BranchOut Food Inc. 10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31 , 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number: 001-41723 BRANCHOUT FOOD INC. (Exact name of registrant as specified in its charter) nevada 87-3980472 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 205 SE Davis Ave. , Suite C Bend , Oregon 97702 (Address of principal executive offices and zip code) Registrant’s telephone number, including area code: (844) 263-6637 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock BOF Nasdaq Capital Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant based upon the closing price of $1.73 per share as of June 30, 2024 was approximately $ 14,304,692 . As of April 14, 2025, there were 9,584,769 shares of registrant’s common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE: None TABLE OF CONTENTS Page PART I 1 Item 1. Business 2 Item 1A. Risk Factors 7 Item 1B. Unresolved Staff Comments 20 Item 1C. Cybersecurity 20 Item 2. Properties 20 Item 3. Legal Proceedings 21 Item 4. Mine Safety Disclosures 21 PART II 22 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 22 Item 6. [Reserved] 25 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 36 Item 8. Financial Statements and Supplementary Data 37 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 38 Item 9A. Controls and Procedures 38 Item 9B. Other Information 39 PART III 39 Item 10. Directors, Executive Officers and Corporate Governance 39 Item 11. Executive Compensation 42 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 44 Item 13. Certain Relationships and Related Transactions, and Director Independence 45 Item 14. Principal Accounting Fees and Services 48 PART IV 49 Item 15. Exhibits and Financial Statement Schedules 49 SIGNATURES 51 i PART I Forward Looking Statements This Form 10-K contains “forward-looking” statements including statements regarding our expectations of our future operations. For this purpose, any statements contained in this Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation: ● the factors set forth under “ Risk Factors ” in this Form 10-K; ● the fact that we have a limited operating history; ● the expected growth of our business and our Company; ● our ability to comply with Nasdaq continued listing requirements; ● estimates of our total addressable market and our expectations about market trends; ● whether we are able to achieve commercial success and market acceptance for our products; ● our expectations regarding competitive companies and technologies and our industry generally; ● the impact on our business, financial condition and results of operation from COVID-19, or any pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide; ● our ability to manage and grow our business by expanding our commercial organization and increasing our sales to existing and new customers in current and new geographies; ● our ability to manufacture sufficient quantities of our products with sufficient quality; ● our ability to accurately forecast customer demand for our products and manage our inventory; ● our ability to establish and maintain intellectual property protection for our products or avoid future claims of infringement; ● tariffs imposed on the importation of our products into the United States; ● U.S. or foreign regulatory actions affecting us or the food and beverage industry generally; ● the timing or likelihood of making regulatory filings and obtaining regulatory approvals; ● our ability to hire and retain key personnel; ● our ability to obtain additional financing if and when required for our operations; ● our ability to comply with government laws, rules and regulations both in the United States and internationally; and ● our expectations regarding the time during which we will be an emerging growth company under the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”). The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. While we believe these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results, performance, or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Given these risks and uncertainties, you are cautioned not rely on such forward-looking statements as predictors of future events. Forward-looking statements are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements included in this Form 10-K. Any forward-looking statement that we make in this Form 10-K speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, changed circumstances, future events or otherwise. 1 ITEM 1. BUSINESS Overview BranchOut Food Inc. (together with its subsidiaries, the “Company,” “BranchOut,” “we,” “our,” or “us”) was originally incorporated as AvoChips Inc., an Oregon corporation, on February 21, 2017. On November 2, 2017, AvoChips Inc. converted into Avochips, LLC, an Oregon limited liability company and on November 19, 2021, Avochips, LLC converted into a Nevada corporation named BranchOut Food Inc. We are engaged in the development, marketing, sale, and distribution of plant-based, dehydrated fruit and vegetable snacks and powders. Our products have historically been manufactured for us by two contract manufacturers, one based in the Republic of Chile, and the other in the Republic of Peru, which housed our large-scale continuous through-put dehydration machine that completed its first production run in the first quarter of 2023. Our dehydrated fruit and vegetable products are produced using a new proprietary dehydration technology licensed by us from a third party. Our customers are primarily located throughout the United States. In 2024, we decided to initiate our own production facility in Peru to become vertically integrated. We recently completed the build out of the new facility (the “Peru Facility”), which commenced operations in December 2024, and utilizes three large-scale REV machines (a REV 60, REV 100 and REV 120) that we recently purchased from EnWave Corporation (“EnWave”), as well as, a small REV 10 R&D machine that is being used for product development and customer sample purposes. Using our licensed technology platform, we believe our lines of branded, private-label and industrial ingredient products positively address current consumer trends. In our experience, conventional dehydration methods, such as freeze-drying and air drying, tend to degrade most fruit and vegetables through oxidation, browning/color degradation, nutritional content reduction and/or flavor loss. As a result, certain highly sensitive fruits, such as avocados and bananas, have not previously been successfully offered as a dehydrated base for consumer products. We believe that our licensed technology platform and process is the only way to produce quality avocado and banana-based snack and powdered products. Additionally, we believe our licensed technology platform produces superior products when using other fruits and vegetables when compared to conventional drying and dehydration technologies. We license technology, consisting of a portfolio of patents, and purchased production machines, from EnWave, and we have been granted the exclusive rights to use the licensed technology platform as applied to several core products in Peru, and avocado based products in the United States. In addition, BranchOut has the nonexclusive rights to use the licensed technology platform for other products. We entered into a private labeling contract with one of the world’s largest retailers in late 2022 to supply the retailer with two products for placement in half of their domestic stores. In late 2023, the same retailer agreed to carry two additional products of ours in certain of their stores. In April 2024, we received a commitment from this retailer to carry another product of ours in their stores. Based on this most recent commitment, our products have been carried in a total of 1,400 of this retailer’s stores as of December 31, 2024. On October 23, 2024, we entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) with Alexander Capital, L.P. (“Alexander Capital”) for the sale of shares of common stock from time to time through Alexander Capital having an aggregate offering price of up to $3 million. As of December 31, 2024, we had sold 1,317,307 shares of common stock under the ATM Agreement resulting in gross proceeds of approximately $2.5 million and aggregate net proceeds of approximately $2.3 million, after deducting expenses, including a 3% commission paid to Alexander Capital. Subsequent to December 31, 2024, the ATM Agreement was amended to increase the aggregate offering price of shares of common stock that may be sold under the ATM Agreement to $5 million. Following December 31, 2024, we sold 1,303,115 additional shares of common stock under the ATM for gross proceeds of approximately $2.5 million and aggregate net proceeds of approximately $2.4 million. As of the date of the filing of this Annual Report on Form 10-K, as a result of such sales of common stock under the ATM Agreement, the Company believes it has stockholders’ equity in excess of $2.5 million, in compliance with Nasdaq Listing Rule 5550(b)(1). In June 2023, we completed our initial public offering (“IPO”) in which we issued 1,190,000 shares of common stock at a price of $6.00 per share. We received net proceeds of $6,226,000 in the IPO after deducting underwriters’ discounts and commissions and before consideration of other issuance costs. In connection with the IPO, a total of $6,029,204 of convertible debt, consisting of $5,526,691 of principal and $502,513 of interest, was converted into 1,572,171 shares of common stock. 2 Our Products We plan to continue to grow revenues strategically by penetrating the multi-billion dollar grocery, industrial ingredient and online market. Our current product line includes: ● BranchOut Snacks: dehydrated fruit and vegetable-based snacks, including Avocado Chips, Chewy Banana Bites, Pineapple Chips, Brussels Sprout Crisps, Strawberry Crisps and Bell Pepper Crisps. ● Private Label: Prunes, Carrots, Brussel Sprouts and Raisins sold to major retailers. ● BranchOut Industrial Ingredients: Banana, Mango, Blueberry, Pineapple, Cherry Tomato, Avocado and many others. We are currently developing many additional products for all sales channels. BranchOut Snacks We currently produce all of our BranchOut snack products at our plant in Peru using our licensed technology. Our snacks are mostly single ingredient products. Our Avocado Chips are real avocado slices, dehydrated using our licensed technology and process to create crispy, crunchy avocado slices while maintaining their vibrant green color, rich creamy avocado flavor, and superfood nutritional content. We offer these in three flavors, “Sea Salt with a Hint of Lime”, “Chili Lime” and “Sriracha” seasoned topically on the avocado slices. We also offer a “Chewy Banana Bite”. Each “Banana Bite” is an actual banana slice, providing a unique marshmallow-like, chewy texture. Previous market offerings in the banana snack space include fried plantain chips and dark brown air-dried banana snacks. We believe that our “Chewy Banana Bite” product is superior due to its fresh-looking, natural yellow color, single ingredient base and fresh banana flavor. We offer the banana bites in two flavors, “Original”, and “Cinnamon Churro”. According to widely accepted market data, fresh bananas have historically shown to be the most consumed fruit in America and the highest selling item in grocery stores; however, we do not believe that any banana snack has been offered prior to our “Chewy Banana Bite” product that is of similar quality. Our “Pineapple Chip” product is made up of 100% dried pineapple slices. The Pineapple Chips are made from real pineapple slices and offer a fresh pineapple flavor. In addition, we recently added two vegetable-based snacks, Brussels Sprout Crisps and Bell Pepper Crisps to our BranchOut branded product line. BranchOut Private Label We also manufacture and supply products to major retailers in North America on a private label basis. The business line allows us to manufacture and supply fruits and vegetables from South America to the distribution centers of major US retailers. BranchOut Industrial Ingredients While BranchOut remains focused on the growth of its branded snack business, demand for industrial ingredients has continued to increase as we expand our market presence. To accelerate the scaling of this growing business line, we have entered into an Agreement with MicroDried, a market leader in premium dried ingredients. This partnership leverages MicroDried’s strong industry relationships and sales infrastructure alongside BranchOut’s proprietary GentleDry™ technology. Under the agreement, the companies will collaborate on the production and commercialization of fruit and vegetable pieces, powders and fragments, manufactured at our Peru Facility. The collaboration is expected to generate several million dollars in annual ingredient sales for BranchOut, with upside potential as the partnership expands. Products in Development We are currently working on several new items at the request of major national retailers, consumer product brands and ingredient manufacturers for their private label brand, as well as our own brand. In addition, we have been in discussions with the U.S. Army about the possibility of including certain of our products in their Meals Ready-to-Eat for their personnel. The U.S. Army has asked us to develop snack concepts for sensory and shelf-life testing, which is currently in progress. Separately, we have been developing a line of salad toppers with one of the largest salad dressing producers in the U.S. 3 Industry We operate within the U.S. grocery market, which reached approximately $1.5 trillion in 2024, making it the largest retail sector in the country by sales volume. Within this market, BranchOut is focused on the growing demand for clean-label, minimally processed snack products that meet modern consumer expectations for quality, convenience, and transparency. The shift in consumer behavior over the past several years has moved firmly away from highly processed, artificial, and sugar-laden packaged foods. Shoppers are increasingly seeking snacks with short ingredient lists, simple processing, and real food appeal, especially in categories like chips, fruit snacks, and shelf-stable produce alternatives. This trend is reflected in the rapid expansion of premium snack sets in national retailers, club stores, and e-commerce platforms. Among shelf-stable snack technologies, freeze-drying has gained popularity for its ability to extend shelf life while maintaining nutritional integrity. However, freeze-dried products often suffer from poor texture, muted flavor, and high production costs—limitations that have hindered broader consumer adoption. We believe that many traditional snack brands, and freeze-dried products in particular, are failing to meet evolving consumer demands. BranchOut is uniquely positioned to fill this gap with our proprietary GentleDry™ technology, which delivers superior taste, texture, and color, while preserving up to 95% of the nutrition found in fresh produce. Our Growth Strategy BranchOut’s long-term goal is to build a scalable and widely recognized brand that delivers exceptional products across multiple grocery aisles, supported by complementary private label and bulk ingredient businesses. In a category crowded with short-lived brands and lookalike products, we believe that a reputation for quality and trust remains one of the most effective barriers to entry and a critical driver of long-term value in the competitive consumer-packaged goods space. In addition, we aim to leverage our capabilities by offering major retailers private label products. These two approaches make up the heart of our platform strategy. Our primary growth strategies are as follows: Open-Ended and Long Duration Growth Opportunity in the Enormous Grocery Market The U.S. grocery market is one of the largest retail end-markets in the world. BranchOut’s strategy is to maximize penetration of this opportunity through a variety of avenues, including growing brand trust and recognition, significantly expanding our grocery distribution footprint to multiples of our current level of customer retail locations, driving shelf velocity through an acceleration of online and offline advertising and introducing new products to expand our store footprint. Exposure to Plant-Based, Functional and Natural Foods Portions of the Grocery Market Within the grocery category, there is an ongoing secular shift from highly processed legacy brands that demonstrate little nutritional benefit to natural, nutrient-dense, functional and plant-based alternatives. We expect that the shift in consumer tastes driving the growth of natural and plant-based alternatives will continue for the foreseeable future as consumers become better educated on nutrition and focus on health and wellness. There is also clear evidence that an increasing number of natural and plant-based products in stores are moving beyond the natural and specialty segments and into conventional grocery stores. The continuation of these trends should benefit BranchOut as we seek to penetrate the very large overall grocery market. Continued Expansion of Distribution Footprint Currently, our products are marketed and sold through a diverse set of physical retail channels, including grocery chains, club stores, specialty and natural food outlets, and on our website at www.branchoutfood.com. Maximizing potential distribution would be a key growth driver for BranchOut and our goal is to expand distribution so that our products are available wherever our customers choose to shop, whether it be a retail store, food service environment or directly online. While expanding distribution, we plan to simultaneously increase our brand awareness through an extensive program of online and offline marketing initiatives to accelerate the sell-through velocity of our products once they reach the shelves of our wholesale partners. Maximize Market Penetration of Existing Product Lines We believe that our existing snacks and nutritional powders represent a multi-billion-dollar opportunity. We believe simply penetrating these core markets with our differentiated product lines will provide BranchOut with a large and long-duration growth opportunity. In the near-term, BranchOut plans to focus on growing its share within these categories. We plan to drive growth and brand recognition of both our snacks and nutritional powders through distribution expansion and increased marketing and advertising. We plan to also attempt to leverage our new and existing wholesale relationships to gain additional shelf space for our full suite of existing products. 4 Expected Increases in Gross Margins, Fixed-Cost Leverage and a Capital Efficient Sales and Marketing Strategy Should Allow Earnings to Grow Faster than Sales, Providing a Path to Profitability While generating topline growth is of primary importance to BranchOut, we are also highly focused on growing earnings faster than net sales and achieving profitability. Our new large-scale continuous throughput dehydration machine was commissioned in September 2022 and we completed the first production run in the first quarter of 2023. During 2024, we completed the build out of our 50,000 square-foot facility in Peru, which commenced operations in December 2024, and utilizes three large-scale REV machines that we recently purchased from EnWave, as well as, a small REV 10 R&D machine that is being used for product development and customer sample purposes. We expect operating margins to be further improved in 2025, as we become more vertically integrated with the transition of more of our production from third party contract manufacturers to internal production. New Product Development We intend to grow by launching new products over time. In the first and second quarters of 2020, we launched three flavors of Avocado Chips, three flavors of our Chewy Banana Bites and our Pineapple Chips. In the first quarter of 2022, we launched Banana Powder and Blueberry Powder to complement our Avocado Powder which was already on the market. In 2023, we launched a line of vegetable-based snacks including Brussels Sprout Crisps, and Bell Pepper Crisps, and in March 2024 we introduced our Salad Toppers and Kids Snack Pack line aimed at kids’ school lunches. We are also developing Broccoli Bites, Mango Chips, Mandarin Crisps and others. In addition, we are developing several new items at the request of a national retailer which are planned to be sold under their brand. These new products have been, and we expect that our future products will be, developed primarily through internal research and development. Using our unique licensed technology and South American supply chain, we believe that BranchOut is in a position to create a wide variety of innovative new products. We intend to continue to create innovative products that conform to our brand ethos of uniqueness, great taste, high-quality ingredients, nutritional density, and functionality. Regulation Our operations involve food products and are subject to the oversight of, among others, the Food and Drug Administration (the “FDA”) and state, local and foreign counterparts, and United States Department of Agriculture (the “USDA”). The FDA, pursuant to the FDCA, as amended by the Food Safety Modernization Act (“FSMA”), enforces statutory standards regarding the growing, harvesting, manufacturing, processing, packaging, holding, distributing, importing, exporting, labeling and safety of food products, establishes requirements for or limitations on ingredients or substances in foods and establishes standards of identity for certain foods. Similar functions are performed by state, local and foreign governmental entities with respect to food products produced or distributed in their respective jurisdictions. FSMA, which is a major reform of U.S. food safety laws, aims to ensure the U.S. food supply is safe by focusing on preventing contamination. We have been working to comply with the new requirements of FSMA as the FDA has begun implementing and enforcing these provisions, and we will aim to ensure continued compliance as new regulations are promulgated and additional requirements go into effect. The USDA regulates imports and exports of agricultural and food products into and from the United States. The USDA also oversees the National Organic Program, which provides the national standards for labeling products as USDA organic, and regulates the introduction of certain genetically engineered organisms. Competition The food retail industry is very competitive. We compete with a number of Natural, Organic and Functional Food and Beverage producers, including Bare Snacks, which is a brand owned by PepsiCo, Rind Snacks, Inc., and Mariani Packing Co., Inc. In addition, our online business competes with food retail stores, supermarkets, warehouse clubs and other mass and general retail and online merchandisers. We face significant competition from these producers and retailers. Any changes in their merchandising and operational strategies could negatively affect our sales and profitability. In particular, if Natural, Organic and Functional Food and Beverage competitors seek to gain or retain market share by reducing prices, we would likely be forced to reduce our prices on similar product offerings in order to remain competitive, which may result in a decrease in our market share, net sales and profitability and may require a change in our operating strategies. 5 We have been able to compete successfully by differentiating ourselves from our competitors by providing an expanding selection of products, competitive pricing, convenience and customer service. If changes in consumer preferences decrease the competitive advantage attributable to these factors, or if we fail to otherwise positively differentiate our product offering or customer experience from our competitors, our business, financial condition, and results of operations could be materially and adversely affected. Many of our competitors have longer operating histories, greater brand recognition, larger fulfillment infrastructures, greater technical capabilities, significantly greater financial, marketing, and other resources and larger customer bases than we do. These factors may allow our competitors to derive greater net sales and profits from their existing customer bases, acquire customers at lower costs or respond more quickly than we can to new or emerging technologies and changes in consumer preferences or habits. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns, and adopt more aggressive pricing policies (including but not limited to predatory pricing policies and the provision of substantial discounts), which may allow them to build larger customer bases or generate net sales from those customer bases more effectively than we are able to execute upon. There can be no assurance that we will be able to successfully compete against these competitors. Principal Executive Offices Our principal executive offices are located at 205 SE Davis Ave., Suite C, Bend, Oregon 97702. Our telephone number is (844) 263-6637. We believe our facilities are adequate to meet our current and near-term needs. Employees As of March 31, 2025, we had approximately 185 full-time employees, including 180 employees in Peru. Our employees are not represented by labor unions. We consider our relationship with our employees to be positive. 6 ITEM 1A. Risk Factors The following important factors, and the important factors described elsewhere in this report or in our other filings with the SEC, could affect (and in some cases have affected) our results and could cause our results to be materially different from estimates or expectations. Other risks and uncertainties may also affect our results or operations adversely. The following and these other risks could materially and adversely affect our business, operations, results or financial condition. Risks Related to Our Operating History, Financial Position and Capital Needs We are an early-stage company and have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability. We are an early-stage company. We were formed and commenced operations in November 2017. We face all the risks faced by newer companies, including significant competition from existing and emerging competitors, many of which are established and have better access to capital. In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays, and other known and unknown factors. We will need to transition from an early-stage company to a company capable of supporting larger scale commercial activities. If we are not successful in such a transition, our business, results, and financial condition will be harmed. We have not been profitable to date, and we expect operating losses for the near future. During the years ended December 31, 2024 and 2023, we had net revenue of approximately $6,516,337 and $2,825,855, respectively, and incurred net losses of approximately $4,751,516 and $3,925,710, respectively. There can be no assurance that we will not continue to incur net losses in the future. We may not succeed in expanding our customer base and product offerings and even if we do, may never generate revenue that is significant enough to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Furthermore, we may not be able to control overhead expenses even where our operations successfully expand. Our failure to become and remain profitable would depress our value and could impair our ability to raise capital, expand our business, diversify our product offerings, or even continue our operations. Our audited financial statements for the years ended December 31, 2024 and 2023 included a statement from our independent registered public accounting firm that there is substantial doubt about our ability to continue as a going concern, and a continuation of negative financial trends could result in our inability to continue as a going concern. There is substantial doubt about our ability to continue as a going concern over the next twelve months and our independent registered public accounting firm has included a “going concern” explanatory paragraph in their report in our financial statements as of and for the years ended December 31, 2024 and 2023. If our operating results fail to improve, our financial condition will deteriorate which could render us unable to continue as a going concern. Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our securities. On April 11, 2024, we received a letter from Nasdaq stating that we were not in compliance with Nasdaq Listing Rule 5550(b)(1) (the “Rule”) because our stockholders’ equity of $2,210,476 as of December 31, 2023 was below the minimum requirement of $2,500,000. Pursuant to Nasdaq’s Listing Rules, on May 28, 2024, we submitted to Nasdaq a plan to regain compliance with the Rule, which was accepted by Nasdaq and provided us with an extension of 180 calendar days from April 11, 2024 (until October 8, 2024) to regain compliance with the Rule. On October 10, 2024, Nasdaq notified us that we did not meet the terms of the extension to regain compliance with the Rule, and as a result, unless we requested an appeal, trading of our common stock would be suspended. On October 11, 2024, we submitted a request for a hearing with Nasdaq’s Hearings Panel to appeal Nasdaq’s delisting determination, which stayed the suspension of trading of our common stock. As of November 14, 2024, as a result of the sale of 928,602 Shares under the ATM Agreement for aggregate gross offering proceeds of approximately $1,795,000, we regained compliance with the Rule, and the hearing before the Hearing Panel was cancelled. However, Nasdaq informed us that it will continue to monitor the Company’s ongoing compliance with the stockholders’ equity requirement and, if we fail to evidence compliance with the Rule upon the filing of its Annual Report on Form 10-K for the year ended December 31, 2024, we may be subject to delisting. As of December 31, 2024, we were again not in compliance with the Rule, with stockholders’ equity of $2,341,583 as reported in this Annual Report on Form 10-K. However, as a result of the sale of 1,303,115 additional shares of our common stock under the ATM Agreement following December 31, 2024 for net proceeds of approximately $2.4 million, as of the date of filing this Annual Report on Form 10-K, the Company believes it has regained compliance with the Rule. However, Nasdaq will continue to monitor the Company’s ongoing compliance with the stockholders’ equity requirement and, if at the time of its next periodic report the Company does not evidence compliance, it may be subject to delisting. A delisting would likely have a negative effect on the price of our common stock and may impair the ability of our stockholders to sell our stock. 7 We may need to raise additional capital to fund our existing commercial operations and develop and commercialize new products and expand our operations. If our available cash balances, net proceeds from financing activities, and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, we may seek to sell common stock or other securities, and/or seek additional debt financing. We may consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons, including to: ● increase our sales and marketing efforts and address competitive developments; ● provide for supply and inventory costs; ● maintain compliance with Nasdaq listing requirements; ● fund development and marketing efforts of any future products or additional features to then-current products; ● acquire, license or invest in new technologies; and ● acquire or invest in complementary businesses or assets. Our present and future funding requirements will depend on many factors, including: ● our ability to achieve revenue growth and improve gross margins; ● the cost of expanding our operations and offerings, including our sales and marketing efforts; ● the effect of competing market developments; and ● costs related to international expansion. The various ways we could raise additional capital carry potential risks. If we raise funds by issuing equity securities, dilution to our stockholders could result. Any equity securities issued also could provide for rights, preferences, or privileges senior to those of holders of shares of our common stock. If we raise funds by issuing debt securities, those debt securities would have rights, preferences, and privileges senior to those of holders of shares of our common stock. The terms of any debt securities issued or borrowings made pursuant to a credit agreement could impose significant restrictions on our operations. If we raise additional funds through collaborations and licensing arrangements, we might be required to relinquish significant rights or grant licenses on terms that are not favorable to us. Our current growth may not be indicative of our future growth, and our limited operating history may make it difficult to assess our future viability. We expect that, in the future, as our revenue increases, our revenue growth rate will decline. We also believe that growth of our revenue depends on several factors, including our ability to: ● expand our existing channels of distribution; ● develop additional channels of distribution; ● grow our customer base; ● cost-effectively increase online sales on our website and third-party marketplaces; ● effectively introduce new products; ● increase awareness of our brand; ● manufacture at a scale that satisfies future demand; and ● effectively source key raw materials. We may not successfully accomplish any of these objectives. We have not yet demonstrated the ability to manage rapid growth over a long period of time or achieve profitability at scale. Consequently, any predictions regarding our future success or viability may not be as accurate as they could be if we had a longer operating history or had previously achieved profitability. We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy. Our growth has placed, and may continue to place, significant demands on our organizational, administrative, and operational infrastructure, including manufacturing operations, quality control, technical support and customer service, sales force management and general and financial administration. As we continue to grow, we will need to make significant investments in multiple divisions of our company, including in sales, marketing, product development, information technology, equipment, facilities, and human resources. We will also need to improve our operational, financial and management controls as well as our reporting systems and procedures. 8 If we are unable to manage our growth effectively, we may be unable to execute our business plan, which could have a material adverse effect on our business and our results of operations. Managing our planned growth effectively will require us to: ● maintain a low cost of customer acquisition relative to customer lifetime value; ● identify products that will be viewed favorably by customers; ● expand operations with our contract manufacturers; and ● successfully hire, train, and motivate additional employees, including additional personnel for our technology, sales and marketing efforts. The expansion of our products and customer base may result in increases in our overhead and selling expenses. Any increase in expenditures in anticipation of future sales that do not materialize would adversely affect our profitability. In addition, if we are unable to effectively manage the growth of our business, the quality of our products may suffer and we may be unable to address competitive challenges, which would adversely affect our overall business, operations, and financial condition. Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. Upon the completion of the IPO, we became subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and implemented disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. However, we believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. For example, our directors or executive officers could inadvertently fail to disclose a new relationship or arrangement causing us to fail to make a required related party transaction disclosure. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected. Risks Related to Our Business We are dependent on our management team, and the loss of any key member of this team may prevent us from implementing our business plan in a timely manner, or at all. Our success depends largely upon the continued services of our executive officers and other key personnel, particularly our Chief Executive Officer, Eric Healy. Our executive officers or key personnel could terminate their employment with us at any time without penalty. In addition, we do not maintain key person life insurance policies on any of our employees. The loss of one or more of our executive officers or key personnel could seriously harm our business and may prevent us from implementing our business plan in a timely manner, or at all. Our Chief Financial Officer is not a full-time employee. John Dalfonsi, our Chief Financial Officer, is not a full-time employee of the Company and is simultaneously serving other interests. There can be no assurance that we will be able to successfully manage our finance and accounting matters without a full time Chief Financial Officer. Our business is reliant on the license we have been granted to utilize certain dry processing technology we use to manufacture our products in the agreed upon exclusive region. Our ability to continue our business of growth and distribution of our products is dependent on the licensing agreement (the “Licensing Agreement”) we entered into with EnWave to utilize its dehydration technology in the manufacturing of our products. Our license is exclusive to North America, Central America, and South America (excluding our contract manufacturer in Chile) as it specifically relates to our avocado products and Peru, and the Licensing Agreement grants non-exclusive rights for a variety of additional products. Any failure to comply with the terms of the Licensing Agreement could convert the exclusive portion of the license to a non-exclusive license, thereby permitting potential competitors to produce comparable avocado-based products using EnWave’s dehydration technology in the same geographic areas. Thus, any material failure to comply with the terms of the license or any failure to renew the license after it expires could have a material adverse impact on our financial condition and the operation of our business as it relates to our avocado-based products. Furthermore, we are reliant on EnWave to enforce its intellectual property rights in preventing would be competitors from using the technology exclusively licensed to us and there can be no assurance that EnWave will be successful in enforcing such rights in the relevant areas. Furthermore, future product development efforts may lead to additional products that we desire to commercialize. In this case, we will request expanding the exclusive and/or non-exclusive products defined by the Licensing Agreement, but there can be no assurance that EnWave will grant such requests. 9 We rely on a small number of suppliers to provide our raw materials, and our supply chain may be interrupted and prevent us from obtaining the necessary materials we need to operate. We rely on limited number of suppliers and partners to meet our high-quality standards and supply products in a timely and efficient manner. There is, however, no assurance that quality natural and organic products will continue to be available to meet our specific and growing needs. This may be due to, among other reasons, problems with our suppliers’ and vendors’ businesses, finances, labor relations, ability to export materials, product quality issues, costs, production, insurance and reputation, as well as disease pandemics, epidemics or outbreaks such as COVID-19, acts of war, terrorism, natural disasters, fires, earthquakes, flooding or other catastrophic occurrences. If, for any reason, our suppliers or vendors became unable or unwilling to continue to provide services to us, this would likely lead to an interruption in our ability to import our products until we find another source that could provide these services. Failure to find a suitable replacement, even on a temporary basis, would have a material adverse effect on our ability to meet our current production targets, make it difficult to grow and would have an adverse effect on our results of operations. Competition in the food retail industry is intense and presents an ongoing threat to the success of our business. The food retail industry is very competitive. In our online and wholesale business, we compete with food retail stores, supermarkets, warehouse clubs and other mass and general retail and online merchandisers, many of which are larger than us and have significantly greater capital resources than we do, selling both competitive products and retailing our own products, and competing against our direct online business. We also compete with a number of Natural, Organic and Functional Food and Beverage producers. We face significant competition from these and other retailers and producers. Any changes in their merchandising and operational strategies could negatively affect our sales and profitability. In particular, competitors seek to gain or retain market share by reducing prices, we would likely be forced to reduce our prices on similar product offerings in order to remain competitive, which may result in a decrease in our market share, net sales and profitability and may require a change in our operating strategies. We have been able to compete successfully by differentiating ourselves from our competitors by providing an expanding selection of natural, organic, and functional food and beverage products, competitive pricing, convenience and exceptional customer service. If changes in consumer preferences decrease the competitive advantage attributable to these factors, or if we fail to otherwise positively differentiate our product offering or customer experience from our competitors, our business, financial condition, and results of operations could be materially and adversely affected. Many of our current competitors have, and potential competitors may have, longer operating histories, greater brand recognition, larger fulfillment infrastructures, greater technical capabilities, significantly greater financial, marketing, and other resources and larger customer bases than we do. These factors may allow our competitors to derive greater net sales and profits from their existing customer bases, acquire customers at lower costs or respond more quickly than we can to new or emerging technologies and changes in consumer preferences or habits. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns, and adopt more aggressive pricing policies (including but not limited to predatory pricing policies and the provision of substantial discounts), which may allow them to build larger customer bases or generate net sales from those customer bases more effectively than we are able to execute upon. There can be no assurance that we will be able to successfully compete against these competitors. We expect competition in the Natural, Organic and Functional Food and Beverage industry generally to continue to increase. We believe that our ability to compete successfully in this market depends upon many factors both within and beyond our control, including: ● the size and composition of our customer base; ● the number of products that we feature on our website; ● the quality and responsiveness of our customer service; ● our selling and marketing efforts; ● the quality and price of the products that we offer; ● the convenience of the shopping experience that we provide; ● our ability to distribute our products and manage our operations; and ● our reputation and brand strength. 10 Given the rapid changes affecting the global, national, and regional economies generally and the Natural, Organic and Functional Food and Beverage industry, we may not be able to create and maintain a competitive advantage in the marketplace. Our success will depend on our ability to respond to, among other things, changes in consumer preferences, laws and regulations, market conditions, and competitive pressures. Any failure by us to anticipate or respond adequately to such changes could have a material adverse effect on our financial condition, operating results, liquidity, cash flow and our operational performance. If we fail to compete successfully in this market, our business, financial condition, and results of operations would be materially and adversely affected. Our products are new, and our industry is rapidly evolving. To be successful we must, among other things: ● develop, manufacture, and introduce new attractive and successful consumer products in our BranchOut brand; ● attract and maintain a large customer base and develop and grow that customer base; ● increase awareness of our BranchOut brand and develop effective marketing strategies to ensure consumer loyalty; ● establish and maintain strategic relationships with key sales, marketing, manufacturing, and distribution providers; ● respond to competitive and technological developments; and ● attract, retain, and motivate qualified personnel. We cannot guarantee that we will succeed in achieving our goals, and our failure to do so would have a material adverse effect on our business, prospects, financial condition, and operating results. Some of our products are new and are in the early stages of commercialization, and some products that are important to our growth strategy are in various stages of research and development and have not yet been commercialized. Products in development that have not yet been commercialized include Broccoli Bites, Asparagus Sticks, Mango Chips and Mandarin Crisps and others. We are not certain that these, or any other future products, will be developed to commercialization, sell as anticipated, or be desirable to their intended markets. Also, some of our products may have limited uses and benefits, which may limit their appeal to consumers and put us at a competitive disadvantage. Developing new products and placing them into wholesale channels and into conventional and natural grocery environments is an expensive and time-consuming process, and if a product fails to sustain market acceptance, the investment made in the product may be lost. As is typical in a rapidly evolving industry, the development process and demand and market acceptance for recently introduced products are subject to a high level of uncertainty and risk. Because the market for our products is new, evolving and therefore uncertain, it is difficult to predict with any certainty the size of this market and its growth rate, if any. We cannot guarantee that we will be successful in developing new products, or that a market for our products will develop or that demand for our products will be sustainable. If we fail to develop new products, or the market for new products fails to develop, develops more slowly than expected or becomes saturated with competitors, our business, financial condition and operating results would be materially adversely affected. Our future results of operations may be adversely affected by volatile commodity costs. Many aspects of our business could be directly affected by volatile commodity costs. Agricultural commodities and raw materials, including avocados, bananas, pineapples, blueberries and other fresh produce, plastic film, cardboard, and other packaging materials, are the principal inputs used in our products. These items are subject to price volatility which can be caused by commodity market fluctuations, inflation, crop yields, seasonal cycles, weather conditions (including the potential effects of climate change), temperature extremes and natural disasters (including floods, droughts, water scarcity, frosts, earthquakes and hurricanes), pest and disease problems, changes in currency exchange rates, imbalances between supply and demand, natural disasters and government programs and policies, among other factors. Volatile fuel costs translate into unpredictable costs for the products and services we receive from our third-party providers including, but not limited to, distribution costs for our products and packaging costs. The volatility of such costs could have a material adverse effect on our results of operations. We are subject to the risks associated with sourcing and manufacturing products from, and conducting business operations outside of the United States, which could adversely affect our business. We purchase our products from a variety of suppliers, including international suppliers. Our direct purchases from non-US suppliers represented most of our raw material purchases in 2024 and 2023, and we expect our international purchases to grow. We may in the future also enter into agreements with distributors in foreign countries to sell our products. All of these activities are subject to the uncertainties associated with international business operations, including: ● difficulties with foreign and geographically dispersed operations; ● having to comply with various U.S. and international laws; 11 ● changes and uncertainties relating to foreign rules and regulations; ● tariffs, export or import restrictions, restrictions on remittances abroad, imposition of duties or taxes that limit our ability to import necessary materials; ● limitations on our ability to enter into cost-effective arrangements with distributors, or at all; ● fluctuations in foreign currency exchange rates; ● imposition of limitations on production, sale, or export in foreign countries, including due to COVID-19 or other epidemics, pandemics, outbreaks and quarantines; ● imposition of limitations on or increase of withholding and other taxes on remittances and other payments by foreign processors or joint ventures; ● imposition of differing labor laws and standards; ● economic, political, environmental, health-related or social instability in foreign countries and regions; ● an inability, or reduced ability, to protect our intellectual property; ● availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us; ● difficulties in recruiting and retaining personnel, and managing international operations; ● difficulties in enforcing contracts and legal decisions; and ● less developed infrastructure. In particular, there has been significant recent political instability in Peru and Chile, where our contract manufacturers are located. There can be no assurance that political instability in those countries will not materially and adversely affect our contract manufacturers and, in turn, our ability to source our products. If we expand into other target markets, we cannot assure you that our expansion plans will be realized, or if realized, be successful. We expect each market to have particular regulatory and funding hurdles to overcome, and future developments in these markets, including the uncertainty relating to governmental policies and regulations, could harm our business. If we expend significant time and resources on expansion plans that fail or are delayed, our reputation, business and financial condition may be adversely affected. In addition, we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, as amended, and similar worldwide anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to officials or other third parties for the purpose of obtaining or retaining business. While our policies mandate compliance with these anti-bribery laws, our internal control policies and procedures may not protect us from reckless or criminal acts committed by our employees or agents. Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations, cash flows and financial condition. Our results may be negatively affected by changes in foreign currency exchange rates. Currently, substantially all of our international purchase and sales contracts are denominated in U.S. dollars. As a result, a decrease in the value of the U.S. dollar relative to foreign currencies could increase our costs in dollars for the food products and ingredients that we import from other countries. In addition, if and when we expand into international markets, an increase in the value of the U.S. dollar relative to foreign currencies could require us to reduce our selling price or risk making our products less competitive in international markets. A larger portion of our revenues may be denominated in other foreign currencies if we expand into international markets. Conducting business in currencies other than U.S. dollars could subject us to fluctuations in currency exchange rates that could negatively affect our revenues, cost of revenues and operating margins and result in foreign currency translation gains and losses. We may be unable to adequately protect our brand and our other intellectual property rights. We regard our brand, customer lists, trademarks, domain names, trade secrets and similar intellectual property as critical to our success. We may rely on U.S. and international trademark, copyright and patent law, trade secret protection, agreements and other methods with our employees and others to protect our proprietary rights. We might not be able to obtain broad protection in the United States for all our intellectual property. The protection of our intellectual property rights may require the expenditure of significant financial, managerial and operational resources. Moreover, the steps we take to protect our intellectual property may not adequately protect our rights or prevent third parties from infringing or misappropriating our proprietary rights, and we may be unable to broadly enforce all our trademarks. Any of our trademarks or other intellectual property rights or future patents (if any) may be challenged by others or invalidated through administrative process or litigation. Any of our future patent and trademark applications may never be granted. To date, we have applied for patent protection with the United States Patent and Trademark Office with respect to certain of the manufacturing processes that we use (in addition to our licensed technology). Even if we are granted one or more patents with respect to our manufacturing process, there is no guarantee that others will not independently develop or otherwise acquire equivalent or superior technology or intellectual property rights. Furthermore, our confidentiality agreements may not effectively prevent disclosure of our proprietary information, technologies and processes and may not provide an adequate remedy in the event of unauthorized disclosure of such information. 12 We might be required to spend significant resources to monitor and protect our intellectual property rights. For example, we may initiate claims or litigation against others for infringement, misappropriation or violation of our intellectual property rights or other proprietary rights or to establish the validity of such rights. However, we may be unable to discover or determine the extent of any infringement, misappropriation or other violation of our intellectual property rights and other proprietary rights. Despite our efforts, we may be unable to prevent third parties from infringing upon, misappropriating or otherwise violating our intellectual property rights and other proprietary rights. Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel, which may materially and adversely affect our business, financial condition, and results of operations. In addition, our licensed technology platform may use open-source software. The use of such open-source software may subject us to certain conditions, including the obligation to offer, distribute, or disclose our licensed technology platform for no or reduced cost, make the proprietary source code subject to open-source software licenses available to the public, license our software and systems that use open-source software for the purpose of making derivative works, or allow reverse assembly, disassembly, or reverse engineering. We may not be able to enforce our intellectual property rights throughout the world. The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. This could make it difficult for us to stop the infringement or the misappropriation of our intellectual property rights. The loss of the BranchOut brand or logo or other registered or common law trade names or a diminution in the perceived quality of products or services associated with the Company would harm our business. Our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of intellectual property. Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets. Although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Litigation may be necessary to defend these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs to the Company and be a distraction to management and other employees. A food safety or quality issue that results in a product disruption such as a recall, health issue, or death of a consumer could harm our business. The sale of products for human use and consumption involves the risk of injury or illness to consumers. Such injuries may result from inadvertent mislabeling, tampering by unauthorized third parties or product contamination or spoilage. Under certain circumstances, we may be required to recall or withdraw products, suspend production of our products, or cease operations, which may lead to a material adverse effect on our business. In addition, customers may stop placing or cancel orders for such products as a result of such events. Even if a situation does not necessitate a recall or market withdrawal, product liability claims might be asserted against us. While we are subject to governmental inspection and regulations and believe our facilities and those of our co-packers and suppliers comply in all material respects with all applicable laws and regulations, if the consumption of any of our products causes, or is alleged to have caused, a health-related illness or death to a consumer, we may become subject to claims or lawsuits relating to such matters. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or physical harm could cause consumers to lose confidence in the safety and quality of our products. Moreover, claims or liabilities of this type might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others. Although we maintain product liability and product recall insurance in an amount that we believe to be consistent with market practice, we cannot be sure that we will not incur claims or liabilities for which we are not insured or that exceed the amount of our insurance coverage. A product liability judgment against us or a product recall could have a material adverse effect on our business, financial condition, results of operations or liquidity. 13 We may be subject to significant liability that is not covered by insurance. Although we believe that our insurance coverage is consistent with industry practice, any claim under our insurance policies may be subject to certain exceptions, may not be honored fully, in a timely manner, or at all, and we may not have purchased sufficient insurance to cover all losses incurred. If we were to incur liabilities not covered by insurance or if our business operations were interrupted for a substantial period, we could incur costs and suffer losses. Additionally, insurance coverage may not be available to us at commercially acceptable premiums in the future, or at all. We rely on independent certification for a number of our products. We rely on independent third-party certification, such as certifications of our products as “Organic”, “KETO”, “Gluten Free”, “Vegan” or “Non-GMO” (non-genetically modified organisms), to differentiate our products from others. We must comply with the requirements of independent organizations or certification authorities in order to label our products as certified. The loss of any independent certifications could adversely affect our market position as a natural products company and harm our business. Our future results of operations may be adversely affected by the availability of certifiable ingredients. Our ability to ensure a continuing supply of certifiable ingredients at competitive prices depends on many factors beyond our control, such as the number and size of farms that grow organic crops, climate conditions, changes in national and world economic conditions, currency fluctuations and forecasting adequate need of seasonal ingredients. The ingredients that we use in the production of our products (including, among others, avocados, bananas, pineapples and blueberries) are vulnerable to adverse weather conditions and natural disasters, such as floods, droughts, water scarcity, temperature extremes, frosts, earthquakes and pestilence. Natural disasters and adverse weather conditions (including the effects of climate change) can lower crop yields and reduce crop size and crop quality, which in turn could reduce our supplies of certifiable ingredients or increase the prices of such ingredients. If our supplies of certifiable ingredients are reduced, we may not be able to find enough supplemental supply sources on favorable terms, if at all, which could impact our ability to supply product to our customers and adversely affect our business, financial condition and results of operations. We also compete with other manufacturers in the procurement of certifiable product ingredients, which may be less plentiful in the open market than conventional product ingredients. This competition may increase in the future if consumer demand for certifiable products increases. This could cause our expenses to increase or could limit the amount of product that we can manufacture and sell. Adverse weather conditions, natural disasters, crop disease, pests and other natural conditions can impose significant costs and losses on our business. Agricultural products are vulnerable to adverse weather conditions, including severe rains, drought and temperature extremes, floods and windstorms, which are quite common but difficult to predict. Agricultural products also are vulnerable to crop disease and to pests, which may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic conditions. Unfavorable growing conditions caused by these factors can reduce both crop size and crop quality and, in extreme cases, entire harvests may be lost. Additionally, adverse weather or natural disasters, including earthquakes, winter storms, droughts, volcanic events or fires, could impact the manufacturing and business facilities of our suppliers in South America, which could result in significant costs and meaningfully reduce our capacity to fulfill orders and maintain normal business operations. These factors may result in lower sales volume and increased costs due increased costs of products. Incremental costs, including transportation, may also be incurred if we need to find alternate short-term supplies of products from alternative areas. These factors can increase costs, decrease revenues and lead to additional charges to earnings, which may have a material adverse effect on our business, results of operations and financial condition. Climate change may negatively affect our business and operations. There is concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns and the frequency and severity of extreme weather and natural disasters. In the event that climate change has a negative effect on agricultural productivity, we may be subject to decreased availability or less favorable pricing for certain commodities that are necessary for our products, such as avocados, bananas, pineapples, blueberries and other fresh produce. As a result of climate change, we may also be subjected to decreased availability of water, deteriorated quality of water or less favorable pricing for water, which could adversely impact our manufacturing and distribution operations, as well as the agricultural businesses of our suppliers, which rely on the availability and quality of water. 14 Our production equipment may be damaged, adversely affecting our ability to meet consumer and wholesale demand. A significant proportion of our products are produced at our contract manufacturers’ facilities in South America. A significant disruption at those facilities or to any of our key production equipment, even on a short-term basis, could impair our ability to timely produce and ship products, which could have a material adverse effect on our business, financial position and results of operations. In the past, we have had manufacturing delays due to damaged and malfunctioning equipment, shipping delays, U.S. port congestion and delays, and cannot fully insure against the effects of such delays on our business. The manufacturing operations of our suppliers are vulnerable to interruption and damage from natural and other types of disasters, including earthquake, fire, floods, volcanic events, draughts, environmental accidents, winter storms, power loss, disease outbreaks, epidemics or pandemics such as the COVID-19 pandemic, communications failures and similar events. If any disaster were to occur at one of these facilities, our ability to operate our business would be seriously impaired. Damage to our brand’s reputation could have a material impact on our results of operations. Our financial success is directly dependent on the consumer perception of our brand. The success of our brand may suffer if our marketing plans or product initiatives do not have the desired impact on our brand’s image or its ability to attract consumers. Further, our results could be negatively affected if our brand suffers substantial damage to its reputation due to real or perceived quality issues or other actions by the Company or any of its executives. We rely on big box retailers for a substantial portion of our sales, and our failure to maintain and further develop our sales channels could harm our business. We sell a substantial portion of our products through big box retailers such as Costco, Walmart and Sam’s Club Stores. The top two retailers of our products for the years ended December 31, 2024 and 2023, accounted for 99% and 90% of our net sales, respectively. The loss of, or business disruption at, one or more of these retailers or distributors or a negative change in our relationship with these retailers could have a material adverse effect on our business. If we do not maintain our relationship with these retailers or develop relationships with new retailers and distributors, the growth of our business may be adversely affected, and our business may be harmed. We do not have long-term purchase agreements with our customers. Many of our customers buy from us under purchase orders, and we generally do not have long-term agreements with or commitments from these customers for the purchase of products. We cannot provide assurance that our customers, including customers that participate in our subscription programs, will maintain, or increase their sales volumes or orders for our products or that we will be able to maintain or add to our existing customer base. As a result, our past sales experience is not indicative of future sales or anticipated sales trends. Further, decreases in our customers’ sales volumes or orders for products supplied by us may have a material adverse effect on our business, financial condition, or results of operations and may occur without warning thus making future planning and forecasting difficult. We may not be able to successfully implement our growth strategy for our brand on a timely basis or at all. We believe that our future success depends, in part, on our ability to implement our growth strategy of leveraging our existing brand and products to drive increased sales. Our ability to implement this strategy depends, among other things, on our ability to: ● enter distribution and other strategic arrangements with third-party retailers and other potential distributors of our products; ● successfully compete in the product categories in which we operate; ● introduce new and appealing products and successfully innovate on our existing products; ● develop and maintain consumer interest in our brand; and ● increase our brand recognition and loyalty. We may not be able to implement this growth strategy successfully. Our planned marketing expenditures may not result in increased sales or generate sufficient levels of consumer interest or brand awareness, and our high rates of sales and income growth may not be sustainable over time. 15 If we face labor shortages or increased labor costs, our results of operations and our growth could be adversely affected. Labor is a significant component of the cost of operating our business. Our ability to meet labor needs while controlling labor costs are subject to external factors, such as employment levels, prevailing wage rates, minimum wage legislation, changing demographics, health and other insurance costs and governmental labor and employment requirements. In the event of increasing wage rates, if we or any of our contract manufacturers fail to increase our wages competitively, the quality of our workforce and products could decline, while increasing our wages could cause our earnings to decrease. If we face labor shortages or increased labor costs, our operating expenses could increase and our business, financial condition and results of operations could be materially and adversely affected. Consumer preferences for natural and organic food products are difficult to predict and may change. Our business is primarily focused on sales of non-GMO, organic and natural products, and our success depends, in part, on our ability to offer products that anticipate the tastes and dietary habits of consumers and appeal to their preferences on a timely and affordable basis. Consumer eating habits may impact our business because of changes in attitudes regarding diet and health or new information regarding the health effects of consuming products we distribute. If consumer eating habits change significantly, we may be required to modify or discontinue sales of certain items in our product portfolio, and we may experience higher costs associated with implementing those changes. We cannot ensure that we will be able to effectively respond to changes in consumer health perceptions or to adapt our product offerings to trends in eating habits. A significant shift in consumer demand away from our products, could reduce our sales and harm our business. Consumer trends change based on a number of possible factors, including nutritional values, a change in consumer preferences or general economic conditions. Additionally, there is a growing focus among some consumers to buy local food products in an attempt to reduce the carbon footprint associated with transporting food products from longer distances, which could result in a decrease in the demand for food products and ingredients that we import from other countries or transport from remote processing locations or growing regions. Further, failures by us or our competitors to deliver quality products could erode consumer trust in the organic certification of foods. A significant shift in consumer demand away from our products would reduce our market share, harming our business. Technology failures or security breaches could disrupt our operations and negatively impact our business. In the normal course of business, we rely on information technology systems to process, transmit, and store electronic information. For example, our production and distribution facilities and inventory management utilize information technology to increase efficiencies and limit costs. Information technology systems are also integral to the reporting of our results of operations. Furthermore, a significant portion of the communications between, and storage of personal data of, our personnel, customers, and suppliers depend on information technology, including social media platforms. Our information technology systems may be vulnerable to a variety of interruptions, as a result of updating our enterprise platform or due to events beyond our control, including, but not limited to, natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers, and other security issues. These events could compromise our confidential information, impede, or interrupt our business operations, and may result in other negative consequences, including remediation costs, loss of revenue, litigation and reputational damage. Furthermore, if a breach or other breakdown results in disclosure of confidential or personal information, we may suffer reputational, competitive and/or business harm. While we have implemented administrative and technical controls and taken other preventive actions to reduce the risk of cyber incidents and protect our information technology, they may be insufficient to prevent physical and electronic break-ins, cyber-attacks, or other security breaches to our computer systems, which could have a material adverse effect on our business, financial condition or results of operations. Economic downturns could limit consumer demand for our products and negatively affect our sales and profitability. The premium organic and natural food industry is sensitive to national and regional economic conditions and the demand for the products that we distribute may be adversely affected from time to time by economic downturns that impact consumer spending, including discretionary spending. Future economic conditions such as employment levels, business conditions, housing starts, interest rates, inflation rates, energy and fuel costs and tax rates could reduce consumer spending or change consumer purchasing habits. Among these changes could be a reduction in the number of natural and organic products that consumers purchase where there are non-organic alternatives, given that many premium natural and organic products, and particularly premium natural and organic foods, often have higher retail prices than do their non-organic counterparts. 16 Regulatory Risks Tariffs imposed on the importation of our products into the United States would increase the cost of our products and could result in decreased demand for our products. Our operations and financial results may be adversely impacted by changes in trade policies, including the imposition of tariffs, import/export restrictions, or other trade barriers. A significant portion of our products is manufactured in foreign countries, and as a result, we are subject to tariffs, customs duties, and other trade-related costs. While the recent tariffs imposed by President Trump don’t apply to imports from Peru and Chile, if the U.S. or other governments impose new or increased tariffs on goods imported from Peru or other countries where we manufacture our products, it could increase our production costs, reduce our profit margins, and lead to higher prices for consumers, potentially affecting demand for our products. Our products and operations are subject to government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements could adversely affect our business and results of operations. We are affected by a wide range of governmental laws and regulations. Examples of regulatory agencies influencing our operations include the United States Department of Agriculture (the “USDA”), the Food and Drug Administration (the “FDA”), the Federal Trade Commission (the “FTC”), and the Environmental Protection Agency (the “EPA”), among others. These agencies regulate, among other things, with respect to our products and operations: ● design, development, and manufacturing; ● testing, labeling, content, and language of instructions for use and storage; ● product safety; ● marketing, sales, and distribution; ● record keeping procedures; ● advertising and promotion; ● recalls and corrective actions; and ● product import and export. These laws and regulations affect various aspects of our business. For example, certain food ingredient products manufactured by us are regulated under the United States Federal Food, Drug, and Cosmetic Act (“FDCA”), as administered by the FDA. Under the FDCA, pre-marketing approval by the FDA is required for the sale of a food ingredient which is a food additive unless the substance is generally recognized as safe, under the conditions of its intended use by qualified experts in food safety. We believe that most food ingredients in our products are generally recognized as safe. However, this status cannot be determined until actual formulations and uses are finalized. As a result, we may be adversely affected if the FDA determines that our food ingredient products do not meet the criteria for generally recognized as safe. The regulations to which we are subject are complex and have tended to become more stringent over time. Regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales. The failure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement actions and third-party lawsuits such as: ● warning letters; ● fines; ● injunctions; ● civil penalties and civil lawsuits; ● termination of distribution; ● recalls or seizures of products; ● termination of distribution; ● delays in the introduction of products into the market; and ● total or partial suspension of production. Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and harm our reputation, business, financial condition, and results of operations. We may also be required to take corrective actions, such as installing additional equipment or taking other actions, each of which could require us to make substantial capital expenditures. In addition, we could be required to indemnify our employees in connection with any expenses or liabilities that they may incur individually in connection with regulatory action against them. As a result, our future business prospects could deteriorate due to regulatory constraints, and our profitability could be impaired by our obligation to provide such indemnification to our employees. 17 Our reputation could suffer from real or perceived issues involving the labeling or marketing of our products. Products that we sell carry claims as to their origin, ingredients, or health benefits, including, by way of example, the use of the term “natural”, “functional”, or “healthy”, or similar synonyms or implied statements relating to such benefits. Although the FDA and the USDA each has issued statements regarding the appropriate use of the word “natural,” there is no single, U.S. government regulated definition of the term “natural” for use in the food industry, which is true for many other adjectives common in our industry. The resulting uncertainty has led to consumer confusion, distrust, and legal challenges. Plaintiffs have commenced legal actions against several food companies that market “natural” products, asserting false, misleading, and deceptive advertising and labeling claims, including claims related to genetically modified ingredients. In limited circumstances, the FDA has taken regulatory action against products labeled “natural” but that nonetheless contain synthetic ingredients or components. Should we become subject to similar claims, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is unfounded. Adverse publicity about these matters may discourage consumers from buying our products. The cost of defending against any such claims could be significant. Any loss of confidence on the part of consumers in the truthfulness of our labeling or ingredient claims would be difficult and costly to overcome and may significantly reduce our brand value. Any of these events could adversely affect our reputation and brand and decrease our sales, which would have a material adverse effect on our business, financial condition, and results of operations. Similarly, certain USDA regulations set forth the minimum standards producers must meet in order to have their products labeled as “certified organic.” While we believe our products and our supply chain are in compliance with these regulations, changes to food regulations may increase our costs to remain in compliance. We could lose certifications if a facility becomes contaminated, if we do not use raw materials that are certified, or if key ingredients used in our products are no longer allowed to be used in food certifications. The loss of our certifications could materially and adversely affect our business, financial condition, or results of operations. In addition, the USDA has proposed a rule requiring disclosure of the use of genetic engineering in manufacturing a product or an ingredient used in a product. The rule has not been finalized, and we are unable to predict with certainty what the final requirements will be. If the USDA issues bioengineering disclosure regulations inconsistent with our practices, the resulting changes in labeling could adversely affect customer acceptance of our product and materially and adversely affect our business. Litigation and regulatory enforcement concerning marketing and labeling of food products could adversely affect our business and reputation. The marketing and labeling of any food product in recent years has brought increased risk that consumers will bring class action lawsuits and that the FTC and/or state attorneys general will bring legal action concerning the truth and accuracy of the marketing and labeling of the product. Examples of causes of action that may be asserted in a consumer class action lawsuit include fraud, unfair trade practices and breach of state consumer protection statutes. The FTC and/or state attorneys general may bring legal action that seeks removal of a product from the marketplace and impose fines and penalties. Even when unmerited, class claims, action by the FTC or state attorneys’ general enforcement actions can be expensive to defend and adversely affect our reputation with existing and potential customers and consumers and our corporate and brand image, which could have a material and adverse effect on our business, financial condition or results of operations. We may face scrutiny from evolving state regulations concerning health, safety, our supply chain and marketing. In addition to the federal regulatory issues listed above, there are a growing number of state regulations that might impair our ability to operate and avoid interruption. For example, California currently enforces legislation commonly referred to as “Proposition 65” that requires that “clear and reasonable” warnings be given to consumers who are exposed to chemicals known to the State of California to cause cancer or reproductive toxicity. Although we seek to comply with the requirements of Proposition 65, there can be no assurance that we will not be adversely affected by litigation or other actions relating to Proposition 65 or future legislation that is similar or related thereto. Increased compliance costs associated with operating in California and other states could adversely affect our business, financial condition and results of operations. Risks Related to Our Capital Structure Our indebtedness could adversely affect our ability to raise additional capital to fund operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our financial obligations and our creditors have broad remedies in the event of default. As of December 31, 2024 and 2023, we had total liabilities of $10,514,292 and $914,622, respectively. Certain portions of this indebtedness are secured by a security interest in substantially all of our assets, and our security agreements include broad remedies in favor of the lenders, including the right to foreclose on pledged assets in connection with an event of default. 18 If we cannot generate sufficient cash flow from operations to service our debt, we may need to further refinance our debt, dispose of assets, or issue equity to obtain necessary funds. We do not know whether we will be able to do any of this on a timely basis or on terms satisfactory to us, or at all. Our substantial indebtedness could have important consequences, including: ● our ability to obtain additional debt or equity financing for working capital, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes may be limited; ● a portion of our cash flows from operations will be dedicated to the payment of principal and interest on the indebtedness and will not be available for other purposes, including operations, capital expenditures and future business opportunities; and ● we may be vulnerable in a downturn in general economic conditions or in business or may be unable to carry on capital spending that is important to our growth. Our Articles of Incorporation provide that the Nevada Eighth Judicial District Court of Clark County, Nevada shall be the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees. Our Articles of Incorporation provide that, subject to limited exceptions, the Nevada Eighth Judicial District Court of Clark County, Nevada shall be, to the fullest extent permitted by law, the sole and exclusive forum for (i) any derivative action or proceeding brought in the name or right of the Corporation or on its behalf, (ii) any action asserting a claim for breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of Nevada Revised Statutes (“NRS”) Chapters 78 or 92A, our Articles of incorporation or our bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our Articles of Incorporation or bylaws, or (v) any action asserting a claim governed by the internal affairs doctrine. Notwithstanding these provisions of our Articles of Incorporation, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, and notwithstanding the provisions of our Articles of Incorporation, compliance with the federal securities laws and the rules and regulations thereunder may not be waived by our investors. Accordingly, the exclusive forum provision of our Articles of Incorporation would not apply to suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act the rules and regulations thereunder or any other claim for which the federal courts have exclusive or concurrent jurisdiction, which may cause us to incur additional costs associated with resolving such actions in other jurisdictions. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for certain disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents. Stockholders who do bring a claim in the Nevada Eighth Judicial District Court of Clark County, Nevada could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near the State of Nevada. The Nevada Eighth Judicial District Court of Clark County Nevada may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders. Alternatively, if a court were to find the choice of forum provision contained in our Articles of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition. 19 We are an emerging growth company and a smaller reporting company, and the reduced reporting requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors. We are an emerging growth company, as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company until the five-year anniversary of our IPO, although circumstances could cause us to lose that status earlier, including if we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, or if we have total annual gross revenue of $1.07 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any three year period before that time, in which case we would cease to be an emerging growth company immediately. Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company”, which would allow us to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. Investors may find our common stock less attractive because we may rely on these exemptions. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. ITEM 1B. Unresolved Staff Comments Not Applicable. ITEM 1C. CYBERSECURITY Risk Management and Strategy We periodically assess risks from cybersecurity threats, and monitor our information systems for potential vulnerabilities. However, to date, given the small size of our company and the nature of our operations, our reliance on information systems has been limited to the use of standard off-the-shelf software (such as Google, QuickBooks and Microsoft Office) and the use by our employees of standard personal computers. Accordingly, management has not implemented any formal process for assessing, identifying, and managing risks from cybersecurity threats. Risks from cybersecurity threats have, to date, not materially affected us, our business strategy, results of operations or financial condition. We discuss how cybersecurity incidents could materially affect us in our risk factor disclosures in Item 1A of this Annual Report on Form 10-K. Governance As discussed above, given the nature of our current operations and our experience to date, we do not currently perceive cybersecurity as a particularly significant risk to our business. Accordingly, we have not tasked our Board of Directors with any additional cybersecurity oversight duties, or designated any committee of the Board of Directors to specifically oversee cybersecurity risks to our business . ITEM 2. Properties The address of our principal executive offices is 205 SE Davis Ave., Suite C, Bend, Oregon 97702. We do not maintain offices at this address and do not own or lease office or other space in the United States. Each of our U.S. employees works remotely and we pay for meeting and office space on an as needed basis with no long-term commitment. 20 On May 10, 2024, we entered into a ten-year lease for the 50,000 square-foot Peru Facility. 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 we may purchase the Peru Facility for $1,865,456. We believe that our current facilities are adequate for our current needs. ITEM 3. Legal Proceedings From time to time, we may be involved in various disputes and litigation matters that arise in the ordinary course of business. We are not currently engaged in any material legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 21 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of our common stock, $0.001 par value per share, began trading on the Nasdaq Capital Markets under the symbol “BOF” on June 16, 2023. The following table sets forth, for the fiscal quarters indicated, the high and low bid information for our common stock, as reported on the Nasdaq Capital Markets. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. High Low Fiscal Year Ended December 31, 2024 First Quarter $ 3.60 $ 1.10 Second Quarter $ 3.24 $ 0.68 Third Quarter $ 4.11 $ 0.61 Fourth Quarter $ 2.20 $ 1.31 Fiscal Year Ended December 31, 2023 First Quarter $ N/A $ N/A Second Quarter $ 6.20 $ 3.03 Third Quarter $ 3.50 $ 2.02 Fourth Quarter $ 2.10 $ 1.21 As of April 5, 2025, there were 9,584,769 shares of common stock outstanding held by approximately 25 shareholders of record. Such number does not include any shareholders holding shares in nominee or “street name”. Dividends We have not declared or paid any dividends on our common stock since our inception and do not anticipate paying dividends for the foreseeable future. The payment of dividends is subject to the discretion of our board of directors and depends, among other things, upon our earnings, our capital requirements, our financial condition, and other relevant factors. We intend to reinvest any earnings in the development and expansion of our business. Any cash dividends in the future to common shareholders will be payable when, as and if declared by our board of directors, based upon the board’s assessment of our financial condition and performance, earnings, need for funds, capital requirements, prior claims of preferred stock to the extent issued and outstanding, and other factors, including income tax consequences, restrictions and applicable laws. There can be no assurance, therefore, that any dividends on our common stock will ever be paid. 22 Equity Compensation Plan Information This following table provides information about shares our common stock that may be issued under our options outstanding at December 31, 2024. Other than individual options outstanding reflected in the table below, we did not have any shares authorized for issuance under equity plans at December 31, 2024. Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 593,470 $ 2.39 415,530 Equity compensation plans not approved by security holders (1) 182,735 3.76 N/A Total 776,205 $ 2.71 415,530 (1) Represents warrants issued on June 21, 2023 to the underwriter in the Company’s IPO, and warrants issued on June 26, 2024 to underwriter in our follow-on public offering. 2022 Equity Incentive Plan General Our board of directors and stockholders adopted the 2022 Equity Incentive Plan as of January 1, 2022, which provides for the grant of incentive stock options and non-qualified stock options to purchase shares of our common stock and other types of awards. The general purpose of the 2022 Equity Incentive Plan is to provide a means whereby eligible employees, officers, non-employee directors and other individual service providers develop a sense of proprietorship and personal involvement in our development and financial success, and to encourage them to devote their best efforts to our business, thereby advancing our interests and the interests of our stockholders. By means of the 2022 Equity Incentive Plan, we seek to retain the services of such eligible persons and to provide incentives for such persons to exert maximum efforts for our success and the success of our subsidiaries. Description of the 2022 Equity Incentive Plan The following description of the principal terms of the 2022 Equity Incentive Plan is a summary and is qualified in its entirety by the full text of the 2022 Equity Incentive Plan. Administration. In general, the 2022 Equity Incentive Plan is administered by the Compensation Committee of the board of directors. The Compensation Committee determines the persons to whom options to purchase shares of common stock, stock appreciation rights (or “SARs”), restricted stock units, restricted or unrestricted shares of common stock, performance shares, performance units, incentive bonus awards, other stock-based awards and other cash-based awards may be granted. The Compensation Committee may also establish rules and regulations for the administration of the 2022 Equity Incentive Plan and amendments or modifications of outstanding awards. No options, stock purchase rights or awards may be made under the 2022 Equity Incentive Plan on or after January 7, 2032 (or, the expiration date), but the 2022 Equity Incentive Plan will continue thereafter in effect with respect to previously granted options, SARs or other awards that remain outstanding. Eligibility. Persons eligible to receive options, SARs or other awards under the 2022 Equity Incentive Plan are those employees, officers, directors, consultants, advisors and other individual service providers of ours who, in the opinion of the Compensation Committee, are in a position to contribute to our success, or any person who is determined by the Compensation Committee to be a prospective employee, officer, director, consultant, advisor or other individual service provider of the Company or any subsidiary. Shares Subject to the 2022 Equity Incentive Plan. The aggregate number of shares of common stock initially available for issuance in connection with options and other awards granted under the 2022 Equity Incentive Plan was 600,000. The number of shares of common stock available for issuance under the 2022 Equity Incentive Plan automatically increases on the first day of each fiscal year of the Company commencing with fiscal year 2023, and the first day of each fiscal year thereafter until the expiration date, 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, 2024, the annual increases to the plan resulted in 1,009,000 shares being able to be issued under the plan. 23 “Incentive stock options”, or ISOs, that are intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) may be granted under the 2022 Equity Incentive Plan with respect to all of the shares of common stock authorized for issuance under the 2022 Equity Incentive Plan. If any option or SAR granted under the 2022 Equity Incentive Plan terminates without having been exercised in full or if any award is forfeited, the number of shares of common stock as to which such option or award was forfeited will be available for future grants under the 2022 Equity Incentive Plan. Awards settled in cash will not count against the number of shares available for issuance under the 2022 Equity Incentive Plan. No non-employee director may receive awards in any calendar year having an accounting value in excess of $250,000 (inclusive of any cash awards to the non-employee director for such year that are not made pursuant to the 2022 Equity Incentive Plan); provided that, in the case of a new non-employee director, such amount is increased to $350,000 for the initial year of the non-employee director’s term. The number of shares authorized for issuance under the 2022 Equity Incentive Plan and the foregoing share limitations are subject to customary adjustments for stock splits, stock dividends or similar transactions. Terms and Conditions of Options. Options granted under the 2022 Equity Incentive Plan may be either ISOs or “non-statutory stock options” that do not meet the requirements of Section 422 of the Code. The Compensation Committee will determine the exercise price of options granted under the 2022 Equity Incentive Plan. The exercise price of stock options may not be less than the fair market value per share of our common stock on the date of grant (or 110% of fair market value in the case of ISOs granted to a ten-percent stockholder). If on the date of grant the common stock is listed on a stock exchange or is quoted on the automated quotation system of the Nasdaq Stock Market, the fair market value will generally be the closing sale price on the date of grant (or the last trading day before the date of grant if no trades occurred on the date of grant). If no such prices are available, the fair market value will be determined in good faith by the Compensation Committee based on the reasonable application of a reasonable valuation method. No option may be exercisable for more than ten years (five years in the case of an ISO granted to a ten-percent stockholder) from the date of grant. Options granted under the 2022 Equity Incentive Plan will be exercisable at such time or times as the Compensation Committee prescribes at the time of grant. No employee may receive ISOs that first become exercisable in any calendar year in an amount exceeding $100,000. The Compensation Committee may, in its discretion, permit a holder of an option to exercise the option before it has otherwise become exercisable, in which case the shares of our common stock issued to the recipient will continue to be subject to the vesting requirements that applied to the option before exercise. Generally, the option price may be paid in cash, by certified check, or by bank draft. The Compensation Committee may permit other methods of payment, including through delivery of shares of our common stock having a fair market value equal to the purchase price. The Compensation Committee is authorized to establish a cashless exercise program and to permit the exercise price (and/or tax withholding obligations) to be satisfied by reducing from the shares otherwise issuable upon exercise a number of shares having a fair market value equal to the exercise price. No option may be transferred other than by will or by the laws of descent and distribution, and during a recipient’s lifetime an option may be exercised only by the recipient. However, the Compensation Committee may permit the holder of an option, SAR or other award to transfer the option, right or other award to immediate family members or a family trust for estate planning purposes. The Compensation Committee will determine the extent to which a holder of a stock option may exercise the option following termination of service with us. Stock Appreciation Rights. The Compensation Committee may grant SARs under the 2022 Equity Incentive Plan. The Compensation Committee will determine the other terms applicable to SARs. The exercise price per share of a SAR will not be less than 100% of the fair market value of a share of our common stock on the date of grant, as determined by the Compensation Committee. The maximum term of any SAR granted under the 2022 Equity Incentive Plan is ten years from the date of grant. Generally, each SAR will entitle a participant upon exercise to an amount equal to: ● the excess of the fair market value on the exercise date of one share of our common stock over the exercise price, multiplied by ● the number of shares of common stock covered by the SAR. 24 Payment may be made in shares of our common stock, in cash, or partly in common stock and partly in cash, all as determined by the Compensation Committee. Restricted Stock and Restricted Stock Units. The Compensation Committee may award restricted common stock and/or restricted stock units under the 2022 Equity Incentive Plan. Restricted stock awards consist of shares of stock that are transferred to a participant subject to restrictions that may result in forfeiture if specified conditions are not satisfied. Restricted stock units confer the right to receive shares of our common stock, cash, or a combination of shares and cash, at a future date upon or following the attainment of certain conditions specified by the Compensation Committee. The restrictions and conditions applicable to each award of restricted stock or restricted stock units may include performance-based conditions. Dividends with respect to restricted stock may be paid to the holder of the shares as and when dividends are paid to stockholders or at the time that the restricted stock vests, as determined by the Compensation Committee. Dividend equivalent amounts may be paid with respect to restricted stock units either when cash dividends are paid to stockholders or when the units vest. Unless the Compensation Committee determines otherwise, holders of restricted stock will have the right to vote the shares. Performance Shares and Performance Units. The Compensation Committee may award performance shares and/or performance units under the 2022 Equity Incentive Plan. Performance shares and performance units are awards, denominated in either shares or U.S. dollars, which are earned during a specified performance period subject to the attainment of performance criteria, as established by the Compensation Committee. The Compensation Committee will determine the restrictions and conditions applicable to each award of performance shares and performance units. Incentive Bonuses. The Compensation Committee may grant incentive bonus awards under the 2022 Equity Incentive Plan from time to time. The terms of incentive bonus awards will be set forth in award agreements. Each award agreement will have such terms and conditions as the Compensation Committee determines, including performance goals and amount of payment based on achievement of such goals. Incentive bonus awards are payable in cash and/or shares of our common stock. Other Stock-Based and Cash-Based Awards. The Compensation Committee may award other types of equity-based or cash-based awards under the 2022 Equity Incentive Plan, including the grant or offer for sale of shares of our common stock that do not have vesting requirements and the right to receive one or more cash payments subject to satisfaction of such conditions as the Compensation Committee may impose. Effect of Certain Corporate Transactions. The Compensation Committee may, at the time of the grant of an award provide for the effect of a change in control (as defined in the 2022 Equity Incentive Plan) on any award, including (i) accelerating or extending the time periods for exercising, vesting in, or realizing gain from any award, (ii) eliminating or modifying the performance or other conditions of an award, or (iii) providing for the cash settlement of an award for an equivalent cash value, as determined by the Compensation Committee. The Compensation Committee may, in its discretion and without the need for the consent of any recipient of an award, also take one or more of the following actions contingent upon the occurrence of a change in control: (a) cause any or all outstanding options and SARs to become immediately exercisable, in whole or in part; (b) cause any other awards to become non-forfeitable, in whole or in part; (c) cancel any option or SAR in exchange for a substitute option; (d) cancel any award of restricted stock, restricted stock units, performance shares or performance units in exchange for a similar award of the capital stock of any successor corporation; (e) cancel or terminate any award for cash and/or other substitute consideration in exchange for an amount of cash and/or property equal to the amount, if any, that would have been attained upon the exercise of such award or realization of the participant’s rights as of the date of the occurrence of the change in control, but if the change in control consideration with respect to any option or SAR does not exceed its exercise price, the option or SAR may be canceled without payment of any consideration; or (f) make such other modifications, adjustments or amendments to outstanding awards as the Compensation Committee deems necessary or appropriate. Amendment, Termination. The board of directors may at any time amend the 2022 Equity Incentive Plan for the purpose of satisfying the requirements of the Code, or other applicable law or regulation or for any other legal purpose, provided that, without the consent of our stockholders, the board of directors may not (a) increase the number of shares of common stock available under the 2022 Equity Incentive Plan, (b) change the group of individuals eligible to receive options, SARs and/or other awards, or (c) extend the term of the 2022 Equity Incentive Plan. Tax Withholding As and when appropriate, we shall have the right to require each optionee purchasing shares of common stock and each grantee receiving an award of shares of common stock under the 2022 Equity Incentive Plan to pay any federal, state, or local taxes required by law to be withheld. Issuer Purchase of Equity Securities None. ITEM 6. [Reserved] 25 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company for the fiscal years ended December 31, 2024 and 2023. The discussion and analysis that follows should be read together with the section entitled “Forward Looking Statements” and our financial statements and the notes to the financial statements included elsewhere in this annual report on Form 10-K. Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company’s control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report. Overview We 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. We are engaged in the development, marketing, sale, and distribution of plant-based, dehydrated fruit and vegetable snacks and powders. Our products have historically been manufactured for us by two contract manufacturers, one based in the Republic of Chile, and the other in the Republic of Peru, which housed our large-scale continuous through-put dehydration machine that completed its first production run in the first quarter of 2023. Our dehydrated fruit and vegetable products are produced using a new proprietary dehydration technology licensed by us from a third party. Our customers are primarily located throughout the United States. In 2024, we decided to initiate our own production facility in Peru to become vertically integrated. We recently completed the build out of the new facility, which commenced operations in December 2024, and utilizes three large-scale REV machines (a REV 60, REV 100 and REV 120) that we recently purchased from EnWave, as well as, a small REV 10 R&D machine that is being used for product development and customer sample purposes. We expect operating margins to be further improved in 2025, as we become more vertically integrated with the transition of more of our production from third party contract manufacturers to internal production. Using our licensed technology platform, we believe our lines of branded, private-label and industrial ingredient products positively address current consumer trends. In our experience, conventional dehydration methods, such as freeze-drying and air drying, tend to degrade most fruit and vegetables through oxidation, browning/color degradation, nutritional content reduction and/or flavor loss. As a result, certain highly sensitive fruits, such as avocados and bananas, have not previously been successfully offered as a dehydrated base for consumer products. We believe that our licensed technology platform and process is the only way to produce quality avocado and banana-based snack and powdered products. Additionally, we believe our licensed technology platform produces superior products when using other fruits and vegetables when compared to conventional drying and dehydration technologies. We license technology, consisting of a portfolio of patents, and purchased production machines, from EnWave, and we have been granted the exclusive rights to use the licensed technology platform as applied to several products in Peru, and avocado based products in the United States. In addition, BranchOut has the nonexclusive rights to use the licensed technology platform for other products. Our Products We plan to continue to grow revenues strategically by penetrating the multi-billion dollar grocery, industrial ingredient and online markets. Our current product line includes: ● BranchOut Snacks: dehydrated fruit and vegetable-based snacks, including Avocado Chips, Chewy Banana Bites, Pineapple Chips, Brussels Sprout Crisps, Strawberry Crisps and Bell Pepper Crisps. ● Private Label: Prunes, Carrots, Brussel Sprouts and Raisins sold to major retailers. ● BranchOut Industrial Ingredients: Banana, Mango, Blueberry, Pineapple, Cherry Tomato, Avocado and many others. We are currently developing many additional products for all sales channels. 26 Going Concern Uncertainty As of December 31, 2024, we had a cash balance of $2,329,452, a working capital deficit of $3,897,382 and had incurred recurring losses from operations resulting in an accumulated deficit of $17,562,057. Subsequent to December 31, 2024, we received gross proceeds of approximately $2.4 million from sales of our common stock in an “At-the-Market” registered offering. Although we anticipate that our results of operations will improve substantially as a result of the recent launch of our new facility in Peru, there can be no assurance in that regard. If we continue to generate substantial operating losses, we will not have sufficient funds to sustain our operations for the next twelve months and we will need to raise additional cash to fund our operations. These factors raise substantial doubt about our ability to continue as a going concern. The report of our independent registered public accounting firm that accompanies our audited financial statements in this Annual Report on Form 10-K contains an explanatory paragraph regarding the substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of the going concern uncertainty. NXTDried Superfoods During the fourth quarter of 2023, NXTDried Superfoods, one of our former contract manufacturers located in Peru, became involved in a legal dispute with its landlord and another third party, which resulted in that manufacturer suspending operations. As a result of such dispute, we had to fulfill orders by shifting fulfillment to other manufacturing sources until we commenced operations at our own fully integrated production facility in Peru in the fourth quarter of 2024. D uring 2023, we recognized $761,085 of impairment expense, consisting of $485,265, $243,305 and $32,515 on the collectability of a note receivable, VAT taxes receivable and prepaid inventory, respectively , owed to us by NXTDried Superfoods. Peru Facility Lease Given the situation with NXTDried Superfoods, we were required to shift fulfillment of orders to alternative manufacturing sources. On May 10, 2024 we entered into a ten-year lease for our 50,000 square-foot food processing plant located in Peru. The lease of the Peru Facility requires us to make 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 we may purchase the facility for $1,865,456. In connection with our lease of the Peru Facility, we paid $275,000 on May 10, 2024 and another $80,000 during the fourth quarter of 2024, as part of the purchase of 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. The remaining $912,000 is due and payable in monthly installments of $152,000 through June 23, 2025, at which time an additional $55,604 of interest is due, based on a 9% financing rate. Critical Accounting Policies The establishment and consistent application of accounting policies is a vital component of accurately and fairly presenting our financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”), as well as ensuring compliance with applicable laws and regulations governing financial reporting. While there are rarely alternative methods or rules from which to select in establishing accounting and financial reporting policies, proper application often involves significant judgment regarding a given set of facts and circumstances and a complex series of decisions. Initial Public Offering In June 2023, we completed our IPO in which we sold 1,190,000 shares of common stock at a price of $6.00 per share pursuant to an Underwriting Agreement with Alexander Capital, L.P. (the “Underwriter”) . The Company received net proceeds of $6,226,000, after deducting underwriters’ discounts and commissions and before consideration of other issuance costs. In connection with the IPO, a total of $6,029,204 of convertible debt, consisting of $5,526,691 of principal and $502,513 of interest, was converted into 1,572,171 shares of common stock, inclusive of $179,687, consisting of $165,000 of principal and $14,687 of interest, that converted into 43,562 shares of common stock issued upon the conversion of debts held by related parties. Pursuant to the Underwriting Agreement, we also issued the Underwriter a Common Stock Purchase Warrant to purchase up to 82,110 shares of Common Stock at an exercise price of $7.20, which may be exercised for a five-year period beginning December 18, 2023. 27 Prior to the IPO, all deferred offering costs were capitalized in other noncurrent assets on the balance sheets. Deferred offering costs of $1,283,954, primarily consisting of accounting, legal, and other fees related to the Company’s IPO, were offset against the IPO proceeds upon the closing of the IPO in June 2023. Reverse Stock Split On June 15, 2023, we effected a 2.5-for-1 reverse stock split of our outstanding shares of capital stock. All issued and outstanding shares of common stock have been adjusted in these condensed financial statements, on a retrospective basis, to reflect the reverse stock split for all periods presented, as well as all common stock warrants and stock option awards which, by the terms thereof, were subject to adjustment in connection with the reverse stock split. The par value of the common stock was not adjusted by the reverse stock split. 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: - Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. - Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. - Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. 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 were no cash equivalents on hand on December 31, 2024 and 2023. 28 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 $1,555,223 and $407,789 in excess of FDIC insured limits on December 31, 2024 and 2023, respectively, and has not experienced any losses in such accounts. Accounts Receivable Accounts receivable is carried at their estimated collectible amounts. Trade accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance for doubtful accounts of $25,586 at December 31, 2024. No allowance for doubtful accounts was necessary at December 31, 2023. Inventory The Company’s products consist of pre-packaged and bulk-dried fruit and vegetable-based snacks, powders and ingredients purchased from contract-manufacturers in Chile and/or Peru. The Company’s contract manufacturer in Peru uses equipment purchased by the Company in its manufacturing process. Raw materials consist of packaging materials. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. No reserve for obsolete inventories has been recognized. Inventory, consisting of raw materials and finished goods are stated at the lower of cost or net realizable value using the average cost valuation method, at December 31, 2024 and 2023, consisted of the following: December 31, 2024 2023 Raw materials $ 464,681 $ 13,734 Finished goods 1,465,854 323,071 Total inventory $ 1,930,535 $ 336,805 The Company had prepaid inventory advances on products in the amount of $123,792 and $-0- as of December 31, 2024 and 2023, respectively. Advances of 70% of estimated finish product costs are made to enable manufacturer’s purchase of raw materials to produce finished products. The remaining 30% is paid upon receipt of finished goods. Property and Equipment Property and equipment are stated at the lower of cost or estimated net recoverable amount. 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: Office equipment 3 years Furniture and fixtures 5 years Equipment and machinery 5 years 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. Depreciation expense was $171,873 and $223,856 for the years ended December 31, 2024 and 2023, respectively. 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. Our indefinite-lived brand names and trademarks acquired and are assigned an indefinite life as we anticipate that these brand names will contribute cash flows to the Company perpetually. 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. 29 License Agreement The Company is party to a license agreement under which it is licensed to utilize certain technology and production equipment developed and manufactured by another company, relating on an exclusive basis to avocado products and on a non-exclusive basis to other products. The license is not discernible from the equipment; therefore, the license costs have been capitalized and depreciated over the useful life of the equipment. The license agreement also entitles the licensor to a royalty on all revenue from the sale of products produced using the equipment. These royalties are recognized as royalty expenses as the products are sold. There was a total of $41,673 of royalty payments made during the year ended December 31, 2024, and none during the year ended December 31, 2023. Any future minimum royalty payments or equipment purchases under this license agreement are an unrecognized commitment as they relate to retaining exclusivity of the avocado products going forward and the Company can elect not to pay as disclosed in Note 17 to the financial statements included in this 10-K. 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. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customer . Under ASC 606, the Company recognizes revenue from the sale of its plant-based snack products in accordance with a five-step model in which the Company evaluates the transfer of promised goods or services and recognizes revenue when customers obtain control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company has elected, as a practical expedient, to account for the shipping and handling as fulfillment costs, rather than as separate performance obligations, and the related costs are recorded as selling expenses in general and administrative expenses in the statement of operations. Revenue is reported net of applicable provisions for discounts, returns and allowances. Methodologies for determining these provisions are dependent on customer pricing and promotional practices. The Company records reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on industry-based historical data, historical sales returns, if any, analysis of credit memo data, and other factors known at the time. The Company’s sales are predominantly generated from the sale of finished products to retailers, and to a lesser extent, direct to consumers through third party website platforms. These sales contain a single performance obligation, and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, this occurs when the goods are received by the retailer or customer, or when the title of goods is exchanged. Revenues are recognized in an amount that reflects the net consideration the Company expects to receive in exchange for the goods. The Company promotes its products with advertising, consumer incentives and trade promotions. These programs include discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to the transaction price based on amounts estimated as being due to customers and consumers at the end of a period. The Company derives these estimates based principally on historical utilization and redemption rates. The Company does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions. Payment terms in the Company’s invoices are based on the billing schedule established in contracts and purchase orders with customers. 30 Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows: December 31, 2024 2023 Gross revenue $ 6,777,079 $ 3,184,018 Less: slotting, discounts, and allowances 260,742 358,163 Net revenue $ 6,516,337 $ 2,825,855 Cost of Goods Sold Cost of goods sold represents costs directly related to the purchase, production and manufacturing of the Company’s products. Costs include purchase costs, product development, freight-in, packaging, and print production costs. Advertising Costs The Company expenses the cost of advertising and promotions as incurred. Advertising and promotions expense was $311,586 and $162,048 for the years ended December 31, 2024 and 2023, respectively. Stock-Based Compensation The Company accounts for equity instruments issued to employees and non-employees in accordance with the provisions of ASC 718 Stock Compensation (“ASC 718”). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The Company issued stock-based compensation in the amount of $704,699 and $258,574 for the years ended December 31, 2024 and 2023, respectively. Basic and Diluted Loss Per Share The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the years ended December 31, 2024 and 2023, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. Income Taxes The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not. Uncertain Tax Positions In accordance with ASC 740, Income Taxes , the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited, and fully resolved. The Company has not yet undergone an examination by any taxing authorities. The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions. 31 Results of Operations for the Years Ended December 31, 2024 and 2023 The following table summarizes selected items from the statement of operations for the years ended December 31, 2024 and 2023, respectively. Years Ended December 31, Increase / 2024 2023 (Decrease) Net revenue $ 6,516,337 $ 2,825,855 $ 3,690,482 Cost of goods sold 5,652,717 2,922,085 2,730,632 Gross profit (loss) 863,620 (96,230 ) 959,850 Operating expenses: General and administrative 1,870,720 1,581,474 289,246 Salaries and benefits 1,604,200 1,129,858 474,342 Professional services 1,291,141 694,596 596,545 Total operating expenses 4,766,061 3,405,928 1,360,133 Operating loss (3,902,441 ) (3,502,158 ) 400,283 Other income (expense): Interest income 14,156 11,719 2,437 Interest expense (863,231 ) (435,271 ) 427,960 Total other income (expense) (849,075 ) (423,552 ) 425,523 Net loss $ (4,751,516 ) $ (3,925,710 ) $ 825,806 Net Revenue Our net revenue for the year ended December 31, 2024 was $6,516,337, compared to $2,825,855 for the year ended December 31, 2023, an increase of $3,690,482, or 131%. The increase in revenue was primarily due to increased sales to our largest customer during the year ended December 31, 2024. Cost of Goods Sold and Gross Profit (Loss) Our cost of goods sold for the year ended December 31, 2024 was $5,652,717, compared to $2,922,085 for the year ended December 31, 2023, an increase of $2,730,632, or 93%. Cost of goods sold included $171,843 and $223,856 of depreciation on production equipment during the years ended December 31, 2024 and 2023, respectively. Cost of goods sold increased primarily in line with the increase in our sales for the period. As a result of the foregoing, we had a gross profit of $863,620, or 13% of revenues, for the year ended December 31, 2024, compared to a gross operating loss of $96,230, or (3%) of revenues, for the year ended December 31, 2023. Our gross profit margin increased primarily due to cost savings realized as a result of our transition to bulk shipping arrangements and transitioning to our own production facility during the current period. 32 General and Administrative Expense Our general and administrative expense for the year ended December 31, 2024 was $1,870,720, compared to $1,581,474 for the year ended December 31, 2023, an increase of $289,246, or 18%. The largest components of our general and administrative expenses are advertising and marketing, rent, travel, commissions, and storage, shipping and handling expense, as shown below. Year Ended December 31, 2024 2023 Difference % Change Advertising and marketing $ 311,586 $ 162,048 $ 149,538 92 % Rent $ 240,213 $ 37,439 $ 202,774 542 % Travel $ 167,064 $ 58,385 $ 108,679 186 % Commissions $ 212,447 $ 186,365 $ 26,082 14 % Storage, shipping and handling $ 459,089 $ 241,017 $ 218,072 90 % Asset impairment expense $ - $ 761,085 $ (761,085 ) N/A Advertising and marketing expenses increased for the year ended December 31, 2024, as compared to the corresponding period in 2023, as we focused our resources on growing our sales. Our rent increased primarily due to leases entered into in the current year, as we began to develop our operating facility in Peru, which also resulted in increased travel expenses. Commissions increased due to our increased sales, and storage, shipping and handling expenses increased primarily due to increased international shipping rates and increased production that was driven by our increased sales. In addition, during 2023, we recognized $761,085 of impairment expense, consisting of $485,265, $243,305 and $32,515 on the collectability of a note receivable, VAT taxes receivable and prepaid inventory, respectively , related to amounts owed from NXTDried Superfoods, one of our prior co-manufacturers. Salaries and Wages Salaries and wages for the year ended December 31, 2024 was $1,604,200, compared to $1,129,858 for the year ended December 31, 2023, an increase of $474,342, or 42%. This increase was primarily attributable to increased headcount in line with our expanded operations, including $414,614 of non-cash, stock-based compensation related to stock options awarded during the current year. Professional Fees Professional fees for the year ended December 31, 2024 was $1,291,141, compared to $694,596 for the year ended December 31, 2023, an increase of $596,545, or 86%. This increase was primarily attributable to increased consulting fees. Professional fees included $290,085 and $258,574 of non-cash, stock-based compensation related to common stock and stock options awarded during the years ended December 31, 2024 and 2023, respectively. Other Income (Expense) In the year ended December 31, 2024, other expense was $849,075, consisting of $863,231 of interest expense, as partially offset by $14,156 of interest income. During the year ended December 31, 2023, other expense was $423,552, consisting of $435,271 of interest expense, as partially offset by $11,719 of interest income. Other expense increased by $425,523, or 100%, primarily due to interest on increased outstanding debt as we funded our expansion into Peru during the current year. Net loss Net loss for the year ended December 31, 2024 was $4,751,516, compared to $3,925,710 during the year ended December 31, 2023, an increased net loss of $825,806, or 21%. The increased net loss was primarily due to increased compensation and compliance costs related to reporting as a public company, $427,960 of increased interest expense, and $536,074 of increased stock-based compensation during the current year, as partially offset by increased gross profits during the current year, in addition to $761,085 of impairment expense in 2023 that wasn’t incurred in the current year. 33 Liquidity and Capital Resources The following table summarizes our total current assets, liabilities and working capital as of December 31, 2024 and December 31, 2023. December 31, December 31, 2024 2023 Current Assets $ 4,916,614 $ 1,678,243 Current Liabilities $ 8,813,996 $ 779,093 Working Capital $ (3,897,382 ) $ 899,150 As of December 31, 2024, we had negative working capital of $3,897,382. We have incurred net losses since our inception and we anticipate net losses and negative operating cash flows for the near future. To date, our primary sources of capital have been cash generated from the sales of our products, common stock sales, and debt and convertible debt financing. As of December 31, 2024, we had cash of $2,329,452, total liabilities of $10,514,292, and an accumulated deficit of $17,562,057. As of December 31, 2023, we had cash of $657,789, total liabilities of $914,622, and an accumulated deficit of $12,810,541. Cash Flow Comparison of the Year Ended December 31, 2024 and the Year Ended December 31, 2023 The following table sets forth the primary sources and uses of cash for the periods presented below: Year Ended December 31, 2024 2023 Net cash used in operating activities $ (4,859,816 ) $ (3,529,372 ) Net cash used in investing activities (2,822,561 ) (116,565 ) Net cash provided by financing activities 9,362,621 3,755,279 Effect of exchange rate changes on cash (8,581 ) - Net change in cash $ 1,671,663 $ 109,342 Net Cash Used in Operating Activities Net cash used in operating activities was $4,859,816 for the year ended December 31, 2024, compared to $3,529,372 for the year ended December 31, 2023, an increase of $1,330,444, or 38%. The increase was primarily due to our increased net loss and increased purchases of inventory and other assets, as adjusted for increased stock-based compensation, increased accounts payable, and $761,085 of impairment expense on the collectability of a note receivable, VAT taxes receivable and prepaid inventory during the prior year . Net Cash Used in Investing Activities Net cash used in investing activities was $2,822,561 for the year ended December 31, 2024, compared to $116,565 for the year ended December 31, 2023, an increase of $2,705,996, or 2,321%. This increase was primarily attributable to increased property and equipment purchases of $2,847,207 during the current year, as partially offset by $24,646 of advances received on notes receivable in the current year that were not replicated in the prior year, and $116,565 of property and equipment purchases in the prior year. Net Cash Provided by Financing Activities Net cash provided by financing activities was $9,362,621 for the year ended December 31, 2024, compared to $3,755,279 for the year ended December 31, 2023, an increase of $5,607,342, or 149%. Our increased cash provided by financing activities was primarily from $7,071,898 of increased net proceeds received on debt and convertible debt financing, $206,183 of decreased deferred offering cost payments, and $5,489 of decreased principal payments on finance leases, as partially offset by $1,697,203 of decreased proceeds received on the sale of common stock. Our financing activities during the year ended December 31, 2024 are further described below. 34 Debt Financing Kaufman Convertible Note Pursuant to a Securities Purchase Agreement dated July 15, 2025 (as amended, the “SPA”) on July 24, 2024 Kaufman Capital LLC (“Kaufman Capital”) purchased from us (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 common stock at a fixed price of $0.7582 per share, (ii) a warrant to purchase 1,000,000 shares of common stock at an exercise price of $1.00 per share, and (iii) a warrant to purchase 500,000 shares of common stock at an exercise price of $1.50 per share, in consideration of an initial loan in the principal amount of $2,000,000 made to the Company under the Convertible Note. On December 9, 2024, Kaufman Kapital made an additional loan to the Company under the Convertible Note in the amount of $1,400,000. 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. 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”). Kaufman Promissory Note On August 30, 2024, the Company borrowed $1,200,000 from Kaufman Kapital pursuant to a Senior Secured Promissory Note in the principal amount of $1,200,000 (the “Note”) issued by the Company to Kaufman Kapital. The Note matures on June 30, 2025. The loan under the Note bears interest at a rate of 15% per annum. The Company’s obligations under the Note are secured by a lien on substantially all of the Company’s assets pursuant to the Security Agreement. Eagle Vision Promissory Notes 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 Promissory Notes (“Senior Notes”) and warrants to purchase an aggregate of 518,750 shares of the Company’s common stock, to a group of Investors (“Investors”) led by Eagle Vision Fund LP (“Eagle Vision”), an affiliate of John Dalfonsi, CFO of the Company, pursuant to a subscription agreement between the Company and the Investors. The Notes mature on the earlier of December 31, 2025, or the occurrence of a “Qualified Subsequent Financing” or “Change of Control” and bear interest at a rate of 15% per annum. The Company’s obligations under the Notes are secured by liens on substantially all of the Company’s assets pursuant to the terms of a Security Agreement between the Company and the Investors. Equity Investments ATM Financing On October 23, 2024, we entered into an ATM Agreement with Alexander Capital for the sale of shares of common stock from time to time through Alexander Capital having an aggregate offering price of up to $3 million. As of December 31, 2024, we had sold 1,317,307 shares of common stock under the ATM Agreement resulting in gross proceeds of approximately $2.5 million and aggregate net proceeds of approximately $2.3 million, after deducting expenses, including a 3% commission paid to Alexander Capital. Subsequent to December 31, 2024, the ATM Agreement was amended to increase the aggregate offering price of shares of common stock that may be sold under the ATM Agreement to $5 million. Following December 31, 2024, we sold 1,303,115 additional shares of common stock under the ATM Agreement for gross proceeds of approximately $2.5 million and aggregate net proceeds of approximately $2.4 million. As of the date of the filing of this Annual Report on Form 10-K, as a result of such sales of common stock under the ATM Agreement, the Company believes it has stockholders’ equity in excess of $2.5 million, in compliance with Nasdaq Listing Rule 5550(b)(1). Related Party Financing On July 15, 2024, the Company entered into subscription agreements with three related parties, consisting of Eric Healy, the Company’s Chief Executive Officer; Eagle Vision, an affiliate of John Dalfonsi, the Company’s Chief Financial Officer; and the Company’s President, pursuant to which such investors agreed to purchase $525,000 of “Units” from the Company, each Unit consisting of (i) 100 shares of common stock, and (ii) a warrant to purchase 125 shares of common stock over the following ten years at an exercise price of $1.00 per share, at a purchase price per Unit equal to $75.82. The Company completed the sale of the Units to Eric Healy and the Company’s President on July 23, 2024, and the sale of the Units to Eagle Vision on August 30, 2024, resulting in the issuance of an aggregate of 692,429 shares of common stock and warrants to purchase 865,536 shares of common stock. 35 Follow-on Public Offering On June 26, 2024, we sold 1,750,000 shares of common stock in a public offering at a price of $0.80 per share, less underwriting discounts and commissions, and on July 19, 2024, the underwriter in the offering exercised its over-allotment option to purchase an additional 222,500 shares of common stock. We received aggregate net proceeds in this offering of $1,164,685 after deducting the underwriting discounts and commissions and offering expenses. Satisfaction of our Cash Obligations for the Next 12 Months As of December 31, 2024, we had incurred recurring losses from operations resulting in an accumulated deficit of $17,562,057, cash on hand of $2,329,452 and negative working capital of $3,897,382. Subsequent to December 31, 2024, we received gross proceeds of approximately $2.4 million from sales of our common stock in an “At-the-Market” offering. However, assuming we continue to generate substantial losses from operations, we will not have sufficient funds to fund our operations at their current levels for the next twelve months. Although we anticipate that our results of operations will improve substantially as a result of the recent launch of our new facility in Peru, there can be no assurance in that regard, and we may be required to obtain additional financing to fund operations. Since inception, we have raised funds primarily through debt and convertible debt financing, and the sale of equity securities. No assurance can be given that any future financing will be available if required, or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations or cause substantial dilution for our stockholders. We cannot guarantee that we will become profitable. Even if we achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may not be able to sustain or increase profitability and our failure to do so would adversely affect our business, including our ability to raise additional funds. The accompanying financial statements appearing in this 10-K have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements, such as structured finance, special purpose entities, or variable interest entities during the years ended December 31, 2024 and 2023. Emerging Growth Company As an emerging growth company under the JOBS Act, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, while we are an emerging growth company, we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not emerging growth companies. As a result, our financial statements and interim financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year in which we have total annual gross revenues of $1.235 billion or more, (ii) the last day of the first fiscal year in which we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, with at least $700 million of equity securities held by non-affiliates as of the end of the last business day of the second quarter of that fiscal year, (iii) the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities, or (iv) the last day of our fiscal year after the fifth anniversary of the date of the completion of our IPO. EnWave Contract Pursuant to the terms of the Licensing Agreement with EnWave, we cannot undertake any transaction that would result in a change of control of us without the prior written consent of EnWave. ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. 36 ITEM 8. Financial Statements and Supplementary Data BRANCHOUT FOOD INC. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 TABLE OF CONTENTS Page Report of Independent Registered Public Accounting Firm, M&K CPAS, PLLC (PCAOB ID: 2738 ) F-1 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-2 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023 F-3 Consolidated Statement of Stockholders’ Equity for the years ended December 31, 2024 and 2023 F-4 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 F-5 Notes to Consolidated Financial Statements F-6 37 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders BranchOut Food Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of BranchOut Food, Inc. (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the years ended December 31, 2024 and 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America . Going Concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred recurring losses from operations resulting in an accumulated deficit, and had a working capital deficit as of December 31, 2024 which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and the significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved are especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Going Concern Due to the net loss for the year, the Company evaluated the need for a going concern. Auditing management’s evaluation of a going concern can be a significant judgement given the fact that the Company uses management estimates on future revenues and expenses which are not able to be substantiated. As discussed in Note 2, the Company has a going concern due to recurring net losses from operations resulting in an accumulated deficit and working capital at December 31, 2024. To evaluate the appropriateness of the going concern, we examined and evaluated the financial information along with management’s plans to mitigate the going concern and management’s disclosure on going concern. /s/ M&K CPAS, PLLC M&K CPAS, PLLC PCAOB ID 2738 We have served as the Company’s auditor since 2021. The Woodlands, TX April 15, 2025 F- 1 BRANCHOUT FOOD INC. CONSOLIDATED BALANCE SHEETS December 31, December 31, 2024 2023 Assets Current assets: Cash $ 2,329,452 $ 657,789 Accounts receivable, net 418,463 635,549 Advances on inventory purchases 123,792 - Inventory 1,930,535 336,805 Other current assets 114,372 48,100 Total current assets 4,916,614 1,678,243 Property and equipment, net 4,056,299 914,999 Right-of-use assets 1,575,497 147,228 Other assets 1,947,483 - Note receivable 359,982 384,628 Total Assets $ 12,855,875 $ 3,125,098 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 1,194,079 $ 382,948 Accrued expenses 333,614 165,244 Other current liabilities 912,000 - Convertible notes payable, related parties, net of discounts 3,333,413 - Notes payable, current portion 251,647 200,000 Notes payable, related parties 2,760,000 - Notes payable, current portion 2,760,000 - Finance lease liability, current portion 29,243 30,901 Total current liabilities 8,813,996 779,093 Notes payable, net of current portion 34,500 34,500 Operating lease liability, net of current portion 1,573,035 - Finance lease liability, net of current portion 92,761 101,029 Total Liabilities 10,514,292 914,622 Stockholders’ Equity: Preferred stock, $ 0.001 par value, 8,000,000 shares authorized; no shares issued and outstanding - - Common stock, $ 0.001 par value, 80,000,000 shares authorized; 8,424,600 and 4,044,252 shares issued and outstanding at December 31, 2024 and 2023, respectively 8,425 4,044 Additional paid-in capital 19,903,796 15,016,973 Accumulated other comprehensive loss ( 8,581 ) - Accumulated deficit ( 17,562,057 ) ( 12,810,541 ) Total Stockholders’ Equity 2,341,583 2,210,476 Total Liabilities and Stockholders’ Equity $ 12,855,875 $ 3,125,098 The accompanying notes are an integral part of these financial statements. F- 2 BRANCHOUT FOOD INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 2024 2023 For the Years Ended December 31, 2024 2023 Net revenue $ 6,516,337 $ 2,825,855 Cost of goods sold 5,652,717 2,922,085 Gross profit (loss) 863,620 ( 96,230 ) Operating expenses: General and administrative 1,870,720 1,581,474 Salaries and wages 1,604,200 1,129,858 Professional fees 1,291,141 694,596 Total operating expenses 4,766,061 3,405,928 Operating loss ( 3,902,441 ) ( 3,502,158 ) Other income (expense): Interest income 14,156 11,719 Interest expense ( 863,231 ) ( 435,271 ) Total other income (expense) ( 849,075 ) ( 423,552 ) Net loss $ ( 4,751,516 ) $ ( 3,925,710 ) Other comprehensive loss: Loss on foreign currency translation $ ( 8,581 ) $ - Net other comprehensive loss $ ( 4,760,097 ) $ ( 3,925,710 ) Weighted average common shares outstanding - basic and diluted 5,693,162 2,726,330 Net loss per common share - basic and diluted $ ( 0.83 ) $ ( 1.44 ) The accompanying notes are an integral part of these financial statements. F- 3 BRANCHOUT FOOD INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY Shares Amount Shares Amount Capital Income Deficit Equity Accumulated Additional Other Total Preferred Stock Common Stock Paid-In Comprehensive Accumulated Stockholders’ Shares Amount Shares Amount Capital Income Deficit Equity Balance, December 31, 2022 - $ - 1,200,769 $ 1,201 $ 3,743,902 $ - $ ( 8,884,831 ) $ ( 5,139,728 ) Common stock issued pursuant to initial public offering - - 1,190,000 1,190 4,940,856 - - 4,942,046 Common stock issued for services - - 81,312 81 159,059 - - 159,140 Stock options issued for services - - - - 99,434 - - 99,434 Common stock issued for debt conversions - - 1,572,171 1,572 6,027,632 - - 6,029,204 Common stock warrants granted to note holders pursuant to debt financing - - - - 46,090 - - 46,090 Net loss - - - - - - ( 3,925,710 ) ( 3,925,710 ) Balance, December 31, 2023 - $ - 4,044,252 $ 4,044 $ 15,016,973 $ - $ ( 12,810,541 ) $ 2,210,476 Balance - $ - 4,044,252 $ 4,044 $ 15,016,973 $ - $ ( 12,810,541 ) $ 2,210,476 Common stock issued pursuant to secondary public offering - - 1,972,500 1,973 1,162,712 - - 1,164,685 Common stock issued pursuant to ATM program - - 1,500,000 1,500 2,303,505 - - 2,305,005 - Authorized shares, 1,500,000 shares - Unissued shares, 182,693 shares Common stock units sold to related parties - - 692,429 692 524,308 - - 525,000 Common stock issued for services - - 215,419 216 289,869 - - 290,085 Stock options issued for services - - - - 414,614 - - 414,614 Common stock warrants granted to note holders pursuant to debt financing - - - - 101,866 - - 101,866 Amended warrants - - - - 89,949 - - 89,949 Loss on foreign currency translation - - - - - ( 8,581 ) - ( 8,581 ) Net loss - - - - - - ( 4,751,516 ) ( 4,751,516 ) Balance, December 31, 2024 - $ - 8,424,600 $ 8,425 $ 19,903,796 $ ( 8,581 ) $ ( 17,562,057 ) $ 2,341,583 Balance - $ - 8,424,600 $ 8,425 $ 19,903,796 $ ( 8,581 ) $ ( 17,562,057 ) $ 2,341,583 The accompanying notes are an integral part of these financial statements. F- 4 BRANCHOUT FOOD INC. CONSOLIDATED STATEMENTS OF CASH FLOWS 2024 2023 For the Years Ended December 31, 2024 2023 Cash flows from operating activities Net loss $ ( 4,751,516 ) $ ( 3,925,710 ) Adjustments to reconcile net loss to net cash used in operating activities: Bad debts expense 25,586 - Depreciation expense 205,907 223,856 Amortization of debt discounts 369,069 66,090 Impairment of assets - 761,085 Common stock issued for services 290,085 159,140 Options and warrants issued for services 414,614 99,434 Amended warrants 89,949 - Decrease (increase) in assets: Accounts receivable 191,500 ( 557,313 ) Advances on inventory purchases ( 123,792 ) ( 3,015 ) Inventory ( 1,593,730 ) ( 177,044 ) Other current assets ( 66,272 ) ( 278,891 ) Right-of-use asset 118,913 21,092 Other assets ( 1,947,483 ) - Increase (decrease) in liabilities: Accounts payable 811,131 143,009 Accounts payable, related parties - ( 40,140 ) Accrued expenses 1,080,370 ( 20,965 ) Operating lease liability 25,853 - Net cash used in operating activities ( 4,859,816 ) ( 3,529,372 ) Cash flows from investing activities Purchase of property and equipment ( 2,847,207 ) ( 116,565 ) Payments received on notes receivable 24,646 - Net cash used in investing activities ( 2,822,561 ) ( 116,565 ) Cash flows from financing activities Payment of deferred offering costs ( 534,107 ) ( 740,290 ) Proceeds received on convertible notes payable, related parties 3,325,000 25,000 Proceeds received on convertible notes payable, unrelated parties - 442,500 Proceeds received on notes payable - 350,000 Repayment of notes payable ( 448,353 ) ( 2,420,000 ) Proceeds received on notes payable, related parties 2,616,210 - Repayment of notes payable, related parties ( 115,000 ) - Repayments on revolving line of credit - ( 91,541 ) Principal payments on finance lease ( 9,926 ) ( 36,390 ) Proceeds from sale of common stock 4,528,797 6,226,000 Net cash provided by financing activities 9,362,621 3,755,279 Effect of exchange rate changes on cash ( 8,581 ) - Net increase in cash 1,671,663 109,342 Cash - beginning of period 657,789 548,447 Cash - ending of period $ 2,329,452 $ 657,789 Supplemental disclosures: Interest paid $ 196,007 $ 466,337 Income taxes paid $ - $ - Non-cash investing and financing transactions: Equipment purchased with debt financing $ 500,000 $ - Relative fair value of warrants issued as a debt discount $ 101,866 $ 46,090 Relative fair value of shares issued on debt conversions $ - $ 6,029,204 Initial recognition of right-of-use assets and lease liabilities $ 1,547,182 $ 184,592 The accompanying notes are an integral part of these financial statements. F- 5 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 – Nature of Business Nature of Business BranchOut Food Inc. (“BranchOut,” the “Company,” “we,” “our” or “us”) was incorporated as Avochips Inc. in Oregon on February 21, 2017, and converted into AvoLov, LLC, an Oregon limited liability company, on November 2, 2017. On November 19, 2021, the Company converted from an Oregon limited liability company into BranchOut Food Inc., a Nevada corporation. The Company is engaged in the development, marketing, sale, and distribution of plant-based, dehydrated fruit and vegetable snacks and powders. The Company’s products are currently manufactured at its new production facility that commenced production in Pisco Peru in December 2024, and is supported by contract manufacturers, as necessary. The Company’s products are manufactured using a new proprietary dehydration technology licensed by the Company. The Company’s customers are primarily located throughout the United States. Note 2 – Basis of Presentation 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, 2024: Name of Entity Jurisdiction Relationship BranchOut Food Inc. (1) Nevada, U.S. Parent BranchOut Food Sucursal Peru (2) Pisco, Peru Subsidiary (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. Initial Public Offering In June 2023, the Company completed its initial public offering (“IPO”) in which it issued and sold 1,190,000 shares of its common stock at a price of $ 6.00 per share pursuant to an Underwriting Agreement between the Company and Alexander Capital, L.P. (the “Underwriter”) . The Company received net proceeds of $ 6,226,000 , after deducting underwriters’ discounts and commissions and before consideration of other issuance costs. In connection with the IPO, a total of $ 6,029,204 of convertible debt, consisting of $ 5,526,691 of principal and $ 502,513 of interest, was converted into 1,572,171 shares of common stock, inclusive of $ 179,687 , consisting of $ 165,000 of principal and $ 14,687 of interest, that converted into 43,562 shares of common stock issued upon the conversion of debts held by related parties. Pursuant to the Underwriting Agreement, the Company also issued to the Underwriter a Common Stock Purchase Warrant to purchase up to 82,110 shares of Common Stock at an exercise price of $ 7.20 , which may be exercised for a five-year period beginning December 18, 2023. F- 6 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Prior to the IPO, all deferred offering costs were capitalized in other noncurrent assets on the balance sheets. Deferred offering costs of $ 1,283,954 , primarily consisting of accounting, legal, and other fees related to the Company’s IPO, were offset against the IPO proceeds upon the closing of the IPO in June 2023. Reverse Stock Split On June 15, 2023, the Company effected a 2.5-for-1 reverse stock split of its outstanding shares of capital stock. There was no preferred stock outstanding prior to or after the reverse stock split. All issued and outstanding shares of common stock have been adjusted in these condensed financial statements, on a retrospective basis, to reflect the reverse stock split for all periods presented, as well as all common stock warrants and stock option awards which, by the terms thereof, were subject to adjustment in connection with the reverse stock split. The par value of the common stock was not adjusted by the reverse stock split. Going Concern As shown in the accompanying financial statements, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $ 17,562,057 , and a working capital deficit of $ 3,897,382 as of December 31, 2024. The Company’s $ 2,329,452 of cash on hand at December 31, 2024 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, 2024, the Company received gross proceeds of approximately $ 2.5 million from sales of common stock in an “At-the-Market” registered offering. Although the Company anticipates that its results of operations will improve substantially as a result of the recent launch of its new facility in Peru, there can be no assurance in that regard. 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 financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The 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 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. Note 3 – Summary of Significant Accounting Policies 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. F- 7 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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: - Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. - Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. - Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. 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 were no cash equivalents on hand on December 31, 2024 and 2023. 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 $ 1,555,223 and $ 407,789 in excess of FDIC insured limits on December 31, 2024 and 2023, respectively, and has not experienced any losses in such accounts. Accounts Receivable Accounts receivable is carried at their estimated collectible amounts. Trade accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance for doubtful accounts of $ 25,586 at December 31, 2024. No allowance for doubtful accounts was necessary at December 31, 2023. Inventory The Company’s products consist of pre-packaged and bulk-dried fruit and vegetable-based snacks, powders and ingredients purchased from contract-manufacturers in Chile and/or Peru. The Company’s contract manufacturer in Peru uses equipment purchased by the Company in its manufacturing process. Raw materials consist of packaging materials. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. No reserve for obsolete inventories has been recognized. Inventory, consisting of raw materials and finished goods are stated at the lower of cost or net realizable value using the average cost valuation method, at December 31, 2024 and 2023, consisted of the following: Schedule of Inventory 2024 2023 December 31, 2024 2023 Raw materials $ 464,681 $ 13,734 Finished goods 1,465,854 323,071 Total inventory $ 1,930,535 $ 336,805 The Company had prepaid inventory advances on products in the amount of $ 123,792 and $- 0 - as of December 31, 2024 and 2023, respectively. Advances of 70 % of estimated finish product costs are made to enable manufacturer’s purchase of raw materials to produce finished products. The remaining 30 % is paid upon receipt of finished goods. F- 8 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Property and Equipment Property and equipment are stated at the lower of cost or estimated net recoverable amount. 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: Schedule of Estimated Useful Lives Office equipment 3 years Furniture and fixtures 5 years Equipment and machinery 5 - 10 years 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. Depreciation expense was $ 171,873 and $ 223,856 for the years ended December 31, 2024 and 2023, respectively. For the year ended, December 31, 2024, a total of $ 34,034 of depreciation was included in the inventoried production costs, which gets expensed as Cost of Goods Sold as the inventory is sold. 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. Our indefinite-lived brand names and trademarks acquired and are assigned an indefinite life as we anticipate that these brand names will contribute cash flows to the Company perpetually. 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. License Agreement The Company is party to a license agreement under which it is licensed to utilize certain technology and production equipment developed and manufactured by another company, relating on an exclusive basis to avocado products and on a non-exclusive basis to other products. The license is not discernible from the equipment; therefore, the license costs have been capitalized and depreciated over the useful life of the equipment. The license agreement also entitles the licensor to a royalty on all revenue from the sale of products produced using the equipment. These royalties are recognized as royalty expenses as the products are sold. There was a total of $ 41,673 of royalty payments made during the year ended December 31, 2024, and no ne during the year ended December 31, 2023. Any future minimum royalty payments or equipment purchases under this license agreement are an unrecognized commitment as they relate to retaining exclusivity of the avocado products going forward and the Company can elect not to pay as disclosed in Note 17 to the financial statements included in this 10-K. 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. F- 9 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customer . Under ASC 606, the Company recognizes revenue from the sale of its plant-based snack products in accordance with a five-step model in which the Company evaluates the transfer of promised goods or services and recognizes revenue when customers obtain control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company has elected, as a practical expedient, to account for the shipping and handling as fulfillment costs, rather than as separate performance obligations, and the related costs are recorded as selling expenses in general and administrative expenses in the statement of operations. Revenue is reported net of applicable provisions for discounts, returns and allowances. Methodologies for determining these provisions are dependent on customer pricing and promotional practices. The Company records reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on industry-based historical data, historical sales returns, if any, analysis of credit memo data, and other factors known at the time. The Company’s sales are predominantly generated from the sale of finished products to retailers, and to a lesser extent, direct to consumers through third party website platforms. These sales contain a single performance obligation, and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, this occurs when the goods are received by the retailer or customer, or when the title of goods is exchanged. Revenues are recognized in an amount that reflects the net consideration the Company expects to receive in exchange for the goods. The Company promotes its products with advertising, consumer incentives and trade promotions. These programs include discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to the transaction price based on amounts estimated as being due to customers and consumers at the end of a period. The Company derives these estimates based principally on historical utilization and redemption rates. The Company does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions. Payment terms in the Company’s invoices are based on the billing schedule established in contracts and purchase orders with customers. Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows: Schedule of Revenue 2024 2023 December 31, 2024 2023 Gross revenue $ 6,777,079 $ 3,184,018 Less: slotting, discounts, and allowances 260,742 358,163 Net revenue $ 6,516,337 $ 2,825,855 Cost of Goods Sold Cost of goods sold represents costs directly related to the purchase, production and manufacturing of the Company’s products. Costs include purchase costs, product development, freight-in, packaging, and print production costs. Advertising Costs The Company expenses the cost of advertising and promotions as incurred. Advertising and promotions expense was $ 311,586 and $ 162,048 for the years ended December 31, 2024 and 2023, respectively. Stock-Based Compensation The Company accounts for equity instruments issued to employees and non-employees in accordance with the provisions of ASC 718 Stock Compensation (“ASC 718”). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The Company issued stock-based compensation in the amount of $ 704,699 and $ 258,574 for the years ended December 31, 2024 and 2023, respectively. F- 10 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Basic and Diluted Loss Per Share The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the years ended December 31, 2024 and 2023, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. Income Taxes The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not. Uncertain Tax Positions In accordance with ASC 740, Income Taxes , the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited, and fully resolved. The Company has not yet undergone an examination by any taxing authorities. The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. Recently Adopted Accounting Standards In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, “S egment Reporting (Topic 280): Improvements to Reportable Segment Disclosure. ” The ASU updated reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance. The Company adopted ASU No. 2023-07 during the year ended December 31, 2024. See Note 22 “ Segment Reporting ” in the accompanying Notes to the Consolidated Financial Statements for additional information. Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures” . The amendments in this ASU add specific requirements for income tax disclosures to improve transparency and decision usefulness. The guidance in ASU 2023-09 requires that public business entities disclose specific categories in the income tax rate reconciliation and provide additional qualitative information for reconciling items that meet a quantitative threshold. In addition, the amendments in ASU 2023-09 require that all entities disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and disaggregated by individual jurisdictions. The ASU also includes other disclosure amendments related to the disaggregation of income tax expense between federal, state and foreign taxes. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this update should be applied on a prospective basis and retrospective application is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures. F- 11 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-03 and in January 2025, the FASB issued ASU 2025-01, “ Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ” The guidance requires disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and selling expenses. The ASU is effective in the first annual reporting period beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently assessing the effect that adoption of this guidance will have on its Consolidated Financial Statements. Note 4 – Related Party Transactions Kaufman Convertible Note 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. On July 24, 2024, the Company issued the Purchased Securities to Kaufman Kapital in consideration of making the Initial Loan to the Company. On December 9, 2024, Kaufman Kapital made an additional loan to the Company under the Convertible Note in the amount of $ 1,400,000 . 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. 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. Kaufman Promissory Note On August 30, 2024, the Company borrowed $ 1,200,000 from Kaufman Kapital pursuant to a Senior Secured Promissory Note in the principal amount of $ 1,200,000 (the “Note”) issued by the Company to Kaufman Kapital. The Note matures on June 30, 2025 , as amended. The loan under the Note bears interest at a rate of 15 % per annum. The Company’s obligations under the Note are secured by a lien on substantially all of the Company’s assets pursuant to the Security Agreement. In addition, the Note includes affirmative and negative covenants, events of defaults and other terms and conditions, customary in transactions of this nature. Eagle Vision Promissory Notes In connection with the sale of the Purchased Securities to Kaufman Kapital LLC under the SPA, the Company entered into an Omnibus Amendment to Note Documents with substantially all of the holders (the “Holders”) of the Company’s Senior 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 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 Notes held by the Holders beginning July 1, 2024 has been eliminated, and instead all obligations of the Company under such Senior Notes will be due in one lump sum on the maturity date of the Senior 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 Notes held by the Holders and liens granted to the holders thereof. The amendment warrants resulted in $ 89,949 of additional interest expense. F- 12 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 Promissory Notes (“Senior Notes”) and Warrants (“Warrants”) to purchase an aggregate of 518,750 shares of the Company’s common stock, to a group of Investors (“Investors”) led by Eagle Vision Fund LP (“Eagle Vision”), an affiliate of John Dalfonsi, CFO of the Company, pursuant to a subscription agreement between the Company and the Investors. Pursuant to the subscription agreements, Eagle Vision was paid aggregate cash fees in the amount of $ 177,500 upon the closing of the transactions for due diligence fees in consideration of services rendered and to be rendered by Eagle Vision to the Company and the investors, including 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 purchasers, 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, which services are to be provided by Eagle Vision until the senior secured notes have been paid in full, and an aggregate $ 35,000 of legal fees was paid to Investors’ counsel. The 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) and bear interest at a rate of 15 % per annum. In addition, the 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 Notes are secured by liens on substantially all of the Company’s assets pursuant to the terms of a Security Agreement between the Company and the Investors. Each Warrant is exercisable for a 10 ten-year period at an exercise price of $ 1.00 per share. Unit Offering Sale of Common Stock and Warrants On July 15, 2024, the Company entered into Subscription Agreements (the “Subscription Agreements”) with three related parties, consisting of Eric Healy, the Company’s Chief Executive Officer; Eagle Vision, an affiliate of John Dalfonsi, the Company’s Chief Financial Officer; and the Company’s President, pursuant to which such investors agreed to purchase $ 525,000 of “Units” from the Company, each Unit consisting of (i) 100 shares of common stock, and (ii) a warrant to purchase 125 shares of common stock over the following ten years at an exercise price of $ 1.00 per share, at a purchase price per Unit equal to $ 75.82 . The Company completed the sale of the Units to Eric Healy and the Company’s President on July 23, 2024, and the sale of the Units to Eagle Vision on August 30, 2024, resulting in the issuance of an aggregate of 692,429 shares of common stock and warrants to purchase 865,536 shares of common stock. Common Stock Options Issued for Services On February 22, 2024, the Company granted options to purchase 140,000 shares of the Company’s common stock under its 2022 Equity Incentive Plan (the “2022 Plan”), having an exercise price of $ 1.92 per share, exercisable over a 10 -year term, to the Company’s CEO. The options vested immediately. On February 22, 2024, the Company granted options to purchase 75,000 shares of the Company’s common stock, having an exercise price of $ 1.92 per share, exercisable over a 10 -year term, to the Company’s CFO. The options vested immediately. On February 22, 2024, the Company also granted options to purchase an aggregate 79,166 shares of the Company’s common stock, having an exercise price of $ 1.92 per share, exercisable over a 10 -year term, to a total of three of the Company’s directors. The options vested immediately. On August 8, 2023, the Company granted options to purchase 30,000 shares of the Company’s common stock under the 2022 Plan, having an exercise price of $ 6.00 per share, exercisable over a 10 -year term, to the then chairman of the audit committee and now, Chief Financial Officer. The options vest monthly over a 1 one-year period. On August 8, 2023, the Company granted options to purchase 30,000 shares of the Company’s common stock under the 2022 Plan, having an exercise price of $ 2.51 per share, exercisable over a 10 -year term, to one of its directors. The options vest monthly over a 1 one-year period. F- 13 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Common Stock Issued for Services On October 26, 2023, the Company issued 12,500 shares, restricted in accordance with Rule 144, to a consultant, who later became a Company director, for services performed. The aggregate fair value of the shares was $ 19,000 , based on the closing traded price of the common stock on the date of grant . Note 5 – Formation of Subsidiary On April 26, 2024, the Company formed BranchOut Food Sucursal Peru, a wholly-owned subsidiary in Peru, in the form of a legal entity called a branch, for the purpose of operating the 50,000 square-foot Peru Facility. The Company began manufacturing products at the Peru Facility in December of 2024. Note 6 – 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, derivative liabilities 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, 2024 and 2023: Schedule of Valuation of Financial Instruments at Fair Value on a Recurring Basis Level 1 Level 2 Level 3 Fair Value Measurements at December 31, 2024 Level 1 Level 2 Level 3 Assets Cash $ 2,329,452 $ - $ - Right-of-use-asset - - 1,575,497 Notes receivable - 359,982 - Total assets 2,329,452 359,982 1,575,497 Liabilities Convertible notes payable, related parties net of $ 66,587 of discounts - - 3,333,413 Notes payable - 1,846,147 - Notes payable, related parties - 1,200,000 - Lease liabilities - - 1,674,064 Total liabilities - 3,046,147 5,077,477 Total assets and liabilities $ 2,329,452 $ ( 2,686,165 ) $ ( 3,521,286 ) F- 14 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Level 1 Level 2 Level 3 Fair Value Measurements at December 31, 2023 Level 1 Level 2 Level 3 Assets Cash $ 657,789 $ - $ - Right-of-use-asset - - 147,228 Notes receivable - 384,628 - Total assets 657,789 384,628 147,228 Liabilities Notes payable - 235,000 - Lease liability - - 131,930 Total liabilities - 235,000 131,930 Total assets and liabilities $ 657,789 $ 149,628 $ 15,298 There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the years ended December 31, 2024 and 2023. Note 7 – Major Customers and Accounts Receivable The Company had certain customers whose revenue individually represented 10 % or more of the Company’s total net revenue, or whose accounts receivable balances individually represented 10 % or more of the Company’s total accounts receivable, as follows: For the years ended December 31, 2024 and 2023, two customers accounted for 99 % and 90 % of net revenue, respectively, and 89 % and 85 % of accounts receivable, respectively. Note 8 – Other Current Assets Other current assets at December 31, 2024 and 2023, consisted of the following: Schedule of Other Current Assets 2024 2023 December 31, 2024 2023 Prepaid insurance costs $ 21,736 $ 2,403 Prepaid advertising and trade show fees 14,944 20,106 Prepaid professional & license fees 27,369 6,056 Miscellaneous prepaid expenses 19,583 - Interest receivable 30,740 19,535 Total other current assets $ 114,372 $ 48,100 Note 9 – Property and Equipment Property and equipment at December 31, 2024 and 2023, consisted of the following: Schedule of Property and Equipment 2024 2023 December 31, 2024 2023 Equipment and machinery $ 4,580,541 $ 1,233,334 Less: Accumulated depreciation ( 524,242 ) ( 318,335 ) Total property and equipment, net $ 4,056,299 $ 914,999 Depreciation of property and equipment was $ 171,873 and $ 223,856 for the years ended December 31, 2024 and 2023, respectively. For the year ended, December 31, 2024, a total of $ 34,034 of depreciation was included in the inventoried production costs, which gets expensed as Cost of Goods Sold as the inventory is sold. F- 15 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 10 – Other Assets Other assets consisted of the following as of December 31, 2024 and 2023: Schedule of Other Assets December 31, December 31, 2024 2023 First position mortgage (1) $ 1,267,000 $ - VAT tax receivable (2) 680,483 - Total other current assets $ 1,947,483 $ - (1) On May 10, 2024, in connection with the lease of the Company’s facility in Peru, the Company paid $ 275,000 toward the purchase of a First Position Mortgage (“FPM”) 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 . The Company paid an additional $ 80,000 during the fourth quarter of 2024, and the remaining $ 912,000 due on the FPM is to be paid in monthly installments of $ 152,000 from January 24, 2025 to June 23, 2025 , as presented in other current liabilities on the balance sheet. The unpaid balance accrues interest at 9 %. At December 31, 2024, a total of $ 33,215 of interest was accrued. The FPM enables the Company to ensure that they have uninterrupted access to the leased facility, and secures the option to purchase the facility by becoming the primary lien holder on the facility. The Company intends to exercise its option to purchase the facility at some point in the future, in which case the FPM would either be repaid out of the proceeds from a mortgage, or the FPM would be used to reduce the purchase price of the facility. (2) VAT tax receivable is comprised of taxes that were paid as the Company imported equipment and raw materials into Peru. These taxes will be refunded as inventory is exported, or if equipment is exported for any unforeseeable reason. Note 11 – 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 which the Company loaned $ 500,000 to Nanuva (“Advance Payment”) to help finance the capital investment needed for Nanuva to purchase two industrial fruit drying machines to be used in servicing the Company’s manufacturing needs. Pursuant to the MDA, the Company is entitled to recover the Advance Payment in full no later than May 31, 2027, which prior to repayment, will bear interest at 3 % per annum. The Advance Payment is to be repaid pursuant to a two-dollar ($2/kg) deduction in the price of any product exported by Nanuva to the Company with certain mandatory minimum annual payments. Repayments commence on the earlier of a) the first invoice issued by Nanuva after installation of the drying equipment, or b) June 30, 2021. The MDA expires on May 31, 2027, with automatic annual renewals thereafter, unless it is terminated in accordance with the terms of the MDA. The Company deferred collection of the minimum annual payment requirement for 2023 until 2024 when several large orders were placed. As of December 31, 2024, a total of $ 140,018 of the Advance Payment had been repaid as a reduction of inventory costs, consisting of $ 140,018 of principal and $ 16,223 of interest. All payments consisted of reductions in inventory costs, other than a payment of $ 15,000 in cash on March 24, 2021. As of December 31, 2024, a total of $ 390,722 was outstanding from Nanuva, consisting of $ 359,982 of principal and $ 30,740 of unpaid interest. As of December 31, 2023, a total of $ 404,163 was outstanding from Nanuva, consisting of $ 384,628 of principal and $ 19,535 of unpaid interest. The Advance Payment is collateralized by a second lien in the equipment. Pursuant to the MDA, the Company has been appointed as Nanuva’s exclusive distributor in the following territories: Summary of Nanuva’s Exclusive Distributor in Territories Product Exclusivity Territories Minimum Volume (Kg/month)(“MOQ”) Avocado Powder Worldwide (except Chile) 1,000 Banana Chips Worldwide (except Chile) 1,000 Avocado Snacks North America (Canada and USA) 1,000 Avocado Chips Worldwide 1,000 Other Powders No Exclusivity - 0 - Note 12 – Accrued Expenses Accrued expenses consist of the following: Schedule of Accrued Expenses 2024 2023 December 31, 2024 2023 Accrued payroll and taxes $ 82,338 $ 43,376 Accrued interest 210,783 2,577 Accrued chargebacks 26,663 119,291 Accrued royalties 13,830 - Total accrued expenses $ 333,614 $ 165,244 F- 16 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 13 – Convertible Notes Payable, Related Parties As discussed in further detail in Note 4, on July 24, 2024, the Company issued the $ 3.4 million Convertible Note to Kaufman Kapital, together with Warrants, convertible into shares of common stock at a fixed price of $ 0.7582 per share. 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. 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 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, 2024, a total of $ 66,587 of unamortized debt discounts are expected to be expensed over the remaining life of the loan. The Company recognized $ 145,360 of interest expense on convertible notes payable, related parties for the year ended December 31, 2024, consisting of $ 115,989 of stated interest expense, $ 22,956 of amortized debt discounts and $ 6,415 of amortized debt discounts due to warrants. The Company recognized $ 3,696 of interest expense on convertible notes payable, related parties for the year ended December 31, 2023. Note 14 – Notes Payable Notes payable consists of the following as of December 31, 2024 and 2023: Schedule of Notes Payable December 31, December 31, 2024 2023 On May 22, 2023, the Company entered into an equipment purchase agreement with the EnWave Corporation (“EnWave”), for the purchase of a used 100kW Rev vacuum microwave dehydration machine (the “EnWave Machine”). Cash payments of $500,000 were paid towards the $1,000,000 purchase price on the 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. $ 251,647 $ - On May 22, 2023, the Company entered into an equipment purchase agreement with the EnWave Corporation (“EnWave”), for the purchase of a used 100kW Rev vacuum microwave dehydration machine (the “EnWave Machine”). Cash payments of $ 500,000 were paid towards the $ 1,000,000 purchase price on the 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. $ 251,647 $ - On March 15, 2023, the Company completed the sale of a $ 200,000 Promissory Note to The John & Kristen Hinman Trust Dated February 23, 2016 (the “Hinman Note”), pursuant to the Loan Agreement between the Company and the Hinman Trust. The Hinman Note carried interest at 18 % per annum. The Hinman Note was repaid on January 2, 2024. - 200,000 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 principal and 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. 34,500 34,500 Total notes payable $ 286,147 $ 234,500 Less: current maturities 251,647 200,000 Notes payable, less current maturities $ 34,500 $ 34,500 The Company recognized $ 19,809 and $ 214,430 of interest expense on notes payable for the years ended December 31, 2024 and 2023, respectively. F- 17 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 15 – Notes Payable, Related Parties Kaufman Note As discussed in Note 4, on August 30, 2024, the Company borrowed $ 1,200,000 from Kaufman Kapital pursuant to a Senior Secured Promissory Note that, as amended, matures on June 30, 2025 . The loan under the Note bears interest at a rate of 15 % per annum. The Company’s obligations under the Note are secured by a lien on substantially all of the Company’s assets pursuant to the Security Agreement. In addition, the Note includes affirmative and negative covenants, events of defaults and other terms and conditions, customary in transactions of this nature. Eagle Vision Notes As discussed in Note 4, 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 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 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 Notes held by the Holders beginning July 1, 2024 has been eliminated, and instead all obligations of the Company under such Senior Notes will be due in one lump sum on the maturity date of the Senior 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 Notes held by the Holders and liens granted to the holders thereof. The amendment warrants resulted in $ 89,949 of additional interest expense. 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 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. The sales were effected pursuant to a Subscription Agreement, dated January 10, 2024, between the Company and the investors in the Senior Notes, as amended by an amendment (“First Amendment”) to the Subscription Agreement dated as of April 16, 2024 (as so amended, the “Subscription Agreement”). The Senior 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) and bear interest at a rate of 15 % per annum. In addition, the Senior 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 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 Notes (the “Security Agreement”). Each Warrant is exercisable for a 10 ten-year period at an exercise price of $ 1.00 per share. On April 16, 2024, the Company completed the sale of $ 225,000 of Senior Notes, and Warrants to purchase an aggregate of 56,250 shares of the Company’s common stock, to a group of seven Investors, pursuant to a First Amendment to the Subscription Agreement between the Company and the Investors dated as of April 16, 2024. The First Amendment incorporates and amends certain provisions of the Subscription Agreement, dated January 10, 2024, previously entered into by the Company and investors that purchased Notes and Warrants from the Company on January 10, 2024 (the “January Investors”). On July 30, 2024, the Company repaid an aggregate total of $ 115,000 of principal to three of the seven Investors in settlement of their promissory notes. The First Amendment also (i) increased the aggregate principal amount of the Senior 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 January Investors 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 Notes and Warrants, in consideration of services rendered and to be rendered by Eagle Vision to holders of the Senior Notes while the Notes are outstanding, including acting as collateral agent and due diligence and collateral monitoring services. F- 18 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On January 9, 2024, the Company completed the sale of $ 400,000 of Senior Notes and Warrants to purchase an aggregate of 100,000 shares of the Company’s common stock, to a group of six Investors led by Eagle Vision, pursuant to a Subscription Agreement between the Company and the Investors. In accordance with ASC 470, the Company recorded total discounts of $ 339,698 , including $ 80,908 on the relative fair value of the Warrants, incurred as of December 31, 2024. The discounts are being amortized to interest expense over the term of the debentures using the effective interest method. The Company recorded an aggregate $ 339,698 of interest expense pursuant to the amortization of note discounts for the year ended December 31, 2024. Eagle Vision has been paid aggregate cash fees in the amount of $ 177,500 from the sales of the Senior Notes in consideration of services rendered and to be rendered by Eagle Vision to the Company and the holders of the Senior Notes, including for conducting due diligence with respect to the Company, monitoring the performance by the Company of its obligations under the Senior Notes, servicing the interest and principal payments for holders of the Senior 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 Notes. To date, in a series of closings pursuant to the Subscription Agreement, including the most recent sales described above, the Company has issued an aggregate $ 1,675,000 of principal pursuant to the Senior Notes, and Warrants to purchase an aggregate 518,750 shares of common stock. Notes payable, related parties, consists of the following as of December 31, 2024 and 2023: Schedule of Notes Payable Related Parties December 31, December 31, 2024 2023 Total Kaufman Note $ 1,200,000 $ - Total Senior Notes held by Eagle Vision 1,560,000 - Total Senior Notes payable 1,560,000 - Total notes payable, related parties 2,760,000 - Less: current maturities 2,760,000 - Notes payable, related parties, less current maturities $ - $ - The Company recognized $ 664,847 and $ 66,090 of interest expense on notes payable, related parties for the years ended December 31, 2024 and 2023, respectively. Interest expense for the year ended December 31, 2024, consisted 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 Eagle Vision Investors. Interest expense for the year ended December 31, 2023, consisted of $ 66,090 of amortized debt discounts, including $ 46,090 of amortized debt discounts due to warrants issued on a Subordinated Note during the year ended December 31, 2023. The Company recognized aggregate interest expense for the years ended December 31, 2024 and 2023 respectively, as follows: Schedule of Recognized Interest Expense December 31, December 31, 2024 2023 Interest on convertible notes payable, related parties $ 115,989 $ 3,696 Amortization of debt discounts on related party convertible notes 22,956 - Amortization of debt discounts on related party convertible notes, warrants 6,415 - Amortization of debt discounts on related party convertible notes 6,415 - Interest on convertible notes payable - 138,316 Interest on notes payable 19,809 214,430 Interest on notes payable, related parties 235,200 - Interest on notes payable 235,200 - Amortization of debt discounts on related party notes 258,790 20,000 Amortization of debt discounts on modification of Eagle Vision warrants 89,949 - Amortization of debt discounts on related party notes, warrants 80,908 46,090 Amortization of debt discounts on related party notes 80,908 46,090 Interest on other current liability, first position mortgage 33,215 - Interest on revolving line of credit - 8,251 Finance charge on letter of credit - 2,082 Interest on credit cards - 2,406 Total interest expense $ 863,231 $ 435,271 F- 19 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 16 – 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 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 we 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 $ 355,000 was paid during the year ended December 31, 2024. The remaining $ 912,000 is to be paid in monthly installments of $ 152,000 from January 24, 2025 to June 23, 2025, as presented in other current liabilities on the balance sheet. The unpaid balance accrues interest at 9 %. At December 31, 2024, a total of $ 33,215 of interest was accrued. The components of lease expense were as follows: Schedule of Components of Lease Expenses 2024 2023 For the Years Ended December 31, 2024 2023 Operating lease cost: Amortization of right-of-use asset $ 103,146 $ - Interest on lease liability 89,853 - Capitalized inventory costs ( 15,313 ) - Total operating lease cost 177,686 - Finance lease cost: Amortization of right-of-use asset $ 31,563 $ - Interest on lease liability 18,164 - Total finance lease cost 49,727 - Other short-term leases 12,800 - Total lease costs $ 240,213 $ - Supplemental balance sheet information related to leases was as follows: Schedule of Supplemental Information Related to Leases December 31, December 31, 2024 2023 Operating lease: Operating lease assets $ 1,444,036 $ - Current portion of operating lease liability $ - - Noncurrent operating lease liability 1,573,035 - Total operating lease liability $ 1,573,035 $ - Finance lease: Finance lease assets $ 131,461 $ 147,228 Current portion of finance lease liability $ 29,243 30,901 Noncurrent finance lease liability 92,761 101,029 Total finance lease liability $ 122,004 $ 131,930 Weighted average remaining lease term: Operating lease 9.86 years - Finance lease 3.13 years 3.35 years Weighted average discount rate: Operating lease 9 % - Finance lease 11 % 11 % F- 20 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Supplemental cash flow and other information related to finance leases was as follows: Schedule of Supplemental Cash and Other Information Related to finance Leases 2024 2023 For the Years Ended December 31, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows provided by operating leases $ 25,853 $ - Finance cash flows used for finance leases $ 9,926 $ - - Leased assets obtained in exchange for lease liabilities: - Total operating lease liabilities $ 1,547,182 $ - Total finance lease liabilities $ 184,592 $ - The future minimum lease payments due under operating leases as of December 31, 2024 is as follows: Schedule of Future Minimum Operating Lease Payments Year Ending Minimum Lease December 31, Commitments 2025 $ 96,000 2026 192,000 2027 256,000 2028 280,000 Thereafter 1,596,000 Total minimum lease payments 2,420,000 Less effects of discounting 846,965 Lease liability recognized 1,573,035 Less current portion - Long-term operating lease liability $ 1,573,035 The future minimum lease payments due under finance leases as of December 31, 2024 is as follows: Schedule of Future Minimum Finance Lease Payments Year Ending Minimum Lease December 31, Commitments 2025 $ 40,229 2026 43,886 2027 43,886 2028 18,286 Total minimum lease payments 146,287 Less effects of discounting 24,283 Lease liability recognized 122,004 Less current portion 29,243 Long-term finance lease liability $ 92,761 F- 21 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 17 – 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, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies. Legal accruals are recorded when and if it is determined that a loss related to a certain matter is both probable and reasonably estimable. There are currently no pending legal matters. 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 . Other Contractual Commitments 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. 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 was amended on October 26, 2022, September 27, 2023 and May 23, 2024, 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 with respect to the production of avocado products. In order to maintain the 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. In addition to the initial EnWave Equipment we purchased, the Company agreed to purchase additional equipment from EnWave over time. The additional equipment purchase schedule, as amended, requires the Company to purchase a “Second EnWave Machine” and pay up-to four non-refundable deposits for the Second EnWave Machine in the amount of fifty thousand dollars ($ 50,000 ) each on September 30, 2023, December 31, 2023, March 31, 2024 and June 30, 2024 (the “Interim Deposits”). The Company paid the first three non-refundable deposits of $ 50,000 on September 27, 2023, December 31, 2023 and March 8, 2024, and completed the purchase 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. The Company is also required to enter into 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 Agreement is effective as long as EnWave possesses its EnWave technology. There have been no royalty payments to date, and any future minimum royalty payments or equipment purchases under this license agreement are an unrecognized commitment, as they relate to retaining exclusivity of the avocado products going forward and the Company can elect not to pay. F- 22 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 18 – Stockholders’ Equity Preferred Stock The Company has authorized 8,000,000 shares of $ 0.001 par value preferred stock. As of December 31, 2024, none of the preferred stock has been designated or issued. Common Stock The Company has authorized 80,000,000 shares of $ 0.001 par value common stock. As of December 31, 2024, a total of 8,424,600 shares of common stock have been issued. Each holder of common stock is entitled to one vote for each share of common stock held . At-The-Money Offering On October 23, 2024, the Company entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) for the sale of shares of its common stock having an aggregate offering price of up to $ 3,000,000 . The shares were sold at prevailing market prices, and the offering was conducted through Alexander Capital, L.P. (“Alexander Capital”). Net proceeds from the offering of 1,317,307 shares of common stock under the ATM Agreement, after deducting applicable expenses, including a commission paid to Alexander Capital equal to 3 % of the gross proceeds from the sale of the shares, amounted to approximately $ 2,305,005 for the year ended December 31, 2024. As of December 31, 2024, the Company had 182,693 shares of common stock authorized but unissued, as held in a brokerage account with Alexander Capital, which were available for issuance under the ATM Agreement. These shares of common stock represent a part of the total authorized share capital. The issuance of shares has resulted in an increase in the outstanding common stock of the Company, as the proceeds will be used for general corporate purposes or specific use of proceeds, if applicable. No equity impact was recorded for these shares during the year ended December 31, 2024. Initial Public Offering In June 2023, the Company completed its initial public offering IPO in which it issued and sold 1,190,000 shares of its common stock at a price of $ 6.00 per share pursuant to an Underwriting Agreement between the Company and Alexander Capital, L.P. (the “Underwriter”) . The Company received net proceeds of $ 6,226,000 , after deducting underwriters’ discounts and commissions and before consideration of other issuance costs. Pursuant to the Underwriting Agreement, the Company also issued to the Underwriter a Common Stock Purchase Warrant to purchase up to 82,110 shares of Common Stock at an exercise price of $ 7.20 , which may be exercised for a five-year period beginning December 18, 2023. Prior to the IPO, all deferred offering costs were capitalized in other noncurrent assets on the balance sheets. Deferred offering costs of $ 1,283,954 , primarily consisting of accounting, legal, and other fees related to the Company’s IPO, were offset against the IPO proceeds upon the closing of the Company’s IPO in June 2023. Unit Offering Sale of Common Stock and Warrants, Related Parties for the Year Ended December 31, 2024 On July 15, 2024, the Company entered into Subscription Agreements (the “Subscription Agreements”) with three related parties, consisting of Eric Healy, the Company’s Chief Executive Officer; Eagle Vision; and the Company’s President, pursuant to which such investors agreed to purchase $ 525,000 of “Units” from the Company, each Unit consisting of (i) 100 shares of common stock, and (ii) a warrant to purchase 125 shares of common stock over the following ten years at an exercise price of $ 1.00 per share, at a purchase price per Unit equal to $ 75.82 . The Company completed the sale of the Units to Eric Healy and the Company’s President on July 23, 2024, and the sale of the Units to Eagle Vision on August 30, 2024, an affiliate of Mr. Dalfonsi, the Company’s CFO, resulting in the issuance of an aggregate of 692,429 shares of common stock and warrants to purchase 865,536 shares of common stock. F- 23 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Follow-on Offering of Common Stock On June 26, 2024, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Alexander Capital, L.P. as the Representative of the underwriters named therein (the “Representative” and such other Underwriters, the “Underwriters”), relating to the issuance and sale by the Company to the Underwriters (the “Public Offering”) of 1,750,000 Shares (the “Shares”) of common stock at a price to the public of $ 0.80 per share, less underwriting discounts and commissions. Pursuant to the Underwriting Agreement, the Representative was granted an option (the “Over-Allotment Option”), for a period of 45 days, to purchase from the Company up to 262,500 additional shares of common stock, at the same price per share, to cover over-allotments, if any. Pursuant to the Underwriting Agreement, the Company agreed to an 8.0 % underwriting discount on the gross proceeds received by the Company for the Shares, in addition to reimbursement of certain expenses, made customary representations, warranties and covenants concerning the Company, and also agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act. The Offering closed on June 28, 2024. The Company received net proceeds from the Offering of $ 1,000,925 after deducting the underwriting discounts and commissions and offering expenses. On July 19, 2024, the Underwriters exercised their Over-Allotment Option to purchase 222,500 shares of common stock at a price of $ 0.80 per share. The Company received net proceeds $ 163,760 , after deducting $ 14,240 of underwriting commissions. Common Stock Issued for Services for the Year Ended December 31, 2024 On June 1, 2024, the Company issued 6,383 shares of the Company’s common stock under the 2022 Omnibus Equity Incentive Plan (the “2022 Equity Plan”) to PCG Advisory, Inc. (“PCG”) as payment for services in lieu of cash. The fair value of the shares was $ 9,819 , based on the closing traded price of the common stock on the date of grant . On May 1, 2024, the Company issued 4,766 shares of the Company’s common stock under the 2022 Equity Plan to PCG as payment for services in lieu of cash. The fair value of the shares was $ 11,438 , based on the closing traded price of the common stock on the date of grant . On April 22, 2024, the Company issued 99,688 shares under the 2022 Equity Plan to its securities counsel for services performed. The fair value of the shares was $ 109,657 , based on the closing traded price of the common stock on the date of grant . On April 1, 2024, the Company issued 4,988 shares of the Company’s common stock under the 2022 Equity Plan to PCG as payment for services in lieu of cash. The fair value of the shares was $ 9,577 , based on the closing traded price of the common stock on the date of grant . On February 19, 2024, the Company issued 16,836 shares under the Company’s 2022 Equity Plan to its securities counsel for services performed. The fair value of the shares was $ 44,278 , based on the closing traded price of the common stock on the date of grant . On January 26, 2024, the Company issued 60,258 shares under the 2022 Equity Plan, to its securities counsel for services performed. The fair value of the shares was $ 69,297 , based on the closing traded price of the common stock on the date of grant . On January 5, 2024, the Company retained PCG to provide strategic advisory and investor relations services pursuant to an Advisory Agreement under which the Company agreed to issue PCG an aggregate 22,500 shares of the Company’s common stock as payment for services in lieu of cash for the months of January, February, and March 2024. The aggregate fair value of the shares was $ 36,019 , based on the closing traded price of the common stock on the dates of grant . The shares were subsequently issued on April 15, 2024 under the 2022 Equity Plan. Common Stock Issued for Services for the Year Ended December 31, 2023 On November 1, 2023, the Company issued 24,478 shares under the 2022 Equity Plan to its securities counsel for services performed. The aggregate fair value of the shares was $ 40,389 , based on the closing traded price of the common stock on the date of grant . On October 26, 2023, the Company issued 12,500 shares under the 2022 Equity Plan to a consultant, who later became a Company director, for services performed. The aggregate fair value of the shares was $ 19,000 , based on the closing traded price of the common stock on the date of grant . F- 24 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On August 17, 2023, the Company issued 44,334 shares under the 2022 Equity Plan, to its securities counsel for services performed. The aggregate fair value of the shares was $ 99,751 , based on the closing traded price of the common stock on the date of grant . Debt Conversions In connection with the IPO in June 2023, a total of $ 6,029,204 of convertible debt, consisting of $ 5,526,691 of principal and $ 502,513 of interest, was converted into 1,572,171 shares of common stock, inclusive of $ 179,687 , consisting of $ 165,000 of principal and $ 14,687 of interest, that converted into 43,562 shares of common stock issued upon the conversion of debts held by related parties. The notes were converted in accordance with the conversion terms; therefore, no gain or loss had been recognized. Note 19 – Common Stock Options Stock Incentive Plan Our board of directors and shareholders adopted our 2022 Omnibus Equity Incentive Plan on January 1, 2022 (the “2022 Plan”). Our 2022 Plan allows for the grant of a variety of equity vehicles to provide flexibility in implementing equity awards, including nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, incentive bonus awards, other cash-based awards and other stock-based awards. The number of shares reserved for issuance under the 2022 Equity Plan was initially an aggregate of 600,000 shares, as adjusted on June 15, 2023 in connection with the Company’s reverse stock split, subject to annual increases under the plan, resulting in 1,009,000 reserved shares as of December 31, 2024. There were 593,470 options with a weighted average exercise price of $ 2.39 per share outstanding as of December 31, 2024. Common Stock Options Issued for Services On May 1, 2024, the Company granted options to purchase 30,000 shares of the Company’s common stock, having an exercise price of $ 2.40 per share, exercisable over a 10 -year term, to a new employee. The options will vest monthly over three years from the date of grant. The aggregate estimated value using the plain vanilla Black-Scholes Pricing Model, based on a volatility rate of 41 % and a call option value of $ 1.1806 , and an expected term of 6.5 years, was $ 35,419 . The options are being expensed over the vesting period, resulting in $ 7,872 of stock-based compensation expense during the year ended December 31, 2024. As of December 31, 2024, a total of $ 27,547 of unamortized expenses are expected to be expensed over the vesting period. On February 22, 2024, the Company granted options to purchase an aggregate 315,000 shares of the Company’s common stock, having an exercise price of $ 1.92 per share, exercisable over a 10 -year term, to a total of six employees, including options to purchase 140,000 and 75,000 shares issued to the Company’s CEO and CFO, respectively. The options vested immediately. The aggregate estimated value using the plain vanilla Black-Scholes Pricing Model, based on a volatility rate of 41 % and a call option value of $ 0.8581 , and an expected term of 5.5 years, was $ 270,296 . On February 22, 2024, the Company also granted options to purchase an aggregate 79,166 shares of the Company’s common stock, having an exercise price of $ 1.92 per share, exercisable over a 10 -year term, to a total of three of the Company’s directors. The options vested immediately. The aggregate estimated value using the plain vanilla Black-Scholes Pricing Model, based on a volatility rate of 41 % and a call option value of $ 1.1407 , and an expected term of 5.5 years, was $ 90,306 . On October 24, 2023, the Company granted options to purchase an aggregate 42,500 shares of the Company’s common stock, having an exercise price of $ 1.60 per share, exercisable over a 10 -year term, to a total of four employees. The options will vest one-year from the date of grant. The estimated value using the plain vanilla Black-Scholes Pricing Model, based on a volatility rate of 93 % and a call option value of $ 0.7118 , and an expected term of 5.5 years, was $ 30,253 . The options were expensed over the vesting period, resulting in $ 24,581 and $ 5,672 of stock-based compensation expense during the years ended December 31, 2024 and 2023, respectively. On August 8, 2023, the Company granted options to purchase an aggregate 30,000 shares of the Company’s common stock under the 2022 Plan, having an exercise price of $ 6.00 per share, exercisable over a 10 -year term, to the chairman of the audit committee. The options will vest monthly over a one-year period. The estimated value using the plain vanilla Black-Scholes Pricing Model, based on a volatility rate of 39 % and a call option value of $ 0.1644 , and an expected term of 3 years, was $ 4,932 . The options were expensed over the vesting period, resulting in $ 2,980 and $ 1,952 of stock-based compensation expense during the years ended December 31, 2024 and 2023, respectively. On August 8, 2023, the Company granted options to purchase an aggregate 30,000 shares of the Company’s common stock under the 2022 Plan, having an exercise price of $ 2.51 per share, exercisable over a 10 -year term, to one of its directors. The options will vest monthly over a one-year period. The estimated value using the plain vanilla Black-Scholes Pricing Model, based on a volatility rate of 39 % and a call option value of $ 0.7885 , and an expected term of 3 years, was $ 23,655 . The options were expensed over the vesting period, resulting in $ 14,291 and $ 9,364 of stock-based compensation expense during the years ended December 31, 2024 and 2023, respectively. F- 25 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On February 28, 2023, the Company awarded fully vested options to purchase 16,000 shares of common stock under the 2022 Plan at an exercise price equal to $ 4.125 per share, exercisable over a 10 ten-year period to an employee. The estimated value using the plain vanilla Black-Scholes Pricing Model, based on a volatility rate of 50 % and a call option value of $ 2.0249 , and an expected term of 5 years, was $ 32,399 . The options were expensed as stock-based compensation expense during the year ended December 31, 2023. The following is a summary of information about the Stock Options outstanding at December 31, 2024. Schedule of Underlying Stock Options Outstanding Shares Underlying Shares Underlying Options Outstanding Options Exercisable Weighted Shares Average Weighted Shares Weighted Underlying Remaining Average Underlying Average Range of Options Contractual Exercise Options Exercise Exercise Prices Outstanding Life Price Exercisable Price $ 1.60 – 6.00 593,470 8.4 years $ 2.39 564,935 $ 2.58 The following is a summary of activity of outstanding stock options: Schedule of Activity of Outstanding Stock Options Weighted Average Number Exercise of Shares Prices Balance, December 31, 2022 108,404 $ 4.125 Options granted 118,500 3.194 Options canceled ( 57,600 ) ( 4.125 ) Balance, December 31, 2023 169,304 3.639 Options granted 424,166 1.95 Balance, December 31, 2024 593,470 $ 2.39 Exercisable, December 31, 2024 564,935 $ 2.58 Note 20 – Common Stock Warrants Warrants to purchase a total of 3,462,162 shares of common stock at a weighted average exercise price of $ 1.88 per share, with a weighted average remaining life of 5.11 years, were outstanding as of December 31, 2024. Warrants Issued Pursuant to Convertible Note Financing As discussed in further detail in Note 4, on July 24, 2024, the Company issued to Kaufman Kapital, in a private placement (i) a 12 % Senior Secured Convertible Promissory Note in the principal amount of up to $ 3,400,000 , (ii) a warrant to purchase 1,000,000 shares of common stock at an exercise price of $ 1.00 per share, and (iii) a warrant to purchase 500,000 shares of common stock at an exercise price of $ 1.50 per share, in consideration of an initial loan in the principal amount of $ 2,000,000 made to the Company under the Convertible Note. The proceeds received were allocated between the debt and warrants on a relative fair value basis. The relative aggregate estimated value of the $ 1.00 Warrants using the Black-Scholes Pricing Model, based on a weighted average volatility rate of 39 % and a weighted average call option value of $ 0.2138 , was $ 20,303 , of which $ 6,214 was recognized as finance expense during the year ended December 31, 2024. As of December 31, 2024, there was $ 14,089 of unamortized expenses expected to be expensed over the remaining life of the outstanding debt. The relative aggregate estimated value of the $ 1.50 Warrants using the Black-Scholes Pricing Model, based on a weighted average volatility rate of 39 % and a weighted average call option value of $ 0.0768 , was $ 655 , of which $ 201 was recognized as finance expense during the year ended December 31, 2024. As of December 31, 2024, there was $ 454 of unamortized expenses expected to be expensed over the remaining life of the outstanding debt. F- 26 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Warrants Issued Pursuant to Unit Offering to Related Parties On July 15, 2024, the Company entered into Subscription Agreements with three related parties, consisting of Eric Healy, the Company’s Chief Executive Officer; Eagle Vision; and the Company’s President, pursuant to which such investors agreed to purchase $ 525,000 of “Units” from the Company, each Unit consisting of (i) 100 shares of common stock, and (ii) a warrant to purchase 125 shares of common stock over the following ten years at an exercise price of $ 1.00 per share, at a purchase price per Unit equal to $ 75.82 . The Company completed the sale of the Units to Eric Healy and the Company’s President on July 23, 2024, and the sale of the Units to Eagle Vision on August 30, 2024, resulting in the issuance of an aggregate of 692,429 shares of common stock and warrants to purchase 865,536 shares of common stock. Warrants Issued Pursuant to Underwriting Agreement On June 28, 2024, pursuant to the Underwriting Agreement, the Company executed and delivered to the Representative a common stock Purchase Warrant (the “Representative’s Warrant”) to purchase up to 100,625 shares of Common Stock, which may be exercised beginning on December 23, 2024 (the date that is 180 days following the commencement of sales of common stock in connection with the Offering (the “Commencement Date”)) until June 26, 2029. The initial exercise price of the Representative’s Warrant is $ 0.96 per share, which is equal to 120% of the public offering price for the Shares . Warrants Issued Pursuant to Debt Offering On various dates from January 9, 2024 through May 22, 2024 , the Company issued Warrants to purchase an aggregate total of 518,750 shares of common stock at an exercise price of $ 2.00 per share in connection with the sale of Senior Notes to a group of Investors led by Eagle Vision, in the aggregate principal amount of $ 1,675,000 . The proceeds received were allocated between the debt and warrants on a relative fair value basis. The relative aggregate estimated value of the warrants using the Black-Scholes Pricing Model, based on a weighted average volatility rate of 40 % and a weighted average call option value of $ 0.1560 , was $ 80,908 , which was recognized as finance expense during the year ended December 31, 2024. Amendment of Senior Notes and Warrants 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 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 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 Notes held by the Holders beginning July 1, 2024 has been eliminated, and instead all obligations of the Company under such Senior Notes will be due in one lump sum on the maturity date of the Senior 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 Notes held by the Holders and liens granted to the holders thereof. The amendment warrants resulted in $ 89,949 of additional interest expense. Warrants Issued Pursuant to Debt Offering On July 1, 2023 , the Company issued warrants to purchase an aggregate total of 30,000 shares of common stock at an exercise price of $ 6.00 per share to note holders in connection with the sale of senior secured promissory notes in the aggregate principal amount of $ 170,000 to four accredited investors. The proceeds received were allocated between the debt and warrants on a relative fair value basis. The aggregate estimated value of the warrants using the Black-Scholes Pricing Model, based on a weighted average volatility rate of 54 % and a weighted average call option value of $ 3.8171 , was $ 114,513 , of which $ 46,090 was recognized as finance expense during the year ended December 31, 2023. As of December 31, 2023, there were no unamortized expenses expected to be expensed over the remaining life of the outstanding debt, as the debt was repaid in full on June 16, 2023. Underwriters’ Warrants Issued Pursuant to IPO In June 21, 2023, the Company issued warrants to purchase 82,110 shares at $ 7.20 per share, exercisable between December 18, 2023 and December 18, 2028, pursuant to the underwriters’ agreement. The aggregate estimated value of the warrants using the Black-Scholes Pricing Model, based on a weighted average volatility rate of 54 % and a weighted average call option value of $ 1.7981 , was $ 147,639 . F- 27 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following is a summary of information about our warrants to purchase common stock outstanding at December 31, 2024. Schedule of Warrants to Purchase Common Stock Outstanding Shares Underlying Shares Underlying Warrants Outstanding Warrants Exercisable Weighted Shares Average Weighted Shares Weighted Range of Underlying Remaining Average Underlying Average Exercise Warrants Contractual Exercise Warrants Exercise Prices Outstanding Life Price Exercisable Price $ 0.96 -$ 7.50 3,462,162 5.11 years $ 1.88 3,462,162 $ 1.88 The fair value of each warrant grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan: Schedule of Weighted-Average Assumptions Used for Grants Under Fixed Option Plan December 31, December 31, 2024 2023 Average risk-free interest rates 3.56 % 4.04 % Average expected life (in years) 5.56 6.34 Volatility 39.15 % 54.40 % The weighted average fair value of warrants granted with exercise prices at the current fair value of the underlying stock was approximately $ 1.09 and $ 6.88 per warrant for the years ended December 31, 2024 and 2023, respectively. The following is a summary of activity of outstanding common stock warrants, as retrospectively presented pursuant to the amendment on March 7, 2022: Schedule of Outstanding Common Stock Warrants Weighted Average Number Exercise of Shares Prices Balance, December 31, 2022 365,141 $ 6.81 Warrants granted 112,110 6.88 Balance, December 31, 2023 477,251 6.83 Warrants granted 2,984,911 1.09 Balance, December 31, 2024 3,462,162 $ 1.88 Exercisable, December 31, 2024 3,462,162 $ 1.88 Note 21 – Income Taxes The Company incurred a net operating loss for the period from November 19, 2021 (the effective date of the conversion from a limited liability company to a corporation) through December 31, 2024 and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2024, the Company had approximately $ 9,512,000 of federal net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 2041 . The provision (benefit) for income taxes for the period from November 19, 2021 (the effective date of the conversion from a limited liability company to a corporation) through December 31, 2024 were assuming a 21 % effective tax rate. F- 28 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The components of the Company’s deferred tax asset are as follows: Schedule of Deferred Tax Asset December 31, December 31, 2024 2023 Deferred tax assets: Net operating loss carry forwards $ 1,997,520 $ 1,680,000 Net deferred tax assets before valuation allowance $ 1,997,520 $ 1,680,000 Less: Valuation allowance ( 1,997,520 ) ( 1,680,000 ) Net deferred tax assets $ - $ - The Company has incurred cumulative losses which make realization of a deferred tax asset difficult to support in accordance with ASC 740. Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2024. In accordance with ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions. Note 22 – Segment Reporting The Company is engaged in the development, marketing, sale, and distribution of plant-based, dehydrated fruit and vegetable snacks and powders. The Company’s products are currently manufactured at its new production facility that commenced production in Pisco Peru in December 2024, and is supported by contract manufacturers in Peru, as necessary. The Company’s customers are located throughout the United States. The Company’s sales operations, which represent 100% of the Company’s consolidated sales, are one of its two reportable segments. The sales operations’ segment revenues are predominately earned as consumer products are sold to big box retail customers throughout the United States and via the Company’s online platform. The Company aggregates its operating divisions into two reportable segments due to the operating divisions having similar economic characteristics with similar long-term financial performance, but different geographic locations. The Company’s sales occur entirely from, and within, the United States, while all of the Company’s production processes are conducted in Latin America, which represent its other operating segment. In addition, the Company’s operating divisions offer customers the same products, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve of the same customers, and are allocated capital from a centralized location. Operating divisions are organized primarily on a geographical basis so the operating division management team can be responsive to local needs of the operating division and can execute company strategic plans and initiatives throughout the locations in their operating division. This geographical separation is the primary differentiation between these operating divisions. The geographical basis of organization reflects how the business is managed and how the Company’s Chief Executive Officer, who acts as the Company’s chief operating decision maker (“CODM”), assesses performance internally. The accounting policies of the retail operations segment are the same as those described in the summary of significant accounting policies in Note 3 to the Consolidated Financial Statements. The Company’s CODM assesses performance and allocates resources for the retail operations segment using segment earnings before net interest expense, income tax expense and depreciation and amortization (“EBITDA”). The Company defines EBITDA as earnings before interest taxes and depreciation. The Company’s CODM also uses segment EBITDA to measure the operational effectiveness of the Company’s financial model, compare the performance of core operating results between periods, against budget and against competitors and evaluate whether to invest capital in the retail operations segment or in other parts of the Company, such as for share repurchases, debt repayments or capital expenditures. The Company’s CODM is not provided asset information by reportable segment as asset information is provided to the CODM on a consolidated basis. The Company’s capital expenditures are predominately used in the Company’s production operations, rather than its retail operations. F- 29 BRANCHOUT FOOD INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents the Company’s retail operations segment revenue, measure of segment profit or loss, significant segment expenses and reconciliation of the U.S. and Latin America operations segments’ EBITDA to consolidated net earnings before income tax expense for the years ended December 31, 2024 and 2023: Schedule of Segment Reporting 2024 2023 For the Years Ended December 31, 2024 2023 U.S. operations segment sales $ 6,516,337 $ 2,825,855 Latin American operations segment cost of goods sold $ 5,480,874 $ 2,698,229 U.S. operations segment expenses: General and administrative 1,367,039 1,581,474 Rent 52,727 - Salaries and wages 1,390,260 1,129,858 Professional fees 1,090,648 694,596 Total U.S. operating expenses $ 3,900,674 $ 3,405,928 U.S. operations segment EBITDA $ 2,615,663 $ ( 580,073 ) Latin American operations segment cost of goods sold $ 5,480,874 $ 2,698,229 Latin American operations segment expenses: General and administrative 263,438 - Rent 187,486 - Salaries and wages 213,940 - Professional fees 200,493 - Total Latin American operating expenses 865,357 - Operating expenses 865,357 - Latin American operations segment EBITDA $ ( 6,346,231 ) $ ( 2,698,229 ) Consolidated EBITDA $ ( 3,730,568 ) $ ( 3,278,302 ) Reconciliation of net earnings before income tax expense: Consolidated EBITDA $ ( 3,730,568 ) $ ( 3,278,302 ) EBITDA $ ( 3,730,568 ) $ ( 3,278,302 ) Depreciation ( 171,873 ) ( 223,856 ) Interest income 14,156 11,719 Interest expense ( 863,231 ) ( 435,271 ) Consolidated net loss before income tax expense $ ( 4,751,516 ) $ ( 3,925,710 ) Note 23 – Subsequent Events The Company evaluates events that have occurred after the balance sheet date through the date hereof, which these financial statements were issued. No events occurred of a material nature that would have required adjustments to or disclosure in these financial statements except as follows: ATM Offering On February 18, 2025, the Company entered into entered into a First Amendment to the ATM Agreement to increase the aggregate offering price of the Shares that the Company may sell under the ATM Agreement to up to $ 5,000,000 . Subsequent to December 31, 2024, the Company sold a total of 1,303,115 shares of common stock, including 182,693 shares authorized, but unissued at December 31, 2024, at prevailing market prices under the ATM Agreement for aggregate net proceeds of $ 2,407,448 , after deducting applicable expenses, including a commission paid to Alexander Capital equal to 3 % of the gross proceeds from the sale of the shares. Exercise of Warrants On February 14, 2025, the Company received aggregate proceeds of $ 38,157 on the exercise of Representative’s Warrants to purchase an aggregate of 39,747 shares of common stock. F- 30 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None ITEM 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed by us in the reports we file or furnish to the SEC under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. As of December 31, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a –15(e). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were ineffective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer do not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. All internal control systems, no matter how well designed, have inherent limitations. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our internal controls over financial reporting as of December 31, 2024. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control — Integrated Framework (2013).” Based on this assessment, management identified the following material weaknesses that have caused management to conclude that, as of December 31, 2024, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level. We noted the following deficiencies that we believe to be material weaknesses: (1) the Company has no formal control process related to the identification and approval of related party transactions; (2) the Company lacks a formal and complete set of policies and procedures that cover the Company’s internal controls over financial reporting; (3) the Company did not maintain effective internal controls to assure proper segregation of duties; and (4) the Company has a lack of resources to evaluate and review appropriate accounting treatment for certain complex areas, such as the treatment of deferred tax assets, unique transactions, and share based compensation. 38 Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that occurred during the fourth fiscal quarter of 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. Other Information None . PART III ITEM 10. Directors, Executive Officers and Corporate Governance Set forth below are the present directors and executive officers of the Company. There are no arrangements or understandings between any of the directors, officers and other persons pursuant to which such person was selected as a director or an officer. Name Age Position Eric Healy 41 Chief Executive Officer, Chairman of the Board John Dalfonsi 59 Chief Financial Officer, Director David Israel 63 Director Greg Somerville 57 Director Byron Riché Jones 41 Director Deven Jain 22 Director Lindsey L. Schwartz 57 Director Biographies Set forth below are brief accounts of the business experience of each director and executive officer of the Company. Eric Healy—Chief Executive Officer and Chairman of the Board . Eric has been our Chief Executive Officer since inception in November 2017. Mr. Healy brings over 13 years of experience as a mechanical engineer, product development engineer, and a food entrepreneur. Prior to founding BranchOut, Mr. Healy was the owner/partner of the No-Bake Cookie Company, running all aspects of the company. Mr. Healy served as a Senior Mechanical Engineer at Stratos Product Development, Synapse Product Development (both consumer product development engineering firms) as well as a Mechanical Engineer at the Boeing Company. Eric earned a Bachelor of Science in Mechanical Engineering from Oregon State University. John Dalfonsi—Chief Financial Officer and Director. John was appointed to serve as the Company’s Chief Financial Officer on January 10, 2024, and has served as a director of ours since June 21, 2023. Since 1995, Mr. Dalfonsi has closed public and private equity and debt financings, merger and acquisitions, advisory and fairness opinion transactions and Nasdaq and NYSE/AMEX IPOs. He has worked with companies in the healthcare, industrial, consumer, technology, cleantech and resource sectors , bringing a wealth of experience to the Company . During this period, Mr. Dalfonsi has spent the bulk of his career at ROTH Capital Partners, LLC and Paulson Investment Company, LLC. Mr. Dalfonsi has been the Managing Member at Eagle Vision Fund G/P., LLC since April 2022, was previously a Senior Managing Director at Paulson Investment Company, LLC from January 2021 through April 2022, and a Managing Director at Roth Capital Partners from February 2002 to December 2020. Mr. Dalfonsi earned his Bachelor of Science degree in Industrial Engineering from Northwestern University and his Master of Business Administration from the University of Chicago Booth School of Business. David Israel—Independent Director. David Israel was appointed to our board of directors, audit committee, compensation committee, and nominating and corporate government committee on June 21, 2023 . Mr. Israel, one of our co-founders boasts a successful history of food entrepreneurship. As the Chief Executive Officer of Good Planet Foods since February of 2018, David brings extensive experience in natural food product development and management. Additionally, as the Chief Executive Officer of BFY Food Group since February of 2017, David brings an immediate network of distributors and buyers that will continue to scale BranchOut as growth accelerates. David developed and created Pop Gourmet as its founder in 2011, until September of 2018. 39 Greg Somerville—Independent Director. Greg Somerville was appointed to our board of directors, audit committee, compensation committee, and nominating and corporate government committee on June 21, 2023 . Mr. Somerville is an accomplished 30-year Sales and Marketing veteran of the U.S. Food Industry. Greg is currently North America Controller & Chief Executive Officer at Savencia Fromage and Dairy, which is the world’s leading specialty cheese company and has held the position since August of 2021. In North America, Savencia has top share positions in cream cheese, domestically-produced and imported specialty cheeses, hummus, and plant-based dips and snacks. Prior to joining Savencia, Mr. Somerville spent 20 years at Land O’Lakes, Inc., starting in July of 2001 and leaving in July of 2021, where he held a variety of leadership positions in sales, customer marketing, category & consumer insights and sustainability. Mr. Somerville is a trusted industry expert as he previously held board positions at the National Frozen & Refrigerated Foods Association and the International Dairy Deli Bakery Association. Mr. Somerville’s proven track record managing branded food products across the retail, food service and B2B ingredients segments will be invaluable toward supporting BranchOut’s future growth. Greg has a BS in Business from the University of Wisconsin and an MBA from Quinlan School of Business. Byron Riché Jones—Independent Director. Byron Riché Jones was appointed to our board of directors and the chairman of the Company’s audit committee on January 10, 2024. Mr. Jones is a distinguished executive with over 15 years in Project Management and Business Solutions experience, and has served as director of several publicly traded and privately held companies, specifically in the Commercial Real Estate, Consumer Goods, Hospitality, Technology, and Cannabis Sectors. Since 2012, Mr. Jones has been the Director of Project Management at Jones Lang LaSalle, one of the largest global real estate companies in the world, where for the past 10 years he has overseen over $50M (US) in capital and improvements for one of the leading Global Technology Institutions. Since 2021, Mr. Jones has also been the principal of ELEVEN03 Hospitality LLC, a growth portfolio company with holdings in notable Bay Area nightlife venues, including “NOVA nightclub’ and “Wild Rose Eatery and Lounge”. Mr. Jones earned an Honors BS degree in Business Management from the WP Carey School of Business with an emphasis in Small Business Entrepreneurship from Arizona State University in 2005. Deven Jain—Independent Director. Deven Jain was appointed to our Board of Directors on July 24, 2024 upon the closing of the investment by Kaufman Kapital, LLC in our securities, although there is no agreement or arrangement between the Company and Kaufman pursuant to which Kaufman has the right to appoint or nominate a director. Mr. Jain served as an analyst at Kaufman Kapital from June 2024 until January 2025, and previously was an intern at CarMax and Dominion Energy. Mr. Jain is currently pursuing a degree in finance at The McIntire School of Commerce. Lindsey L. Schwartz—Independent Director. Lindsey L. Schwartz was appointed to our board of directors on February 13, 2025. Since September of 2020, Mr. Schwartz has been the Executive Chairman of Schwartz Brothers Restaurants, which owns and operates a number of full-service restaurants in the greater Seattle area and Schwartz Brothers Bakery, which sells products in the US and Canada in many of the largest grocery and warehouse club chains. Mr. Schwartz also serves on the board of directors for Evergreens Salads and multiple advisory boards, including South Forty Snacks, Tiphaus and Radius Networks, and formerly served on the advisory board of Nutpods. Mr. Schwartz earned a BS in Business Administration from the University of Southern California. Family Relationships There are no family relationships among any of our directors or executive officers. Board Committees and Audit Committee Financial Expert Our board of directors has established an Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Our board of directors may establish other committees to facilitate the management of our business. The composition and functions of each committee are described below. Members serve on these committees until their resignation or until otherwise determined by our board of directors. Each committee has adopted a written charter that satisfies the applicable rules and regulations of the SEC and Nasdaq, which is available on our website at www.branchoutfood.com . Audit Committee Our Audit Committee is responsible for, among other things: ● overseeing the integrity of our financial statements and the other financial information we provide to our stockholders and other interested parties; ● monitoring the periodic reviews of the adequacy of the auditing, accounting, and financial reporting processes and systems of internal control that are conducted by our independent registered public accounting firm and management; ● being responsible for the selection, retention, compensation, and termination of our independent registered public accounting firm; ● overseeing the independence and performance of our independent registered public accounting firm; 40 ● overseeing compliance with applicable legal and regulatory requirements as they relate to our financial statements and disclosure of financial information to our stockholders and other interested parties; ● facilitating communication among our independent registered public accounting firm, management, and the board of directors; ● preparing the Audit Committee report required by SEC rules and regulations to be included in our annual proxy statement; and ● performing such other duties and responsibilities as are enumerated in and consistent with the Audit Committee charter. Our Audit Committee operates under a written charter, which satisfies the requirements of applicable SEC rules and Nasdaq listing standards, which is available on our principal corporate website located at www.branchoutfood.com . The board of directors has affirmatively determined that each member who serves on the Audit Committee meets the additional independence criteria applicable to Audit Committee members under SEC rules and Nasdaq listing rules. The board of directors has affirmatively determined that each member of the Audit Committee is financially literate. However, as a result of Mr. Dalfonsi’s resignation from the Audit Committee in January 2024, no member of the Audit Committee currently meets the qualifications of an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act. The Audit Committee consists of Mr. Jones, Mr. Israel and Mr. Somerville. Mr. Jones serves as chair of the Audit Committee. Compensation Committee The Compensation Committee is responsible for, among other things: ● assisting the board of directors in developing and reviewing compensation programs applicable to our executive officers and directors; ● overseeing our Company’s overall compensation philosophy, strategy, and objectives; ● approving the total compensation opportunity, as well as each component of compensation, paid to our executive officers and directors; ● administering our equity-based and cash-based compensation plans applicable to our directors, officers, and employees; ● preparing the report of the compensation committee required by SEC rules to be included in our annual proxy statement; and ● performing such other duties and responsibilities as an enumerated and consistent with the Compensation Committee charter. Our Compensation Committee operates under a written charter, which satisfies the requirements of applicable Nasdaq listing standards, which is available on our principal corporate website located at www.branchoutfood.com . The Board has affirmatively determined that each member of the Compensation Committee meets the independence criteria applicable to Compensation Committee members under SEC rules and Nasdaq listing rules. The Company believes that the composition of the Compensation Committee meets the requirements for independence under, and the functioning of such Compensation Committee complies with, any applicable requirements of the rules and regulations of Nasdaq listing rules and the SEC. The Compensation Committee consists of Mr. Israel and Mr. Somerville. Mr. Israel serves as chair of the Compensation Committee. Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee is responsible for, among other things: ● assisting the board of directors in identifying candidates qualified to serve as directors, consistent with selection criteria approved by the board of directors and the nominating and corporate governance committee; ● recommending to the board of directors the appointment of director nominees that meet the selection criteria; ● recommending to the board of directors the appointment of directors to serve on each committee of the board of directors; ● developing and recommending to the board of directors such corporate governance policies and procedures as the nominating and corporate governance committee determines is appropriate from time to time; 41 ● overseeing the performance and evaluation of the board of directors, and of each committee of the board of directors; and ● performing such other duties and responsibilities as are consistent with the Nominating and Corporate Governance Committee charter. Our Nominating and Corporate Governance Committee operates under a written charter, which satisfies the requirements of applicable Nasdaq listing standards, which is available on our principal corporate website located at www.branchoutfood.com . The Board has determined that each member of the Nominating and Corporate Governance Committee is independent within the meaning of the independent director guidelines of Nasdaq listing rules. The Nominating and Corporate Governance Committee consists of Mr. Israel and Mr. Somerville and. Mr. Somerville serves as chair of the Nominating and Corporate Governance Committee. Code of Business Conduct and Ethics We have adopted a written Code of Business Conduct and Ethics that applies to our directors, officers, and employees, including our Chief Executive Officer, Chief Financial Officer, and Chief Operational Officer or persons performing similar functions, in accordance with U.S. federal securities laws and the corporate governance rules of Nasdaq. The Code of Business Conduct and Ethics is available on the investor relations portion of our website at www.branchoutfood.com . Any substantive amendments or waivers of the Code of Conduct or any similar code(s) subsequently adopted for senior financial officers may be made only by our Board and will be promptly disclosed as required by applicable U.S. federal securities laws and the corporate governance rules of Nasdaq. Delinquent Section 16(a) Reports The were no persons who, at any time during the fiscal year ended December 31, 2024, was a director, executive officer, or beneficial owner of more than 10% of our common stock that failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the most recent fiscal year, except for a late filing of a Form 3 by Kaufman Kapital, a Form 4 filed by Kaufman Kapital one day late, and a late filing of a Form 4 by each of Eric Healy, John Dalfonsi David Israel, Byron Riche Jones, and Greg Somerville. ITEM 11. Executive Compensation Summary Compensation Table The following summary compensation table sets forth the aggregate compensation we paid or accrued during the fiscal years ended December 31, 2024 and 2023 to Eric Healy, our Chief Executive Officer, and John Dalfonsi, our Chief Financial Officer, during 2024 (together, our “Named Executive Officers”). Name and Fiscal Option Financial Position Year Salary Bonus Awards Total Eric Healy, 2024 $ 255,377 $ - $ 120,132 (1) $ 375,509 Chief Executive Officer and Chairman 2023 $ 222,490 $ 100,000 $ - $ 322,490 John Dalfonsi, (2) 2024 $ 150,000 $ - $ 64,356 (3) $ 214,356 Chief Financial Officer 2023 $ - $ - $ - $ - (1) On February 22, 2024, we granted Mr. Healy the option to purchase 140,000 shares of common stock at an exercise price of $1.92 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 41% and a call option value of $0.8581, was $120,132. (2) John Dalfonsi, our Chief Financial Officer, was appointed as the Company’s Chief Financial Officer on January 10, 2024. (3) On February 22, 2024, we granted Mr. Dalfonsi the option to purchase 75,000 shares of common stock at an exercise price of $1.92 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 41% and a call option value of $0.8581, was $64,356. 42 Employment Agreements and Incentive Compensation We have entered into an employment agreement with our Chief Executive Officer, dated December 6, 2022. Pursuant to such agreement, Mr. Healy has agreed to serve as Chief Executive Officer and Chairman of our board of directors in consideration for an annualized salary of $250,000, which commenced upon the completion of the IPO, payable in regular installments in accordance with the usual payment practices of the Company. The employment agreement calls for an annual bonus, as determined by the board of directors and possible additional bonuses for services and results achieved by Mr. Healy. Furthermore, the employment agreement required the Company to pay a bonus to Mr. Healy of $100,000 upon the completion of the IPO in 2023. Pursuant to Mr. Healy’s employment agreement, in the event he is involuntarily terminated by the Company other than for “Cause” or if he resigns for “Good Reason,” he is entitled to receive, subject to certain conditions, (x) an amount equal to the remaining unpaid amounts under the employment term (three years from the date of the agreement), plus an additional 12 months of his then current base salary, each payable on the date of termination; (y) an amount equal to the target bonus for the year of termination of employment, payable within five days following the date of termination; and (z) continued medical and dental coverage. “Cause” and “Good Reason” are each defined in the employment agreement. Finally, Mr. Healy agreed to certain non-solicitation, non-disparagement and non-competition provisions for a period of 24 months following termination and to certain confidentiality obligations. Additional terms and conditions are set forth in the employment agreement. We have entered into a consulting agreement with our Chief Financial Officer dated April 12, 2022, as amended on January 10, 2024. Pursuant to such agreement, Mr. Dalfonsi has agreed to serve as Chief Financial Officer until December 31, 2025 in consideration of monthly payments of $12,500. Outstanding Equity Awards The following table sets forth information with respect to unexercised stock options, stock that has not vested, and equity incentive plan awards held by our Named Executive Officers at December 31, 2024. Outstanding Option Awards at Fiscal Year-End Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price Option Expiration Date Eric Healy, Chief Executive Officer 140,000 (1) - $ 1.92 February 21, 2034 John Dalfonsi, Chief Financial Officer 30,000 (2) - $ 6.00 August 7, 2028 75,000 (1) - $ 1.92 February 21, 2034 (1) Options granted on February 22, 2024, vested immediately. (2) Options granted on August 8, 2023, vested monthly over one year from the date of grant. Option Exercises and Stock Vested None of our Named Executive Officers exercised any stock options or acquired stock through vesting of an equity award during the year ended December 31, 2024. 43 Director Compensation The following table summarizes the compensation paid or accrued by us to our directors that are not Named Executive Officers for the year ended December 31, 2024. Name Fees Earned or Paid in Cash Stock Award Option Awards Non-Equity Incentive Compensation Change in Pension Value and Nonqualified Deferred Compensation Earnings All other Compensation Total David Israel $ - $ - $ 34,221 (1) $ - $ - $ - $ 34,221 Byron Riché Jones $ - $ - $ 38,974 (2) $ - $ - $ - $ 38,974 Greg Somerville $ - $ - $ 17,111 (3) $ - $ - $ - $ 17,111 Deven Jain $ - $ - $ - $ - $ - $ - $ - Lindsay L. Schwartz $ - $ - $ - $ - $ - $ - $ - (1) On February 22, 2024, we granted Mr. Israel an option to purchase 30,000 shares of common stock at an exercise price of $1.92 per share, exercisable over a 10-year term. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 41% and a call option value of $1.1407, was $34,221. (2) On February 22, 2024, we granted Mr. Jones an option to purchase 34,166 shares of common stock at an exercise price of $1.92 per share, exercisable over a 10-year term. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 41% and a call option value of $1.1407, was $38,974. (3) On February 22, 2024, we granted Mr. Somerville an option to purchase 15,000 shares of common stock at an exercise price of $1.92 per share, exercisable over a 10-year term. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 41% and a call option value of $1.1407, was $17,111. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth, as of March 31, 2025, certain information with regard to the record and beneficial ownership of the Company’s common stock by (i) each person known to the Company to be the record or beneficial owner of 5% or more of the Company’s common stock, (ii) each director of the Company, (iii) each of the named executive officers, and (iv) all executive officers and directors of the Company as a group. The address of each of our directors and executive officers named in the table is c/o BranchOut Food Inc., 205 SE Davis Ave., Suite C, Bend, Oregon 97702: Common Stock Name of Beneficial Owner (1) Number of Shares % of Class (2) Officers and Directors: Eric Healy, Chairman and CEO (3) 2,077,104 20.0 % John Dalfonsi, CFO and Director (4) 311,694 3.2 % David Israel, Director (5) 46,254 * Greg Somerville, Director (6) 45,000 * Byron Riché Jones, Director (7) 182,955 1.9 % Lindsey L. Schwartz, Director 141,550 1.5 % Deven Jain, Director - - Directors and Officers as a Group (7 persons) 2,804,557 26.4 % 5% or Greater Shareholders Eric Healy, CEO (3) 2,077,104 20.0 % Daniel L. Kaufman (8) 5,984,305 38.4 % * less than 1% (1) Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock owned by such person. 44 (2) Percentage of beneficial ownership is based upon 9,584,769 shares of common stock. For each named person, this percentage includes common stock that the person has the right to acquire either currently or within 60 days of March 31, 2025, including through the exercise of an option; however, such common stock is not deemed outstanding for the purpose of computing the percentage owned by any other person. (3) Includes 140,000 shares of common stock that may be acquired under an option to purchase 140,000 shares of common stock at an exercise price of $1.92 per share that vested in full on February 22, 2024, exercisable until February 21, 2034. Also includes 659,456 shares of common stock that may be acquired under fully vested warrants to purchase 659,456 shares of common stock at an exercise price of $1.00 per share, exercisable until July 22, 2034. (4) Includes 75,000 shares of common stock that may be acquired under an option to purchase 75,000 shares of common stock at an exercise price of $1.92 per share that vested in full on February 22, 2024, exercisable until February 21, 2034. Also includes 30,000 shares of common stock that may be acquired under an option to purchase 30,000 shares of common stock at an exercise price of $6.00 per share that that vested in full on August 8, 2024, exercisable until August 7, 2028. Also includes an aggregate 44,803 shares of common stock that may be acquired by EagleVision Ventures, Inc., which is an entity 100% owned by the spouse of Mr. Dalfonsi, under the warrants listed below. The spouse of Mr. Dalfonsi has the sole voting and dispositive power over these shares. Options to Purchase Exercise Vesting Expiration Issuance Date: Common Stock: Price: Terms: Date: March 7, 2022 15,383 shares $ 6.50 Fully Vested December 7, 2030 March 7, 2022 7,692 shares $ 7.10 Fully Vested May 6, 2031 May 26, 2022 18,334 shares $ 7.50 Fully Vested May 25, 2027 June 6, 2022 3,394 shares $ 7.50 Fully Vested June 5, 2027 (5) Includes 16,254 shares held in the name of BFY Food Group, LLC, which is an entity in which David Israel is the beneficial owner. Mr. Israel has the sole voting and dispositive power over these shares. Also includes 30,000 shares of common stock that may be acquired under an option to purchase 30,000 shares of common stock at an exercise price of $1.92 per share that vested in full on February 22, 2024, exercisable until February 21, 2034. (6) Includes 15,000 shares of common stock that may be acquired under an option to purchase 15,000 shares of common stock at an exercise price of $1.92 per share that vested in full on February 22, 2024, exercisable until February 21, 2034. Also includes 30,000 shares of common stock that may be acquired under an option to purchase 30,000 shares of common stock at an exercise price of $2.51 per share that vested in full on August 8, 2024, exercisable until August 7, 2028. (7) Includes 12,500 shares held by Byron R Jones & Angelina Jones JT TEN. Includes 34,166 shares of common stock that may be acquired under an option to purchase 34,166 shares of common stock at an exercise price of $1.92 per share that vested in full on February 22, 2024, exercisable until February 21, 2034. (8) Includes an aggregate 4,484,305 shares of common stock that may be acquired by Kaufman Kapital LLC, which is an entity 100% owned by Mr. Daniel L. Kaufman, under $3,400,000 of senior secured convertible promissory notes that are convertible into common stock at a conversion rate of $0.7582 per share. Excludes 375,598 shares that could be converted into common stock on the accrued interest. Also includes 1,000,000 shares of common stock that may be acquired by Kaufman Kapital LLC under warrants to purchase 1,000,000 shares of common stock at an exercise price of $1.00 per share that vested in full with shareholder approval on October 14, 2024, exercisable until December 31, 2025. And, includes 500,000 shares of common stock that may be acquired by Kaufman Kapital LLC under warrants to purchase 500,000 shares of common stock at an exercise price of $1.50 per share that vested in full with shareholder approval on October 14, 2024, exercisable until December 31, 2025. Mr. Kaufman has the sole voting and dispositive power over these shares. ITEM 13 . Certain Relationships and Related Transactions, and Director Independence Certain Relationships and Related Party Transactions Other than the transactions described below, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or will be a party: ● in which the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years; and ● in which any director, executive officer, stockholders who beneficially owns more than 5% of our common stock or any member of their immediate family had or will have a direct or indirect material interest. 45 Convertible Notes Payable 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 $1,400,000 balance on the promissory note was received on December 9, 2024. On July 24, 2024, the Company issued the Purchased Securities to Kaufman Kapital in consideration of Kaufman Kapital making the Initial Loan to the Company. 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. 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. Notes Payable On August 30, 2024, the Company borrowed $1,200,000 from Kaufman Kapital pursuant to a Senior Secured Promissory Note in the principal amount of $1,200,000 (the “Note”) issued by the Company to Kaufman Kapital. The Note matures on June 30, 2025, as amended. The loan under the Note bears interest at a rate of 15% per annum. The Company’s obligations under the Note are secured by a lien on substantially all of the Company’s assets pursuant to the Security Agreement. In addition, the Note includes affirmative and negative covenants, events of defaults and other terms and conditions, customary in transactions of this nature. Transactions with Eagle Vision In connection with the sale of the Purchased Securities to Kaufman Kapital LLC under the SPA, the Company entered into an Omnibus Amendment to Note Documents with substantially all of the holders (the “Holders”) of the Company’s Senior 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 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 Notes held by the Holders beginning July 1, 2024 has been eliminated, and instead all obligations of the Company under such Senior Notes will be due in one lump sum on the maturity date of the Senior 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 Notes held by the Holders and liens granted to the holders thereof. The amendment warrants resulted in $89,949 of additional interest expense. 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 Promissory Notes (“Senior Notes”) and Warrants (“Warrants”) to purchase an aggregate of 518,750 shares of the Company’s common stock, to a group of Investors (“Investors”) led by Eagle Vision Fund LP (“Eagle Vision”), an affiliate of John Dalfonsi, CFO of the Company, pursuant to a subscription agreement between the Company and the Investors. Pursuant to the subscription agreements, Eagle Vision was paid aggregate cash fees in the amount of $177,500 upon the closing of the transactions for due diligence fees in consideration of services rendered and to be rendered by Eagle Vision to the Company and the investors, including 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 purchasers, 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, which services are to be provided by Eagle Vision until the senior secured notes have been paid in full, and an aggregate $35,000 of legal fees was paid to Investors’ counsel. 46 The 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) and bear interest at a rate of 15% per annum. In addition, the 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 Notes are secured by liens on substantially all of the Company’s assets pursuant to the terms of a Security Agreement between the Company and the Investors. Each Warrant is exercisable for a ten-year period at an exercise price of $1.00 per share. Unit Offering Sale of Common Stock and Warrants On July 15, 2024, the Company entered into Subscription Agreements (the “Subscription Agreements”) with three related parties, consisting of Eric Healy, the Company’s Chief Executive Officer; Eagle Vision, an affiliate of John Dalfonsi, the Company’s Chief Financial Officer; and the Company’s President, pursuant to which such investors agreed to purchase $525,000 of “Units” from the Company, each Unit consisting of (i) 100 shares of common stock, and (ii) a warrant to purchase 125 shares of common stock over the following ten years at an exercise price of $1.00 per share, at a purchase price per Unit equal to $75.82. The Company completed the sale of the Units to Eric Healy and the Company’s President on July 23, 2024, and the sale of the Units to Eagle Vision on August 30, 2024, resulting in the issuance of an aggregate of 692,429 shares of common stock and warrants to purchase 865,536 shares of common stock. Policies and Procedures for Related Person Transactions We have adopted a formal policy in regard to related persons that requires all future related person transactions to be approved in advance by our Audit Committee. Any request for such a transaction will be presented to our Audit Committee for review, consideration, and approval. In approving or rejecting any such proposal, our Audit Committee will consider the relevant facts and circumstances available and deemed relevant to the Audit Committee, including, but not limited to, the extent of the related party’s interest in the transaction, and whether the transaction is on terms no less favorable to us than terms we could have generally obtained from an unaffiliated third party under the same or similar circumstances. Certain historical related person transactions described in this prospectus were reviewed and approved or ratified in accordance with our then existing policies, Code of Business Conduct and Ethics, articles of incorporation and bylaws, and Oregon or Nevada law, as applicable. Director Independence Our board of directors currently consists of Eric Healy, our Chief Executive Officer and Chairman, John Dalfonsi our Chief Financial Officer, David Israel, Greg Somerville, Byron Riché Jones, Deven Jain and Lindsey L. Schwartz. As executive officers, Messrs. Healy and Dalfonsi do not qualify as “independent” under standards of independence set forth by national securities exchanges. Our Board of Directors has determined that David Israel, Greg Somerville, Byron Riché Jones, Deven Jain and Lindsey L. Schwartz are “independent” in accordance with the NASDAQ Capital Market’s requirements. 47 ITEM 14. Principal AccountING Fees And Services M&K CPAS, PLLC was the Company’s independent registered public accounting firm for the years ended December 31, 2024 and 2023. Audit and Non-Audit Fees The following table sets forth fees billed by our auditors during the last two fiscal years for services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, services by our auditors that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as audit fees, services rendered in connection with tax compliance, tax advice and tax planning, and all other fees for services rendered. Years Ended December 31, 2024 2023 Audit fees (1) $ 65,450 $ 114,150 Audit related fees - - Tax fees - - All other fees (2) 24,900 - Total $ 90,350 $ 114,150 (1) Audit fees were principally for audit services and work performed in the review of the Company’s quarterly reports on Form 10-Q (2) Other fees were principally for work performed in the review of the Company’s offerings filed under Forms S-1 and S-3, which were netted against the proceeds of the offerings 48 PART IV ITEM 15. Exhibits and Financial Statement Schedules Exhibit Description of Document 1.1 Underwriting Agreement, dated June 26, 2024, between the Company and Alexander Capital, L.P., as Representative of the Underwriters (Incorporated by reference to Exhibit 1.1 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on July 1, 2024) 1.2 At-The-Market Issuance Sales Agreement, dated as of October 23, 2024, between BranchOut Food Inc. and Alexander Capital, L.P. (Incorporated by reference to Exhibit 1.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on October 23, 2024) 3.1 Articles of Incorporation of BranchOut Food Inc. (incorporated by reference to Exhibit 3.1 of the Form S-1 filed with the Securities and Exchange Commission by BranchOut Food Inc. on April 24, 2023) 3.2 Certificate of Amendment to Articles of Incorporation (Incorporated by reference to Exhibit 1.2 of the Company’s form 8-K filed with the Securities and Exchange Commission on June 22, 2023) 3.3 Certificate of Amendment to Articles of Incorporation of BranchOut Food Inc. filed January 4, 2024 (incorporated by reference to Exhibit 3. of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on January 8, 2024) 3.4 Bylaws of BranchOut Food Inc. (incorporated by reference to Exhibit 3.2 of the Form S-1 filed with the Securities and Exchange Commission by BranchOut Food Inc. on April 24, 2023) 4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Form S-1/A filed with the Securities and Exchange Commission by BranchOut Food Inc. on June 13, 2023) 4.2 Form of Representative’s Warrant (incorporated by reference to Exhibit 4.3 of the Form S-1/A filed with the Securities and Exchange Commission by BranchOut Food Inc. on May 12, 2023) 4.3 Form of Common Stock Warrant (issued to Selling Stockholders) (incorporated by reference to Exhibit 4.3 of the Form S-1 filed with the Securities and Exchange Commission by BranchOut Food Inc. on June 9, 2023) 4.4 Form of Warrant issued under Subscription Agreement dated as of January 9, 2024, as amended on April 15, 2024 (Incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on January 16, 2024) 4.5 Representative’s Warrant (Incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on July 1, 2024) 4.6 Form of 12% Senior Secured Convertible Promissory Note of the Company in the principal amount of up to $3,400,000 issuable under Securities Purchase Agreement dated July 15, 2024 (Incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on July 19, 2024) 4.7 Form of $1.00 Warrant issuable under Securities Purchase Agreement dated July 15, 2024 (Incorporated by reference to Exhibit 4.2 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on July 19, 2024) 4.8 Form of $1.50 Warrant issuable under Securities Purchase Agreement dated July 15, 2024 (Incorporated by reference to Exhibit 4.3 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on July 19, 2024) 4.9 Form of Warrant issuable under Subscription Agreement dated July 15, 2024 (Incorporated by reference to Exhibit 4.4 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on July 19, 2024) 4.10 Description of Securities Registered Under Section 12 of the Exchange Act (Incorporated by reference to Exhibit 4.5 of the Form 10-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on April 1, 2024) 10.1 Form of Indemnification Agreement+ (incorporated by reference to Exhibit 10.1 of the Form S-1/A filed with the Securities and Exchange Commission by BranchOut Food Inc. on June 9, 2023) 10.2 2022 Equity Incentive Plan of BranchOut Food Inc.+ (incorporated by reference to Exhibit 10.2 of the Form S-1 filed with the Securities and Exchange Commission by BranchOut Food Inc. on April 24, 2023) 10.3 Subscription Agreement dated as of January 10, 2024 between BranchOut Food Inc. and the investors named therein (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on January 16, 2024) 10.4 Form of Senior Secured Note issued under Subscription Agreement dated as of January 10, 2024 between BranchOut Food Inc. and the investors named therein (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on January 16, 2024) 10.5 Security Agreement dated as of January 10, 2024 between BranchOut Food Inc. and the investors named therein (incorporated by reference to Exhibit 10.3 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on January 16, 2024) 10.6 Executive Employment Agreement between Eric Healy and BranchOut Food Inc. dated December 6, 2022+ (incorporated by reference to Exhibit 10.7 of the Form S-1 filed with the Securities and Exchange Commission by BranchOut Food Inc. on April 24, 2023) 49 10.7 Contract Manufacturing Agreement between BranchOut Food Inc. and NXTDried Superfoods SAC dated January 14, 2022. £ (incorporated by reference to Exhibit 10.9 of the Form S-1 filed with the Securities and Exchange Commission by BranchOut Food Inc. on April 24, 2023) 10.8 Manufacturing and Distributorship Agreement (“MDA”) between BranchOut Food Inc. and Natural Nutrition SpA, a Chilean company (“Nanuva”) dated February 4, 2021. £ (incorporated by reference to Exhibit 10.10 of the Form S-1 filed with the Securities and Exchange Commission by BranchOut Food Inc. on April 24, 2023) 10.9 License Agreement between BranchOut Food, Inc. and EnWave Corporation dated May 7, 2021, together with amendments thereto dated October 26, 2022 and February 21, 2023. £ (incorporated by reference to Exhibit 10.11 of the Form S-1 filed with the Securities and Exchange Commission by BranchOut Food Inc. on April 24, 2023) 10.10 First Amendment to Subscription Agreement dated as of April 16, 2024, between BranchOut Food Inc. and the investors named therein (Incorporated by reference to Exhibit 10.4 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on April 16, 2024) 10.11 Lease Agreement, dated as of May 10, 2024, between BranchOut Food Inc. and landlord of the Peru Facility (Incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on May 16, 2024) 10.12 Assignment of Credit and Substitution of Mortgagee, dated as of May 10, 2024, among BranchOut Food Inc., assignor, and landlord of the Peru Facility (Incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on May 16, 2024) 10.13 License Agreement between BranchOut Food, Inc. and EnWave Corporation dated May 7, 2021, together with amendments thereto dated October 26, 2022 and February 21, 2023. (Incorporated by reference to Exhibit 10.11 of the Form S-1 filed with the Securities and Exchange Commission by BranchOut Food Inc. on April 24, 2023). 10.14 Third Amendment to License Agreement, dated as of May 23, 2024, between BranchOut Food Inc. and EnWave Corporation (Incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on May 28, 2024) 10.15 Securities Purchase Agreement, dated July 15, 2024, between the Company and Daniel L. Kaufman (Incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on July 19, 2024) 10.16 Amendment to Securities Purchase Agreement, dated July 19, 2024, by and among the Company, Daniel L. Kaufman and Kaufman Kapital LLC (Incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on July 19, 2024) 10.17 Unit Subscription Agreement of the Company, dated July 15, 2024 (Incorporated by reference to Exhibit 10.3 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on July 19, 2024) 10.18 Security Agreement between the Company and Kaufman Kapital LLC, dated July 23, 2024 (Incorporated by reference to Exhibit 10.3 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on July 29, 2024) 10.19 Omnibus Amendment to Note Documents, dated July 23, 2024, between the Company and holders of the Company’s Senior Notes (Incorporated by reference to Exhibit 10.4 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on July 29, 2024) 10.20 Senior Secured Promissory Note of the Company in the principal amount of $1,200,000, dated August 29, 2024, issued to Kaufman Kapital LLC (Incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by BranchOut Food Inc. on August 30, 2024) 10.21* Public Deed of First Addendum to the Credit Assignment Agreement and Substitution of Mortgage Creditor, dated December 13, 2024, between BranchOut Food Inc. and Campos Del Sur S.A. 21.1* List of Subsidiaries of BranchOut Food Inc. 31.1* Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a) 31.2* Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a) 32.1* Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1* Clawback Policy of BranchOut Food Inc. 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Schema Document 101.CAL* Inline XBRL Calculation Linkbase Document 101.DEF* Inline XBRL Definition Linkbase Document 101.LAB* Inline XBRL Labels Linkbase Document 101.PRE* Inline XBRL Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. + Indicates a management contract or compensatory plan or arrangement. £ Portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K 50 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BRANCHOUT FOOD INC. (Registrant) By: /s/ Eric Healy Eric Healy Chief Executive Officer (Principal Executive Officer) By: /s/ John Dalfonsi John Dalfonsi Chief Financial Officer (Principal Financial Officer) Dated: April 15, 2025 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant, and in the capacities and on the dates indicated: Signature Title Date /s/ Eric Healy Chief Executive Officer and Chairman Eric Healy (Principal Executive Officer) April 15, 2025 /s/ John Dalfonsi Chief Financial Officer and Director April 15, 2025 John Dalfonsi (Principal Financial Officer) /s/ David Israel Director April 15, 2025 David Israel /s/ Greg Somerville Director April 15, 2025 Greg Somerville /s/ Byron Riché Jones Director April 15, 2025 Byron Riché Jones /s/ Deven Jain Director April 15, 2025 Deven Jain /s/ Lindsey L. Schwartz Director April 15, 2025 Lindsey L. Schwartz 51