Company: BOF
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004712
Chunk: 472

Company: BranchOut Food Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1A
Chunk 472
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 current projections of earnings before interest and taxes. Impairment is measured using discounted cash flows of future operating
results based upon a rate that corresponds to the cost of capital. Impairments are recognized in operating results to the extent that
carrying value exceeds discounted cash flows of future operations.

Our
indefinite-lived brand names and trademarks acquired and are assigned an indefinite life as we anticipate that these brand names will
contribute cash flows to the Company perpetually. We evaluate the recoverability of intangible assets periodically by considering events
or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. The Company expenses
internally developed trademarks.

 29 

License
Agreement

The
Company is party to a license agreement under which it is licensed to utilize certain technology and production equipment developed and
manufactured by another company, relating on an exclusive basis to avocado products and on a non-exclusive basis to other products. The
license is not discernible from the equipment; therefore, the license costs have been capitalized and depreciated over the useful life
of the equipment. The license agreement also entitles the licensor to a royalty on all revenue from the sale of products produced using
the equipment. These royalties are recognized as royalty expenses as the products are sold. There was a total of $41,673 of royalty payments
made during the year ended December 31, 2024, and none during the year ended December 31, 2023. Any future minimum royalty
payments or equipment purchases under this license agreement are an unrecognized commitment as they relate to retaining exclusivity of
the avocado products going forward and the Company can elect not to pay as disclosed in Note 17 to the financial statements included
in this 10-K.

Derivatives

The
Company evaluates convertible notes payable, stock options, stock warrants and other contracts to determine if those contracts or embedded
components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40,
Derivative Instruments and Hedging: Contracts in Entity’s Own Equity.

The
result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and
is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability,
the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of
a derivative instrument, the instrument is