Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 4 – Fair Value of Financial Instruments

Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company has cash, notes receivable, derivative liabilities and debts that must be measured under the fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

BRANCHOUT FOOD INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of September 30, 2024 and December 31, 2023:

	Fair Value Measurements at September 30, 2024
	Level 1		Level 2			Level 3
Assets
Cash	$	1,069,193	$	-		$	-
Right-of-use-assets		-		-			1,983,629
Notes receivable		-		359,982			-
Total assets		1,069,193		359,982			1,983,629
Liabilities
Convertible notes payable, net of $83,371 of discounts		-		-			1,916,629
Notes payable		-		409,398			-
Notes payable, related parties, net of $109,655 of discounts		-		2,650,345			-
Lease liabilities		-		-			2,047,718
Total liabilities		-		3,059,743			3,964,347
		1,069,193		(2,699,761	)		(1,980,718	)

	Fair Value Measurements at December 31, 2023
	Level 1		Level 2		Level 3
Assets
Cash	$	657,789	$	-	$	-
Right-of-use-asset		-		-		147,228
Notes receivable		-		384,628		-
Total assets		657,789		384,628		147,228
Liabilities
Notes payable		-		234,500		-
Lease liability		-		-		131,930
Total liabilities		-		234,500		131,930
		657,789		150,128		15,298

There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the nine months ended September 30, 2024, or the year ended December 31, 2023.