Company: BOF
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010566
Chunk: 82

Company: BranchOut Food Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 82
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 credit position financing 
     16,866  
     - 
  
    Total interest expense 
    $240,978  
    $28,744 

Note
13 – 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 $456,000 was paid during the three months ended March 31, 2025, and $355,000 was paid during the year ended December
31, 2024. The remaining $456,000 is to be paid in monthly installments of $152,000 through June 23, 2025, as presented in other current
liabilities on the balance sheet. The unpaid balance accrues interest at 9%. At March 31, 2025, a