Barfresh Food Group (BRFH) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01We have a history of operating losses
2. 02We 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 agreementNew
3. 03By acquiring Arps Dairy, we are now exposed to operational risk in dairy processingNew
4. 04Our operations depend on the consistent availability and quality of raw milkNew
5. 05Dairy processing facilities are subject to extensive regulationNew
6. 06Our dairy processing operations are dependent on reliable performance of our equipmentNew
7. 07We require reliable and trained personnel for our dairy operationsNew
8. 08It is difficult to predict the timing and amount of our sales because our distributors and national accounts may not be required to place minimum orders with us21% rewritten
9. 09As an increasing portion of our sales is coming from school districts, our business is becoming more seasonal, which presents certain challenges with respect to cash flow
10. 10As described more fully in Item 7, we experienced product quality issues with a contract manufacturer (the “Manufacturer”) that provided approximately 52% of our products in the year ended December 31, 2022. Complaints from customers led us to withdraw product from the market and destroy existing inventory64% rewritten
11. 11Our ability, through our suppliers, business partners, contract manufacturers, independent distributors and retailers, to produce, transport, distribute and sell products is critical to our success68% rewritten
12. 12If we do not adequately manage our inventory levels, our operating results could be adversely affected
13. 13Completion of the New Facility, including the installation of equipment and the buildout of production lines is required in the near termNew
14. 14Failure to complete the New Facility within the projected budget and timeframe will likely impact negatively our projected new revenue and adjusted EBITDA estimatesNew
15. 15A worsening of economic conditions or a decrease in consumer spending may adversely impact our ability to implement our business strategy
16. 16The challenges of competing with the many food services businesses may result in reductions in our revenue and operating margins
17. 17Increases in costs of packaging, ingredients and contract manufacturing tolling fees may have an adverse impact on our gross margin58% rewritten
18. 18Supplies and prices of the various ingredients that are used in the 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
19. 19Our business depends substantially on the continuing efforts of our senior management and other key personnel, and our business may be severely disrupted if we lose their services
20. 20We may be unable to attract and retain qualified, experienced, highly skilled personnel, which could adversely affect the implementation of our business plan
21. 21Product liability exposure may expose us to significant liability
22. 22Litigation or legal proceedings could expose us to significant liabilities and damage our reputation
23. 23Our inability to protect our intellectual property rights may force us to incur unanticipated costs
24. 24Our products may infringe the intellectual property rights of third parties, and third parties may infringe our proprietary rights, either of which may result in lawsuits, distraction of management and the impairment of our business
25. 25We will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance initiatives and corporate governance practices
26. 26Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences
27. 27Our use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions

Risks Related to Ownership of Our Common Stock

1. 28If we are unable to adequately fund our operations, we may be forced to voluntarily file for deregistration of our common stock with the SEC
2. 29We may not be able to continue to comply with Nasdaq listing standards
3. 30If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our share price and trading volume could decline
4. 31Because we became public by means of a “reverse merger”, we may not be able to attract the attention of major brokerage firms
5. 32Future sales of our common stock in the public market could lower the price of our common stock and impair our ability to raise funds in future securities offerings
6. 33Our common stock is subject to price volatility unrelated to our operations
7. 34Because we do not intend to pay dividends, shareholders will benefit from an investment in our common stock only if it appreciates in value
8. 35The price of our common stock may become volatile, which could lead to losses by investors and costly securities litigation
9. 36Investors may experience dilution of their ownership interests because of future issuances of additional shares of our common stock27% rewritten
10. 37Provisions in our Company charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management
11. 38Our board of directors controls a significant percentage of the outstanding shares of voting stock44% rewritten