UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2013
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ___________________
Commission File Number: 333-168738
BARFRESH FOOD GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware | 27-1994406 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
90 Madison Street, Suite 701, Denver, CO | 80206 |
(Address of principal executive offices) | (Zip Code) |
303-329-3008
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | [ ] | Accelerated filer | [ ] |
Non-accelerated filer | [ ] (Do not check if a smaller reporting company) | Smaller reporting company | [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[ ] Yes [X] No
As of November 10, 2013, there were 59,592,660 outstanding shares of common stock of the registrant.
EXPLANATORY NOTE
The purpose of this Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2013, filed with the Securities and Exchange Commission on November 13, 2013 (the “Form 10-Q”), is solely to correct a typographical error. During the three months ended September 30, 2013, five-year warrants included as part of a common stock unit offering entitle the holder to purchase one-half (1/2) share of common stock at an exercise price of $0.50.
No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.
TABLE OF CONTENTS
Page Number | ||
PART I - FINANCIAL INFORMATION | ||
Item 1. | Financial Statements. | F-1 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 3 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 9 |
Item 4. | Controls and Procedures. | 9 |
PART II - OTHER INFORMATION | ||
Item 1. | Legal Proceedings. | 10 |
Item 1A. | Risk Factors. | 10 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 10 |
Item 3. | Defaults Upon Senior Securities. | 10 |
Item 4. | Mine Safety Disclosures. | 10 |
Item 5. | Other Information. | 10 |
Item 6. | Exhibits. | 10 |
SIGNATURES | 11 |
2 |
PART I - FINANCIAL INFORMATION
Barfresh Food Group Inc.
Condensed Consolidated Balance Sheets
September 30, 2013 | March 31, 2013 | |||||||
(Unaudited) | (Audited) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 1,021,716 | $ | 85,957 | ||||
Accounts Receivable | 12,628 | 7,413 | ||||||
Receivable from related party | - | 13,540 | ||||||
Inventory | 52,035 | 12,712 | ||||||
Prepaid expenses | 51,251 | 226,602 | ||||||
Total current assets | 1,137,630 | 346,224 | ||||||
Property, plant and equipment, net of depreciation | 308,595 | 311,496 | ||||||
Intangible asset, net of amortization | 30,894 | 31,985 | ||||||
Deposits | 16,161 | 10,731 | ||||||
Total Assets | $ | 1,493,280 | $ | 700,436 | ||||
Liabilities And Stockholders’ Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 126,904 | $ | 247,682 | ||||
Accrued expenses | 181,752 | 187,096 | ||||||
Deferred rent liability | 3,466 | 5,066 | ||||||
Advances from related party | - | 30,272 | ||||||
Convertible note - related party current, net of discount | - | 36,551 | ||||||
Convertible note current, net of discount | - | 285,100 | ||||||
Total current liabilities | 312,122 | 791,767 | ||||||
Convertible note - related party, net of discount | 18,487 | - | ||||||
Convertible note, net of discount | 136,803 | - | ||||||
Total liabilities | 467,412 | 791,767 | ||||||
Commitments and contingencies | - | - | ||||||
Stockholders’ equity (deficit): | ||||||||
Preferred stock, $0.000001 par value, 5,000,000 shares authorized, none issued or outstanding | - | - | ||||||
Common stock, $0.000001 par value; 95,000,000 shares authorized; 59,592,660 and 47,166,660 shares issued and outstanding at September 30 and March 31, 2013, respectively | 59 | 50 | ||||||
Additional paid in capital | 4,544,717 | 2,355,328 | ||||||
Accumulated Deficit | (3,518,908 | ) | (2,446,709 | ) | ||||
Total stockholders’ equity (deficit) | 1,025,868 | (91,331 | ) | |||||
Total Liabilities and Stockholders’ Deficit | $ | 1,493,280 | $ | 700,436 |
See the accompanying notes to the condensed consolidated financial statements
F- 1 |
Barfresh Inc.
Condensed Consolidated Statements of Operations
For the six months ended | For the three months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue | $ | 32,258 | $ | 2,880 | $ | 15,933 | $ | 2,880 | ||||||||
Cost of revenue | 21,319 | 1,584 | 11,045 | 1,584 | ||||||||||||
Gross profit | 10,939 | 1,296 | 4,888 | 1,296 | ||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 902,632 | 635,385 | 477,726 | 355,686 | ||||||||||||
Depreciation Amortization | 28,477 | 7,046 | 17,909 | 6,501 | ||||||||||||
Total operating expenses | 931,109 | 642,431 | 495,635 | 362,187 | ||||||||||||
Operating loss | (920,170 | ) | (641,135 | ) | (490,747 | ) | (360,891 | ) | ||||||||
Other expenses | ||||||||||||||||
Interest | 152,029 | 28,070 | 67,819 | 28,070 | ||||||||||||
Net (loss) | $ | (1,072,199 | ) | $ | (669,205 | ) | $ | (558,566 | ) | $ | (388,961 | ) | ||||
Per share information - basic and fully diluted: | ||||||||||||||||
Weighted average shares outstanding | 54,459,888 | 48,580,492 | 57,443,225 | 48,749,269 | ||||||||||||
Net (loss) per share | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) |
See the accompanying notes to the condensed consolidated financial statements
F- 2 |
Barfresh Food Group Inc.
Condensed Consolidated Statements of Cash Flows
For the six month ended September 30, | ||||||||
2013 | 2012 | |||||||
Net cash used in operations | $ | (1,028,338 | ) | $ | (375,738 | ) | ||
Cash flow from investing activities: | ||||||||
Purchase of equipment | (24,486 | ) | (137,128 | ) | ||||
Net Cash used in investing activities | (24,486 | ) | (137,128 | ) | ||||
Cash flow from financing activities: | ||||||||
Issuance of common stock for cash | 2,038,855 | - | ||||||
Issuance of convertible debt | 20,000 | 440,000 | ||||||
Repayment of convertible debt | (40,000 | ) | - | |||||
Advance from related party | 12,975 | - | ||||||
Repayment to related party | (43,247 | ) | - | |||||
Net cash provided by financing activities | 1,988,583 | 440,000 | ||||||
Net increase (decrease) in cash | 935,759 | (72,866 | ) | |||||
Cash at beginning of period | 85,957 | 420,976 | ||||||
Cash at end of period | $ | 1,021,716 | $ | 348,110 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 55,725 | $ | - | ||||
Cash paid for income taxes | $ | - | $ | - | ||||
Non-cash financing activities: | ||||||||
Common stock issued for services/stock based compensation | $ | - | $ | 322,779 | ||||
Fair value of warrants issued with convertible notes | $ | 142,873 | $ | 142,019 | ||||
Value of beneficial conversion of convertible notes | $ | 125,905 | $ | 142,019 |
See the accompanying notes to the condensed consolidated financial statements
F- 3 |
Barfresh Food Group Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2013
(Unaudited)
Note 1. Basis of Presentation
Throughout this report, the terms “our,” “we,” “us,” and the “Company” refer to Barfresh Food Group Inc., including its subsidiaries. The accompanying unaudited condensed financial statements of Barfresh Food Group Inc. at September 30, 2013 and 2012 have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial statements, instructions to Form 10-Q, and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year ended March 31, 2013. In management's opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation to make our financial statements not misleading have been included. The results of operations for the periods ended September 30, 2013 and 2012 presented are not necessarily indicative of the results to be expected for the full year. The March 31, 2013 balance sheet has been derived from our audited financial statements included in our annual report on Form 10-K for the year ended March 31, 2013.
We were in the development stage from December 4, 2009 through March 31, 2013. Our fiscal year ending March 31, 2014 is the first year during which we are considered an operating company and is no longer in the development stage.
Note 2. Summary of Significant Accounting Policies
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplates our continuation as a going concern. We have incurred losses to date of $3,518,908. To date we have funded our operations through advances from a related party, issuance of convertible debt, and the sale of our common stock. We intend to raise additional funding through third party equity or debt financing. There is no certainty that funding will be available as needed. These factors raise substantial doubt about our ability to continue operating as a going concern. Our ability to continue our operations as a going concern, realize the carrying value of our assets, and discharge our liabilities in the normal course of business is dependent upon our ability to raise capital sufficient to fund our commitments and ongoing losses, and ultimately generate profitable operations.
Basis of Consolidation
The consolidated condensed financial statements include the financial statements of the Company and our wholly owned subsidiaries Barfresh Inc. and Smoothie Inc. All inter-company balances and transactions among the companies have been eliminated upon consolidation.
Intangible Assets
Intangible assets are comprised of patents, net of amortization. The patent costs are being amortized over the life of the patent which is twenty years from the date of filing the patent application. In accordance with ASC Topic 350 Intangibles - Goodwill and Other (“ASC 350”), the costs of internally developing other intangible assets, such as patents, are expensed as incurred. However, as allowed by ASC 350, legal fees and similar costs relating to patents have been capitalized.
Property, Plant and Equipment
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment loss, if any. Depreciation is calculated on a straight line basis over the estimated useful lives of the assets. Leasehold improvements are being amortized over the shorter of the useful life of the asset or the lease term that includes any expected renewal periods that are deemed to be reasonably assured. The estimated useful lives used for financial statement purposes are:
Furniture and fixtures: 5 years
Equipment: 7 years
Leasehold improvements: 2 years
F- 4 |
Barfresh Food Group Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2013
(Unaudited)
(Continued)
Revenue Recognition
We recognize revenue when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable, and collection is reasonably assured.
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.
Earnings per Share
We calculate net loss per share in accordance with ASC Topic 260, Earnings per Share . Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period, and diluted earnings per share is computed by including common stock equivalents outstanding for the period in the denominator. At September 30, 2013 and 2012 any equivalents would have been anti-dilutive as we had losses for the periods then ended.
Research and Development
Expenditures for research activities relating to product development and improvement are charged to expense as incurred. We incurred $8,439 and $12,229, in research and development expenses for the six month periods ended September 30, 2013 and 2012, respectively, and $4,532 and $12,229 in research and development expenses for the three month periods ended September 30, 2013 and 2012, respectively.
Rent Expense
We recognize rent expense on a straight-line basis over the reasonably assured lease term as defined in ASC Topic 840, Leases (“ASC 840”). In addition, our lease agreement provides for rental payments commencing at a date other than the date of initial occupancy. We include the rent holidays in determination of straight-line rent expense. Therefore, rent expense is charged to expense beginning with the occupancy date. Deferred rent was $3,466 and $5,066 at September 30, 2013 and March 31, 2013, respectively and will be charged to rent expense over the life of the lease.
Recent Pronouncements
We have reviewed all recently issued, but no yet effective, accounting pronouncements and do not believe the future adoptions of any such pronouncements may be expected to cause a material impact on our financial condition or the results of operations.
Note 3. Property Plant and Equipment
Major classes of property and equipment consist of the following:
September 30, 2013 | March 31, 2013 | |||||||
Furniture and fixtures | $ | 13,331 | $ | 11,070 | ||||
Equipment | 352,546 | 330,321 | ||||||
Leasehold Improvements | 3,300 | 3,300 | ||||||
369,177 | 344,691 | |||||||
Less: accumulated depreciation | (60,582 | ) | (33,195 | ) | ||||
$ | 308,595 | $ | 311,496 |
We recorded depreciation expense related to these assets of $27,387 and $5,955 for the six month periods ended September 30, 2013 and 2012, respectively, and $17,364 and $5,955 for the three month periods ended September 30, 2013 and 2012, respectively.
F- 5 |
Barfresh Food Group Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2013
(Unaudited)
(Continued)
Note 4. Intangible Assets
As of September 30, 2013 and March 31, 2013, intangible assets consist of patent costs of $37,087, less accumulated amortization of $6,193 and $5,102, respectively.
Estimated amortization expense related to the patent as of September 30, 2013 is as follows:
Fiscal Years ending March 31, | Total Amortization | |||
2014 (six months remaining) | $ | 1,636 | ||
2015 | 2,181 | |||
2016 | 2,181 | |||
2017 | 2,181 | |||
2018 | 2,181 | |||
Later years | 20,534 | |||
$ | 30,894 |
Note 5. Advance from Related Party
During the six months ended September 30, 2013 and the year ended March 31, 2013 we received a cash advance in the amounts of $12,975 and $30,272, respectively, from a relative of an officer of the Company. The advances bear no interest and were repaid.
Note 6. Convertible Note (Related and Unrelated)
In August 2012, we closed an offering of $440,000 of Convertible Notes (“Notes”), $50,000 of which was purchased by a significant shareholder of ours. The Notes bear interest at a rate of 12% per annum and are due and payable on September 6, 2013. In addition the Notes are convertible at any time after the original issue date until the Note is no longer outstanding, into our $0.000001 par value common stock at a conversion price of $0.372 per share. We also issued 956,519 warrants to the Note holders for the right to purchase shares of our common stock. Each warrant entitles the holder to purchase one share of our $0.000001, par value common stock, at a price of $0.46 per share. There were 956,519 warrants issued.
When the Convertible Notes were due we settled the Notes by repaying $40,000 of the Notes in cash, issuing new convertible notes (“New Notes”) in the amount of $400,000 and received payment for another New Note in the amount of $20,000. In addition we cancelled the outstanding warrants. The New Notes bear interest at a rate of 12% per annum and are due and payable on September 6, 2015. In addition the New Notes are convertible at any time after the original issue date until the Note is no longer outstanding, into our $0.000001 par value common stock at a conversion price of $0.25 per share. We also issued warrants to the New Note holders for the right to purchase shares of our common stock. Each warrant entitles the holder to purchase one share of our $0.000001, par value common stock, at a price of $0.25 per share. There were 1,680,000 warrants issued.
In accordance with the guidance in ASC Topic 470-20 Debt with Conversion and Other Options (“ASC 470”), we first calculated the fair value of the warrants issued and then determined the relative value of the note and determined that there was a beneficial conversion feature.
The fair value of the warrant, $0.13 per share, ($216,531 in the aggregate) was calculated using the Black-Sholes option pricing model using the following assumptions:
Expected life (in years) | 3 | |||
Volatility (based on a comparable company) | 85 | % | ||
Risk Free interest rate | 0.91 | % | ||
Dividend yield (on common stock) | - |
The relative value of the warrants to the note was $142,873, which was the amount recorded as a portion of the debt discount. We also recorded a beneficial conversion feature on the convertible notes of $125,905. The amounts recorded as debt discount will be amortized over the life of the note, two years, and charged to interest expense. We estimated the effective interest rate as calculated to be approximately 74% but will be paying cash at a rate of 12% per annum.
F- 6 |
Barfresh Food Group Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2013
(Unaudited)
(Continued)
The balance at September 30, 2013 was comprised of:
Convertible notes payable, related and unrelated parties | $ | 420,000 | ||
Unamortized Debt discount | (264,710 | ) | ||
$ | 155,290 |
Accrued expenses include interest of $9,646 at September 30, 2013.
The aggregate amount of principal payments due are as follows:
Fiscal Years ending March 31, | ||||
2014 | $ | - | ||
2015 | - | |||
2016 | 420,000 | |||
$ | 420,000 |
Note 7. Commitments and Contingencies
We lease office space under non-cancelable operating lease, which expires October 31, 2014.
The aggregate minimum requirements under non-cancelable leases as of September 30, 2013 are as follows:
Fiscal Years ending March 31, | ||||
2014 (six months remaining) | $ | 39,990 | ||
2015 | 46,655 | |||
$ | 86,645 |
Rent expense was $39,952 and $2,383 for the six month periods ended September 30, 2013 and 2012, respectively, and $21,812 and $794 for the three month periods ended September 30, 2013 and 2012, respectively.
Note 8. Stockholders’ Equity
During prior periods we issued 1,850,000 shares of our common stock to non-employees for various consulting services. Pursuant to the guidance in ASC Topic 505-50, Equity Based Payments to Non-Employees (“ASC 505-50”), the shares issued are being amortized over the periods of the contracts which range from one to two years. The shares were valued at the market price on the date of grant. The aggregate value of the shares previously issued was $596,500. The unamortized balance of $46,500, representing the vested portion not yet expensed, is included in prepaid expenses at September 30, 2013.
During the six months ended September 30, 2013, we terminated a contract with a non-employee. All previously unvested stock option expense to the non-employee, in the amount of $14,747 was reversed and credited to general and administrative expenses
We have consulting contracts which provide for the potential issuance of an additional 1,350,000 shares of our common stock at prices to be determined in the future. The contracts contain performance commitments relating to future revenue and/or earnings. There are not significantly large disincentives for nonperformance to make the achievement of the goals probable. None of the goals were achieved as of September 30, 2013, and in accordance with the guidance ASC 505-50 no expense was recognized for these future grants.
F- 7 |
Barfresh Food Group Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2013
(Unaudited)
(Continued)
Certain previously granted restricted stock rights and stock options were subject to performance conditions. As a result of the employee termination the performance conditions will not be met. In accordance with ASC Topic 718, Compensation - Stock Compensation (“ASC 718”), previously recognized unvested equity based compensation cost of $103,488, have been reversed during the six month period ended September 30, 2013.
During the three months ended June 30, 2013 we completed an offering of common stock units at a price of $0.25 per unit. Each unit consists of one share of common stock and a three year warrant to purchase one-half (1/2) share of our common stock at an exercise price of $0.50 per share (“Unit” or “Units”). Prior to the six months ended September 30, 2013 we sold 1,600,000 units representing 1,600,000 shares and warrants to purchase 800,000 shares for total consideration of $400,000 less $17,500 in cost. During the six months ended September 30, 2013 we sold an additional 1,600,000 units representing 1,600,000 shares and warrants to purchase 800,000 shares for total consideration of $400,000. In total we sold 3,200,000 units representing 3,200,000 shares and warrants to purchase 1,600,000 shares for total consideration of $800,000 less $17,500 in cost for a net amount received of $782,500.
The fair value of the warrants, $266,673, was estimated at the date of grant using the Black-Scholes option pricing model, with an allocation of the proceeds applied to the warrants. The difference between the warrant allocation and the proceeds was allocated to the shares of common stock issued. The fair value of the warrants has been included in the total additional paid in capital. The following assumptions were used in the Black-Scholes option pricing model:
Expected life (in years) | 3 | |||
Volatility (based on a comparable company) | 100 | % | ||
Risk Free interest rate | 0.36 | % | ||
Dividend yield (on common stock) | - |
During the three months ended September 30, 2013 we completed an offering of common stock units at a price of $0.25 per unit. Each unit consists of one share of common stock, a three year warrant to purchase one share of our common stock at an exercise price of $0.25 per share (which may be exercised on a cashless basis), and a five year warrant to purchase one-half (1/2) share of our common stock at an exercise price of $0.50 per share (“Unit” or “Units) for total consideration of $1,906,500 less $267,645 in cost for a net amount received of $1,638,855.
The fair value of the warrants, estimated at the date of grant using the Black-Scholes option pricing model was $3,089,919. The estimated value was higher than the proceeds received from the sale of the common stock units. Accordingly, the proceeds received less the par value of the common stock, has been included in the total additional paid in capital. The following assumptions were used in the Black-Scholes option pricing model:
Expected life (in years) | 3 -5 | |||
Volatility (based on a comparable company) | 87 - 106 % | |||
Risk Free interest rate | 0.67 - 1.38 % | |||
Dividend yield (on common stock) | - |
The following is a summary of outstanding stock options issued to employees as of September 30, 2013
Number
of
Options |
Exercise
price per share |
Average
remaining term in years |
Aggregate
intrinsic value at date of grant |
|||||||||||||
Outstanding March 31, 2013 | 625,000 | $ | 1.00 | 2.23 | $ | - | ||||||||||
Cancelled | (625,000 | ) | - | |||||||||||||
Outstanding September 30, 2013 | - | - | - | - | ||||||||||||
Exercisable | - | $ | - | - | $ | - |
F- 8 |
Barfresh Food Group Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2013
(Unaudited)
(Continued)
Note 9. Outstanding Warrants
The following is a summary of all outstanding warrants as of September 30, 2013:
Number
of
warrants |
Exercise
price per share |
Average
remaining term in years |
Aggregate
intrinsic value at date of grant |
|||||||||||||
Warrants issued in connection with private placements of common stock | 14,372,232 | $ 0.25 - 1.50 | 3.38 | $ | 1,296,420 | |||||||||||
Warrants issued in connection with private placement of convertible notes | 1,680,000 | $ | 0.25 | 2.82 | $ | - |
Note 10. Interest Expense
Interest expense includes direct interest of $24,924 and $11,724 for the six and three months ended September 30, 2013, respectively, and $4,400 for the six and three months ended September 30, 2012, respectively, calculated based on the interest rate stated in the convertible notes.
In addition as more fully described in Note 6 above, interest expense includes non-cash amortization of the debt discount of $121,622 and $50,612, for six and three month periods ended September 30, 2013, respectively, and $29,310 for the six and three months ended September 30, 2012, respectively.
Note 11. Income Taxes
We account for income taxes in interim periods in accordance with ASC Topic 740, Income Taxes (“ASC 740”). We have determined an estimated annual effective tax rate. The rate will be revised, if necessary, as of the end of each successive interim period during our fiscal year to our best current estimate. As of September 30, 2013 the estimated effective tax rate for the year will be zero.
There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2009 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. There have been no income tax related interest or penalties assessed or recorded.
ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
For the six and three month ended September 30, 2013 and 2012 we did not have any interest and penalties associated with tax positions. As of September 30, 2013 we did not have any significant unrecognized uncertain tax positions.
Note 12. Business Segments
We operate in only one segment and geographic location.
F- 9 |
Barfresh Food Group Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2013
(Unaudited)
(Continued)
Note 13. Subsequent Events
Management has evaluated all activity and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements except as for the following:
Subsequent to September 30, 2013 we acquired all of the international patent rights in respect to a sealed pack of ingredients for an individual smoothie and associated methods and apparatuses (the “Patents”). The Patents, which were filed pursuant to the Patent Cooperation Treaty (the “PCT”), have been granted in 13 jurisdictions and are pending in the remainder of the jurisdictions that have signed the PCT. In addition, we purchased all of the trademarks related to the patented products. These intellectual property assets were acquired from an Australia bank pursuant to an open competitive bidding process for a cash purchase price of AUS $710,000 (approximately U.S. $678,000). Prior to this acquisition we owned the related patents rights in the United States and Canada.
We will amortize the patents acquired over the remaining life of the patent which is twenty years from the date of filing the patent application which was June 2005.
F- 10 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the financial information included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”), including our unaudited condensed consolidated financial statements as of September 30, 2013 and for the six and three months ended September 30, 2013 and 2012 and the related notes. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “us,” “we,” “our,” and similar terms refer to Barfresh Food Group Inc. This discussion includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements.
We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Factors that may affect our results include, but are not limited to, the risk factors in Item 2.01 in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on July 1, 2013. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
We are a company engaging in the manufacturing and distribution of ready to blend beverages, particularly, smoothies, shakes and frappes. We hold the technology, and a Canadian patent and a United States patent pending for a sealed pack of ingredients for an individual smoothie. We have generated limited revenue to date. We have been developing flavor profiles of our smoothies that we believe will be appealing to tastes in the United States. We have been in discussions with a number of companies including both large and small quick service restaurant (“QSR”) chains and national food services companies that serve alternative venues such as stadiums, arenas and universities with national footprints in the United States and have reached preliminary agreements with three potential customers to begin testing in the near future. We are in ongoing negotiations with a number of other companies. We recently purchased all of the international intellectual rights to the technology. We are currently reviewing our options as how best to monetize the international patents.
To date, we have funded our operations through the sale of our common stock, issuance of convertible debt, and advances from a related party.
In January 2012, we completed an offering of units consisting of an aggregate of (i) 1,333,332 shares of our common stock and (ii) warrants to purchase 1,333,332 shares of common stock which have a five-year term and an initial per share exercise price of $1.50. The price per unit was $0.75 for an aggregate purchase price of $999,998.
In August 2012, we closed an offering of $440,000 of Convertible Notes (“Notes”), $50,000 of which was purchased by a significant shareholder of ours. The Notes bear interest at a rate of 12% per annum and were due and payable on September 6, 2013. In addition the Notes were convertible at any time after the original issue date until the Note is no longer outstanding, into our $0.000001 par value common stock at a conversion price of $0.372 per share. We also issued 956,519 warrants to the Note holders for the right to purchase shares of our common stock. Each warrant entitles the holder to purchase one share of our $0.000001, par value common stock, a price of $0.46 per share. There were 956,519 warrants issued.
When the Convertible Notes were due we settled the Notes by repaying $40,000 of the Notes in cash, issuing new convertible notes (“New Notes”) in the amount of $400,000 and received payment for another New Note in the amount of $20,000. In addition we cancelled the outstanding warrants. The New Notes bear interest at a rate of 12% per annum and are due and payable on September 6, 2015. In addition the New Notes are convertible at any time after the original issue date until the Note is no longer outstanding, into our $0.000001 par value common stock at a conversion price of $0.25 per share. We also issued warrants to the New Note holders for the right to purchase shares of our common stock. Each warrant entitles the holder to purchase one share of our $0.000001, par value common stock, a price of $0.25 per share. There were 1,680,000 warrants issued.
During December 2012 through June 30, 2013 we sold (i) 3,200,000 shares of our common stock and (ii) warrants to purchase 1,600,000 shares of common stock which have a three-year term and an initial per share exercise price of $0.50. The price per unit was $0.25 for an aggregate purchase price of $800,000. We incurred cost of the offering of $17,500, for net proceeds of $785,500. The offering has been closed.
During December 2012 through September 30, 2013 we received a cash advance from a relative of an officer of the Company in the amount of $43,274. The advance had no interest and was repaid.
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During the three months ended September 30, 2013 we completed an offering of common stock units at a price of $0.25 per unit. Each unit consisted of one share of common stock, a three year warrant to purchase one share of our common stock at an exercise price of $0.25 per share (which may be exercised on a cashless basis), and a five year warrant to purchase one-half (1/2) share of our common stock at an exercise price of $0.50 per share for total consideration of $1,906,500 less $267,645 in cost for a net amount received of $1,638,855.
Our plan is to utilize contract manufacturers to manufacture our products in the United States. Ice cream manufacturers are best suited for our products. Our first production line has been installed and commissioned in Salt Lake City and is currently producing products being sold to our customers as well as new product development for new large customers.
Although we do not have a contract with any suppliers for the raw materials needed to manufacture smoothie packs we believe that there are a significant number of sources available and we do not anticipate becoming dependent on any one supplier. As demand for our range of products grows, we will look to contract a level of our raw material requirements to ensure continuity of supply.
We currently have two employees selling our product. The process of obtaining orders from potential customers will likely follow the following process:
● | Meeting with and introducing products to customer |
● | Developing flavor profiles for the specific customer |
● | Participate in test marketing of the product with the flavors developed for the customer |
● | Agree to a roll out schedule for the customer. |
Although we have agreements with potential customers, representing approximately 10,000 outlets, to develop flavors and test our products and have begun to develop flavor profiles for others, we have no assurance that we will supply any chain with our products. During the six months ended September 30, 2013 we began shipping our products to one of the customers we have contracts with and to a number of smaller customers.
In addition to the large retail fast food and fast casual chains, we will sell to food distributors that supply products to the food services market place.
There can be no assurance that we will not become dependent on one or a few major customers.
Subsequent to September 30, 2013 we acquired all of the international patent rights in respect to a sealed pack of ingredients for an individual smoothie and associated methods and apparatuses (the “Patents”). The Patents, which were filed pursuant to the Patent Cooperation Treaty (the “PCT”), have been granted in 13 jurisdictions and are pending in the remainder of the jurisdictions that have signed the PCT. In addition, we purchased all of the trademarks related to the patented products. These intellectual property assets were acquired from an Australia bank pursuant to an open competitive bidding process for a cash purchase price of AUS $710,000 (approximately U.S. $678,000). Prior to this acquisition we owned the related patents rights in the United States and Canada.
We intend to monetize the international patents outside of our current area of operations, North America, by expanding contract manufacturing to other countries and selling either through selling agents or our own sales personnel or by entering into some form of license or royalty agreements with third parties.
Critical accounting Policies
Our financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplates our continuation as a going concern. We have incurred losses to date of $3,518,908. To date we have funded our operations through advances from a related party, issuance of convertible debt, and the sale of our common stock. We intend to raise additional funding through third party equity or debt financing. There is no certainty that funding will be available as needed. These factors raise substantial doubt about our ability to continue operating as a going concern. Our ability to continue our operations as a going concern, realize the carrying value of our assets, and discharge our liabilities in the normal course of business is dependent upon our ability to raise capital sufficient to fund our commitments and ongoing losses, and ultimately generate profitable operations.
We were in the development stage from December 4, 2009 through March 31, 2013. Our fiscal year ending March 31, 2014 is the first year during which we are considered an operating company and no longer in the development stage.
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Intangible Assets
Intangible assets are comprised of patents, net of amortization. The patent costs are being amortized over the life of the patent which is twenty years from the date of filing the patent application. In accordance with ASC Topic 350 Intangibles - Goodwill and Other (“ASC 350”), the costs of internally developing other intangible assets, such as patents, are expensed as incurred. However, as allowed by ASC 350, legal fees and similar costs relating to patents have been capitalized.
Property, Plant and Equipment
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment loss, if any. Depreciation is calculated on a straight line basis over the estimated useful lives of the assets. Leasehold improvements are being amortized over the shorter of the useful life of the asset or the lease term that includes any expected renewal periods that are deemed to be reasonably assured. The estimated useful lives used for financial statement purposes are:
Furniture and fixtures: 5 years
Equipment: 7 years
Leasehold improvements: 2 years
Revenue Recognition
We recognize revenue when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable, and collection is reasonably assured.
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.
Earnings per Share
We calculate net loss per share in accordance with ASC Topic 260, Earnings per Share . Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period, and diluted earnings per share is computed by including common stock equivalents outstanding for the period in the denominator. At September 30, 2013 and 2012 any equivalents would have been anti-dilutive as we had losses for the periods then ended.
Research and Development
Expenditures for research activities relating to product development and improvement are charged to expense as incurred. We incurred $8,439 and $12,229, in research and development expenses for the six month periods ended September 30, 2013 and 2012, respectively, and $4,532 and $12,229 in research and development expenses for the three month periods ended September 30, 2013 and 2012, respectively.
Rent Expense
We recognize rent expense on a straight-line basis over the reasonably assured lease term as defined in ASC Topic 840, Leases (“ASC 840”). In addition, our lease agreement provides for rental payments commencing at a date other than the date of initial occupancy. We include the rent holidays in determination of straight-line rent expense. Therefore, rent expense is charged to expense beginning with the occupancy date. Deferred rent was $3,466 and $5,066 at September 30, 2013 and March 31, 2013, respectively and will be charged to rent expense over the life of the lease.
Results of Operations
Results of Operation for Six Month Period Ended September 30, 2013 As Compared to the Six Month Period Ended September 30, 2012
(References to 2013 and 2012 are to the six month periods ended September 30, 2013 and 2012 respectively, unless otherwise specified.)
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Revenue
Revenue for 2013 was $32,258 as compared to $2,880 in 2012. A number of customers began testing our products in multiple locations in 2013. There was no revenue prior to July 1, 2012.
Cost of revenue for 2013 was $21,319 as compared to $1,584 in 2012. Our gross profit was $10,939 (33.9%) and $1,296 (45.0%) for the six month periods ended September 30, 2013 and 2012, respectively. We anticipate that our gross profit percentage in 2013 is more indicative of our expected results going forward than the percentage in 2012.
Operating expenses
Our operations during 2012 had been limited to developing flavor profiles of our product, setting up a manufacturing facility, producing products, setting up a sales force and negotiating agreements. Our operations in 2013 are more indicative of no longer being a development stage company.
All of our general and administrative expenses increased significantly as we grew the business and is not necessarily indicative of the rate of future growth.
The following is a breakdown of our general and administrative expenses for the six month periods ended September 30, 2013 and 2012:
2013 | 2012 | Difference | ||||||||||
Personnel costs | $ | 455,920 | $ | 21,185 | $ | 434,735 | ||||||
Consulting fees | 172,762 | 382,680 | (209,918 | ) | ||||||||
Travel | 74,695 | 48,839 | 25,856 | |||||||||
Legal and professional fees | 72,698 | 63,188 | 9,510 | |||||||||
Investor and public relations | 66,094 | 5,312 | 60,782 | |||||||||
Marketing and selling | 40,987 | 26,288 | 14,699 | |||||||||
Rent | 39,952 | 2,383 | 37,569 | |||||||||
Research and development | 8,439 | 12,229 | (3,790 | ) | ||||||||
Stock based compensation/options | (103,488 | ) | 37,292 | (140,780 | ) | |||||||
Other expenses | 74,573 | 35,989 | 38,584 | |||||||||
$ | 902,632 | $ | 635,385 | $ | 267,247 |
Personnel cost represent the cost of employees. As of September 30, 2013 we had 6 employees. We had 3 employees in 2012. In 2012 the worked performed by 3 of the employees was performed by consultants.
Consulting fees decreased by $209,918 (54.9%) from $382,680 in 2012 to $172,762 in 2013. During 2013 and 2012, we had from four to six consultants providing services to us. As of September 30, 2013 we have only two consultant providing services. Of the amounts included in consulting fees, $116,842 and $127,315, represents noncash expenses in 2013 and 2012, respectively.
Travel expenses increased by $25,856 (52.9%) from $48,839 in 2012 to $74,695 in 2013. Travel expenses are being incurred primarily related to selling expenses.
Legal and professional fees increased by $9,510 (15.1%) from $63,188 in 2012 to $72,698 in 2013. Legal and professional fees relate to Securities and Exchange Commission (“SEC”) compliance, financing legal expenses, and contract negotiation regarding sales, and manufacturing.
Investor and public relation expenses increased $60,782 from $5,312 in 2012 to $66,094 in 2013. The increase was primarily from engaging two firms to assist us with our investor and public relations needs. We anticipate continuing the use of outside sources in the future.
Marketing and selling expenses increased $14,699 (55.9%) from $26,288 in 2012 to $40,987 in 2013. The increase relates primarily to sample expenses. We gave away more products in 2013 than in 2012.
Rent expense is primarily for our location in Beverly Hills, California. Our rent expense is approximately $6,700 per month. The lease on the office commenced in October 2012.
Research and development expenses decreased by $3,790 (31.0%), from $12,229 in 2012 to $8,439 in 2013. Research and development represent the cost of developing flavor profiles of our products and the development of future equipment. We anticipate cost continuing in future periods, the amounts of which cannot be estimated at this point in time. Our research and development costs will be dependent on new formulations and new flavor profiles as our customer base increases.
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Certain previously granted restricted stock rights and stock options were subject to performance conditions. As a result of the employee termination the performance conditions will not be met, in accordance with ASC Topic 718, Compensation - Stock Compensation (“ASC 718”), previously recognized unvested equity based compensation cost of $103,488, have been reversed during the six month period ended September 30, 2013.
Other expenses consist of ordinary operating expenses such as office, telephone, insurance, and stock related costs. These costs have increased as our business has grown. We anticipate additional increases in these expenses.
We had operating losses of $920,170 and $641,431 for 2013 and 2012, respectively.
Interest expense increased $123,959 from $28,070 in 2012 to $152,029 in 2013. Interest primarily relates to convertible debt which were issued in August 2012. Interest expense includes direct interest of $24,924 and $4,400 for 2013 and 2012, respectively, calculated based on the interest rate stated in the convertible notes. In addition, interest expense includes non-cash amortization of the debt discount of $121,622 and $23,670, for 2013 and 2012, respectively.
We had net losses of $1,072,199 and $669,205 for 2013 and 2012, respectively.
Results of Operation for Three Month Period Ended September 30, 2013 As Compared to the Three Month Period Ended September 30, 2012
(References to 2013 and 2012 are to the three month periods ended September 30, 2013 and 2012 respectively, unless otherwise specified.)
Revenue
Revenue for 2013 was $15,933 as compared to $2,880 in 2012. A number of customers began testing our products in multiple locations in 2013. There was no revenue prior to the three months ended September 30, 2012.
Cost of revenue for 2013 was $11,045 as compared to $1,584 in 2012. Our gross profit was $4,888 (30.7%) and $1,296 (45.0%) for the three month periods ended September 30, 2012 and 2012, respectively. We anticipate that our gross profit percentage in 2013 is more indicative of our expected results going forward than the percentage in 2012.
Operating expenses
Our operations during 2012 had been limited to developing flavor profiles of our product, setting up a manufacturing facility, producing products, setting up a sales force and negotiating agreements. Our operations in 2013 are more indicative of future operations as we are no longer a development stage company.
All of our general and administrative expenses increased significantly as we grew the business and is not necessarily indicative of the rate of future growth.
The following is a breakdown of our general and administrative expenses for the three month periods ended September 30, 2013 and 2012:
2013 | 2012 | Difference | ||||||||||
Personnel costs | $ | 225,536 | $ | 21,185 | $ | 204,351 | ||||||
Consulting fees | 58,667 | 183,919 | (125,252 | ) | ||||||||
Travel | 36,934 | 28,890 | 8,044 | |||||||||
Legal and professional fees | 34,534 | 28,526 | 6,008 | |||||||||
Investor and public relations | 21,295 | 4,362 | 16,933 | |||||||||
Marketing and selling | 24,533 | 15,413 | 9,120 | |||||||||
Rent | 21,812 | 2,383 | 19,429 | |||||||||
Research and development | 4,532 | 12,229 | (7,697 | ) | ||||||||
Stock based compensation/options | - | 37,292 | (37,292 | ) | ||||||||
Other expenses | 49,883 | 21,487 | 28,396 | |||||||||
$ | 477,726 | $ | 355,686 | $ | 122,040 |
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Personnel cost represent the cost of employees. As of September 30, 2013 we had 6 employees. We had 3 employees in 2012. In 2012 the worked performed by 3 of the employees was performed by consultants.
Consulting fees decreased by $125,252 (68.1%) from $183,919 in 2012 to $58,667 in 2013. During 2013 and 2012, we had from two to three consultants providing services to us. As of September 30, 2013 we have only two consultant providing services. Of the amounts included in consulting fees, $25,000 and $55,313, represents noncash expenses in 2013 and 2012, respectively.
Travel expenses increased by $8,044 (27.8%) from $28,890 in 2012 to $36,934 in 2013. Travel expenses are being incurred primarily related to selling expenses.
Legal and professional fees increased by $6,008 (21.1%) from $28,526 in 2012 to $34,534 in 2013. Legal and professional fees relate to Securities and Exchange Commission (“SEC”) compliance, financing legal expenses, and contract negotiation regarding consultants and manufacturing.
Investor and public relation expenses increased $16,933 from $4,362 in 2012 to $21,295 in 2013. The increase was primarily from engaging two firms to assist us with our investor and public relations needs. We anticipate continuing the use of outside sources in the future.
Marketing and selling expenses increased $9,120 (59.2%) from $15,413 in 2012 to $24,533 in 2013. The increase relates primarily to sample expenses. We gave away more products in 2013 than in 2012.
Rent expense is primarily for our location in Beverly Hills, California. Our rent expense is approximately $6,700 per month. The lease on the office commenced in October 2012.
Research and development expenses decreased by $7,697 (62.9%), from $12,229 in 2012 to $4,532 in 2013. Research and development represent the cost of developing flavor profiles of our products and the development of future equipment. We anticipate cost continuing in future periods the amounts of which cannot be estimated at this point in time. Our research and development costs will be dependent on new formulations and new flavor profiles as our customer base increases.
There was no stock based compensation in 2013.
Other expenses consist of ordinary operating expenses such as office, telephone, insurance, and stock related costs. These costs have increased as our business has grown. We anticipate additional increases in these expenses.
We had operating losses of $490,747 and $360,891 for 2013 and 2012, respectively
Interest expense increased $39,749 from $28,070 in 2012 to $67,819 in 2013. Interest primarily relates to convertible debt which were issued in August 2012. Interest expense includes direct interest of $15,039 and $4,400 for 2013 and 2012, respectively, calculated based on the interest rate stated in the convertible notes. In addition, interest expense includes non-cash amortization of the debt discount of $51,467 and $23,670 for 2013 and 2012, respectively.
We had net losses of $558,566 and $388,961 for 2013 and 2012, respectively.
Liquidity and Capital Resources
As of September 30, 2013 we had working capital of $825,508. During the six months ended September 30, 2013 we used cash of $1,028,338 in operations, $24,486 for investment in equipment, and we received $2,306,500 less expenses of $267,645 for a net amount of $2,308,855 for the sale of (i) 9,226,000 shares our common stock and (ii) warrants to purchase 12,239,000 shares of common stock which have terms from three to five year and exercise prices between $0.25 and $0.50 per share. In addition we borrowed $12,975 and repaid $43,247 in advances from a relative of one of our officers and directors. We also repaid $40,000 and borrowed $20,000 of principal our convertible debt.
Our operations to date have been financed by the sale of securities and by the issuance of convertible debt. We believe that the proceeds of our latest offering should be sufficient to fund our operations for the foreseeable future. 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 capital or debt. There are no assurances that we will be able to generate the necessary capital or debt to carry out our current plan of operations.
8 |
The aggregate minimum requirements under non-cancelable leases as of September 30, 2013 are as follows:
Fiscal Years ending March 31, | ||||
2014 (six months remaining) | 39,990 | |||
2015 | 46,655 | |||
$ | 86,645 |
The aggregate amount of principal payments due are as follows:
Fiscal Years ending March 31, | ||||
2014 (six months remaining) | $ | - | ||
2015 | - | |||
2016 | 420,000 | |||
$ | 420,000 |
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required because we are a smaller reporting company.
Item 4 . Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officers), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.
The matters involving internal control over financial reporting that our management considered to be a material weakness was a lack of segregation of duties as we have an inadequate number of personnel to properly implement control procedures.
Management believes that the material weakness set forth above did not have an effect on our financial results.
Changes in Internal Control over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the three months ended September 30, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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We are subject to various legal proceedings from time to time in the ordinary course of business, none of which are required to be disclosed under this Item 1.
Not required because we are a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None that have not been disclosed on a current report on Form 8-K.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
None.
Item 6. Exhibits. (Counsel to prepare)(Need to make decision whether submission of CTR request is practical)
Exhibit
No. |
Description | |
10.1 | Intellectual Property Sale Deed by and between National Australia Bank Limited and Barfresh Inc. dated October 15, 2013, filed herewith. | |
31.1 | Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1** | Certification of Principal Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2** | Certification of Principal Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
** | In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed. |
10 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BARFRESH FOOD GROUP INC. | ||
Date: November 20, 2013 | By: | /s/ Riccardo Delle Coste |
Riccardo Delle Coste
Chief Executive Officer
|
||
Date: November 20, 2013 | By: | /s/ Arnold Tinter |
Arnold Tinter | ||
Chief Financial Officer
|
11 |
Execution version
Intellectual Property Sale Deed
Gregory Winfield Hall as agent for National Australia Bank
Limited (as Mortgagee in Possession)
Barfresh Inc.
Gadens Lawyers
77 Castlereagh Street
Sydney NSW 2000
T | + 61 2 9931 4999 |
F | + 61 2 9931 4888 |
Ref | WXD33614099 |
2 |
Intellectual Property Sale Deed
Dated 15 October 2013
Parties
1. | Gregory Winfield Hall as agent for National Australia Bank Limited (as Mortgagee in Possession) C/-PwC, 201 Sussex Street, Sydney, NSW, 2000 ( Seller ). |
2. | Barfresh Inc. of Suite 701, 90 Madison Street, Colorado,80206 USA ( Buyer ). |
Background
A. | National Australia Bank Limited ACN 004 044 937 ( NAB ) provided certain facilities to Barfresh Food Group Pty Ltd. (“Bar Fresh Food Group”) an Australian company. |
B. | Smoo Pty Limited ACN 113 127 030 ( Smoo ) provided a guarantee to NAB to secure the obligations of Barfresh Food Group to NAB, which guarantee is supported by the GSA. |
C. | Smoo is in default of its obligations under the guarantee and the GSA. |
D. | NAB has appointed Gregory Winfield Hall ( Mr Hall ) as agent to act on its behalf in exercising its powers under the GSA, including the right to sell the Intellectual Property. |
E. | Smoo has the legal title to the Intellectual Property. |
F. | The Seller has agreed to sell, and the Buyer has agreed to buy, the Seller’s right, title and interest in the Intellectual Property on the terms and conditions of this document. |
Operative provisions
1. | Definitions and interpretation | |
1.1 | Definitions | |
In this document, unless the context otherwise requires: | ||
$ means the lawful currency of the Commonwealth of Australia. | ||
ASX means ASX Limited. | ||
ATO Public Ruling means any ruling authorised by the Commissioner of Taxation for Australia and published by the Australian Taxation Office. | ||
Bank Security Interests mean the security interests listed in part 1 of schedule 2. | ||
Business Day means a day that is not a Saturday, Sunday or public holiday in Sydney. | ||
Claim includes a claim, notice, demand, action, proceeding, litigation, investigation or judgment, loss, cost or liability however arising whether present or future. |
3 |
Completion Date means the date on which Completion takes place. | ||
Completion means completion of the sale and purchase of the Intellectual Property contemplated in this document. | ||
Confidential Information means: | ||
(a) | all information of or used by the Seller, relating to its transactions, operations and affairs; | |
(b) | all other information in relation to the Intellectual Property treated by the Seller as confidential, including this document; | |
(c) | all notes, data, reports and other records (whether or not in tangible form) based on, incorporating or derived from information referred to in paragraph (a) or (b); and | |
(d) | all copies (whether or not in tangible form) of the information, notes, reports and records referred to in paragraphs (a), (b) or (c), | |
that is not public knowledge (otherwise than as a result of a breach of confidentiality). | ||
Defaulting Party has the meaning given in clause 4.4. |
Due Diligence Material means all information and documents provided or made available by or on behalf of the Seller or its representatives to the Buyer or its representatives.
Encumbrance means any security interest, mortgage, lien, restriction against transfer, pledge, claim, encumbrance and any third party interest.
End Date means the first to occur of:
(a) | the Completion Date; or | |
(b) | the date this document is terminated under clause 4.5 or clause 10. |
Event of Default means the happening of any of the events listed in clause 10.1.
Excluded Intellectual Property means:
(c) | any assets of the Seller not included in the definition of Intellectual Property; | |
(d) | all assets which are the subject of a valid Claim of any third party; | |
(e) | any asset, the transfer, surrender, disposal or dealing of or with which, or any part of or interest in which, would or might cause a breach of a third party right or be otherwise contrary to any relevant law; and | |
(f) | Excluded Claims. |
Excluded Claims mean all claims which the Seller and or NAB may have against third parties.
Governmental Agency means the Crown, any government, any governmental ministry or department, or any Crown, governmental, semi-governmental, statutory, parliamentary, administrative, fiscal, public, municipal, local, judicial or regulatory entity, agency, instrumentality, utility, authority, court, commission, body or tribunal.
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GSA means the General Security Agreement between NAB and Smoo dated 14 August 2012, and registered as number 201208150032747 in the Personal Property Securities Act 2009 Register.
GST means the same as in the GST Law, and any other goods and services tax or any tax, levy, charge or impost which applies in a similar way.
GST Law has the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999 (Cth) and words defined in the GST Law (including ’supply’ and ‘taxable supply’) have the same meaning in this document unless the context makes it clear that a different meaning is intended.
Immediately Available Funds mean a bank cheque issued by an Australian registered bank or an electronic funds transfer through the RTGS (real-time gross settlement) payment system.
Insolvency Event means the happening of any of the following events:
(a) | an application is made to a court for an order or an order is made appointing a liquidator, provisional liquidator in respect of the Buyer (or proceedings are commenced or a resolution passed or proposed in a notice of meeting for any of those things); | |
(b) | proceedings are initiated with a view to obtaining an order for the winding up or similar process of the Buyer, or an order is made or any effective resolution is passed for the winding up of the Buyer; | |
(c) | except to reconstruct or amalgamate while solvent on terms approved by the non-defaulting party, the Buyer enters into, or resolves to enter into, a scheme of arrangement, deed of company arrangement or composition with, or assignment for the benefit of, all or any class of its creditors, or it proposes a reorganisation, moratorium or other administration involving any class of its creditors; | |
(d) | a controller is appointed to or over or takes possession of all or a substantial part of the assets or undertakings of the Buyer; | |
(e) | the Buyer is or is deemed or presumed by law or a court to be insolvent; | |
(f) | the Buyer takes any step to obtain protection or is granted protection from its creditors, under any applicable legislation or an administrator is appointed to the Buyer; and | |
(g) | anything analogous or having a substantially similar effect to any of the events specified above happens in respect of the Buyer under the law of any applicable jurisdiction. |
Intellectual Property means the right, title and interest, if any, of the Seller to the Patents and Trade Marks, and any other rights that the Seller has, if any, in other intellectual property rights, whether or not protected by statute or common law in Australia or elsewhere in the world, including copyright, designs, other subject matter of intellectual property rights and trading names and domain names, but excluding moral rights of the Seller.
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Liability means all liability (whether actual, contingent or prospective), loss, damages, costs and expenses of any description.
Mr Hall has the meaning given in paragraph D of the Background section above.
NAB has the meaning given in paragraph A of the Background section above.
Non-Defaulting Party has the meaning given in clause 4.4.
Patents includes the patents described in part 1 of schedule 1.
Penalty Amount means an amount equal to:
(a) | the Purchase Price under this document; | |
(b) | less the ultimate purchase price paid by a third party purchaser or purchasers ( Third Party ) of the Intellectual Property; | |
(c) | plus all the costs of the Seller that relate to the sale of the Intellectual Property to the Third Party, including receivership costs, marketing costs, costs of lawyers and costs of other advisors; and | |
(d) | plus interest on the amount referred to in paragraph (a) calculated from 15 October 2013 to the date that the Third Party completes on the acquisition of the Intellectual Property. |
Permitted Disclosees has the meaning given in clause 9.1(b)(i).
Purchase Price means the amount specified at clause 3.1.
Smoo has the meaning given in paragraph B of the Background section above.
Specified Time means 12:00 pm on 15 October 2013.
Stakeholder means Gadens Lawyers Sydney Pty Limited of 77 Castlereagh Street, Sydney, New South Wales.
Tax includes any tax, levy, impost, assessment, deduction, charge, rate, stamp duty or compulsory loan or withholding levied, imposed, assessed or collected by or under any legislation or Governmental Agency, including any income, company, undistributed profits, payroll, sales, goods, services, value added, capital gains, withholding, prescribed payments, land, rating, stamp, transaction, social service and workers’ compensation tax, stamp duty, charge, contribution, levy and obligation, together with any associated interest, penalty, fine, charge and fee or other amount and Taxation has a corresponding meaning.
Trade Marks means the registered trademarks listed in part 2 of schedule 1.
1.2 | Interpretation |
In this document unless the context otherwise requires:
(a) | clause and subclause headings are for reference purposes only; | |
(b) | the singular includes the plural and vice versa; | |
(c) | words denoting any gender include all genders; |
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(d) | reference to a person includes any other entity recognised by law and vice versa; | |
(e) | where a word or phrase is defined its other grammatical forms have a corresponding meaning; | |
(f) | any reference to a party to this document includes its successors and permitted assigns; | |
(g) | any reference to any document or agreement includes that document or agreement as amended at any time; | |
(h) | the use of the word includes or including is not to be taken as limiting the meaning of the words preceding it; | |
(i) | the expression at any time includes reference to past, present and future time and the performance of any action from time to time; | |
(j) | an agreement, representation or warranty on the part of two or more persons binds them jointly and severally; | |
(k) | an agreement, representation or warranty on the part of two or more persons is for the benefit of them jointly and severally; | |
(l) | reference to an exhibit, annexure, attachment or schedule is a reference to the corresponding exhibit, annexure, attachment or schedule in this document; | |
(m) | reference to a provision described, prefaced or qualified by the name, heading or caption of a clause, subclause, paragraph, schedule, item, annexure, exhibit or attachment in this document means a cross reference to that clause, subclause, paragraph, schedule, item, annexure, exhibit or attachment; | |
(n) | when a thing is required to be done or money required to be paid under this document on a day which is not a Business Day, the thing must be done and the money paid on the immediately preceding Business Day; and | |
(o) | reference to a statute includes all regulations and amendments to that statute and any statute passed in substitution for that statute or incorporating any of its provisions to the extent that they are incorporated. |
1.3 | The rule about contra proferentem |
This document is not to be interpreted against the interests of a party merely because that party proposed this document or some provision in it or because that party relies on a provision of this document to protect itself.
2. | Sale and purchase |
2.1 | Sale of Intellectual Property |
The Seller agrees to sell to the Buyer, and the Buyer agrees to buy from the Seller, the Seller’s right, title and interest in the Intellectual Property:
(a) | for the Purchase Price; | |
(b) | with all rights attached or accrued by or after the Specified Time; and | |
(c) | with effect from Completion. |
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3. | Purchase Price | |
3.1 | Amount | |
The Purchase Price for the Intellectual Property is $710,000. | ||
3.2 | Payment of the Purchase Price | |
The Buyer has paid the Purchase Price on or around the Specified Time, and the Seller acknowledges receipt of the Purchase Price. | ||
3.3 | Set off | |
Subject to as provided in this document, all amounts payable by the Buyer under this document must be paid by the Buyer without set off or deduction or withholding by the Buyer and the Buyer waives all right of set off, deduction, withholding, counter claim, retention, abatement or compensation. | ||
4. | Completion | |
4.1 | Time and place | |
Completion will take place at 2 pm (or such other time as the parties may agree) on 15 October 2013 at the offices of the Stakeholder at 77 Castlereagh Street, Sydney, or another place agreed by the parties in writing. | ||
4.2 | Seller’s obligations | |
At Completion, the Seller must deliver to the Buyer to the extent it has them in its possession: |
(a) | the certificates of registration for the Trade Marks; and | |
(b) | the certificates of registration for the Patents. |
4.3 | Simultaneous actions at Completion | |
In respect of Completion: |
(a) | the obligations of the parties under this document are interdependent; and | |
(b) | all actions required to be performed will be taken to have occurred simultaneously on the date of Completion. |
4.4 | Notice to complete |
If Completion does not occur in accordance with this clause 4 because of the failure of any party (the Defaulting Party ) to satisfy any of its obligations under this clause 4 then:
(a) | the Buyer (where the Defaulting Party is the Seller); or |
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(b) | the Seller (where the Defaulting Party is the Buyer), |
(in either case the Non-Defaulting Party ) may give the Defaulting Party a notice requiring the Defaulting Party to satisfy those obligations within a period of 5 Business Days after the date of the notice and specifying that time is of the essence in relation to that notice.
4.5 | Remedies for failure to comply with notice |
If the Defaulting Party fails to comply with a notice given under clause 4.4, the Non-Defaulting Party may, without limiting its other rights or remedies available under this document or at law, but subject to clause 7:
(a) | immediately terminate this document, in which case the Non-Defaulting Party may seek damages for breach of this document; or |
(b) | seek specific performance of this document, in which case: |
(i) | if specific performance is obtained the Non-Defaulting Party may also seek damages for breach of this document; and |
(ii) | if specific performance is not obtained the Non-Defaulting Party may then terminate this document and also seek damages for breach of this document. |
5. | Post Completion |
5.1 | Assistance |
For a period of 40 Business Days after the Completion Date, the Seller will execute any forms or other documents necessary to assist the Buyer register, at its sole cost, the sale and purchase of the Intellectual Property. | |
5.2 | Limit on assistance |
The assistance in clause 5.1 does not require the Seller to pay any fees, or carry out any action outside of Australia, or require the Seller to give any guarantee, warranty, representation or other assurance to any other person. | |
6. | Title, risk and liabilities |
6.1 | Title |
The Seller’s right, title and interest in the Intellectual Property passes to the Buyer at Completion. | |
6.2 | Possession |
With effect from Completion, possession of the Intellectual Property and risk related to the Intellectual Property is given by the Seller and taken by the Buyer at the Specified Time. |
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6.3 | Income, profits and benefits |
With effect from Completion, all income, profits and benefits of or related to the Intellectual Property:
(a) | up to the Specified Time, belong to the Seller; and | |
(b) | after the Specified Time, belong to the Buyer. |
6.4 | Liabilities |
With effect from Completion, all Liabilities of or related to the Intellectual Property, after the Specified Timeare the responsibility of the Buyer and the Buyer indemnifies the Seller from and against those Liabilities.
7. | Limitation of liability |
7.1 | “As is, where is”basis |
(a) | The Buyer unconditionally agrees that the Intellectual Property is to be sold and purchased on an “as is, where is” basis without recourse to, or warranty by, the Seller or NAB. | |
(b) | The Buyer cannot make any claim, objection or requisition against the Seller or NAB, or rescind or terminate this document in respect of the condition of the Intellectual Property. |
7.2 | No warranties |
The Buyer acknowledges that no term, condition, warranty, representation or covenant of any kind has been made or is given by the Seller or NAB, their employees, officers, representatives, agents or advisors, in respect of any aspect of any of the Intellectual Property, or is implied in this document, and the execution of this document by the Buyer will be conclusive proof that the Intellectual Property are in every way satisfactory to the Buyer.
7.3 | Liability of the Seller and NAB |
The Seller and NAB are not liable to the Buyer for any Liability arising from or relating to any statement, representation, warranty, promise, undertaking or agreement in connection with the sale of the Intellectual Property, including any information provided for in the Due Diligence Material.
7.4 | Buyer acknowledgments |
(a) | The Buyer acknowledges that it has made its own assessment as to the condition, value, fitness for purpose and title to the Intellectual Property and the quality or suitability of the Intellectual Property and has placed no reliance in that assessment on any statement, conduct or representation by the Seller or NAB in relation to those matters. |
(b) | The Buyer acknowledges, represents and warrants, and agrees with the Seller and NAB that: |
(i) | it enters into this document solely as a result of its own due diligence, investigations, inquiries, advice and knowledge concerning the Intellectual Property, relying only on its own judgment after such investigation and enquiries; |
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(ii) | neither the Seller nor NAB, nor their representatives,nor any person acting on their behalf, have made any representation, warranty or other inducement to the Buyer to enter into this document; |
(iii) | it has not and will not rely on representations, warranties, forecasts, opinions, statements of belief, or other inducements by or on behalf of the Seller,NAB, or their representatives or any other person; |
(iv) | it has undertaken a due diligence investigation in relation to the Intellectual Property and irrespective of whether or not the due diligence was as full or exhaustive as the Buyer would have wished, it has nevertheless independently and without the benefit of any inducement, representation or warranty from the Seller or NAB, determined to enter into this document; and |
(v)
|
any estimate, budget or forecast made, or opinion expressed, in relation to the financial position or prospects related to the Intellectual Property (whether written or oral) was made or expressed to and accepted by the Buyer and this document is entered into, on the basis and condition that: |
(A) | neither the Seller nor NAB, nor their representatives have made or does make any representation or warranty as to the accuracy or completeness of such estimate, budget, forecast or expression of opinion or that any such estimate, budget, forecast, or expression of opinion will be achieved; and |
(B)
|
neither the Seller nor NAB, nor their representatives, will be liable to the Buyer or any other person in respect thereof and neither the Seller nor NAB, nor their representatives, will be liable to the Buyer or any other person in the event that, for whatever reason, such estimate, budget, forecast or expression of opinion is or becomes inaccurate, incomplete or misleading in any respect. |
(c) | To the fullest extent permitted by law, all conditions, representations or terms implied or imposed by State or Commonwealth laws are excluded, and the Buyer waives any rights it may have in respect of them. |
(d) | To the fullest extent permitted by law, the Seller and NAB will under no circumstances be liable in any way whatsoever to the Buyer nor will the Buyer have any remedy in respect of any Claim (whether contractual, tortious, statutory or otherwise) for any form of damages, losses, costs, injury or harm sustained or incurred by the Buyer in consequence of or resulting directly or indirectly out of the supply, performance or the use of the Intellectual Property, or by any third party or in connection with this document or otherwise. |
(e) | The Buyer acknowledges and agrees that no warranties with respect to this document or the Intellectual Property are given by the Seller or NAB. The Buyer further acknowledges and agrees that: |
(i) | the aggregate maximum liability of the Seller and NAB (including legal costs and expenses incurred defending a Claim) as a result of any Claim under this clause 7.4(e) or any other Claim relating to this document is limited to $20,000; and |
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(ii) | the Seller will not be liable for any Claim unless: |
(A) | as soon as the Buyer becomes aware of anything which is or may be reasonably likely to give rise to a Claim, the Buyer notifies the Seller in writing: |
(I) | setting out the act, matter or thing relied on as giving rise to the Claim, the subject of the Claim, and all relevant details of the Claim; and |
(II) | within 10 Business Days after it has first come to the Buyer’s attention and no later than one month after the Completion Date; and |
(B) | if the relevant Claim has not already been satisfied, settled or withdrawn, legal proceedings for the relevant Claim have been properly issued and served on the Seller within one month after the Completion Date. |
7.5 | Due diligence |
The Buyer acknowledges that:
(a) | the Due Diligence Material was provided to the Buyer solely to assist with its due diligence enquiries; |
(b) | the Due Diligence Material was intended as a guide only and does not constitute all or any part of an offer or of this document; |
(c) | any calculations contained in the Due Diligence Material have not been independently verified by the Seller or NAB; |
(d) | any projections contained in the Due Diligence Material represent best estimates only and may be based on assumptions which, while reasonable, may be incorrect; |
(e) | it has not relied on any material contained in the Due Diligence Material as a statement or representation of fact or as to any further matter, but has satisfied itself as to the correctness and completeness (or otherwise) of the information by its own enquiries, inspections and independent investigations; |
(f) | except for rights and remedies provided by statute which may not be excluded, no liability (under statute, in contract or tort for negligence or otherwise) is assumed by the Seller or NAB, or any of their representatives for any material contained in the Due Diligence Material; and |
(g) | neither the Seller nor NAB, nor their representatives,make any warranty or representation as to the accuracy or the reliability of any of the contents of the Due Diligence Material and the Seller and NAB are not responsible for any of the their representatives in respect of the contents of or omissions from the Due Diligence Material. |
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7.6 | Indemnities |
The Buyer indemnifies and will keep indemnified the Seller and NAB from and against any of the following:
(a) | all Claims which may be asserted against or suffered or incurred by the Seller or NAB to the extent that such Claims arise out of, result from or relate to: |
(i) | the ownership, sale, use or dealing with the Intellectual Property; |
(ii) | any intellectual property rights asserted, claimed or proven by any third party in respect of the Intellectual Property; or |
(iii) | any Tax (including GST), royalty or impost of a like nature which may be payable in respect of the Intellectual Property, |
provided that all such Claims are in respect of the period after the Specified Time; and
(b) | any and all losses and other Liabilities which may be asserted against or suffered or incurred by the Seller or NAB and which arise out of or result from: |
(i) | any misrepresentation, breach of warranty or breach of or non-compliance with any of the provisions of this document by the Buyer; or |
(ii) | any misrepresentation or breach of warranty in or occasioned by any certificate or other document furnished or caused to be furnished by the Buyer to the Seller or NAB. |
The Seller and NAB need not incur any cost or make any payment before enforcing any right of indemnity under this clause 7.6.
7.7 | Release |
In consideration of the Seller entering into this document, the Buyer covenants and agrees that it unequivocally releases the Seller and NAB, and their representatives, from all Liabilities or Claims in connection with the Intellectual Property, or any other asset of the Seller or NAB, and further agrees not to make any Claim against the Seller or NAB in connection with the Intellectual Property, or any other asset of the Seller or NAB, or in any way whatsoever connected with any act done or omitted to be done in relation to the sale of the Intellectual Property under this document.
7.8 | No claim |
The Buyer may not make a claim or requisition, delay completion, rescind or terminate because of any matter disclosed in or arising from any of the Due Diligence Material or other documents comprising annexures or schedules to this document.
7.9 | Capacity of Seller |
(a) | Mr Hall is not executing this document in his personal capacity, and does not assume personal liability under any warranty or obligation of the Seller in this document. |
(b) | The Buyer releases Mr Hall from any personal liability whatsoever and must not seek to bring proceedings against him in his personal capacity. |
(c) | The Buyer is not entitled to make any requisition, objection or claim or rescind or terminate this document in relation to the appointment of Mr Hall as agent for NAB. |
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7.10 | Liability for future events |
The Seller and NAB are not liable to the Buyer for any Liabilities attributable to anything done or not done after the date of this document by the Buyer or any person acting, or purporting to act, on behalf of the Buyer.
7.11 | No rescission |
The Buyer agrees that its sole remedy for a Claim for breach of this document, however arising, is a Claim for damages in contract only, and the Buyer waives any right to Claim any other remedy, including rescission of this document or any related document, for a Claim for breach of this document.
7.12 | Exclusion of certain losses |
Notwithstanding any provision of this document, the Seller and NAB will not, under any circumstances, be liable to another party for any breach of this document or any other duty it may owe to the Buyer (including any duty of care for the purposes of the tort of negligence):
(a) | for any special or indirect losses of any nature or description; |
(b) | for any consequential losses of any nature or description; or |
(c) | for loss of profit, loss of revenue, loss of use, loss of contract, loss of goodwill or increased cost of working, whether that loss is direct or indirect or normal or consequential in nature. |
7.13 | Obligations of the Buyer |
(a) | Within 10 Business Days of receiving any Claim or demand or being served with any legal proceedings which may lead to Liability on the part of the Seller, the Buyer must give written notice to the Seller setting out full details of the Claim, demand or legal proceedings. |
(b) | The Buyer must not accept, compromise or pay any Claim or demand or agree to arbitrate, compromise or settle any legal proceedings which may lead to Liability on the part of the Seller without the prior written approval of the Seller. |
7.14 | Survival |
This clause 7 remains in full force and effect after Completion.
8. | Representations and warranties |
8.1 | Representations |
The Buyer represents and warrants to the Seller that each of the following statements is true and accurate at the date of this document and will be true and accurate on the Completion Date:
(a) | the Buyer is validly existing under the laws of its place of incorporation or registration; |
(b) | the Buyer has the power to enter into and perform its obligations under this document and to carry out the transactions contemplated by this document; |
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(c) | the Buyer has taken all necessary actions to authorise its entry into and performance of this document and to carry out the transactions contemplated by this document; |
(d) | the Buyer’s obligations under this document are valid and binding and enforceable against it in accordance with the terms; |
(e) | neither the Buyer nor any party related to it has taken any action under which any person is or may be entitled to a commission, brokerage or finder’s fee in connection with the sale and purchase of the Intellectual Property; |
(f) | the Buyer, and each of its officers, employees, agents and representatives holds or is able upon application to hold, all permits, licences and authorisations to conduct its business in accordance with all applicable laws; |
(g) | none of the following has occurred and is subsisting, or is threatened, in relation to the Buyer: |
(i) | a meeting has been convened, resolution proposed, petition presented or order made for the winding up of the Buyer; |
(ii) | a receiver, receiver and manager, provisional liquidator, liquidator or other officer of the Court has been appointed in relation to all or any material asset of the Buyer; or |
(iii) | amortgagee or chargee has taken, attempted or indicated an intention to exercise its rights under any security of which the Buyer is the mortgagor or chargor; and |
(h) | the Buyer is not, and is not likely to: |
(i) | become insolvent within the meaning of section 95A of the Corporations Act2001 (Cth); |
(ii) | stop paying its debts as and when they fall due; or |
(iii) | become subject to voluntary administration under Part 5.3A of the Corporations Act 2001 (Cth). |
8.2 | Application of representations by the Buyer |
Each of the representations made by the Buyer under clause 8.1 remains in full force and effect on and after Completion
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9. | Confidentiality and publicity |
9.1 | Confidentiality |
The Buyer:
(a) | must keep confidential any Confidential Information of the Seller and all Confidential Information disclosed to the Buyer by or on behalf of the Seller, or of which the Buyer becomes aware (whether before or after the date of this document); and |
(b) | may disclose any Confidential Information in respect of which the Buyer has an obligation of confidentiality under clause 9.1(a) only: |
(i) | to those of the Buyer’s officers or employees or advisers ( Permitted Disclosees ) who: |
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(A) | have a need to know for the purposes of this document and the transactions contemplated by it; and |
(B) | undertake to the Buyer (and, where required by the Seller, to the Seller also) a corresponding obligation of confidentiality to that undertaken by the Buyer under clause 9.1(a); |
(ii) | if required to do so by law, a court of law or the Listing Rules of ASX; or |
(iii) | with the prior written approval of the Seller. |
9.2 | Confidential Information |
Clause 9.1 applies:
(a) | with respect to Confidential Information: |
(i) | until Completion; or |
(ii) | until the information is public knowledge (otherwise than as a result of a breach of confidentiality by the Buyer or any of its permitted disclosees), |
whichever occurs first; and
(b) | with respect to any other confidential information of the Seller, until the information is public knowledge (otherwise than as a result of a breach of confidentiality by the Buyer or any of its Permitted Disclosees). |
9.3 | Announcements |
The Buyer must not make or authorise a press release or public announcement relating to the negotiations of the parties or the subject matter or provisions of this document ( Announcement ) unless:
(a) | it is required to be made by law or the Listing Rules of the ASX and before it is made, the Buyer has: |
(i) | notified the Seller; and |
(ii) | given the Seller a reasonable opportunity to comment on the contents of, and the requirement for, the Announcement; or |
(b) | it has the prior written approval of the Seller. |
9.4 | Return of documents |
If Completion does not occur for any reason, the Buyer must immediately return to the Seller all the Confidential Information obtained by the Buyer and the Permitted Disclosees, including all copies of the Confidential Information made by the Buyer and its Permitted Disclosees.
9.5 | Indemnity |
The Buyer indemnifies the Seller, and will keep the Seller indemnified, against all Claims which the Seller may suffer or incur directly or indirectly in connection with or arising from breach of this clause 9by the Buyer or the Permitted Disclosees.
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9.6 | Survival |
This clause 9 remains in full force and effect after Completion.
10. | Termination |
10.1 | Event of Default |
If any one or more of the following occur, an Event of Default at the non-defaulting party’s option will have occurred:
(a) | the Buyer defaults in the performance of its obligations under this document; |
(b) | an Insolvency Event occurs in respect of the Buyer; or |
(c) | any action is initiated by any competent authority with a view to striking the Buyer’s name off any register of companies. |
10.2 | Default |
If an Event of Default occurs and the default:
(a) | is not capable of being remedied; or |
(b) | if capable of being remedied, is not remedied within 5 Business Days after notice requiring it to be remedied is given to the defaulting party by the Seller, |
the Seller may immediately terminate this document by giving written notice to the Buyer.
10.3 | After termination |
(a) | On termination of this document for any reason, the Buyer must stop, and must require its permitted disclosees to stop, using Confidential Information of the Seller and at the Seller’s option: |
(i) | return to the Seller; |
(ii) | destroy and certify in writing to the Seller the destruction of; or |
(iii) | destroy and permit a representative of Seller to witness the destruction of, |
all Confidential Information in its possession or control.
(b) | If this document is terminated, then: |
(i) | each party will be released from its obligations to further perform this document, except for those obligations that are expressly stated to continue in force; and |
(ii) | in the case of termination before Completion, each party must do all acts and things at their own cost, including the execution of all such documents necessary to reverse an action done, if any, according to clause 4.2. |
(c) | If this document is terminated for any reason (including under clause 4.5 or clause 10) other than due to a material default of the Seller under this document, the Buyer must pay to the Seller the Penalty Amount within 10 Business Days of receiving a notice from the Buyer that the Intellectual Property have been sold to a third party or parties. |
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(d) | For the avoidance of doubt, the Penalty Amount due under clause 10.3(b) is an amount that must be paid in addition to any other amounts due under this document, including forfeiture of the Purchase Price and payment of interest amounts under clause 12. |
10.4 | Survival |
Clauses Error! Reference source not found. , 4.5, 7, 8, 9, 10.3, 10.4, 10.5, 11, 12 and 13 remain in full force and effect after termination of this document.
10.5 | Accrued rights |
Termination of this document does not affect any accrued rights or remedies of a party.
11. | Tax |
11.1 | Consideration |
Subject to clause 11.2, any consideration to be paid or provided for a supply under this document or any related transaction documents, unless specifically expressed to include GST, does not include an amount on account of GST.
11.2 | GST |
(a) | If GST is payable by a supplier (or by the representative member for a GST group of which the supplier is a member) on any supply made under or in relation to this document, the recipient must pay to the supplier an amount ( GST Amount ) equal to the GST payable on the supply. The GST Amount is payable by the recipient in addition to and at the same time as the net consideration for the supply. |
(b) | If a party is required to make any payment or reimbursement, that payment or reimbursement must be reduced by the amount of any input tax credits or reduced input tax credits to which the other party (or the representative member for a GST group of which it is a member) is entitled for any acquisition relating to that payment or reimbursement. |
(c) | This clause 11.2 is subject to any other specific agreement regarding the payment of GST on supplies. |
11.3 | Indemnity |
The recipient must indemnify the supplier against, and pay the supplier on demand, the amount of any damage or cost directly or indirectly arising from or caused by any failure by the recipient to pay any amount (including any additional tax, penalty tax, fine, interest or other charge under the GST Law) from the date GST would have been payable had the supply been correctly treated as a taxable supply.
11.4 | Buyer responsible for duty |
The Buyer must pay all stamp duty, duty or similar tax payable in relation to the execution, performance and registration of this document, or any other document executed or effected under this document.
18 |
11.5 | Buyer indemnity |
The Buyer indemnifies the Seller and NAB against any loss incurred by the Seller or NAB in relation to any duty and penalties specified in clause 11.4, whether through default by the Buyer under clause 11.4 or otherwise.
12. | Interest |
12.1 | Failure to pay amount due |
If the Buyer fails to pay any amount payable under this document on the due date for payment, the Buyer must pay interest on the amount unpaid at the higher of 12% per annum or the rate (if any) fixed or payable under a judgment or other thing referred to in clause 12.2.
12.2 | Interest accrual |
Any interest payable under clause 12.1:
(a) | accrues from day to day from and including the due date for payment of the amount payable under this document up to the actual date of payment, before and, as an additional and independent obligation, after any judgment or other thing into which the liability to pay the amount becomes merged; and |
(b) | may be capitalised by the Seller at fortnightly intervals. |
13. | General provisions |
13.1 | Costs |
Each party must pay its own costs in relation to:
(a) | the negotiation, preparation, execution, performance, amendment or registration of, or any consent given or made; and |
(b) | the performance of any action by that party in compliance with any liability arising, |
under this document, or any document or agreement executed or effected under this document, unless this document provides otherwise.
13.2 | Assignment |
A party must not transfer any right or liability under this document without the prior written consent of each other party, except where this document provides otherwise.
13.3 | Notices |
(a) | Any notice may be served by delivery in person or by post, or transmission by facsimile or email, to the address, number or email address of the recipient specified in clause 13.3(c), or most recently notified by the recipient to the sender. |
(b) | Any notice is effective for the purposes of this document on delivery to the recipient, or production to the sender of a facsimile transmittal confirmation report, or the sender not receiving an automated out of office or undelivered email from the recipient email address, before 4.00 pm on a Business Day in the place in or to which the written notice is delivered or received, or otherwise at 9.00 am on the next Business Day following delivery or receipt. |
19 |
(c) | The addresses for service for notices of the parties are: |
Seller
Mr Gregory Winfield Hall as agent for National Australia Bank Limited (as Mortgagee in Possession)
PwC, 201 Sussex Street, Sydney, NSW, 2000
Fax: None
Email: greg.hall@au.pwc.com
Buyer
Barfresh Inc
Suite 701, 90 Madison Street, CO, 80206 USA
fax: 303 3293819
13.4 | Governing law and jurisdiction |
(a) | This document is governed by and construed under the law in the State of New South Wales. |
(b) | Any legal action in relation to this document against any party or its property may be brought in any court of competent jurisdiction in the State of New South Wales. |
(c) | Each party by execution of this document irrevocably, generally and unconditionally submits to the non-exclusive jurisdiction of any court specified in this clause 22.5 in relation to both itself and its property. |
13.5 | Amendments |
Any amendment to this document has no force or effect, unless effected by a document executed by the parties.
13.6 | Pre-contractual negotiation |
This document:
(a) | expresses and incorporates the entire document between the parties in relation to its subject-matter, and all the terms of that document; and |
(b) | supersedes and excludes any prior or collateral negotiation, understanding, communication or document by or between the parties in relation to that subject matter or any term of that document. |
13.7 | Further assurance |
Each party must execute any document and perform any action necessary to give full effect to this document, whether before or after performance of this document.
13.8 | Continuing performance |
(a) | The provisions of this document do not merge with any action performed or agreement executed by any party for the purposes of performance of this document. |
20 |
(b) | Any representation in this document survives the execution of any agreement for the purposes of, and continues after, performance of this document. |
(c) | Any indemnity agreed by any party under this document: |
(i) | constitutes a liability of that party separate and independent from any other liability of that party under this document or any other agreement; and |
(ii) | survives and continues after performance of this document. |
13.9 | Waivers |
Any failure by any party to exercise any right under this document does not operate as a waiver and the single or partial exercise of any right by that party does not preclude any other or further exercise of that or any other right by that party.
13.10 | Remedies |
Subject to clause 7, the rights of a party under this document are cumulative and not exclusive of any rights provided by law.
13.11 | Severability |
Any provision of this document which is invalid in any jurisdiction is invalid in that jurisdiction to that extent, without invalidating or affecting the remaining provisions of this document or the validity of that provision in any other jurisdiction.
13.12 | Third party rights and benefits |
(a) | Except as provided in this clause 13.12, this document confers rights only on a person expressed to be a party, and not on any other person. |
(b) | Without prejudice to the rights of NAB under this clause 13.12, the Buyer agrees that NAB has the benefit of the provisions of this document given in favour of the Seller. |
(c) | The Buyer acknowledges and agrees that a breach of this document or negligence by the Buyer in relation to performance or failure to perform this document may result in a loss being suffered by NAB and/or the Seller ( NAB Loss ). |
(d) | Subject to the limitations and exclusions of liability set out in this document, and to any claim, defence, counter-claim or right of set-off which at law, in equity or under statute would be available to the Buyer if NAB were the Seller and the loss were suffered by it, the Buyer agrees that any NAB Loss will be treated as a loss suffered by the Seller and the Seller may enforce any rights in relation to that loss. |
(e) | The Seller enters into this document as agent for NAB for the sole purpose of: |
(i) | NAB obtaining (and being able to enforce through the Seller) any rights granted to NAB (which, to avoid doubt, includes the indemnities of clause 7.6 and the payment obligation in sub-clause (d) above); and |
(ii) | NAB obtaining (and being able to enforce) the benefit of the caps and exclusion on the Seller’s liability in this document, including those of clause 7. |
21 |
13.13 | Counterparts |
This document may be executed in any number of counterparts, all of which taken together are deemed to constitute one and the same document.
22 |
Schedule 1 – Intellectual Property
Part 1 – Patents
Australia
# | Applicant | Inventor |
PATENT
Title |
PATENT
Application Details |
Filing
Date |
Status | ||||||
1. | Smoo Pty Limited | Riccardo Dario Coste Delle | Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 2012254903 | 15 November 2012 | Filed | ||||||
2 | Smoo Pty Limited | Riccardo Dario Coste Delle | Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 2005274678 | 16 August 2005 | Granted |
Brazil
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | PIO514480.9 | Exam Requested |
China
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | ZL200580033724.5 | Registered |
Europe
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 05773978 | Response lodged to Examiner’s report |
23 |
Hong Kong
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 07109841.5 | Application lodged: filing receipt received |
Indonesia
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | W-00200700882 | Accepted |
Israel
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 181335 | Registered |
India
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 01616/DELNP/07 | Exam requested |
Japan
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 5057975 | Registered |
24 |
Republic of Korea
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 1157907 | Registered |
Mexico
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 282747 | Registered |
Malaysia
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | MY-142467-A | Registered |
New Zealand
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 553358 | Registered |
The Philippines
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 1-2007-500384 | Registered |
25 |
Russian Federation
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 2376228 | Registered |
Singapore
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 130396 | Registered |
Thailand
PATENT
Title |
PATENT
Official Number |
Status | ||
Sealed pack of ingredients for an individual smoothie, and associated methods and apparatuses | 103337 | Examination request |
South Africa
Part 2 – Trade Marks
Australia
# | Owner | TRADEMARK Description |
TRADEMARK
Number |
Filing Date | Classes | Status |
Renewal
Due/Comments |
|||||||
1 | Smoo Pty Limited | 1043654 | 25 February 2005 | 30,32 | Registered | 25 February 2015q | ||||||||
2 | Smoo Pty Limited | 1427159 | 24 May 2011 | 29,30 | Opposed |
Accepted for registration on 17 January 2013
Opposed by Geoffrey Chesworth and Tania Chesworth.
Notice of Opposition lodged on 11 April 2013 Hearing Pending |
26 |
India
# | Owner |
TRADEMARK
Description |
TRADEMARK
Number |
Filing Date | Classes | Status | ||||||
1 | Smoo Pty Limited | 1661025 | 4/3/2008 | 30,32 | Opposed | |||||||
2 | Smoo Pty Limited | 1661026 | 4/3/2008 | 30,32 | Registered |
South Africa
TRADEMARK Description | TRADEMARK Number | Status | ||
1043654 | Registered |
27 |
Schedule 2 – Encumbrances
Part 1 – Bank Security Interests
Item | Secured Party | Registration number | Class/Description | |||
1. | National Australia Bank Limited | 201208150032747 | All Present and After Acquired Property No Exceptions |
28 |
Signing page
Executed as a deed.
Signed sealed and delivered on behalf of Gregory Winfield Hall as agent for National Australia Bank Limited (as Mortgagee in Possession): | ||
/s/ Margaret Jamison | /s/ Gregory Winfield Hall | |
Witness signature |
Gregory Winfield Hall | |
Margaret Jamison | ||
Print witness name |
Signed sealed and delivered on behalf of Barfresh Inc. by its duly authorised signatory: | ||
Director | ||
/s/ Steven Lang | Steven Lang | |
Print name |
29 |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Riccardo Delle Coste, certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of Barfresh Food Group Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Dated: November 20, 2013 | By: | /s/ Riccardo Delle Coste |
Riccardo
Delle Coste
|
Exhibit 31.2
CERTIFICATION OF
CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
I, Arnold Tinter, certify that:
1. | I have reviewed this Form 10-Q/A of Barfresh Food Group Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 20, 2013 | |
/s/ Arnold Tinter | |
Arnold
Tinter
|
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Barfresh Food Group Inc., (the “Company”) on Form 10-Q/A for the quarter ended September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Riccardo Delle Coste, Chief Executive Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 20, 2013 | By: | /s/ Riccardo Delle Coste |
Riccardo
Delle Coste
|
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION OF
CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with this Quarterly Report of Barfresh Food Group Inc. (the “Company”) on Form 10-Q/A for the quarter ended September 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Arnold Tinter, Chief Financial Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Barfresh Food Group Inc. |
Date: November 20, 2013 | |
/s/ Arnold Tinter | |
Arnold
Tinter
|
|