| Basis of Presentation and Significant Accounting Policies | Note 1. Basis of Presentation and Significant Accounting Policies Throughout this report, the terms “our”,
“we”, “us” and the “Company” refer to Barfresh Food Group Inc., including its subsidiaries.
The accompanying unaudited condensed consolidated financial statements of Barfresh Food Group Inc. at September 30, 2017 and December
31, 2016 have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial
statements, instructions to Form 10-Q, and Regulation S-X. Accordingly, certain information and footnote disclosures normally included
in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial
statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form
10-K for the year ended December 31, 2016. In management’s opinion, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation to make our financial statements not misleading have been included. The
results of operations for the periods ended September 30, 2017 and 2016 presented are not necessarily indicative of the results
to be expected for the full year. The December 31, 2016 balance sheet has been derived from our audited financial statements included
in our annual report on Form 10-K for the year ended December 31, 2016. Basis of Consolidation The condensed consolidated financial statements
include the financial statements of the Company and our wholly owned subsidiaries Barfresh Inc. and Barfresh Corporation, Inc. 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
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 September 30, 2017 and December 31, 2016. However, we believe that
the financial institution where the cash on deposit that exceeds $250,000 is financially sound and the risk of loss is minimal. Fair Value Measurement Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures
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.
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. Our financial instruments consist of accounts
receivable, accounts payable, accrued expenses and installment debt. The carrying value of our financial instruments approximates
their fair value due to their relative short maturities and the nature of the debt. 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. Intangible Assets Intangible assets are comprised of patents,
net of amortization, and trademarks. The patent costs are being amortized over the life of the patents, which is twenty years from
the date of filing the patent applications. In accordance with ASC Topic 350 Intangibles - Goodwill and Other 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 deemed to be reasonably assured. The estimated useful lives
used for financial statement purposes are: Furniture and fixtures: 5 years Equipment: 7 years Leasehold improvements: 2 years Vehicle: 5 years Revenue Recognition We recognize revenue from products sold when
there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable
and collection is reasonably assured. Earnings per Share We calculate net loss per share in accordance
with ASC Topic 260, Earnings per Share Research and Development Expenditures for research activities relating
to product development and improvement are charged to expense as incurred. We incurred $107,324 and $101,304 for the three-month
periods ended September 30, 2017 and 2016, respectively. We incurred $447,927 and $256,874 in research and development expenses
for the nine-month periods ended September 30, 2017 and 2016, respectively. Rent Expense We recognize rent expense on a straight-line
basis over the reasonably assured lease term as defined in ASC Topic 840, Leases Recent pronouncements From time to time, new accounting pronouncements
are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards not yet effective
may have an impact on our results of operations and financial position. In May 2014, the FASB issued ASU Update 2014-09
Revenue from Contracts with Customers (Topic 606), which converged guidance on recognizing revenue in contracts with customers
on an effective date after our year ending December 31, 2017. The Company is in the initial stages of evaluating the effect of
the standard on our financial statements and continue to evaluate the available transition methods. However, based on our initial
evaluation, we do not expect there to be material changes to our current Revenue Recognition policies due to the non-complex contracts
with our customers, including the definition of our performance obligations and the transaction prices in our contracts with our
customers. The Company does not plan to adopt the standard until the interim period ended March 31, 2018. In July 2015, the FASB issued ASU 2015-11,
Inventory, which simplifies the measurement principle of inventories valued under the First-In, First-Out (“FIFO”)
or weighted average methods from the lower of cost or market to the lower of cost and net realizable value. ASU 2015-11 is effective
for reporting periods beginning after December 15, 2016 including interim periods within those annual periods. The adoption of
this guidance did not have a material impact on our Consolidated Financial Statements. In November 2015, the FASB issued ASU 2015-17,
Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and liabilities be classified as noncurrent
on the balance sheet. ASU 2015-17 is effective for annual periods beginning after December 15, 2016, including interim periods
within those annual periods. Early adoption is permitted as of the beginning of an interim or annual reporting period. Upon adoption,
ASU 2015-17 may be applied either prospectively or retrospectively. The adoption of this guidance did not have a material impact
on our financial statements. In February 2016, the FASB issued ASU No. 2016-02,
Leases, to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”)
to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months.
A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and
a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments
in this ASU leaves the accounting for the organization that own the assets leased to the lessee (“lessor”) largely
unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with
Customers. The Company is in the initial stages of evaluating
the effect of the standard on our financial statements and continue to evaluate the available transition methods. However, based
on our initial evaluation, we do not expect there to be material changes to both our current and long-term lease liabilities and
our fixed assets of our limited number of operating leases that will be converted to financing leases under the new guidance. The
Company does not plan to adopt the standard until the interim period ended March 31, 2019. In March 2016, the FASB issued ASU No. 2016-09,
Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”). The standard identifies areas for simplification
involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification
of awards as either equity or liabilities, an option to recognize stock compensation expense with actual forfeitures recognized
as they occur, as well as certain classifications on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning
after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company previously adopted
ASU 2016-09. In August 2014, the FASB issued FASB ASU2014-15,
Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entities
Ability to Continue as a Going Concern |
