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BEND, Ore. - BranchOut Food Inc. (NASDAQ: BOF), a food technology company known for its GentleDry™ dehydrated snacks and ingredients with a market capitalization of $17 million, announced today a strategic agreement with Kaufman Kapital LLC. According to InvestingPro data, the company has shown impressive revenue growth of ~96% over the last twelve months, despite operating with challenging gross margins of ~14%. The pact includes a $1 million cash infusion through the early exercise of warrants and amendments to existing financing terms, aiming to bolster the company’s balance sheet and facilitate debt repayment.
The agreement, set to be completed no later than June 16, 2025, involves Kaufman Kapital fully exercising an existing warrant to purchase 1,000,000 shares of BranchOut’s common stock, resulting in $1 million in cash proceeds. Key amendments include extending the maturity date of a $3.4 million Senior Secured Convertible Promissory Note from December 31, 2025, to December 31, 2026, and pushing the maturity date of the remaining $875,000 balance of an original $1.2 million Kaufman note to December 31, 2025. Additionally, the expiration date of a separate warrant to purchase 500,000 shares has been extended to December 31, 2026.
Eric Healy, CEO of BranchOut Food, expressed that the agreement reflects Kaufman Kapital’s strong confidence in the company’s long-term growth strategy and operational execution. A spokesperson for Kaufman Kapital also voiced their continued confidence in BranchOut’s trajectory, citing the company’s impressive operations and commercial growth.
The funds from the warrant exercise are earmarked for debt reduction as part of BranchOut’s goal to eliminate all current liability notes payable by the end of 2025. The company is entering a transformative phase, aiming for significant improvements in operating cash flow by scaling production, enhancing efficiencies at its Peru facility, and increasing sales. InvestingPro analysis reveals the company’s current ratio of 0.68 indicates pressure on short-term liquidity, making this debt reduction strategy crucial. Two additional InvestingPro Tips highlight important financial considerations for investors interested in BOF’s turnaround potential. BranchOut plans to repay $1.56 million in senior secured debt, with the aid of cash flow and the recent warrant exercise proceeds. The final payment on one of the EnWave dehydration machines is due in August 2025, and the company anticipates a VAT reimbursement from Peru, which will further bolster cash flow.
BranchOut has also strategically invested in expanding air-dry capacity at its Peru facility, which is expected to enhance vertical integration and support better gross margins. This move is projected to optimize equipment utilization and delay further capital investments.
The company has filed a $10 million shelf registration for strategic flexibility, though it does not intend to use this for debt repayment or operating losses. BranchOut anticipates positive operating income in 2025 and plans to address all remaining current liability notes payable through a mix of warrant proceeds and operating cash flow. This goal appears challenging given the company’s current EBITDA of -$3.26 million and weak overall financial health score, as reported by InvestingPro. Investors seeking deeper insights into BOF’s financial metrics and growth potential can access comprehensive analysis and additional ProTips through an InvestingPro subscription. The shelf registration will allow the company to pursue growth opportunities as they arise.
This news is based on a press release statement from BranchOut Food Inc.
In other recent news, BranchOut Food Inc. has entered a definitive agreement with Kaufman Kapital LLC, involving Kaufman exercising a warrant to purchase 1,000,000 shares of BranchOut’s common stock at $1.00 per share. This exercise is expected to bring a cash payment of $1,000,000 to BranchOut. The agreement also includes amendments to existing financial arrangements, such as extending the expiration date for a warrant to purchase additional shares and altering the maturity dates of certain promissory notes. Additionally, BranchOut Food Inc. has signed a definitive agreement with MicroDried to integrate its GentleDry technology into MicroDried’s portfolio. This collaboration aims to enhance large-scale production at BranchOut’s new facility in Peru, with anticipated annual ingredient sales of $5-6 million. The partnership combines BranchOut’s innovative technology with MicroDried’s market presence, expanding the reach of high-quality dried ingredients. These developments reflect BranchOut’s strategy to expand its market presence and financial arrangements.
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