Good afternoon, everyone, and thank you for participating on today's second quarter 2026 earnings conference call 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 meanings of the safe harbor provisions of the Private Security Litigation Reform Act of 1995, including statements about the company's commercial progress, success of its strategic relationships, and projection of future financial performance. These forward-looking statements are identified by the use of the words such as grow, expand, anticipate, intend, estimate, believe, expect, plan, should, hypothetical potential forecasts 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 assumption, 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 to not place undue reliance on these forward-looking statements, which speak only of 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 Commissions including its annual report on Form 10-K and the quarterly report on 10-Q. Current reports on Form 8-K, including any warning, risks, factors, and cautionary statements contained therein. Furthermore, the company expressly disclaims any current intentions to update publicly any forward-looking statements after this call, whereas a result of new information, future events, and 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 EBITDA, adjusted EBITDA, which are reconciled in tables in the business update release to the most comparable GAAP measures. The reconciling items are non-operational or non-cast costs, including stock compensation and other non-recurring costs, such as those associated with acquisition-related expenses. Management believes that EBITDA and adjusted EBITDA provide useful information to the investor because they are directly reflected of the performance of the company. Now, I'd like to turn the call over to CEO of Barfresh Food Group, Mr. Riccardo Delle Coste. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining us for our second quarter 2026 earnings call. I want to start with the big picture of where we stand. We are in the middle of transforming Barfresh from a company that depended entirely on third-party co-manufacturers into one that controls its own production. And that work touches three parts of the business this quarter. Our commercial momentum in the education channel, the ramp of our existing ARPS dairy facility, and the construction of our larger facility in Defiance, Ohio. All three moved forward in the second quarter, though not all of them moved as quickly as we had hoped. I will walk through each one, and then Lisa will take you through the numbers in detail. On the commercial side, this year is about stabilizing the business, bringing control of production in-house, earning customers' trust back, winning back the customers we had lost due to supply interruptions, and setting up for a great 2027. Revenue in our frozen beverage and food segment, consisting primarily of legacy barfresh products, increased 9%, driven largely by contributions from ARPS dairy. Combined with the raw and processed milk segment, which added $2.9 million of revenue this quarter, the acquisition successfully delivered top-line growth and allowed us to re-engage with customers to rebuild the legacy barfresh business. We look forward to seeing the results of these rebuilding efforts materialized in the second half of 2026. Where we fell short was on the production side. This quarter's results landed below where we expected them to be. The ramp at our existing ARPS dairy facility took longer than we had modeled, and the extra cost that came with that slower ramp pulled down both our gross margin and adjusted EBITDA more than we planned for when we gave guidance back in May. Given where we are at, at the halfway point of the year, we have taken a more conservative view of how quickly we will reach normalised production. And that is reflected in the revised full-year guidance Lisa will walk through in a moment. None of that changes how we think about the size of the opportunity in front of us once our manufacturing platform is fully up and running. That has not moved. Let me provide some additional detail behind that shortfall. and what we are doing about it, starting with why we made the acquisition in the first place. The ARPS acquisition was a key strategic move because we had become reliant on co-packers and the broader shortage in cultured dairy manufacturing left us exposed. Some of our co-packers didn't renew their agreements and others simply couldn't supply the quantities we needed. The ARPS acquisition was necessary to ensure continuity of supply in an already challenged supply chain and that is exactly what it has delivered. We've been able to make our products and maintain our sales to our customers, which was our key objective for the year, to stabilize supply. That said, this has come at a higher cost than we initially anticipated due to the condition of the old ARB's facilities infrastructure and equipment. Once we started running the volumes we needed, we tested the limits of some of that infrastructure and equipment, and we were forced to make the repairs necessary to run our products reliably. That has taken more work and expense than we anticipated to get the facility operating at our required volume with our products. Those higher costs are what you'll see show up in our margin and operating costs this quarter. I'd also add some more colour on the plant condition itself because it explains a lot of what happened this quarter. The facility was older and the equipment and infrastructure needed more repair and attention than we had anticipated. Much of that only became apparent once we started producing our own products and once the ice cream volume began to increase. At that point, the plant could not reliably run both barfresh products and the ice cream business at the same time without one affecting our ability to deliver the other. As a result, the ice cream business was moved and we are able to focus the plant's capacity and our improvement efforts on barfresh products and on building the higher volume capability we'll need for both product lines going forward. We expect to bring the ice cream business back once the rest of the production is fully stabilized and we're consistently hitting the volumes and efficiencies we expect. While this had a real impact on both our top line and bottom line this quarter, we see it as temporary and necessary in order to stay focused on our core branded products. The good news is we've made significant improvement in production throughput at the old facility, which is allowing us to service our customers and we expect continued improvement through the back half of the year and right up through our move into the new facility. Our team is working through equipment installation, training and process refinements and finishing construction at the larger 44,000 square foot facility in Defiance, Ohio is central to that effort. We are working towards partial commissioning of the core products by the end of 2026, followed by the balance of products shortly after. And we expect it to meaningfully improve our throughput, efficiency and profitability once it is online. It remains our top operational priority. On the new facility specifically, we continue to work through the plans for completing construction and installation. We have a $2.4 million grant we've been approved for, which we need to spend before the end of the year, and we're on track to do that. We had planned to use the proceeds from the convertible note to pay off the mortgage on the property, and we've done that. We now own the property and building free and clear. As we've always said, we still plan to obtain a new mortgage and additional equipment financing to complete the project. Costs on the project have increased more than we initially anticipated, and this remains a moving target. We may need to adjust our approach to make the economics work. That piece isn't finalized yet, and we're actively working through it. We expect margin to improve in the back half of the year as throughput increases at the old facility. And once the new facility is up and running, we expect significantly greater margin improvement, along with increased capacity for both existing and new products. Overall, we see this acquisition as a very important strategic shift for the business. It ensured we could keep supplying our customers, which we have successfully done, and it allowed us to remove the majority of our co-packers. Once construction on the new facility is complete, this will put us in control of our own production, set us up for profitability and give us many options for profitable growth. That covers the operational side. On the commercial side, the education channel is where we are putting our energy and it remains our greatest near-term opportunity. We kept adding to our customer base this quarter. Several of our recent school wins began serving our portfolio during the 25-26 school year with implementation expected across all their locations for the 26-27 school year. We expect to announce several additional new educational channel wins in the coming weeks and months as more of this year's bids close ahead of the new school year. Our broker network continues to communicate our manufacturing progress and the supply reliability we are building, and that message continues to resonate as we go back to customers we've lost and gain new customers ahead of the new school year. With that overview, I'll now turn it over to Lisa to walk us through the numbers.

Thank you, Cardo. Let me walk you through our second quarter 2026 financial results in detail. Revenue for the second quarter of 2026 was $4.7 million, compared to $1.6 million in the second quarter of 2025, representing 190% year-over-year growth. Arp's dairy contributed $3.2 million to revenue, including $2.9 million in raw and processed milk sales, with revenue in our frozen beverage and food segment consisting primarily of legacy bar fresh products, increased 9%. Gross loss for the second quarter of 2026 was $150,000 or negative 3.2% of revenue compared to gross profit of $506,000 or 31.1% of revenue in the second quarter of 2025. The decline was driven by startup and implementation costs and lower than anticipated productivity at our existing processing facility as it continues to ramp toward full-scale operations. Spelling marketing and distribution expense for the second quarter of 2026 was $561,000 or 12% of revenue compared to $634,000 or 39% of revenue in the second quarter of 2025. The year-over-year improvement was driven by lower personnel costs as we increasingly leverage our broker network, reduced equipment maintenance costs resulting from the higher mix of single-serve products, and the inclusion of raw and processed milk sales, which carry minimal distribution overhead. G&A expenses for the second quarter of 2026 were $794,000 compared to $673,000 in the same period last year, primarily reflecting higher personnel, recruiting and other administrative costs associated with the ARPS dairy business. Net loss for the second quarter of 2026 was $1.9 million compared to a net loss of $880,000 in the second quarter of 2025. Adjusted EBITDA for the second quarter was a loss of approximately $1.2 million compared to a loss of approximately $600,000 in the prior year period. A reconciliation of net loss to adjusted EBITDA is provided in our earnings release. Turning to our balance sheet. As of June 30, 2026, we had approximately $1.4 million of cash and accounts receivable and approximately $2.2 million of inventory on our balance sheet. In March 2026, we secured 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. In addition, we were previously approved for a $2.4 million grant to purchase and install specialized equipment necessary for full-scale production operations that must be utilized in 2026. Based on our first half results and the slower than anticipated ramp in production efficiency at our existing facility, we are revising our full year 2026 guidance. Due to the removal of the ice cream mix production and slower growth originating from the last school year's supply constraints, we expect fiscal year 2026 revenue of $23 million to $26 million, representing 62% to 83% growth compared to fiscal year 2025. We now expect fiscal year 2026 adjusted EBITDA of negative one to two million and expect to be adjusted EBITDA negative half a million to break even in the back half of this year.

I want to give you some additional color on the change in our fiscal year 2026 adjusted EBITDA guidance.

About 1.8 million relates to higher processing spend at Arp's Dairy. Approximately 0.8 million due to the loss of Arp's Dairy ice cream mix business due to production issues caused by equipment and infrastructure constraints. Another 0.8 million relates to material cost increases. approximately 0.6 million attributable to a delayed revenue recovery for legacy bar fresh product lines, and another 0.6 million related to other synergies not yet realized, primarily around inbound and storage freight and cold storage costs. We do expect revenue to improve sequentially in the third and fourth quarters of 2026 as new school district wins ramp for the 2026-27 school year. and as production efficiency at our existing facility continues to improve. Now, I will turn the call back to Riccardo for closing remarks.

Thank you, Lisa. Before we turn to questions, let me close with a few thoughts. First, our education channel continued to rebuild in the second quarter and we expect a strong back half of the year as new school district wins and returning customers ramp into 2026-27 school year. Second, our results this quarter came in below our expectations driven by a slower than planned productivity ramp at our existing ARPS dairy facility. We are addressing these inefficiencies and we have already seen improvements and we expect continued sequential improvement as we move through the year. Third, completing construction of our 44,000 square foot facility in Defiance, Ohio remains our top operational priority. We believe this facility will represent a meaningful step change in our production economics once it is commissioned. and fourth our confidence in the long-term opportunity in front of us once our integrated manufacturing platform is fully online is unchanged once the new plant is operational we will have an exceptional platform to grow our sales in both existing products in our existing and new channels, as well as new products in our existing and new channels. Right now, we remain focused on serving our core education customers reliably as we rebuild toward the growth we know this business is capable of. And with that, I'd like to open up the line for questions. Operator?

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.

Thank you.

Our first question comes to the line of Anthony Vendetti with Maxim Group. Please proceed.

Anthony Vendetti Thank you. So, Riccardo, just I'm trying to understand. So, what exactly was the issue that caused you to have to move the ice cream production out of that facility and then is that I know you said things are going to improve in the back half, but is that issue completely fixed or is in the process of being fixed? It's a bit of a mixed bag. So they're all interrelated.

As we started making production at the old facility and we started to increase that production as we weaned off more from the co-packers, what became apparent was that the infrastructure and the equipment needed more attention than we first thought. and as a result of that it really limited our ability to produce the equipment to produce sorry the products as needed so moving out of the ice cream part especially in the busiest time of the year through the summer was was necessary it's also allowed us the opportunity to focus on the smoothie products and we've made significant improvements in being able to do that with our own products and increase the throughput. Every week continues to be getting better as the different parts of the old facility are improved or serviced or replaced. So we have made a significant improvement. What you're seeing in the Q2 results which is on the back of obviously seasonally lower sales and at the same time it was early on in the building efforts of the production so there was a lot more cost going in during that period we've made a lot of improvements along the way and we continue to make improvements in the efficiency and the yields that we're getting in the current production facility so and we expect it to only improve as we continue through the balance of the year based on all the improvements in the infrastructure and the equipment that have already been made. So we've already, we've done a lot of that already now.

So when the initial due diligence of that facility, was it just not thorough enough or what, you know, so obviously, like you said.

Yeah, it was thorough. The challenge that we had was with our specific products, We weren't able to test it under maximum capacity, so to speak, with our actual production. So yes, the equipment was there. Yes, the equipment was investigated. But it wasn't until the load started being put on the facility in its entirety and then the ice cream business at the same time that it was, you know, these other gaps became more apparent.

So in terms of the school contracts that you have signed up, the fact that you were able to move out the ice cream, I don't know how quickly you were able to do that, but were you able to fulfill all the school contracts for your Twist and Go product? 100%. Absolutely. Okay, good.

Yeah, absolutely. And even more than that, We've been building inventory during the summer period and with the weekly throughput and we've got sufficient production capacity to meet those needs and that's really why we needed to make the investment in setting and improving the infrastructure and the equipment at the old facility so that we were able to do that and that's exactly what we've done. So our ability to deliver products against our customers and our contracts for the education channel, we've got that organized, and we feel very good about that, and we're already producing product to be able to do that.

So you're included in your EBITDA loss guidance. Is the cost associated with getting the production facility are running at a clip that it will be able to eventually take and sufficiently be able to take back the ice cream production at some point. Is there any additional capex that you think is needed to ensure that that happens either faster or less likely to be a manufacturing slash production issue in the future?

I mean, there may be some smaller items, but we feel like we're at the tail end of that now with the current facility. Our focus is now moving to the new facility.

Okay, and then just in terms of the Twist & Go product or even the dairy, more than Twist & Go, there has to be a certain amount of protein in there, and it comes obviously from the yogurt kind of mix that's in that Twist and Go product. But in terms of input costs to produce that product, what are you seeing in terms of inflation for those products? Have those input costs risen or are they somewhat stable?

Yeah, so they have risen. We have, again, a bit of a mixed bag. We've seen some that have risen and we've seen some that we've got some savings on. but we're constantly looking at ways of mitigating any cost increases and reformulations where possible as well in kind of making the product more efficient and getting some ingredient cost savings. Okay, great. As Lisa kind of mentioned, we have a target per case cost, right? And you know the two components that she listed was $1.8 million in cost difference for the upbringing of the ARPS facility was obviously the largest difference from our guidance and then another $800,000 on the ice cream business so you know you look at those two numbers alone they're obviously the two single biggest contributors so you know as we get to our expected per case rate on the manufacturing front, which is purely a function of equipment and processing speeds and reliability. That's gonna be an easy pickup once those targets are met. And similarly, with just bringing the ice cream business back, if that ends up being what we do, it's again another pretty significant contribution. or explanation for that part.

Yeah, you'd ask about the material cost. That's another $800,000 and we're looking at that from the context of the potential reformulations or other cost savings opportunities.

Right, right. So those three pillars alone are very significant and well within our control in terms of being able to improve.

Okay, because overall, I know the dairy business is much lower gross margin than your Twist and Go product, correct? Correct.

Yeah, and that's why we're really focusing on our biofresh products.

Sure, makes sense. Okay, I'll hop back in a few. Thanks for that, Collin.

Thank you.

Our next question comes from the line of William Goreski with Green Ridge Global. Please proceed.

Hey, Riccardo. You just mentioned that the, I guess, school sales were everybody's getting the product that they're wanting. But the bar fresh sales are first half to first half a year ago are only up marginally. Why are we not seeing more demand with all the school signings?

Well, two things. we obviously had supply constraints right which is the whole reason why we did the acquisition in the first place so we knew going into this year that we had some customers that had the product and had to take us off the menus because we couldn't supply them so this year was really all about getting manufacturing up and running communicating to the customers and that damage was already done last year so to speak but going into the new school year we are getting new customers and we are getting customers back but we're not seeing that until the next school year which is starting to happen now. The first half of the year is still a continuation of the previous school year for many of the school districts, right?

Right. Do you then have the capacity in place today to supply what You know, the existing schools, the law schools, and the new schools for this upcoming school year?

Correct. Yes, based on what we're projecting, yes, we do.

Yeah, we continue... Again, that comes back to... So we continue to have to protect our co-manufacturers as well. So it's not 100% reliant on ARPS, which is good, because we've needed some time to ramp and get to an efficient production capacity.

Okay, so you're still using third-party manufacturing for some of this?

Yes. Yeah, our 10Q has kind of a breakdown of what we did internally and what was done with Coman.

And again, that comes back to the reason for really focusing on the biofresh products.

Yep, yep, okay. And then for, I don't know if you can, because it's not broken out in the guidance, but What should we be looking for for the split between the two barfresh and ARPS lines for the second half of the year? I mean, is a lot of that going to be barfresh?

Yeah, any of the growth is barfresh because the ARPS is just going to be kind of steady milk producing components. So, you know, what you see in the fluid milk segment is pretty stable throughout. We're not planning on growing that piece.

Okay. And then on the, you had mentioned about financing issues and everything. Do you think there's a chance you guys are going to have to go back to the market to raise money?

We're not planning to. We own the property free and clear. So the plan is to get a mortgage on the property, which is part of the plan. And, you know, other equipment financing options available is what will be, you know, that's our plan right now.

Okay. All right. Thanks, guys.

Thank you. As a reminder, it is star one to ask a question.

As a reminder, it is star one to ask a question.

There are no further questions. This concludes today's teleconference.

You may disconnect your lines at this time. Thank you for your participation.