BranchOut Food Inc. Announces Plan to Eliminate Current Liability Notes Payable with $1 Million Warrant Exercise and Extension of Key Financing Agreements

Rhea-AI Summary

BranchOut Food (NASDAQ: BOF) has secured a strategic agreement with Kaufman Kapital LLC, resulting in a $1 million cash infusion through early warrant exercise for 1,000,000 shares. The deal includes key debt maturity extensions: a $3.4M Senior Secured Convertible Note extended to December 2026 and $875,000 Kaufman Senior Secured Note to December 2025. The company plans to eliminate current liability notes payable by end-2025 through warrant proceeds and operating cash flow. Several financial burdens are concluding, including a $1.3M mortgage payment in June 2025 and equipment loan in August 2025. BranchOut expects positive operating income in 2025 and recently filed a $10M shelf registration for strategic growth opportunities, with potential raises limited to $1-3M in H2 2025.

Positive

• $1 million immediate cash infusion through warrant exercise by Kaufman Kapital
• Extension of $3.4M Senior Secured Note maturity to December 2026
• Expected positive operating income in 2025
• Strategic acquisition of $1.3M first mortgage on Peru factory
• Completion of air-drying capacity expansion expected to improve margins and efficiency
• VAT reimbursement system to generate recurring cash flow from exports

Negative

• Significant debt obligations remain with $3.4M Senior Secured Note and $875,000 Kaufman Note
• Potential dilution from $10M shelf registration if utilized
• Monthly cash burden of $152,000 mortgage payment until June 2025
• Dependency on warrant proceeds and future cash flow for debt repayment

Insights

Financial Restructuring Specialist

BranchOut's $1M cash injection and debt extensions significantly improve balance sheet health and near-term financial flexibility.

BranchOut Food's financial restructuring plan represents a substantial improvement to its debt profile and liquidity position. The $1 million cash infusion through Kaufman Kapital's early warrant exercise provides immediate capital to reduce current liabilities, while the extension of $3.4 million in convertible notes from 2025 to 2026 and the $875,000 senior secured note to end-2025 significantly reduces near-term debt pressure.

The company's comprehensive liability reduction strategy addresses several financial burdens simultaneously: (1) repayment of $1.56 million in senior secured debt using warrant proceeds, (2) elimination of a substantial $152,000 monthly payment for the Peru factory mortgage in June 2025, (3) removal of a $44,000 monthly equipment loan payment in August 2025, and (4) recovery of approximately $883,000 in Peruvian VAT credits.

Particularly noteworthy is the strategic $500,000 investment in air-drying capacity at the Peru facility. This capital expenditure enhances vertical integration and improves margins, while critically increasing throughput of expensive dehydration equipment by 300-400%. This efficiency gain allows BranchOut to delay multi-million dollar equipment investments, preserving capital while increasing production capacity.

The shelf registration filing provides flexibility without immediate dilution pressure, as management explicitly states they don't plan to use equity for debt repayment or operating losses. The company's expectation to achieve positive operating income in 2025, coupled with Kaufman Kapital's demonstrated confidence through early warrant exercise, suggests improving financial fundamentals as one-time expenses and transitional costs conclude.

Kaufman Kapital exercises warrant and extends key debt maturities, providing $1 million in support of BranchOut’s financial strategy

BEND, Ore., June 02, 2025 (GLOBE NEWSWIRE) -- BranchOut Food Inc. (NASDAQ: BOF), a leading food technology company specializing in its patented GentleDry™ dehydrated snacks and ingredients, announces the execution of a strategic agreement with Kaufman Kapital LLC, resulting in a $1 million cash infusion through the early exercise of existing warrants. The agreement also includes amendments to existing financing terms that strengthen BranchOut’s balance sheet, allow for debt repayment and extend key debt maturities.

Under the terms of the agreement, Kaufman Kapital will exercise in full an existing warrant to purchase 1,000,000 shares of BranchOut’s common stock, providing the Company with $1,000,000 in cash proceeds no later than June 16, 2025.

In addition, the parties agreed to the following amendments:

• Extension of the maturity date of the $3.4 million Senior Secured Convertible Promissory Note from December 31, 2025 to December 31, 2026.
• Extension of the maturity date on the remaining $875,000 balance of the original $1.2 million Kaufman Senior Secured Promissory Note to December 31, 2025.
• Extension of the expiration date of a separate warrant to purchase 500,000 shares to December 31, 2026
  

“This Agreement reflects the strong confidence Kaufman Kapital has in our long-term growth strategy and operational execution,” said Eric Healy, CEO of BranchOut Food. “The warrant exercise provides us with additional capital, while the note extensions improve our financial flexibility and strengthen our balance sheet.”

Kaufman Kapital’s decision to exercise its warrant ahead of schedule and extend key financing terms reflects continued confidence in BranchOut’s trajectory. “We’ve been closely following BranchOut’s progress, and the execution we’re seeing across both operations and commercial growth is outstanding,” said a spokesperson for Kaufman Kapital. “Our early exercise of the warrant reflects our strong confidence in the team, the business model, and the long-term opportunity. We’re bullish on where BranchOut is headed and proud to support their continued momentum.”

The $1 million in proceeds from the warrant exercise will be used to pay down outstanding debt obligations as part of BranchOut’s broader initiative to eliminate all current liability notes payable by the end of 2025. This strategic use of capital reflects the Company’s commitment to strengthening its balance sheet and positioning itself for sustained growth.

Path to Material Cash Flow Improvement

BranchOut is entering a transformative phase in its financial profile, with multiple cost burdens and liabilities set to be eliminated or dramatically reduced in the coming months. As the Company continues to scale production, drive efficiencies at its Peru facility, and grow sales, it expects a significant improvement in operating cash flow. Several one-time or transitional expenses tied to the completion of the facility and initial scale-up phase are now concluding.

• Senior Secured Notes – The Company plans to repay the $1.56 million in senior secured debt, funded through a combination of cash flow and the $1 million proceeds from the recent warrant exercise. The remaining $875,000 principal on the $1.2 million Kaufman note is expected to be paid gradually through operating cash flow over the remainder of 2025.
  
• Real Estate Credit Position – In 2024, BranchOut strategically acquired the $1.3 million first mortgage on its Peru factory property to secure its long-term lease and eventual right to acquire the building at a significant discount as the property owner undergoes bankruptcy proceedings. This debt, which carried a monthly payment of approximately $152,000, will be fully repaid in June 2025, relieving a major monthly cash burden.
  
• EnWave Equipment Loan – The final payment on one of the EnWave dehydration machines will be made in August 2025, eliminating an additional $44,000 per month in cash outflow.
  
• Peru VAT Reimbursement – Over the past 12 months, BranchOut paid the 18% Peruvian VAT (Value Added Tax) on capital equipment and facility build-out, spending approximately $883,000 and generating an equal amount in recoverable export credits. Going forward, the Company expects to receive refunds at a rate of 18% of its export value—effectively turning those credits into recurring inbound cash flow as exports ramp up.
  
• Air-Dry Capacity Expansion – In Q1 2025, BranchOut made a strategic decision to add dedicated air-drying capacity to its Peru facility, investing approximately $500,000 in additional capital expenditures. This build-out, scheduled for completion in June 2025, is expected to significantly reduce the Company’s dependence on third-party raw material suppliers. The investment enhances vertical integration, improves control over input quality, and supports better gross margins going forward. Importantly, pre-drying fruits and vegetables before they enter the GentleDry™ process increases throughput of the high-capex dehydration equipment by 3–4X, optimizing utilization and delaying the need for additional multi-million-dollar equipment investments.
  

These developments, combined with rising production efficiency, growing sales, and the Company’s expectation for positive operating income in 2025, are expected to drive a material improvement in BranchOut’s cash generation profile. With the bulk of non-recurring expenses behind it and a clear plan to reduce all remaining near-term liabilities, the Company is now well-positioned to scale sustainably.

Shelf Registration Supports Strategic Optionality

The recently filed $10 million shelf registration is intended solely to provide strategic flexibility for growth capital and reflects sound financial governance. BranchOut does not expect to raise equity to repay debt or fund operating losses. The Company anticipates generating positive operating income in 2025 and intends to repay all remaining current liability notes payable—including debt maturing on December 31, 2025—through a combination of warrant proceeds and operating cash flow.

The shelf enables BranchOut to act opportunistically should compelling growth opportunities arise, such as expanding the sales team, entering new markets, or accelerating key strategic initiatives. The Company does not anticipate raising more than $1–3 million in the second half of 2025, and only to support long-term expansion if such opportunities materialize.

About BranchOut Food Inc.

BranchOut Food is a leading international food technology company, specializing in the production of high-quality dehydrated fruit and vegetable-based products through its proprietary GentleDry Technology. This next-generation dehydration method preserves up to 95% of the original nutrition of fresh produce, offering superior quality and taste. Protected by over 17 patents, BranchOut’s technology enables it to stand out as a trusted brand, ingredient and a private-label supplier. For more information, visit www.branchoutfood.com or follow us on social media here.

For more information:
info@branchoutfood.com

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations or forecasts of future events. Forward-looking statements may be identified using words such as “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “position,” "outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements with respect to the operations of BranchOut Food, Inc., (the Company) strategies, prospects and other aspects of the business of the Company are based on current expectations that are subject to known and unknown risks and uncertainties, which could cause actual results or outcomes to differ materially from expectations expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Although it may voluntarily do so from time to time, the Company undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

FAQ

What is the purpose of BranchOut Food's (BOF) $1 million warrant exercise agreement?

The warrant exercise by Kaufman Kapital provides immediate cash to help eliminate current liability notes payable and strengthens BranchOut's balance sheet, while extending key debt maturities.

How much debt does BranchOut Food (BOF) currently have?

BranchOut has a $3.4M Senior Secured Convertible Note extended to December 2026, an $875,000 Kaufman Senior Secured Note due December 2025, and various other obligations including a $1.3M mortgage being paid off in June 2025.

When does BranchOut Food (BOF) expect to achieve positive operating income?

The company expects to generate positive operating income in 2025 as it scales production, improves efficiency at its Peru facility, and grows sales.

What is the purpose of BranchOut Food's (BOF) $10 million shelf registration?

The shelf registration provides strategic flexibility for growth opportunities, with potential raises limited to $1-3M in H2 2025, and is not intended for debt repayment or operating losses.

How will BranchOut Food (BOF) improve its cash flow in 2025?

BranchOut plans to improve cash flow through debt reduction, completion of one-time expenses, VAT reimbursements from exports, and increased operational efficiency at its Peru facility.