Barfresh Food Group Inc.

Good afternoon, everyone, and thank you for participating on today's fourth quarter and full year 2023 corporate update call for Bar Fresh Food Group. Joining us today is Bar Fresh Food Group's founder and CEO, Ricardo De La Costa, and Bar Fresh Food Group's CFO, Lisa Rogers. Following prepared remarks, we will open the call for your questions. The discussion today will include forward-looking statements Except for historical information herein, matters set forth on this call are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about the company's commercial projects, success of its strategic relationships, and projections of future financial performance. These forward-looking statements are identified by the use of words such as grow, expand, anticipate, intend, estimate, believe, expect, plan, should, hypothetical, potential, forecast, and predict, continue, could, may, predict, and will, and variations of such words and similar expressions are intended to identify such forward-looking statements. All statements other than the statements of historical fact that address activities, events, or developments that the company believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made based on experience, expected future developments, and other factors that the company believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks, and uncertainties, many of which are beyond the control of the company. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, Actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. The contents of this call should be considered in conjunction with the company's recent filings with the Securities and Exchange Commission, including its annual report on Form 10-K and the quarterly reports on Form 10-Q, and current reports on Form 8K, including any warnings, risk factors, and cautionary statements contained therein. Furthermore, the company expressly disclaims any current intention to update publicly any forward-looking statements after this call, whether as a result of new information, future events, changes, and assumptions, or otherwise. In order to aid in the understanding of the company's business performance, the company is also presenting certain non-GAAP measures, including adjusted EBITDA, which are reconciled in the table in the business update release to the most comparable gap measure. The reconciling items are non-operational or non-cash costs, including stock compensation, stock issues for services, and other non-recurring costs such as those associated with the project, product withdrawal, asset impairment, and the company's NASDAQ uplist. Management believes that adjusted EBITDA provides useful information to the investor because it is directly reflective of the period-to-period performance of the company's core business. Now I will turn the call over to CEO of Barfresh Food Group, Mr. Ricardo Della Costa.

Please go ahead, sir. Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year 2023 earnings call.

The company generated its second highest fiscal year revenue in 2023 with $8.1 million. despite a full year without our largest Twist & Go bottle manufacturer, who had previously accounted for over 50% of all our purchases. These sales results are a testament to the success of our smoothie carton product, which we rolled out in the fourth quarter of 2022, and our growing sales team's ability to sell it into new and existing customers. We used the new carton product to sign on new school accounts over the course of the year. including one of the top five largest school districts in the United States. As we've stated previously, the carton format is aligned with the growing trend in schools to move toward more ecologically friendly products and has provided us an entry point into more of the higher volume school accounts. Over the past year, we were laser focused on expanding both our carton and bottle capacity. Since the launch of our new smoothie carton product offering at the end of 2022, we have been working with our carton co-manufacturer to have engineering changes made to the manufacturing line to increase capacity to approximately 25 million to 30 million units per year. All the engineering changes were completed and over the course of this year, we incrementally used additional carton capacity that was made available. We did experience a slight setback with production beginning in December as an unforeseen national shortage of cartons plagued the beverage industry and continued into the early part of February. This shortage sent schools scrambling and got the attention of Congress, especially since schools are a large customer of the four ounce and eight ounce cartons for milk, both of which were in short supply. We were, however, able to weather the storm better than others in the industry due to our contract manufacturing relationship with a major player in the dairy industry. The issue has been resolved and we are back to full carton production. As for the bottle capacity, we worked with our existing bottle co-manufacturer to see if there was a way to increase capacity and we were successful toward the end of fiscal year 2023 and this increased capacity will now continue. We also look to bring on a new co-manufacturer to replace the loss of our largest one and we're in the final stages of signing with a new co-manufacturer this past quarter. However, they were ultimately unable to execute the contract. They are working to resolve the internal issues that prevented them from signing with us and we are hopeful they will be resolved soon and we can move forward again with them. However, we are also exploring other options in order to expedite the process of securing additional bottle capacity and expect this to be resolved before the beginning of the new school year in August of 2024. In addition to working to expand capacity this past year, we also expanded our product offerings with the relaunch of our world's 100% juice concentrates. This product is USDA reimbursable, Smart Snack compliant for schools in the United States, a good source of vitamin C, contains no added sugars, and comes in five great tasting flavors. And most importantly, it is stored and delivered ambient, which opens up many more opportunities for us. We had originally launched this Wells 100% juice concentrate as a complement to our existing one-to-one bulk Easy Pour product into the education channel, in August of 2020. However, it ended up being more of a soft launch and was subsequently put on hold due to the extended closure of schools from the pandemic. As a result of the pandemic, schools experienced prolonged labour challenges which impacted our world's 100% use concentrates due to the need of personnel to operate the frozen dispensing equipment. We had been waiting for the prolonged labour challenges to resolve at schools. as well as waiting for the selling cycle to recommence for new school menus before we relaunch the product, which we did this past quarter. We believe it was the right time to reintroduce the product and allows our sales force to go out with a wider range of options at various price points. We are growing our sales team by expanding our sales broker coverage to an additional 13 states where we previously had no representation in the education market. Barfresh expects to have sales coverage across 49 out of the 50 states before the end of the first quarter of 2024. And for the first time, we plan to market the newly relaunched world's 100% juice concentrates, as well as the one-to-one bulk easy core concentrates through our sales brokers to the general food service market and into the education channel. And finally, as part of our expanded sales efforts, we also expect to sign a military broker contract for national coverage of all US military bases with barfresh products in the United States. This is a national agreement that provides both deep senior relationships as well as local people nationwide to visit and sell our products to all the local bases. This is a first for the company and is expected to provide a robust lift in sales and further solidify our relationships with the military. In summary, We believe there is a lot of white space left for us across our sales channels, especially in the education channel. We have increased capacity for both our carton and bottle smoothie products, increased our sales network and increased our product offerings with the reintroduction of world's 100% juice concentrates. All of which we believe is setting us up for record first quarter revenue versus any other first quarter as we have already achieved over two million in sales and have another month remaining in the quarter. We believe we will be on a path to sustain top line growth once we have the necessary manufacturing capabilities for our bottle smoothie product fully online. I'll now turn the call over to our CFO, Lisa Roger. Lisa?