Barfresh Food Group Inc.

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Good afternoon, everyone, and thank you for joining us for our second quarter 2025 earnings call. I'm pleased to report that we've reached an important milestone with our second co-manufacturing partner completing its equipment installations during the second quarter. While this addresses a key component of the production challenges that have impacted our revenue and margins, we continue to work on building consistent operational capacity and we now have two co-manufacturers producing product as we enter the third quarter. In addition, we continue to work on solidifying our overall long-term supply chain. As an example, in January 2026, we are adding a higher capacity bottling manufacturer for our Twist & Go bottles, which will replace one of our current manufacturers at the beginning of 2026. The current manufacturer will continue to produce product through February of 2026, and then our relationship with them will end. The new higher capacity manufacturer is currently producing our Twist & Go smoothie cartons. So this is a natural progression to have them also be a part of our bottling manufacturing team. This additional capacity is expected to exceed the volume of the manufacturer we are replacing by approximately 400%. For the second quarter, we delivered revenue of $1.6 million, representing an 11% year-over-year growth. This growth was driven by expanded bottle capacity at our existing manufacturer, as we worked through the final stages of our co-manufacturing transition. The manufacturing capacity investments we've made over the past several quarters represent important progress as we work towards more consistent production capabilities. Because of the capacity issues we had in the second quarter, a few of our customers temporarily had to take our offerings off their menus, but we expect them to add our offerings back during the fourth quarter of 2025 and the first quarter of 2026. We are now building inventory for the first time in many quarters. So with our high selling season in the education channel ahead of us, we're focused on aligning our production capabilities with market demand. As we work through the operational transition and build production, we expect revenue growth in the back half of this year. Looking at our market position, our sales network continues to cover the vast majority of the US, and we remain at only 5% market penetration in the education channel, representing a significant runway for growth. The bidding process for the 2025-2026 school year is concluding, and we're seeing interest in both our Twist & Go products and our new Pop & Go 100% juice freeze pops, which targets the larger lunch day part market. While we're revising our fiscal year 2025 revenue guidance to $12.5 to $14 million, reflecting the greater than anticipated impact of our manufacturing constraints in the first half, this still represents strong 17% to 31% year-over-year growth despite the earlier product supply challenges. More importantly, we expect the progress we're making on manufacturing consistency to contribute to margin improvement in the second half of the year. The operational leverage we're building will create a foundation for continued margin expansion and provide the flexibility to support accelerated growth as we broaden our market reach and deepen penetration across our customer base. I'll now turn the call over to our CFO, Lisa Roger, for a detailed financial review.

Thank you, Ricardo. Let me walk you through our second quarter financial results in detail. Revenue for the second quarter of 2025 increased to $1.6 million compared to $1.5 million for the second quarter of 2024. The year-over-year increase is primarily driven by our ability to expand bottle capacity from a new contract manufacturing relationship, which also resulted in higher processing and logistical costs. The new manufacturer completed the previously described equipment installations and started making product at the end of the second quarter. Expanded capacity will start becoming available in the second half of this year and continue to ramp. Gross margin for the second quarter of 2025 was 31% compared to 35% for the second quarter of 2024. The year-over-year decrease is a result of product mix and new manufacturer trial and development costs, including inefficiencies during the early production period incurred to gain additional production volume. We expect our gross margin to normalize in the second half of 2025 as new co-manufacturers are operating at full capacity and capability, improving our supply and cost structure. Moving to operating expenses. Selling, marketing, and distribution expense for the second quarter of 2025 increased to $634,000, or 39% of revenue, compared to $583,000, or 40% of revenue, in the second quarter of 2024. The year-over-year dollar increase is a result of higher storage and outbound freight due to our product mix being more heavily weighted toward categories with less concentrated distribution. G&A expenses for the second quarter of 2025 were $673,000 compared to $865,000 in the same period last year. The year-over-year decrease in G&A was driven by a reduction in personnel-related expenses, the reduction in legal, professional, and consulting fees, lower stock-based compensation as a result of lower expected attainment under our performance stock unit program. Net loss for the second quarter of 2025 was $880,000 compared to a net loss of $1 million in the second quarter of 2024. The decrease in net loss is primarily due to the reduction in general and administrative expense, partially offset by increased storage and freight costs. For the second quarter of 2025, Our adjusted EBITDA was a loss of approximately $600,000 compared to a loss of approximately $682,000 in the same period last year. Adjusted EBITDA in the second quarter of 2025 was impacted by costs associated with sourcing elements of the production process from multiple locations while new co-manufacturers completed equipment installations required to perform as full service partners. The equipment has now been delivered, installed, and is operational. and we expect to return to our optimized production and distribution network in the back half of the year. Turning to our balance sheet, as of June 30, 2025, we had approximately $1.3 million of cash and accounts receivable and approximately $1.8 million of inventory on our balance sheet. We continue to manage our liquidity carefully through various measures, including equity compensation for directors and employees, non-recourse litigation financing, and receivable financing. Now I will turn the call back to Ricardo for closing remarks.