What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-14 compared with 2023-08-21 · 158 added, 241 removed, 128 unchanged (76% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

should read the following discussion of our financial condition and results of operations in conjunction with the condensed financial

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entitled “—Limitations of Key Metrics.”

were 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 redomiciled to Nevada in connection with a conversion

from an Oregon limited liability company to a Nevada corporation, named BranchOut Food Inc.

were incorporated as Avochips Inc., an Oregon corporation, on February 21, 2017, and on November 2, 2017, we converted into Avochips,

LLC, an Oregon limited liability company.

On November 19, 2021, we converted from an Oregon limited liability company into BranchOut

Food Inc., a Nevada corporation.

Avochips, LLC redomiciled to Nevada in connection with a conversion from an Oregon limited liability

company to a Nevada corporation, named BranchOut Food Inc.

are engaged in the development, marketing, sale, and distribution of plant-based, dehydrated fruit and vegetable snacks and powders.

One of the Company’s contract manufacturers is in the Republic of Chile.

The Company entered into a second contract manufacturing

agreement in 2022 with a company based in the Republic of Peru.

This facility in Peru houses BranchOut’s continuous through-put

dehydration machine, substantially increasing production capacity.

Our new large-scale continuous through-put dehydration machine was

commissioned in September 2022 and we completed the first production run in the first quarter of 2023.

Both facilities produce dehydrated

fruit and vegetable products for BranchOut using a new proprietary dehydration technology.

The Company’s customers are primarily

located throughout the United States.

is an emerging natural food brand with a licensed technology platform that enables the manufacturing and marketing of plant-based dehydrated

BranchOut has licensed rights from an independent third party to a new dehydration technology designed for drying and processing

highly sensitive fruits and vegetables such as avocados, bananas and others.

Using the licensed technology platform, we believe BranchOut’s

line of branded food products speak to current consumer trends.

Our products are currently manufactured for us by two contract manufacturers, one based in the Republic of Chile, and the other in the

Republic of Peru.

The manufacturing facility in Peru houses our new large-scale continuous through-put dehydration machine that completed

its first production run in the first quarter of 2023, and which substantially increased our production capacity.

Both facilities produce

dehydrated fruit and vegetable products for BranchOut using a new proprietary dehydration technology licensed by us from a third party.

The Company’s customers are primarily located throughout the United States.

is an emerging natural food brand with a licensed technology platform for the manufacture of plant-based dehydrated foods.

has licensed rights from an independent third party to a new dehydration technology designed for drying and processing highly sensitive

fruits and vegetables such as avocados, bananas and others.

Using the licensed technology platform, we believe BranchOut’s line

of branded food products speak to current consumer trends.

In our experience, conventional dehydration methods, such as freeze-drying

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and vegetables as the base when compared to conventional drying and dehydration technologies.

With more than 17 patents registered or

pending in 14 countries, BranchOut has been granted the exclusive rights to use the licensed technology platform as applied to avocados,

With licenses to 17 patents registered

or pending in 14 countries, BranchOut has been granted the exclusive rights to use the licensed technology platform as applied to avocados,

in addition to BranchOut’s own patent pending process, and nonexclusive rights to use the licensed technology platform for other

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our current product lines, as well as expanding our platform to include additional products that meet our strict plant-based ingredient

criteria to diversify our revenue base and increase BranchOut’s TAM opportunity.

BranchOut’s current products are primarily:

criteria to diversify our revenue base and increase BranchOut’s total addressable market (“TAM”) opportunity.

current products are primarily:

BranchOut Snacks:

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BranchOut Powders:

Avocado Powder, Banana Powder and

Blueberry Powder.

Powder, Banana Powder and Blueberry Powder.

BranchOut Industrial Ingredients:

Bulk Avocado Powder,

dried avocado pieces and other fruit powders/pieces.

Bulk Avocado Powder, dried avocado pieces and other fruit powders/pieces.

is currently developing additional products, including chocolate covered fruit items and many private label products for large retailers.

Affecting Our Results of Operations

believe our performance and continued success depend on several factors that present significant opportunities.

These factors include:

in Product Development and Innovation

expect to continue to focus on long-term revenue growth through investments in our business.

In research and development and new product

development, our team is continually working on new products and iterations of our existing products.

Further, we anticipate we will

continue to invest significantly in our current product line in order to improve customer satisfaction, quality, and unit economics.

We are committed to continuously expanding our portfolio and bringing next-generation products to market.

Commercial Expansion in the United States and International Markets

sales and marketing, we are also dedicating meaningful resources to expand our commercial team in the United States and in international

Our top commercial priorities in the United States include sales and marketing expansion to gain additional retail distribution

and online sales.

to Grow Our Customer Base in both Online and Traditional Wholesale Distribution Channels

are currently growing our customer base through both paid and organic online channels, as well as by expanding our presence in a variety

of physical retail distribution channels.

Online customer acquisitions typically occur at our direct website Branchoutfood.com

and Amazon.com.

Our online customer acquisition program includes paid and unpaid social media, search, display and traditional

Our products are also sold through a growing number of physical retail channels.

Wholesale customers include grocery chains, club

stores, among others.

Customer acquisition in physical retail channels depends on, among other things, paid promotions through retailers,

display and traditional media.

to Acquire and Retain Customers at a Reasonable Cost

believe an ability to consistently acquire and retain customers at a reasonable cost relative to projected life-time value will be a

key factor affecting future performance.

To accomplish this goal, we intend to balance advertising spend between online and offline channels,

as well as balancing more targeted and measurable “direct response” marketing spend with advertising focused on increasing

our long-term brand recognition, where success attribution is less directly measurable on a near-term basis.

to Drive Repeat Usage of Our Products

accrue substantial economic value from repeat users of our products who consistently re-order our products.

The pace of our growth rate

will be affected by the repeat usage dynamics of existing and newly acquired customers.

to Expand Our Product Line

goal is to substantially expand our product line over time to increase our growth opportunity and reduce product-specific risks through

diversification into multiple products each designed around daily use.

Our pace of growth will be partially affected by the cadence and

magnitude of new product launches over time.

to Expand Gross Margins

overall profitability will be impacted by our ability to expand gross margins through effective sourcing of raw materials, controlling

labor and shipping costs, as well as spreading other production-related costs over greater manufacturing volumes.

to Expand Operating Margins

ability to expand operating margins will be impacted by our ability to cover fixed general and administrative costs and variable sales

and marketing costs with higher revenues and gross profit dollars.

to Manage Our Global Supply Chain and Expand Production In-line with Demand

ability to grow and meet future demand will be affected by our ability to properly plan for and source inventory from a variety of suppliers.

to Optimize Key Components of Working Capital

ability to reduce cash burn in the near-term and eventually generate positive cash flow will be partially impacted by our ability to

effectively manage all the key working capital components that could influence our cash conversion cycle.

we are so early in our lifecycle of growth, it is difficult to discern the exact magnitude of seasonality affecting our business.

evidence of seasonality is not discernable from our growth.

of Our Results of Operations

currently derive our revenue from the sale of our finished snack and powder products.

We also record as revenue any amounts billed to

customers for shipping costs and record as cost of goods sold the actual shipping costs.

We have elected to exclude from the measurement

of the transaction price all taxes, such as sales, use, value-added, assessed by government authorities and collected from a customer.

Therefore, revenue is recognized net of such taxes.

Revenues are offset by customer deductions that are non-promotional or undecipherable.

This includes slotting fees which are funds paid for shelve placement within the schematic at retail facilities.

We expect our net revenue

to increase in the foreseeable future as we increase deduction management efforts, expand our sales territories, add new customers and

increase the utilization of our products by our existing customers, though net revenue may fluctuate from quarter to quarter due to a

variety of factors, including availability of reimbursement, the size and success of our sales force, the number of customers who are

aware of and purchase our products.

of Goods Sold

of goods sold consists primarily of finished products purchased from third-party suppliers, shipping costs, excess and obsolete inventory

adjustments and royalties.

Our products are manufactured to our specifications primarily by third-party suppliers in the Chile, Peru,

the PRC and the United States.

Cost of goods sold is recognized at the time revenue is recognized in accordance with customer agreements.

Prior to selling the products, the cost of our products is recorded as inventories, net in our balance sheets.

Cost of goods sold is

expected to increase due primarily to increased sales volume.

calculate gross profit as net revenue less cost of goods sold, and gross margin as gross profit divided by net revenue.

We expect our

gross profit to increase in the foreseeable future as our net revenue grows, though our gross profit and gross margin have been and will

continue to be affected by a variety of factors, primarily average selling prices, third-party manufacturing costs, change in mix of

customers, excess and obsolete inventory adjustments, royalties and seasonality of our business.

We expect our gross margin to fluctuate

from period to period, however, based upon the factors described above and seasonality.

and Administrative

and administrative expenses consist primarily of commissions paid to U.S.

sales representatives, salaries, bonuses, and benefits related

to selling, marketing, and general and administrative functions, and stock-based compensation.

In addition, selling, general, and administrative

expenses consist of the costs associated with marketing initiatives, trade show and related travel, other travel expenses, insurance

costs, facility expenses and other general corporate expenses.

expect general and administrative expenses to continue to increase in the foreseeable future as we continue to grow our business, though

it may fluctuate from quarter to quarter.

We also expect our administrative expenses, including stock-based compensation expense, to

increase as we increase our headcount and expand our facilities and business processes to support our operations as a public company.

Our selling, general and administrative expenses may fluctuate from period to period due to the seasonality of our business and as we

continue to add direct sales territory managers in new territories.

and wages consist of salaries and wages for full-time, as well as contract, employees of the Company.

fees consist of expenses incurred for accounting, legal, finance, consulting, audit, and transfer agent services.

It also consists of

stock-based compensation paid for advisory, fundraising, and financial services.

We anticipate increased expenses related to audit, legal,

regulatory, and tax-related services associated with being a public company, compliance with exchange listing and SEC requirements, director

and officer insurance premiums and investor relations costs.

We also expect to see an increase in our stock-based compensation expense

with the establishment of a new equity plan associated with this offering and related grant either in the form of restricted stock units

Other Expense

expense consists primarily of interest expense from amortization of debt discounts, and other income from interest earned on notes receivable.

It also includes any gains and loss attributable to the changes in fair market value from the derivative liabilities associated with

the issuance of convertible notes.

of Operations for the Three Months Ended June 30, 2023 and 2022

following table summarizes selected items from the statement of operations for the three months ended June 30, 2023 and 2022, respectively.

of Operations for the Three Months Ended September 30, 2023 and 2022

following table summarizes selected items from the statement of operations for the three months ended September 30, 2023 and 2022, respectively.

Three Months Ended

September 30,

Cost of goods sold

Gross profit (loss)

Operating expenses:

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Total other income (expense)

net revenue for the three months ended June 30, 2023 was $343,065, compared to $305,574 for the three months ended June 30, 2022, an

increase of $37,491, or 12%.

The increase in revenue was primarily due to increased sales to big box retailers during the three months

ended June 30, 2023.

of Goods Sold and Gross Profit (Loss)

cost of goods sold for the three months ended June 30, 2023 was $305,703, compared to $424,006 for the three months ended June 30, 2022,

a decrease of $118,303 or 28%.

Cost of goods sold decreased primarily due to our transition to bulk shipping arrangements.

of the foregoing, we had gross profit of $37,362 for the three months ended June 30, 2023 as compared to a gross loss of $118,432 for

the three months ended June 30, 2022.

net revenue for the three months ended September 30, 2023 was $906,996, compared to $181,930 for the three months ended September 30,

2022, an increase of $725,066, or 399%.

The increase in revenue was primarily due to increased sales to big box retailers during the

three months ended September 30, 2023.

of Goods Sold and Gross Profit

cost of goods sold for the three months ended September 30, 2023 was $878,664, compared to $172,830 for the three months ended September

30, 2022, an increase of $705,834 or 408%.

Cost of goods sold increased primarily due to increased costs associated with our increased

sales to big box retailers during the three months ended September 30, 2023.

As a result of the foregoing, we had gross profit of $28,332,

or 3%, for the three months ended September 30, 2023 as compared to a gross profit of $9,100, or 5%, for the three months ended September

Our gross profit margin decreased slightly due to increased product costs incurred during the current period.

and Administrative

general and administrative expense for the three months ended June 30, 2023 was $141,031, compared to $212,540 for the three months ended

June 30, 2022, a decrease of $71,509 or 34%.

The largest components of our general and administrative expenses are advertising and marketing,

travel, and storage, shipping and handling expense.

Three Months Ended June 30,

general and administrative expense for the three months ended September 30, 2023 was $230,459, compared to $351,110 for the three months

ended September 30, 2022, a decrease of $120,651 or 34%.

The largest components of our general and administrative expenses are advertising

and marketing, travel, and storage, shipping and handling expense.

Three Months Ended September 30,

Advertising and marketing

Storage, shipping and handling

Advertising and marketing expenses decreased for the three months ended June 30, 2023 as compared to the corresponding

period in 2022 as we focused our resources on our IPO.

Our travel expenses decreased for the same reason, as we reduced our international

Storage, shipping and handling expenses increased primarily due to increased international shipping rates.

and wages for the three months ended June 30, 2023 was $436,238, compared to $221,995 for the three months ended June 30, 2022, an increase

of $214,243, or 97%.

and marketing expenses decreased for the three months ended September 30, 2023 as compared to the corresponding period in 2022 as we

focused our resources on our IPO.

Our travel expenses decreased for the same reason, as we reduced our international travel.

shipping and handling expenses increased primarily due to increased international shipping rates.

and wages for the three months ended September 30, 2023 was $222,764, compared to $110,091 for the three months ended September 30, 2022,

an increase of $112,673, or 102%.

This increase was primarily attributable to increased headcount in line with our expanded operations.

fees for the three months ended June 30, 2023 was $158,205, compared to $120,132 for the three months ended June 30, 2022, an increase

of $38,073, or 32%.

fees for the three months ended September 30, 2023 was $218,160, compared to $112,519 for the three months ended September 30, 2022,

an increase of $105,641, or 94%.

This increase was primarily attributable to increased consulting fees.

expense for the three months ended June 30, 2023 was $55,758, compared to $81 for the three months ended June 30, 2022, an increase of

The increase was primarily due to depreciation associated with our EnWave 60kW Vacuum Microwave Dehydration and Chiller Machines,

which were installed at our contract manufacturer in Peru in the third quarter of 2022.

expense for the three months ended September 30, 2023 was $55,939, compared to $37,252 for the three months ended September 30, 2022,

an increase of $18,687, or 50%.

The increase was primarily due to depreciation associated with our EnWave 60kW Vacuum Microwave Dehydration

and Chiller Machines, which were installed at our contract manufacturer in Peru in the third quarter of 2022.

Income (Expense)

the three months ended June 30, 2023, other expense was $219,640, consisting of $222,551 of interest expense, as partially offset by

$2,911 of interest income.

For the three months ended June 30, 2022, other expense was $207,108, consisting of $211,158 of interest expense,

as partially offset by $4,050 of interest income.

Other expense increased by $12,532, or 6%, primarily due to the increased interest

on a greater debt burden in the current period, which was mostly settled in June of 2023.

loss for the three months ended June 30, 2023 was $973,510, compared to $880,288 for the three months ended June 30, 2022, an increased

net loss of $93,222, or 11%.

The increased net loss was primarily due to $214,243 of increased salaries and wages as we expanded our

staff during the current period, as partially offset by $155,794 of improved gross profits over the comparative period.

of Operations for the Six Months Ended June 30, 2023 and 2022

following table summarizes selected items from the statement of operations for the six months ended June 30, 2023 and 2022, respectively.

Six Months Ended

the three months ended September 30, 2023, other expense was $7,003 on a net basis, consisting of $10,004 of interest expense, as partially

offset by $3,001 of interest income.

For the three months ended September 30, 2022, other expense was $214,409 on a net basis, consisting

of $217,346 of interest expense, as partially offset by $2,937 of interest income.

Other expense decreased by $207,406, or 97%, primarily

due to the decreased interest on debt which was mostly settled in June of 2023.

loss for the three months ended September 30, 2023 was $705,993, compared to $816,281 for the three months ended September 30, 2022,

a decreased net loss of $110,288, or 14%.

The decreased net loss was primarily due to $207,342 of decreased interest expense on debt

that was mostly settled in June of 2023, as partially offset by $112,673 of increased salaries and wages as we expanded our staff during

the current period.

of Operations for the Nine Months Ended September 30, 2023 and 2022

following table summarizes selected items from the statement of operations for the nine months ended September 30, 2023 and 2022, respectively.

Nine Months Ended

September 30,

Cost of goods sold

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$ (1,339,940 )

net revenue for the six months ended June 30, 2023 was $440,405, compared to $543,719 for the six months ended June 30, 2022, a decrease

of $103,314, or 19%.

The decrease in revenue was primarily due to our having had several large purchase orders from Costco in the six

months ended June 30, 2022 which were not replicated in the six months ended June 30, 2023.

net revenue for the nine months ended September 30, 2023 was $1,347,401, compared to $725,649 for the nine months ended September 30,

2022, an increase of $621,752, or 86%.

The increase in revenue was primarily due to increased sales to big box retailers during the nine

months ended September 30, 2023.

of Goods Sold and Gross Profit (Loss)

cost of goods sold for the six months ended June 30, 2023 was $376,862, compared to $702,506 for the six months ended June 30, 2022,

a decrease of $325,644 or 46%.

Cost of goods sold decreased primarily in line with the decrease in our sales for the period and a reduction

in our shipping costs, which, in turn, was primarily a result of our transition to bulk shipping arrangements.

As a result of the foregoing,

we had gross profit of $63,543 for the six months ended June 30, 2023 as compared to a gross loss of $158,787 for the six months ended

June 30, 2022.

cost of goods sold for the nine months ended September 30, 2023 was $1,255,526, compared to $875,336 for the nine months ended September

30, 2022, an increase of $380,190 or 43%.

Cost of goods sold increased primarily in line with the increase in our sales for the period

and a reduction in our shipping costs, which, in turn, was primarily a result of our transition to bulk shipping arrangements.

of the foregoing, we had gross profit of $91,875, or 7%, for the nine months ended September 30, 2023, as compared to a gross loss of

$149,687, or (21%), for the nine months ended September 30, 2022.

Our gross profit margin increased primarily due to cost savings realized

as a result of our transition to bulk shipping arrangements during the current period.

and Administrative

general and administrative expense for the six months ended June 30, 2023 was $321,931, compared to $394,576 for the six months ended

June 30, 2022, a decrease of $71,509, or 34%.

The largest components of our general and administrative expenses are advertising and marketing,

travel, and storage, shipping and handling expense.

Six Months Ended June 30,

general and administrative expense for the nine months ended September 30, 2023 was $552,390, compared to $745,686 for the nine months

ended September 30, 2022, a decrease of $193,296, or 26%.

The largest components of our general and administrative expenses are advertising

and marketing, travel, and storage, shipping and handling expense.

Nine Months Ended September 30,

Advertising and marketing

Storage, shipping and handling

and marketing expenses decreased for the six months ended June 30, 2023, as compared to the corresponding period in 2022 as we focused

our resources on our IPO.

Our travel expenses increased in connection with commencing new operations that required travel to Peru during

the first quarter of 2023.

And, storage, shipping and handling expenses increased primarily due to increased international shipping rates.

and wages for the six months ended June 30, 2023 was $688,048, compared to $320,872 for the six months ended June 30, 2022, an increase

of $367,176, or 114%.

and marketing expenses decreased for the nine months ended September 30, 2023, as compared to the corresponding period in 2022 as we

focused our resources on our IPO.

Our travel expenses increased minimally, and storage, shipping and handling expenses increased primarily

due to increased international shipping rates.

and wages for the nine months ended September 30, 2023 was $910,812, compared to $430,963 for the nine months ended September 30, 2022,

an increase of $479,849, or 111%.

This increase was primarily attributable to increased headcount in line with our expanded operations.

fees for the six months ended June 30, 2023 was $302,346, compared to $283,435 for the six months ended June 30, 2022, an increase of

$18,911, or 7%.

fees for the nine months ended September 30, 2023 was $520,506, compared to $395,954 for the nine months ended September 30, 2022, an

increase of $124,552, or 31%.

This increase was primarily attributable to increased consulting fees.

expense for the six months ended June 30, 2023 was $111,581, compared to $162 for the six months ended June 30, 2022, an increase of

The increase was primarily due to depreciation associated with our EnWave 60kW Vacuum Microwave Dehydration and Chiller Machines,

which were installed at our contract manufacturer in Peru in the third quarter of 2022.

expense for the nine months ended September 30, 2023 was $167,520, compared to $37,414 for the nine months ended September 30, 2022,

an increase of $130,106, or 348%.

The increase was primarily due to depreciation associated with our EnWave 60kW Vacuum Microwave Dehydration

and Chiller Machines, which were installed at our contract manufacturer in Peru in the third quarter of 2022.

Income (Expense)

the six months ended June 30, 2023, other expense was $390,240, consisting of $395,996 of interest expense, as partially offset by $5,756

of interest income.

During the comparative six months ended June 30, 2022, other expense was $1,822,423, consisting of $1,829,446 of

interest expense, as partially offset by $7,023 of interest income.

Other expense decreased by $1,432,183, or 79%, primarily due to the

decreased amortization of debt discounts in the current period.

loss for the six months ended June 30, 2023 was $1,750,603, compared to $2,980,255 during the six months ended June 30, 2022, a decreased

net loss of $1,229,652, or 41%.

The decreased net loss was primarily due to $222,330 of improved gross profits and a reduction of $1,433,450

of interest expense related to the amortization of debt discounts in the prior period that were not recognized in the current period,

as partially offset by $367,176 of increased salaries and wages as we expanded our headcount during the current period.

the nine months ended September 30, 2023, other expense was $397,243, consisting of $406,000 of interest expense, as partially offset

by $8,757 of interest income.

During the comparative nine months ended September 30, 2022, other expense was $2,036,832, consisting of

$2,046,792 of interest expense, as partially offset by $9,960 of interest income.

Other expense decreased by $1,639,589, or 80%, primarily

due to the decreased amortization of debt discounts and reductions in interest expense on debt which was mostly settled in June of 2023.

loss for the nine months ended September 30, 2023 was $2,456,596, compared to $3,796,536 during the nine months ended September 30, 2022,

a decreased net loss of $1,339,940, or 35%.

The decreased net loss was primarily due to $241,562 of improved gross profits and a reduction

of $1,640,792 of interest expense related to the amortization of debt discounts in the prior period that were not recognized in the current

period and reductions in interest expense on debt which was mostly settled in June of 2023, as partially offset by $479,849 of increased

salaries and wages as we expanded our headcount during the current period.

and Capital Resources

following table summarizes our total current assets, liabilities and working capital as of June 30, 2023 and December 31, 2022.

following table summarizes our total current assets, liabilities and working capital as of September 30, 2023 and December 31, 2022.

September 30,

Current Assets

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$ (7,291,560 )

of June 30, 2023, we had working capital of $2,878,089.

of September 30, 2023, we had working capital of $2,279,827.

We have incurred net losses since our inception and we anticipate net losses

and negative operating cash flows for the near future, and we may not be profitable or realize growth in the value of our assets.

our primary sources of capital have been cash generated from the sales of our product, common stock sales, and debt financing.

June 30, 2023, we had cash of $1,588,794, total liabilities of $785,826, and an accumulated deficit of $10,635,434.

As of December 31,

2022, we had cash of $312,697, total liabilities of $8,404,033, and an accumulated deficit of $8,884,831.

of the Six Months Ended June 30, 2023 and the Six Months Ended June 30, 2022

date, our primary sources of capital have been cash generated from the sales of our products, common stock sales, and debt financing.

As of September 30, 2023, we had cash of $1,008,484, total liabilities of $757,082, and an accumulated deficit of $11,341,427.

December 31, 2022, we had cash of $312,697, total liabilities of $8,404,033, and an accumulated deficit of $8,884,831.

of the Nine Months Ended September 30, 2023 and the Nine Months Ended September 30, 2022

following table sets forth the primary sources and uses of cash for the periods presented below:

Six Months Ended

Nine Months Ended

September 30,

Net cash used in operating activities

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Cash Used in Operating Activities

cash used in operating activities was $2,799,724 for the six months ended June 30, 2023, compared to $1,222,201 for the six months ended

June 30, 2022, an increase of $1,577,523, or 129%.

The increase was primarily due to increased inventory purchases and payments on accounts

payable from our use of IPO proceeds.

cash used in operating activities was $3,258,248 for the nine months ended September 30, 2023, compared to $2,013,591 for the nine months

ended September 30, 2022, an increase of $1,244,657, or 62%.

The increase was primarily due to increased accounts receivable, inventory

purchases and payments on accounts payable from our use of IPO proceeds.

Cash Used in Investing Activities

cash used in investing activities was $10,100 for the six months ended June 30, 2023, compared to $27,090 for the six months ended June

30, 2022, a decrease of $16,990, or 63%.

This decrease was primarily attributable to decreased property and equipment purchases, as partially

offset by advances received on notes receivable in the prior period that were not replicated in the current period.

cash used in investing activities was $66,565 for the nine months ended September 30, 2023, compared to $22,436 for the nine months ended

September 30, 2022, a decrease of $44,129, or 197%.

This decrease was primarily attributable to decreased property and equipment purchases,

as partially offset by advances received on notes receivable in the prior period that were not replicated in the current period.

Cash Provided by Financing Activities

cash provided by financing activities was $3,850,171 for the six months ended June 30, 2023, compared to $1,743,139 for the six months

ended June 30, 2022, an increase of $2,107,032, or 121%.

Our increased cash provided by financing activities was primarily from the net

proceeds received in our IPO in the current period, as partially offset by debt repayments.

cash provided by financing activities was $3,784,850 for the nine months ended September 30, 2023, compared to $1,652,220 for the nine

months ended September 30, 2022, an increase of $2,132,630, or 129%.

Our increased cash provided by financing activities was primarily

from the net proceeds received in our IPO in the current period, as partially offset by debt repayments.

TO CONTINUE AS A GOING CONCERN

of September 30, 2023, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $11,341,427,

with working capital of only $2,279,827.

We are too early in our development stage to project future revenue levels, and may not be able

to generate sufficient funds to sustain our operations for the next twelve months.

Accordingly, we may need to raise additional cash

to fund our operations.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

the event sales do not materialize at the expected rates, management would seek additional financing and would attempt to conserve cash

by further reducing expenses.

There can be no assurance that we will be successful in achieving these objectives;

therefore, without

sufficient financing it would be unlikely for the Company to continue as a going concern.

condensed 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.

The condensed 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.

Our ability to scale production and distribution capabilities and further increase the value

of our brands, is largely dependent on our success in raising additional capital.

ACCOUNTING POLICIES AND ESTIMATES

financial results are affected by the selection and application of accounting policies and methods.

In the six-month period ended June

In the three-month period ended September

30, 2023 there were no changes to the application of critical accounting policies previously disclosed in the Prospectus.

36 unchanged sentences

these trademarks and tradenames.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined

in Rule 12b-2 of the Exchange Act.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis