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BranchOut Food Inc.

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Business Summary

BranchOut Food Inc. is a growth-stage consumer packaged foods company specializing in developing, manufacturing, marketing, and distributing clean-label, plant-based dried fruit and vegetable snacks for retail and foodservice markets . The company operates within the U.S. consumer packaged foods (CPG) industry, which is estimated to be approximately $1.5 trillion to nearly $2 trillion annually . Within this market, the "better-for-you" snacks segment, emphasizing simple, recognizable ingredients, reduced sugar, and clean-label claims, is a significant and growing portion, estimated at approximately $50.4 billion in 2024 . The U.S. private-label sales also reached a record $282.8 billion in 2025 , indicating sustained retailer and consumer adoption of store-brand products, including food, which aligns with BranchOut's offerings.

BranchOut's core business model revolves around converting fresh fruits and vegetables into shelf-stable snacks and industrial ingredients using its proprietary GentleDry™ technology, licensed exclusively from EnWave Corporation . The company generates revenue through three primary channels: branded retail snack products under the BranchOut brand, private label products for major North American retailers, and fruit and vegetable ingredients sold to food manufacturers . The primary customer segments include large national retail customers in the United States, such as Costco and Walmart, with additional limited sales through private-label and ingredient customers .

The company's product portfolio includes BranchOut branded snacks such as Pineapple Chips, Simply Pineapple; Crunchy Strawberry Halves, 100% Strawberries; Organic Chewy Banana Slices, Simply Bananas; Chewy Banana Slices, Cinnamon Churro; Bell Pepper Crisps, with Sea Salt; and Carrot Sticks, with Sea Salt . These products are designed to retain natural color, flavor, and texture through the GentleDry™ dehydration technology . For private label offerings, the company manufactures products like dehydrated prunes, carrots, brussels sprouts, and raisins for major North American retailers . Additionally, BranchOut produces industrial ingredients such as banana, mango, blueberry, pineapple, cherry tomato, and avocado pieces, fragments, powders, and inclusions for food manufacturers . The GentleDry™ technology is protected by more than 17 patents .

For the fiscal year ended December 31, 2025, BranchOut reported net revenue of $13,724,563 , a significant increase from $6,434,514 in 2024 . Gross profit for 2025 was $2,034,447 , up from $781,797 in 2024 , with the gross margin improving to 14.8% from 12.2% . Operating expenses increased to $7,397,924 in 2025 from $4,684,238 in 2024 , leading to an operating loss of $5,363,477 compared to $3,902,441 in the prior year . The net loss for 2025 was $6,124,672 , an increase from $4,751,516 in 2024 . Basic and diluted net loss per common share improved to $(0.57) in 2025 from $(0.83) in 2024 . Cash used in operating activities increased to $6,999,712 in 2025 from $4,859,816 in 2024 . As of December 31, 2025, the company had cash of $616,278 , total liabilities of $8,887,985 , and an accumulated deficit of $23,686,729 . Working capital improved to a negative $584,240 from a negative $3,897,382 in 2024 .

The company's net revenue increased by $7,290,049, or 113% , in 2025 compared to 2024, primarily due to higher sales volumes to existing customers and new product introductions . Gross profit increased by $1,252,650 , and gross margin improved by 2.6 percentage points, reflecting increased internal manufacturing, changes in product mix, and logistics efficiencies . Operating expenses increased by $2,713,686 , driven by expanded commercial activities, higher administrative costs as a public company, and costs associated with scaling production at the Peru Facility . Notably, idle capacity expense, which was not measured in 2024, amounted to $1,201,233 in 2025 due to the Peru Facility operating below normal utilization . Research and development expense increased by 1,386% to $269,994 in 2025 from $18,175 in 2024 . Shipping and handling expenses increased by $173,900, or 38% , but at a lower rate than revenue growth due to improved bulk shipping arrangements . Advertising and promotions increased by $284,898, or 124% , due to expanded product distribution and new retail locations .

During 2024, BranchOut initiated an organizational realignment to transition from reliance on third-party manufacturers to in-house production at its 50,000 square foot manufacturing facility in Pisco, Peru . This realignment incurred aggregate costs of approximately $6.7 million from April 2024 through December 31, 2025, including $5.1 million in facility start-up costs, $1.2 million in idle capacity costs, and $0.4 million in professional fees . The company substantially completed this realignment as of December 31, 2025 . In 2025, the company repaid $1,200,000 of principal on the Kaufman Senior Secured Promissory Note and $1,560,000 of remaining principal outstanding under the Eagle Vision Senior Secured Notes . Warrants were exercised to purchase 1,504,844 shares of common stock, generating aggregate cash proceeds of $1,500,799 .

Business Outlook

BranchOut's near-term operating performance is expected to depend primarily on revenue growth, production scale, cost management, and capital availability . Management continues to focus on increasing production volumes, improving manufacturing efficiency, managing working capital, and supporting distribution expansion . While operating leverage may improve as production scales, the company remains dependent on external financing to support operations and working capital requirements . The company expects that existing cash balances and cash generated from operations will not be sufficient to fund operating requirements for at least the next twelve months, necessitating additional financing .

The company is driving revenue growth through customer onboarding and product expansion, developing new snack and ingredient products to generate repeat consumer demand and support scalable retail and foodservice placement . It is also focused on expanding distribution channels across national and regional retail, club, grocery, and private-label platforms . Product development efforts are concentrated on expanding the snack portfolio, supporting private label programs for large retailers, and developing new ingredient applications for food manufacturers . The company is working with certain large retail customers to develop new snack products with higher protein and fiber content, expected to incorporate combinations of fruit and high-protein dairy ingredients .

To support these new product initiatives, BranchOut incurred capital expenditures in the first quarter of 2026 to expand manufacturing capabilities at the Peru Facility, including the installation of additional dehydration capacity for high-protein dairy applications . This expansion is anticipated to increase production flexibility, enable manufacturing in an allergen-controlled environment, and support more efficient production processes . These new products are expected to be more efficient to produce than certain existing products, requiring less raw material preparation and yielding higher protein density after dehydration, which may contribute to improved gross margins as production volumes increase and products are commercialized .

The company's operational outlook includes scaling manufacturing utilization and capacity, with a focus on achieving high utilization at its Peru Facility and investing in incremental capacity expansion to support anticipated demand, operational efficiency, and margin improvement . Management expects reported gross margin to improve as the plant gains operating experience and throughput increases, with a greater portion of fixed manufacturing costs being absorbed into product costs, leading to a corresponding reduction in idle capacity expense . The company is also focused on improving demand forecasting, production planning, and supplier coordination to better align raw material sourcing with its production schedule and reduce reliance on higher-cost spot purchases .

Regarding capital allocation, subsequent to December 31, 2025, the company entered into an at-the-market issuance sales agreement to sell shares of common stock for aggregate gross proceeds of up to $1,500,000 . As of February 13, 2026, the company had issued and sold 500,000 shares of common stock under this agreement for aggregate gross proceeds of $1,499,873 . On January 28, 2026, BranchOut borrowed $1,500,000 from Kaufman Kapital LLC through a senior secured promissory note maturing on January 28, 2027, bearing interest at 8% per annum . Additionally, on February 10, 2026, the Compensation Committee approved the grant of stock options under the 2022 Plan to purchase an aggregate of 1,390,000 shares of common stock at an exercise price of $2.96 per share .

Management explicitly flagged several structural headwinds and execution risks to its growth plan. These include the inherent difficulty in forecasting demand due to customer purchases typically being made through purchase orders rather than long-term commitments, which can lead to revenue volatility . The company's relatively limited scale may also make it more vulnerable to supplier concentration risks, including reduced leverage in pricing negotiations, longer lead times, and greater sensitivity to vendor disruptions . Furthermore, the operating model requires a meaningful investment in working capital to support inventory for both existing orders and anticipated demand, with a long operating cycle of six to eight weeks from raw material sourcing to customer payment, creating timing differences in cash flow .

Geographic, regulatory, and macro factors identified as constraints include the risks associated with operating and manufacturing in Peru, such as political, economic, regulatory, currency, tariff, labor, and supply chain risks . International shipping conditions, including freight availability, transit times, fuel costs, and port congestion, may impact logistics costs and delivery schedules . The company is also subject to U.S. Customs and Border Protection requirements, U.S. Food and Drug Administration regulations, and applicable trade and tariff policies upon entry into the United States . Changes in tax laws, cross-border tax matters, or adverse tax determinations in the United States or Peru could materially adversely affect financial condition and results of operations .

Risk Factors

The company faces material risks including a history of losses and negative cash flows, with net losses of $6,124,672 in 2025 and an accumulated deficit of $23,686,729 , raising substantial doubt about its ability to continue as a going concern. The business requires significant working capital and may need additional capital through equity or debt financings, which may not be available on acceptable terms or could dilute existing stockholders . Customer concentration is a significant risk, with three customers accounting for approximately 96.8% of net revenue and 97% of accounts receivable in 2025 . All production is concentrated in a single facility in Pisco, Peru, making the company vulnerable to disruptions from equipment failure, labor issues, natural disasters, or political instability in Peru . Operating in Peru also exposes the company to risks related to political, economic, regulatory, labor, tax, infrastructure, and currency conditions, including foreign currency fluctuations where a significant portion of costs are in Peruvian soles and revenues in U.S. dollars . Agricultural supply, environmental conditions, and commodity volatility pose risks to costs, production, and margins due to dependence on raw materials subject to weather, climate variability, and crop disease . The company's reliance on licensed GentleDry™ technology from EnWave Corporation means limitations, disputes, or loss of exclusivity could materially harm the business . Cybersecurity incidents, including ransomware attacks, could disrupt operations, financial reporting, and compromise data . The company's Chief Financial Officer is not a full-time employee, which could impact financial management . Furthermore, the company has identified material weaknesses in internal control over financial reporting, including no formal control process for related party transactions, lack of a formal and complete set of policies and procedures, insufficient segregation of duties, and a lack of resources to evaluate complex accounting areas .

Management Priorities

Management's message to shareholders conveys a focus on executing a manufacturing-led growth model, emphasizing revenue growth, manufacturing scale, margin discipline, and liquidity management during the current growth and scaling phase. They explicitly state that near-term operating performance will depend primarily on revenue growth, production scale, cost management, and capital availability . Management continues to focus on increasing production volumes, improving manufacturing efficiency, managing working capital, and supporting distribution expansion . While operating leverage may improve as production scales, the company remains dependent on external financing to support operations and working capital requirements . Key strategic priorities include expanding distribution of existing retail customers, developing new customer relationships, and introducing new products to support increased sales volumes . They are also committed to increasing utilization at the Peru Facility and improving production efficiency , alongside managing logistics, production, and operating costs as production scales . Finally, maintaining access to capital and managing working capital to support operations during the scale-up phase is a critical priority .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Overview
  2. [2] Item 1, Business — Consumer Packaged Foods Industry
  3. [3] Item 1, Business — Consumer Packaged Foods Industry
  4. [4] Item 1, Business — Consumer Packaged Foods Industry
  5. [5] Item 1, Business — Overview
  6. [6] Item 1, Business — Products
  7. [7] Item 1, Business — Distribution Channels and Customers
  8. [8] Item 1, Business — BranchOut Branded Snacks
  9. [9] Item 1, Business — BranchOut Branded Snacks
  10. [10] Item 1, Business — Private Label Products
  11. [11] Item 1, Business — Industrial Ingredients
  12. [12] Item 1, Business — Overview
  13. [13] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  14. [14] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  15. [15] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  16. [16] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  17. [17] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  18. [18] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  19. [19] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  20. [20] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  21. [21] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  22. [22] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  23. [23] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  24. [24] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  25. [25] Item 8, Consolidated Statements of Operations and Comprehensive Loss
  26. [26] Item 8, Consolidated Statements of Operations and Comprehensive Loss
  27. [27] Item 7, MD&A — Cash Flow
  28. [28] Item 7, MD&A — Cash Flow
  29. [29] Item 7, MD&A — Liquidity and Capital Resources
  30. [30] Item 7, MD&A — Liquidity and Capital Resources
  31. [31] Item 7, MD&A — Liquidity and Capital Resources
  32. [32] Item 7, MD&A — Liquidity and Capital Resources
  33. [33] Item 7, MD&A — Liquidity and Capital Resources
  34. [34] Item 7, MD&A — Net Revenue
  35. [35] Item 7, MD&A — Net Revenue
  36. [36] Item 7, MD&A — Gross Profit
  37. [37] Item 7, MD&A — Gross Profit
  38. [38] Item 7, MD&A — Total Operating Expenses
  39. [39] Item 7, MD&A — 2025 Compared to 2024
  40. [40] Item 7, MD&A — General and Administrative Expense
  41. [41] Item 7, MD&A — General and Administrative Expense
  42. [42] Item 7, MD&A — General and Administrative Expense
  43. [43] Item 7, MD&A — General and Administrative Expense
  44. [44] Item 7, MD&A — Shipping and Handling
  45. [45] Item 7, MD&A — Shipping and Handling
  46. [46] Item 7, MD&A — Advertising and Promotions
  47. [47] Item 7, MD&A — Advertising and Promotions
  48. [48] Item 7, MD&A — Company Realignment
  49. [49] Item 7, MD&A — Company Realignment
  50. [50] Item 7, MD&A — Company Realignment
  51. [51] Item 7, MD&A — Company Realignment
  52. [52] Item 12, Note 12 — Kaufman Senior Secured Promissory Note, Related Party
  53. [53] Item 12, Note 12 — Eagle Vision Senior Notes and Warrants, Related Party
  54. [54] Item 13, Note 15 — Exercise of Warrants
  55. [55] Item 7, MD&A — Key Considerations Going Forward
  56. [56] Item 7, MD&A — Key Considerations Going Forward
  57. [57] Item 7, MD&A — Key Considerations Going Forward
  58. [58] Item 7, MD&A — Satisfaction of Cash Obligations for the Next 12 Months
  59. [59] Item 7, MD&A — Strategic Focus
  60. [60] Item 7, MD&A — Strategic Focus
  61. [61] Item 1, Business — Products in Development
  62. [62] Item 7, MD&A — Product Innovation and Manufacturing Capability Expansion
  63. [63] Item 7, MD&A — Product Innovation and Manufacturing Capability Expansion
  64. [64] Item 7, MD&A — Product Innovation and Manufacturing Capability Expansion
  65. [65] Item 7, MD&A — Product Innovation and Manufacturing Capability Expansion
  66. [66] Item 1, Business — Our Strategy
  67. [67] Item 7, MD&A — Scaling Production and Margin Progression
  68. [68] Item 7, MD&A — Supply Chain and Input Costs
  69. [69] Item 21, Note 21 — At-the-Market Offering
  70. [70] Item 21, Note 21 — At-the-Market Offering
  71. [71] Item 21, Note 21 — Debt
  72. [72] Item 21, Note 21 — Stock-Based Compensation
  73. [73] Item 1A, Risk Factors — We generally do not have long-term purchase commitments from customers, and demand forecasting is difficult.
  74. [74] Item 1A, Risk Factors — Our reliance on a limited number of key suppliers and service providers exposes us to supply chain concentration risk that could disrupt operations and adversely affect our business.
  75. [75] Item 7, MD&A — Working Capital and Cash Flow Dynamics
  76. [76] Item 1A, Risk Factors — Risks Related to Our Operating History, Financial Position, and Capital Structure
  77. [77] Item 1A, Risk Factors — International logistics and customs processes could increase costs and disrupt service levels.
  78. [78] Item 1, Business — Macroeconomic Environment
  79. [79] Item 1A, Risk Factors — Changes in tax laws, cross-border tax matters, or adverse tax determinations in the United States or Peru could materially adversely affect our financial condition and results of operations.
  80. [80] Item 1A, Risk Factors — We may require additional capital to fund operations and growth, and financing may not be available on acceptable terms or at all.
  81. [81] Item 12, Note 5 — Accounts Receivable, Net
  82. [82] Item 1A, Risk Factors — Our manufacturing operations are concentrated in a single facility in Peru, and any disruption could materially adversely affect our business, results of operations, and financial condition.
  83. [83] Item 1A, Risk Factors — We are exposed to risks associated with operating in Peru.
  84. [84] Item 1A, Risk Factors — Agricultural supply, environmental conditions, and commodity volatility could adversely affect our costs, production, and margins.
  85. [85] Item 1A, Risk Factors — Our business depends on licensed dehydration technology, and limitations, disputes, or loss of exclusivity could materially harm our business.
  86. [86] Item 1A, Risk Factors — Disruptions to our information technology systems or cybersecurity incidents could harm operations, financial reporting, and our business.
  87. [87] Item 1A, Risk Factors — Our Chief Financial Officer is not a full-time employee.
  88. [88] Item 9A, Controls and Procedures — Management’s Annual Report on Internal Control Over Financial Reporting

Analysis on 5/20/2026