What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-15 compared with 2024-11-14 · 127 added, 202 removed, 109 unchanged (75% of the section changed)

13 unchanged sentences

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.

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.

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 October 2024, and utilizes three large-scale REV machines (a REV 60, REV 100 and REV 120 ) that we recently purchased from

EnWave Corporation, as well as, a small REV 10 R&D machine that is being used for product development

and customer sample purposes .

our licensed technology platform, we believe our lines of branded, private-label and industrial ingredient products positively address current consumer

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.

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 avocados.

In addition, BranchOut has the nonexclusive rights to use the licensed technology platform for other products.

plan to grow revenues strategically by penetrating the multi-billion dollar grocery market opportunity presented by our current product

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

primary branded products are:

dehydrated fruit and vegetable-based snacks, including Avocado Chips, Chewy Banana Bites, Pineapple Chips, Brussels Sprout

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.

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

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.

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:

fruit and vegetable-based snacks, including Avocado Chips, Chewy Banana Bites, Pineapple Chips, Brussels Sprout Crisps, Strawberry

Crisps and Bell Pepper Crisps.

Avocado Powder, Banana Powder and Blueberry Powder.

Industrial Ingredients:

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

are currently developing additional products, including dragon fruit and private label products for large retailers.

Private Label:

Carrots, Brussel Sprouts and Raisins sold to major retailers.

BranchOut Industrial Ingredients:

Banana, Mango, Blueberry, Pineapple, Cherry Tomato, Avocado and many others.

are currently developing many additional products for all sales channels.

Concern Uncertainty

of September 30, 2024, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $16,074,867,

with working capital of $702,541.

We are too early in our development stage to project revenue with a necessary level of certainty;

we may not have sufficient funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund

our operations.

of March 31, 2025, we had a cash balance of $2,386,381, a working capital deficit of $2,736,656 and had incurred recurring losses from

operations resulting in an accumulated deficit of $18,480,439.

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 Company continues to develop

its operations.

In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt

to conserve cash by further reducing expenses.

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

condensed consolidated financial statements do not include any adjustments that might result from the outcome of any uncertainty as to

5 unchanged sentences

and further increase the value of our brands, is largely dependent on our success in raising additional capital.

to our Equipment in Peru;

NXTDried Superfoods

the fourth quarter of 2023, NXTDried Superfoods, our contract manufacturer 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 currently

do not have access to the dehydration machine that was previously operated by this manufacturer.

Although we have been able to continue

to fulfill orders by shifting fulfillment to other manufacturing sources, and have recently opened our new facility in Peru, our costs of goods for

the three and nine month periods ending September 30, 2024, have increased as a result.

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 , owed to us by NXTDried Superfoods.

Facility Lease

the situation with NXTDried Superfoods, we were required to shift fulfillment of orders to alternative manufacturing sources.

10, 2024 we entered into a ten-year lease for a 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 Peru Facility for $1,865,456.

connection with our lease of the Peru Facility, we paid $275,000 on May 10, 2024, toward 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,

for a purchase price of $1,267,000.

The remaining $992,000 was due and payable by us on August 10, 2024, subject to certain requirements

which haven’t yet been met, therefore the Company has deferred payment until a later date, to be determined.

of Operations for the Three Months Ended September 30, 2024 and 2023

following table summarizes selected items from the statement of operations for the three months ended September 30, 2024 and 2023, respectively.

April 26, 2024, we formed BranchOut Food Sucursal Peru for the purpose of developing a production facility to produce our products

On May 10, 2024 we entered into a ten-year lease for our 50,000 square-foot food processing plant located in Peru (the

“Peru Facility”).

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.

We began manufacturing products at the Peru Facility in December of 2024, and produced approximately

$1,450,000 of products during the first quarter of 2025.

connection with our lease of the Peru Facility, we paid $275,000 on May 10, 2024, $80,000 during the fourth quarter of 2024, and another

$456,000 during the first quarter of 2025 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 $456,000

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.

of Operations for the Three Months Ended March 31, 2025 and 2024

following table summarizes selected items from the statement of operations for the three months ended March 31, 2025 and 2024, respectively.

Three Months Ended

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$ (1,050,967 )

net revenue for the three months ended September 30, 2024 was $2,181,495, compared to $906,996 for the three months ended September 30,

2023, an increase of $1,274,499, or 141%.

The increase in revenue was primarily due to increased sales to our largest customer during

the three months ended September 30, 2024.

of Goods Sold and Gross Profit

cost of goods sold for the three months ended September 30, 2024 was $1,845,155, compared to $934,603 for the three months ended September

30, 2023, an increase of $910,552, or 97%.

Cost of goods sold increased primarily due to increased sales during the three months ended

September 30, 2024.

As a result of the foregoing, we had gross profit of $336,340, representing gross margins of 15%, for the three months

ended September 30, 2024 as compared to a gross loss of $27,607, or negative gross margins of 3%, for the three months ended September

Our gross profit margin increased primarily due to cost savings realized as a result of our transition to bulk shipping arrangements

during the current period.

Cost of goods sold included depreciation expense for the three months ended September 30, 2024 of $60,614,

compared to $55,939 for the three months ended September 30, 2023, an increase of $4,675, or 8%.

and Administrative

general and administrative expense for the three months ended September 30, 2024 was $560,537, compared to $230,459 for the three months

ended September 30, 2023, an increase of $330,078, or 143%.

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.

Months Ended September 30,

Advertising and marketing

Storage, shipping and handling

and marketing expenses increased for the three months ended September 30, 2024, compared to the corresponding period in 2023, as we focused

our resources on our IPO in the prior period.

Our rent increased primarily due to leases entered into in the current year, as we began

to develop our operating facility in Peru, which resulted in increased travel expenses for the same reason.

Sales commissions decreased

as we focused most of our resources on servicing our largest customer.

We expect commissions to increase as we grow.

Storage, shipping

and handling expenses increased primarily due to increased international shipping rates and increased production that was driven by our

increased sales.

and wages for the three months ended September 30, 2024 was $309,433, compared to $222,764 for the three months ended September 30, 2023,

an increase of $86,669, or 39%.

This increase was primarily attributable to an increased head count necessary to service our expanded

sales and build out of our production facility in Peru.

In addition, salaries and wages included $14,565 of non-cash, stock-based compensation

related to stock options awarded during the current period.

fees for the three months ended September 30, 2024 was $369,525, compared to $218,160 for the three months ended September 30, 2023,

an increase of $151,365, or 69%.

This increase was primarily attributable to increased legal and consulting fees in the current period.

Professional fees included $110,897 of non-cash, stock-based compensation for the three months ended September 30, 2023.

Income (Expense)

the three months ended September 30, 2024, other expense was $367,650 on a net basis, consisting of $370,532 of interest expense, as

partially offset by $2,882 of interest income.

For the three months ended September 30, 2023, other expense was $7,003 on a net basis,

consisting of $10,004 of interest expense, as partially offset by $3,001 of interest income.

Other expense increased by $360,647, or

5,150%, primarily due to interest on increased outstanding debt as we funded our expansion into Peru during the current period.

loss for the three months ended September 30, 2024 was $1,270,805, compared to $705,993 for the three months ended September 30, 2023,

an increase of $564,812, or 80%.

The increased net loss was primarily due to increased compensation and compliance costs related to reporting

as a public company during the current period and increased interest expense, as partially offset by increased gross profits and a $96,332

decrease in stock-based compensation.

of Operations for the Nine Months Ended September 30, 2024 and 2023

following table summarizes selected items from the statement of operations for the nine months ended September 30, 2024 and 2023, respectively.

Nine Months Ended

Cost of goods sold

Operating expenses:

General and administrative

Salaries and benefits

Professional services

Total operating expenses

Operating loss

Other income (expense):

Interest income

Interest expense

Total other income (expense)

$ (3,264,326 )

$ (2,456,596 )

net revenue for the nine months ended September 30, 2024 was $5,011,497, compared to $1,347,401 for the nine months ended September 30,

net revenue for the three months ended March 31, 2025 was $3,193,522, compared to $1,467,016 for the three months ended March 31, 2024,

an increase of $1,726,506, or 118%.

The increase in revenue was primarily due to increased sales to our largest customer during

the nine months ended September 30, 2024.

The increase in revenue was primarily due to increased sales to our two largest customers during

the three months ended March 31, 2025.

of Goods Sold and Gross Profit

cost of goods sold for the nine months ended September 30, 2024 was $4,242,810, compared to $1,423,046 for the nine months ended September

cost of goods sold for the three months ended March 31, 2025 was $2,641,007, compared to $1,183,428 for the three months ended March

31, 2024, an increase of $1,457,579, or 123%.

Cost of goods sold increased primarily due to increased sales during the nine months ended

September 30, 2024.

As a result of the foregoing, we had gross profit of $768,687, representing gross margins of 15%, for the nine months

ended September 30, 2024 as compared to a gross loss of $75,645, or negative gross margins of 6%, for the nine months ended September

Our gross profit margin increased primarily due to cost savings realized as a result of our transition to bulk shipping arrangements

during the current period.

Cost of goods sold included depreciation expense for the nine months ended September 30, 2024 of $173,285,

compared to $167,520 for the nine months ended September 30, 2023, an increase of $5,765, or 3%.

Cost of goods sold increased primarily due to increased sales during the three months

ended March 31, 2025.

As a result of the foregoing, we had gross profit of $552,515, representing gross margins of 17%, for the

three months ended March 31, 2025 as compared to a gross profit of $283,588, or gross margins of 19%, for the three months ended

March 31, 2024.

Our gross profit margin decreased slightly due primarily to costs incurred transitioning the production of our products to the Peru

We anticipate that our margins will increase as we ramp up production and utilize more of the

facility’s capacity.

Cost of goods sold included depreciation expense for the three months ended March 31, 2025 of $152,262,

compared to $55,823 for the three months ended March 31, 2024, an increase of $96,439, or 173%.

and Administrative

general and administrative expense for the nine months ended September 30, 2024 was $1,201,474, compared to $552,390 for the nine months

ended September 30, 2023, an increase of $649,084, or 118%.

general and administrative expense for the three months ended March 31, 2025 was $685,779, compared to $319,736 for the three months

ended March 31, 2024, an increase of $366,043, or 114%.

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.

Months Ended September 30,

Three Months Ended March 31,

Advertising and marketing

Storage, shipping and handling

and marketing expenses increased for the nine months ended September 30, 2024, compared to the corresponding period in 2023, as we focused

our resources on our IPO in the prior period.

Our rent increased primarily due to leases entered into in the current year, as we began

to develop our operating facility in Peru, which resulted in increased travel expenses for the same reason.

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.

and wages for the nine months ended September 30, 2024 was $1,257,316, compared to $910,812 for the nine months ended September 30, 2023,

an increase of $346,504, or 38%.

This increase was primarily attributable to $408,700 of non-cash, stock-based compensation related to

stock options awarded during the current period.

fees for the nine months ended September 30, 2024 was $1,064,567, compared to $520,506 for the nine months ended September 30, 2023,

an increase of $544,061, or 105%.

This increase was primarily attributable to increased legal and consulting fees in the current period,

as a portion of these fees were capitalized as offering costs on our IPO in the comparative period.

Professional fees included $290,085

and $179,389 of non-cash, stock-based compensation for the nine months ended September 30, 2024 and 2023, respectively.

and marketing expenses increased for the three months ended March 31, 2025, compared to the corresponding period in 2024, as we increased our marketing efforts in the current period, given greater available resources.

Our rent increased primarily due to leases entered into in the latter half of the

prior year, as we began to develop our operating facility in Peru, which resulted in increased travel expenses for the same reason.

commissions decreased as we focused most of our resources on servicing our largest customer.

We expect commissions to increase as we

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

that was driven by our increased sales.

and wages for the three months ended March 31, 2025 was $314,242, compared to $598,286 for the three months ended March 31, 2024, a decrease

of $284,044, or 47%.

This decrease was primarily attributable to $376,384 of non-cash, stock-based compensation related to stock options

awarded during the prior period, compared to $4,024 of non-cash, stock-based compensation related to stock options awarded during the

current period.

fees for the three months ended March 31, 2025 was $235,034, compared to $390,666 for the three months ended March 31, 2024, a decrease

of $155,632, or 40%.

This decrease was primarily attributable to $149,594 of non-cash, stock-based compensation for the three months

ended March 31, 2024 that were not incurred during the current period.

Income (Expense)

the nine months ended September 30, 2024, other expense was $509,656 on a net basis, consisting of $518,233 of interest expense, as partially

the three months ended March 31, 2025, other expense was $235,842 on a net basis, consisting of $240,978 of interest expense, as partially

offset by $5,136 of interest income.

For the nine months ended September 30, 2023, other expense was $397,243 on a net basis, consisting

For the three months ended March 31, 2024, other expense was $25,867 on a net basis, consisting

of $28,744 of interest expense, as partially offset by $2,877 of interest income.

Other expense decreased by $112,413, or 28%, primarily

due to interest on increased outstanding debt as we funded our expansion into Peru during the current period.

loss for the nine months ended September 30, 2024 was $3,264,326, compared to $2,456,596 for the nine months ended September 30, 2023,

an increase of $807,730, or 33%.

The increased net loss was primarily due to increased compensation and compliance costs related to reporting

as a public company, including a $519,396 increase in stock-based compensation during the current period and increased interest expense,

as partially offset by increased gross profits.

Other expense increased by $209,975, or 812%, primarily

due to interest on increased outstanding debt as we funded our expansion into Peru during 2024.

loss for the three months ended March 31, 2025 was $918,382, compared to $1,050,967 for the three months ended March 31, 2024, a decrease

of $132,585, or 13%.

The decreased net loss was primarily due to increased gross profits and a $521,954 decrease in stock-based compensation,

as partially offset by $366,043 of increased general and administrative expenses.

and Capital Resources

following table summarizes our total current assets, liabilities and working capital as of September 30, 2024 and December 31, 2023.

September 30,

following table summarizes our total current assets, liabilities and working capital as of March 31, 2025 and December 31, 2024.

Current Assets

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Working Capital

of September 30, 2024, we had working capital of $702,541.

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

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

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

As of September 30, 2024, we had cash of $1,069,193, total liabilities of $8,042,725, and an accumulated deficit of $16,074,867.

$ (2,736,656 )

$ (3,897,382 )

of March 31, 2025, we had negative working capital of $2,736,656.

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

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

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

As of March 31, 2025, we had cash of $2,386,381, total liabilities of $10,230,144, and an accumulated deficit of $18,480,439.

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.

of the Nine Months Ended September 30, 2024 and the Nine Months Ended September 30, 2023

of the Three Months Ended March 31, 2025 and the Three Months Ended March 31, 2024

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

Nine Months Ended

Three Months Ended

Net cash used in operating activities

$ (1,927,122 )

$ (3,258,248 )

Net cash used in investing activities

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Cash Used in Operating Activities

cash used in operating activities was $3,259,049 for the nine months ended September 30, 2024, compared to $3,258,248 for the nine months

ended September 30, 2023, an increase of $801.

The increase was primarily due to our increased net loss and increased inventory purchases, as adjusted for increased

stock-based compensation, increased accounts payable, and a $275,000 payment for

other assets.

cash used in operating activities was $1,927,122 for the three months ended March 31, 2025, compared to $503,578 for the three months

ended March 31, 2024, an increase of $1,423,544, or 283%.

The increase was primarily due to our increased accounts receivable as of March 31, 2025.

Cash Used in Investing Activities

cash used in investing activities was $2,095,691 for the nine months ended September 30, 2024, compared to $66,565 for the nine months

ended September 30, 2023, an increase of $2,029,126, or 3,048%.

This increase was primarily attributable to $2,120,337 of property and

equipment purchases, as partially offset by $24,646 of advances received on notes receivable in the current period, compared to $66,565

of property and equipment purchases in the comparative period.

cash used in investing activities was $377,841 for the three months ended March 31, 2025, compared to $40,100 for the three months ended

March 31, 2024, an increase of $337,741, or 842%.

This increase was primarily attributable to $377,841 of property and equipment purchases,

compared to $50,000 of property and equipment purchases, as partially offset by $9,900 of advances received on notes receivable, in the

comparative period.

Cash Provided by Financing Activities

cash provided by financing activities was $5,767,938 for the nine months ended September 30, 2024, compared to $3,784,850 for the

nine months ended September 30, 2023, an increase of $1,983,088, or 52%.

Our increased cash provided by financing activities was

primarily from $3,703,710 of increased net proceeds received on debt financing, $2,071,439 of decreased debt repayments, $326,975 of

decreased deferred offering cost payments, and $3,964 of decreased principal payments on finance leases, as partially offset by

$4,123,000 of decreased proceeds received on the sale of common stock.

cash provided by financing activities was $2,353,683 for the three months ended March 31, 2025, compared to $137,589 for the three months

ended March 31, 2024, an increase of $2,216,094, or 1,611%.

Our increased cash provided by financing activities was primarily from $2,445,605

of increased net proceeds received on the sale of common stock, net of $15,610 of offering costs, and $115,765 of decreased debt repayments,

as partially offset by $345,000 of decreased proceeds received from related party debt financing and $276 of increased principal payments

on finance leases.

ACCOUNTING POLICIES AND ESTIMATES

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

In the nine-month period ended September

In the three-month period ended March

31, 2025 there were no changes to the application of critical accounting policies disclosed in our Annual Report on Form 10-K for the

41 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis