BranchOut Food Inc. 10-K

ITEM 1. BUSINESS Overview BranchOut Food Inc., (collectively with its subsidiary, “BranchOut,” the “Company,” “we,” “us” or “our”), is a growth-stage 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. We were originally incorporated as AvoChips Inc., an Oregon corporation, on February 21, 2017. On November 2, 2017, AvoChips Inc. converted into Avochips, LLC, an Oregon limited liability company and on November 19, 2021, Avochips, LLC converted into a Nevada corporation named BranchOut Food Inc. BranchOut is headquartered in the U.S. with a 50,000 square foot manufacturing facility located in Pisco, Peru (the “Peru Facility”). The Peru Facility is strategically located near key agricultural regions, enabling harvest-driven seasonal sourcing of high-quality fruits and vegetables—including pineapple, banana, strawberry, avocado and apple—while reducing transportation time and costs and supporting product freshness. We utilize proprietary GentleDry™ technology to convert fresh fruits and vegetables into clean-label snacks and industrial ingredients within approximately 10 days. GentleDry™ is an advanced dehydration platform licensed exclusively to us from EnWave Corporation for certain fruits and vegetables, enabling the production of differentiated products that preserve taste, texture, color, and nutrients while improving process speed, energy efficiency, and oxidation control. The GentleDry™ technology is protected by more than 17 patents. We are focused on expanding distribution, increasing production capacity, and developing new products intended to drive repeat consumer demand and scalable retail placement. We emphasize continuous improvement across product formulation, texture, flavor, and quality, while leveraging process innovation to deliver clean-label products at competitive price points that support broad distribution across national retail platforms. Products We develop, manufacture, and market dehydrated fruit and vegetable products using our proprietary GentleDry™ technology. Our products are primarily sold through three channels: branded retail snack products, private label products for major retailers, and fruit and vegetable ingredients sold to food manufacturers. These products are manufactured at the Peru Facility in Pisco, Peru. BranchOut Branded Snacks We market a line of plant-based snack products under the BranchOut brand. These products consist primarily of dehydrated fruit and vegetable snacks designed to retain the natural color, flavor, and texture of the underlying produce. Many of the products are made from single-ingredient fruits or vegetables with minimal additional seasoning. Current branded snack products include: ● 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 ● Carrot Sticks, with Sea Salt Our products are produced using our licensed GentleDry™ dehydration technology, which removes moisture while preserving the natural characteristics of the fruit or vegetable. The resulting products are shelf-stable and designed to provide a crunchy or chewy texture depending on the product format. BranchOut branded snacks are sold through multiple distribution channels including retail grocery stores, club stores, online retailers, and our direct-to-consumer e-commerce platforms. 2 Private Label Products In addition to its branded products, we manufacture fruit and vegetable products for major North American retailers on a private label basis. These products are sold under the retailer’s brand and distributed through the retailer’s existing grocery and club store channels. Private label offerings currently include products such as dehydrated prunes, carrots, brussels sprouts, and raisins, as well as other fruit and vegetable snack formats requested by retail customers. Private label manufacturing allows us to leverage our Peru Facility capacity and technology while expanding relationships with large retail partners. Industrial Ingredients We also produce dehydrated fruit and vegetable ingredients for use by food manufacturers in a variety of consumer packaged goods applications. These ingredients may be used in products such as cereals, snack bars, baked goods, salads, ready-to-eat meals, and other packaged foods. Our ingredient products include dehydrated fruit and vegetable pieces, fragments, powders, and inclusions derived from products such as: ● Banana ● Mango ● Blueberry ● Pineapple ● Cherry Tomato ● Avocado ● Other fruits and vegetables We have entered into a commercial collaboration with MicroDried, a supplier of premium dried fruit ingredients, to support the marketing and distribution of certain ingredient products produced at the Peru Facility. Products in Development We continue to develop additional fruit and vegetable snack products and ingredient formats for both branded and private label customers. Product development efforts are focused on expanding our snack portfolio, supporting private label programs for large retailers, and developing new ingredient applications for food manufacturers. From time to time, we engage with potential commercial partners and institutional customers to develop products tailored to specific applications. Macroeconomic Environment We operate within a global macroeconomic environment that includes agricultural sourcing, manufacturing, regulatory compliance, and cross-border logistics. Our manufacturing operations are located in Peru, where we source fruits and vegetables and manufacture products for export to the United States. Upon entry into the United States, our products are subject to U.S. Customs and Border Protection requirements, U.S. Food and Drug Administration regulations, and applicable trade and tariff policies. International shipping conditions—including freight availability, transit times, fuel costs, port congestion, and broader global trade dynamics—may impact logistics costs, delivery schedules, and inventory levels. Operating in Peru requires compliance with local tax, labor, customs, and regulatory frameworks administered by the Peruvian government, including oversight by the Peruvian tax authority (SUNAT). These requirements govern manufacturing operations, tax compliance, and export documentation and may affect operating timelines, administrative processes, and working capital needs. We monitor macroeconomic conditions, regulatory environments, and global trade dynamics to manage supply-chain execution, control costs, and maintain continuity of operations. While these factors introduce operational complexity, management believes its experience navigating cross-border manufacturing and logistics supports scalable growth within the current global trade environment. Consumer Packaged Foods Industry The United States consumer packaged foods (“CPG”) industry is large and highly competitive, with snacking representing a significant and growing portion of consumer food spending. U.S. CPG industry is approximately $1.5 trillion to nearly $2 trillion annually reflecting continued demand for convenient food options. Within CPG snacking, consumer preferences have been shifting toward “better-for-you” offerings that emphasize simple, recognizable ingredients, reduced sugar, and clean-label claims. Demand continues to grow for snacks that prioritize natural ingredients and minimal processing, reflecting consumer focus on transparency and health-oriented choices. Better-for-you snack categories continue to attract innovation and shelf space as consumers seek convenient options aligned with plant-forward and clean-label preferences. The global better-for-you snacks market is estimated at approximately $50.4 billion in 2024, with the U.S. characterized by significant product innovation and demand for snacks made with natural and organic ingredients. 3 At the same time, the competitive environment continues to evolve as retailers expand their private-label assortments and compete on value and quality. U.S. private-label sales reached a record $282.8 billion in 2025, indicating sustained retailer and consumer adoption of store-brand products across categories, including food. Our Strategy BranchOut is focused on executing a growth-stage strategy that balances product innovation, distribution expansion, and disciplined manufacturing scale-up. As a manufacturing-led business, our strategy emphasizes aligning customer growth and product development with production capacity, supply-chain execution, and cost control. Key elements of our strategy include: ● Driving revenue growth through customer onboarding and product expansion , by developing new snack and ingredient products designed to generate repeat consumer demand and support scalable retail and foodservice placement. ● Expanding distribution channels across national and regional retail, club, grocery, and private-label platforms to increase product availability while maintaining disciplined customer and channel selection. ● Scaling manufacturing utilization and capacity , with a focus on achieving high utilization at our Peru Facility while investing in incremental capacity expansion to support anticipated demand, operational efficiency, and margin improvement. ● Maintaining operational discipline during scale-up , including production planning, inventory management, quality control, and supply-chain coordination, to support consistent product quality, reliable fulfillment, and cost management as volumes increase. Management believes that this growth-stage, manufacturing-focused approach allows us to compete effectively by pairing differentiated products with scalable operations, while managing the complexity and execution demands inherent in expanding within the consumer-packaged foods industry. Distribution Channels and Customers We sell our products primarily through large national retail customers in the United States, including Costco and Walmart, with additional limited sales through private-label and ingredient customers. Sales to these customers are generally made pursuant to purchase orders and program-based arrangements rather than long-term volume commitments Products are manufactured at our Peru Facility and exported to the United States for distribution through national retail channels, and our direct-to-consumer e-commerce platforms. A substantial portion of our net sales is derived from a limited number of customers, and changes in purchasing patterns, pricing terms, or distribution decisions by these customers could materially affect operating results. Competition We operate in a competitive segment of the consumer-packaged foods industry focused on fruit- and vegetable-based snacks and ingredients. We compete with established food manufacturers, emerging better-for-you snack brands, and private-label suppliers, many of which have greater financial, marketing and distribution resources than we do. Competition in this industry is based on product quality, price, brand recognition, ingredient transparency, innovation, and the ability to secure and maintain retail shelf space. Some competitors may have longer operating histories, larger scale facilities, broader product lineups, or established relationships with major retailers, which could result in competitive pressures on pricing and market share. We compete through product differentiation, including the development of clean-label, minimally processed products that preserve taste, texture, and nutritional attributes. Our manufacturing platform enables us to produce differentiated formats and textures that are not widely available through conventional processing methods. In addition, we focus on innovation across our BranchOut-branded, private-label, and industrial ingredient channels, working with customers to develop products tailored to specific category needs. We also seek to compete through operational execution, including consistent product quality, reliable supply, and responsiveness to customer requirements. Seasonality Our operating model is influenced by the seasonality of agricultural harvest cycles for certain fruits and vegetables and by seasonal shifts in consumer demand and retailer purchasing patterns. These factors can affect the timing and cost of raw material sourcing, production scheduling, and finished goods inventory levels. To manage these dynamics, we seek to optimize production planning and inventory management, including producing higher volumes during periods of peak raw material availability and leveraging the shelf-stable nature of our products to support customer demand throughout the year. As a result, quarterly operating results may fluctuate based on the timing of harvest cycles, production runs, customer orders, and promotional activity. 4 Intellectual Property Our product differentiation and manufacturing processes are supported by proprietary technology developed and licensed for use in producing our snacks and ingredient products. BranchOut uses proprietary GentleDry™ technology under an exclusive license agreement with EnWave Corporation, that is critical to our manufacturing process. The GentleDry™ platform is protected by more than 17 patents in multiple jurisdictions, and we also maintain confidentiality and operational controls to protect trade secrets and know-how related to our product formulations, process parameters and quality protocols. While we believe these intellectual property rights and licensed technologies are important to our competitive position, there can be no assurance that they will not be challenged, circumvented, invalidated or infringed upon by competitors. Employees and Operating Partners Our operations are supported by an international workforce, with approximately 98% of our employees based in Peru supporting manufacturing and supply-chain activities. We believe our employees and operating partners are critical to execution, product quality, and long-term growth, and we seek to foster a safe, respectful, and collaborative working environment across our operations. At our Peru Facility, we must comply with applicable labor, employment, and workplace safety regulations and provide access to health, safety, and wellness resources consistent with local standards and practices. We emphasize workforce stability, training, and operational continuity and maintain relationships with local partners and service providers to support our manufacturing and logistics activities. We consider employee health and safety to be core operational priorities and maintain policies and procedures designed to promote safe working conditions at our manufacturing facility. Supporting employees and partners through responsible employment practices and operational discipline contributes to product quality, supply-chain reliability, and long-term business performance. Corporate Sustainability and Social Responsibility We are committed to responsible operational and sourcing practices as integral components of our operations. The proprietary dehydration technology promotes efficient use of agricultural produce, reduced food waste, and lower energy consumption while preserving key product attributes. Our manufacturing facility in Pisco, Peru is strategically located within regions that support agricultural production, enabling efficient sourcing and fostering relationships with local agricultural communities. Government Regulation Our operations are subject to regulation by U.S. federal, state, and local authorities, as well as foreign regulatory agencies in the jurisdictions in which we operate. In the United States, we are regulated by the Food and Drug Administration (“FDA”) under the Federal Food, Drug, and Cosmetic Act, as amended by the Food Safety Modernization Act (“FSMA”), which governs the manufacturing, processing, packaging, labeling, storage, and safety of food products, including imported foods. FSMA emphasizes preventive food safety controls and enhanced oversight of foreign food facilities supplying the U.S. market. We maintain food safety and quality systems designed to comply with applicable FDA and FSMA requirements and monitors regulatory developments to support continued compliance. Our products are also subject to regulation by the United States Department of Agriculture (“USDA”) and U.S. Customs and Border Protection in connection with the importation of agricultural and food products into the United States. In addition, our manufacturing operations in Peru are subject to applicable local laws and regulations governing food production, labor, tax, and export requirements. We believe we are in material compliance with applicable food safety, labeling, and import regulations; however, changes in regulatory requirements, enforcement practices, or trade policies could affect operating costs, supply-chain execution, or administrative complexity. Principal Executive Offices Our principal executive offices are located at 205 SE Davis Ave., Suite C, Bend, Oregon 97702. Our telephone number is (844) 263-6637. Employees As of December 31, 2025, we had approximately 314 full-time employees, including 308 employees in Peru. Our employees are not represented by labor unions. We consider our relationship with our employees to be positive. 5