BranchOut Food Inc.

Note 1 –Nature of Business

Nature of Business

BranchOut Food Inc., a Nevada corporation, together with its Peruvian subsidiary (collectively, “BranchOut,” the “Company,” “we,” “our” or “us”), is engaged in the development, marketing, sale and distribution of plant-based, dehydrated fruit and vegetable snacks and powders manufactured at a 50,000 square foot manufacturing facility leased by the Company in Pisco, Peru.

In April 2024, we formed BranchOut Food Sucursal Peru, our Peruvian wholly-owned subsidiary, to operate our manufacturing facility in Pisco Peru, which commenced operations in December 2024. Our products are produced using our advanced dehydration platform licensed exclusively from EnWave Corporation (“EnWave”) to create our private label, branded, and bulk wholesale products. We use proprietary GentleDry™ Technology optimized to preserve taste, texture, color, and nutrients. Our GentleDry™ Technology is protected by over 17 patents. Prior to operating our manufacturing facility, we relied on contract manufacturers.

Note 2 –Basis of Presentation and Summary of Significant Accounting Policies

Basis of Accounting

The accompanying financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the U.S. Securities and Exchange Commission (“SEC”). All references to GAAP are in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the GAAP hierarchy.

When preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the following entities, all of which were under common control and ownership at December 31, 2025:

(1)Holding company in the form of a corporation.

(2)Peruvian wholly-owned subsidiary of BranchOut Food Inc. in the form of a branch.

The consolidated financial statements herein contain the operations of the wholly-owned subsidiary listed above. The Company’s headquarters are located in Bend, Oregon.

Going Concern

As shown in the accompanying consolidated financial statements, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $23,686,729, and a working capital deficit of $584,240 as of December 31, 2025. The Company’s $616,278 of cash on hand at December 31, 2025 may not be sufficient to sustain operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Subsequent to December 31, 2025, the Company received gross proceeds of approximately $1.5 million from the sale of common stock through an at-the-market registered offering and borrowed a $1.5 million under a secured promissory note. Management is actively pursuing new customers to increase revenues. In addition, the Company is currently seeking additional sources of capital to fund short-term operations. Management believes these factors will contribute toward achieving profitability.

The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These consolidated financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities, that might be necessary should the Company be unable to continue as a going concern.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported net loss, total assets, total liabilities, stockholders’ equity, or cash flows, but affected the classification of certain amounts within the consolidated statements of operations.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Segment Reporting

Under ASC 280,Segment Reporting, operating segments are defined as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company has two components, consisting of its sales operations in the United States, and its production operations in Peru. Therefore, the Company’s Chief Executive Officer, who is also the CODM, makes decisions and manages the Company’s operations based on these two operating segments for the manufacture and distribution of its products.

Fair Value of Financial Instruments

ASC 820,Fair Value Measurements and Disclosures, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes between the following:

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Cash and Cash Equivalents

Cash equivalents include money market accounts which have maturities of three months or less. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. Cash equivalents are stated at cost plus accrued interest, which approximates market value. There wereno cash equivalents on hand on December 31, 2025 and 2024.

Cash in Excess of FDIC Insured Limits

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, under current regulations. The Company had $250,014 and $1,555,223 in excess of FDIC insured limits on December 31, 2025 and 2024, respectively, and has not experienced any losses in such accounts.

Research and Development

We operate in a fast-moving category shaped by shifting consumer preferences, requiring continuous innovation and new product development. To support this, we rely on our proprietary GentleDry™ Technology, an advanced dehydration platform licensed exclusively from EnWave. We expect to continue investing in R&D as we scale our GentleDry™ product portfolio and bring new, innovative offerings to market that align with evolving consumer needs.

Research and development costs include salaries, building costs, utilities, administrative expenses and other corporate costs. For the year ended December 31, 2025, our research and development expenses totaled $269,994, compared to $18,175 for the same period in 2024.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and impairment losses. The cost of property, plant and equipment is depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based on the following life expectancy:

Construction in progress consists of costs incurred on machinery, equipment, and facility improvements that have not yet been placed into service. These costs are not depreciated until the related assets are completed and placed into service, at which time they are reclassified to the appropriate property and equipment category and depreciation begins.

Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized, and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation are eliminated, and any resulting gain or loss is reflected in operations.

Impairment of Long-Lived Assets

Long-lived assets held and used by the Company are reviewed for possible impairment whenever events or circumstances indicate the carrying amount of an asset may not be recoverable or is impaired. Recoverability is assessed using undiscounted cash flows based upon historical results and current projections of earnings before interest and taxes. Impairment is measured using discounted cash flows of future operating results based upon a rate that corresponds to the cost of capital. Impairments are recognized in operating results to the extent that carrying value exceeds discounted cash flows of future operations.

We evaluate the recoverability of intangible assets periodically by considering events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. The Company expenses internally developed trademarks.

Derivatives

The Company evaluates convertible notes payable, stock options, stock warrants and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40,Derivative Instruments and Hedging: Contracts in Entity’s Own Equity.

The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date.

Cost of Goods Sold

Cost of goods sold includes the direct costs associated with the production and manufacture of the Company’s products. Production costs primarily consist of direct raw materials, direct labor, and manufacturing overhead. These costs are capitalized into inventory and recognized as cost of goods sold when the related products are sold.

Manufacturing overhead is allocated to inventory based on production capacity. Overhead costs include factory rent, utilities, depreciation, and other factory-related expenses. The Company allocates fixed manufacturing overhead to inventory based on the normal capacity of the production facilities in accordance with ASC 330, Inventory. Costs associated with abnormal levels of idle capacity or other abnormal production costs are expensed as incurred.

The Company periodically reviews production capacity and manufacturing overhead allocations to ensure that inventory costs reflect normal production levels.

Advertising and Promotions Costs

The Company incurs advertising and promotional costs related primarily to product demonstrations, trade shows, and other marketing activities intended to promote the Company’s products and brand awareness. Advertising and promotional costs are expensed as incurred and are included in selling, general and administrative expenses in the consolidated statements of operations.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Stock Compensation. Compensation expense for equity awards is measured at the grant-date fair value and recognized over the requisite service period, generally the vesting period of the award. The Company estimates the fair value of stock options using a valuation model that incorporates assumptions such as expected volatility, expected term, and the risk-free interest rate.

Foreign Currency Translation

The functional currency of the Company’s foreign subsidiary in Peru is the Peruvian sol. Assets and liabilities of foreign operations are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing during the period.

Translation adjustments resulting from this process are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity.

Transaction gains and losses resulting from foreign currency transactions denominated in currencies other than the functional currency are recognized in the consolidated statements of operations as incurred.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the periods in which the temporary differences are expected to reverse.

A valuation allowance is recorded to reduce deferred tax assets to the amount that management believes is more likely than not to be realized. In assessing the need for a valuation allowance, management considers all available positive and negative evidence, including historical operating results, expectations of future taxable income, and the reversal of existing taxable temporary differences. Due to the Company’s cumulative losses since inception, management has determined that it is more likely than not that the Company’s deferred tax assets will not be realized and has recorded a full valuation allowance.

The Company recognizes the financial statement benefit of a tax position only after determining that it is more likely than not that the position will be sustained upon examination by the relevant taxing authority based on the technical merits of the position. For tax positions meeting the more-likely-than-not recognition threshold, the amount recognized in the financial statements is the largest benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company evaluates uncertain tax positions on a periodic basis and has determined that there are no uncertain tax positions requiring recognition as of December 31, 2025 and 2024.

The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of income tax expense.

Basic and Diluted Net Loss Per Share

The Company computes basic net loss per common share by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding plus the effect of potentially dilutive common shares outstanding during the period using the treasury stock or if-converted methods, as applicable.

For the years ended December 31, 2025 and 2024, the inclusion of potentially dilutive securities would have been anti-dilutive due to the Company’s net loss; therefore, diluted net loss per share is the same as basic net loss per share.

Recently Issued Accounting Pronouncements

The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not discussed below were assessed and determined to be either not applicable to the Company or not expected to have a material impact on the Company’s consolidated financial statements.

Recently Adopted Accounting Standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments enhance reportable segment disclosure requirements, including expanded disclosures regarding significant segment expenses and information regularly provided to the chief operating decision maker used to assess segment performance. The Company adopted ASU 2023-07 during the year ended December 31, 2024. See Note 17 – Segment Reporting for additional information.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require enhanced income tax disclosures, including additional disaggregation within the effective tax rate reconciliation and disclosure of income taxes paid by jurisdiction. The Company adopted ASU 2023-09 during the year ended December 31, 2025. See Note 12 – Income Taxes for additional information.

Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), and in January 2025 issued ASU 2025-01, which clarified the effective date of ASU 2024-03. The amendments require public business entities to provide additional disclosures that disaggregate certain income statement expenses, including purchases of inventory, employee compensation, depreciation, amortization, and selling expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this guidance on its consolidated financial statement disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments introduce a practical expedient for estimating expected credit losses on current accounts receivable and contract assets arising from transactions accounted for under ASC 606. The guidance is effective for the Company beginning January 1, 2026, with early adoption permitted. The Company is currently evaluating the impact this update may have on its consolidated financial statements.

Note 3 -Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when control of promised goods transfers to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods. The Company generates revenue primarily from the sale of plant-based snack products and bulk-ingredient products to retailers and distributors, and to a lesser extent from direct-to-consumer sales through third-party e-commerce platforms. These arrangements typically contain a single performance obligation, which is the delivery of finished goods to the customer.

Revenue is recognized at a point in time when control of the goods transfers to the customer, which generally occurs upon delivery to the retailer or customer, or when title and risk of loss pass to the customer in accordance with the contractual shipping terms. Revenue is recorded net of variable consideration, including discounts, promotional allowances, returns, and other pricing adjustments. Estimates of variable consideration are recognized in the period the related revenue is recorded and are based on historical experience, contractual terms, and other relevant factors. These estimates are updated each reporting period as additional information becomes available.

The Company promotes its products through trade promotions and consumer incentive programs, including discounts, slotting fees, coupons, rebates, in-store display incentives, and volume-based incentives. These amounts are recorded as reductions of revenue as they represent variable consideration payable to customers or consumers and do not provide a distinct good or service to the Company.

The Company has elected the practical expedient under ASC 606 to treat shipping and handling activities performed after control of goods transfers to the customer as fulfillment activities rather than separate performance obligations. Accordingly, shipping and handling costs are recorded within selling expenses in general and administrative expenses in the consolidated statements of operations.

Payment terms are generally established in contracts or purchase orders with customers.

Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenue as follows:

Note 4 –Inventories

The Company’s products consist of pre-packaged and bulk dried fruit and vegetable-based snacks, powders, and ingredients developed at its manufacturing facility in Peru, as well as products purchased from contract manufacturers in Chile and Peru. Raw materials consist primarily of purchased fruits, vegetables, and packaging materials. Inventory, consisting of raw materials, work in process, and finished goods, is stated at the lower of cost or net realizable value using the weighted-average cost method. Cost includes direct materials, direct labor, manufacturing overhead, packaging, tariffs, and inbound freight necessary to bring products to their present condition and location.

Manufacturing overhead includes indirect labor, factory rent, utilities, depreciation, and other factory-related costs and is allocated to inventory based on the normal production capacity of the facility. Abnormal amounts of idle facility expense, freight, handling costs, or spoilage are expensed as incurred and are not capitalized into inventory. The Company evaluates inventory for excess quantities, obsolescence, deterioration, and other factors in assessing net realizable value. Inventory that is determined to be obsolete or expired is written off in the period in which it is identified.

Inventories at December 31, 2025 and December 31, 2024 consisted of the following:

The Company secures certain raw materials through advance payments to suppliers of up to 50%. The Company had advances on inventory purchases for raw material in the amounts of $561,160 and $123,792 as of December 31, 2025 and December 31, 2024, respectively.

Note 5 –Accounts Receivable, Net

Accounts receivable are stated at their estimated net realizable value. The Company evaluates the collectability of trade receivables on an ongoing basis and establishes an allowance for doubtful accounts as needed based on a combination of factors, including historical collection experience, the financial condition of customers, specific account reviews, and current economic conditions. Management believes the allowance for doubtful accounts is adequate to cover expected credit losses. The allowance for doubtful accounts was $25,586 at both December 31, 2025 and December 31, 2024.

The Company has certain customers whose revenue or accounts receivable balances individually represent 10% or more of total net revenue or total accounts receivable, respectively. For the year ended December 31, 2025, three customers accounted for approximately 96.8% of net revenue and 97% of accounts receivable. For the year ended December 31, 2024, two customers accounted for approximately 99% of net revenue and 90% of accounts receivable.

Note 6 –Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following as of December 31, 2025 and December 31, 2024:

Note 7 –Property and Equipment

Property and equipment consisted of the following as of December 31, 2025 and December 31, 2024:

Depreciation of property and equipment was $616,581 and $205,907 for the years ended December 31, 2025, and 2024, respectively. Depreciation expense related to manufacturing equipment is included in inventory and recognized in cost of goods sold as the related inventory is sold.

The Company leases a manufacturing facility located in Pisco, Peru, which is accounted for as an operating lease (see Note 11). The lease includes a purchase option that allows the Company to acquire the facility at the end of the lease term. During 2024, the landlord of this facility entered bankruptcy proceedings.

To protect its long-term strategic interests, the Company purchased the first mortgage position on the facility and continues to hold its contractual purchase option under the lease. Management currently intends to acquire ownership of the facility either (i) through the landlord’s bankruptcy settlement process or (ii) by exercising the purchase option at the end of the lease term, although there can be no assurance that the Company will be successful in this regard. The Company accounts for the facility as a leased asset. The first mortgage position is included on the balance sheet in other assets of $1,267,000 as of December 31, 2025 and December 31, 2024 (see Note 8). As of December 31, 2025, the $1,267,000 balance has been paid in full. The Company capitalizes leasehold improvements related to the buildout of the facility, which expanded the Company’s production capacity.

Note 8 –Other Assets and Other Receivable

Other Assets

The Company has other assets of $1,267,000 as of the years ended December 31, 2025, and 2024, consisting of the first mortgage position (the “FPM”) on the manufacturing facility it leases in Pisco, Peru, which the Company acquired to protect its long-term strategic interests (see Note 11). During 2024, the landlord of the leased facility entered bankruptcy proceedings.

On May 10, 2024, the Company made the first payment of $275,000 toward the FPM. The FPM is secured by the facility in Peru. Payments were made in various installments totaling $355,000 as of December 31, 2024, and $912,000 during the year ended December 31, 2025.

Other Receivable

The Company’s Peruvian operations are subject to an 18% value-added tax (“VAT”) or (“Impuesto General a las Ventas” or “IGV”) on substantially all purchases and exports of goods and services. IGV paid on purchases can be offset against IGV collected on exports, with the net amount either remitted to, or recovered from, the Peruvian tax authority (SUNAT) through a refund claim. IGV does not represent an expense of the Company when recoverable and is recorded as an asset until applied or refunded. The receivable is recoverable from the Peruvian tax authority as a result of the Company’s export activities. Management evaluates the recoverability of the VAT receivable based on historical refund experience and believes the balance is fully recoverable.

As of December 31, 2025, the Company’s Peruvian operations had paid more IGV on purchases than it had collected on sales, resulting in a net IGV receivable of $1,114,758, of which $679,626 is classified in Other Current Assets (see Note 6). During the year ended December 31, 2025, the Company received payments from SUNAT, in the amount of $541,573.

Note 9 –Notes Receivable

Nanuva Note Receivable

On February 4, 2021, the Company entered into a Manufacturing and Distributorship Agreement (“MDA”) with Natural Nutrition SpA, a Chilean company (“Nanuva”). In connection with the MDA, the Company advanced $500,000 to Nanuva (the “Advance Payment”) to assist Nanuva in financing capital investments required to purchase two EnWave REV™ 10 machines used to produce products for the Company. The Advance Payment is evidenced by a promissory note bearing interest at 3% per annum on the outstanding principal balance. The note is collateralized by a second lien on the equipment purchased by Nanuva. The MDA expires on May 31, 2027, with automatic annual renewals thereafter unless terminated in accordance with its terms.

Repayments under the agreement are based on kilograms produced by Nanuva for the Company, subject to a minimum contractual annual payment of $12,000. On February 4, 2024, the Company and Nanuva entered into an amendment to the MDA which extended the date of the first minimum contractual annual payment to September 30, 2024.

As of December 31, 2025, the total outstanding balance of the note receivable from Nanuva was $401,523, consisting of $359,982 of principal and $41,541 of accrued interest. Since inception, the Company has received repayments under the note totaling $156,241, consisting of $140,018 of principal and $16,223 of interest, which were recognized as reductions of inventory costs as products were manufactured by Nanuva for the Company.

During 2025, the Company determined that it no longer expects to utilize Nanuva for third-party manufacturing as the Company transitioned production to its manufacturing facility in Pisco, Peru. Based on this change in operating strategy, the lack of recent manufacturing activity with Nanuva, and uncertainty regarding Nanuva’s ability to repay the note according to its contractual terms after declaring bankruptcy, management evaluated the collectability of the note receivable in accordance with ASC 326, Financial Instruments—Credit Losses. As a result of this assessment, the Company recorded a full allowance for credit losses on the outstanding balance of the Nanuva note receivable as of December 31, 2025.

The Company continues to hold a second lien on the EnWave REV™ 10 machines that collateralize the note receivable and has commenced negotiations with Nanuva to recover the equipment and terminate the MDA. Management believes the estimated fair value of the collateral may exceed the outstanding balance of the note; however, because the Company has not obtained possession of the equipment as of December 31, 2025, the note receivable has been fully reserved. Any recovery related to the collateral will be recognized when realized.

In April 2024, the Company also advanced Nanuva $75,600 related to inventory orders that were not fulfilled. The Company recorded an allowance for doubtful accounts for the full amount of this prepaid inventory balance.

Note 10 –Accrued Expenses

Accrued expenses consisted of the following as of December 31, 2025 and December 31, 2024:

Note 11 –Leases

Equipment Lease

The Company has financed production equipment with an acquisition cost of approximately $168,141 under a finance lease with a five-year term and a bargain purchase price of $1.00 at the end of the lease term. The finance lease commenced on May 9, 2023, and expires on May 31, 2028, with monthly lease payments of $3,657 commencing June 1, 2023, and a pre-funding and acceptance fee of $18,079, subject to the ASU 2016-02. As the Company’s lease does not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Peru Facility Lease

On May 10, 2024, the Company entered into a ten-year lease for the 50,000 square-foot manufacturing facility in Pisco, Peru (the “Peru Facility”), which commenced operations in December of 2024. The lease of the Peru Facility requires monthly lease payments of $8,000 in the first two years of the lease, $20,000 in the third year of the lease, $22,000 in the fourth year of the lease, $24,000 in the fourth year of the lease, and $25,000 thereafter. The lease also has a 10-year renewal option, and a buy-out option under which the Company may purchase the Peru Facility for $1,865,456.

In connection with the lease of the Peru Facility, the Company purchased a first position mortgage receivable in the amount of $1,267,000, which is secured by the Peru Facility and was owed by the landlord of the Peru Facility to its former tenant, for a purchase price of $1,267,000, of which payments were made in various installments totaling $355,000 during the year ended December 31, 2024; and $912,000 during the year ended December 31, 2025. As of December 31, 2025, the $1,267,000 balance has been paid in full. See Notes 7 and 8 for additional details.

The components of lease expense for the years ended December 31, 2025 and December 31, 2024 were as follows:

Supplemental balance sheet information related to leases as of December 31, 2025 and December 31, 2024 was as follows:

Supplemental cash flow and other information related to finance leases for the years ended December 31, 2025 and December 31, 2024 was as follows:

The future minimum lease payments due under operating leases as of December 31, 2025 are as follows:

The future minimum lease payments due under finance leases as of December 31, 2025 are as follows:

Note 12 –Debt

Kaufman Convertible Notes Payable, Related Party

On July 15, 2024, the Company entered into a Securities Purchase Agreement (as amended, the “SPA”) with Daniel L. Kaufman, pursuant to which Mr. Kaufman agreed to purchase from the Company, in a private placement (i) a 12% Senior Secured Convertible Promissory Note in the principal amount of up to $3,400,000 (the “Convertible Note”), convertible into shares of the Company’s common stock at a fixed price of $0.7582 per share of common stock, a (ii) a warrant to purchase 1,000,000 shares of common stock at an exercise price of $1.00 per share (the “$1.00 Warrant”), and (iii) a warrant to purchase 500,000 shares of common stock at an exercise price of $1.50 per share (the “$1.50 Warrant” and, together with the $1.00 Warrant, the “Warrants” and together with the Convertible Note, the “Purchased Securities”), in consideration of an initial loan in the principal amount of $2,000,000 (the “Initial Loan”) made to the Company under the Convertible Note, subject to the terms and conditions thereof.

On July 19, 2024, the Company, Mr. Kaufman and Kaufman Kapital LLC (“Kaufman Kapital”) entered into an amendment to the SPA, which among other things, replaced Mr. Kaufman with Kaufman Kapital as the “Investor” under the SPA.

The Convertible Note matures on the earlier of (i)December 31, 2025, (ii) the sale by the Company of $5,000,000 of equity or debt securities in a single transaction or series of related transactions (excluding certain specified transactions), or (iii) the closing of a change of control transaction as provided in the Convertible Note. Loans outstanding under the Convertible Note bear interest at an initial rate of 12% per annum, and together with accrued principal are convertible into common stock.

On July 24, 2024 the, the Initial Loan payment of $2,000,000 was made to the Company under the Convertible Note, and on December 9, 2024, Kaufman Kapital made an additional loan to the Company under the Convertible Note in the amount of $1,400,000.

On June 1, 2025 the Company and Kaufman Kapital entered into a Warrant Exercise and Amendment to Notes and Warrant Agreement (the “Warrant Exercise Agreement”), pursuant to which Kaufman Kapital exercised in full the $1.00 Warrant on June 4, 2025 for a cash payment to the Company of $1,000,000. In addition, pursuant to the Warrant Exercise Agreement, Kaufman Kapital and the Company agreed (i) to extend the expiration date of the $1.50 Warrant to December 31, 2026, (ii) to extend the maturity date of the Convertible Note to December 31, 2026, (iii) to extend the maturity date of the Senior Secured Promissory Note of the Company in the original principal amount of $1,200,000, issued to Kaufman on August 29, 2024 (the “Secured Note”) to December 31, 2025, (iv) that the Company will not make any prepayment under the Convertible Note at any time amounts are outstanding under the Secured Note or any other non-convertible notes of the Company (excluding notes issued pursuant to equipment financing), and (v) thatthe Company will not prepay more than $2,400,000 of principal outstanding under the Convertible Note prior to September 30, 2026. The amendment to the $1.50 Warrant resulted in $32,099 of additional interest expense during 2025.

Subsequent to December 31, 2025, on January 28, 2026, Kaufman converted $500,000 of principal outstanding under the Company’s Convertible Note into 659,457 shares of the Company’s common stock. See Note 21 – Subsequent Events.

The Company’s obligations under the Convertible Note are secured by a lien granted to Kaufman Kapital on substantially all of the Company’s assets pursuant to a Security Agreement entered between the Company and Kaufman Kapital (the “Security Agreement”). In addition, the Convertible Note includes affirmative and negative covenants, events of defaults and other terms and conditions, customary in transactions of this nature.

In accordance with ASC 470, the Company recorded total discounts of $95,958, consisting of $75,000 of legal fees and $20,958 related to the relative fair value of the Warrants. The discounts are amortized to interest expense over the term of the loan using the effective interest method. As of December 31, 2025, a total of $39,309 of unamortized debt discounts are expected to be expensed over the remaining life of the loan.

Kaufman Senior Secured Promissory Note, Related Party

On August 29, 2024, the Company borrowed $1,200,000 from Kaufman Kapital pursuant to a Senior Secured Promissory Note that, as amended, matures on December 31, 2025. The loan under the Secured Note bears interest at a rate of 15% per annum. The Company’s obligations under the Secured Note are secured by a lien on substantially all of the Company’s assets pursuant to the Security Agreement. In addition, the Secured Note includes affirmative and negative covenants, events of defaults and other terms and conditions, customary in transactions of this nature.

During the year ended December 31, 2025, the Company repaid $1,200,000 of principal on the Secured Note. The principal outstanding under the Secured Note is $0 as of December 31, 2025.

Subsequent to December 31, 2025, on January 28, 2026, the Company entered into a $1,500,000 Senior Secured Promissory Note with Kaufman Kapital. The note bears interest at 8% per annum and matures on January 28, 2027. See Note 21 – Subsequent Events.

Eagle Vision Senior Notes and Warrants, Related Party

On January 9, 2024 the Company entered into a Subscription Agreement (the “Subscription Agreement”) with Eagle Vision Fund LP., for the sale of Senior Secured Notes bearing interest at a rate of 15% per annum (“Senior Secured Notes”) to Purchasers in the aggregate amount of up to $400,000 and detachable 10-year warrants (the “Warrants”) to purchase in the aggregate up to 100,000 shares of the Company’s common stock at an exercise price of $2.00 per share.

On April 16, 2024, the Company amended the Subscription Agreement (the “First Amendment”) to complete the sale of $225,000 of additional Senior Secured Notes and Warrants to purchase an aggregate of 56,250 shares of the Company’s common stock to Purchasers. On July 30, 2024, the Company repaid an aggregate total of $115,000 of principal to Purchasers in settlement of their Senior Secured Notes.

The First Amendment incorporates and amends certain provisions of the Subscription Agreement. The First Amendment also (i) increased the aggregate principal amount of the Senior Secured Notes available to be sold from time to time under the Subscription Agreement from $400,000 to $2,000,000, (ii) increased the number of shares of common stock of the Company available to be issued under Warrants sold from time to time under the Subscription Agreement from 100,000 to 600,000, (iii) provides for an aggregate one-time payment in the amount of $46,290 to the initial Investors in the Senior Secured Notes and the issuance to them of Warrants to purchase 100,000 shares of common stock, in consideration of their agreement to enter into the First Amendment, and (iv) provided for the payment of up to $80,000 to Eagle Vision Fund with the proceeds of notes to be issued by the Company at subsequent closings of sales of Senior Secured Notes and Warrants, in consideration of services rendered and to be rendered by Eagle Vision to holders of the Senior Secured Notes while such notes are outstanding, including acting as collateral agent and due diligence and collateral monitoring services.

During the period of May 14, 2024, through May 22, 2024, the Company completed the sale of an aggregate of $1,050,000 of Senior Secured Notes and Warrants to purchase an aggregate of 262,500 shares of the Company’s common stock, to a group of investors led by Eagle Vision, an affiliate of John Dalfonsi, a director of the Company and its Chief Financial Officer.

In the aggregate, through a series of closings pursuant to the Subscription Agreement, including the sales described above, the Company issued an aggregate $1,675,000 of principal pursuant to the Senior Secured Notes and Warrants to purchase an aggregate 518,750 shares of common stock.

The Senior Secured Notes mature on the earlier of December 31, 2025, or the occurrence of a Qualified Subsequent Financing or Change of Control (as such terms are defined in the Subscription Agreement). In addition, the Senior Secured Notes are subject to covenants, events of defaults and other terms and conditions set forth in the Subscription Agreement. The Company’s obligations under the Senior Secured Notes are secured by liens on substantially all of the Company’s assets pursuant to the terms of the Security Agreement entered into by the Company on January 10, 2024, in favor of holders of the Senior Secured Notes.

In connection with the sale of the Purchased Securities to Kaufman Kapital under the SPA, the Company entered into an Omnibus Amendment to Note Documents with substantially all of the Holders of the Company’s Senior Secured Notes and Warrants issued under that certain Subscription Agreement dated as of January 10, 2024, as amended, pursuant to which, among other things, (i) the exercise price of the Warrants issued to the Holders was reduced from $2.00 to $1.00, (ii)the outside maturity date of the Senior Secured Notes held by the Holders was extended from December 31, 2024 to December 31, 2025 (subject to further extension in the event the maturity date of the Convertible Note is extended), (iii) the Company’s obligation to make payments of principal under the Senior Secured Notes held by the Holders beginning July 1, 2024 has been eliminated, and instead all obligations of the Company under such Senior Secured Notes will be due in one lump sum on the maturity date of the Senior Secured Notes, and (iv) the Company’s obligations under the Convertible Note and liens granted to the holder thereof, will be pari passu with the Company’s obligations under the Senior Secured Notes held by the Holders and liens granted to the holders thereof. The amendment warrants resulted in $89,949 of additional interest expense during 2024.

In accordance with ASC 470, the Company recorded total discounts of $339,698, including $80,908 on the relative fair value of the Warrants during the year ended December 31, 2024. The discounts were amortized to interest expense during 2024 using the effective interest method.

Eagle Vision has been paid aggregate cash fees in the amount of $177,500 from the sales of the Senior Secured Notes in consideration of services rendered by Eagle Vision to the Company and the holders of the Senior Secured Notes, including for conducting due diligence with respect to the Company, monitoring the performance by the Company of its obligations under the Senior Secured Notes, servicing the interest and principal payments for holders of the Senior Secured Notes, engaging in ongoing discussions with the Company’s management regarding the Company’s operations and financial condition, acting as collateral agent, and evaluating financial and non-financial information related to the Company. The Company has also paid an aggregate of $35,000 of the investors’ legal fees from sales of the Senior Secured Notes.

During the year ended December 31, 2025, the Company repaid $1,560,000 of remaining principal outstanding under the Senior Secured Notes. The principal outstanding is $0 as of December 31, 2025.

During the year ended December 31, 2025, of the 518,750 warrants issued to purchasers of the Senior Secured Notes, warrants were exercised to purchase an aggregate of 362,500 shares of the Company’s common stock at an exercise price of $1.00 per share aggregate cash proceeds of $362,500.

Notes payable to related parties as of December 31, 2025 and December 31, 2024, consists of the following:

The Company recognized $445,683 of interest expense on convertible notes payable, related parties for the year ended December 31, 2025, consisting of $418,406 of stated interest expense, $21,320 of amortized debt discounts and $5,957 of amortized debt discounts due to warrants.

The Company recognized $261,636 of interest expense on notes payable, related parties for the year ended December 31, 2025. The Company recognized $664,847 of interest expense on notes payable, related parties for the year ended December 31, 2024, consisting of $235,200 of stated interest expense, $258,790 of amortized debt discounts and $80,908 of amortized debt discounts due to warrants, along with $89,949 of additional interest expense related to the modification of warrants issued to Senior Secured Notes purchasers.

EnWave Equipment Promissory Note

On May 22, 2023, the Company entered into an equipment purchase agreement with EnWave for the purchase of a used 100kW REV vacuum microwave dehydration machine (the “Third EnWave Machine”). Cash payments of $500,000 were paid towards the $1,000,000 purchase price on the Third EnWave Machine, while the $500,000 balance due is to be paid in twelve (12) monthly installments of $44,424, bearing interest 12% per annum, commencing August 1, 2024.

The Company is also required to enter an Equipment Purchase Agreement for a 120kW, or greater, rated power EnWave Equipment (the “Fourth EnWave Machine”) on, or before, December 31, 2026, and to satisfy the payment obligations required with respect to the Fourth EnWave Machine by the License Agreement. The license is not discernible from the equipment; therefore, the license costs have been capitalized and depreciated over the useful life of the equipment.

On September 16, 2025, the Company and EnWave entered into (i) a Fifth Amendment to License Agreement (the “Amendment”), which amended certain terms of the License Agreement between the Company and EnWave originally dated May 7, 2021 (as amended, the “License Agreement”), and (ii) an Equipment Purchase Agreement (the “Purchase Agreement”).

Pursuant to the Purchase Agreement, the Company also purchased from EnWave a refurbished 120kW REV vacuum microwave dehydration machine for a purchase price of $1,500,000. The purchase price is payable in 24 equal monthly installments, commencing April 1, 2026, pursuant to a secured promissory note bearing interest at the rate of 8.00% per annum (see Note7).

See Note 19 – Commitments and Contingencies for additional information on the License Agreement.

SBA EIDL Loan Agreement

On May 17, 2020, the Company entered into a loan agreement with the United States Small Business Administration (the “SBA”), as lender, pursuant to the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business (the “EIDL Loan Agreement”) encompassing a $34,500 Promissory Note issued to the SBA (the “EIDL Note”) (together with the EIDL Loan Agreement, the “EIDL Loan”), bearing interest at 3.75% per annum. In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated May 17, 2020, between the SBA and the Company pursuant to which the EIDL Loan is secured by a security interest on all of the Company’s assets. Under the EIDL Note, the Company is required to pay interest payments of $169 every month beginning May 17, 2021; however, the SBA extended the repayment date to November 17, 2022. All remaining principal and accrued interest is due and payable on May 17, 2050. The EIDL Note may be repaid at any time without penalty.

The Company has notes payable (in addition to the Senior Secured Notes and the notes payable to Kaufman Kapital described above), consisting of the following as of December 31, 2025 and December 31, 2024:

The Company recognized $17,058 and $19,809 of interest expense on these notes payable for the years ended December 31, 2025, and 2024, respectively.

The schedule of principal maturities of debt as of December 31, 2025 are as follows:

The Company recognized aggregate interest expense during the years ended December 31, 2025 and December 31, 2024 as follows:

Note 13 –Changes in Stockholders’ Equity

Preferred Stock

The Company is authorized to issue 8,000,000 shares of preferred stock, par value $0.001 per share. As of December 31, 2025, no shares of preferred stock were issued or outstanding.

Common Stock

The Company is authorized to issue 80,000,000 shares of common stock, par value $0.001 per share. As of December 31, 2025,13,385,459 shares of common stock were issued and outstanding. Holders of common stock are entitled to one vote per share.

Reverse Stock Split

On June 15, 2023, the Company effected a 2.5-for-1 reverse stock split of its outstanding shares of common stock. All share and per-share amounts presented in these consolidated financial statements have been retroactively adjusted to reflect the reverse stock split for all periods presented. The par value of the common stock was not adjusted.

At-the-Market Offerings

During the year ended December 31, 2025, the Company issued 2,421,415 shares of common stock pursuant to its At-the-Market (“ATM”) programs, resulting in net proceeds of $5,239,988 after commissions and offering expenses.

Registered Offering

On November 13, 2025, the Company completed the sale of 1,034,600 shares of its common stock in an underwritten offering for aggregate gross proceeds of approximately $2.5 million. After deducting underwriting discounts, fees, and offering expenses, the Company received net proceeds of $2,297,590. The Company used the proceeds for working capital and general corporate purposes.

In connection with the sale of common stock the Company issued warrants to the underwriter to purchase up to 41,384 shares of common stock and allocated $51,195 of the proceeds to additional paid-in capital based on the relative fair value of the warrants. This allocation represented a non-cash financing activity and did not affect total cash proceeds received.

Options

The Company maintains the 2022 Equity Incentive Plan, which provides for the issuance of stock options and other equity-based awards. During the year ended December 31, 2025, the Company issued options to purchase shares of common stock under the plan for services rendered. A summary of stock option activity and related stock-based compensation expense is included in Note 14 – Common Stock Options.

Warrants

During the year ended December 31, 2025, the Company recorded a $32,099 non-cash increase to additional paid-in capital related to the fair value of warrant modifications. In addition, warrants were exercised to purchase an aggregate of 1,504,844 shares of the Company’s common stock, resulting in cash proceeds of $1,499,294. A summary of warrant activity and related terms is included in Note 15 – Common Stock Warrants.

Foreign Currency Translation

Foreign currency translation adjustments, primarily related to the Company’s foreign operations in Peru, increased accumulated other comprehensive income by $35,446 during the year ended December 31, 2025.

Note 14 –Common Stock Options

The Company’s Board of Directors and stockholders adopted the 2022 Equity Incentive Plan (the “2022 Plan”) effective January 1, 2022. The 2022 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and other equity-based awards to employees, directors, and consultants.

The number of shares reserved for issuance under the 2022 Plan was initially 600,000 shares and was adjusted in connection with the Company’s 2023 reverse stock split. Pursuant to the 2022 Plan, the number of shares of common stock available for issuance thereunder automatically increases on the first day of each fiscal year of the Company in an amount equal to 5% percent of the total number of shares of our common stock outstanding on the last day of the immediately preceding fiscal year of the Company, unless the board of directors takes action prior thereto to provide that there will not be an increase in the share reserve for such year or that the increase in the share reserve for such year will be of a lesser number of shares of common stock than would otherwise occur. As of December 31, 2025, the annual increases to the plan resulted in 1,633,000 shares being able to be issued under the plan.

As of December 31, 2025, a total of 1,603,000 shares were reserved for issuance under the 2022 Plan, of which options to purchase 1,383,470 shares of common stock were outstanding.

During 2025, the Company granted options to purchase 790,000 shares of common stock with a total grant date fair value of $810,044 and exercise prices ranging from $1.93 to $2.50. The fair value of stock options granted during 2025 were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:

Expected volatility was based on the historical volatility of comparable public companies, and the expected term was determined using the simplified method.

Stock options granted during 2025 generally vest over a three-year period and expire ten years from the grant date. Certain options granted in prior periods vested upon grant. The Company accounts for forfeitures as they occur and, accordingly, expects substantially all outstanding options to vest.

As of December 31, 2025, options to purchase 803,542 shares of common stock were vested and exercisable, with a weighted-average exercise price of $2.42 with a weighted-average exercise price of $2.42 and a remaining contractual life of 7.9 years on a weighted-average basis.

Stock-based compensation expense was $245,419 and $414,614 for the years ended December 31, 2025, and 2024, respectively.

As of December 31, 2025, total unrecognized compensation cost related to unvested stock options was $599,549, which is expected to be recognized over the remaining weighted-average vesting period of 2.4 years. As of December 31, 2025, the weighted-average remaining contractual life of outstanding options was 8.6 years.

Note 15 –Common Stock Warrants

The Company evaluated the warrants under ASC 815 and determined that they meet the criteria for equity classification.

Issuance of Warrants

On November 14, 2025, the Company issued warrants to purchase 41,384 shares of its common stock in connection with an underwritten offering of common stock. The warrants fully vest on May 13, 2026. The warrants are exercisable at an exercise price of $3.00 per share and expire on November 14, 2030. The warrants are classified as equity and were recorded to additional paid-in capital at their estimated fair value on the issuance date, determined using the Black-Scholes option pricing model.

The issuance of these warrants did not result in the receipt of additional cash proceeds beyond those received in the related financing transaction. Refer to Note 13 – Changes in Stockholders’ Equity, for additional information on the offering relating to the issuance of these warrants.

Exercise of Warrants

During the year ended December 31, 2025, warrants to purchase 1,504,844 shares were exercised, resulting in aggregate cash proceeds of $1,500,799.

The aggregate intrinsic value of warrants exercised during 2025 was $1,756,000.

On June 4, 2025, Kaufman Kapital exercised warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $1.00 per share, resulting in cash proceeds of $1,000,000. These warrants were originally issued in connection with the Kaufman Kapital Senior Secured Convertible Note.

Warrants from other series were exercised for the purchase of an aggregate of 504,844 shares of the Company’s common stock at exercise prices ranging from $0.96 to $1.00 per share, resulting in aggregate cash proceeds of $500,799. These exercises included 362,500 shares related to the Eagle Vision Senior Secured Note at an exercise price of $1.00 per share and 101,128 shares related to underwriter warrants issued in connection with a secondary offering at an exercise price of $0.96 per share.

In total, warrants were exercised at a weighted-average exercise price of approximately $1.00 per share during the year ended December 31, 2025.

Refer to Note 12 – Debt for additional information regarding the Kaufman Kapital Senior Secured Convertible Note and Eagle Vision Senior Secured Note.

Modified Warrant

On June 4, 2025, the Company amended certain warrants to extend their contractual term. The modification was accounted for as an equity-classified warrant modification, and the incremental fair value of $32,099 resulting from the extension was recognized as an increase to additional paid-in capital. No other material terms, including exercise price or number of shares issuable, were changed as part of the amendment.

The remaining contractual life of outstanding warrants ranges from 1 to 8.7 years.

Note 16 –Fair Value of Financial Instruments

Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company has cash, notes receivable, and debts that must be measured under the fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balances sheet as of December 31, 2025 and 2024:

There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the years ended December 31, 2025 and 2024.

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 identifiedtwo 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:

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:

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:

Note 18 –Related Party Transactions

Kaufman Kapital, led by Daniel Kaufman, is a beneficial owner holding more than 10% of the Company’s outstanding common stock.

On July 15, 2024, the Company entered into a Securities Purchase Agreement with Daniel L. Kaufman, as described in Note 12. As of December 31, 2025 the principal outstanding on the Convertible Note was $3,400,000. Kaufman Kapital exercised the $1.00 Warrant on June 24, 2025, as described in Note 15. The $1.50 Warrant has not been exercised as of December 31, 2025.

On August 29, 2024, the Company borrowed $1,200,000 from Kaufman Kapital pursuant to the Secured Note, as described in Note 12.

On May 7, 2025, September 30, 2025, and November 17, 2025 the Company repaid $325,000, $375,000, and $500,000 of principal on the Secured Note. The principal outstanding is $0 as of December 31, 2025.

Subsequent to December 31, 2025, the Company entered into a $1,500,000 Senior Secured Promissory Note with Kaufman Kapital. In addition, Kaufman Kapital converted $500,000 of principal outstanding under the Company’s Convertible Note into 659,457 shares of the Company’s common stock. See Note 21 – Subsequent Events.

Eagle Vision Fund LP is led by the Company’s CFO, John Dalfonsi.

As discussed further in Note 12 above, on various dates from January 9, 2024 through May 22, 2024, the Company completed the sale of an aggregate $1,675,000 of Senior Secured Notes and Warrants to purchase an aggregate of 518,750 shares of the Company’s common stock, to a group of investors led by Eagle Vision Fund LP.

During the year ended December 31, 2025 the Company repaid $1,560,000 of remaining principal outstanding under the Senior Secured Notes resulting in the payment in full of such notes as of December 31, 2025.

During the year ended December 31, 2025, of the 518,750 Warrants issued to purchasers of the Senior Secured Notes, Warrants were exercised to purchase an aggregate of 350,000 shares of the Company’s common stock at an exercise price of $1.00 per share for aggregate cash proceeds of $350,000.

Note 19 –Commitments and Contingencies

Legal Matters

From time to time, the Company may be a party to various legal matters, threatened claims, or proceedings in the normal course of business. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses the likelihood of outcomes in litigation and makes appropriate accruals and disclosures based on current information and legal counsel’s opinions. There’s no guarantee that these matters won’t significantly impact the Company’s business, financial position, or results of operations. Legal accruals are recorded when and if it is determined that a loss related to a certain matter is both probable and reasonably estimable.

The Company is the subject of a lawsuit commenced by its former Chief Financial Officer alleging wrongful termination. Based on information currently available and on the advice of legal counsel, the Company is engaged in settlement discussions related to this matter. While no agreement has been finalized, the Company believes that a resolution of the matter may result in a payment. At this time, the Company is unable to determine that a loss is both probable and reasonably estimable and, accordingly, no liability has been recorded in the accompanying consolidated financial statements. The ultimate outcome of this matter remains uncertain.

Other than as set forth above, there are no legal matters pending against the Company.

Operating Lease

On May 10, 2024, the Company entered into a ten-year lease for the 50,000 square-foot Peru Facility, which commenced operations in December of 2024. The lease requires monthly lease payments of $8,000 in the first two years of the lease, $20,000 in the third year of the lease, $22,000 in the fourth year of the lease, $24,000 in the fourth year of the lease, and $25,000 thereafter. The lease also has a 10-year renewal option, and a buy-out option under which the Company may purchase the Peru Facility for $1,865,456.

Finance Lease

The Company leases equipment under a non-cancelable finance lease payable in monthly installments of $3,657 expiring on May 31, 2028.

NXTDried Manufacturing Agreement

On January 19, 2022, the Company entered into a contract manufacturing agreement with NXTDried Superfoods SAC to produce products for distribution by the Company. The Company agreed to pre-pay for inventory via an advance to enable the manufacturer to invest in necessary processing facilities that will be reimbursed to the Company on an agreed per kg basis over the period of 2022 to 2026.

EnWave License Agreement

On May 7, 2021, the Company entered into a license agreement (“License Agreement”) with EnWave, pursuant to which EnWave licensed to the Company a collection of patents and intellectual property (the “EnWave Technology”) used to manufacture and operate vacuum microwave dehydration machines purchased by the Company from EnWave (the “EnWave Equipment”). The License Agreement is effective as long as EnWave possesses its EnWave technology.

At various dates the License Agreement has been amended to, among other things, modify the exclusivity retention royalty payments required to be paid by the Company. The License Agreement entitles EnWave to a fixed royalty percentage on all of the Company’s revenue from the sale of products produced using the EnWave Technology, net of trade or volume discounts, refunds paid, settled claims for damaged goods, applicable excise, sales and withholding taxes imposed at the time of the sale, and provides the Company with certain exclusivity rights.

In order to maintain exclusivity, the Company must make annual royalty minimum payments to EnWave of $250,000 per year, commencing in 2025 and continuing through each subsequent year in perpetuity, as long as the Company elects to maintain exclusivity. The Company recognized $250,000 of royalty expenses for the year ended December 31, 2025.

In addition to the initial EnWave Equipment we purchased, the Company agreed to purchase additional equipment from EnWave overtime. The additional equipment purchase schedule, as amended, required the Company to purchase a “Second EnWave Machine”, which was purchased in full on December 12, 2024. The Company is also required to execute an Equipment Purchase Agreement for a 120kW, or greater rated power, EnWave Equipment (the “Third EnWave Machine”) on or before December 31, 2025, and satisfy the payment obligations required with respect to the Third EnWave Machine by the License Agreement.

On September 16, 2025 the Company entered into a Purchase Agreement for the Third EnWave Machine, a refurbished 120kW REV vacuum microwave for a purchase price of $1,500,000. The purchase price is payable in 24 equal monthly installments, commencing April 1, 2026, pursuant to a secured promissory note (the “Promissory Note”) bearing interest at the rate of 8.00% per annum.

The Company is also required to enter an Equipment Purchase Agreement for a 120kW, or greater, rated power EnWave Equipment (the “Fourth EnWave Machine”) on, or before, December 31, 2026, and to satisfy the payment obligations required with respect to the Fourth EnWave Machine by the License Agreement. The license is not discernible from the equipment; therefore, the license costs have been capitalized and depreciated over the useful life of the equipment.

Pursuant to the Amendment, among other things, EnWave granted the Company a global exclusive license (but subject to existing licenses previously issued by EnWave to two other manufacturers) to manufacture Dragon Fruit products using EnWave’s technology under the License Agreement.

Note 20 -Income Taxes

The Company incurred net operating losses for the years ended December 31, 2025 and 2024. Accordingly, no provision for income taxes has been recorded. In addition, no income tax benefit has been recognized due to the uncertainty of the realization of deferred tax assets.

Effective Tax Rate Reconciliation

The provision (benefit) for income taxes differs from the amount computed by applying the U.S. federal statutory income tax rate to the Company’s loss before income taxes for the years ended December 31, 2025 and December 31, 2024 are as follows:

Deferred Tax Assets

The components of the Company’s deferred tax asset are as follows:

The Company has incurred cumulative losses since inception which makes realization of its deferred tax assets uncertain. Based on the available objective evidence, including the Company’s history of operating losses, management believes it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company has recorded a full valuation allowance against its net deferred tax assets as of December 31, 2025 and 2024.

Net Operating Loss Carryforwards

At December 31, 2025, the Company had approximately $12.9 million of federal net operating loss carryforwards available to offset future taxable income. Federal net operating losses generated after December 31, 2017 may be carried forward indefinitely; however, the utilization of such losses is limited to 80% of taxable income in any given year.

Utilization of the Company’s net operating loss carryforwards may be subject to annual limitations under Section 382 of the Internal Revenue Code due to changes in ownership.

Income Taxes Paid

Income taxes paid (net of refunds) were as follows:

The Company did not incur or pay income taxes during the years ended December 31, 2025 and 2024 due to operating losses.

Foreign Taxes

The Company’s foreign subsidiary is subject to income taxation in Peru. Deferred tax assets related to the foreign jurisdiction have not been recognized due to cumulative losses and the Company’s overall valuation allowance position.

Uncertain Tax Positions

In accordance with ASC 740, the Company evaluates uncertain tax positions using a two-step recognition and measurement process. The Company has evaluated its tax positions and determined that there are no uncertain tax positions as of December 31, 2025 and 2024.

Note 21 –Subsequent Events

The Company evaluated subsequent events through the date the consolidated financial statements were issued.

Debt

On January 28, 2026, the Company borrowed $1,500,000 from Kaufman Kapital, pursuant to a Senior Secured Promissory Note (the “Note”). The Note matures on January 28, 2027 and bears interest at a rate of 8% per annum. The Company’s obligations under the Note are secured by a lien on substantially all of the Company’s assets pursuant to a Security Agreement previously entered into in connection with the issuance of the Company’s 12% Senior Secured Convertible Promissory Note dated July 23, 2024. The Note includes customary affirmative and negative covenants and events of default.

On January 28, 2026, Kaufman Kapital converted $500,000 of principal outstanding under the Convertible Note into 659,457 shares of the Company’s common stock. Refer to Note 12 – Debt for additional information.

Exercise of Warrants

On February 24, 2026, warrants were exercised to purchase 37,500 shares of the Company’s common stock at an exercise price of $1.00 per share, resulting in aggregate cash proceeds of $37,500.

At-the-Market Offering

On January 27, 2026, the Company entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) with Alexander Capital, L.P., as sales agent. Under the ATM Agreement, the Company may offer and sell shares of its common stock from time to time through the sales agent for aggregate gross proceeds of up to $1,500,000. The sales agent is entitled to a commission equal to 3.0% of the gross proceeds of shares sold under the ATM Agreement.

As of February 13, 2026, the Company had issued and sold 500,000 shares of common stock under the ATM Agreement for aggregate gross proceeds of $1,499,873.

Stock-Based Compensation

On February 10, 2026, the Compensation Committee of the Board of Directors approved the grant of stock options under the 2022 Plan to directors, employees, and consultants to purchase an aggregate of 1,390,000 shares of the Company’s common stock at an exercise price of $2.96 per share, representing the fair market value of the Company’s common stock on the grant date. All options have a ten-year term.

The grants include a combination of time-based and performance-based awards. Time-based options vest over periods of up to 36 months, while certain performance-based options vest upon the Company achieving specified revenue and EBITDA targets. The Company will recognize stock-based compensation expense related to these awards in future periods in accordance with ASC 718. Because these grants were made after December 31, 2025, they did not impact the Company’s consolidated financial statements for the year ended December 31, 2025.

Tariff Refund – Gain Contingency

On March 4, 2026, the U.S. Court of International Trade ruled that certain tariffs imposed under the International Emergency Economic Powers Act were unlawful. As a result, the Company may be entitled to a refund of tariffs previously paid. As of December 31, 2025, the Company had paid $348,752 of such tariffs. The Company has concluded that recovery of these amounts represents a gain contingency under ASC 450, Contingencies. Accordingly, no receivable or reduction of cost of goods sold has been recognized in the 2025 consolidated financial statements. Any recovery will be recognized when realized or realizable. The timing and amount of recovery remain subject to further legal proceedings and administrative action by U.S. Customs and Border Protection.