Good afternoon, everyone, and thank you for participating on today's first quarter 2022 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 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 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 that 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 the understanding of the company's business performance, the company is also presenting certain non-GAAP measures, including adjusted EBITDA, which are reconciled in a table on the business update release to the most comparable GAAP measures. The reconciling items are non-operational or non-cash costs, including stock compensation, stock issued for services, gain or loss on the sale of derivatives and other non-recurring costs, such as those associated with the company's recent Nasdaq uplist. 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 the CEO of Barfresh Food Group, Mr. Riccardo Delle Coste. Please go ahead, sir.
Good afternoon, everyone, and thank you for joining us for our first quarter 2022 earnings call. I'm pleased with the start of this fiscal year. Revenue in the first quarter increased 149% year-over-year to $2.5 million, despite continued supply chain issues impacting our ability to fulfill all immediate orders. Our revenue growth was driven by continued success in the education channel with our Twist & Go products, and also by an uptick in our single-serve and bulk products as we enter into the spring selling season and continue to see more and more of those customers re-engage with us following a hiatus from the pandemic. It's encouraging to see these customer segments start to improve, and more importantly, as we enter the upcoming quarter, that we see a greater return of our single-serve and bulk customers.
Firstly, because they are a higher margin product and will help offset the pressure from the supply chain. Secondly, because our education channel slows down in the second quarter with the school year coming to an end. Our diverse customer mix also helps to offset that seasonality. Additionally, we have been expanding our customer base driven by our strong product adoption and increased size of our sales team. We have continued to expand our footprint with new school locations as we tackle the massive opportunity in the United States with over 98,000 schools and 14,000 school districts. You can expect a number of new school announcements from us as we enter the new 2022-2023 school year.
We also have a number of distributors in our pipeline that we are building relationships with, similar to the one we announced earlier this year with G&J Pepsi-Cola Bottlers. As was also the case in the fourth quarter, our entire industry continued to face unparalleled supply constraints this quarter that included raw material shortages, increased labor and packaging costs, and elevated transportation costs. These costs impacted our ability to fully service all our clients and impacted our margins in the first quarter. As we enter the second quarter and look to the back half of the year, we believe we have initiatives in place to offset the majority of these issues. These initiatives include freight and ingredient optimization, packaging and equipment improvements, and price increases that went into effect at the end of the first quarter across a broad range of our products and customers.
We remain confident that the strong sales growth we are projecting, matched with the initiatives we are continuing to implement to offset cost pressures, will allow us to achieve more record sales quarters and improve margins in the back half of this fiscal year. I'll now turn the call over to our CFO, Lisa Roger, to talk about the first quarter results in more detail. Lisa.
Thank you, Riccardo. Revenue for the first quarter of 2022 increased 149% to $2.5 million compared to $1 million for the same period last year. As Riccardo mentioned, we achieved year-over-year revenue growth despite our inability to fulfill all orders. The year-over-year increase in revenue is the result of increased orders for our Twist & Go product in the school channel, as well as the gradual return in sales of our single-serve and bulk products. We believe the second quarter top line will be comparable to the first as we will be entering a seasonally light selling quarter for our education channel. While seeing progress, we are still gradually ramping up with our single-serve and bulk customers. However, we believe the back half of the year will be strong and expect to achieve record revenue growth for the full year 2022.
Gross margins for the first quarter of 2022 were 32% compared to 34% for the same period last year. The decline in gross margins was due to higher raw material and packaging costs, as well as higher sales volume and product mix for our lower margin Twist & Go products. We expect gross margins to improve in the back half of 2022 as the pricing and other cost savings initiatives in various stages of implementation go into effect, and as more customers of our higher margin single-serve and bulk products reengage with us. Our net loss for the first quarter of 2022 was $0.9 million as compared to a net loss of $0.6 million in the first quarter of 2021.
G&A expenses for the first quarter of 2022 increased to $1.5 million compared to $0.8 million in the same period last year. The increase in G&A was driven by a significant increase in personnel costs compared to the pullback we had in this area in the COVID-19 affected quarter last year, as well as an increase in shipping and storage costs from the increase in revenue, coupled with the unprecedented market price and labor shortages in the quarter. For the first quarter of 2022, our adjusted EBITDA was a loss of $547,000 as compared to a loss of approximately $437,000 for the same period last year. Adjusting for the increase in revenue, shipping and storage costs impacted adjusted EBITDA by approximately $80,000, and the decline in gross margins had a $60,000 impact.
Personnel costs increased by approximately $190,000. We believe more than half of these cost increases will be offset by the price increase implemented at the end of the first quarter, with the remaining costs offset by the other savings initiatives we are implementing. Now moving to our balance sheet. As of March 31, 2022, we had approximately $4.5 million of cash and $900,000 of inventory on our balance sheet compared to $5.7 million of cash and $700,000 of inventory as of December 31, 2021. Now I will turn the call back to Riccardo for closing remarks.
Thank you, Lisa. We are pleased that Q1 has set a new baseline revenue number for the company, especially given that Q1 is traditionally the lowest revenue quarter of the year. Given the industry-wide supply challenges that we have not been immune to, I believe we are well positioned to manage through them and will exit this fiscal year with an improved top and bottom line. Q1 sales alone were approximately 40% of all of 2021 full year sales and will continue to grow. We are entering the spring and summer quarters where we expect a greater return of our pre-COVID customers. We continue to work on cost and efficiency improvements. We are continuing to work on strategic partnerships. We now have a near full team on board, and we expect to finish the year with strong improvements to both our top and bottom line.
I believe we are off to a successful start to the year, and we are just beginning to hit our stride as a company. Now with that, let's take your questions. Operator.
Thank you very much, sir. Ladies and gentlemen, we will now be conducting a question and answer session. If you'd like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two 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. Ladies and gentlemen, again, if you wish to ask a question, please press star and then one. Our first question is from Anthony Vendetti of Maxim Group. Please go ahead.
Thanks. So a couple of questions, Riccardo. You know, you signed the agreement with the distribution with Pepsi bottlers. Any other independent Pepsi bottlers are you having discussions with? Any others sign up since last quarter? Can you talk a little bit about how that distribution's going with the first one?
Yeah, that one's just getting started. I mean, it has been, you know, only 6 weeks, 5 or 6 weeks since we last kind of got together. It's progressing. We are in conversations with others.
Okay. I know you're looking at convenience stores. Where are you in the potential move into the supermarket channel? Is that still early stage or is that planned?
Yeah. It is still early stage. We've got a lot of white space in front of us. As you can kind of, you know, see, we've been dealing with some of the supply chain challenges, the same as everybody else. We've made a lot of changes and improvements, and we continue to look for ways to make further improvements. Even the price increase that we provided was really at the end of the first quarter, so we didn't get the maximum impact for that. You know, as it relates to the grocery product, it is still in the works and just a little bit earlier than what we would have hoped.
Okay. You know, obviously, supply chain issues, raw material inflation impacts your cost of goods sold. You mentioned you've been able to implement price increases. Have the price increases been able to completely offset your input costs, partially offset? What's been the response from clients? Any pushback, or have they said that makes sense, you know, everyone is seeing price increases?
Yeah, good question. Mixed bag all around. We haven't been able to fully offset the cost increases with the price increase. We were never intending to do so. We are, you know, and we also did implement that price increase at the end of the first quarter, but we do expect between the price increase and some of the other initiatives that we have underway, it will probably more than offset. It will actually more than offset the cost increases. The silver lining from what's kind of happened in the marketplace is that it's really forced us to do a deep dive on our costing structure.
I think that, by the time we're finished, it's gonna end up yielding some very positive results for the company, from what we have underway.
Just to dig a little further, you said a mixed bag. The clients that are pushing back, what's been their concern? Obviously, the price increase is the concern, but what's been the pushback? Are they saying if there's gonna be too much of a price increase, they're gonna go elsewhere, or they're not able to absorb it because they don't think they can pass it along themselves? I mean, I'm just trying to understand what the.
Yeah. For the most part, it's been, hasn't been an issue. It really hasn't. You know, there are the occasional accounts, just like anything, where you know, you hit a little bit of a resistance or maybe it's just price increase fatigue because it's not just us, right? It's everybody that's giving price increases. I think for the balance and the vast majority, it really hasn't been an issue, and we've been able to take price pretty easily, actually.
Okay, good. Excellent. I'll hop back in the queue.
Thanks.
Thank you very much. The next question is from William Gregozeski of Greenridge Global. Please go ahead.
Hey, guys. You mentioned that you're seeing the old single-serve and bulk customers coming back online. Can you roughly quantify, I mean, what % of the ones you have sent product to in the past are taking product again now?
That's a good question. We're really just starting to see the orders coming through, and the engagement has definitely ticked up. I would probably say we're maybe at, like, the 70 mark. But it's still pretty early in the spring. As we get deeper into the summer, you know, and later into the spring, I think that'll continue to improve. It's just started, and it's been great to actually see not only the orders have been picking up, but there's actually been a fair amount of outreach from customers seeking us out and seeking the product again, even where maybe in some territories where distribution's dropped off because people had closed down or what have you, and they're still seeking us out through new distributors or some of our other distributors or even direct.
I would say we're probably at about a 70 mark right now, but it's definitely growing.
Okay. Is that about the same in the military channel?
Yeah, very similar actually. The military is probably a little bit further along, or it's coming back a little bit more because they seem to be turning on all at once. They did have a little bit of a close down when we had that COVID spurt at the end of the year.
Okay. You've mentioned in the past that, you kno w, you could have had more sales if you had more product. How are you guys doing with, you know, getting enough to send out to customers that want the product?
Yeah, great. That's a great question. We've, you know, we've really been doing an enormous amount of work on our supply chain, both capacity, production capacity with co-packers as well as ingredient sourcing, you know, alternative suppliers, as well. We have opened up the additional capacity, so we've solved that capacity issue. We've also located and sourced additional vendors for products that have now closed the gap for what we see as, you know, at least the balance of the year in the foreseeable future now. We have taken a look at all those critical and high risk ingredients and put contingency plans in place, as well as contracts. We feel very good about where we're at right now with both the ingredient sourcing and the capacity.
We've got some additional initiatives that are in the pipeline right now that's going to only further enhance that and also contribute to lowering our cost of goods.
All right. Great. Thanks.
These issues have forced us to take a hard look at the business, and it's going to yield an incredibly positive result for us.
Thanks, Riccardo.
Thanks very much.
Thank you very much. Ladies and gentlemen, again, if you wish to ask a question, please press star and then one to join the queue. We will pause a moment to see if we have any further questions. Thank you. Ladies and gentlemen, we have reached the end of our Q&A session. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.