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
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
News Market Reaction
On the day this news was published, BOF gained 19.21%, reflecting a significant positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
Kaufman Kapital exercises warrant and extends key debt maturities, providing
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
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
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 b alance 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
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 of18% 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
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
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
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?
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What is the purpose of BranchOut Food's (BOF) $10 million shelf registration?
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