Description of Branchout Food Inc's Business Segments
The company operates through two reportable segments as determined by its Chief Executive Officer, who serves as the Chief Operating Decision Maker (CODM): United States Operations and Latin American Operations. The United States Operations segment encompasses sales, marketing, distribution, and customer relationships, generating substantially all consolidated revenue through sales to retail customers, distributors, and e-commerce platforms within the United States. The Latin American Operations segment includes production and manufacturing activities, notably the dehydration facility in Pisco, Peru, along with related production support functions.
Revenue is generated exclusively within the United States; the Latin American Operations segment functions as an internal production unit without external revenue, with its costs reflected in cost of goods sold and operating expenses. The segments are managed separately due to differences in function, cost structure, and geographic location. The United States Operations segment focuses on sales growth, distribution expansion, and brand development, while the Latin American Operations segment emphasizes production efficiency, capacity utilization, and cost management.
The CODM evaluates segment performance and allocates resources primarily based on segment EBITDA, which excludes interest, taxes, stock compensation, impairment, and depreciation/amortization. Expenses for the United States Operations segment include cost of goods sold from third-party manufacturers for raisins and prunes, as well as operating expenses such as general and administrative costs, salaries, professional fees, and selling expenses. Latin American Operations expenses mainly consist of production-related costs, including manufacturing overhead, labor, facility costs, and other operating expenses. In 2025, the Latin American Operations segment incurred significant costs related to the ramp-up and operation of the Peru facility, which negatively affected segment EBITDA.
Corporate-level expenses are recorded within the United States Operations segment and are not allocated to Latin American Operations for CODM evaluation. The CODM reviews asset information on a consolidated basis and does not assess assets by segment. Capital expenditures are primarily associated with the Latin American Operations segment, reflecting ongoing investments in manufacturing equipment, facility infrastructure, and production capacity.
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