Good afternoon, everyone, and thank you for participating on today's Fourth Quarter and Full Year 2023 Corporate Update Call 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 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 and/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 take undue reliance on these forward-looking statements, which speak only 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 such as 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 especially 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 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 GAAP measures. 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 product withdrawal, asset impairment and the company's NASDAQ uplift. 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. Riccardo Delle Coste. 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 use 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 will laser focus 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 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 4-ounce and 8-ounce cartons for…

Thank you, Ricardo. Revenue for the fourth quarter of 2023 was $1.9 million, compared to $1.4 million for the fourth quarter of 2022. The increase in fourth quarter revenue is a result of improved supply due to increased capacity in our carton production this year over last year and the return of customers last year due to the loss of the company's largest bottle manufacturer at Twist & Go, partially offset by the industry-wide carton shortage Ricardo mentioned that impacted sales in the quarter. Revenue for the full year of 2023 was $8.1 million compared to $9.2 million in the same period of 2022. Revenue in 2022 was negatively impacted by a $493,000 claim estimate resulting from the voluntary product withdrawal of Twist & Go. Excluding the refund claim estimate, revenue for the full year of 2022 was $9.7 million. The year-over-year decline is a result of limited supply and lost customers caused by the loss of our largest bottle manufacturer of Twist & Go as well as the shortage of cartons during the fourth quarter of 2023. As Ricardo said, the issue has since resolved itself. However, it will have a bearing on our first quarter of 2024 results as it impacted the first six weeks of sales. We do, however, expect revenue to grow sequentially in the Q1 as we have been able to recently increase capacity with our existing bottle manufacturer for Twist & Go. Gross margin for the fourth quarter of 2023 was 33% compared to 36% for the fourth quarter of 2022. Gross margin for the full year of 2023 was 36% compared to 16% for the same period of 2022. Gross margin for the full year of 2022 adjusted for the product withdrawal was 30%. The year-over-year increase is due to a full year…

Thank you, Lisa. We are encouraged to have recorded our second highest fiscal year revenue in 2023 and are on track to have a record first quarter in 2024 versus any other Q1, and expect the positive momentum we're seeing in the first quarter the increased cotton and bottle capacity, as well as our expanded sales network will continue throughout the year setting us up to achieve a record fiscal year of revenue. We expect to replace our lost bottle manufacturer shortly and believe once we have the right manufacturing partners on board that provide us ample bottle capacity, we will be back on track to driving significant long-term profitable growth. And with that, I'd like to open up the line for questions. Operator?

[Operator Instructions]. Our first question is from Anthony Vendetti with Maxim Group. Please proceed with your question.

On the carton shortage, is that going to impact gross margins in any way? And then as we move to the '24 school year beginning in August, September, I know you said you expect to have a new packager on board. Can you maybe just talk through what conversations you're having? How many replacement companies are you looking at this point? And then in the meantime, is there anything that you think can fill the gap, whether it's the military channel or some other channel, while you're waiting for this replacement company?

So, with regards to the national carton shortage, I'm sure a lot of people would have seen that in the media. Schools were without milk cartons period due to the national shortage. We did weather that storm a lot better due to our significant manufacturing partner relationships who are some of the largest in the dairy industry. So, we were impacted December in the fourth quarter and then also in the first six weeks thereabouts in January, in the first quarter, January a little bit of February. As a result of that, we were also fortunate that we were able to get some increased capacity from our bottle manufacturer which closed that gap, because it probably would have been a little bit worse off, but because of the increased bottle capacity from our existing manufacturer, we're able to close that gap a little bit. As a result of the higher SKU between the bottles and cartons, there was a little bit more of a compression on the margin. And we'll see a little bit more of that in the first quarter. However, the carton supply issue has been fully rectified now and we're back to full production and serviceability on those lines. So, as it relates to the bottle manufacturing capacity and getting the extra bottle manufacturer on board, we’ve done a lot of work on that last year and as you probably remember I did give some updates on that and we were literally, we were supposed to have it signed in Q4 in actual fact that the contract was fully negotiated and out for signatures. And unfortunately, the partner was going through some management changes and they were just unable to sign the contract due to some internal things that they were working on. And we were to revisit in a few months. It just so happens that that revisit is occurring right now and we've reconnected and it's back on the table. So, we are expecting to still have something closed here very shortly. However, in the meantime, we haven't just been sitting on our hand. We have been out there looking at other opportunities and we do have a number of other opportunities that are on the table for us right now as well. So, as we think about what our bottle capacity looks like, we are extremely confident that we will still get it resolved and get it resolved very quickly. In actual fact, we now have more options on the table than what we did previously. So that should also help our negotiating power. And I think that there are some other opportunities that may come out of it as well as we kind of get deeper into confirming what our manufacturing relationships look like. So, I think there's going to be more to come on that that are going to be very beneficial to the company going forward.

Okay. So even if the one that you're revisiting doesn't come through, it sounds like you have other options. That's why you're confident that within the next couple of months, you'll have something so that you're all set up for the beginning of the '24 school year?

Correct, yes.

Okay. And then maybe just an update, a little more of if you can elaborate more on the military channel and then any other updates on other opportunities outside of the school channel?

Yes, sure. So, we did mention it briefly in the script that we spoke about before in the update. Post-COVID it's been quite challenging getting back into the market with different products in certain channels, particularly with the bulk products and the one-to-one and the easy-pour as well as the new five-to-one that we had launched in 2020, they both require the beverage dispensing equipment. Now that's what we have in the military and that's what we have in the schools as well as recreation and amusement locations. And as a result of COVID, there was a lot of changes that happened and then post-COVID, there was a lot of prolonged labor challenges within these establishments particularly in the education channel. So fast forward now, good year out of that, there's been a lot of reshuffling and a lot of rehiring in a lot of these places and we just haven't been able to up until now get those products front and center and get the attention of the operators to be able to put it back on the menu, to have the people in place to be able to service them and we've now started to see that and we've relaunched the five-to-one 100% juice concentrates. They've actually done really well with the initial customers that we've seeded them in. As a result of that, we have taken a different approach with our sales growth strategy and previously it was only our limited sales team that were really selling the bulk products being the five-to-one and the one-to-one product. And now what we're in the process of doing, have already started doing and will be increasing significantly that is including a broker network to go out there and sell both of those products not only to the education channel,…

And then just maybe comment just looking at the mix that you have right now, what do you think is a reasonable normalized or go-forward gross margin for the business?

We're projecting high-30s, low-40s for 2024. It will build over time. Q1 is going to be a little bit lower just because of the carton issue. And then beyond that, expect to see low-40s.

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