Company: BOF
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004712
Chunk: 1153

Company: BranchOut Food Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 5
Chunk 1153
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, $243,305 and $32,515 on the collectability of a note receivable, VAT taxes receivable
and prepaid inventory, respectively, owed to us by NXTDried Superfoods.

Peru
Facility Lease

Given
the situation with NXTDried Superfoods, we were required to shift fulfillment of orders to alternative manufacturing sources. On May
10, 2024 we entered into a ten-year lease for our 50,000 square-foot food processing plant located in Peru. The lease of the Peru Facility
requires us to make 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 we may purchase the facility for $1,865,456.

In
connection with our lease of the Peru Facility, we paid $275,000 on May 10, 2024 and another $80,000 during the fourth quarter of 2024,
as part of the purchase of 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. The remaining $912,000 is due and payable in monthly installments
of $152,000 through June 23, 2025, at which time an additional $55,604 of interest is due, based on a 9% financing rate.

Critical
Accounting Policies

The
establishment and consistent application of accounting policies is a vital component of accurately and fairly presenting our financial
statements in accordance with generally accepted accounting principles in the United States (“GAAP”), as well as ensuring
compliance with applicable laws and regulations governing financial reporting. While there are rarely alternative methods or rules from
which to select in establishing accounting and financial reporting policies, proper application often involves significant judgment regarding
a given set of facts and circumstances and a complex series of decisions.

Initial
Public Offering

In
June 2023, we completed our IPO in which we sold 1,190,000 shares of common stock at a price of $6.00 per share pursuant to an Underwriting
Agreement with Alexander Capital, L.P. (the “Underwriter”). The Company
received