Company: BOF
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021655
Chunk: 78

Company: BranchOut Food Inc.
Filing Date: 2025-11-12
Form: 10-Q
Item: Item 8
Chunk 78
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 located in Pisco, Peru, which is accounted for as an operating lease (see Note 11). The lease
includes a purchase option that allows the Company to acquire the facility at the end of the lease term. During 2024, the landlord of
this facility entered bankruptcy proceedings.

To
protect its long-term strategic interests, the Company purchased the first mortgage position on the facility and continues to hold its
contractual purchase option under the lease. Management currently intends to acquire ownership of the facility either (i) through the
landlord’s bankruptcy settlement process or (ii) by exercising the purchase option at the end of the lease term, although there
can be no assurance that the Company will be successful in this regard. The Company accounts for the facility as a leased asset. The
first mortgage position is included on the balance sheet in other assets of $1,267,000 as of September 30, 2025 and December 31, 2024.
The Company capitalizes leasehold improvements related to the buildout of the facility, which expanded the Company’s production
capacity.

    14

Note
8 – Other Assets and Other Receivable

Other
Assets

The
Company has other assets of $1,267,000 as of September 30, 2025, and December 31, 2024, consisting of the first mortgage position on
the production facility it leases in Pisco, Peru (the “FPM”), which the Company acquired to protect its long-term strategic
interests (see Note 11). During 2024, the landlord of the leased facility entered bankruptcy proceedings.

On
May 10, 2024, the Company made the first payment of $275,000 toward the FPM. The FPM is secured by the facility in Peru. Payments were
made in various installments totaling $355,000 as of December 31, 2024, and $912,000 during the nine months ended September 30, 2025.

Other
Receivable

The
Company’s Peruvian operations are subject to an 18% value-added tax (“VAT”) or (“Impuesto General a las Ventas”
or “IGV”) on substantially all purchases and exports of goods and services. IGV paid on purchases can be offset against IGV
collected on exports, with the net amount either remitted to, or recovered from, the Peruvian tax authority (SUNAT), as applicable. This
receivable is recover