Company: BOF
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021655
Chunk: 72

Company: BranchOut Food Inc.
Filing Date: 2025-11-12
Form: 10-Q
Item: Item 8
Chunk 72
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 associated with the purchase, production and manufacturing of the Company’s products. Production
costs are primarily calculated from direct raw materials, labor, and variable manufacturing costs. We determine manufacturing overhead
by applying a predetermined rate based on actual machine hours used in production. Overhead costs include factory rent, utilities, depreciation,
and other factory-related expenses, allocated to products based on the factory’s capacity and actual machine hours incurred during
production.

We
analyze factory capacity to establish a normal level of production, which serves as the basis for allocating manufacturing overhead costs.
This approach ensures that our overhead costs are systematically and consistently allocated to inventory.

Advertising
and Promotions Costs

The
Company incurs advertising and promotional expenses related to demos with customers, trade shows, and promotional allowances. Advertising
and promotional costs are expensed as incurred. Advertising and promotional expenses were $579,507 and $223,801 for the nine months ending
September 30, 2025 and 2024, respectively.

    11

Stock-Based
Compensation

The
Company accounts for equity instruments issued to employees and non-employees in accordance with the provisions of ASC 718 Stock Compensation
(“ASC 718”). All transactions in which the consideration provided in exchange for the purchase of goods or services consists
of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable.

The
Company incurred stock-based compensation in the amount of $177,257 and $698,785 for the nine months ended September 30, 2025 and 2024,
respectively.

Recent
Accounting Pronouncements

From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted
by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards,
which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

Recently
Adopted Accounting Standards

In
November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosure.” The ASU updated reportable segment disclosure requirements, primarily through
requiring enhanced disclosures about significant segment expenses and information used to assess segment performance. The Company adopted
ASU No. 2023-07 during the year ended