Barfresh Provides Update on First Quarter 2020 and Recent Business Expansion - Seite 2

Financial Results

Revenue for the first quarter of 2020 was $733,880, compared to $834,534 in the first quarter of 2019.  The decline in revenue is primarily the result of decreased sales in the Company’s single serve product due to COVID-19 causing the temporary closure of restaurants and bars.  Gross margin for the first quarter of 2020 was 54%, an improvement of 2% over last year’s first quarter gross margin of 52%.  The Company expects gross profit margins for the remainder of 2020 to be comparable to that of the first quarter of 2020 for its existing product lines.  Operating loss for the first quarter of 2020 improved to $0.9 million, as compared with $1.8 million in the first quarter of 2019. The improvement was primarily the result of a 39% reduction in G&A expenses in the quarter as the Company’s cost improvement initiatives from 2019 and beginning of 2020 resulted in meaningful leverage.

As of March 31, 2020, the Company had $2.34 million of cash and cash in escrow, and $0.7 million of inventory on its balance sheet.  Additionally, the Company announced on March 20, 2020, that during the first quarter of 2020 it had entered into binding definitive agreements for approximately $5.87 million financing, through the combination of an aggregate sale of approximately $5.87 million of common stock at $0.50 per share with 50% warrant coverage with an exercise of $0.60 per share.  Concurrent with the offering, the Company also reduced its overall debt by approximately $2.0 million through holders converting their existing debt into the Company’s current offering of its common stock and warrants.  $2.325 million of this equity raise is included in the cash balance for the Company as of March 31, 2020.

The above information is presented in conformity with accounting principles generally accepted in the United States.  In order to aid in the understanding of the Company’s business performance, the Company has also presented below certain non-GAAP measures, including EBITDA and Adjusted EBITDA, which are reconciled in the table below to comparable GAAP measures.  Management believes that Adjusted EBITDA provides useful information to the investor because it is directly reflective of the cash flow of the Company. The primary factors in reconciling these items are non-cash costs, including stock compensation, stock issued for services, and gain or loss on the sale of derivatives. Adjusted EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of liquidity.