Good afternoon, everyone, and thank you for participating on today's second quarter 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 facts 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…

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 2 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 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 work 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.…

Thank you, Riccardo. 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, a reduction in legal, professional and consulting fees and lower stock-based compensation as a result of lower expected attainment under our performance stock unit program. Net loss…

Thank you, Lisa. While the first half of 2025 persisted with product supply shortages impacting our customers and revenue and the manufacturing challenges were more significant than we initially projected, we have made important progress. Our co-manufacturing partners have completed the equipment installations that were needed, and we're now working to build production consistency and operational capability to support sustainable growth. As we enter our high season selling period for the education channel, we have the manufacturing capacity, product portfolio and sales network in place to capitalize on the significant market opportunity ahead of us. The investments we've made position us not just for a strong second half of 2025, but for continued growth and margin expansion in the years to come. We look forward to updating you on our progress as we execute on these opportunities in the quarters ahead. And with that, I would like to open up the line for questions. Operator?

We will now be conducting the question and answer session. [Operator Instructions] The first question is from Thomas McGovern from Maxim Group.

Yes. So you guys mentioned, obviously, with the new school you're coming up is a big period for signing contracts. You mentioned the interest you guys have received thus far. But I was wondering if we could dive in a little bit more. Just curious how those conversations are progressing, maybe when you expect to close the majority of those conversations? And then specifically, if you could comment on the Pop & Go. I know that was an entry way for you guys to branch out beyond breakfast meals and into the more lucrative lunch meal time. So I just want to see kind of where that's progressing, if you've seen specific interest in that new product category.

Yes. Thanks, Thomas. We have seen some good pickup on the pops. We've actually got some large school districts that have approved us already. The bidding process is completing. There are some schools that are still updating their final bids that haven't come through just yet that we're waiting on that. We are on the bids and they just haven't been confirmed. So overall, we've had a good response generally. And then in addition, the pops have had a very positive start to the year. So that from that perspective, it's a good start to the year. We are still dealing with though, as we mentioned on the call, the bottle shortages were a bit of a challenge for us in Q2. Obviously, we fixed that now with the additional inventory that we've been building and the equipment installations being completed at our second co-manufacturing partners location. But some of them have taken us off the menus temporarily, and they will be going back on. So outside of that, it's been a good start.

Got you. And so just kind of a follow-up on that. So for the customers that have had to take you off the menu, is that locked in? Have they committed to taking product once it's available? Or is it something that you're going to have to go back and say, hey, we've rectified these issues and kind of convince them or enter a separate agreement maybe to ensure that they're back on the menu from this school year?

I mean it's a bit of a mixed bag. I mean the products are already approved. So we don't need to worry about getting them reapproved in most instances. It's more a matter of when we have consistent supply and they know that we have the consistent supply to be able to rely on that they'll have it back onto the menu as the menu opens up.

Understood. I appreciate that insight. And then final question for me. Obviously, you guys over the past few years have done a great job of expanding across, I believe you're in 49 states now. Just curious if there's a specific region or a territory that you guys see an immediate or near-term opportunity that you'd like to call out? Or anything you could talk to on a higher-level strategy for your continued expansion across school systems in the U.S.

I mean having more capacity is going to allow us to get a broader general penetration across the whole country. Obviously, the larger populated areas have more opportunities for us. The Pop & Go product is very new. So again, concentration in the more populated states as a priority.

[Operator Instructions] The next question is from William Gregozeski from Greenridge Global.

Following up on the inventory thing, you ended the quarter with $1.8 million of inventory. What is that made up of? Because I'm assuming it's not much bottle in there.

No, it's actually mostly bottle because we are able to build over the summer. So we -- to compensate for the lack of capacity that we've experienced, we built a lot of inventory to prepare for the school year. That makes sense.

Okay. So yes. So the customers that were taking off the menu that was early in the quarter then?

Correct. Yes, the equipment didn't get installed until the end -- towards the end of June. School is already out.

Right. So basing their menus on the experience they had in the spring -- they wouldn't have placed their first order until really July or August.

Okay. And when will we hear kind of what the -- you mentioned on the pops, but when will we hear kind of on the -- how many new schools you'll add for the upcoming school year for the traditional products?

Soon.

So we should expect like a press release relatively soon on kind of what's happened with that?

Yes. We're just finding our feet with it now. It's just getting -- schools are just coming back as we're speaking. So they're still getting set up now around the country. As I mentioned earlier, there are still some districts where we've been approved. We're just waiting for what the throughputs would look like, and there are still some larger ones that are on the bids. So we know that they've approved the product. We're just waiting for some bids to still be awarded.

Okay. And then last question I had was on the manufacturing, what is the capacity now you have for the different products? And then what will that be at the beginning of next year with the new one coming on?

With regards to products as a whole or specifically the bottles?

Yes. I mean it seems like you're mostly selling bottles now versus some of the other products you do have in the portfolio. So if you can just talk -- I mean, I don't know how it's split between bottles and cartons and everything.

It's about even between bottles and cartons. It's probably 80% Twist & Go, just to give you a sense.

Yes. It's split between the bottles and cartons, but we're just at capacity with the bottles.

Okay.

So going forward, that capacity on the bottles increases. But right now, they're even, like Lisa just mentioned.

Okay. I mean what's the number, like volume number that you'll be able to produce next year with that new one up?

So with the new manufacturing coming up, we should be in the $20 million to $25 million range. Just on the bottles. Just on the bottles.

Okay. And then what's the cartons that you're at?

We probably have at least 3x more capacity on cartons than we're currently selling. So we're not anywhere near a cap there.

[Operator Instructions] There are no further questions at this time. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.