Operator:
Good afternoon, everyone, and thank you for participating on today's Fourth Quarter and Full year 2025 Earnings Conference Call and Webcast for Barfresh Food Group. Joining us today is Barfresh Food Group's Founder and CEO, Riccardo Delle Coste; and Barfresh Food Group's CFO, Lisa Roger. 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 within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about the company's commercial progress, 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 project, 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 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 by such forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of 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 8-K, 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 in assumptions or otherwise. In order to aid in understanding of the company's business performance, the company is also presenting certain non-GAAP measures, including adjusted gross profit, EBITDA, adjusted EBITDA, which are reconciled in the tables and business update release to the most comparable GAAP measures and certain calculations based on its results, including gross margin and adjusted gross margin. The reconciling items are nonoperational or noncash costs, including stock compensation and other nonrecurring costs, such as those associated with the product withdrawal, the related dispute, certain manufacturing relocation costs and acquisition-related expenses. Management believes that the adjusted gross profit, EBITDA and adjusted EBITDA provide useful information to the investors, because they are directly reflective of the performance of the company. Now with that, I will turn the call over to the CEO of Barfresh Food Group, Mr. Riccardo Delle Coste. Please, sir, go ahead.

Riccardo Delle Coste:
Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year 2025 earnings call. I'm very excited to report that 2025 has been a transformational year for Barfresh. One that has fundamentally repositioned our company for sustainable growth and profitability. The fourth quarter capped off an exciting year, in which we achieved record revenue of $14.2 million, completed a strategic acquisition that gives us control of our own manufacturing capabilities and secured financing that positions us to unlock over $200 million in revenue capacity. Before I discuss our quarterly and full year results, let me provide context on the strategic milestones that have reshaped our business model. In early October, we completed the acquisition of Arps Dairy, which has fundamentally changed how we operate. This acquisition brought us an operational 15,000 square foot processing facility where we immediately commenced production, along with a 44,000 square foot state-of-the-art manufacturing facility in Defiance, Ohio. We're already realizing immediate benefits from enhanced supply chain control and operational efficiency with approximately 90% of our revenue mix now manufactured in-house, giving us the ability to deliver orders that we previously would not have been able to deliver without the acquisition. After years of being constrained by third-party manufacturers, which created operational challenges, revenue limitations and increased operating costs, we now have control over the majority of our production. Our updated time line for the remaining construction and equipment installation at our larger facility is extended to the fourth quarter of 2026 due to the timing of financing. In March of 2026, we secured a $7.5 million senior convertible note financing that delivers transformative benefits. These proceeds enable us to pay off the existing mortgage on the larger Defiance facility, meaning we now own our manufacturing plant, free and clear. The financing also accelerates construction completion, enabling us to move into the enhanced facility before the end of 2026. Additionally, as previously announced, we would approve for a $2.4 million government grant to install specialized equipment necessary for full-scale production operations. For the fourth quarter of 2025, we achieved record revenue of $5.4 million, representing a 94% year-over-year revenue growth. For the full year of 2025, we achieved record revenue of $14.2 million, representing a 33% year-over-year growth. The fourth quarter and full year revenue growth was driven by the inclusion of the newly acquired Arps Dairy. Growth in our base business for 2025 was limited by the supply constraints of our co-manufacturing model underscoring the strategic necessity of acquiring Arps Dairy. With the limited manufacturing supply we have been focused on maintaining results and working on recovering lost customers, but now as we move into 2026 with enhanced capacity coming online, we are also focused on acquiring new ones. We've seen strong uptake across our existing Twist & Go portfolio and our Pop & Go 100% juice freeze pops have gained meaningful traction with several large school districts. I'm particularly excited to highlight a significant win we announced recently that demonstrates our continued momentum and competitive strength in the education channel. We successfully secured a 7-year bid award, with the largest school district in Nevada, representing the fifth-largest school district in the entire United States. This district serves over 300,000 students across the region, making it one of the most substantial wins in the K-12 channel. This win is especially meaningful for several reasons. First, it validates our ability to compete successfully for and secure placements, with the largest school districts in the country. And second, with our enhanced manufacturing capabilities through the Arps Dairy acquisition and our expanded product lineup, we are well positioned to support this district's needs reliably and consistently. This represents a major milestone in our expansion within the K-12 education channel and strengthens our position as we continue pursuing similar large-scale opportunities nationwide. Despite wins like this fifth largest district in the nation, we remain at only approximately 5% market penetration in the education channel overall, which represents substantial runway for growth. And we have tremendous growth opportunities within the districts we currently serve. A key priority throughout the fourth quarter and into fiscal 2026 has been protecting our base business and rebuilding relationships with customers who are impacted by the supply constraints we experienced earlier in the year. We successfully brought back customers who had temporarily removed our products due to our earlier supply shortfalls with many reintroductions occurring in the fourth quarter. Our approach has been straightforward and relationship-focused. We've stayed in close contact with these school districts through our broader broker network and our own sales team, communicating transparently about our manufacturing progress and our transition to owned facilities. Because these customers are already familiar with our products and have seen the positive response from students, the reintroduction process is more streamlined. This focused effort to win back displaced customers while simultaneously pursuing new district opportunities, positions us well for sustained growth as we're both recovering lost ground and expanding our market presence. The manufacturing capacity issues that constrained our first half performance were mostly resolved by year-end with the acquisition of Arps Dairy's processing plant and the contribution from our smoothie bottle co-manufacturing partners, which provided additional production capacity, giving both existing and prospective customers confidence in our ability to deliver reliably. The combination of record fiscal 2025 revenue, successful school district penetration, including major wins like the fifth largest school district in the nation, and our expanding manufacturing capabilities positions us well as we execute on our fiscal 2026 plan. We've built significant operational momentum, and with our owned facility, providing enhanced control and capacity, we're ready to capitalize on the substantial market opportunities ahead. With that overview of our strategic progress and market momentum I'll now turn it over to Lisa to walk through the detailed financial results for the fourth quarter and full year.

Lisa Roger:
Thank you, Riccardo. Let me walk you through our fourth quarter and full year financial results in detail. Revenue for the fourth quarter of 2025 increased to $5.4 million, representing our highest quarterly revenue in company history. Revenue for the full year of 2025 was a record $14.2 million compared to $10.7 million in the same period of 2024. This growth was driven by our Arps Dairy acquisition, which contributed $2.9 million. Gross margin in the fourth quarter of 2025 was 3% compared to 26% for the fourth quarter of 2024. Adjusted gross margin for the fourth quarter of 2025 was 4%, compared to 30% in the prior year period. Adjusted gross margin for the full year of 2025 was 22% compared to 37% for the full year of 2024. The decrease in gross margin resulted from transitioning Barfresh production to the company's new facility to capture long-term operational efficiencies and scale benefits, which involves typical startup and implementation costs that temporarily impacted margins. Additionally, we continued Arps Dairy's existing milk processing business, which operates at different margin profiles than our core business and can experience commodity pricing fluctuations that may impact revenue, but provide stable milk supply and support production and diversification. These are strategic investments in our long-term growth and opportunities. We expect incremental margin recovery to occur throughout the year and accelerating in the second half of 2026 when the equipment enhancements are completed and the new facility is commissioned. Net loss for the fourth quarter of 2025 improved to $763,000 compared to a net loss of $852,000 in the fourth quarter of 2024. Net loss for the full year of 2025 was $2.7 million compared to a net loss of $2.8 million in the prior year period. Selling, marketing and distribution expenses were $783,000 compared to $872,000 in the fourth quarter of 2024. Selling, marketing and distribution expenses for the full year of 2025 were $3.2 million compared to $3.1 million in the same period of 2024. G&A expenses for the fourth quarter of 2025 were $922,000 compared to $607,000 in the same period last year. G&A expenses for the full year of 2025 were $3.2 million compared to $3 million in the same period of 2024. Adjusted EBITDA for the fourth quarter was a loss of approximately $1.1 million compared to a loss of approximately $563,000 in the prior year period. For the full year of 2025, our adjusted EBITDA was a loss of approximately $2.1 million compared to a loss of $1.3 million in the same period of 2024. We expect to achieve positive adjusted EBITDA in fiscal year 2026 as we realize the full benefits of our integrated manufacturing model and complete our facility optimization. Turning to our balance sheet. As of December 31, 2025, we had approximately $2.3 million of cash and accounts receivable and approximately $1.7 million of inventory on our balance sheet. In March 2026, we secured a subscriptions for a $7.5 million senior convertible note financing. The proceeds were used to pay off the existing mortgage on our manufacturing facility in Defiance, Ohio, as well as other obligations and will accelerate construction completion, which will position the company to control its manufacturing destiny with significantly expanded production capacity. In addition, as previously announced, we were recently approved for a $2.4 million government grant to purchase and install specialized equipment necessary for full-scale production operations. The financing structure gives us significant financial flexibility. The ability to pay in either cash or registered stock preserves cash for operational needs during the construction phase and owning the facility free and clear, positions us to access additional capital through mortgage and equipment financing as may be required for any remaining investments. Now I will turn the call back to Riccardo for closing remarks.

Riccardo Delle Coste:
Thank you, Lisa. As I reflect on 2025, this year represents an inflection point for Barfresh. We delivered record revenue of $14.2 million and fundamentally repositioned this company for unprecedented growth. The strategic decision we made this year acquiring Arps Dairy and securing the financing to facilitate the completion of construction on our new state-of-the-art facility mean we are no longer constrained by third-party manufacturers or limited production capabilities. We now control our own destiny. Looking ahead, we have multiple powerful drivers of growth working in our favor. First, our own manufacturing capabilities through Arps Dairy give us direct control over production, enhanced operational efficiency and the flexibility to innovate and scale new products more rapidly. Second, once our facility expansion is complete, we will have capacity to support over $200 million in annual revenues, a significant leap in our production capabilities. The new equipment and optimized facility layout will create greater operational efficiencies, increase profit margins and provide the scalability to support aggressive growth plans. Third, we're still in the early innings of penetrating our core education channel with massive runway ahead of us. Our recent school district wins demonstrate that we're gaining traction and rebuilding momentum. Fourth, Beyond our core product lines, the expanded facility opens significant opportunities for manufacturing, both for new products owned by Barfresh and co-manufacturing for third parties, creating additional revenue streams that leverage our state-of-the-art capabilities. Now turning to our fiscal 2026 outlook. As we advance our initiatives for the year, we are making thoughtful progress on the integration and optimization of our 44,000 square foot facility. While the implementation is taking slightly longer than initially anticipated, the new equipment and optimized facility layout will create greater operational efficiencies, increase profit margins and provide the scalability to support our growth plans once fully operational. Given our updated facility and equipment time line, we are adjusting our fiscal 2026 revenue guidance to a range of $28 million to $32 million, and our adjusted EBITDA guidance to a range of $3.2 million to $3.8 million. While this represents a more conservative ramp-up schedule than our initial projections, it still reflects substantial year-over-year growth of 97% to 125% on revenue from both the full year inclusion of Arps Dairy's revenue and growth of legacy Barfresh products. We remain confident in the transformational nature of the platform we are building and believe fiscal 2026 will represent a pivotal year that demonstrates the power and scalability of our integrated model. For the first quarter of fiscal 2026, we expect revenue in the range of $5 million to $5.2 million and to be adjusted EBITDA breakeven, which is also impacted by our updated equipment time line. As we progress through the year and complete our facility enhancements, we expect year-over-year quarterly improvement in both revenue and profitability. We are building a scalable, profitable business model that positions us to capitalize on significant market opportunities while delivering sustainable long-term value creation for our shareholders. The integrated manufacturing model we're building will enable us to pursue opportunities with improved economics and operational control that simply weren't possible before. The operational momentum we demonstrated in 2025, combined with owning our own manufacturing facility and dramatically expanding our capacity positions Barfresh for what we expect to be exceptional growth beyond fiscal year 2026. We look forward to updating you on our progress as we move through 2026 and demonstrate the full potential of what we've built. And with that, I would like to open up the line for questions. Operator?

Operator:
[Operator Instructions] And our first question comes from the line of Thomas McGovern with Maxim Group.

Thomas McGovern:
First one, just as we're gaining additional clarity on the supply chain ramp here and the initiatives that are underway to kind of stabilize everything after some of the shakiness we've seen in the past. I'm just curious how the conversations have gone with -- in terms of reengaging the school districts that you might have lost due to some supply chain disruptions in the past. Just maybe unpack that for me. And then my second question relates specifically to your guidance, right? If we look at that, we're clearly expecting some growth in the back half of the year. Maybe walk me through what you're expecting in terms of timing? And then kind of what some of the underlying assumptions for that full year guidance is, is that based on essentially just your base business, including conversations that have kind of come to fruition? Or does that assume that certain relationships or contracts that are up in the air will be signed as we're entering maybe the new school year for '26, '27?

Riccardo Delle Coste:
Yes, sure. Thomas, so the customers that we're talking with and have been constantly engaged with love the product. we're really just now focused on keeping that communication up. We're reaching out to customers that have taken off the product due to no supply. We're going through the bidding process again. A lot of the customers are just waiting for us to have product come back into distribution in certain markets or their bid to come back around with their distribution partners. The fortunate part is that we're in the bidding cycle again now. So we're having added again to customers, and we're getting new ones as well. So we're in a very fortunate position that we've got some great customers that love our product, and they want to keep using it and the kids love the product. And as we're now getting product back out into the market in different parts of the country, we're just staying in close contact with them and working towards whatever obstacles they may have from a timing perspective in their own establishments. Does that make sense?

Thomas McGovern:
Yes, absolutely. And then just kind of maybe walk me through some of the underlying assumptions for the revenue -- the implied revenue growth in the back half or quarters 2 through 4?

Riccardo Delle Coste:
Yes. So the implied revenue obviously includes both the Barfresh business and the Arps business going forward. We would typically have a more severe drop off with Barfresh products in the second quarter, for example. With the Arps business, we actually have the addition of the ice cream mix, which is quiet in the winter months. So it's actually quite counter seasonal to the rest of our business. And then in the -- so in the second quarter, we'll have a higher than expected for our products revenue. And then in Q3, you'll have the addition of still of the ice cream mix-type products together with the Barfresh products as well, which is our biggest -- typically our biggest quarter. So the growth is coming by the combination of the 2 businesses, based on the base business that we have as well as some foresight with some of the new accounts and bids that we're winning.

Thomas McGovern:
Understood. And then just one more question for me. I mean, especially as you guys are kind of diversifying your seasonality, if you will, or with your product portfolio, you should expect some counterweight there, which is great. Just also curious, I know it's not as large of a component of revenue now, but as we look at channels outside of education, in the past, we've talked about foodservice and military as potential growth channels for you guys. Is there any updates on that front? And can you talk maybe a little bit about strategy and how innovation or new product launches might play a role in expanding your presence in those channels?

Riccardo Delle Coste:
Yes. I mean there are so many opportunities in terms of different channels for us to focus on. I mean, we've got a huge market that we're only in a 4% to 5% market penetration of in the education channel. And we haven't even been able to keep up with supply up until now in that channel alone. So we do feel that there's an enormous amount of opportunities in other channels, whether it's food service, whether it's even retail, petrol and convenience, we just haven't had the supply to get there. So we have been in this -- protect our base business mode for the last couple of years. Now that we have the manufacturing capacity, and we're in control of that we're now going to be getting back into aggressive sales mode. And that aggressive sales mode is going to be exploring the various channels out there and how we can best exploit these opportunities.

Operator:
[Operator Instructions] And our next question comes from [indiscernible].

Unknown Analyst:
Congratulations, Riccardo and Lisa, on the record Q4 and this acquisition. I think, it has definitely changed the story where last year, the company was supply constrained. But I think at this juncture, the company -- the business just controls its own destiny. So it's really a great move. I have 2 questions. One is in terms of the production capacity, I think it was mentioned on the press release that with this new enhancements to the facility done, where it will -- basically, you'll have a capacity to support about $200 million in revenue at some point. Can you share on what's the production capacity that you have at the moment? And how does it scale? When do you get to that point? That's number one. And then number 2 is in terms of the guidance, 28% to 32%, very strong guidance. And as you mentioned, that includes the base business and the Arps business. From the base business side, does the guidance include the business that you already have signed up? And is there an upside to as you go in the school season and sign more school districts?

Riccardo Delle Coste:
Yes. So let me start with the first question on the capacity, and we'll circle back to the second one. The existing facility is an older facility. We're operating in there, and we're able to service to get what we need, and that will see us through up until we get to the new facility. It's not ideal, but it's working, and we're able to get product out that had we not done the acquisition, we would not have been able to supply customers. That's how important this acquisition actually was for us. When we get into the new facility, which will be later this year, the infrastructure will all be there. The base infrastructure for the processing will also be there. So it's really going to be a matter of as we ramp up and want to do more things, whether it's more products, we'll have additional capacity on our existing lines, plus room to install new lines. So we're going to have a lot more flexibility in how we grow the business, and where those revenues come from. That's why this is such an important acquisition for us because not only is it going to be instrumental in growing our base business and our base product portfolio, but it's also going to give us an enormous amount of opportunities in the future. As we look at the revenue in the base business, we're looking at 2026 as a stabilizing year for the business. And that includes the customers that we have both in the Barfresh business and the Arps business, a little bit of growth in terms of being able to acquire and get back to some of these customers that we've lost and really setting us up for a very exciting 2027, especially once the new facility is done, and we get a really significant jump in efficiencies to the bottom line.

Unknown Analyst:
Got it. Got it. And then one more on the recent signing of this Nevada large school district. I mean, for a 7-year deal, I mean, that's also I think it's -- from an outside, I mean, it just looks like -- I mean, the business, and you have so much confidence to supply the product to sign such a long-term deal. And in the past, I mean, Barfresh has been able to sign similar kind of deals like with Los Angeles School District at some point, but I think you guys were supply constrained. Anything you can share on what the pipeline really looks like? I mean, does this just changes where you are not really just going after like smaller school districts, is not where you just intend to go after larger school districts and you have the confidence to be able to?

Riccardo Delle Coste:
We will. We will. We really are focused on just making sure that we get out of the old facility into the new facility. So that we start talking to those larger accounts and really starting to build that pipeline and being able to go after the business aggressively. And that's just something that we couldn't do before because we couldn't supply.

Unknown Analyst:
Okay. And on that facility upgrade, what is the time line? I think you said end of 2026.

Riccardo Delle Coste:
It will be before the end of the year.

Operator:
[Operator Instructions] All right. And it looks like there are no further questions at this time. So with that, I would like to thank everyone for their participation, and this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time, and have a wonderful rest of your day.