Company: BOF
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021655
Chunk: 76

Company: BranchOut Food Inc.
Filing Date: 2025-11-12
Form: 10-Q
Item: Item 8
Chunk 76
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 recognized. Manufacturing overhead costs are allocated to work in progress based on the factory’s normal capacity and actual machine hours incurred
during production. Overhead costs include indirect labor, factory rent, utilities, depreciation, and other factory-related expenses. Costs
such as packaging, tariffs, and inbound freight are included in finished goods inventory as they are necessary to bring products to their
final condition and location for sale.

Inventory, consisting of raw
materials, work in progress and finished goods are stated at the lower of cost or net realizable value using the average cost valuation
method, and consisted of the following as of September 30, 2025 and December 31, 2024:

 Schedule of Inventory  

    September 30,
2025  
    December 31,
2024 
  
    Raw materials 
    $371,481  
    $464,681 
  
    Work in progress 
     827,554  
     - 
  
    Finished goods 
     867,469  
     1,465,854 
  
    Total inventory 
     2,066,504  
     1,930,535 

The
Company secures raw materials with advances of up to 50%. The Company had prepaid inventory advances on product in the amounts of $621,495
and $123,792 as of September 30, 2025 and December 31, 2024, respectively.

    13

Note
5 – Accounts Receivable, Net

Accounts receivable are stated at their estimated
net realizable value. The Company evaluates the collectability of trade receivables on an ongoing basis and establishes an allowance for
doubtful accounts as needed based on a combination of factors, including historical collection experience, the financial condition of
customers, specific account reviews, and current economic conditions. Management believes the allowance for doubtful accounts is adequate
to cover expected credit losses. The allowance for doubtful accounts was $25,586 at both September 30, 2025 and December 31, 2024.

The Company had certain customers whose
revenue or accounts receivable balances individually represented 10% or more of total net revenue or total accounts receivable, respectively.
For the nine months ended September 30, 2025, three customers accounted for approximately 96% of net revenue and 97% of accounts receivable
as of period-end. For the nine months ended September 30, 2024, two customers accounted for