical breaches or other actions or attempts
to exploit vulnerabilities may cause confidential information or Personally Identifiable Information belonging to us or our employees,
customers, consumers, partners, suppliers, or governmental or regulatory authorities to be misused or breached. These risks could be
magnified since the number of employees, contractors and others working outside of offices increased since the COVID-19 pandemic. Additionally,
continued geopolitical turmoil, including the ongoing wars in Ukraine and Israel,the Middle East, has heightened the risk of cyberattacks. When
risks risks
such as these materialize, the need for us to coordinate with various third-party service providers and for third-party service
providers providers
to coordinate amongst themselves might increase challenges and costs to resolve related issues. Our information security program
includes includes
capabilities designed to evaluate and mitigate cyber risks arising from third-party service providers. Cyber threats to externally
hosted hosted
technology and business services are beyond our control. Additionally, new initiatives, such as those related to digital commerce
and and
direct sales, that increase the amount of confidential information that we process and maintain increase our potential exposure to
a a
cybersecurity breach. Furthermore, the rapid evolution and increased adoption of artificial intelligence technologies may intensify
our our
cybersecurity risks. If our controls, disaster recovery and business continuity plans or those of our third-party providers do not
effectively effectively
respond to or resolve the issues related to any such disruptions in a timely manner, our product sales, financial condition,
results results
of operations and stock price may be materially and adversely affected, and we might experience delays in reporting our financial
results, results,
loss of intellectual property and damage to our reputation or brands.
We
mayrecently be required to seekobtained financing through the issuance of equity or convertible debt securities and warrants to fund our operations. We may also issue
additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection
connection with hiring or retaining employees, future acquisitions or for other business purposes. The future issuance of any such
additional shares
of common stock will result in dilution to our shareholders and may create downward pressure on the trading price
of our common stock.
Our
board of directors controls thea majoritysignificant percentage of the outstanding shares of voting stock.
At
present, members of our board of directors and/or their affiliated entities control overapproximately 50%37% of the outstanding shares of voting
stock, stock,
and therefore have thesignificant power to controlinfluence all matters requiring the approval of our stockholders, including the election
of directors and
the approval of mergers and other significant corporate transactions.
Management's Discussion & Analysis (MD&A)
Largest changes
“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 fixed overhead expense. Our current dispute with the Manufacturer and the resulting loss of product supply and legal expense have negatively impacted our financial position, results of operations and cash flow. …”see in full comparison
“Our operations to date have been financed by the sale of securities, the issuance of convertible and short-term debt and equipment leasing. Our liquidity needs will depend on careful management of the construction of the New Facility, as well as how quickly we are able to profitably ramp up sales, achieve manufacturing cost synergies anticipated as a result of the Acquisition, control and reduce variable operating expenses, and control fixed overhead expense. …”see in full comparison
Our gross profit was $3,114,000 (22%) and $3,668,000 (34%)see in full comparisonand $2,884,000 (36%)for20242025 and2023,2024, respectively. Excluding production relocationcosts,cost and ingredient contract obligations, our gross profit was $3,177,000 in 2025 (22%) and $3,951,000 in 2024 (37%).The improvement in gross margin is a result of favorable product mix, pricing actions, and a slight improvement in the cost of supply chain components.
“The Company is primarily engaged in selling frozen beverages and food. As a result of the Acquisition, the Company sells raw and processed milk to a single customer. Continuation of the raw and processed milk business is strategic from the standpoint of our supply chain and capacity utilization.”see in full comparison
“Cost of revenue was $11,094,000 in 2025 compared to $7,049,000 in 2024, an increase of $4,045,000, or 57%. Cost of revenue increased at a higher rate compared to revenue due to the inclusion of the raw and processed milk operations after the Acquisition. Products in this segment are generally commodities with commensurate margins, but provide a strategic milk supply to the business and contribute to fixed overhead costs. Cost of revenue in the frozen beverages and food segment, which consisted primarily of Barfresh legacy products in 2025, increased 20%. …”see in full comparison
“In order to consummate the Acquisition, we paid $1,223,000, net of cash acquired, to purchase 100% of Arps Dairy stock. Additionally, we incurred $518,000 in acquisition costs in 2025. In order to finance the Acquisition, we increased our receivables-based line of credit in September 2025 to $2,500,000. As a result of the Acquisition, $5,251,000 of mortgage debt, construction related payables and advances from former shareholders payable by Arps Dairy became short-term financial commitments of the Company. …”see in full comparison
Full comparison: every changed paragraph (37)
The Company is primarily engaged in selling frozen beverages and food. As a result of the Acquisition, the Company sells raw and processed milk to a single customer. Continuation of the raw and processed milk business is strategic from the standpoint of our supply chain and capacity utilization.
The Company’s legacy products are packaged in four distinct formats.
The Company’s ready-to-drink smoothie, Twist & Go™, has initially been focused towards the USDA national school meal program, including the School Breakfast Program, the National School Lunch Program and Smart Snacks in Schools Program. This sweet fruit and creamy yogurt smoothie contains four ounces of yogurt and a half-cup of fruit/fruit juice and comes in three different flavors: strawberry banana, peach, and mango pineapple. The product was originally launched in a bottled packaging format. The Company introduced Twist & Go™ cartons in 2022. “Twist & Go”™ contains no added sugars, preservatives, artificial flavors or colors. At only 125 -130 calories and with 5 grams of protein, it makes the perfect start to any day or on-the-go snack.
In 2024, the Company introduced its ready-to-eat juice pop, “Pop & Go” ™, with initial shipments in the fourth quarter of 2024. The product will initially be focused towards the National School Lunch and Smart Snacks in Schools Programs. Pop & Go ™ contains 4 oz of juice, no added sugars, preservatives or artificial flavors or colors, and comes in five flavors.
Domestic
and international patents are owned by Barfresh, as well as related trademarks for all of the single serve products.
Patent rights have been maintained in two jurisdictions including the United States. The patents expire in 2025.
The raw and processed milk is sold directly to a single customer.
CurrentlyAs
of April 13, we have 1032 employees and 3 consultants.
In 2025, Barfresh
utilizesutilized contract manufacturers to manufacture the predominate majority of all of the products in the United States. Barfresh anticipates that it will manufacture the majority of its products in 2026.
We determined that we operate in two reportable segments: Frozen Beverages and Food, and Raw and Processed Milk. The following table summarizes revenue and gross profit by segment for the years ended December 31, 2025 and 2024:
Revenue
was $14,208,000 in 2025 compared to $10,717,000 in 2024 compared to $8,127,000 in 2023,2024, an increase of $2,590,000,$3,491,000, or 32%.33%. Arps Dairy contributed $2,852,000 to revenue,
including $2,748,000 in raw and processed milk sales. Our revenue in 20242025 benefited from increased
sales of our bottled Twist & Go
smoothies due to improved availability resulting from inventory built over the months prior to the
commencement of the school year,year continued acceptanceand
growth of Twistour Pop & Go smoothies provided in cartons, and improvements in bulk sales
due to the reintroduction of our WHIRLZ 100% juice productpops, introduced in the fourth quarter of 2023.2024, partially offset by declining revenue from our bulk,
single serve and smoothie carton products.
Cost of revenue was $11,094,000 in 2025 compared to $7,049,000 in 2024, an increase of $4,045,000, or 57%. Cost of revenue increased at a higher rate compared to revenue due to the inclusion of the raw and processed milk operations after the Acquisition. Products in this segment are generally commodities with commensurate margins, but provide a strategic milk supply to the business and contribute to fixed overhead costs. Cost of revenue in the frozen beverages and food segment, which consisted primarily of Barfresh legacy products in 2025, increased 20%. The rate of increase in cost of revenue exceeded revenue growth due to start up costs at Arps Dairy, provisions for anticipated expirations of bulk product inventory, and provisions for ingredient related cost obligations to conclude our multi-year co-manufacturing agreements.
Cost
of revenue was $7,049,000 in 2024 compared to $5,243,000 in 2023, an increase of $1,806,000, or 34%. Cost of revenue increased at a slightly
higher rate compared to revenue due to $283,000 in cost incurred to relocate our single-serve smoothie pouch production line.
Our
gross profit was $3,114,000 (22%) and $3,668,000 (34%) and $2,884,000 (36%) for 20242025 and 2023,2024, respectively. Excluding production relocation costs,cost and ingredient
contract obligations, our gross
profit was $3,177,000 in 2025 (22%) and $3,951,000 in 2024 (37%). The improvement in gross margin is a result of favorable product mix, pricing actions, and a slight
improvement in the cost of supply chain components.
Gross profit from frozen beverages and food was $2,977,000 in 2025 (26%) compared to $3,668,000 in 2024 (34%). The decrease is due to product mix, as bulk, single serve and smoothie carton products have generally sold at a higher gross margin compared to smoothie bottles. Additionally, gross profit was impacted by the increase in cost of revenue from start-up costs and inventory provisions.
Gross profit from raw and processed milk was $137,000 in 2025 (5%).
Sales
and marketing expense increaseddecreased approximately $330,000$14,000 (25%1%) from approximately $1,336,000 in 2023 to $1,666,000 in 2024. The increase
is a result of higher personnel costs, travel and broker commission due2024 to expansion$1,652,000 ofin the broker network.2025.
Storage
and outbound freight expense increased approximately $195,000$57,000 (15%4%) from $1,278,000 in 2023 to $1,473,000 in 2024,2024 to $1,530,000 in 2025, primarily because of
of the 32%7% increase in frozen beverage and food revenue over the same period, partially offset by freight efficiencies, and lower storage
and inventory management
cost in 2024. We incurred $99,000 in outbound freight in 2025 for processed milk deliveries.
Personnel
cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes and continues to be our largest
cost. Personnel cost increaseddecreased by approximately $51,000$37,000 (4%3%) from $1,199,000 in 2023 to $1,250,000 in 2024.2024 to $1,213,000 in 2025. The increasedecrease in personnel
cost resulted primarily from the non-recurring confirmation and recognition of our 2021 COVID-related tax credit in 2023, partially offset
by a reduction in cashco-manufacturing bonusadministration expense.headcount, partially offset by the addition of general and
administrative personnel at Arps Dairy.
Stock-based
compensation increaseddecreased by approximately $241,000$248,000 (44%32%) from $543,000 in 2023 to $784,000 in 2024.2024 to $536,000 in 2025. The increasedecrease is due to higherlower attainment
under performance
awards and the modificationnon-recurrence of the two-year extension of expiring options issued to our board of directorsdirector tooptions extend the term throughin December
2026. 2024.
Legal,
professional and consulting fees decreased by approximately $28,000$61,000 (-9%22%). Wedue reduced outside services and obtainedto non-recourse litigation funding secured in May of 2024.
financingLegal, toprofessional conserveand workingconsulting capital.fees associated with the Acquisition are included in business acquisition expense.
Research
and development expense increased by approximately $17,000 (15%) from $115,000 in 2023 to $132,000 in 2024. Expense related to optimization
of our carton format and the re-launch of our bulk concentrate products in 2023, and the launch of our Pop & Go product in 2024,
as well as reformulations to meet specific market or manufacturing requirements.
Other
general and administrative expenses increaseddecreased approximately $76,000$25,000 (15%4%) from $519,000 in 2023 to $595,000 in 2024 primarily due to
recruiting fees incurred to broaden$570,000 thein capabilities of our management team.2025.
Business acquisition expense of $518,000 represents legal, accounting, and consulting fees, as well as travel associated with the Acquisition.
Interest
expense was $52,000$217,000 in 20242025 compared to $8,000$52,000 in 2023.2024. The increase of $44,000$165,000 is a result of securing a receivables-based lineutilization of creditreceivables financing
inthroughout 2024,the asyear, welland asmortgage debt, notes and lease financing related to the Acquisition and the purchase of equipment andrequired softwarefor
the financing.New Facility.
On February 5, 2025, we entered into securities purchase agreements with several investors, pursuant to which the Company sold an aggregate of 1,052,793 shares of common stock at a price of $2.85 per share in a registered direct offering, raising $2,974,000.
Our continuing dispute with the Manufacturer and the resulting loss of product supply in 2022 negatively impacted our financial position, results of operations and cash flow. Subsequently, we contracted with a co-manufacturer for additional smoothie bottle manufacturing capacity. While expanded capacity became available in the fourth quarter of 2024, we were notified in 2025 that other co-manufacturers elected to discontinue production of smoothie cartons and smoothie bottles in December 2025 and January 2026, respectively. The Acquisition was undertaken to resolve constrained capacity experienced since 2022 under the co-manufacturing business model.
In order to consummate the Acquisition, we paid $1,223,000, net of cash acquired, to purchase 100% of Arps Dairy stock. Additionally, we incurred $518,000 in acquisition costs in 2025. In order to finance the Acquisition, we increased our receivables-based line of credit in September 2025 to $2,500,000. As a result of the Acquisition, $5,251,000 of mortgage debt, construction related payables and advances from former shareholders payable by Arps Dairy became short-term financial commitments of the Company. The Acquisition was structured to allow us to take control of Arps Dairy manufacturing operations ahead of completing all necessary long-term financing activities.
Following the Acquisition, Arps Dairy secured a receivables-based line of credit of $1,500,000.
We acquired $728,000 of equipment through leasing transactions in 2025. In December 2025, we were granted $2,400,000 to fund up to 50% of the cost of new equipment purchases and installation for the New Facility.
During
the year ended December 31, 2024,2025, we used $2,229,000$1,666,000 in operations. Our net loss adjusted for non-cash operating expenses was a loss
of $1,752,000,$2,839,000, while changes in non-cash current assets and liabilities consumedprovided $477,000$1,173,000 primarily because weof investeddelayed payments to co-manufacturers
who discontinued providing product in inventory
forDecember production trials2025 and ramp,January and our accounts payable decreased as we improved adherence with vendor terms.2026.
As of December 31, 2025, we had negative working capital of $6,303,000, including $2,170,000 of mortgage debt and $2,433,000 of construction payables, compared with working capital $606,000 on December 31, 2024. Disputed accounts payable due to the Manufacturer of $499,000 are excluded from both December 31, 2025 and 2024 working capital amounts.
In February 2026, $400,000 of Arps selling shareholder advances were converted into shares of our common stock.
In March 2026, we raised $7,528,000 through the sale of convertible promissory notes. The proceeds were used to retire $2,541,000 in mortgage debt and construction payables, and are expected to be used to repay remaining construction related payables as well as complete construction of the New Facility in 2026.
Our operations to date have been financed by the sale of securities, the issuance of convertible and short-term debt and equipment leasing. Our liquidity needs will depend on careful management of the construction of the New Facility, as well as how quickly we are able to profitably ramp up sales, achieve manufacturing cost synergies anticipated as a result of the Acquisition, control and reduce variable operating expenses, and control fixed overhead expense. There are no assurances that the grant received in December 2025 and the proceeds from the sale of convertible promissory notes in March 2026 will be sufficient to carry out our current plan of operations. We anticipate that we will have additional sources of liquidity, if required, through mortgage financing supported by the guarantee of the United States Department of Agriculture, and equipment lease financing, among other options. However, there are no assurances that these funds will be available. If we are unable to generate sufficient cash flow from operations, control construction costs, or raise additional capital through debt issuances, we may be required to raise additional funds in the form of equity.
As
of December 31, 2024, we had working capital of $606,000 compared with $2,345,000 at December 31, 2023, both excluding disputed accounts
payable of $499,000 resulting from our dispute with the Manufacturer. The decrease in working capital is primarily due to losses incurred
in 2024, partially offset by borrowing under our receivables-based line of credit.
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 fixed overhead expense. Our current dispute with the Manufacturer and the resulting loss
of product supply and legal expense have negatively impacted our financial position, results of operations and cash flow. While the introduction
of our carton packaging format in 2023 has mitigated the loss of supply, the product offering has not been accepted by some customers
or as a substitute for the bottle product in all use cases. We have contracted with a co-manufacturer for additional smoothie bottle
manufacturing capacity. Expanded capacity became available in the fourth quarter of 2024, and we expect that capacity to increase and
become more efficient in 2025, subject to the risks and uncertainties associated with production activities. Additionally, we have taken
other measures to reduce our liquidity requirements, including compensating our directors and employees with equity to reduce cash compensation
requirements, obtaining non-recourse litigation financing, securing receivables financing in the third quarter of 2024, and the sale
of an aggregate of 1,052,793 shares of common stock to raise $3,000,000 in February 2025.
Our
operations to date have been financed by the sale of securities, the issuance of convertible debt and the issuance of short-term debt.
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.
What changed in the latest 10-Q
Risk Factors
Not required because we are a smaller reporting company.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Results of Operation for the Six Months Ended June 30, 2026 as Compared to the Six Months Ended June 30, 2025”
New heading “Revenue and cost of revenue”
New heading “Selling, marketing and distribution expense”
New heading “General and administrative expense”
New heading “Interest Expense”
Largest changes
“Results of Operation for the Six Months Ended June 30, 2026 as Compared to the Six Months Ended June 30, 2025”see in full comparison
Our operations to date have been financed by the sale of securities, the issuance of convertible and short-term debt and equipment leasing. Our liquidity needs will depend on careful management of the construction of the New Facility, as well as how quickly we are able to profitably ramp up sales, achieve manufacturing cost synergies anticipated as a result of the Acquisition, control and reduce variable operating expenses, and control fixed overhead expense.see in full comparisonThere are no assurances that the grant received in December 2025 and theThe proceeds from the sale of convertible promissory notes in March 2026will beare not sufficient to carry out our current plan ofoperations.operations, which includes the investment of $6,662,000 in Construction Obligations described in Note 5 of the accompanying unaudited financial statements. The $2,400,000 grant received in December 2025 is subject to uncertainty associated with the requirement to complete all funded phases of the project by December 31, 2026. This uncertainty could increase the Construction Obligation to $9,062,000. We anticipate that we will have additional sources ofliquidity, if required,liquidity through mortgage financing supported by the guarantee of the United States Department of Agriculture, and equipment lease financing, among other options. However, there are no assurances that these funds will be available. If we are unable to generate sufficient cash flow from operations, control construction costs, or raise additional capital through debt issuances, we may be required to raise additional funds in the form of equity.
Full comparison: every changed paragraph (39)
Results
of Operation for the Three Months Ended MarchJune 31,30, 2026 as Compared to the Three Months Ended MarchJune 31,30, 2025
Revenue
increased $2,702,000,$3,082,000, or 92%,190%, to $5,632,000$4,707,000 in 2026 as compared to $2,930,000$1,625,000 in 2025. Arps Dairy contributed $2,837,000$3,193,000 to revenue,
including $2,566,000$2,943,000 in raw and processed milk sales. Revenue in the frozen beverages and food segment increased 9%.
Cost
of revenue increased $2,569,000,$3,738,000, or 127%,334%, to $4,599,000$4,857,000 in 2026 as compared to $2,030,000$1,119,000 in 2025. Cost of revenue increased at a significantly
higher
rate compared to revenue due to the inclusion of the raw and processed milk operations after the Acquisition. Products in this
segment segment
are generally commodities with commensurate margins, but provide a strategic milk supply to the business and contribute to fixed
overhead overhead
costs. Cost of revenue in the frozen beverages and food segment, which consisted primarily of Barfresh legacy products in 2026,
increased increased
76% due to start-up costs and lower than anticipated productivity at the sameExisting rate as revenue.Facility.
Our gross loss was $150,000 (-3%) for 2026 and our gross profit was $506,000 (31%) for 2025.
Our
gross profit was $1,033,000 (18%) and $900,000 (31%) for 2026 and 2025, respectively.
Gross
profitloss from frozen beverages and food was $905,000$209,000 (-12%) in 2026 (30%) compared to $900,000a ingross 2025profit of $506,000 (31%). in 2025. The slight decrease is
due to product
mix.high start-up costs and lower than anticipated productivity at the Existing Facility.
Gross
profit from raw and processed milk was $128,000$59,000 (2%) in 2026 (5%).2026.
Sales
and marketing expense decreased approximately $179,000$102,000 (41%28%) from approximately $433,000$358,000 in 2025 to $254,000$256,000 in 2026. The decrease is
a result of lower personnel costs as we rely more heavily on our broker network, as well as a decrease in sample expense, which was elevated
in 2025 due to the introduction of our Pop & Go freeze pops.network. Additionally, equipment maintenance expense for machines
provided to
our customers for use with our bulk products decreased, as single serve products have become more prominent in the school
setting.
Storage
and outbound freight expense increased approximately $52,000$29,000 (13%11%) from approximately $391,000$276,000 in 2025 to $443,000$305,000 in 2026, primarily
due to costs associated with the delivery of processed milk at Arps Dairy.Dairy, partially offset by lower revenue and finished goods inventory
of legacy Barfresh products.
Personnel
cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes. Personnel cost decreasedincreased by
approximately $14,000$43,000 (4%15%) from approximately $372,000$292,000 in 2025 to $358,000$335,000 in 2026. The decrease in personnel cost resulted from decreased
head count, and lower employer payroll taxes2026 due to timingthe addition of vestingheadcount ofassociated stock-basedwith
Arps compensation.Dairy.
Stock-based
compensation decreased by approximately $56,000 (35%) from $158,000 in 2025 to $102,000 in 2026 as a result of lower expected attainment
under our performance stock unit program.
Legal,
professional and consulting fees increased by approximately $26,000$37,000 (32%123%) from $81,000$30,000 in 2025 to $107,000$67,000 in 2026 primarily due to costs timing
of temporary
personnelaudit fees associated with integrationthe filing of Arpsour Dairy.annual report on Form 10-K.
Other
general and administrative expenses increased by approximately $25,000$34,000 (21%27%) due to travelincreased costsrecruiting, information technology and
insurance expense associated with theArps integration of Arps
Dairy.
We
had net losses of approximately $661,000$1,861,000 and $761,000$880,000 for the three-month periods ending MarchJune 31,30, 2026 and 2025, respectively. The
increase decrease
in net loss of approximately $100,000$981,000 was primarily due to aan decreaseincrease in the loss from operations of $302,000,$649,000, offset byand an increase
of of
$202,000$332,000 in interest expense incurred related to the acquisition of Arps Dairy and the build out of the New Facility.
Results of Operation for the Six Months Ended June 30, 2026 as Compared to the Six Months Ended June 30, 2025
Revenue and cost of revenue
Revenue increased $5,784,000, or 127%, to $10,339,000 in 2026 as compared to $4,555,000 in 2025. Arps Dairy contributed $6,021,000 to revenue, including $5,508,000 in raw and processed milk sales.
Cost of revenue increased $6,307,000, or 200%, to $9,456,000 in 2026 as compared to $3,149,000 in 2025. Cost of revenue increased at a higher rate compared to revenue as low margin milk processing revenue made up 53% of the revenue mix. Additionally, start-up costs and low productivity significantly impacted the cost of legacy Barfresh products that were produced at the Existing Facility.
Our gross profit was $883,000 (9%) and $1,406,000 (31%) for 2026 and 2025, respectively.
Gross profit from frozen beverages and food was $696,000 (14%) and $1,406,000 in 2026 and 2025, respectively. The decrease is due to high start-up costs and lower than anticipated productivity at the Existing Facility.
Selling, marketing and distribution expense
Selling, marketing and distribution expense decreased approximately $200,000 (14%) from approximately $1,458,000 in 2025 to $1,258,000 in 2026.
Sales and marketing expense decreased approximately $281,000 (36%) from approximately $791,000 in 2025 to $510,000 in 2026. The decrease is a result of lower personnel costs as we rely more heavily on our broker network. Additionally, equipment maintenance expense for machines provided to our customers for use with our bulk products decreased, as single serve products have become more prominent in the school setting. Finally, sample expense decreased due to non-recurring sample costs associated with the 2025 launch of our Pop & Go product.
Storage and outbound freight expense increased approximately $81,000 (12%) from approximately $667,000 in 2025 to $748,000 in 2026, primarily due to costs associated with the delivery of processed milk at Arps Dairy, partially offset by lower revenue and finished goods inventory of legacy Barfresh products.
General and administrative expense
General and administrative expenses increased approximately $129,000 (9%) from approximately $1,420,000 in 2025 to $1,549,000 in 2026.
Personnel cost increased by approximately $29,000 (4%) from approximately $665,000 in 2025 to $694,000 in 2026 due to the addition of headcount associated with Arps Dairy.
Stock-based compensation decreased by approximately $41,000 from $297,000 in 2025 to $256,000 in 2026 as a result of lower expected attainment under our performance stock unit program.
Legal, professional and consulting fees increased by approximately $63,000 (57%) from $111,000 in 2025 to $174,000 in 2026 due to audit costs associated with the expanded scope of work resulting from the Acquisition, and temporary consultants associated with the integration of Arps Dairy.
Other general and administrative expenses increased by approximately $58,000 (24%) due to increased information technology and insurance expense associated with Arps Dairy.
Interest Expense
Interest expense was $569,000 in 2026 compared to $35,000 in 2025. The increase of $534,000 is a result of mortgage debt, notes and lease financing related to the Acquisition and the purchase of equipment required for the New Facility, as well as the issuance of $7,528,000 of convertible notes in March 2026.
Net loss
We had net losses of approximately $2,522,000 and $1,641,000 for the six-month periods ending June 30, 2026 and 2025, respectively. The increase in net loss of approximately $881,000 was primarily due to an increase in loss from operations of $347,000, and an increase of $534,000 in interest expense incurred related to the acquisition of Arps Dairy and the build out of the New Facility.
We
acquired $823,000$888,000 of equipment through leasing transactions in 2025 and the first threesix months of 2026. In December 2025, we were granted
$2,400,000 to fund up to 50% of the cost of new equipment purchases and installation for the New Facility.
In
March 2026, we raised $7,528,000 through the sale of convertible promissory notes. The proceeds were used to retire $2,541,000 in mortgage
debt and construction payables, and are expected to be used to repay remainingcertain construction related payables as well as complete construction
of the New Facility in 2026.payables.
During
the quartersix endedmonths Marchending 31,June 30, 2026, we used $2,382,000$3,051,000 in operations. Our net loss adjusted for non-cash operating expenses wasused a loss$2,002,000,
of $455,000, while changes in current assets and liabilities used $1,927,000$1,049,000 primarily because of settlements of amounts due to co-manufacturers who
who discontinued providing product in December 2025 and January 2026.2026, partially offset by a decrease in accounts receivable due to seasonality.
As
of MarchJune 31,30, 2026, we had net current assetsliabilities of $903,000,$1,041,000, including $1,861,000$1,818,000 of construction payables, compared with net current
liabilities liabilities
of $6,303,000 on December 31, 2025. Disputed accounts payable due to the Manufacturer of $499,000 are excluded from both
June March 31,30, 2026
and December 31, 2025 amounts.
Our
operations to date have been financed by the sale of securities, the issuance of convertible and short-term debt and equipment leasing.
Our liquidity needs will depend on careful management of the construction of the New Facility, as well as how quickly we are able to
profitably ramp up sales, achieve manufacturing cost synergies anticipated as a result of the Acquisition, control and reduce variable
operating expenses, and control fixed overhead expense. There are no assurances that the grant received in December 2025 and theThe proceeds
from the sale of convertible promissory notes in March 2026 will beare
not sufficient to carry out our current plan of operations.operations, which includes the investment of $6,662,000 in Construction Obligations described
in Note 5 of the accompanying unaudited financial statements. The $2,400,000 grant received in December 2025 is subject to uncertainty
associated with the requirement to complete all funded phases of the project by December 31, 2026. This uncertainty could increase the
Construction Obligation to $9,062,000. We anticipate
that we will have additional sources of liquidity, if required,liquidity through mortgage financing supported
by the guarantee of the United States
Department of Agriculture, and equipment lease financing, among other options. However, there are
no assurances that these funds will
be available. If we are unable to generate sufficient cash flow from operations, control construction
costs, or raise additional capital
through debt issuances, we may be required to raise additional funds in the form of equity.
BRFH insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 2 filings (1 insider, 2 trade dates, 31,456 shares, about $35.3K). Net open-market shares: -31,456 (purchases minus sales); net value about -$35.3K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-01 | Delle Coste Riccardo |
Other | 870 | — | — |
| 2026-10-01 | Cugine Joseph M. |
Other | 5,798 | — | — |
| 2026-09-17 | Roger Lisa |
Open-market sale | 25,329 | $1.10 | $27.9K |
| 2026-09-10 | Roger Lisa |
Open-market sale | 6,127 | $1.22 | $7.5K |
| 2026-07-01 | Delle Coste Riccardo |
Other | 399 | — | — |
| 2026-07-01 | Cugine Joseph M. |
Other | 2,657 | — | — |
| 2026-06-13 | Roger Lisa |
Shares withheld for tax | 2,963 | — | — |
| 2026-04-27 | Roger Lisa |
Grant/award | 15,000 | — | — |
| 2026-04-15 | Roger Lisa |
Grant/award | 6,800 | — | — |
| 2026-04-15 | Delle Coste Riccardo |
Grant/award | 31,848 | — | — |
Well-known investors holding BRFH (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 10,903 | $21.8K | 0.0% | New position |