v3.26.1
Segment Reporting
 12 Months Ended
Dec. 31, 2025
Segment Reporting [Abstract]  
Segment Reporting

Note 17 – Segment Reporting

 

The Company is a consumer-packaged foods company focused on developing, manufacturing, marketing, and distributing clean-label, plant-based dried fruit and vegetable snacks for retail and foodservice markets through BranchOut-branded products, private-label offerings, and industrial ingredient sales. In accordance with ASC 280, Segment Reporting, the Company has identified two operating and reportable segments based on how its Chief Executive Officer, who serves as the Chief Operating Decision Maker (“CODM”), evaluates performance and allocates resources:

 

●United States Operations – includes all sales, marketing, distribution, and customer relationships. This segment generates substantially all of the Company’s consolidated revenue through sales to retail customers, distributors, and e-commerce platforms within the United States.
●Latin American Operations – includes the Company’s production and manufacturing activities, including its dehydration facility in Pisco, Peru, and related production support functions.

 

Segment Structure and Operations

 

The Company’s United States Operations segment is responsible for revenue generation and customer engagement, while the Latin American Operations segment supports these activities through the manufacture of finished goods and production of ingredient products. All revenue is generated within the United States, and the Latin American Operations segment does not generate external revenue. Instead, it operates as an internal production function, with costs reflected in cost of goods sold and operating expenses.

 

The Company manages these segments separately due to differences in function, cost structure, and geographic location. The United States Operations segment is focused on sales growth, distribution expansion, and brand development, while the Latin American Operations segment is focused on production efficiency, capacity utilization, and cost management.

 

 

CODM Evaluation and Measure of Profit or Loss

 

The CODM evaluates segment performance and allocates resources primarily based on segment earnings before interest expense, interest income, income taxes, stock compensation expense, impairment expense, and depreciation and amortization (“EBITDA”). Segment EBITDA is used by the CODM to:

 

●evaluate operating performance and efficiency,
●assess period-over-period results,
●compare actual performance to budgets and strategic targets, and
●determine capital allocation priorities across the business.

 

Segment Expenses

 

For the U.S. Operations segment, expenses include cost of goods sold from third party manufacturers for raisins and prunes as well as operating expenses such as general and administrative, salaries and wages, professional fees, and other selling and administrative costs.

 

For the Latin American Operations segment, expenses primarily include production-related costs, including manufacturing overhead, labor, facility costs, and other operating expenses associated with the Company’s production activities. During the year ended December 31, 2025, the Latin American Operations segment incurred significant costs associated with the ramp-up and operation of the Company’s Peru facility, which negatively impacted segment EBITDA.

 

Corporate-level expenses, including executive, finance, and administrative functions, are recorded within the U.S. Operations segment and are not allocated to the Latin American Operations segment for purposes of CODM evaluation.

 

Assets and Capital Expenditures

 

The CODM reviews asset information on a consolidated basis and does not evaluate assets by segment. Accordingly, asset information is not disclosed by reportable segment. Capital expenditures are primarily associated with the Latin American Operations segment, reflecting ongoing investment in manufacturing equipment, facility infrastructure, and production capacity.

 

Reportable Segment Information

 

The following table presents revenue, significant expenses, and segment EBITDA for the Company’s reportable segments, together with a reconciliation to consolidated net loss before income taxes for the years ended December 31, 2025 and 2024:

 

   2025   2024 
  

For the Years Ended

December 31,

 
   2025   2024 
         
United States operations segment sales  $13,724,563   $6,434,514 
           
United States operations segment cost of goods sold   2,834,229    5,480,874 
United States operations segment expenses:          
General and administrative   2,312,198    1,285,245 
Rent   49,590    52,727 
Salaries and wages   1,027,351    975,647 
Professional fees   960,855    800,564 
Total United States operating expenses  $4,349,994   $3,114,183 
United States operations segment EBITDA  $6,540,340   $(2,160,543)
           
Latin American operations segment cost of goods sold  $8,239,306   $- 
Latin American operations segment expenses:          
General and administrative   1,710,708    263,438 
Rent   158,826    187,486 
Salaries and wages   349,798    213,940 
Professional fees   181,657    200,493 
Total Latin American operating expenses   2,400,989    865,357 
Latin American operations segment EBITDA  $(10,640,295)  $865,357 
Consolidated EBITDA  $(4,099,955)  $(3,025,900)
Reconciliation of net earnings before income tax expense:          
Consolidated EBITDA  $(4,099,955)  $(3,025,900)
Depreciation   (616,581)   (171,843)
Interest income   19,400    14,156 
Interest expense   (780,595)   (863,231)
Stock compensation expense   (245,419)   (704,698)
Impairment of note receivable   (401,522)   - 
Consolidated net loss before income tax expense  $(6,124,672)  $(4,751,516)