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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 (Mark
One)

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2023

 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: 001-41228

 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.)

 3600
 Wilshire Boulevard Suite 1720

 Los
 Angeles, California

 90010

 (Address
 of principal executive offices)

 (Zip
 Code)

 Registrant's
telephone number, including area code 310 - 598-7113

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Common
 Stock, $0.000001 par value

 BRFH

 Nasdaq
 Capital Market

 Securities
registered pursuant to Section 12(g) of the Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

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 such 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. Yes No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large
 Accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer

 Smaller
 reporting company

 Emerging
 Growth Company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm
that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The
aggregate market value of the voting and non-voting common equity held by non-affiliates (excluding voting shares held by officers and
directors) as of June 30, 2023 was $ 5,105,383.

 As
of March 18, 2024, there were 14,507,146 outstanding shares of common stock of the registrant.

 DOCUMENTS
INCORPORATED BY REFERENCE

 Certain
information required by Part III of this Annual Report on Form 10-K is incorporated by reference from portions of the registrant's
definitive proxy statement relating to its 2024 annual meeting of stockholders to be filed pursuant to Regulation 14A within 120 days
of December 31, 2023. Other items incorporated by reference are listed in the Exhibit Index of this Annual Report on Form 10-K.

 BARFRESH
FOOD GROUP INC.

 FORM

 TABLE
OF CONTENTS

 Page

 Item
 1.

 Business

 Item
 1A.

 Risk Factors

 Item
 1B.

 Unresolved Staff Comments

 Item
 1C.

 Cybersecurity

 Item
 2.

 Properties

 Item
 3.

 Legal Proceedings

 Item
 4.

 Mine Safety Disclosures.

 Item
 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 6.

 [Reserved]

 Item
 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item
 8.

 Financial Statements and Supplementary Data

 Item
 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 9A.

 Controls and Procedures

 Item
 9B.

 Other Information

 Item
 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspection

 Item
 10.

 Directors, Executive Officers and Corporate Governance

 Item
 11.

 Executive Compensation

 Item
 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item
 14.

 Principal Accountant Fees and Services

 Item
 15.

 Exhibits and Financial Statement Schedules

 Item
 16.

 Form 10-K Summary

 CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION

 This
Annual Report on Form 10-K ("Annual Report"), the other reports, statements, and information that we have previously filed
or that we may subsequently file with the Securities and Exchange Commission ("SEC") and public announcements that we have
previously made or may subsequently make include, may include, incorporate by reference or may incorporate by reference certain statements
that may be deemed to be forward-looking statements. The forward-looking statements included or incorporated by reference in this Annual
Report and those reports, statements, information and announcements address activities, events or developments that Barfresh Food Group
Inc., a Delaware corporation (hereinafter referred to as "we". "us", "our", "Company"
or "Barfresh") expects or anticipates will or may occur in the future. Any statements in this document about expectations,
beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements.
These statements are often, but not always, made through the use of words or phrases such as "may", "should",
"could", "predict", "potential", "believe", "will likely result", "expect",
"will continue", "anticipate", "seek", "estimate", "intend", "plan",
"projection", "would", "outlook" and similar expressions. Accordingly, these statements involve estimates,
assumptions and uncertainties, which could cause actual results to differ materially from those expressed in them. Any forward-looking
statements are qualified in their entirety by reference to the factors discussed throughout this document. All forward-looking statements
concerning economic conditions, rates of growth, rates of income or values as may be included in this document are based on information
available to us on the dates noted, and we assume no obligation to update any such forward-looking statements.

 Management
cautions that forward-looking statements are qualified by their terms and/or important factors, many of which are outside of our control,
involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements
made, including, but not limited to, the following risk factors. Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.

 Certain
risks and uncertainties could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements
made by us, and you should not place undue reliance on any such forward-looking statements. Actual results or outcomes may differ materially
from those expressed in any forward-looking statements made by us, and you should not place undue reliance on any such forward-looking
statements. Any forward-looking statement speaks only as of the date on which it is made and we do not undertake any obligation to update
any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect
the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which will arise.
In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements. See "Risk Factors"
set forth in Item 1A.

 AVAILABLE
INFORMATION

 We
are subject to the information reporting requirements of the Securities Exchange Act of 1934, as amended, and we file quarterly reports
on Form 10-Q, Annual Reports on Form 10-K, Current Reports on Form 8-K, proxy statements and other required information and reports with
the SEC.

 You
can read our SEC filings, including the registration statement, over the Internet at the SEC's website at www.sec.gov at
no cost. You may also request a copy of these filings, at no cost, by writing us at 3600 Wilshire Boulevard, Suite 1720, Los Angeles,
90010 or calling us at (310) 598-7113.

 We
also maintain a website at www.barfresh.com/us/, at which you may access these materials free of charge as soon as reasonably
practicable after they are electronically filed with, or furnished to, the SEC. Information contained on or accessible through our website
is not a part of this report, and the inclusion of our website address in this report is an inactive textual reference only.

 PART
I

 Item
1. Business.

 Corporate
History and Background

 The
Company is engaged in the manufacturing and distribution of ready-to-drink and ready-to-blend frozen beverages, including smoothies,
shakes and frappes. The current operation was established following a 2012 reverse merger into an inactive Delaware corporation, formed
on February 25, 2010. We have two direct subsidiaries: Barfresh Corporation, Inc. (formerly known as Smoothie, Inc.) and Barfresh, Inc.
Our corporate office is located at 3600 Wilshire Boulevard Suite 1720, Los Angeles, 90010. Our telephone number is (310) 598-7113 and
our website is www.barfresh.com.

 Business
Overview

is a leader in the creation, manufacturing and distribution of ready-to-drink and ready-to-blend frozen beverages. The current portfolio
of products includes smoothies, shakes and frappes.

 Some
of the key benefits of the products for the end consumers that drink the products include:

 From
 as little as 125-130 calories (per serving)

 Real
 fruit in every smoothie

 Dairy
 free options

 Kosher
 approved

 Gluten
 Free

 Products

 Products
are packaged in three distinct formats.

 The
Company's ready-to-drink smoothie, "Twist & Go", has initially been focused towards the USDA national school
meal program, including the School Breakfast Program, the National School Lunch Program and Smart Snacks in Schools Program. This sweet
fruit and creamy yogurt smoothie contains four ounces of yogurt and a half-cup of fruit/fruit juice and comes in three different flavors:
strawberry banana, peach and mango pineapple. The product was originally launched in a bottled packaging format. The Company introduced
Twist & Go cartons in 2022. Twist & Go contains no added sugars, preservatives, artificial flavors or colors. At
only 125 -130 calories and with 5 grams of protein, it makes the perfect start to any day or on-the-go snack.

 The
Company's bulk "Easy Pour" format, which contains all the ingredients necessary to make the beverage, is packaged in
gallon containers in a concentrated formula that is mixed in beverage dispensing equipment 1:1 with water. The Company has a "no
sugar added" version of the bulk "Easy Pour" format that is specifically targeted for the aforementioned USDA national
school meal programs. In addition, the Company received approval from the United States Defense Logistics Agency ("DLA")
to sell its smoothie products into all branches of the U.S. Armed Forces and is currently in contract with and selling its bulk Easy
Pour products into over one hundred military bases in the United States and abroad. Additionally, the Company offers WHIRLZ 100% Juice
concentrate, which is sold at ambient temperatures and mixed in beverage dispensing equipment on a 5:1 ratio.

 The
Company's single-serve format features portion controlled and ready-to-blend beverage ingredient packs or "beverage packs".
The beverage packs contain all the ingredients necessary to make the beverage, including the base (either sorbet, frozen yogurt, or ice
cream), real fruit pieces, juices, and ice – five ounces of water are added before blending.

 Distribution

 The
Company conducts sales through several channels, including National Accounts, Regional Accounts, and Broadline Distributors.

 Manufacturing

utilizes contract manufacturers to manufacture all of its products in the United States.

 Research
and Development

 The
Company incurred approximately $115,000 and $382,000 in research and development expenses for the years ended December 31, 2023 and 2022,
respectively. Research and Development expenses in 2022 were primarily attributable to the launch of the Company's Twist &
Go cartons, as well as costs incurred to investigate the quality issues experienced with the Manufacturer, more fully described
in Item 7.

 Competition

 There
is significant competition in the smoothie market at both the institutional and consumer purchasing level.

 The
Company distributes products institutionally primarily through distributors to school districts. The Company has recently launched its
Twist & Go ready-to-drink smoothie as well as a "no sugar added" version of the bulk "Easy Pour" format,
WHIRLZ 100% Juice Concentrates, both of which are specifically targeted for the USDA national school meal program, including the School
Breakfast Program, the National School Lunch Program, and Smart Snacks in Schools Program. At the institutional level, the Company competes
with other food and beverage manufacturers, many of which have significantly greater financial resources and distribution reach.

 The
competition at the consumer level is primarily between specialized juice bars (e.g. Jamba Juice) and major fast casual and fast-food
restaurant chains (such as McDonalds). Barfresh does not compete specifically at this level but intends to supply its product to customers
that fall within these segments to enable them to compete for consumer demand. The Company believes that its single serve products afford
a very significant competitive advantage based on ease of use, portion control, premium quality, and minimal capital investment required
to enable a customer to begin to carry Barfresh beverage products. The Company also believes that its bulk "Easy Pour" product
represents an attractive alternative delivery method for customers that serve high volume locations, where speed of service over extended
periods is a critical requirement.

 There
may also be new entrants to the smoothie market that may alter the current competitor landscape.

 Intellectual
Property

owns the domestic and international property rights to its products' sealed pack of ingredients used in its single serve products.
Patents in the United States and Australia are in effect through 2025.

 Governmental
Approval and Regulation

 While
the Company is not aware of the need for any governmental approvals to manufacture or distribute its products, manufacturing products
which meet the criteria of the USDA'S national school meal program and USDLA is critical to the Company's business plan.

 The
Company utilizes contract manufacturers. Before entering into any manufacturing contracts, the Company determines that the manufacturer
meets all government requirements.

 Environmental
Laws

 The
Company does not believe that it is subject to any environmental laws, either state or federal. Compliance with any laws concerning manufacturing
is the responsibility of the contract manufacturer.

 Employees

 As
of March 18, 2024, the Company has 10 employees and 3 consultants.

 Item
1A. Risk Factors

 An
investment in the Company's securities involves significant risks, including the risks described below. The risks included below
are not the only ones that the Company faces. Additional risks presently unknown to us or that we currently consider immaterial or unlikely
to occur could also impair our operations. If any of the risks or uncertainties described below or any such additional risks and uncertainties
actually occur, our business, prospects, financial condition or results of operations could be negatively affected.

 Beginning
in March 2020, the COVID-19 pandemic had a significant impact on the Company. Specifically, our business was impacted by dining bans
targeted at restaurants to reduce the size of public gatherings. Such bans precluded our single-serve products from being served at those
establishments and in some instances, resulted in abandoned product launches. Furthermore, many school districts closed regular attendance
for a period of time thereby disrupting sales of product into that channel. In 2022 and 2023, we experienced supply chain interruptions
and inflation for component and transportation costs. We believe that the impact of the pandemic has substantially abated, but will continue
to monitor and assess developments.

 Risks
Related to Our Business

 We
have a history of operating losses.

 We
have a history of operating losses and may not achieve or sustain profitability. These operating losses have been generated while we
market to potential customers. We cannot guarantee that we will become profitable. Even if we achieve profitability, given the competitive
and evolving nature of the industry in which we operate, we may be unable to sustain or increase profitability and our failure to do
so would adversely affect the Company's business, including our ability to raise additional funds.

 If
we continue to suffer losses from operations, our working capital may be insufficient to support our ability to expand our business operations
as rapidly as we would deem necessary at any time, unless we are able to obtain additional financing. There can be no assurance that
we will be able to obtain such financing on acceptable terms, or at all. If adequate funds are not available or are not available on
acceptable terms, we may not be able to pursue our business objectives and would be required to reduce our level of operations, including
reducing infrastructure, promotions, sales and marketing programs, personnel and other operating expenses. These events could adversely
affect our business, results of operations and financial condition. If adequate funds are not available or if they are not available
on acceptable terms, our ability to fund the growth of our operations, take advantage of opportunities, develop products or services
or otherwise respond to competitive pressures, could be significantly limited.

 Issues
with a manufacturer have resulted in a significant loss for 2022 and 2023, as well as other negative impacts.

 As
described more fully in Item 7, we experienced product quality issues with a contract manufacturer (the "Manufacturer") that
provided approximately 52% of our products in the year ended December 31, 2022. Complaints from customers led us to withdraw product
from the market and destroy existing inventory. The results for 2022 reflect the estimated accounting impact of these actions, including
$493,000 in refunds and administrative fees due to customers and $932,000 to dispose of unsaleable inventory.

 In
addition to the accounting impact, we must obtain suitable replacement contract manufacturers and regain the confidence of our customers
and investing public, all while seeking a resolution with the Manufacturer. These tasks have required substantial amounts of personnel
and capital resources in 2023 with ongoing activities expected in 2024.

 We
may need additional financing in the future, which may not be available when needed or may be costly and dilutive.

 We
may require additional financing to support our working capital needs in the future. The amount of additional capital we may require,
the timing of our capital needs and the availability of financing to fund those needs will depend on a number of factors, including our
strategic initiatives and operating plans, the performance of our business and the market conditions for debt or equity financing. Additionally,
the amount of capital required will depend on our ability to meet our case sales goals and otherwise successfully execute our operating
plan. We believe it is imperative to meet these sales objectives in order to lessen our reliance on external financing in the future.
Although we believe various debt and equity financing alternatives will be available to us to support our working capital needs, financing
arrangements on acceptable terms may not be available to us when needed. Additionally, these alternatives may require significant cash
payments for interest and other costs or could be highly dilutive to our existing shareholders. Any such financing alternatives may not
provide us with sufficient funds to meet our long-term capital requirements. If necessary, we may explore strategic transactions that
we consider to be in the best interest of the Company and our shareholders, which may include, without limitation, public or private
offerings of debt or equity securities, and other strategic alternatives; however, these options may not ultimately be available or feasible.

 A
worsening of economic conditions or a decrease in consumer spending may adversely impact our ability to implement our business strategy.

 Our
success depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions and the
availability of discretionary income. There is no certainty regarding economic conditions in the United States, and credit and financial
markets and confidence in economic conditions could deteriorate at any time. Accordingly, we may experience declines in revenue during
economic turmoil or during periods of uncertainty including uncertainty resulting from war, terrorism or contagious disease. Any material
decline in the amount of discretionary spending, leading cost-conscious consumers to be more selective in restaurants visited, could
have a material adverse effect on our revenue, results of operations, business and financial condition.

 The
challenges of competing with the many food services businesses may result in reductions in our revenue and operating margins.

 We
compete with many well-established companies, food service and otherwise, on the basis of taste, quality and price of product offered,
customer service, atmosphere, location and overall guest experience. Our success depends, in part, upon the popularity of our products
and our ability to develop new menu items that appeal to consumers across all four day parts. Shifts in consumer preferences away from
our products, our inability to develop new menu items that appeal to consumers across all day parts, or changes in our menu that eliminate
items popular with some consumers could harm our business. We compete with other smoothie and juice bar retailers, specialty coffee retailers,
yogurt and ice cream shops, bagel shops, fast-food restaurants, delicatessens, caf s, take-out food service companies, supermarkets
and convenience stores. Our competitors change with each of the four day parts, ranging from coffee bars and bakery caf s to casual
dining chains. Many of our competitors or potential competitors have substantially greater financial and other resources than we do,
which may allow them to react to changes in the market quicker than we can. In addition, aggressive pricing by our competitors or the
entrance of new competitors into our markets, could reduce our revenue and operating margins. We also compete with other employers in
our markets for workers and may become subject to higher labor costs as a result of such competition.

 It
is difficult to predict the timing and amount of our sales because our distributors and national accounts may not be required to place
minimum orders with us.

 Our
distributors are not required to place minimum monthly or annual orders for our products. Accordingly, we cannot predict the timing or
quantity of purchases by any of our independent distributors or whether any of our distributors will continue to purchase products from
us in the same frequencies and volumes as they may have done in the past. Additionally, our larger distributors and partners may make
orders that are larger than we have historically been required to fill. Shortages in inventory levels, supply of raw materials or other
key supplies could negatively affect us.

 Disruption
within our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial condition
and results of operations.

 Our
ability, through our suppliers, business partners, contract manufacturers, independent distributors and retailers, to produce, transport,
distribute and sell products is critical to our success.

 Damage
or disruption to our suppliers or to manufacturing or distribution capabilities due to weather, natural disaster, fire or explosion,
terrorism, pandemics such as COVD-19 and influenza, labor strikes or other reasons, could impair the manufacture, distribution and sale
of our products. Many of these events are outside of our control. Failure to take adequate steps to protect against or mitigate the likelihood
or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial
condition and results of operations.

 During
the fourth quarter of 2023, the beverage industry began experiencing a shortage of 4-ounce and 8-ounce cartons, directly impacting our
"Twist & Go" product. As of the date of this report, the shortage is continuing and could impair the ability of
our manufacturers to fulfill orders that we place with them and/or increase our costs. If we are unable to pass on any increased costs,
our gross margin will decrease.

 Our
experience with the Manufacturer demonstrates how our reliance on a limited number of manufacturers and suppliers further increases this
risk. Most of our suppliers and manufacturers produce similar products for other companies, and our products may represent a small portion
of their businesses. Further, it takes a newly engaged manufacturer typically up to nine months of retrofitting/ preparation before it
can begin producing our products. We have contracts in place to produce sufficient units to meet projected demand; however, if one of
our manufacturers fails to perform, we would be faced with a significant interruption in our supply chain. If one of our manufacturers
or suppliers fails to perform or deliver products, for any reason, our sales and results of operations could be adversely affected. Furthermore,
if we are unable to meet our customers' demands due to a disruption in our supply chain, we may lose that customer which could
adversely affect our business, financial condition and results of operations.

 Our
dependence on independent contract manufacturers could make management of our manufacturing and distribution efforts inefficient or unprofitable.

 We
are expected to arrange for our contract manufacturing needs sufficiently in advance of anticipated requirements, which is customary
in the contract manufacturing industry for comparably sized companies. Based on the cost structure and forecasted demand for the particular
geographic area where our contract manufacturers are located, we continually evaluate which of our contract manufacturers to use. To
the extent demand for our products exceeds available inventory or the production capacity of our contract manufacturing arrangements,
or orders are not submitted on a timely basis, we will be unable to fulfill distributor orders on demand. Conversely, we may produce
more product inventory than warranted by the actual demand for it, resulting in higher storage costs and the potential risk of inventory
spoilage. Our failure to accurately predict and manage our contract manufacturing requirements and our inventory levels may impair relationships
with our independent distributors and key accounts, which, in turn, would likely have a material adverse effect on our ability to maintain
effective relationships with those distributors and key accounts. At present, we must replace the Manufacturer with one or more new contract
manufacturers and/or arrange for increased production from our existing contract manufacturers, all of which require several months to
implement.

 If
we do not adequately manage our inventory levels, our operating results could be adversely affected.

 We
need to maintain adequate inventory levels to be able to deliver products to distributors on a timely basis. Our inventory supply depends
on our ability to correctly estimate demand for our products. Our ability to estimate demand for our products is imprecise, particularly
for new products, seasonal promotions and new markets. If we materially underestimate demand for our products or are unable to maintain
sufficient inventory, we might not be able to satisfy demand on a short-term basis. If we overestimate distributor or retailer demand
for our products, we may end up with too much inventory, resulting in higher storage costs, increased trade spending and the risk of
inventory spoilage. If we fail to manage our inventory to meet demand, we could damage our relationships with our distributors and retailers
and could delay or lose sales opportunities, which would unfavorably impact our future sales and adversely affect our operating results.
In addition, if the inventory of our products held by our distributors and retailers is too high, they will not place orders for additional
products, which would also unfavorably impact our sales and adversely affect our operating results.

 Increases
in costs of packaging, ingredients and contract manufacturing tolling fees may have an adverse impact on our gross margin.

 Packaging
costs such as paper and aluminum cans have experienced industry wide price increases in the past and there is always the risk that the
Company's contract manufacturers increase their toll rates based on increases in their fixed and variable costs. If the Company
is unable to pass on these costs, the gross margin will be significantly impacted.

 Fluctuations
in various food and supply costs, particularly fruit and dairy, could adversely affect our operating results.

 Supplies
and prices of the various ingredients that we are going to use to can be affected by a variety of factors, such as weather, seasonal
fluctuations, demand, politics and economics in the producing countries.

 These
factors subject us to shortages or interruptions in product supplies, which could adversely affect our revenue and profits. In addition,
the prices of fruit and dairy, which are the main ingredients in our products, can be highly volatile. The fruit of the quality we seek
tends to trade on a negotiated basis, depending on supply and demand at the time of the purchase. An increase in pricing of any fruit
that we are going to use in our products could have a significant adverse effect on our profitability. We cannot assure you that we will
be able to secure our fruit supply.

 Our
business depends substantially on the continuing efforts of our senior management and other key personnel, and our business may be severely
disrupted if we lose their services.

 Our
future success heavily depends on the continued service of our senior management and other key employees. If one or more of our senior
executives is unable or unwilling to continue to work for us in his or her present position, we may have to spend a considerable amount
of time and resources searching, recruiting, and integrating a replacement into our operations, which would substantially divert management's
attention from our business and severely disrupt our business. This may also adversely affect our ability to execute our business strategy.

 We
may be unable to attract and retain qualified, experienced, highly skilled personnel, which could adversely affect the implementation
of our business plan.

 Our
success depends to a significant degree upon our ability to attract, retain and motivate skilled and qualified personnel. As we become
a more mature company in the future, we may find recruiting and retention efforts more challenging. If we do not succeed in attracting,
hiring and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to grow effectively. Our
inability to attract highly skilled personnel with sufficient experience in our industries could harm our business.

 Product
liability exposure may expose us to significant liability.

 We
may face an inherent business risk of exposure to product liability and other claims and lawsuits in the event that the development or
use of our technology or prospective products is alleged to have resulted in adverse effects. We may not be able to avoid significant
liability exposure. Although we believe our insurance coverage to be adequate, we may not have sufficient insurance coverage, and we
may not be able to obtain sufficient coverage at a reasonable cost. An inability to obtain product liability insurance at acceptable
cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of our products.
A product liability claim could hurt our financial performance. Even if we ultimately avoid financial liability for this type of exposure,
we may incur significant costs in defending ourselves that could hurt our financial performance and condition.

 Litigation
or legal proceedings could expose us to significant liabilities and damage our reputation.

 We
may become party to litigation claims and legal proceedings. Litigation involves significant risks, uncertainties and costs, including
distraction of management attention away from our business operations. We evaluate litigation claims and legal proceedings to assess
the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates,
we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate. These assessments and estimates
are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes
or losses may differ materially from those envisioned by our current assessments and estimates. Our policies and procedures require strict
compliance by our employees and agents with all U.S. and local laws and regulations applicable to our business operations, including
those prohibiting improper payments to government officials. Nonetheless, our policies and procedures may not ensure full compliance
by our employees and agents with all applicable legal requirements. Improper conduct by our employees or agents could damage our reputation
or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines, as
well as disgorgement of profits.

 Our
litigation with Manufacturer was voluntarily withdrawn from the court system in January 2023 and refiled in August 2023, as we were unable
to reach a suitable resolution. While we believe that that our claims have merit, there is no assurance of a favorable outcome to this
case.

 Our
inability to protect our intellectual property rights may force us to incur unanticipated costs.

 Our
success will depend, in part, on our ability to obtain and maintain protection in the United States and internationally for certain intellectual
property incorporated into our products. Our intellectual property rights may be challenged, narrowed, invalidated or circumvented, which
could limit our ability to prevent competitors from marketing similar solutions that limit the effectiveness of our patent protection
and force us to incur unanticipated costs. In addition, existing laws of some countries in which we may provide services or solutions
may offer only limited protection of our intellectual property rights.

 Our
products may infringe the intellectual property rights of third parties, and third parties may infringe our proprietary rights, either
of which may result in lawsuits, distraction of management and the impairment of our business.

 As
the number of patents, copyrights, trademarks and other intellectual property rights in our industry increases, products based on our
technology may increasingly become the subject of infringement claims. Third parties could assert infringement claims against us in the
future. Infringement claims with or without merit could be time consuming, result in costly litigation, cause product shipment delays
or require us to enter into royalty or licensing agreements. Royalty or licensing agreements, if required, might not be available on
terms acceptable to us, or at all. We may initiate claims or litigation against third parties for infringement of our proprietary rights
or to establish the validity of our proprietary rights. Litigation to determine the validity of any claims, whether or not the litigation
is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel
from productive tasks. If there is an adverse ruling against us in any litigation, we may be required to pay substantial damages, discontinue
the use and sale of infringing products and expend significant resources to develop non-infringing technology or obtain licenses to infringing
technology. Our failure to develop or license a substitute technology could prevent us from selling our products.

 We
will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial
time to compliance initiatives and corporate governance practices.

 As
a public company, we will continue to incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act of 2002, the Dodd-Frank
Wall Street Reform and Consumer Protection Act and other applicable securities rules and regulations impose various requirements on public
companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
Our management and other personnel will need to continue to devote a substantial amount of time to these compliance initiatives. Moreover,
these rules and regulations will increase our legal and financial compliance costs and make some activities more time-consuming and costly.

 We
cannot predict or estimate the amount of additional costs we may incur to continue to operate as a public company, nor can we predict
the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of
specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing
bodies which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to
disclosure and governance practices.

 We
have identified a material weakness in our disclosure controls and procedures and internal control over financial reporting. If not remediated,
our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could
result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which
could have a material adverse effect on our financial condition and the trading price of our common stock.

 Maintaining
effective internal control over financial reporting and effective disclosure controls and procedures are necessary for us to produce
reliable financial statements. As discussed in Item 9A – "Controls and Procedures" of this Form 10-K, we have re-evaluated
our internal control over financial reporting and our disclosure controls and procedures and concluded that they were not effective as
of December 31, 2023.

 A
material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that
there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or
detected on a timely basis. Management has concluded that there is a material weakness due to the control environment. The control environment
is impacted due to the Company's inadequate segregation of duties.

 The
Company is committed to remediating its material weaknesses as promptly as possible. Implementation of the Company's remediation
plans has commenced, including adding appropriate staffing and implementing an improved information system. Remediation is being overseen
by the audit committee. However, there can be no assurance as to when these material weaknesses will be remediated or that additional
material weaknesses will not arise in the future. Even effective internal control can provide only reasonable assurance with respect
to the preparation and fair presentation of financial statements. Any failure to remediate the material weaknesses or the development
of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial
statements, which in turn could have a material adverse effect on our financial condition and the trading price of our common stock and
we could fail to meet our financial reporting obligations.

 Failure
to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

 As
a Delaware corporation, we are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies
from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Some foreign
companies, including some that may compete with our Company, may not be subject to these prohibitions. Corruption, extortion, bribery,
pay-offs, theft and other fraudulent practices may occur from time-to-time in countries in which we conduct our business. However, our
employees or other agents may engage in conduct for which we might be held responsible. If our employees or other agents are found to
have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our
business, financial condition and results of operations.

 Our
use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions.

 We
use information technology and third-party service providers to support our business processes and activities, including supporting critical
business operations such as manufacturing and distribution; communicating with our suppliers, customers and employees; maintaining effective
accounting processes and financial and disclosure controls; executing corporate transactions; conducting research and development activities;
and meeting regulatory, legal and tax requirements. Shared service centers managed by third parties provide an increasing number of services
important to conducting our business, including accounting, internal control, human resources and computing functions.

 Continuity
of business applications and services has been, and may in the future be, disrupted by events such as infection by viruses or malware;
other cybersecurity attacks; issues with or errors in systems' maintenance or security; power outages; hardware or software failures;
denial of service attacks; telecommunication failures; natural disasters; terrorist attacks; and other catastrophic occurrences. Our
use of new and emerging technologies such as cloud-based services and mobile applications continues to evolve, presenting new and additional
risks in managing access to our data, relying on third parties to manage and safeguard data, ensuring access to our systems and availability
of third-party systems. In addition, we are experiencing new and more frequent attempts by third parties to gain access to our systems,
such as through increased email phishing of our workforce.

 We
leverage third parties for various technology and business services who may experience cybersecurity breaches, whether from circumvention
of security systems, denial-of-service attacks or other cyberattacks such as hacking, phishing attacks, computer viruses, ransomware
or malware, cyber extortion, employee or insider error, malfeasance, social engineering, physical breaches or other actions or attempts
to exploit vulnerabilities may cause confidential information or Personally Identifiable Information belonging to us or our employees,
customers, consumers, partners, suppliers, or governmental or regulatory authorities to be misused or breached. These risks could be
magnified since the number of employees, contractors and others working outside of offices increased since the COVID-19 pandemic. Additionally,
continued geopolitical turmoil, including the ongoing war in Ukraine, has heightened the risk of cyberattacks. When risks such as these
materialize, the need for us to coordinate with various third-party service providers and for third-party service providers to coordinate
amongst themselves might increase challenges and costs to resolve related issues. Our information security program includes capabilities
designed to evaluate and mitigate cyber risks arising from third-party service providers. Cyber threats to externally-hosted technology
and business services are beyond our control. Additionally, new initiatives, such as those related to digital commerce and direct sales,
that increase the amount of confidential information that we process and maintain increase our potential exposure to a cybersecurity
breach. Furthermore, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity
risks. If our controls, disaster recovery and business continuity plans or those of our third-party providers do not effectively respond
to or resolve the issues related to any such disruptions in a timely manner, our product sales, financial condition, results of operations
and stock price may be materially and adversely affected, and we might experience delays in reporting our financial results, loss of
intellectual property and damage to our reputation or brands.

 Risks
Related to Ownership of Our Common Stock

 If
we are unable to adequately fund our operations, we may be forced to voluntarily file for deregistration of our common stock with the
SEC.

 Compliance
with the periodic reporting requirements required by the SEC consumes a considerable amount of both internal, as well external, resources
and represents a significant cost for us. If we are unable to continue to devote adequate funding and the resources needed to maintain
such compliance, while continuing our operations, we could be forced to deregister with the SEC. After the deregistration process, our
common stock would only be tradable on the "Pink Sheets" and could suffer a decrease in or absence of liquidity.

 We
may not be able to continue to comply with Nasdaq listing standards.

 In
May 2023, we received a letter from Nasdaq indicating that we were not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires
companies listed on The Nasdaq Stock Market to maintain a minimum of $2,500,000 in stockholders' equity for continued listing.
In our quarterly report on Form 10-Q for the period ended March 31, 2023, we reported stockholders' equity of $1,845,000, thereby
failing to satisfy Listing Rule 5550(b)(1). While we recently regained compliance with this Rule, our stockholders' equity at December
31, 2023 was only $2,503,000. Incurring net losses going forward may cause us to fail to meet Nasdaq listing standards and result in
our common stock only being tradable in the over-the-counter markets.

 Our
use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions.

 We
use information technology and third-party service providers to support our business processes and activities, including supporting critical
business operations such as manufacturing and distribution; communicating with our suppliers, customers and employees; maintaining effective
accounting processes and financial and disclosure controls; executing corporate transactions; conducting research and development activities;
and meeting regulatory, legal and tax requirements. Shared service centers managed by third parties provide an increasing number of services
important to conducting our business, including accounting, internal control, human resources and computing functions.

 Continuity
of business applications and services has been, and may in the future be, disrupted by events such as infection by viruses or malware;
other cybersecurity attacks; issues with or errors in systems' maintenance or security; power outages; hardware or software failures;
denial of service attacks; telecommunication failures; natural disasters; terrorist attacks; and other catastrophic occurrences. Our
use of new and emerging technologies such as cloud-based services and mobile applications continues to evolve, presenting new and additional
risks in managing access to our data, relying on third parties to manage and safeguard data, ensuring access to our systems and availability
of third-party systems. In addition, we are experiencing new and more frequent attempts by third parties to gain access to our systems,
such as through increased email phishing of our workforce.

 We
leverage third parties for various technology and business services who may experience cybersecurity breaches, whether from circumvention
of security systems, denial-of-service attacks or other cyberattacks such as hacking, phishing attacks, computer viruses, ransomware
or malware, cyber extortion, employee or insider error, malfeasance, social engineering, physical breaches or other actions or attempts
to exploit vulnerabilities may cause confidential information or Personally Identifiable Information belonging to us or our employees,
customers, consumers, partners, suppliers, or governmental or regulatory authorities to be misused or breached. These risks could be
magnified since the number of employees, contractors and others working outside of offices increased since the COVID-19 pandemic. Additionally,
continued geopolitical turmoil, including the ongoing war in Ukraine, has heightened the risk of cyberattacks. When risks such as these
materialize, the need for us to coordinate with various third-party service providers and for third-party service providers to coordinate
amongst themselves might increase challenges and costs to resolve related issues. Our information security program includes capabilities
designed to evaluate and mitigate cyber risks arising from third-party service providers. Cyber threats to externally-hosted technology
and business services are beyond our control. Additionally, new initiatives, such as those related to digital commerce and direct sales,
that increase the amount of confidential information that we process and maintain increase our potential exposure to a cybersecurity
breach. Furthermore, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity
risks. If our controls, disaster recovery and business continuity plans or those of our third-party providers do not effectively respond
to or resolve the issues related to any such disruptions in a timely manner, our product sales, financial condition, results of operations
and stock price may be materially and adversely affected, and we might experience delays in reporting our financial results, loss of
intellectual property and damage to our reputation or brands.

 If
securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our share
price and trading volume could decline.

 The
trading market for our common stock may be impacted, in part, by the research and reports that securities or industry analysts publish
about our business or us. There can be no assurance that analysts will cover us, continue to cover us or provide favorable coverage.
If one or more analysts downgrade our stock or change their opinion of our stock, our share price may decline. In addition, if one or
more analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets,
which could cause our share price or trading volume to decline.

 Because
we became public by means of a "reverse merger", we may not be able to attract the attention of major brokerage firms.

 Additional
risks may exist since we became public through a "reverse merger". Securities analysts of major brokerage firms may not provide
coverage of us since there is little incentive to brokerage firms to recommend the purchase of our common stock. We cannot assure you
that brokerage firms will want to conduct any secondary offerings on behalf of our Company in the future.

 Future
sales of our common stock in the public market could lower the price of our common stock and impair our ability to raise funds in future
securities offerings.

 Future
sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could
adversely affect the then prevailing market price of our common stock and could make it more difficult for us to raise funds in the future
through a public offering of our securities.

 Our
common stock is subject to price volatility unrelated to our operations.

 The
market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability
to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock,
changes in general conditions in the economy and the financial markets or other developments affecting the Company's competitors
or the Company itself.

 Because
we do not intend to pay dividends, shareholders will benefit from an investment in our common stock only if it appreciates in value.

 We
have never declared or paid any cash dividends on our preferred stock or common stock. For the foreseeable future, it is expected that
earnings, if any, generated from our operations will be used to finance the growth of our business, and that no dividends will be paid
to holders of the Company's common stock. As a result, the success of an investment in our common stock will depend upon any future
appreciation in its value. There can be no guarantee that our common stock will appreciate in value.

 The
price of our common stock may become volatile, which could lead to losses by investors and costly securities litigation.

 The
trading price of our common stock is likely to be highly volatile and could fluctuate in response to factors such as:

 actual
 or anticipated variations in our operating results;

 announcements
 of developments by us or our competitors;

 announcements
 by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

 adoption
 of new accounting standards affecting our industry;

 additions
 or departures of key personnel;

 introduction
 of new products by us or our competitors;

 sales
 of our common stock or other securities in the open market; and

 other
 events or factors, many of which are beyond our control.

 The
stock market is subject to significant price and volume fluctuations. In the past, following periods of volatility in the market price
of a company's securities, securities class action litigation has often been initiated against such a company. Litigation initiated
against us, whether or not successful, could result in substantial costs and diversion of our management's attention and Company
resources, which could harm our business and financial condition.

 Investors
may experience dilution of their ownership interests because of future issuances of additional shares of our common stock.

 We
intend to continue to seek financing through the issuance of equity or convertible securities to fund our operations. In the future,
we may also issue additional equity securities resulting in the dilution of the ownership interests of our present shareholders. We may
also issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in
connection with hiring or retaining employees, future acquisitions or for other business purposes. The future issuance of any such additional
shares of common stock will result in dilution to our shareholders and may create downward pressure on the trading price of our common
stock.

 Provisions
in our Company charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders,
more difficult and may prevent attempts by our stockholders to replace or remove our current management.

 Provisions
in our certificate of incorporation and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control
of our Company that stockholders may consider favorable, including transactions in which they might otherwise receive a premium for their
shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock,
thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the
members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current
management by making it more difficult for stockholders to replace members of our board of directors. In addition, because we are incorporated
in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns
in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the
transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved
in a prescribed manner.

 Our
board of directors controls the majority of the outstanding shares of voting stock.

 At
present, members of our board of directors and/or their affiliated entities control over 60% of the outstanding shares of voting stock,
and therefore have the power to control all matters requiring the approval of our stockholders, including the election of directors and
the approval of mergers and other significant corporate transactions.

 Item
1B. Unresolved Staff Comments.

 Not
applicable.

 Item
1C. Cybersecurity.

 We
are committed to our goal to protect sensitive business-related and personal information, as well as our information systems. Although
the size and scope of our operations is limited compared to larger global operations, we are subject to numerous and evolving cybersecurity
risks that could adversely and materially affect our business, financial condition and results of operations. In that regard, we have
increased our investment in information systems by hiring a Director of Technology in 2024 to replace limited outsourced services previously
utilized.

 Our
Management Leadership Team, with oversight from the Board of Directors, plans to implement a comprehensive cybersecurity program, including
incident response process, aligned with the National Institute of Standards and Technology (NIST) Cybersecurity Framework and NIST Computer
Security Incident Handling Guide (NIST SP 800-61) to assess, identify, address and manage risks from cybersecurity threats that may result
in material adverse effects on the confidentiality, integrity and availability of our business and information systems.

 Our
Director of Technology reports to our Chief Financial Officer and has operational responsibility for our information security programs,
protections, and efforts, along with leading efforts for implementing, monitoring, and maintaining cybersecurity and data security strategy,
policy, standards, architecture, and practices across our business. We anticipate that our Director of Technology will update the Chief
Financial Officer and Chief Executive Officer on these matters and work closely with these Senior Executives to oversee compliance with
legal, regulatory, and contractual security requirements with the guidance of outside counsel.

 We
anticipate that our Board, in coordination with the Audit Committee, will oversee the Company's enterprise risks arising from cybersecurity
threats and will periodically review the measures we have implemented to identify and mitigate data protection and cybersecurity risks.
We do not currently have a Cybersecurity Incident Response Plan ("CSIRP") to provide the organizational and operational structure,
processes, and procedures for investigating, containing, documenting and mitigating cybersecurity incidents. We expect to implement a
risk-based approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and
procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure
and reporting of such incidents can be made by management in a timely manner.

 We
also rely on information technology and third-party vendors to support our operations, including our secure processing of personal, confidential,
sensitive, proprietary and other types of information. Despite ongoing efforts to continuously improve our and our vendors' ability
to protect against cyber incidents, we may not be able to protect all information systems, and such incidents may lead to reputational
harm, revenue and customer loss, legal actions, statutory penalties, among other consequences. While we have not experienced any material
cybersecurity threats or incidents in recent years, there can be no guarantee that we will not be the subject of future threats or incidents.
Additional information on cybersecurity risks we face can be found in Item 1A, Risk Factors, which should be read in conjunction
with the foregoing information.

 Item
2. Properties.

 Our
principal executive offices are located at 3600 Wilshire Boulevard Suite 1720, Los Angeles, 90010. Beginning in April 2019, we leased
this office space pursuant to a direct lease for approximately $80,000 annually through March 31, 2023. The Company extended its lease
multiple times, most recently through September 2024, while management evaluates options for renewal or relocation.

 Item
3. Legal Proceedings

 As
described in Note 7, the Company has an on-going dispute with the Manufacturer, the outcome of which cannot be predicted at this time.

 From
time to time, various lawsuits and legal proceedings may arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are
currently the defendant in one legal proceeding for an amount less than $100,000. Our legal counsel and management believe a material
unfavorable outcome to be remote.

 Item
4. Mine Safety Disclosures.

 Not
applicable.

 PART
II

 Item
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Market

 Our
common stock is currently traded on the Nasdaq's Capital Market under the symbol "BRFH". Our common stock had been
quoted on the Nasdaq's Capital Market since January 20, 2022.

 Holders

 On March 18, 2024, there were 14,507,146 shares of our common stock
outstanding. Our shares of common stock are held by 89 stockholders of record. The number of record holders was determined from the records
of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers,
dealers and registered clearing agencies.

 Recent
Sales of Unregistered Securities

 On
October 9, 2023, the Company drew down $1,390,000 in convertible debt and converted a total of $1,207,000 of principal into 820,160 shares
of common stock. Additionally, on December 19, 2023, the Company drew down $470,000 in convertible debt and converted a total of $653,000
of principal and $4,000 of accrued interest into 495,331 shares of common stock.

 The
registrant relied upon the exemption from registration contained in Rule 506(b) and Section 4(a)(2) of the Securities Act, and corresponding
provisions of state securities laws, on the basis that (i) offers were made to a limited number of prospective investors and existing
debt holders, (ii) each offer was made through direct communication with the offerees by the registrant, (iii) each of the offerees had
the requisite sophistication and financial ability to bear risks of investing in the registrant's common stock, (iv) the registrant
provided extensive disclosure to the offerees, and (v) there was no general solicitation and no commission or remuneration was paid in
connection with the offers.

 Purchases
of Equity Securities by the Company

 There
were no purchases of equity securities made by the Company in the period covered by this report.

 Securities
Authorized for Issuance Under Equity Compensation Plans

 For
equity compensation plan information, refer to Item 12. Security Ownership of Certain Beneficial Owners and Related Stockholder Matters
of this Annual Report on Form 10-K.

 Transfer
Agent

 Our
transfer agent, Securities Transfer Corporation, is located at 2901 N. Dallas Parkway, Suite 380, Plano, Texas 75093, and its telephone
number is (469) 633-0101.

 Item
6. [Reserved]

 Item
7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

 The
information and financial data discussed below is derived from the audited financial statements of Barfresh for its fiscal years ended
December 31, 2023 and 2022. The financial statements of Barfresh were prepared and presented in accordance with generally accepted accounting
principles in the United States. The information and financial data discussed below is only a summary and should be read in conjunction
with the historical financial statements and related notes of Barfresh contained elsewhere in this Annual Report. This discussion and
analysis may contain forward-looking statements based on assumptions about our future business. Our actual results could differ materially
from those anticipated in these forward-looking statements as a result of certain factors. See "Cautionary Note Regarding Forward
Looking Statements" above for a discussion of forward-looking statements and the significance of such statements in the context
of this Annual Report.

 Overview

 The
Company's products are packaged in three distinct formats.

 The
Company's ready-to-drink smoothie, Twist & Go, has initially been focused towards the USDA national school meal program,
including the School Breakfast Program, the National School Lunch Program and Smart Snacks in Schools Program. This sweet fruit and creamy
yogurt smoothie contains four ounces of yogurt and a half-cup of fruit/fruit juice and comes in three different flavors: strawberry banana,
peach and mango pineapple. "Twist & Go" contains no added sugars, preservatives, artificial flavors or colors.
At only 125 -130 calories and with 5 grams of protein, it makes the perfect start to any day or on-the-go snack.

 The
Company's bulk "Easy Pour" format, which contains all the ingredients necessary to make the beverage, is packaged in
gallon containers in a concentrated formula that is mixed 1:1 with water. The Company has a "no sugar added" version of the
bulk "Easy Pour" format that is specifically targeted for the aforementioned USDA national school meal programs. In addition,
the Company received approval from the United States Defense Logistics Agency ("DLA") to sell its smoothie products into
all branches of the U.S. Armed Forces and is currently in contract with and selling its bulk Easy Pour products into over one hundred
military bases in the United States and abroad.

 The
Company's single-serve format features portion controlled and ready-to-blend beverage ingredient packs or "beverage packs".
The beverage packs contain all the ingredients necessary to make the beverage, including the base (either sorbet, frozen yogurt, or ice
cream), real fruit pieces, juices, and ice – five ounces of water are added before blending.

 Domestic
and international patents and patents pending are owned by Barfresh, as well as related trademarks for all of the single serve products.
Patent rights have been granted in 13 jurisdictions including the United States. In addition, the Company has purchased all of the trademarks
related to the patented products.

 The
Company conducts sales through several channels, including National Accounts, Regional Accounts, and Broadline Distributors.

 Currently
we have 10 employees and 3 consultants.

utilizes contract manufacturers to manufacture all of the products in the United States.

 Critical
Accounting Policies

 Our
financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP").

Recognition

 In
accordance with ASC 606, "Revenue from Contracts with Customers", revenue is recognized when a customer obtains ownership
of promised goods. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive
in exchange for these goods. The Company applies the following five steps:

 1)

 Identify
 the contract with a customer

 A
 contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party's
 rights, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration
 for goods or services that are transferred is probable. For the Company, the contract is the approved sales order, which may also
 be supplemented by other agreements that formalize various terms and conditions with customers.

 2)

 Identify
 the performance obligation in the contract

 Performance
 obligations promised in a contract are identified based on the goods or that will be transferred to the customer. For the Company,
 this consists of the delivery of frozen beverages, which provide immediate benefit to the customer.

 3)

 Determine
 the transaction price

 The
 transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods
 and is generally stated on the approved sales order. Variable consideration, which typically includes rebates or discounts, are estimated
 utilizing the most likely amount method. Provisions for refunds and other adjustments are generally provided for in the period the
 related sales are recorded, based on management's assessment of historical and projected trends.

 4)

 Allocate
 the transaction price to performance obligations in the contract

 Since
 our contracts contain a single performance obligation, delivery of frozen beverages, the transaction price is allocated to that single
 performance obligation.

 5)

 Recognize
 Revenue when or as the Company satisfies a performance obligation

 The
 Company recognizes revenue from the sale of frozen beverages when title and risk of loss passes and the customer accepts the goods,
 which generally occurs at the time of delivery to a customer warehouse. Customer sales incentives such as volume-based rebates or
 discounts are treated as a reduction of sales at the time the sale is recognized. Shipping and handling costs are treated as fulfilment
 costs and presented in distribution, selling and administrative costs.

 Stock-based
Compensation

 We
account for share-based employee compensation plans under the fair value recognition and measurement provisions in accordance with applicable
accounting standards, which require all share-based payments to employees, including grants of stock options and restricted stock units
(RSUs) and performance stock units (PSUs), to be measured based on the grant date fair value of the awards, with the resulting expense
generally recognized on a straight-line basis over the period during which the employee is required to perform service in exchange for
the award. Expense for PSUs is recognized based on expected performance against targets.

 Results
of Operations

and cost of revenue

was $8,127,000 in 2023 compared to $9,162,000 in 2022, a decrease of $1,035,000, or 11%. Revenue in 2022 was negatively impacted by the
$630,000 claims estimate resulting from the market withdrawal of product purchased from the Manufacturer. Excluding the refund claims
estimate, revenue was $9,655,000 in 2022 and therefore decreased by $1,528,000 in 2023, or 16% based on product shipped. Our revenues
have been adversely impacted as a result of lost customers and supply constraints resulting from the product issues and related dispute
with the Manufacturer. While the introduction of our carton packaging format has mitigated the loss of supply, the product offering has
not been accepted by some customers or as a substitute for the bottle product in all use cases. Further, as discussed in Item 1A, Risk
Factors, we may be adversely affected by a carton shortage currently impacting the beverage industry. We have identified and are
actively working to develop additional smoothie bottle manufacturing capacity. We had expected expanded capacity to become available
in early 2024, but were unable to complete the contracting process with the potential partner that had been identified. We believe we
will expand capacity in 2024, however, there can be no assurances regarding our ability to identify and contract with a suitable partner.

 Cost
of revenue was $5,243,000 in 2023 compared to $7,722,000 in 2022, a decrease of $2,479,000, or 32%. Cost of revenue in 2022 was negatively
impacted by the $932,000 inventory write-off related to the product withdrawal. Excluding the inventory write-off, cost of revenue was
$6,790,000 in 2022, and therefore decreased by $1,547,000 in 2023, or 23% based on product shipped. Excluding the impact of the product
withdrawal, cost of revenue declined due to lower revenue, and lower product cost due to a shift in product mix resulting from the limited
supply of smoothie bottles.

 Our
gross profit was $2,884,000 (36%) and $1,440,000 (16%) for 2023 and 2022, respectively. Adjusted for the product withdrawal, our 2022
gross profit was $2,865,000 (30%). Adjusted comparative gross margin improvement is a result of favorable product mix, pricing actions,
and a slight improvement in the cost of supply chain components.

 Selling,
marketing and distribution expense

 Year ended

 Year ended

 2023

 2022

 Change

 Percent

 Sales and marketing

 $
 1,336,000

 $
 1,394,000

 $
 (58,000
)

 -4
 %

 Storage and outbound freight

 1,278,000

 1,467,000

 (189,000
)

 -13
 %

 $
 2,614,000

 $
 2,861,000

 $
 (247,000
)

 -9
 %

 Selling,
marketing and distribution expense decreased approximately $247,000 (-9%) from approximately $2,861,000 in 2022 to $2,614,000 in 2023.

 Sales and marketing expense decreased approximately $58,000 (4%) from
approximately $1,394,000 in 2022 to $1,336,000 in 2023. We reduced labor costs in 2023. These reductions were partially offset by additional
expense for product sampling of smoothie carton products, equipment maintenance incurred to relaunch bulk product sales in locations that
had been non-operational as a result of COVID shutdowns and subsequent labor shortages, and broker commissions as we engaged numerous
regional K-12 specialists to expand our geographic reach in the third quarter of 2022, and thus incurred a full year of expense in 2023
compared to a partial year in 2022.

 Storage
and outbound freight expense decreased approximately $189,000 (-13%) from approximately $1,467,000 in 2022 to $1,278,000. Adjusted for
freight cost related to aforementioned product withdrawal credit memos, freight expense was $1,274,000 in 2022. The volume-related decrease
in expense from the decline in revenue was offset by higher costs resulting from product mix and inefficiencies due to production transitions.

 General
and administrative expense

 Year ended

 Year ended

 2023

 2022

 Change

 Percent

 Personnel costs

 $
 1,199,000

 $
 1,340,000

 $
 (141,000
)

 -11
 %

 Stock-based compensation and payment for outside services

 543,000

 559,000

 (16,000
)

 -3
 %

 Legal, professional and consulting fees

 310,000

 499,000

 (189,000
)

 -38
 %

 Director fees paid in cash

 -

 100,000

 (100,000
)

 -100
 %

 Research and development

 115,000

 382,000

 (267,000
)

 -70
 %

 Other general and administrative expenses

 527,000

 669,000

 (142,000
)

 -21
 %

 $
 2,694,000

 $
 3,549,000

 $
 (855,000
)

 -24
 %

 General
and administrative expense decreased approximately $855,000 (-24%) from approximately $3,549,000 in 2022 to $2,694,000 in 2023.

 Personnel
cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes and continues to be our largest
cost. Personnel cost decreased by approximately $141,000 (-11%) from approximately $1,340,000 in 2022 to $1,199,000 in 2023. The decrease
in personnel cost resulted primarily from the confirmation and recognition of our 2021 COVID-related tax credit, partially offset by
bonus expense from the 2023 decision to cash settle a portion of the 2022 performance stock units. Additionally, salaries were lower
due to a decrease in headcount.

 Legal,
professional and consulting fees decreased by $189,000 (-38%). We reduced outside services in an effort to conserve working capital.

 Research
and development expense decreased approximately $267,000 (-70%) from approximately $382,000 in 2022 to $115,000 in 2023. Expense was
elevated in 2022 as we incurred pre-production expense related to the launch of our carton format, while 2023 expense was limited as
activities were minimized to conserve working capital.

 Certain
director fees previously paid in cash were paid in stock in 2023 in order to conserve working capital.

 Other
general and administrative expenses decreased approximately $142,000 (-21%) from approximately $669,000 in 2022 to $527,000 in 2023 primarily
as a result of non-recurring costs related to our uplisting to the NASDAQ stock exchange in 2022, partially offset by licensing and development costs for information technology improvements.

 Asset
Impairment

 We
evaluate the recoverability of property and equipment and finite-lived intangible assets for possible impairment whenever events or circumstances
indicate that the carrying amount of such assets may not be recoverable. The evaluation is performed at the lowest level for which identifiable
cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a
comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates
that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets is reduced
to fair value. In 2022, we recorded impairment charges of $746,000 related to idle equipment resulting from overcapacity for single-serve
products and equipment that is held at the Manufacturer. No impairment charges were recorded in 2023.

 Net
loss

 We
had net losses of approximately $2,824,000 and $6,134,000 for the years ended December 31, 2023 and 2022, respectively. The decrease
in net loss of approximately $3,296,000, was the result of the non-recurrence of the estimated refund claims and inventory disposal costs
associated with the product withdrawal, improved margins, and a reduction of approximately $1,106,000 in operating expenses due to cost
saving measures, reduced volume of product shipped, and the recognition of our COVID-related tax credit and the non-recurrence of the
$746,000 asset impairment.

 Liquidity
and Capital Resources

 On
October 23, 2023, we drew down $1,390,000 in convertible debt and converted a total of $1,207,000 of principal into 820,160 shares of
common stock. Additionally, on December 19, 2023, we drew down $470,000 in convertible debt and converted a total of $653,000 of principal
and $4,000 of accrued interest into 495,331 shares of common stock, settling all debt. Debt drawdowns included the non-cash settlement
of $30,000 in accounts payable.

 During
the year ended December 31, 2023, we used $2,958,000 in operations. As of December 31, 2023, we had working capital of $1,846,000
compared with $1,801,000 at December 31, 2022. Cash received from our debt issuance of $1,830,000 offset our operating loss of
$1,848,000, net of $990,000 in non-cash expenses. Our cash balance declined by $1,128,000 as receivables rebounded to reflect the
34% increase in revenue for the quarter ended December 31, 2023 compared to the same period of 2022, in addition to the settlement
of credit memo reserves resulting from the 2022 product withdrawal. Additionally, we settled accrued payroll, with the repayment
reinvested by management in our debt offering, and reduced liabilities for cash director fees and franchise taxes associated with
our 2021 reverse split. We intend to compensate directors in stock or options until our liquidity and financial position
improve.

 Our
liquidity needs will depend on how quickly we are able to profitably ramp up sales, as well as our ability to control and reduce variable
operating expenses, and to continue to control and reduce fixed overhead expense. Our recent business developments with the Manufacturer
impact our supply chain and will result in increased legal cost and are expected to have a negative impact on our financial position,
results of operations and cash flow.

 Our
operations to date have been financed by the sale of securities, the issuance of convertible debt and the issuance of short-term debt,
including related party advances. If we are unable to generate sufficient cash flow from operations with the capital raised we will be
required to raise additional funds either in the form of equity or in the form of debt. There are no assurances that we will be able
to generate the necessary capital to carry out our current plan of operations.

 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
7A. Quantitative and Qualitative Disclosures About Market Risk.

 Not
applicable because we are a smaller reporting company.

 Item
8. Financial Statements and Supplementary Data.

 Our
consolidated financial statements are included beginning immediately following the signature page to this report. See Item 15 for a list
of the consolidated financial statements included herein.

 Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 None.

 Item
9A. Controls and Procedures.

 Management's
Annual Report on Internal Control over Financial Reporting

 Disclosure
Controls and Procedures

 Under
the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer,
we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act of 1934
Rule 13a-15(e). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that the Company's
disclosure controls and procedures were effective as of December 31, 2023.

 Management's
Annual Report on Internal Control over Financial Reporting

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Rule 13a-15(f) under the Exchange Act, for the Company.

 Internal
control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that
could have a material effect on the financial statements.

 Our
management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2023. The framework
used by management in making that assessment was the criteria set forth in the document entitled "Internal Control – Integrated
Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013.

 Under
the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer,
we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act of 1934
Rule 13a-15(e). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that the Company's
disclosure controls and procedures were not effective as of December 31, 2023.

 Management
has identified the following material weakness in our internal control over financial reporting:

 Management
has concluded that there is a material weakness due to the control environment. The control environment is impacted due to the Company's
inadequate segregation of duties, including information technology control activities.

 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.

 In an effort to remediate the identified material weakness and enhance
our internal control over financial reporting, we have hired additional information technology personnel to help ensure that we are able
to properly implement internal control procedures.

 This
report shall not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that
section, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless
of any general incorporation language in such filing.

 Changes
in Internal Control over Financial Reporting

 None

 Item
9B. Other Information.

 None

 Item
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

 None

 PART
III

 Item
10. Directors, Executive Officers and Corporate Governance.

required by this Item regarding our directors and executive officers, corporate governance, including our audit committee and code of
ethics, and compliance with Section 16(a) of the Exchange Act is incorporated by reference to our proxy statement to be filed with the
SEC in connection with our 2024 Annual Meeting of Stockholders (the "Proxy Statement").

 Item
11. Executive Compensation.

required by this Item regarding executive compensation is incorporated by reference to our Proxy Statement.

 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

required by this Item regarding executive compensation is incorporated by reference to our Proxy Statement.

required by this item regarding securities authorized for issuance under our equity compensation plans is incorporated by reference to
the information set forth under the caption "Executive Compensation" in our Proxy Statement.

 Item
13. Certain Relationships and Related Transactions, and Director Independence.

required by this Item regarding executive compensation is incorporated by reference to our Proxy Statement.

 Item
14. Principal Accounting Fees and Services.

required by this Item regarding executive compensation is incorporated by reference to our Proxy Statement.

 PART
IV

 Item
15. Exhibits and Financial Statements.

 (a)
1. Financial Statements

 See
Index to Financial Statements in Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.

 2.
Financial Statement Schedules

 All
other financial statement schedules have been omitted because they are either not applicable or the required information is shown in
the financial statements or notes thereto.

 3.
Exhibits

 See
the Exhibit Index, which follows the signature page of this Annual Report on Form 10-K, which is incorporated herein by reference.

 (b)
Exhibits

 See
Item 15(a) (3) above.

 (c)
Financial Statement Schedules

 See
Item 15(a) (2) above.

 Item
16. Form 10-K Summary.

 None.

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) 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:
 March 22, 2024

 By:

 /s/
 Riccardo Delle Coste

 Riccardo
 Delle Coste

 Chief
 Executive Officer

 (Principal
 Executive Officer)

 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

 Signature

 Capacity

 Date

 /s/
 Riccardo Delle Coste

 Chief
 Executive Officer and Director

 March

 Riccardo
 Delle Coste

 (Principal
 Executive Officer

 /s/
 Lisa Roger

 Chief
 Financial Officer

 March

 Lisa
 Roger

 (Principal
 Financial Officer)

 /s/
 Steven Lang

 March

 Steven
 Lang

 /s/
 Arnold Tinter

 March

 Arnold
 Tinter

 /s/
 Joseph M. Cugine

 March

 Joseph
 M. Cugine

 /s/
 Isabelle Ortiz-Cochet

 March

 Isabelle
 Ortiz-Cochet

 /s/
 Alexander Ware

 March

 Alexander
 Ware

 /s/
 Justin Borus

 March

 Justin
 Borus

 Exhibit

 Exhibit

 Number

 Description

 3.1

 Certificate of Incorporation of Moving Box Inc. dated February 25, 2010 (incorporated by reference to Exhibit 3.1 to Form S-1 (Registration No. 333-168738) as filed August 11, 2010)

 3.2

 Amended and Restated Bylaws of Barfresh Food Group Inc. (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K as filed August 4, 2014)

 3.3

 Certificate of Amendment of Certificate of Incorporation of Moving Box Inc. dated February 13, 2012 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K as filed February 17, 2012)

 3.4

 Certificate of Amendment of Certificate of Incorporation of Smoothie Holdings Inc. dated February 16, 2012 (incorporated by reference to Exhibit 3.2 to Current Report on Form 8-K as filed February 17, 2012)

 3.5

 Certificate of Amendment of Certificate of Incorporation of Barfresh Food Group Inc. dated December 17, 2021 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K as filed December 29, 2021)

 3.6

 Certificate of Amendment of Certificate of Incorporation of Barfresh Food Group Inc. dated August 1, 2022 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K as filed August 2, 2022)

 4.1

 Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.20 to Annual Report on Form 10-K for the year ended December 31, 2019, as filed April 13, 2020)

 10.1

 Barfresh Food Group, Inc. 2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 to Annual Report Form 10-K filed July 7, 2015)+

 10.2

 Barfresh Food Group, Inc. 2023 Equity Incentive Plan (incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-8 filed August 14, 2023)+

 10.3

 Executive Employment Agreement by and between Smoothie, Inc. and Riccardo Delle Coste dated April 27, 2015 (incorporated by reference to Exhibit 10.11 to Annual Report Form 10-K filed July 7, 2015)+

 10.4

 Form of Securities Purchase Agreement together with form of Convertible Promissory Note (incorporated by reference to Exhibit 10.1 from the Quarterly Report on Form 10-Q filed October 26, 2023)

 21.1

 Subsidiaries (incorporated by reference to Exhibit 21.1 to Annual Report on Form 10-K for the year ended December 31, 2019, filed April 13 2020)

 23.2

 Consent of Independent Registered Public Accounting Firm*

 31.1

 Rule 13a-14(a) Certification of Principal Executive Officer*

 31.2

 Rule 13a-14(a) Certification of Principal Financial Officer*

 32.1

 Certification Pursuant to 18 U.S.C. Section 1350*

 32.2

 Certification Pursuant to 18 U.S.C. Section 1350*

 97.1

 Compensation Recovery Policy*

 101.INS

 Instance.

 101.XSD

 Inline

 101.PRE

 Presentation.

 101.CAL

 Calculation.

 101.DEF

 Definition.

 101.LAB

 Label.

 Cover

 *

 Filed
 herewith

 +

 Compensatory
 plan

 In
accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

 Furnished
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.

to Consolidated Financial Statements

 Page

 Report of Independent Registered Public Accounting Firm (Eide Bailly LLP, Denver, Colorado, PCAOB ID 286)

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022

 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022

 Notes to Consolidated Financial Statements

 F- 1

 Report
of Independent Registered Public Accounting Firm

 To
the Board of Directors and Stockholders

Food Group, Inc.

 Los
Angeles, California

 Opinion
on the Consolidated Financial Statements

 We
have audited the accompanying consolidated balance sheets of Barfresh Food Group, Inc. (the "Company") as of December 31,
2023 and 2022, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended,
and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of Barfresh Food Group, Inc. as of December 31,
2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

 Correction
of Error

 As
discussed in Note 2 to the consolidated financial statements, the 2022 financial statements have been restated to correct a misstatement.

 Basis
for Opinion

 These
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be independent with respect to Barfresh Food Group, Inc. in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Barfresh Food Group Inc. is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose
of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express
no such opinion.

 Our
audits included performing procedures to assess the risk of material misstatement of the consolidated financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.

 Critical
Audit Matter

 The
critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material
to the consolidated financial statements and (2) involved especially challenging, subjective or complex judgments. The communication
of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matter or on the accounts
or disclosures to which they relate.

 Valuation
of Convertible Debt and Related Conversion

 As
discussed in Note 6 to the consolidated financial statements, in 2023 the Company executed subscription agreements for $1,880,000 of
a $2,000,000 privately placed convertible debt offering. The complexity of the accounting treatment (especially the derivative
considerations related to the conversion) requires management to make significant judgements which impacts the overall calculation
and conversion of the debt.

 We
identified the valuation of the convertible debt and related conversion as a critical audit matter. Auditing the complex judgments involves
especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.

 The
primary procedures we performed to address this critical audit matter included:

 Gaining
 an understanding of management's processes, controls and methodology related to the convertible debt issued and related derivative
 considerations.

 Testing
 the completeness, accuracy and relevance of the underlying data which includes the principal, interest, and volume weighted average
 stock price (conversion price) used in determining the proper accounting treatment of the convertible debt and related issuance of
 common stock.

 Testing
 cash receipts related to the issuance of the convertible debt.

 Testing
 common stock issued in relation to the conversion of the convertible debt.

 Evaluating
 the adequacy of the disclosure related to the convertible debt and related equity.

 We
have served as Barfresh Food Group Inc.'s auditor since 2012.

 /s/ Eide Bailly LLP

 Denver,
Colorado

 March 22, 2024

 F- 2

 Consolidated
Balance Sheets

 2023

 2022

 Assets

 Current assets:

 Cash

 $
 1,891,000

 $
 2,808,000

 Restricted cash

 -

 211,000

 Trade accounts receivable, net

 821,000

 126,000

 Other receivables

 160,000

 101,000

 Inventory, net

 1,214,000

 1,048,000

 Prepaid expenses and other current assets

 67,000

 79,000

 Total current assets

 4,153,000

 4,373,000

 Property, plant and equipment, net of depreciation

 409,000

 801,000

 Operating lease right-of-use assets, net

 -

 18,000

 Intangible assets, net of amortization

 241,000

 306,000

 Deposits

 7,000

 7,000

 Total assets

 $
 4,810,000

 $
 5,505,000

 Liabilities and Stockholders' Equity

 Current liabilities:

 Accounts payable

 $
 1,670,000

 $
 1,534,000

 Disputed co-manufacturer accounts payable (Note 7)

 499,000

 499,000

 Accrued expenses

 85,000

 286,000

 Accrued payroll and employee related

 53,000

 233,000

 Lease liability

 -

 20,000

 Total current liabilities

 2,307,000

 2,572,000

 Total liabilities

 2,307,000

 2,572,000

 Commitments and contingencies (Note 7)

 -

 -

 Stockholders' equity:

 Preferred stock, $ 0.000001 par value, 400,000 shares authorized, none issued or outstanding

 -

 -

 Common stock, $ 0.000001 par value; 23,000,000 shares authorized; 14,420,105 and 12,934,741 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

 -

 -

 Additional paid in capital

 63,299,000

 60,905,000

 Accumulated deficit

 ( 60,796,000
)

 ( 57,972,000
)

 Total stockholders' equity

 2,503,000

 2,933,000

 Total liabilities and stockholders' equity

 $
 4,810,000

 $
 5,505,000

 See
the accompanying notes to the consolidated financial statements

 F- 3

 Consolidated
Statements of Operations

 For
the years ended December 31, 2023 and 2022

 2023

 2022

 $
 8,127,000

 $
 9,162,000

 Cost of revenue

 5,243,000

 7,722,000

 Gross profit

 2,884,000

 1,440,000

 Operating expenses:

 Selling, marketing and distribution

 2,614,000

 2,861,000

 General and administrative

 2,694,000

 3,549,000

 Depreciation and amortization

 400,000

 418,000

 Impairment of long-lived assets

 -

 746,000

 Total operating expenses

 5,708,000

 7,574,000

 $
 ( 2,824,000
)

 $
)

 Per share information - basic and fully diluted:

 Weighted average shares outstanding

 13,359,000

 12,924,000

 Net loss per share

 $
 ( 0.21
)

 $
 ( 0.47
)

 See
the accompanying notes to the consolidated financial statements

 F- 4

 Consolidated
Statements of Stockholders' Equity

 For
the years ended December 31, 2023 and 2022

 Shares

 Amount

 Capital

 (Deficit)

 Total

 Additional

 Common Stock

 paid in

 Accumulated

 Shares

 Amount

 Capital

 (Deficit)

 Total

 Balance December 31, 2021 (as restated)

 12,905,112

 $
 -

 $
 60,341,000

 $
 ( 51,838,000
)

 $
 8,503,000

 Shares issued for warrant exercise

 -

 5,000

 -

 5,000

 Issuance of stock and options for services

 23,643

 -

 173,000

 -

 173,000

 Equity-based compensation

 5,000

 -

 386,000

 -

 386,000

 -

 -

 -

)

)

 Balance December 31, 2022

 12,934,741

 -

 60,905,000

 ( 57,972,000
)

 2,933,000

 Balance

 12,934,741

 -

 60,905,000

 ( 57,972,000
)

 2,933,000

 Equity-based compensation

 165,779

 -

 544,000

 -

 544,000

 Cash settlement of equity-based compensation

 ( 24,000
)

 ( 24,000
)

 Issuance of stock and options for services

 4,094

 -

 11,000

 -

 11,000

 Conversion of debt and interest (Note 6)

 1,315,491

 -

 -

 Conversion of debt and interest

 1,315,491

 -

 -

 -

 -

 -

 ( 2,824,000
)

 ( 2,824,000
)

 Balance December 31, 2023

 14,420,105

 $
 -

 $
 63,299,000

 $
 ( 60,796,000
)

 $
 2,503,000

 Balance

 14,420,105

 $
 -

 $
 63,299,000

 $
 ( 60,796,000
)

 $
 2,503,000

 See
the accompanying notes to the consolidated financial statements.

 F- 5

 Consolidated
Statements of Cash Flows

 For
the years ended December 31 2023 and 2022

 2023

 2022

 Net
 loss

 $

 ( 2,824,000

)

 $

)

 Adjustments
 to reconcile net loss to net cash used in operating activities

 Asset
 impairment

 -

 746,000

 Loss
 on asset disposal

 18,000

 -

 Depreciation
 and amortization

 403,000

 444,000

 Stock-based
 compensation

 544,000

 386,000

 Stock
 and options issued for services

 11,000

 173,000

 Changes
 in assets and liabilities

 Accounts
 receivable

 ( 695,000

)

 1,097,000

 Other
 receivables

 ( 59,000

)

 ( 101,000

)

 Inventories

 ( 166,000

)

 ( 343,000

)

 Prepaid
 expenses and other assets

 10,000

 ( 20,000

)

 Accounts
 payable

 202,000

 560,000

 Disputed
 accounts payable

 -

 499,000

 Accrued
 expenses

 ( 402,000

)

 45,000

 Net
 cash used in operating activities

 ( 2,958,000

)

 ( 2,648,000

)

 Investing
 activities

 Purchase
 of property and equipment

 -

 ( 13,000

)

 Net
 cash used in investing activities

 -

 ( 13,000

)

 Financing
 activities

 Proceeds
 from issuance of stock

 -

 5,000

 Proceeds
 from convertible notes

 1,830,000

 -

 Net
cash from financing activities

 1,830,000

 5,000

 Net
 change in cash and restricted cash

 ( 1,128,000

)

 ( 2,656,000

)

 Cash
 and restricted cash, beginning of year

 3,019,000

 5,675,000

 Cash
 and restricted cash, end of year

 $

 1,891,000

 $

 3,019,000

 See
the accompanying notes to the consolidated financial statements.

 F- 6

food Group Inc.

 Notes
to Consolidated Financial Statements

 Note
1. Summary of Significant Accounting Policies

Food Group Inc., ("we," "us," "our," and the "Company") was incorporated on February
25, 2010 in the State of Delaware. The Company is engaged in the manufacturing and distribution of ready-to-drink and ready-to-blend
beverages, particularly, smoothies, shakes and frappes.

 Basis
of Presentation

 The
accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the
United States of America ("GAAP").

 Principles
of Consolidation

 The
consolidated financial statements include the financial statements of the Company and our wholly owned subsidiaries, Barfresh Inc. and
Barfresh Corporation Inc. (formerly known as Smoothie, Inc.). All inter-company balances and transactions among the companies have been
eliminated upon consolidation.

 Use
of Estimates

 The
preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ
from these estimates.

 Concentration
of Credit Risk

 The
amount of cash on deposit with financial institutions exceeds the $ 250,000 federally insured limit at December 31, 2023 and 2022. However,
we believe that cash on deposit that exceeds $ 250,000 in the financial institutions is financially sound and the risk of loss is minimal.

 The
following customers accounted for 10% or more of the Company's accounts receivable balance at December 31:

 Schedule of Company's Contract Manufacturers of Finished Goods

 2023

 2022

 Customer A

 %

 %

 Customer B

 %

 %

 Customer C

 %

 %

 Customer D

 %

 %

 Restricted
Cash

 At
December 31, 2022, the Company had $ 211,000 in restricted cash related to a contract manufacturing agreement. The restricted cash was
released in 2023.

 Fair
Value Measurement

 Financial
Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements
and Disclosures ("ASC 820"), provides a comprehensive framework for measuring fair value and expands disclosures which
are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing
the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities
and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:

 Level
1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets
and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on
the New York Stock Exchange.

 F- 7

 Level
2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported
date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced
with models using highly observable inputs.

 Level
3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included
in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts
used to determine the fair value of financial transmission rights.

 Financial
Instruments

 Our
financial instruments consist of cash, restricted cash, accounts receivable and accounts payable. The carrying value of our financial
instruments approximates their fair value.

 Accounts
Receivable

 Accounts
receivable from customers are typically unsecured. The Company's credit policy calls for payment generally within 30 days. The
credit worthiness of a customer is evaluated prior to a sale. Accounts receivable totaled $ 821,000 and
$ 126,000 as
of December 31, 2023 and 2022, respectively. Allowances for credit losses are considered when an undisputed balance is
greater than 90 days past due. There was no allowance
for credit losses as of December 31, 2023 and 2022. There was no credit loss expense for the years ended December 31, 2023 and 2022.

 Inventory

 Inventory
consists of finished goods and is carried at the lower of cost or net realizable value on a first in first out basis. The Company monitors
the remaining useful life of its inventory and establishes a reserve of obsolescence where appropriate.

 Intangible
Assets

 Intangible
assets are comprised of patents, net of amortization and trademarks. 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, costs associated with the acquisition of patents from third parties, legal fees and similar costs relating
to patents have been capitalized.

 In
accordance with ASC 350 legal costs related to trademarks have been capitalized. We have determined that trademarks have an indeterminable
life and therefore are not being amortized.

 Long-Lived
Assets and Other Acquired Intangible Assets

 We
evaluate the recoverability of property and equipment and finite-lived intangible assets for possible impairment whenever events or circumstances
indicate that the carrying amount of such assets may not be recoverable. The evaluation is performed at the lowest level for which identifiable
cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a
comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates
that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets is reduced
to fair value. We recorded impairment charges of $ 746,000 related to idle equipment resulting from overcapacity for single-serve products
and equipment that is held at the Manufacturer in 2022. There was no impairment in 2023.

 F- 8

 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:

 Summary of Estimated Useful Lives of Assets

 Manufacturing
 equipment

 years

 Customer
 equipment

 years

Recognition

 In
accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains ownership of promised goods.
The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these
goods. The Company applies the following five steps:

 1)

 Identify
 the contract with a customer

 A
 contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party's
 rights, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration
 for goods or services that are transferred is probable. For the Company, the contract is the approved sales order, which may also
 be supplemented by other agreements that formalize various terms and conditions with customers.

 2)

 Identify
 the performance obligation in the contract

 Performance
 obligations promised in a contract are identified based on the goods or services that will be transferred to the customer. For the
 Company, this consists of the delivery of frozen beverages, which provide immediate benefit to the customer.

 3)

 Determine
 the transaction price

 The
 transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods
 and is generally stated on the approved sales order. Variable consideration, which typically includes rebates or discounts, are estimated
 utilizing the most likely amount method. Provisions for refunds are generally provided for in the period the related sales are recorded,
 based on management's assessment of historical and projected trends.

 4)

 Allocate
 the transaction price to performance obligations in the contract

 Since
 the Company's contracts contain a single performance obligation, delivery of frozen beverages, the transaction price is allocated
 to that single performance obligation.

 5)

 Recognize
 revenue when or as the Company satisfies a performance obligation

 The
 Company recognizes revenue from the sale of frozen beverages when title and risk of loss passes and the customer accepts the goods,
 which generally occurs at the time of delivery to a customer warehouse. Customer sales incentives such as volume-based rebates or
 discounts are treated as a reduction of sales at the time the sale is recognized. Shipping and handling costs are treated as fulfilment
 costs and presented in distribution, selling and administrative costs.

 Payments
 that are received before performance obligations are recorded are shown as current liabilities.

 The
 Company evaluated the requirement to disaggregate revenue and concluded that substantially all of its revenue comes from a single
 product, frozen beverages.

 F- 9

 Research
and Development

 Expenditures
for research activities relating to product development and improvement are charged to expense as incurred. The Company incurred $ 115,000
and $ 382,000, in research and development expenses for the years ended December 31, 2023 and 2022, respectively.

 Storage
and Shipping Costs

 Storage
and outbound freight costs are included in selling, marketing and distribution expense. For the years ended December 31, 2023 and 2022,
storage and outbound freight amounted to $ 1,278,000 and $ 1,467,000, respectively.

 Leases

 We
determine if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes
the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose
the asset is used. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value
of lease payments over the lease term. Lease expense is recognized on a straight-line basis over the lease term. As a lessee, the Company
leases office space.

 Income
Taxes

 The
provision for income taxes is determined in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes ("ASC
740"). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets
and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.

 ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements,
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the
financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax
positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 ASC
740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely
than not that some portion or all of the deferred tax assets will not be recognized.

 For
the years ended December 31, 2023 and 2022 we did not have any interest and penalties or any significant unrecognized uncertain tax positions.

 Derivative
Liability

 The
Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components
of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, "Derivatives and Hedging."
The Company determined that its convertible instruments issued in 2023 did not include any embedded derivatives that require bifurcation.

 Loss
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 December 31, 2023 and 2022 any equivalents would
have been anti-dilutive as we had losses for the years then ended.

 F- 10

 Stock
Based Compensation

 The
Company calculates stock compensation in accordance with ASC Topic 718, Compensation-Stock Based Compensation ("ASC 718").
ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the financial statements and establishes
fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based
measurement method in accounting for share-based payment transactions with employees.

 Recent
pronouncements

 From
time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We have not determined if the
impact of recently issued standards that are not yet effective will have an impact on our results of operations and financial position.

 Subsequent
events

 None.

 Note
2. Restatement of Prior Financial Information

 This
Company's previously filed audited balance sheet and statement of operations and cash flow statement have been restated to correct
errors in calculating depreciation. From a quantitative and qualitative perspective, the Company determined that correcting the previously
filed financial statements would not require amendment to its previously filed reports on Form 10-Q and 10-K. The restatement reduced the accumulated deficit by $ 327,000 as of December
31, 2021. The effect of the correction
of previously issued financial statements is summarized below:

 Schedule of Prior Financial Information

 As Previously

 Reported

 Adjustment

 Restated

 December 31, 2022

 As Previously

 Reported

 Adjustment

 Restated

 Consolidated Balance Sheet

 Property, plant and equipment, net of depreciation

 $
 389,000

 $

 $
 801,000

 Total assets

 $
 5,093,000

 $

 $
 5,505,000

 Accumulated deficit

 $
 ( 58,384,000
)

 $

 $
 ( 57,972,000
)

 Total stockholders' equity

 $
 2,521,000

 $

 $
 2,933,000

 Total liabilities and stockholders' equity

 $
 5,093,000

 $

 $
 5,505,000

 As Previously

 Reported

 Adjustment

 Restated

 Year ended December 31, 2022

 As Previously

 Reported

 Adjustment

 Restated

 Consolidated Statement of Operations

 Depreciation and amortization

 $
 503,000

 $
 ( 85,000
)

 $
 418,000

 Total operating expenses

 $
 7,659,000

 $
 ( 85,000
)

 $
 7,574,000

 $
 ( 6,219,000
)

 $
 85,000

 $
)

 Consolidated Statement of Cash Flows

 $
 ( 6,219,000
)

 $
 85,000

 $
)

 Depreciation and amortization

 $
 529,000

 $
 ( 85,000
)

 $
 444,000

 Net cash used in operating activities

 $
 ( 2,648,000
)

 $
 -

 $
 ( 2,648,000
)

 F- 11

 Note
3. Inventory

 Inventory
consists of the following at December 31:

 Schedule of Inventory

 2023

 2022

 Raw materials

 $
 28,000

 $
 65,000

 Finished goods

 1,186,000

 983,000

 Inventory, net

 $
 1,214,000

 $
 1,048,000

 Note
4. Property Plant and Equipment

 Major
classes of property and equipment consist of the following at December 31:

 Schedule of Property and Equipment, Net

 2023

 2022

 Manufacturing equipment

 $
 1,546,000

 $
 1,618,000

 Customer equipment

 1,410,000

 1,417,000

 Property and equipment, gross

 2,956,000

 3,035,000

 Less: accumulated depreciation

 ( 2,547,000
)

 ( 2,234,000
)

 Property and equipment, net of depreciation

 $
 409,000

 $
 801,000

 We
recorded depreciation expense related to these assets of $ 339,000 and $ 380,000 for the years ended December 31, 2023 and 2022, respectively.
Depreciation expense in cost of revenue was $ 18,000 and $ 29,000 for the years ended December 31, 2023 and 2022 respectively.

 Note
5. Intangible Assets

 Intangible
assets consist of the following at December 31:

 Schedule of Intangible Assets

 2023

 2022

 Patent costs, subject to amortization

 $
 768,000

 $
 768,000

 Less: accumulated amortization

 ( 651,000
)

 ( 586,000
)

 Patent costs, net

 117,000

 182,000

 Trademarks, not subject to amortization

 124,000

 124,000

 Total

 $
 241,000

 $
 306,000

 The
amounts carried on the balance sheet represent cost to acquire, legal fees and similar costs relating to the patents incurred by the
Company. Amortization is calculated through the expiration date of the patent. The amount charged to expenses for amortization of the
patent costs was $ 64,000 for each of the years ended December 31, 2023 and 2022, respectively.

 Estimated
future amortization expense related to patents as of December 31, 2023, is as follows:

 Schedule of Estimated Future Amortization Expense Related to Intangible Property

 Total

 Amortization

 Years
 ending December 31,

 2024

 $

 64,000

 2025

 49,000

 2026

 4,000

 Intangible
 asset, net of amortization

 $

 117,000

 F- 12

 Note
6. Convertible Notes

 From
July to October of 2023, the Company executed subscription agreements for $ 1,880,000 of a $ 2,000,000 privately placed convertible debt
offering. The debt may be drawn in 25% increments, matures on the anniversary of the draw, bears interest at 10% per annum for the term,
regardless of earlier payment or conversion, and is mandatorily convertible as to principal and interest into shares of the Company's
common stock at any time prior to maturity at the greater of $1.20 or 85% of the volume-weighted average price of the common stock for
the ten trading days immediately preceding the written notice of the conversion (the "Conversion Price"). If the Company
has not exercised the mandatory conversion, the holder of the debt has the option after six months and on up to four occasions to convert
all or any portion of the principal and interest into shares of the Company's common stock at the Conversion Price.

 On
October 23, 2023, we drew down $ 1,390,000 in convertible debt and converted a total of $ 1,207,000 of principal into 820,160 shares of
common stock. Additionally, on December 19, 2023, the Company drew down $ 470,000 in convertible debt and converted a total of $ 653,000
of principal and $ 4,000 of accrued interest into 495,331 shares of common stock, settling all debt. Debt drawdowns included the non-cash
settlement of $ 30,000 in accounts payable.

 Note
7. Commitments and Contingencies

 Lease
Commitments

 The
Company leases office space under a non-cancelable operating lease which expired on March 31, 2023 and has been extended multiple times,
most recently through September 30, 2024. The Company incurred lease expense of $ 80,000 for the years ended December 31, 2023 and 2022, respectively.
Due to the short-term nature of the extensions, there is no right of use asset or related liability as of December 31, 2023. As of December
31, 2022, the right of use asset and related liability were $ 18,000 and $ 20,000, respectively.

 Legal
Proceedings

 Schreiber
Dispute

 The
Company's products are produced to its specifications through several contract manufacturers. One of the Company's contract
manufacturers (the "Manufacturer") provided approximately 52 % and 42 % of the Company's products in the years ended
December 31, 2022 and 2021, respectively, under a Supply Agreement with an initial term through September 2025.

 Over
the course of 2022, the Company experienced numerous quality issues with the case packaging utilized by the Manufacturer. In addition,
in July of 2022, the Company began receiving customer complaints about the texture of the Company's smoothie products produced
by the Manufacturer. In response, the Company withdrew product from the market and destroyed on-hand inventory, withholding $ 499,000
in payments due to the Manufacturer.

 The
Company attempted to resolve the issues based on the contractual procedures described in the Supply Agreement. However, on November 4,
2022, in response to a formal proposal of alternate resolutions, the Company received notification from the Manufacturer that it was
denying any responsibility for the defective manufacture of the product. In response, on November 10, 2022, the Company filed a complaint
in the United States District Court for the Central District of California, Western Division (the "Complaint"), claiming
that the Manufacturer had not met its obligations under the Supply Agreement, and seeking economic damages. In response, the Manufacturer
terminated the Supply Agreement. On January 20, 2023, the Company filed a voluntary dismissal of the Complaint which allowed the parties
to reach a potential resolution outside of the court system. However, as the parties were once again unable to come to an agreement,
the Company re-filed the Complaint in California State Court in August 2023 and continues to progress through the court system.

 F- 13

 Due
to the uncertainties surrounding the claim, the Company is not able to predict either the outcome or a range of reasonably possible recoveries
that could result from its actions against the Manufacturer, and no gain contingencies have been recorded. The disruption in its supply
resulting from the dispute has and will continue to adversely impact the Company's results of operations and cash flow until a
suitable resolution is reached or new sources of reliable supply at sufficient volume can be identified and developed, the timing of
which is uncertain. The Company has mitigated the impact of the supply disruption with the introduction of its single-serve smoothie
cartons; however the product format has not been accepted by some customers or as a substitute for the bottle product in all use cases.

 Other
legal matters

 From
time to time, various lawsuits and legal proceedings may arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are
currently the defendant in one legal proceeding for an amount less than $ 100,000. Our legal counsel and management believe a material
unfavorable outcome to be remote.

 Note
8. Stockholders' Equity

 In
2022, the Company issued 23,643 shares of common stock, valued between $ 5.00 - $ 5.16 per share, for services rendered. Additionally,
 5,000 fully vested shares of common stock were granted and issued for equity-based compensation at a value of $ 4.50 per share.

 In
2022, the Company issued 986 shares of common stock due to the exercise of a warrant at an exercise price of $ 5.07.

 In
2023, the Company issued 1,315,491 shares of common stock pursuant to the conversion of debt and accrued interest, as more fully described
in Note 6.

 In
2023, the Company issued 165,779 shares of common stock for equity-based compensation. Additionally, 4,094 shares of common stock valued
between $ 1.45 - $ 4.00 were issued for services.

 Warrants

 The
following is a summary of changes in warrants outstanding for the years ended December 31, 2023 and 2022:

 Summary of Changes in Warrants Outstanding

 Number of
 warrants

 Outstanding at December 31,2021

 1,287,404

 Exercised

 ( 986
)

 Expired

 ( 106,228
)

 Outstanding at December 31, 2022

 1,180,190

 Expired

 ( 936,375
)

 Outstanding at December 31, 2023

 243,815

 The
following is a summary of all outstanding warrants as of December 31, 2023:

 Summary of Outstanding Warrants

 Warrant
 issuance event

 Number
 of warrants

 average

 exercise

 price

 Exercise
 price

 per
 share

 Remaining

 term in

 years

 Intrinsic

 value at

 date of

 grant

 Settlement
 of deferred compensation

 243,815

 $

 6.32

 $

 3.51
 - 9.10

 0.74

 $

 -

 Equity
Incentive Plan

 Through
2022, the Company issued equity incentive awards under the 2015 Equity Incentive Plan (the "2015 Plan") and outside the Plan.
In June 2023, the Company's stockholders adopted the 2023 Equity Incentive Plan (the "2023 Plan"), reserving 650,000
shares for future issuance. The Board of Directors discontinued further grants under the 2015 Plan.

 Awards
may be granted to employees, members of the Board of Directors and consultants, and may take the form of options, restricted stock, restricted
stock units, performance shares and stock appreciation rights. The Company has issued options with no intrinsic value, stock awards and
stock units through December 31, 2023, and issues new shares upon exercise of options or vesting of stock awards and stock units.

 The
Company has reserved approximately 493,000 and 43,000 respectively for awards outstanding under the 2015 Plan and 2023 Plan, and 162,000
shares for equity awards issued outside either of the Company's equity incentive plans. As of December 31, 2023, 607,000 shares
remain available for the issuance of awards under the 2023 Plan. Total shares reserved for awards that are outstanding and expected to
vest or available for issuance is 1,305,000 as of December 31, 2023.

 Stock-Based
Compensation

 The
total amount of equity-based compensation included in general and administrative expense in the accompanying consolidated statements
of operations was $ 290,000 and $ 386,000 for the years ended December 31, 2023 and 2022.

 As
of December 31, 2023, the Company has $ 93,000 of total unrecognized share-based compensation expense related to unvested options, stock
awards and stock units, which is expected to be amortized over the remaining weighted average period of 1.3 years.

 F- 14

 Stock
Options

 The
following is a summary of stock option activity:

 Summary of Stock Options Activity

 Number of
 Options

 average
 exercise price
 per share

 Remaining
 term in years

 Outstanding on December 31, 2021

 635,889

 $
 7.41

 3.8

 Issued

 64,672

 $
 5.72

 8.0

 Cancelled/expired

 ( 17,622
)

 $
 5.08

 Outstanding on December 31, 2022

 682,939

 $
 7.30

 3.2

 Issued

 65,468

 $
 1.50

 8.0

 Cancelled/expired

 ( 161,316
)

 $
 7.92

 Outstanding on December 31, 2023

 587,091

 $
 6.50

 3.6

 Exercisable, December 31, 2023

 526,389

 $
 6.73

 3.2

 The
fair value of the options issued was calculated using the Black-Sholes option pricing model, based on the criteria shown below:

 Summary of Fair Value of Options Using Black-Sholes Option Pricing Model

 2023

 2022

 Expected
 term (in years)

 5.5
 - 8

 Weighted average expected
 volatility

 84.4

 %

 82.8 %
 - 85.7

 %

 average risk-free interest rate

 3.7

 %

 1.5 %
 - 3.9

 %

 Expected
 dividends

 $

 -

 $

 -

 average grant date fair value per share

 $

 1.21

 $

 4.53

 Restricted
Stock

 The
following is a summary of restricted stock award and restricted stock unit activity:

 Summary of Restricted Stock Award and Restricted Stock Unit Activity

 Number of
shares

average grant
date fair value

 Unvested at January 1, 2022

 -

 $
 -

 Granted

 46,554

 $
 4.96

 Forfeited

 ( 4,631
)

 $
 5.38

 Unvested at December 31, 2022

 41,923

 $
 4.92

 Granted

 5,000

 $
 1.25

 Vested

 ( 4,386
)

 $
 5.06

 Forfeited

 ( 9,931
)

 $
 3.33

 Unvested at December 31, 2023

 32,606

 $
 4.82

 Performance
Stock Units

 During
2023 and 2022, the Company issued performance share units ("PSUs") that represent shares potentially issuable based upon
achievement of Company and individual performance targets. The grantees have the ability to earn 0 % and, in some cases, up to 200 % of
the PSU target award. The awards also included various time-based service requirements.

 F- 15

 The
following is a summary of PSU activity:

 Summary of Performance Stock Unit Activity

 Number of
shares

average grant
date fair value

 Unvested at January 1, 2022

 -

 $
 -

 Granted

 123,512

 $
 4.50

 Forfeited

 ( 105,834
)

 $
 4.50

 Unvested at December 31, 2022

 17,678

 $
 4.50

 Cash settled

 ( 17,678
)

 $
 4.50

 Granted

 288,469

 $
 1.70

 Forfeited

 ( 179,330
)

 $
 1.67

 Unvested and expected to vest at December 31, 2023

 63,888

 $
 1.84

 In
February 2023, the awards granted for 2022 were modified to pay the original grant-date fair value of the shares expected to vest in
cash. Additionally, the Company performance targets were modified to allow approximately 77,000 shares to vest that would have otherwise
been forfeited, and were not included in the total unvested at December 31, 2022. As a result of the modifications, the Company recorded
an additional $ 218,000 in compensation expense in 2023.

 Note
9. Income Taxes

 Income
tax provision (benefit) for the years ended December 31, 2023 and 2022 is summarized below:

 Summary of Income Tax Provision (Benefit)

 2023

 2022

 Current:

 Federal

 $
 -

 $
 -

 State

 -

 -

 Total

 -

 -

 Deferred:

 Federal

 ( 464,000
)

 ( 956,000
)

 State

 ( 155,000
)

 ( 323,000
)

 Change in valuation allowance

 619,000

 1,279,000

 Total

 -

 -

 Provision for income taxes

 $
 -

 $
 -

 The
provision for income taxes differs from the amount computed by applying the statutory federal income tax rate before provision for income
taxes. The sources and tax effect of the differences are as follows:

 Summary of Statutory Federal Income Tax Rate Before Provision for Income Taxes

 2023

 2022

 Statutory federal income tax rate

 %

 %

 State tax

 Change in valuation allowance

 ( 28
)

 ( 28
)

 Total Income tax

 -
 %

 -
 %

 Components
of the net deferred income tax assets at December 31, 2023 and 2022 were as follows:

 Schedule of Components of Net Deferred Income Tax Assets

 2023

 2022

 Net operating loss carryover

 $
 14,567,000

 $
 13,948,000

 Valuation allowance

 ( 14,567,000
)

 ( 13,948,000
)

 Deferred tax assets,
 net

 $
 -

 $
 -

 F- 16

 ASC
740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely
than not that some portion or all of the deferred tax assets will not be recognized. After consideration of all the evidence, both positive
and negative, management has determined that a $ 14,567,000 and $ 13,948,000 allowance at December
31, 2023 and 2022, respectively, is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized.
The increase in the valuation allowance for the current period is $ 619,000 resulting from current year tax losses net of adjustments
to finalize the 2022 tax loss upon filing the tax returns.

 As
of December 31, 2023, the Company has a net operating loss carry forward to offset future taxable income of approximately $ 52,056,000,
$ 28,482,000 of which begins to expire in 2033. Net operating loss carry forwards of $ 23,574,000 may be carried forward indefinitely.
The Company may have experienced an ownership change that could limit its ability to utilize its operating loss carryforward to offset
taxable income in future years. An analysis will be required to determine whether such change has occurred, the outcome of which could
impact the Company's operating results and cash flow if and when it achieves profitability in taxable jurisdictions.

 CARES
Act

 On
March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") to provide
certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including
a provision for an Employee Retention Credit ("ERC"), which allows for employers to claim a refundable tax credit against
the employer share of Social Security tax equal to 70% of the qualified wages paid to employees from the start of the COVID-19 pandemic
through September 30, 2021. The ERC was designed to encourage businesses to keep employees on the payroll during the COVID-19 pandemic.

 As
there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, the Company
accounts for the ERC by analogy to International Accounting Standard ("IAS") 20, Accounting for Government Grants and Disclosure
of Government Assistance. In accordance with IAS 20, management determined based upon receipt of confirmation of the claim made by its
co-employment partner and review of the calculations provided that it has reasonable assurance for receipt of the ERC and recorded the
ERC benefit of $ 92,000
 within general and administrative expenses in
the accompanying consolidated statement of operations for the year ended December 31, 2023. The Company recorded a corresponding receivable
for the benefit expected to be received within other receivables on the consolidated balance sheet as of December 31, 2023. The Company
received the refund in March 2024.

 ERC
claims can be made in a variety of circumstances with varying degrees of subjectivity and clear authoritative guidance. Paid claims are
subject to IRS inspection which may occur prior to expiration of the statute of limitations. The Company's ERC claim was based
on objectively calculated declines in revenue using methods that are clearly defined in the CARES Act and various regulations and interpretations
thereof.

 Note
10. Business Segments and Customer Concentrations

 The
Company operates in one business segment. Sales to the following customers represented more than 10% of total sales for the years ended
December 31, 2023 and 2022:

 Schedule of Revenue by Major Customers by Reporting Segments

 2023

 2022

 Customer A

 %

 %

 Customer B

 %

 %

 Customer C

 %

 %

 Customer D

 %

 %

 Note
11. Supplemental Cash Flow Information

 Supplemental
cash flow information is as follows:

 Schedule of Cash Flow Supplemental Information

 2023

 2022

 Cash paid during the year for:

 Amounts included in the measurement of lease liabilities

 $
 20,000

 $
 78,000

 Non-cash financing and investing activities:

 Convertible note issued in exchange for trade payables

 $
 30,000

 $
 -

 Conversion of debt and interest to equity

 $

 $
 -

 Value of shares relinquished in modification of stock-based compensation awards (Note 8)

 $
 24,000

 $
 -

 Note
12. Liquidity

 During
the years ended December 31, 2023 and 2022, the Company used cash for operations of $ 2,958,000 and $ 2,648,000, respectively. The Company
has a history of operating losses and negative cash flow, which were expected to improve with growth, offset by working capital required
to achieve such growth. As described more fully in Note 7, the litigation against the Manufacturer has resulted in uncertainty around
our ability to procure product, which in turn may inhibit our ability to achieve positive cash flow. Additionally, management has considered
that dispute resolution, including litigation, is costly and will require the outlay of cash.

 However,
as of December 31, 2023, we have $ 1,891,000 of cash and even though we have identified certain indicators, these indicators do not raise
substantial doubt regarding the Company's ability to continue as a going concern. However, we cannot predict, with certainty, the
outcome of its potential actions to generate liquidity, including the availability of additional financing, or whether such actions would
generate the expected liquidity as planned.

 F- 17