Borealis Foods Faces Going Concern Doubt Amid Mounting Debt, Cash Crunch

Ticker: BRLSW · Form: 10-Q · Filed: Nov 19, 2025 · CIK: 1852973

Sentiment: bearish

Topics: Going Concern, Liquidity Crisis, Debt Burden, Net Loss, Food Technology, Emerging Growth Company, SEC Filing

Related Tickers: BRLSW, BRLS

TL;DR

**Borealis Foods is on life support; avoid this stock unless you're a high-risk gambler.**

AI Summary

Borealis Foods Inc. (BRLSW) reported a net loss of $3,780,821 for the three months ended September 30, 2025, an improvement from the $4,832,169 net loss in the same period of 2024. For the nine months ended September 30, 2025, the net loss was $12,568,535, significantly better than the $19,561,531 loss in the prior year. Revenue for the three months decreased to $7,103,749 from $7,687,899 year-over-year, while nine-month revenue slightly increased to $21,137,689 from $20,908,612. The company's cash position drastically declined to $128,869 as of September 30, 2025, from $652,965 at December 31, 2024. Current liabilities surged to $64,119,395 from $25,406,490, largely due to a significant increase in 'Due to related parties' to $19,134,580 and 'Notes payable, current portion' to $20,166,932. The independent registered public accounting firm has expressed substantial doubt about Borealis Foods' ability to continue as a going concern, citing recurring losses, negative operating cash flows, and substantial near-term debt maturities.

Why It Matters

This filing reveals Borealis Foods is in a precarious financial state, with its auditor expressing 'substantial doubt' about its ability to continue as a going concern. For investors, this signals extreme risk, as the company's cash reserves are critically low at $128,869 and current liabilities are over six times current assets. Employees face uncertainty regarding job security, while customers might question the long-term viability of the company's product supply. In the competitive food technology sector, Borealis's inability to secure additional financing or manage its debt burden could lead to market share erosion or even bankruptcy, impacting the broader market's perception of emerging growth companies in this space.

Risk Assessment

Risk Level: high — The risk level is high due to the independent registered public accounting firm expressing 'substantial doubt' about Borealis Foods' ability to continue as a going concern. This is evidenced by recurring losses from operations, negative cash flows from operating activities, and a critically low cash balance of $128,869 as of September 30, 2025. Furthermore, current liabilities of $64,119,395 significantly exceed current assets of $9,470,623, indicating severe liquidity issues.

Analyst Insight

Investors should exercise extreme caution and consider divesting any existing positions in BRLSW. The 'going concern' warning, coupled with a rapidly deteriorating balance sheet and substantial debt maturities, suggests a high probability of further share price decline or even insolvency. New investors should avoid initiating a position until the company demonstrates a clear path to financial stability and resolves its liquidity crisis.

Financial Highlights

debt To Equity
N/A
revenue
$21,137,689
operating Margin
N/A
total Assets
N/A
total Debt
N/A
net Income
-$12,568,535
eps
N/A
gross Margin
N/A
cash Position
$128,869
revenue Growth
0.6%

Key Numbers

Key Players & Entities

FAQ

What is the primary concern raised in Borealis Foods Inc.'s 10-Q filing?

The primary concern is the 'substantial doubt' expressed by the independent registered public accounting firm regarding Borealis Foods Inc.'s ability to continue as a going concern. This is due to recurring losses, negative cash flows from operations, and a critically low cash balance of $128,869 as of September 30, 2025.

How did Borealis Foods Inc.'s revenue perform in the latest quarter?

For the three months ended September 30, 2025, Borealis Foods Inc.'s net revenue decreased to $7,103,749, down from $7,687,899 in the same period of 2024. However, for the nine months, net revenue slightly increased to $21,137,689 from $20,908,612.

What is Borealis Foods Inc.'s current cash position?

As of September 30, 2025, Borealis Foods Inc. reported a cash balance of $128,869. This represents a significant decrease from $652,965 at December 31, 2024, highlighting a severe cash crunch.

What are the key changes in Borealis Foods Inc.'s liabilities?

Borealis Foods Inc.'s total current liabilities surged to $64,119,395 as of September 30, 2025, from $25,406,490 at December 31, 2024. This increase is primarily driven by 'Due to related parties' rising to $19,134,580 and 'Notes payable, current portion' increasing to $20,166,932.

What is the net loss reported by Borealis Foods Inc. for the nine months ended September 30, 2025?

Borealis Foods Inc. reported a net loss of $12,568,535 for the nine months ended September 30, 2025. This is an improvement compared to the $19,561,531 net loss reported for the same period in 2024.

What strategic initiatives has Borealis Foods Inc. implemented to improve performance?

Management has implemented several strategic and operational initiatives, including significantly reducing sales, general, and administrative expenses by 40% year-over-year for the three months ended September 30, 2025, driven by the conclusion of one-time transaction-related costs and disciplined discretionary spending reductions.

What are the risks associated with Borealis Foods Inc.'s debt burden?

Borealis Foods Inc. has a substantial debt burden, with a significant portion maturing soon and requiring repayment or refinancing. This, combined with the increase in 'Notes payable, current portion' to $20,166,932, poses a material adverse effect on the company's financial condition and ability to continue operations.

How does Borealis Foods Inc.'s gross profit compare year-over-year?

For the three months ended September 30, 2025, Borealis Foods Inc.'s gross profit was $1,040,558, down from $1,273,270 in the same period of 2024. However, for the nine months, gross profit increased to $2,455,245 from $1,938,166.

What is the significance of the 'Reverse Recapitalization' for Borealis Foods Inc.?

The Reverse Recapitalization, consummated on February 7, 2024, involved Borealis Foods Inc. (formerly Legacy Borealis) combining with Oxus Acquisition Corp. and Newco. This transaction resulted in Borealis Foods Inc. becoming the surviving entity, a public company, and is a key event in its corporate history.

What is the impact of material weaknesses in internal control on Borealis Foods Inc.?

Borealis Foods Inc. has identified material weaknesses in its internal control over financial reporting. If these are not effectively maintained, the company may not be able to accurately report financial results or prevent fraud, which could harm its business and the trading price of its Common Shares.

Risk Factors

Industry Context

Borealis Foods operates as a food technology integrator focused on addressing global food security through functional foods. The company develops and commercializes tasty, affordable, and sustainable ready-to-eat meals. The industry is characterized by a growing demand for convenient, healthy, and sustainable food options, but also faces challenges related to supply chain stability, regulatory compliance, and intense competition.

Regulatory Implications

As a food technology company, Borealis Foods is subject to stringent food safety regulations (e.g., BRC AA+ rating mentioned for its manufacturing facility). Compliance with these standards is critical for market access and consumer trust. Additionally, any changes in trade policies or tariffs, particularly between the US and Canada/Mexico, could impact its international sales and profitability.

What Investors Should Do

  1. Monitor financing activities closely.
  2. Scrutinize related-party transactions and debt.
  3. Assess the impact of revenue decline and cost management.
  4. Evaluate the severity of internal control weaknesses.

Glossary

Going Concern
The assumption that a company will continue to operate for the foreseeable future, typically at least 12 months from the reporting date. If there is substantial doubt about this, it must be disclosed. (The independent auditor has expressed substantial doubt about Borealis Foods' ability to continue as a going concern, highlighting significant financial distress.)
Reverse Recapitalization
A transaction where a private company becomes public by merging with a publicly traded shell company (like an SPAC), effectively reversing the typical SPAC merger process. (This describes the significant corporate restructuring event that occurred on February 7, 2024, which brought Borealis Foods public.)
US GAAP
United States Generally Accepted Accounting Principles, the common set of accounting standards and procedures used in the U.S. (The financial statements are prepared in accordance with US GAAP, ensuring a standard framework for financial reporting.)
Material Weaknesses
A deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. (The identification of material weaknesses poses a significant risk to the accuracy of financial reporting and investor confidence.)
Intercompany Balances
Transactions or balances between different entities within the same corporate group, which are eliminated upon consolidation to present a single set of financial statements for the group. (These are eliminated in the consolidated financial statements, ensuring that only external transactions are reflected.)

Year-Over-Year Comparison

Compared to the prior year, Borealis Foods has shown an improvement in its net loss for both the three-month period (from $4.8M to $3.8M) and the nine-month period (from $19.6M to $12.6M). However, revenue for the three months declined year-over-year, while nine-month revenue saw only a marginal increase. The most concerning trend is the drastic deterioration of liquidity, with cash falling sharply and current liabilities more than doubling, driven by increases in related-party debt and short-term notes payable. New risks related to internal control weaknesses and customer concentration have also been highlighted.

Filing Stats: 4,471 words · 18 min read · ~15 pages · Grade level 18 · Accepted 2025-11-19 17:05:21

Filing Documents

Forward-looking statements involve risks and uncertainties

Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following: our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern; our limited operating history makes it difficult to evaluate our business and prospects; our potential insolvency or inability to pay our debts would have a material adverse effect on our business, financial condition, results of operations and cash flow; we may be unable to execute our business plan or maintain our competitive position and high-level customer satisfaction if we fail to maintain adequate operational and financial resources or fail to obtain additional financing, particularly if we continue to grow rapidly; we have a substantial debt burden, a significant portion of which matures soon and requires repayment or refinancing; our management team has limited experience managing a public company; we are an early stage and emerging growth company and, as such, we are subject to all the risks associated with early stage and emerging growth companies; we have identified material weaknesses in our internal control over financial reporting; if we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, investors could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our Common Shares; a significant portion of our revenue is concentrated with a limited number of customers; adverse climate conditions may have an adverse effect on our business. We may take various actions to mitigate our business risks associated with climate change, which may require us to incur substantial costs and ma

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 1 Item 1. Unaudited Condensed Consolidated Financial Statements 1 Unaudited Condensed Consolidated Balance Sheets 1 Unaudited Condensed Consolidated Statements of Operations 2 Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit) 3 Unaudited Condensed Consolidated Statements of Cash Flows 4 Notes to the Unaudited Condensed Consolidated Financial Statements 5 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 18 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 26 Item 4.

Controls and Procedures

Controls and Procedures 27

OTHER INFORMATION

PART II. OTHER INFORMATION 29 Item 1.

Legal Proceedings

Legal Proceedings 29 Item 1A.

Risk Factors

Risk Factors 29 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30 Item 3. Defaults Upon Senior Securities 30 Item 4. Mine Safety Disclosures 30 Item 5. Other Information 30 Item 6. Exhibits 31

SIGNATURES

SIGNATURES 32 i Borealis Foods, Inc. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets September 30, 2025 December 31, 2024 (Audited) Assets Current Assets: Cash $ 128,869 $ 652,965 Accounts receivable, net of allowance for credit losses of $ 280,000 and $ 247,653 as of September 30, 2025 and December 31, 2024, respectively 2,574,783 1,965,748 Inventories, net 5,997,898 8,046,259 Prepaid expenses and other current assets 769,073 1,134,611 Total current assets 9,470,623 11,799,583 Property, plant and equipment, net 44,325,607 45,736,326 Intangible assets 383,710 319,307 Right - of-use asset, net 30,615 63,826 Goodwill 1,917,356 1,917,356 Other non-current assets 169,685 169,685 Total assets $ 56,297,596 $ 60,006,083 Liabilities and Shareholders' (deficit) Current liabilities: Accounts payable and accrued expenses $ 14,030,501 $ 10,802,524 Due to related parties 19,134,580 7,825,792 Line of credit, current portion 10,149,641 727,279 Notes payable, current portion, net of capitalized loan costs 20,166,932 5,456,934 Operating lease payable, current portion 31,710 55,116 Finance leases payable, current portion 606,031 538,845 Total current liabilities 64,119,395 25,406,490 Due to related parties, net of current portion - 7,601,661 Line of credit, net of current portion - 7,600,000 Convertible notes payable, net of current portion 3,000,000 3,000,000 Notes payable, net of current portion - 14,478,051 Operating lease payable, net of current portion - 12,015 Finance leases payable, net of current portion 666,856 1,143,829 Deferred tax liability 1,459,923 1,459,923 Total liabilities 69,246,174 60,701,969 Shareholders' (deficit) Common Stock, no par value - - Additional paid-in capital 90,412,531 90,096,688 Accumulated deficit ( 103,361,109 ) ( 90,792,574 ) Total shareholders' (deficit) ( 12,948,578 ) ( 695,886 ) Total li

Financial Statements

Financial Statements 1. Description of Business and Summary of Significant Accounting Policies Overview The accompanying unaudited condensed consolidated financial statements include the financial statements of Borealis Foods Inc. (" Borealis "), and its subsidiaries: Palmetto Gourmet Foods (Canada) Inc., (" PGF Canada "), Palmetto Gourmet Foods, Inc. (" PGF "), PGF Real Estate I, Inc. (" PGF RE I "), PGF Real Estate II, Inc. (" PGF RE II "), and Borealis IP (" Borealis IP ") (collectively, the " Company "). Borealis is a food technology integrator with a mission to address global food security challenges through the development and commercialization of tasty, affordable and sustainable functional foods. Borealis has developed a range of high-quality, affordable, sustainable, and nutritious premium, ready-to-eat meals sold in the United States, Canada, Central America, South America and Europe. PGF Canada is a holding company, holding the shares of PGF. PGF is a food manufacturing company with a BRC AA+ rated food grade facility. PGF RE I and PGF RE II are holding companies that rent their fixed assets to PGF. Borealis IP holds the intellectual property of the Company. Intercompany balances and transactions have been eliminated in consolidation. Reverse Recapitalization Transaction On February 23, 2023, Borealis Foods Inc., a corporation incorporated under the laws of Canada (" Legacy Borealis "), entered into a Business Combination Agreement (as amended, amended and restated, supplemented, or otherwise modified from time to time, the "Business Combination Agreement") with Oxus Acquisition Corp. (" Oxus ") and 1000397116 Ontario Inc., an Ontario corporation and a wholly owned subsidiary of Oxus (" Newco "). On February 7, 2024, Legacy Borealis, Oxus, and Newco consummated the transactions (collectively, the " Reverse Recapitalization ") contemplated by the Business Combination Agreement by means of a statutory arrangement under the Canada Business Cor

Financial Statements

Financial Statements 1. Description of Business and Summary of Significant Accounting Policies (continued) Going Concern (continued) The Company has not raised external capital in the three quarters of 2025 but is actively evaluating financing alternatives, including debt and equity issuances, to support ongoing operations and strengthen the balance sheet. Management is also aligning inventory and production levels with committed demand from stable institutional customers, which is expected to enhance working capital efficiency and cash flow conversion through the remainder of the year. While these measures represent meaningful progress toward operational stability, the Company's ability to continue as a going concern remains subject to successful execution of its strategic plan and securing additional financing, if needed. Accordingly, substantial doubt remains about the Company's ability to continue as a going concern within one year from the date these unaudited condensed consolidated financial statements are issued. We have included additional disclosures in MD&A under "Liquidity and Capital Resources," and in Note 11, "Subsequent Events," regarding related-party advances and compensation deferral subsequent to quarter-end Basis of Presentation The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (" US GAAP ") and the Company's functional currency is the U.S. Dollar. We have condensed certain categories of information in our unaudited condensed consolidated financial statements to enhance the readability and understanding of those statements by making them more succinct. As a result, certain footnote disclosures we normally include in our annual consolidated financial statements have been omitted but remain prepared in accordance with US GAAP and the rules and regulations of the SEC (" Securities and Exchange Commission "). For further infor

Financial Statements

Financial Statements 1. Description of Business and Summary of Significant Accounting Policies (continued) Property, Plant and Equipment, net Property, plant, and equipment are recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets or, where applicable, based on actual machine hours utilized. Management has opted to depreciate the manufacturing lines and related assets using the machine hours method, as it provides a more accurate reflection of the actual utilization and wear of these assets. This approach ensures that the depreciation expense aligns more closely with the assets' usage patterns, thereby improving the matching of costs with related revenues. This change in depreciation method was a change in estimate effected by a change in accounting principle and accordingly was acc

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