BranchOut Food Inc. Q1 2025 Results

A Growth Story Ready to Take Off

BranchOut Food Inc. Q1 2025 Results: A Growth Story Ready to Take Off

BranchOut Food Inc. (BOF) shared their Q1 2025 results, and it’s a mix of exciting growth and some challenges to watch. They reported $3.2M in revenue—a huge 110% increase compared to last year—thanks to their new 50,000-square-foot Peru facility and big wins with retail partners. There’s a $1.9M cash burn, growing accounts receivable, and $6.275M in debt with high interest payments, but BOF’s momentum is strong, and I’m confident they can keep growing fast. Let’s dive into the details and see why this company has so much potential.

Income Statement: Revenue Growth Shines, Interest Is a Challenge

BOF’s Q1 revenue reached $3.2M, up 110% from $1.5M in Q1 2024—a fantastic jump! Their Peru facility, with a $40M yearly production capacity using their special GentleDry™ technology, is making a big difference. They’ve partnered with a warehouse club (likely Costco), bringing in nearly $3M in sales in the first half of 2025 across five U.S. regions. They also secured five private-label products at a major retailer (presumably Walmart) and started shipping orders for a MicroDried partnership that could bring $5-6M in yearly sales. Cost of goods sold increased to $2.6M from $1.2M, but gross profit doubled to $553K from $284K, keeping margins at 17.3% (slightly down from 19.1% last year). Low factory use in Q1 raised fixed costs per unit, but Q2’s 50%+ increase in factory use is already helping, and management expects margins to climb past 20% soon—I believe they’ll get there.

Operating expenses (OpEx) dropped to $1.2M from $1.3M, which is great for a company growing this fast. General and administrative (G&A) costs fell 31% to $686K from $1.0M, showing they’re managing expenses well, though G&A rose $366K when excluding stock-based compensation (SBC)—something to keep an eye on. Sales and marketing stayed steady at $314K (from $319K), while professional fees went up to $235K from $39K, likely from their ATM program and debt deals (more on that later). SBC in salaries dropped to $4K from $376K, and professional fees had zero SBC (down from $150K), saving $522K total—a smart way to save equity. The operating loss shrank 33% to $682K from $1.0M, putting them closer to profitability. The tough part? Interest expense jumped to $241K from $29K, an 812% increase, due to $6.275M in debt from their 2024 Peru expansion. Net loss improved 13% to $918K from $1.1M, with EPS at ($0.11) versus ($0.26). One-time costs like $160K in air freight and $200K in raw materials impacted Q1, but BOF is moving forward strongly.

Balance Sheet: Liquidity Needs Attention, But Growth Is Promising

BOF’s balance sheet as of March 31, 2025, shows total assets at $14.1M, up from $12.9M at the end of 2024—a positive sign. Current assets are $5.8M compared to $8.5M in current liabilities, giving a current ratio of 0.68—not the best, but I’m not too worried for a company growing this quickly. Cash is $2.4M (up from $2.3M), making up 41% of current assets, with $8.5M in current liabilities creating some pressure. Liquidity concerns weigh large, for sure. Accounts receivable (AR) grew to $1.5M from $418K, showing strong sales (more on that below). Inventory increased to $1.6M from $1.2M—15% raw materials, 42.5% work in progress, and 42.5% finished goods. This mix is encouraging—they’re ready to deliver orders quickly as sales grow, and with demand rising, this inventory will move fast.

Liabilities total $10.2M, down from $10.5M, with $8.5M current: $3.3M in convertible notes, $1.7M in other notes payable (including $875K left on the Kaufman Promissory Note after a $325K repayment on May 7), and $626K in accrued expenses. Non-current liabilities are only $1.7M, mostly leases, so the focus is on short-term debts. Stockholders’ equity rose to $3.9M from $2.3M, thanks to additional paid-in capital increasing to $22.4M from $19.9M through ATM stock sales. The accumulated deficit grew to $18.5M from $17.6M, but that’s expected when a company is investing in growth—I’m optimistic about their future.

Cash Flow: Spending to Grow, With Financing as Support

BOF used $1.9M in operating activities in Q1, up from $504K last year—it’s a lot, but growth this fast isn’t cheap. The $918K net loss is the starting point, with a $1M AR increase and $340K inventory growth tying up cash. Accounts payable dropped $57K, and accrued expenses fell $162K, helping a bit, while non-cash items like $152K in depreciation and $400K in SBC softened the impact. Investing activities used $378K for equipment—a confident move to support growth, and I like their ambition. Financing brought in $2.4M, driven by $2.4M in common stock sales and $39K from warrant exercises, offset by $84K in debt repayments. Net cash rose $57K to $2.4M. The operating cash use is a concern, but with sales growing and factory use improving, I think they’ll turn this around soon.

Share Structure: Dilution Exists, But It’s Worth It for Growth

BOF has 8.7M shares outstanding per the income statement, with 9.6M issued as of March 31 (up from 8.4M), showing dilution from the ATM program. There are no preferred shares, which keeps things simple, and SBC at $400K is reasonable for a small company growing fast. Insider ownership was noted at 12%—I’d double-check, but it seems solid. The Kaufman Convertible Note could add 4.5M shares if converted at $0.7582/share, plus 1.5M from warrants, and Eagle Vision Notes add 518K more—over 6.5M total. That’s a lot on a 9.6M share base, but with revenue growing 110%, I think shareholders will be okay with it. Growth like this needs funding, and this is a fair price to pay.

Strategic Updates: BOF Is Building Something Big

BOF’s Peru facility is a major advantage—$40M yearly capacity and tariff benefits (avoiding 30% U.S. tariffs on Chinese imports) help them beat competitors. Their warehouse club deal with likely Costco and private-label wins at presumably Walmart are driving massive growth, while the MicroDried partnership could add $5-6M in yearly sales. They’re launching a direct-to-consumer (DTC) channel with a new Chief Brand Officer and are in talks to replace China-sourced private-label products at retailers. Q1 had some challenges—low factory use, a delayed warehouse club order, and one-time costs ($160K air freight, $200K raw materials)—but Q2’s 50%+ factory use improvement is exciting, and management expects this to keep getting better. They’re aiming to be debt-free by year-end 2025, and with this kind of growth, I believe they can do it.

Accounts Receivable with Likely Costco and Presumably Walmart: Growth with a Catch

BOF’s AR surged to $1.5M in Q1 2025 from $418K at the end of 2024, a $1.1M increase, largely due to sales to likely Costco and presumably Walmart. This reflects a positive trend in sales growth, aligning with their 110% revenue increase to $3.2M and nearly $3M in H1 sales from the warehouse club partnership. Selling to established retailers like likely Costco and presumably Walmart indicates strong demand, and the low risk of non-payment from such reputable clients is reassuring. However, these companies are known for slow payment cycles, often 60-90 days, which contributed to $1M of BOF’s $1.9M Q1 cash burn. With $2.4M in cash, a 0.68 current ratio, and $875K in debt due by June 30, 2025, these delayed payments strain liquidity. While the sales growth is encouraging, BOF needs to accelerate collections—perhaps by negotiating shorter terms or exploring invoice factoring—and diversify their customer base to include faster-paying clients to better manage cash flow.

Debt Situation: Interest Is High, But Growth Can Handle It

BOF has $6.275M in related party debt: $3.4M Kaufman Convertible Note (12%, due December 2025), $875K left on the Kaufman Promissory Note (15%, due June 30, 2025, after a $325K repayment), and $1.675M Eagle Vision Notes (15%, due December 2025). Interest costs are heavy at $659K yearly ($408K + $251K), or $330K for the second half of 2025, and the $241K Q1 expense hurts with 17% margins. They need $891K by June 30 ($875K + $16K interest) and $5.4M by December if the Kaufman note isn’t converted. With $2.4M in cash and $1.9M burn, it’s a challenge, but I’m optimistic: converting the Kaufman note to equity (4.5M shares) could clear $3.4M, leaving $2.5M to pay off.

Overall: A Company with Big Potential

BOF is growing fast—110% revenue increase, strong partnerships with Costco and Walmart, and a Peru facility giving them a tariff advantage that’s hard to match. The MicroDried deal, DTC launch, and Q2’s factory use gains (with more expected) should push margins past 17% toward 20%+, bringing them closer to profitability. The $1.9M cash burn, 0.68 current ratio, and $6.275M in debt are challenges—$875K due in 44 days (as of May 16, 2025) is a hurdle, and slow AR collections need attention. Dilution risks (6.5M+ shares) exist, but growth this strong makes it worth it. BOF can reach their debt-free goal with good planning: convert debt to equity, keep revenue growing, and manage cash flow better.

This commentary is my personal analysis, written to track companies I’m interested in, and I’m sharing it as of the date noted. It is not financial advice, and I’m not recommending buying, selling, or holding any stock. I may or may not own shares in the company at this time, and readers should do their own research before making any investment decisions.