v3.26.1
Segment Reporting
 6 Months Ended
Jun. 30, 2026
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.

 

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 three and six months ended June 30, 2026 and 2025:

  

   2026   2025   2026   2025 
   For the Three Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2026   2025   2026   2025 
                 
U.S. operations segment sales  $4,458,271   $3,274,946   $7,065,066   $6,445,809 
                     
U.S. operations segment cost of goods sold   169,405    704,887    770,797    1,563,839 
U.S. operations segment expenses:                    
General and administrative   1,069,116    539,941    1,541,052    1,052,347 
Salaries and wages   364,989    266,570    729,479    503,591 
Professional fees   216,172    276,588    414,846    443,210 
Total U.S. operating expenses  $1,650,277   $1,083,099   $2,685,377   $1,999,148 
Other income   29,768    -    29,768    - 
U.S. operations segment EBITDA  $2,688,357   $1,486,960   $3,638,660   $2,882,822 
                     
Latin American operations segment cost of goods sold  $3,943,024   $1,883,021   $5,339,766   $3,464,887 
Latin American operations segment expenses:                    
General and administrative   601,596    496,020    1,222,423    610,125 
Salaries and wages   105,108    92,522    200,790    165,718 
Professional fees   32,224    46,474    57,593    114,886 
Total Latin American operating expenses   738,928    635,016    1,480,806    890,729 
Latin American operations segment EBITDA  $(4,681,952)   (2,518,037)  $(6,820,572)  $(4,355,616)
Consolidated EBITDA  $(2,013,595)   (1,031,077)  $(3,181,912)  $(1,472,794)
                     
Reconciliation of net earnings before income tax expense:                    
Consolidated EBITDA  $(2,013,595)  $(1,031,077)  $(3,181,912)  $(1,472,794)
Depreciation and amortization expense   (249,017)   (200,494)   (457,018)   (399,924)
Interest income   59    6,600    1,808    11,736 
Interest expense   (184,551)   (301,112)   (359,454)   (579,459)
Stock compensation expense   (272,932)   (77,073)   (515,744)   (81,097)
Consolidated net loss before income tax expense  $(2,720,036)  $(1,603,156)  $(4,512,320)  $(2,521,538)