Company: BOF
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021655
Chunk: 67

Company: BranchOut Food Inc.
Filing Date: 2025-11-12
Form: 10-Q
Item: Item 8
Chunk 67
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NOTES
TO THE CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note
1 – Organization and Background

Nature
of Business

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

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

Company
Realignment

Beginning
April 2024, the Company initiated an organizational realignment to expand manufacturing operations by opening and operating a
factory in Pisco, Peru. This large-scale initiative aligned the Company’s resources, strategies, and goals with our desired
outcomes. Through September 30, 2025, we have incurred total aggregate costs of approximately $6.4
million related to this initiative, consisting of (i) approximately $5.1
million in factory start-up costs including purchasing equipment, build-out, and supplies for the new facility and (ii)
approximately $1.3
million in factory idle capacity, professional fees, legal fees, and travel costs.

For
the nine months ended September 30, 2025, we incurred approximately $1.5 million of realignment costs comprised of: $573,991 for capitalized
machinery and equipment, $848,906 for factory idle capacity, $29,652 for travel costs and $88,016 for professional and legal fees. For
the nine months ended September 30, 2024, we incurred approximately $2.4 million of realignment costs comprised of: $2.1 million for
capitalized machinery and equipment, $45,601 for travel costs and $263,916 for professional and legal fees