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Edited Transcript of BRFH earnings conference call or presentation 14-Nov-18 9:30pm GMT

Q3 2018 Barfresh Food Group Inc Earnings Call

BEVERLY HILLS Mar 19, 2019 (Thomson StreetEvents) -- Edited Transcript of Barfresh Food Group Inc earnings conference call or presentation Wednesday, November 14, 2018 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Joseph M. Cugine

Barfresh Food Group, Inc. - President & Director

* Joseph S. Tesoriero

Barfresh Food Group, Inc. - CFO

* Riccardo Delle Coste

Barfresh Food Group, Inc. - Founder, CEO & Chairman

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Conference Call Participants

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* Anthony V. Vendetti

Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst

* Jim Gorman

* Justin Bradley Borus

Ibex Investors LLC - Managing Member, CIO, and Chief Compliance Officer

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Presentation

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Operator [1]

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Good afternoon, everyone, and thank you for participating on today's third quarter corporate update call for Barfresh Food Group. Joining us today is Barfresh Food Group's Founder and CEO, Riccardo Delle Coste; Joe Cugine, President; and Joseph Tesoriero, Chief Financial Officer for Barfresh Food Group. Following prepared remarks, we will open the call for your questions.

The discussion today will include forward-looking statements, except for the historical information herein, matters discussed 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 and 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, among others. All statements, other than 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.

Such forward-looking statements are based on certain assumptions made based on experience, expected further developments and other factors that the company believes are appropriate under these circumstances. These statements are subject to a matter of assumptions, risks and uncertainties, many of which are beyond the control of the company and may not materialize.

Investors are cautioned that any such statements are not guarantees of future performance. The contents of this call should be considered in conjunction with the warnings, risk factors and cautionary statements contained in 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. Furthermore, the company does not intend, and is not obligated, to update publicly any forward-looking statements, except as required by law.

Now I will turn the call over to the Founder and CEO of Barfresh Food Group, Mr. Riccardo Delle Coste. Please go ahead, sir.

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [2]

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Good afternoon, everyone, and thank you for joining us. On our call today, we will review our third quarter 2018 results, discuss our recent wins, review our growing sales channels and provide additional insights into our expanding sales pipeline.

Our third quarter was another record quarter for the company, with net sales increasing approximately 140% to over $1.6 million. Gross margins improved 4.5% to 55.3%, while we reduced our general and administrative expenses by 8%.

To put our revenue growth into perspective, the $1.6 million generated in the third quarter of this year is roughly the same amount generated over the first 9 months of last year. Revenue in the first 9 months of 2018 is more than double the revenue of the first 9 months of the prior year. These improved results are primarily due to our 2 new sales channels, education and military, and we are just getting started. And on top of that, we just announced today our breakthrough approval by a large national restaurant chain.

Throughout the quarter, we continued to make progress with our education and military channels. As about last press release on the education channel in September, we announced that we had expanded to over 300 school locations throughout multiple states. We have continued to grow since that announcement, adding more school locations in new districts and adding schools in districts that were already customers. This represents a tenfold increase from the beginning of 2018. In addition, we have successfully completed our previously announced 45 military installations, and we are now serving in over 45 U.S. armed forces dining facilities. We continue to make great progress in this channel with more locations being added, and we will be able to provide further update shortly.

Continued growth in the education channel is being driven by the great success we are having with our existing school customers as their products are having a direct impact on increasing breakfast participation rates. Our continued growth will also be driven by the new distribution agreements we recently signed covering the West and Southwest regions of the country.

One of our new distributors is recognized nationwide by the United States Department of Agriculture and American School Food Service Association as the largest specialty food supplier working exclusively with the education foodservice channel and serving more than 600 school districts with thousands of schools throughout the West and Southwest United States. This agreement gives us access to more opportunities beyond the 300 school locations we currently serve.

Our product is a perfect fit with our distributor's commitment to serve the nation's schools with the highest quality, most nutritiously sound meals. The military and education channels represent large attractive customer bases for us. With over 98,000 schools and 940 military bases, we are very optimistic about growth in these channels for years to come.

We have successfully navigated the biggest hurdle for these channels, which is the product approval process, and now we are able to turn our full attention to the sales process. These military and education customers are primarily multi-year contracted customers with annual volume commitments. These channels are counter-seasonal to our "up and down the street" base business. We expect that over time, these 2 channels could become our largest and most predictable revenue streams. We are rapidly signing on new customers and will continue to update the market as we progress both channels.

And finally, we have finally received written notification that our products have been approved to be rolled out with a national quick-serve restaurant chain with over 2,500 locations. After an enormous amount of dedication, perseverance and hard work, the testing is finally complete, and we received approval. I'm also happy to announce that this new national QSR qualifies as our second milestone of a convertible note issued in March of this year as amended, and we expect to receive that funding within the next few weeks. This funding, coupled with the cash savings afforded by our leaner and more efficient personnel organization will allow us to enter 2019 adequately funded to pursue our strategic plan for accelerated growth. We are extremely excited and proud of this accomplishment and look forward to a very healthy 2019.

In summary, we are very pleased with the results for the first 9 months of 2018. We have ample manufacturing capacity to satisfy the expected ramp in 2019 as well as the established base business that we now have developed. We have made great progress in rightsizing our fixed overhead to reduce G&A costs, and we have a robust client base that is continually expanding. Keep in mind, we expect to enter 2019 with over 45 military bases compared to none at the beginning of 2018 and over 300 schools compared to approximately 30 at the beginning of 2018. So our base business going into 2019 is very solid.

And with that, I'd like to turn the call over to our CFO, Joe Tesoriero, to discuss our financial results before handing it off to our President, Joe Cugine, who will provide more insight into our channels and opportunities. Joe?

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Joseph S. Tesoriero, Barfresh Food Group, Inc. - CFO [3]

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Thank you, Riccardo. Today, I'll discuss the third quarter and first 9 months financial results and then provide an update on the key operational aspects of our business.

Net revenue was $1.6 million for the third quarter, an increase of 138% compared to $680,000 for the comparable prior period. And as Riccardo said in his opening remarks, the first 9 months of 2018 were double the first 9 months of the prior year, coming in at $3.3 million versus $1.6 million. This improvement was driven by increased sales of our bulk Easy Pour product in a number of areas, including our 2 newest sales channels, education and military.

Our gross profit margin for the third quarter was 55.3% compared to 50.8% margin in the year-ago period. Similarly, gross profit margin for the first 9 months of 2018 was 54.3% compared to 49.2% in the first 9 months of 2017. The improvement in gross profit margin is primarily driven by product mix. Also, the increase in sales has enabled us to begin leveraging our established infrastructure in order to realize cost savings in raw materials. We expect to finish the year with gross profit margin similar to the current quarter.

During the third quarter, we realized a net reduction of $200,000 in our general and administrative expense, an improvement of 8%, driven primarily by a 28% reduction in personnel costs, which include payroll, stock compensation and travel, reflecting the beneficial P&L impact of our ongoing efforts to achieve the most efficient and effective mix of in-house and brokerage sales support.

Higher sales, strong gross margins and reduced G&A expense allowed us to reduce our operating loss by 33% or $680,000.

We ended the third quarter with $1.1 million of inventory, about 20% lower than the $1.4 million of inventory we had on hand at the beginning of the year. This improvement in working capital is a result of our increased sales during the quarter, coupled with our ongoing focus to control working capital.

While shipping and storage expense increased 10% on a quarter-over-quarter basis, it is noteworthy that expressed as a percentage of sales, shipping and storage decreased by over 50% from 35% in 2017 to 16% in 2018. We anticipate that shipping and storage expense as a percentage of sales will continue to reduce as our business grows and we take advantage of economies of scale.

And as Riccardo mentioned earlier in the call, we have now satisfied the amended second milestone requirements of the convertible note issued in March of this year. And we expect to receive the related Milestone 2 funding in the amount of $1.3 million within the next few weeks.

Additionally, the company is currently pursuing an asset-backed loan facility to fund the expected ramp-up of new business resulting from the national account rollout announced today. The Milestone 2 funding and the planned ABL, coupled with the cash savings afforded by our leaner and more efficient personnel organization, will allow us to enter 2019 adequately funded to pursue our strategic plan for accelerated growth.

Now with that, let me turn the call over to our President, Joe Cugine. Joe?

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Joseph M. Cugine, Barfresh Food Group, Inc. - President & Director [4]

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Thank you, Joe. Riccardo opened the call today by highlighting, in particular, our strong growth in the education and military channels. And before I expand on these areas, I would like to update you on specific recent customer wins and explain how these types of wins are expected to translate into strong revenue growth in 2019.

One of our most important developments to date has now occurred in the QSR channel with the completion of testing and receipt of approval from a large national restaurant chain for a national rollout. We are incredibly excited about this opportunity and are now focused on execution as that project moves forward. Moreover, we remain diligent on continuing our work with other large national QSRs. We are continuing our testing process with other customers in our pipeline with the goal of launching different chains in the near term. We continue to be proud of our product innovation and flexibility in meeting customer demands to help maximize their frozen beverage platform. You'll be hearing more about our progress with other chains in the near future.

We continue to see a high level of interest in our product from many other national and regional customers, including QSRs; casual dine restaurants; third-party operators; dining and large traffic customer segments, such as (inaudible), zoos, theaters and ski resorts. Last month, we announced that we had expanded our relationship with Landry's Incorporated. As a reminder, in April of 2017, we first began serving our products in all of Landry's Bubba Gump Shrimp Company's U.S. restaurant locations. Based on the success of our product in that restaurant chain, a year later, Landry's decided to also begin serving our products in their Joe’s Crab Shack restaurants. We are now part of the beverage build for a range of adult beverages in the 55-plus Joe’s Crab Shack locations.

Once the customer brought our single-serve product in-house, they recognized the opportunity for speed-up service efficiencies, while at the same time, seeing that our product is a great complement to their current beverage offerings. We are excited to continue expanding flavors within existing locations as well as additional banners within the Landry's family. We have many more opportunities in the pipeline that we expect to announce in the coming quarters.

To further expand upon the casual dine segment. During our last investor call, I spoke about one of our large casual dining chains customers, where we have gained 20% penetration with our single-serve product. This project is continuing to do very well, and we are working towards a national rollout to all locations within the near term.

Moving to the education channel. We are now in contract with and/or selling our products into over 300 school locations, which represents growth of over 50% from just 3 months ago, when we had our last investor update. We continue to receive positive responses from school administrators and believe that our unique offering, specialized programs, national distribution footprint and strategic distributor relationships, really allow us to achieve rapid growth in this channel, with over 14,000 U.S. public school districts representing over 98,000 schools. We have navigated the approval process in many school districts and are receiving increasing number of incoming calls from schools in those districts that would like to add our smoothies to their menus.

To help drive demand and growth, we also launched 3 great tasting and healthy new flavors targeted to the students. School administrators can now offer innovation and provide bold and colorful products that consist of nothing artificial, have real fruit, no sugar added and are gluten-free. And so far, the feedback from our customers at the product tastings has been tremendous.

Further advancing our education channel progress has been reinforced by the latest agreement we signed with our new distributor in the West and Southwest. Our new distributor is recognized as the leading specialty food supplier in the education channel, and the decision to partner with us speaks volumes to our high quality and affordable product.

Our frozen beverages will now be part of the product offerings they bring to the 600-plus school districts they work with throughout the West and Southwest United States. We are proud of these relationships that further enable us to remain one of the fastest-growing beverage suppliers within the education channel.

Moving now to the military channel. In just a short time, we have gone from 6 military bases to 45 installations now completed, with more locations being added every week. We have exceeded our internal expectations and continue to actively pursue all U.S. military facilities. Starting in 2019, we expect to announce that military bases overseas will be proudly serving Barfresh smoothies. Our bulk Easy Pour format is the perfect solution to feed large number of enlisted personnel that visit the dining halls in a very short period of time for breakfast, lunch, dinner, 7 days a week, 52 weeks a year. We have not only exceeded our placement goals, but we're also excited to have some of the largest military bases serving our product in multiple locations.

In the past few months, for example, we have installed 5 Barfresh smoothie machines in 5 separate locations on 1 base and 6 on another. This provides the operator the ability to serve the maximum number of military personnel wherever they choose to dine. And lastly, we have started to expand in the nonappropriated side of the business, concentrating on high-traffic locations.

Our sales strategy for bulk Easy Pour is balanced across a wide channel base, targeting year-round high-traffic destinations. For example, in addition to recreation channels and restaurants that are highly seasonal, we have secured new streams of revenue, driven by our penetration in the nonseasonal channels like military, education, workplace dining, ski resorts and theaters, all of which remained very strong during fall and winter. We plan on continuing the strategy, winning across multiple channels of business.

And with that, I turn it back to Riccardo.

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [5]

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Thanks, Joe. We're very excited about our recent progress as well as the opportunities ahead and the outlook for 2019. As you heard from us today, we've made tremendous progress with our breakthrough approval from our first major national restaurant chain as well as strong headway in our military and education channels with years of revenue growth expected. We continue to increase our margin, whilst at the same time, reducing our fixed overhead costs as we continue to execute on our plan. We will enter 2019 funded from Milestone 2 with a strong base business of over 45 military locations, over 300 schools and an approval from a national restaurant chain as well as many regional customers adding to our strong growth opportunity for 2019.

We look forward to updating the market as we begin to execute on these accomplishments as well as updating you as to when our other pipeline customers come to fruition.

Now with that, let me open up the call for some questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Justin Borus from Ibex Investors.

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Justin Bradley Borus, Ibex Investors LLC - Managing Member, CIO, and Chief Compliance Officer [2]

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Riccardo, congratulations on the new national account. Can you give us any color? Obviously, the press release is a little vague, and I'm sure you're saying as much as the account will let you say, but when you say more than 2,500 locations, can you give us a sense? Is that 2,501 locations? Is that 10,000 locations? Can you give us any sort of more specific range of what we could expect there?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [3]

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2,501? It's more substantial than that.

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Justin Bradley Borus, Ibex Investors LLC - Managing Member, CIO, and Chief Compliance Officer [4]

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Look, I don't think I heard you Riccardo. Can you say that again? I only heard -- we only heard the very end.

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [5]

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Oh, I can tell you, obviously, we can't comment to the exact number of locations, but what I can tell you is that it's not 2,501, it's a lot more substantial than that.

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Justin Bradley Borus, Ibex Investors LLC - Managing Member, CIO, and Chief Compliance Officer [6]

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Is it safe to assume this is a household name that most people have heard of or even visited from time to time?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [7]

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Yes, it will be a very easily recognized household brand name.

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Justin Bradley Borus, Ibex Investors LLC - Managing Member, CIO, and Chief Compliance Officer [8]

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And is there -- just one last question. Is there any -- I know you mentioned that you expect and hope to win some more national chain. Obviously, this is an excruciating sales cycle. Do you think we're kind of getting towards the finish line with more chains? Or are we kind of in the middle of the process? Now that you know what it takes to close one, can you give us a sense for -- are we talking years, months, weeks? Is it one? Or is it more? How does our pipeline look?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [9]

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Look, I think it's probably important to put all this in perspective, right? I mean, this is the whole reason why we started the company in the first place. It was really for these channels. So it's taking us a lot longer to get here. But I think today really shows the genuine progress that we've made, and I think we have been pretty consistent in communicating that we've -- that we have a robust pipeline of other major national accounts, and that position remains the same today and even more so. And we absolutely feel that we'll see more of those accounts come out the other end very shortly. And whilst it has taken us a lot longer, there's a lot that we have learned over this period of time, and we have applied that to some of these other accounts. So it's an incredibly exciting time from our side, and we absolutely expect to bring more major accounts through the other end of the funnel shortly.

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Operator [10]

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Our next question comes from the line of Anthony Vendetti from Maxim Group.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [11]

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So in terms of the national account, what does that rollout look like? Obviously, you're not going to be into 2,500-plus locations overnight. Is this a 6-month rollout? Or what's the approximate schedule?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [12]

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Yes, look, there are still a few steps to take, but I can tell you that it's not a piecemeal. It's a system-wide approach, all at once. So it actually is expected to be system-wide, but it would -- in terms of the timing, we're really staying away from giving any guidance as to that. We're in a very competitive market. Obviously, it's a very competitive landscape, particularly around seasonality and timing. So the part that I can't answer of that question is that it's a system-wide approach all at once versus doing it piecemeal.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [13]

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Okay. And then, how many SKUs will be offered initially?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [14]

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Again, I can't say exactly how many, but I can confirm that it's multiple.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [15]

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Multiple SKUs. Okay.

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [16]

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Yes, multiple SKUs. So look, I mean, this has been a long time in the making, right? We've had a lot of -- it's a very exciting time for the company, and we're just -- we're pretty happy on this side.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [17]

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Okay. And then, based on this account as well as some others, I know it was mentioned in the press release that you were able to still cut costs. Are there any hires that have to occur to help make sure this runs smoothly once the start of this system-wide rollout occurs?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [18]

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Now look, that's a really good question, right, because I think from the very outset, the way we've built the business is so that when we do have these big increases in revenue opportunities, we don't need to add a whole bunch of overhead where we're coordinating the movement of the product -- and these are national accounts, right? So it's -- this doesn't require our personnel to go out to each of the individual stores. All of that's managed by the account. So we're really making the product and sending it to their distributors' warehouses, and that's where it starts and stops for us. The heavy lifting for us is all done upfront in the product development and the initial testing of the product. So once all that's complete, all we are doing is making product and sending it to their distributors' warehouse. So the direct answer is no. We actually are not expecting to add headcount as a result.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [19]

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Okay, great. And then on the schools, it looks like you added not just schools, but you added some SKUs. Does that bring the total SKUs for the schools to 7? And is it 7 in all the schools? Or is it on a school-by-school basis?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [20]

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Yes, look, I mean, it's very interesting. We are now dealing with 3 channels that are all equally exciting, and it's great that the national account part has now come to the table for us. But this education channel is -- we're really expecting it to be a massive channel. We've gone from 30 to 300, and I can tell you we're just starting. We really are just starting. So the SKUs that we've created, we're about 7 or 8 SKUs in total. Generally, the schools will run 2 flavors at a time and rotate through the different options throughout the year, some of them with dairy and the yogurt and some of them without. But I think, as we go deeper into this channel, there are other organic opportunities that will be presenting themselves that we've already seen. So we're incredibly bullish in this channel and very excited to be solidifying our position with these customers that are on multi-year contracts to buy our products, so yes.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [21]

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Okay, okay. And then the revenue from these additional 100 schools, is that starting up this semester? Or is that starting up in January?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [22]

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No. It will be starting up this semester. It does take a little bit of time to get them started from when we signed them to when we get them started. There's a bit involved. And whether it's certain documentation that needs to be completed and submitted ahead of time, you need to get a distributor set up and the distributor needs to get their forms set up, that then will go through our existing distributors. So sometimes there's a process to getting that done. And then, there's a training for the school folk. It can take a little bit of time and work to get these accounts set up.

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Operator [23]

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Our next question comes from the line of [Rey Reyes from Abby Ventures].

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Unidentified Analyst, [24]

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Look, congratulations on the national account. And it seems that you've exhausted, you've given all the color you're going to be able to give on that. So I want to ask a couple more questions about the school segment. It seems clear that the momentum is accelerating there. The sales cycle is shortening as you get into more and more schools and the word of mouth and all that. So I was wondering the 300-plus schools that you're in now, what do you think that number will look like, for example, by the end of this year, beginning of next year? What do you think it might look like by the end of 2019? And I also wanted to get a little more sense as to what the average revenue per school looks like. Like, for example, the schools that you've been in for a while now, what kind of revenue do they generate on a per-school basis?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [25]

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Sure. Thanks, [Rey]. So the number that we are into -- we believe that a 400-school target number, we should be able to get there before the end of the year. So we're pretty comfortable with that number by December. But the most interesting part of that is, let's just say the existing 300 schools that we have now, because that's a number that we actually have confirmed, that's actually 300 schools that we actually have pouring our product. But what is not so evident is that those 300 schools are actually part of a much larger district. So for example -- and the reason why this is really important is because typically, the most challenging part of this business in the school channel is actually getting approval. Once you're approved in a particular district -- school district, then it's a lot easier for them to say, okay, we're in 2 schools, we're going to now add you to 3 other schools or 5 other schools. So that's really the most challenging part. So coming back to the 300 schools that we're already in, the part that's not so evident is that those schools represent probably a much greater number of schools that are part of their district. They're probably closer to 3,000 to 4,000 schools. So we feel that there's going to be a natural organic growth in addition to getting new schools. Now are we going to get all of them? No. But it's an organic growth opportunity that exists within the customers that we've already sold product to. So as we keep going down the path, we think that there's an enormous opportunity to keep growing. And a perfect example is Pasco County. We started within that district in 30 schools. We're now in 50. So that's the type of organic growth that we can expect within the existing channels, and that's without the new sales process. It's probably worth mentioning that we have a lot of schools, that we have 3 schools or 5 schools in a particular district, and that district represents 100 schools or 200 schools and some even greater than that. So when you take that away and have a look at the groundwork that we've done, and the selling cycle as well, right, schools have a lot of vacation times and there are certain bidding times, so there is a little -- there's been a little bit of learning from our side in terms of the timing for acquiring these accounts. But I tell you, it is incredibly exciting for us to be in this channel, and we really see it as an enormous growth channel for us that will eventually be very consistent and repeatable revenues. So very excited.

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Unidentified Analyst, [26]

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That's really good. And then, what do think we could expect on a per-school basis? How much revenue can an individual school generate?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [27]

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Look, probably about $10,000 to $15,000, say, $10,000 to $15,000 annually per school.

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Operator [28]

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Our next question comes from the line of Jim Gorman from Gorman Capital.

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Jim Gorman, [29]

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Do you mind talking a bit more about the military opportunity? Specifically, how many bases do you expect by the end of the year and what kind of revenue you expect per installation?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [30]

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Sure. Jim, so we had the -- we announced the 45 installations earlier in the year, or not too long ago, actually. So they are all pouring now. They did -- we did get delayed a little bit. We expected those to be all installed by the end of September. Unfortunately, we did have some delays on the equipment side in terms of getting equipment delivered because we have taken a lot of supply from our supplier. So they got done -- majority of those got done in October. And that was really -- there's a bit of delay in the revenue recognition into this quarter as a result of that. But in terms of where we expect to finish the year, we think a number of -- 70 to 85 is probably close to where we'll finish the year, so a significant leg up again still from where we currently are. So that's where we expect to finish the year with the military locations, and we'll provide a more accurate and detailed update on that very shortly.

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Jim Gorman, [31]

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Okay. And what kind of revenue do you expect per installation?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [32]

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Yes, look. We're expecting anywhere from $35,000 to $50,000 per installation. So these are high-revenue locations. So that's what we're expecting on a per location basis.

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Jim Gorman, [33]

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Is that per quarter or per year?

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [34]

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That's per annum. I wish it was per quarter.

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Operator [35]

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Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to management for closing remarks.

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Riccardo Delle Coste, Barfresh Food Group, Inc. - Founder, CEO & Chairman [36]

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Yes. Thanks, everybody. Obviously, a very exciting time at Barfresh, and we look forward to actually bringing some more developments shortly, and thanks very much for joining. Cheers.

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Operator [37]

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This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.