10-K: Borealis Foods Reports 8.7% Revenue Growth Amidst Financial Restructuring

Borealis Foods Inc. announced an 8.7% increase in net revenue to $30.08 million for the fiscal year ended December 31, 2025, alongside significant cost reductions, though the company continues to face substantial debt and a going concern warning.

Summary

• Borealis Foods Inc. reported net revenue of $30.08 million for the fiscal year ended December 31, 2025, an increase of 8.7% from the previous year.
• Gross profit improved by 60% to $3.51 million, with gross margin reaching 11.7% for the full year, and 15.0% in the fourth quarter.
• Total selling, general, and administrative (SG&A) expenses decreased by 35.6% to $14.55 million, reflecting structural cost reductions.
• The company reported a net loss of $18.98 million for the fiscal year.
• Borealis Foods has a working capital deficit of approximately $61.8 million as of December 31, 2025.
• The company's independent registered public accounting firm has expressed substantial doubt about its ability to continue as a going concern.
• A significant portion of shareholder debt ($33.3 million) may convert to common shares if equity financings of at least $70 million are not completed by July 1, 2026, which could result in substantial dilution.
• The company refinanced its credit facility with a new $17.0 million term loan from Oxus Capital PTE Ltd., a related party.
• Borealis Foods is not currently in compliance with certain Nasdaq listing requirements and has until June 29, 2026, to regain compliance.
• The company identified material weaknesses in its internal control over financial reporting, primarily related to insufficient accounting resources and inadequate controls over related party transactions and debt covenant compliance.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to the significant going concern warning, material weaknesses in internal controls, and the risk of substantial dilution, despite some positive revenue growth and cost-saving measures.

Positives

• Net revenue increased by 8.7% to $30.08 million for the fiscal year ended December 31, 2025.
• Gross profit improved by 60.4% to $3.51 million, with gross margin reaching 11.7% for the full year and 15.0% in the fourth quarter.
• Total SG&A expenses decreased by 35.6% to $14.55 million, indicating successful cost reduction efforts.
• The company has a diversified customer base, with its two largest customers representing approximately 35% of net revenues in 2025, down from 57% in 2023.
• The refinancing of the FrontWell credit facility with Oxus Capital PTE Ltd. extends the primary debt maturity to April 2031.
• The company's manufacturing facility in Saluda, South Carolina, has significant installed capacity.
• Management is actively pursuing financing initiatives to address going concern issues.

Negatives

• The company has a working capital deficit of approximately $61.8 million as of December 31, 2025.
• The company reported a net loss of $18.98 million for the fiscal year ended December 31, 2025.
• The independent registered public accounting firm has expressed substantial doubt about the company's ability to continue as a going concern.
• Approximately $33.3 million of shareholder debt may automatically convert into common shares if equity financings of at least $70 million are not completed by July 1, 2026, leading to substantial dilution.
• Oxus Capital has the option to convert approximately $2.0 million in accrued interest into common shares, further diluting existing shareholders.
• The company is not currently in compliance with certain Nasdaq listing requirements, with a deadline of June 29, 2026, to regain compliance.
• Material weaknesses in internal control over financial reporting have been identified, including insufficient accounting resources and inadequate controls over related party transactions and debt covenant compliance.
• The company has minimal cash on hand ($0.06 million as of December 31, 2025).

Risks

• Substantial doubt about the company's ability to continue as a going concern due to recurring losses, negative cash flows, and a highly leveraged capital structure.
• The company's senior secured debt is held by a related party (Oxus Capital PTE Ltd.), creating potential conflicts of interest and limiting financial flexibility.
• The potential for substantial dilution to existing shareholders if $33.3 million in shareholder debt converts to common shares due to failure to complete equity financings.
• Non-compliance with Nasdaq listing requirements could lead to delisting, adversely affecting liquidity and the ability to raise capital.
• Material weaknesses in internal controls could lead to inaccurate financial reporting or fraud, eroding shareholder confidence.
• Dependence on suppliers for key ingredients, with potential disruptions affecting operating results.
• Volatility in ingredient and packaging costs due to unpredictable market conditions, including geopolitical events.
• Adverse climate conditions could impact agricultural productivity and the cost/availability of raw materials.
• Geopolitical conflicts, such as the 2026 Iran war, have disrupted global energy and commodity markets, increasing costs and potentially reducing consumer demand.
• The company's limited operating history makes it difficult to evaluate its business and prospects.
• The management team has limited experience managing a public company.
• Inability to raise adequate capital in the future could affect the company's ability to continue as a going concern.

Future Outlook

The company is focused on scaling production, normalizing vendor payment terms, and securing additional financing to achieve financial sustainability. Management believes its operational progress, institutional demand pipeline, and asset base provide a credible pathway to financial stability, but acknowledges that plans are not fully within its control and their successful implementation is not assured.

Management Comments

• The net loss of $18.98 million for fiscal 2025 reflects the lingering burden of a capital structure shaped by the 2024 Reverse Recapitalization, not operational underperformance.
• Management is actively engaged in refinancing discussions and financing initiatives designed to resolve this mismatch and fully unlock the earnings power of our improving operations.
• The company continued to execute its strategic repositioning and channel diversification in 2025, with emphasis on institutional and food service growth, gross margin expansion, and structural cost reduction.
• Management believes the trajectory of our operating results including 8.7% net revenue growth, 60.4% gross profit improvement, and 35.6% core SG&A reduction in 2025 demonstrates an operating business that is approaching the inflection point at which self-funded growth becomes achievable.

Industry Context

StockSavvy.ai notes that Borealis Foods operates in the highly competitive global instant noodle market, estimated to be over $60 billion. The company's strategy to differentiate through high-protein, plant-based offerings and expansion into food service channels aligns with broader consumer trends towards healthier and convenient meal options. However, the company faces significant challenges from larger competitors with greater resources.

Corporate Governance

Legal Proceedings

• The company is involved in various pending and threatened litigation matters in the ordinary course of business. Management does not believe the final resolution of these proceedings will have a material effect on the company's financial position or results of operations.

Related Party Transactions

• On April 27, 2026, the company entered into a $17.0 million term loan credit agreement with Oxus Capital PTE Ltd., a major shareholder and former SPAC sponsor, to repay the FrontWell credit facility.
• Oxus Capital has the option to convert Year 1 accrued interest (approximately $2.0 million) into common equity.
• Approximately $33.3 million in shareholder debt (advanced by Oxus Capital, Reza Soltanzadeh, and Barthelemy Helg) may convert into common shares if equity financings of at least $70 million are not completed by July 1, 2026.
• During fiscal year 2025, the company issued promissory notes totaling approximately $11.4 million to entities controlled by its CEO and Non-Executive Chairman, and $3.5 million to Oxus Capital PTE Ltd., without adequate evaluation of debt incurrence restrictions.
• In November 2025, Mr. Helg and Mr. Soltanzadeh provided 500,000 common shares each as collateral for a promissory note to EarlyBirdCapital, Inc. These shares were transferred to EarlyBirdCapital upon an alleged default, and the company intends to make Mr. Helg and Mr. Soltanzadeh whole by issuing replacement shares, which would be dilutive.

Stakeholder Impact

• Existing shareholders face substantial dilution risk if debt converts to equity due to failure to secure new financing.
• The company's going concern status and potential delisting from Nasdaq could negatively impact investor confidence and the market price of its securities.
• The appointment of lender-designated directors may create conflicts of interest, potentially impacting decisions that affect all shareholders.
• The company's ability to manage growth and maintain customer satisfaction could be impacted by its financial resources.

Next Steps

• Regain compliance with Nasdaq listing requirements by June 29, 2026.
• Complete equity financings of at least $70 million by July 1, 2026, to avoid substantial dilution from debt conversion.
• Continue to reduce SG&A expenses and grow institutional food service channels.
• Implement remediation plans for material weaknesses in internal controls.

Key Dates

Recommendation

The company's severe going concern issues, material control weaknesses, significant dilution risk, and potential Nasdaq delisting outweigh the reported revenue growth. Investors should consider selling their holdings due to the high financial and operational risks.

Keywords

Borealis Foods, Form 10-K, Annual Report, Revenue Growth, Net Loss, Going Concern, Debt Refinancing, Dilution, Nasdaq Compliance, Internal Controls, Food Industry, Ramen Noodles, Plant-Based Protein