10-K/A: Borealis Foods Files Amended 10-K Amid Going Concern Doubts

Borealis Foods Inc. has filed an amended annual report (10-K/A) addressing SEC comments, but the filing highlights significant going concern issues and substantial net losses.

Summary

• This filing is an amendment (Amendment No. 2) to Borealis Foods Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
• The amendment addresses specific comments from the SEC regarding the independent auditor's report, inclusion of the prior year's auditor report, and proper restatement procedures.
• The company continues to face substantial doubt about its ability to continue as a going concern due to significant debt coming due, negative cash flow, and a substantial net loss.
• Management plans to mitigate these concerns include expense reductions, growth in production, debt-to-equity conversion, and pursuing additional financing.
• Subsequent to year-end, the company refinanced its senior credit facility with a new agreement from Oxus Capital PTE Ltd., a related party, providing a term loan of up to $17,000,000.
• The company is also obligated to raise at least $70,000,000 in additional equity by June 30, 2026, or outstanding convertible notes held by Oxus Capital may convert to equity.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to the substantial doubt about the company's ability to continue as a going concern, significant net losses, and a severely negative working capital position.

Positives

• The company has implemented expense reductions, with selling, general, and administrative expenses declining by approximately $8,047,000 (35.6%) in 2025.
• A new credit agreement with Oxus Capital PTE Ltd. provides a $17,000,000 term loan facility, which was used to repay the previous senior credit facility and eliminate the August 2026 balloon maturity.
• Management is actively pursuing additional debt or equity financing to provide working capital.
• The company's revenue increased to $30,079,571 in 2025 from $27,668,894 in 2024.

Negatives

• The company incurred a net loss of $18,978,618 for the year ended December 31, 2025, compared to a net loss of $25,327,198 in 2024.
• At December 31, 2025, cash and cash equivalents were approximately $63,859, and the company had negative working capital of approximately $61,762,000.
• There is substantial doubt about the company's ability to continue as a going concern within one year after the issuance of these financial statements.
• Goodwill and a trademark were fully impaired in Q4 2025, resulting in impairment charges of $1,917,356 and $90,082, respectively.
• Accounts payable and accrued expenses increased significantly to $16,046,886 in 2025 from $11,529,803 in 2024.
• Due to related parties increased substantially to $27,295,885 in 2025 from $7,825,792 in 2024.

Risks

• Substantial doubt exists regarding the company's ability to continue as a going concern due to recurring losses, negative cash flow, and significant debt maturities.
• The company is obligated to raise at least $70,000,000 in additional equity by June 30, 2026, or convertible notes held by Oxus Capital may convert to equity.
• The company's reliance on two customers for approximately 35% of net revenues in 2025 and three customers for 51% of accounts receivable presents a concentration risk.
• Purchases from 10 vendors accounted for 54% of purchases in 2025, indicating a potential supply chain risk.
• The company has a significant amount of debt coming due within the next 12 months.
• The company's ability to execute its plans to mitigate going concern issues is not fully within its control and cannot be assessed as probable of being effectively implemented.

Future Outlook

The company's future outlook is heavily dependent on its ability to secure additional financing and execute its turnaround plans, as substantial doubt exists regarding its going concern status. Management plans include continued expense reduction, production growth, debt-to-equity conversion, and pursuing additional debt or equity financing.

Management Comments

• Management has developed plans intended to mitigate the conditions that raise substantial doubt, including continued reduction of selling, general, and administrative expenses, growth in production volumes, conversion of a portion of related party debt to equity, and pursuit of additional debt or equity financing.
• Management believes that research and development and innovation are core elements of their business strategy and represent a critical competitive advantage, expecting continued investment to capture a larger share of consumers through additional revenue streams.

Industry Context

StockSavvy.ai notes that the food technology sector is competitive, with companies focusing on sustainability and affordability. Borealis Foods' focus on ready-to-eat meals addresses convenience trends, but the company's financial struggles highlight the challenges of scaling production and managing costs in this industry.

Comparison to Industry Standards

• The company's net loss of $18.98 million on revenues of $30.08 million for 2025 indicates a negative net profit margin of approximately -63%, which is significantly worse than typical industry standards for established food manufacturers.
• The negative working capital of $61.76 million is a critical concern, far exceeding typical industry benchmarks where positive working capital is essential for operational liquidity.
• The company's reliance on related party financing, particularly the $17 million term loan from Oxus Capital, suggests difficulty in accessing traditional credit markets, which are generally more favorable for companies with stronger financial health.
• The significant impairment of goodwill ($1.92 million) and a trademark ($0.09 million) indicates potential overvaluation of past acquisitions or a decline in the value of intangible assets, which is not a standard positive indicator in the industry.

Legal Proceedings

• The company is involved in legal proceedings in the normal course of business, but management does not believe the final resolution will have a material effect on the consolidated financial position or results of operations.

Related Party Transactions

• The company entered into a new senior secured credit agreement with Oxus Capital PTE Ltd., a major shareholder, for a term loan facility of up to $17,000,000.
• Oxus Capital PTE Ltd. is entitled to appoint two members to the Company's Board of Directors in connection with the Oxus Credit Agreement.
• The company has outstanding notes payable to a shareholder totaling $13,285,792 as of December 31, 2025, bearing interest at 10% annually.
• Advances from the Chairman of the Board and Chief Executive Officer totaled $2,050,000 and $282,500, respectively, between January 1, 2026, and May 29, 2026.
• The Chief Executive Officer deferred approximately $208,000 in compensation during the period from January 1, 2026, to May 29, 2026.

Stakeholder Impact

• Shareholders face continued dilution risk if the company is forced to issue equity at potentially unfavorable terms to meet financing obligations, or if convertible notes convert.
• Creditors, particularly those with existing debt, face increased risk due to the company's going concern issues and reliance on related party financing.
• Employees may face uncertainty regarding job security given the company's precarious financial situation and ongoing restructuring efforts.
• Suppliers may face extended payment terms or increased scrutiny due to the company's liquidity challenges.

Next Steps

• The company must raise at least $70,000,000 in additional equity by June 30, 2026, or face potential conversion of convertible notes.
• Management plans to continue reducing SG&A expenses and pursue further financing.
• The company will continue to operate under the new senior secured credit agreement with Oxus Capital PTE Ltd.

Key Dates

Recommendation

The filing indicates severe financial distress, including substantial doubt about the company's ability to continue as a going concern, significant net losses, and negative working capital. While management has plans and has secured some refinancing, the immediate need for a large equity raise and the ongoing operational challenges present a high level of risk for investors.

Keywords

Borealis Foods, Annual Report, 10-K/A, Financial Statements, Going Concern, Net Loss, Debt Refinancing, Equity Financing