Company: BOF
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001641172-25-023605
Chunk: 37

Company: BranchOut Food Inc.
Filing Date: 2025-08-13
Form: 10-Q
Item: Item 1
Chunk 37
---
 expense 
    $504,713  
    $147,701 

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 the Company 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 payments were made in various installments totaling $355,000 as of December 31, 2024 and $912,000 during the six
months ended June 30, 2025.

    19

BRANCHOUT
FOOD INC.

NOTES
TO THE CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The
components of lease expense were as follows:

 Schedule of Components of Lease Expenses 

    2025  
    2024 

    For the Six Months Ended 

    June 30,