BranchOut Food Inc.
For the period ended Dec 31, 2024. Filed Apr 15, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Apr 15, 2025
BOF$1.68-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-01.
0001493152-24-012492
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-04-15.
0001641172-25-004712
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 111 previous paragraphs and 126 current paragraphs.
78 unchanged; 27 reworded; 21 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
We are currently developing many additional products for all sales channels.
Current report
NXTDried Superfoods
Current report
Peru Facility Lease
Current report
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.
Current report
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.
Current report
Under ASC 280,Segment Reporting, operating segments are defined as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company has two components, consisting of its sales operations in the United States, and its production operations in Peru. Therefore, the Company’s Chief Executive Officer, who is also the CODM, makes decisions and manages the Company’s operations based on these two operating segments for the manufacture and distribution of its products.
Current report
Net loss for the year ended December 31, 2024 was $4,751,516, compared to $3,925,710 during the year ended December 31, 2023, an increased net loss of $825,806, or 21%. The increased net loss was primarily due to increased compensation and compliance costs related to reporting as a public company, $427,960 of increased interest expense, and $536,074 of increased stock-based compensation during the current year, as partially offset by increased gross profits during the current year, in addition to $761,085 of impairment expense in 2023 that wasn’t incurred in the current year.
Current report
Debt Financing
Current report
Kaufman Convertible Note
Current report
Pursuant to a Securities Purchase Agreement dated July 15, 2025 (as amended, the “SPA”) on July 24, 2024 Kaufman Capital LLC (“Kaufman Capital”) purchased from us (i) a 12% Senior Secured Convertible Promissory Note in the principal amount of up to $3,400,000 (the “Convertible Note”), convertible into shares of common stock at a fixed price of $0.7582 per share, (ii) a warrant to purchase 1,000,000 shares of common stock at an exercise price of $1.00 per share, and (iii) a warrant to purchase 500,000 shares of common stock at an exercise price of $1.50 per share, in consideration of an initial loan in the principal amount of $2,000,000 made to the Company under the Convertible Note. On December 9, 2024, Kaufman Kapital made an additional loan to the Company under the Convertible Note in the amount of $1,400,000. The Convertible Note matures on the earlier of (i) December 31, 2025, (ii) the sale by the Company of $5,000,000 of equity or debt securities in a single transaction or series of related transactions (excluding certain specified transactions), or (iii) the closing of a change of control transaction as provided in the Convertible Note. Loans outstanding under the Convertible Note bear interest at an initial rate of 12% per annum, and together with accrued principal are convertible into common stock. The Company’s obligations under the Convertible Note are secured by a lien granted to Kaufman Kapital on substantially all of the Company’s assets pursuant to a Security Agreement entered between the Company and Kaufman Kapital (the “Security Agreement”).
Current report
Kaufman Promissory Note
Current report
On August 30, 2024, the Company borrowed $1,200,000 from Kaufman Kapital pursuant to a Senior Secured Promissory Note in the principal amount of $1,200,000 (the “Note”) issued by the Company to Kaufman Kapital. The Note matures on June 30, 2025. The loan under the Note bears interest at a rate of 15% per annum. The Company’s obligations under the Note are secured by a lien on substantially all of the Company’s assets pursuant to the Security Agreement.
Current report
Eagle Vision Promissory Notes
Current report
On various dates from January 9, 2024 through May 22, 2024, the Company completed the sale of an aggregate $1,675,000 of Senior Secured Promissory Notes (“Senior Notes”) and warrants to purchase an aggregate of 518,750 shares of the Company’s common stock, to a group of Investors (“Investors”) led by Eagle Vision Fund LP (“Eagle Vision”), an affiliate of John Dalfonsi, CFO of the Company, pursuant to a subscription agreement between the Company and the Investors. The Notes mature on the earlier of December 31, 2025, or the occurrence of a “Qualified Subsequent Financing” or “Change of Control” and bear interest at a rate of 15% per annum. The Company’s obligations under the Notes are secured by liens on substantially all of the Company’s assets pursuant to the terms of a Security Agreement between the Company and the Investors.
Current report
Equity Investments
Current report
ATM Financing
Current report
On October 23, 2024, we entered into an ATM Agreement with Alexander Capital for the sale of shares of common stock from time to time through Alexander Capital having an aggregate offering price of up to $3 million. As of December 31, 2024, we had sold 1,317,307 shares of common stock under the ATM Agreement resulting in gross proceeds of approximately $2.5 million and aggregate net proceeds of approximately $2.3 million, after deducting expenses, including a 3% commission paid to Alexander Capital. Subsequent to December 31, 2024, the ATM Agreement was amended to increasethe aggregate offering price of shares of common stock that may be sold under the ATM Agreement to $5 million. Following December 31, 2024, we sold 1,303,115 additional shares of common stock under the ATM Agreement for gross proceeds of approximately $2.5 million and aggregate net proceeds of approximately $2.4 million. As of the date of the filing of this Annual Report on Form 10-K, as a result of such sales of common stock under the ATM Agreement, the Company believes it has stockholders’ equity in excess of $2.5 million, in compliance with Nasdaq Listing Rule 5550(b)(1).
Current report
Related Party Financing
Current report
On July 15, 2024, the Company entered into subscription agreements with three related parties, consisting of Eric Healy, the Company’s Chief Executive Officer; Eagle Vision, an affiliate of John Dalfonsi, the Company’s Chief Financial Officer; and the Company’s President, pursuant to which such investors agreed to purchase $525,000 of “Units” from the Company, each Unit consisting of (i) 100 shares of common stock, and (ii) a warrant to purchase 125 shares of common stock over the following ten years at an exercise price of $1.00 per share, at a purchase price per Unit equal to $75.82. The Company completed the sale of the Units to Eric Healy and the Company’s President on July 23, 2024, and the sale of the Units to Eagle Vision on August 30, 2024, resulting in the issuance of an aggregate of 692,429 shares of common stock and warrants to purchase 865,536 shares of common stock.
Current report
Follow-on Public Offering
Current report
On June 26, 2024, we sold 1,750,000 shares of common stock in a public offering at a price of $0.80 per share, less underwriting discounts and commissions, and on July 19, 2024, the underwriter in the offering exercised its over-allotment option to purchase an additional 222,500 shares of common stock. We received aggregate net proceeds in this offering of $1,164,685 after deducting the underwriting discounts and commissions and offering expenses.
Removed paragraphs (6)
Previous report
We are currently developing additional products, including chocolate covered fruit items and private label products for large retailers.
Previous report
Access to our Equipment in Peru; NXTDried Superfoods
Previous report
ASC 280,Segment Reporting, requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding how to allocate resources. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
Previous report
Depreciation Expense
Previous report
Depreciation expense for the year ended December 31, 2023 was $-0-, compared to $93,253 for the year ended December 31, 2022, a decrease of $93,253. The decrease was primarily due to depreciation associated with our EnWave 60kW Vacuum Microwave Dehydration and Chiller Machines, which were installed at our contract manufacturer in Peru in the third quarter of 2022, and commenced production activities on January 1, 2023, resulting in the recognition of depreciation as a component of cost of goods sold.
Previous report
Net loss for the year ended December 31, 2023 was $3,925,710, compared to $4,643,352 during the year ended December 31, 2022, a decreased net loss of $717,642, or 15%. The decreased net loss was primarily due to $74,320 of improved gross profits and a reduction of $1,815,622 of interest expense related to the amortization of debt discounts in the prior period that were not recognized in the current period and reductions in interest expense on debt which was mostly settled in June of 2023, as partially offset by $1,170,392 of increased operating expenses, including $761,085 of impairment expense.
Reworded paragraphs (27)
Previous wording
We are engaged in the development, marketing, sale, and distribution of plant-based, dehydrated fruit and vegetable snacks and powders. Our products are currently manufactured for us by two contract manufacturers, one based in the Republic of Chile, and the other in the Republic of Peru. The manufacturing facility in Peru houses our new large-scale continuous through-put dehydration machine that completed its first production run in the first quarter of 2023, and which substantially increased our production capacity. Both facilities produce dehydrated fruit and vegetable products for BranchOut using a new proprietary dehydration technology licensed by us from a third party. The Company’s customers are primarily located throughout the United States.
Current wording
We are engaged in the development, marketing, sale, and distribution of plant-based, dehydrated fruit and vegetable snacks and powders. Our products have historically been manufactured for us by two contract manufacturers, one based in the Republic of Chile, and the other in the Republic of Peru, which housed our large-scale continuous through-put dehydration machine that completed its first production run in the first quarter of 2023. Our dehydrated fruit and vegetable products are produced using a new proprietary dehydration technology licensed by us from a third party. Our customers are primarily located throughout the United States. In 2024, we decided to initiate our own production facility in Peru to become vertically integrated. We recently completed the build out of the new facility, which commenced operations in December 2024, and utilizes three large-scale REV machines (a REV 60, REV 100 and REV 120)thatwe recently purchased from EnWave, as well as, a small REV 10 R&D machine that is being used for product development and customer sample purposes. We expect operating margins to be further improved in 2025, as we become more vertically integrated with the transition of more of our production from third party contract manufacturers to internal production.
Previous wording
Using our licensed technology platform, we believe our line of branded food products speak to current consumer trends. In our experience, conventional dehydration methods, such as freeze-drying and air drying, tend to degrade most fruit and vegetables through oxidation, browning/color degradation, nutritional content reduction and/or flavor loss. As a result, certain highly sensitive fruit, such as avocados and bananas, have not previously been successfully offered as a dehydrated base for consumer products. We believe that BranchOut’s licensed technology platform and process is the only way to produce quality avocado and banana-based snack and powdered products. Additionally, we believe our licensed technology platform produces superior products when using other fruits and vegetables as the base when compared to conventional drying and dehydration technologies. We license technology, consisting of a portfolio of patents, and purchased production machines, from Enwave, and we have been granted the exclusive rights to use the licensed technology platform as applied to avocados. In addition, BranchOut has its own patent pending process, and has the nonexclusive rights to use the licensed technology platform for other products.
Current wording
Using our licensed technology platform, we believe our lines of branded, private-label and industrial ingredient products positively address current consumer trends. In our experience, conventional dehydration methods, such as freeze-drying and air drying, tend to degrade most fruit and vegetables through oxidation, browning/color degradation, nutritional content reduction and/or flavor loss. As a result, certain highly sensitive fruits, such as avocados and bananas, have not previously been successfully offered as a dehydrated base for consumer products. We believe that our licensed technology platform and process is the only way to produce quality avocado and banana-based snack and powdered products. Additionally, we believe our licensed technology platform produces superior products when using other fruits and vegetables when compared to conventional drying and dehydration technologies. We license technology, consisting of a portfolio of patents, and purchased production machines, from EnWave, and we have been granted the exclusive rights to use the licensed technology platform as applied to several products in Peru, and avocado based products in the United States. In addition, BranchOut has the nonexclusive rights to use the licensed technology platform for other products.
Previous wording
Over time, we plan to grow revenues strategically by penetrating the multi-billion dollar grocery market opportunity presented by our current product lines, as well as expanding our platform to include additional products that meet our strict plant-based ingredient criteria. Our current primary products are:
Current wording
We plan to continue to grow revenues strategically by penetrating the multi-billion dollar grocery, industrial ingredient and online markets. Our current product line includes:
Previous wording
As of December 31, 2023, we had a cash balance of $657,789, have incurred recurring losses from operations resulting in an accumulated deficit of $12,810,541, and had total working capital of $899,150. We are too early in our development stage to project revenue with a necessary level of certainty; therefore, we may not have sufficient funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund our operations. These factors raise substantial doubt about our ability to continue as a going concern. The Company continues to develop its operations. In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these objectives.
Current wording
As of December 31, 2024, we had a cash balance of $2,329,452, a working capital deficit of $3,897,382 and had incurred recurring losses from operations resulting in an accumulated deficit of $17,562,057. Subsequent to December 31, 2024, we received gross proceeds of approximately $2.4 million from sales of our common stock in an “At-the-Market” registered offering. Although we anticipate that our results of operations will improve substantially as a result of the recent launch of our new facility in Peru, there can be no assurance in that regard. If we continue to generate substantial operating losses, we will not have sufficient funds to sustain our operations for the next twelve months and we will need to raise additional cash to fund our operations. These factors raise substantial doubt about our ability to continue as a going concern.
Previous wording
The report of the Company’s independent registered public accounting firm that accompanies its audited financial statements in this Annual Report on Form 10-K contains an explanatory paragraph regarding the substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of the going concern uncertainty.
Current wording
The report of our independent registered public accounting firm that accompanies our audited financial statements in this Annual Report on Form 10-K contains an explanatory paragraph regarding the substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of the going concern uncertainty.
Previous wording
During the fourth quarter of 2023, NXTDried Superfoods, our contract manufacturer located in Peru, became involved in a legal dispute with its landlord and another third party, which resulted in that manufacturer suspending operations. In addition, as a result of such dispute, we currently do not have access to the dehydration machine that was previously operated by this manufacturer. Although we have been able to continue to fulfill orders by shifting fulfillment to other manufacturing sources, our costs of goods are expected to increase as a result. In addition, if we are unable to regain access to our dehydration machine and utilize it for the production of our products, our operating results may be materially and adversely affected. In addition, during 2023, we recognized $761,085 of impairment expense, consisting of $485,265, $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.
Current wording
During the fourth quarter of 2023, NXTDried Superfoods, one of our former contract manufacturers located in Peru, became involved in a legal dispute with its landlord and another third party, which resulted in that manufacturer suspending operations. As a result of such dispute, we had to fulfill orders by shifting fulfillment to other manufacturing sources until we commenced operations at our own fully integrated production facility in Peru in the fourth quarter of 2024. During 2023, we recognized $761,085 of impairment expense, consisting of $485,265, $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.
Previous wording
Prior to the IPO, all deferred offering costs were capitalized in other noncurrent assets on the balance sheets. Deferred offering costs of $1,283,954, primarily consisting of accounting, legal, and other fees related to the Company’s IPO, were offset against the IPO proceeds upon the closing of the IPO in June 2023. As of December 31, 2023, all deferred offering costs were paid. Unpaid deferred offering costs totaled $543,664 as of December 31, 2022.
Current wording
Prior to the IPO, all deferred offering costs were capitalized in other noncurrent assets on the balance sheets. Deferred offering costs of $1,283,954, primarily consisting of accounting, legal, and other fees related to the Company’s IPO, were offset against the IPO proceeds upon the closing of the IPO in June 2023.
Previous wording
The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, under current regulations. The Company had $407,789 and $62,697 in excess of FDIC insured limits on December 31, 2023 and 2022, respectively, and has not experienced any losses in such accounts.
Current wording
The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, under current regulations. The Company had $1,555,223 and $407,789 in excess of FDIC insured limits on December 31, 2024 and 2023, respectively, and has not experienced any losses in such accounts.
Previous wording
Accounts receivable is carried at their estimated collectible amounts. Trade accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had no allowance for doubtful accounts on December 31, 2023 and 2022.
Current wording
Accounts receivable is carried at their estimated collectible amounts. Trade accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance for doubtful accounts of $25,586 at December 31, 2024. No allowance for doubtful accounts was necessary at December 31, 2023.
Previous wording
The Company had prepaid inventory advances on product in the amount of $29,500 as of December 31, 2022. Advances of 70% of estimated finish product costs are made to enable manufacturer’s purchase of raw materials to produce finished products. The remaining 30% is paid upon receipt of finished goods.
Current wording
The Company had prepaid inventory advances on products in the amount of $123,792 and $-0- as of December 31, 2024 and 2023, respectively. Advances of 70% of estimated finish product costs are made to enable manufacturer’s purchase of raw materials to produce finished products. The remaining 30% is paid upon receipt of finished goods.
Previous wording
Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized, and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation are eliminated, and any resulting gain or loss is reflected in operations. Depreciation expense was $223,856 and $93,253 for the years ended December 31, 2023 and 2022, respectively.
Current wording
Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized, and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation are eliminated, and any resulting gain or loss is reflected in operations. Depreciation expense was $171,873 and $223,856 for the years ended December 31, 2024 and 2023, respectively.
Previous wording
In 2021, the Company entered into a license agreement to license the rights to certain production equipment developed and manufactured by another company through the purchase of that company’s equipment. The license is not discernable 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 have been no royalty payments to date, and 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.
Current wording
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.
Previous wording
The Company expenses the cost of advertising and promotions as incurred. Advertising and promotions expense was $162,048 and $199,287 for the years ended December 31, 2023 and 2022, respectively.
Current wording
The Company expenses the cost of advertising and promotions as incurred. Advertising and promotions expense was $311,586 and $162,048 for the years ended December 31, 2024 and 2023, respectively.
Previous wording
The Company issued stock-based compensation in the amount of $258,574 and $93,521 for the years ended December 31, 2023 and 2022, respectively.
Current wording
The Company issued stock-based compensation in the amount of $704,699 and $258,574 for the years ended December 31, 2024 and 2023, respectively.
Previous wording
Our net revenue for the year ended December 31, 2023 was $2,825,855, compared to $752,178 for the year ended December 31, 2022, an increase of $2,073,677, or 276%. The increase in revenue was primarily due to increased sales to big box retailers during the year ended December 31, 2023.
Current wording
Our net revenue for the year ended December 31, 2024 was $6,516,337, compared to $2,825,855 for the year ended December 31, 2023, an increase of $3,690,482, or 131%. The increase in revenue was primarily due to increased sales to our largest customer during the year ended December 31, 2024.
Previous wording
Cost of Goods Sold and Gross Loss
Current wording
Cost of Goods Sold and Gross Profit (Loss)
Previous wording
Our cost of goods sold for the year ended December 31, 2023 was $2,922,085, compared to $922,728 for the year ended December 31, 2022, an increase of $1,999,357, or 217%. Cost of goods sold included $223,856 of depreciation on production equipment during the year ended December 31, 2023. Cost of goods sold increased primarily in line with the increase in our sales for the period and a reduction in our shipping costs, which, in turn, was primarily a result of our transition to bulk shipping arrangements. As a result of the foregoing, we had a gross operating loss of $96,230, or (3%), for the year ended December 31, 2023, as compared to a gross operating loss of $170,550, or (23%), for the year ended December 31, 2022. Our gross profit margin increased primarily due to cost savings realized as a result of our transition to bulk shipping arrangements during the current period.
Current wording
Our cost of goods sold for the year ended December 31, 2024 was $5,652,717, compared to $2,922,085 for the year ended December 31, 2023, an increase of $2,730,632, or 93%. Cost of goods sold included $171,843 and $223,856 of depreciation on production equipment during the years ended December 31, 2024 and 2023, respectively. Cost of goods sold increased primarily in line with the increase in our sales for the period. As a result of the foregoing, we had a gross profit of $863,620, or 13% of revenues, for the year ended December 31, 2024, compared to a gross operating loss of $96,230, or (3%) of revenues, for the year ended December 31, 2023. Our gross profit margin increased primarily due to cost savings realized as a result of our transition to bulk shipping arrangements and transitioning to our own production facility during the current period.
Previous wording
Our general and administrative expense for the year ended December 31, 2023 was $1,581,474, compared to $929,726 for the year ended December 31, 2022, an increase of $651,748, or 70%. The largest components of our general and administrative expenses are advertising and marketing, travel, storage, shipping and handling, commissions and asset impairment expense.
Current wording
Our general and administrative expense for the year ended December 31, 2024 was $1,870,720, compared to $1,581,474 for the year ended December 31, 2023, an increase of $289,246, or 18%. The largest components of our general and administrative expenses are advertising and marketing, rent, travel, commissions, and storage, shipping and handling expense, as shown below.
Previous wording
Advertising and marketing, and travel, expenses decreased for the year ended December 31, 2023, as compared to the corresponding period in 2022 as we focused our resources on our IPO in the current year. Our storage, shipping and handling expenses increased primarily due to increased international shipping rates, and commissions increased due to our increased shipments on sales during the current year. In addition, during 2023, we recognized $761,085 of impairment expense, consisting of $485,265, $243,305 and $32,515 on the collectability of a note receivable, VAT taxes receivable and prepaid inventory, respectively, respectively, related to amounts owed from NXTDried Superfoods SAC, one of our co-manufacturers.
Current wording
Advertising and marketing expenses increased for the year ended December 31, 2024, as compared to the corresponding period in 2023, as we focused our resources on growing our sales. Our rent increased primarily due to leases entered into in the current year, as we began to develop our operating facility in Peru, which also resulted in increased travel expenses. Commissions increased due to our increased sales, and storage, shipping and handling expenses increased primarily due to increased international shipping rates and increased production that was driven by our increased sales. In addition, during 2023, we recognized $761,085 of impairment expense, consisting of $485,265, $243,305 and $32,515 on the collectability of a note receivable, VAT taxes receivable and prepaid inventory, respectively, related to amounts owed from NXTDried Superfoods, one of our prior co-manufacturers.
Previous wording
Salaries and wages for the year ended December 31, 2023 was $1,129,858, compared to $628,637 for the year ended December 31, 2022, an increase of $501,221, or 80%. This increase was primarily attributable to increased headcount in line with our expanded operations.
Current wording
Salaries and wages for the year ended December 31, 2024 was $1,604,200, compared to $1,129,858 for the year ended December 31, 2023, an increase of $474,342, or 42%. This increase was primarily attributable to increased headcount in line with our expanded operations, including $414,614 of non-cash, stock-based compensation related to stock options awarded during the current year.
Previous wording
Professional fees for the year ended December 31, 2023 was $694,596, compared to $583,920 for the year ended December 31, 2022, an increase of $110,676, or 19%. This increase was primarily attributable to increased consulting fees.
Current wording
Professional fees for the year ended December 31, 2024 was $1,291,141, compared to $694,596 for the year ended December 31, 2023, an increase of $596,545, or 86%. This increase was primarily attributable to increased consulting fees. Professional fees included $290,085 and $258,574 of non-cash, stock-based compensation related to common stock and stock options awarded during the years ended December 31, 2024 and 2023, respectively.
Previous wording
In the year ended December 31, 2023, other expense was $423,552, consisting of $435,271 of interest expense, as partially offset by $11,719 of interest income. During the year ended December 31, 2022, other expense was $2,237,266, consisting of $2,250,893 of interest expense, as partially offset by $13,627 of interest income. Other expense decreased by $1,813,714, or 81%, primarily due to the decreased amortization of debt discounts and reductions in interest expense on debt which was mostly settled in June of 2023.
Current wording
In the year ended December 31, 2024, other expense was $849,075, consisting of $863,231 of interest expense, as partially offset by $14,156 of interest income. During the year ended December 31, 2023, other expense was $423,552, consisting of $435,271 of interest expense, as partially offset by $11,719 of interest income. Other expense increased by $425,523, or 100%, primarily due to interest on increased outstanding debt as we funded our expansion into Peru during the current year.
Previous wording
As of December 31, 2023, we had working capital of $899,150. We have incurred net losses since our inception and we anticipate net losses and negative operating cash flows for the near future, and we may not be profitable or realize growth in the value of our assets. To date, our primary sources of capital have been cash generated from the sales of our products, common stock sales, and debt financing. As of December 31, 2023, we had cash of $657,789, total liabilities of $914,622, and an accumulated deficit of $12,810,541. As of December 31, 2022, we had cash of $312,697, total liabilities of $8,404,033, and an accumulated deficit of $8,884,831.
Current wording
As of December 31, 2024, we had negative working capital of $3,897,382. We have incurred net losses since our inception and we anticipate net losses and negative operating cash flows for the near future. To date, our primary sources of capital have been cash generated from the sales of our products, common stock sales, and debt and convertible debt financing. As of December 31, 2024, we had cash of $2,329,452, total liabilities of $10,514,292, and an accumulated deficit of $17,562,057. As of December 31, 2023, we had cash of $657,789, total liabilities of $914,622, and an accumulated deficit of $12,810,541.
Previous wording
Net cash used in operating activities was $3,529,372 for the year ended December 31, 2023, compared to $2,467,681 for the year ended December 31, 2022, an increase of $1,061,691, or 43%. The increase was primarily due to increased accounts receivable, inventory purchases and payments on accounts payable from the proceeds of our IPO, in addition to$761,085 of impairment expense on the collectability of a note receivable, VAT taxes receivable and prepaid inventory.
Current wording
Net cash used in operating activities was $4,859,816 for the year ended December 31, 2024, compared to $3,529,372 for the year ended December 31, 2023, an increase of $1,330,444, or 38%. The increase was primarily due to our increased net loss and increased purchases of inventory and other assets, as adjusted for increased stock-based compensation, increased accounts payable, and$761,085 of impairment expense on the collectability of a note receivable, VAT taxes receivable and prepaid inventory during the prior year.
Previous wording
Net cash used in investing activities was $116,565 for the year ended December 31, 2023, compared to $22,436 for the year ended December 31, 2022, an increase of $94,129, or 420%. This increase was primarily attributable to increased property and equipment purchases, as partially offset by advances received on notes receivable in the prior period that were not replicated in the current period.
Current wording
Net cash used in investing activities was $2,822,561 for the year ended December 31, 2024, compared to $116,565 for the year ended December 31, 2023, an increase of $2,705,996, or 2,321%. This increase was primarily attributable to increased property and equipment purchases of $2,847,207 during the current year, as partially offset by $24,646 of advances received on notes receivable in the current year that were not replicated in the prior year, and $116,565 of property and equipment purchases in the prior year.
Previous wording
Net cash provided by financing activities was $3,755,279 for the year ended December 31, 2023, compared to $2,182,482 for the year ended December 31, 2022, an increase of $1,572,797, or 72%. Our increased cash provided by financing activities was primarily from the net proceeds received in our IPO in the current period, as partially offset by debt repayments.
Current wording
Net cash provided by financing activities was $9,362,621 for the year ended December 31, 2024, compared to $3,755,279 for the year ended December 31, 2023, an increase of $5,607,342, or 149%. Our increased cash provided by financing activities was primarily from $7,071,898 of increased net proceeds received on debt and convertible debt financing, $206,183 of decreased deferred offering cost payments, and $5,489 of decreased principal payments on finance leases, as partially offset by $1,697,203 of decreased proceeds received on the sale of common stock. Our financing activities during the year ended December 31, 2024 are further described below.
Previous wording
As of December 31, 2023, we had incurred recurring losses from operations resulting in an accumulated deficit of $12,810,541, cash on hand of $657,789 and working capital of $899,150. We do not currently have sufficient funds to fund our operations at their current levels for the next twelve months. As we implement our business plan and attempt to expand operational activities, we expect to continue to experience net negative cash flows from operations in amounts not now determinable, and will be required to obtain additional financing to fund operations. Our ability to continue as a going concern is dependent upon our ability to raise additional capital and to achieve sustainable revenues and profitable operations. Since inception, we have raised funds primarily through debt financing and the sale of equity securities. We will need, and are currently seeking, additional funds to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations or cause substantial dilution for our stockholders. If we are unable to obtain additional funds, our ability to carry out and implement our planned business objectives and strategies will be significantly delayed, limited or may not occur. We cannot guarantee that we will become profitable. Even if we achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may not be able to sustain or increase profitability and our failure to do so would adversely affect our business, including our ability to raise additional funds.
Current wording
As of December 31, 2024, we had incurred recurring losses from operations resulting in an accumulated deficit of $17,562,057, cash on hand of $2,329,452 and negative working capital of $3,897,382. Subsequent to December 31, 2024, we received gross proceeds of approximately $2.4 million from sales of our common stock in an “At-the-Market” offering. However, assuming we continue to generate substantial losses from operations, we will not have sufficient funds to fund our operations at their current levels for the next twelve months. Although we anticipate that our results of operations will improve substantially as a result of the recent launch of our new facility in Peru, there can be no assurance in that regard, and we may be required to obtain additional financing to fund operations. Since inception, we have raised funds primarily through debt and convertible debt financing, and the sale of equity securities. No assurance can be given that any future financing will be available if required, or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations or cause substantial dilution for our stockholders. We cannot guarantee that we will become profitable. Even if we achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may not be able to sustain or increase profitability and our failure to do so would adversely affect our business, including our ability to raise additional funds.