What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-14 compared with 2024-08-14 · 168 added, 151 removed, 428 unchanged (43% of the section changed)

3 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

2024 December 31, 2023

1 unchanged sentence

Cash $ 721,542 $ 7,615,630

Accounts receivable, net of allowance for credit losses of $ 283,159 as of June 30, 2024 and $ 224,433 as of December 31, 2023

Accounts receivable, net of allowance for credit losses of $ 320,650 as of September 30, 2024 and $ 224,433 as of December 31, 2023

2,907,790 1,775,756

44 unchanged sentences

$ 61,911,526 $ 65,786,342

See accompanying notes.

See accompanying notes to the unaudited condensed consolidated financial statements.

Borealis Foods Inc.

1 unchanged sentence

Condensed Consolidated Statements of Operations (Unaudited)

For the Three Months Ended For the Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

For the Three Months Ended For the Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Gross sales $ 8,075,788 $ 8,264,745 $ 22,036,285 $ 23,870,009

2 unchanged sentences

Cost of goods sold 5,953,089 7,205,527 17,109,095 21,449,469

Raw materials 3,046,816 4,782,060 7,817,284 10,440,161

Labor and overhead 1,460,918 1,724,578 3,338,722 3,803,781

Depreciation 461,540 996,625 1,861,351 2,938,098

1 unchanged sentence

Gross profit (loss) 1,273,270 ( 476,799 ) 1,938,166 ( 1,860,357 )

Selling, general and administrative expenses 5,611,669 5,409,066 12,827,257 9,628,697

Sales & marketing 1,123,460 312,289 5,073,810 1,677,316

Business development 1,306,589 196,243 2,475,764 435,015

Training 477,752 651,500 1,364,149 2,130,207

General & administrative expenses 1,986,517 2,786,155 8,807,852 9,332,345

Total sales, general & administrative expenses 4,894,318 3,946,187 17,721,575 13,574,883

Loss from operations ( 3,621,048 ) ( 4,422,986 ) ( 15,783,409 ) ( 15,435,240 )

Other income expense

South Carolina grant revenue — — — 158,995

Gain on foreign exchange rates 4,506 295 6,133 295

Other income (expense) ( 2,765 ) 4,298 3,368 163,588

Interest expense ( 1,207,524 ) ( 2,166,413 ) ( 3,766,542 ) ( 5,535,932 )

9 unchanged sentences

Diluted 21,378,890 10,731,583 19,951,016 10,731,583

See accompanying notes

See accompanying notes to the unaudited condensed consolidated financial statements.

Borealis Foods Inc.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)

Three and Six Months Ended June 30, 2023

Class A Common Shares Class B Common Shares Class C Common Shares Class D Common Shares Additional Paid-In Capital Accumulated Deficit Total Shareholders’ Deficit

Number of Shares Common Shares Number of Shares Common Shares Number of Shares Common Shares Number of Shares Common Shares

Three and Nine Months Ended September 30, 2023

Class A Common Shares Class B Common Shares Class C Common Shares Additional Paid-In Capital Accumulated Deficit Total Shareholders’ Deficit

Number of Shares Common Shares Number of Shares Common Shares Number of Shares Common Shares

Balance at January 1, 2023 100,000,000 $ — 56,008,749 $ — 6,345,000 $ — $ 42,625,786 $ ( 37,986,129 ) $ 4,639,657

5 unchanged sentences

Balance at June 30, 2023 100,000,000 — 56,008,749 — 6,345,000 — 42,917,776 ( 52,223,704 ) ( 9,305,928 )

See accompanying notes.

Expense related to stock options (Note 8) — — — — — — 100,151 — 100,151

Marketing representative issued equity (Note 1) — — 1,109,205 — — — 1,000,000 — 1,000,000

Net loss — — — — — — — ( 6,585,101 ) ( 6,585,101 )

Balance at September 30, 2023 100,000,000 $ — 57,117,954 $ — 6,345,000 $ — $ 44,017,927 $ ( 58,808,805 ) $ ( 14,790,878 )

See accompanying notes to the unaudited condensed consolidated financial statements.

Borealis Foods Inc.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)

Three and Six Months Ended June 30, 2024

Class A Common Shares Class B Common Shares Class C Common Shares Class D Common Shares Additional Paid-In Capital Accumulated Deficit Total Shareholders’ Deficit

Number of Shares Common Shares Number of Shares Common Shares Number of Shares Common Shares Number of Shares Common Shares

Three and Nine Months Ended September 30, 2024

Class A Common Shares Class B Common Shares Class C Common Shares Additional Paid-In Capital Accumulated Deficit Total Shareholders’ Deficit

Number of Shares Common Shares Number of Shares Common Shares Number of Shares Common Shares

Balance at January 1, 2024 100,000,000 $ — 56,008,749 $ — 6,345,000 $ — $ 44,118,081 $ ( 65,465,376 ) $ ( 21,347,295 )

8 unchanged sentences

21,378,890 $ — — $ — — $ — $ 90,096,688 $ ( 80,194,738 ) $ 9,901,950

See accompanying notes.

Net loss — — — — — — — ( 4,832,169 ) ( 4,832,169 )

Balance at September 30, 2024 21,378,890 $ — — $ — — $ — $ 90,096,688 $ ( 85,026,907 ) $ 5,069,781

See accompanying notes to the unaudited condensed consolidated financial statements.

Borealis Foods Inc.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Six Months Ended June 30, 2024 For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2024 For the Nine Months Ended September 30, 2023

Cash Flows from Operating Activities:

21 unchanged sentences

Proceeds from convertible notes payable 3,000,000 25,000,000

Payments on convertible notes payable — ( 4,500,000 )

Payments on finance leases payable ( 415,320 ) ( 366,846 )

Payments on notes payable — ( 2,630,000 )

Borrowings on line of credit 6,500,000 —

Payments on line of credit — ( 10,630,000 )

Proceeds from notes payable — 15,000,000

Payments on loan fees — ( 607,436 )

Net cash provided by financing activities 9,084,680 23,395,718

10 unchanged sentences

Note payable accounted for as due to related party 7,601,661 —

See accompanying notes.

See accompanying notes to the unaudited condensed consolidated financial statements.

Borealis Foods Inc.

1 unchanged sentence

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

Description of Business and Summary of Significant Accounting Policies

1 unchanged sentence

(“ Borealis ”), and its subsidiaries:

Palmetto Gourmet Foods Inc.

(“PGF”), Palmetto Gourmet Foods Real Estate I, Inc.

(“PGF RE I”), Palmetto Gourmet Foods Real Estate II, Inc.

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 Inc (" Borealis IP ") (collectively, the “ Company ”).

Borealis is a food technology company that has developed a high-quality, affordable, sustainable, and nutritious range of plant-based, ready-to-eat meals, which are sold in the U.S., Canada, and Europe.

Borealis has a mission to address global food security challenges by developing highly nutritious and functional food products that are both affordable and sustainable.

Borealis’ focus on affordability and sustainability reflects its commitment to making a positive impact on both human life and the planet.

Borealis, a Canadian corporation, is a food technology integrator that focuses on the development and commercialization of functional foods.

PGF is an early growth stage food manufacturing company and has spent significant time and resources developing its recipes and fabricating production equipment to meet its product specifications.

PGF is the first American producer of sustainable, nutritious, and affordable ramen noodles.

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.

11 unchanged sentences

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

Reverse Recapitalization Transaction (continued)

Arrangement, (a) Newco and Legacy Borealis amalgamated (the “ Legacy Borealis Amalgamation ”, and the amalgamated corporation resulting therefrom, “ Amalco ”), with Amalco surviving the Legacy Borealis Amalgamation as a wholly-owned subsidiary of New Oxus;

and (b) following the Legacy Borealis

Amalgamation, New Oxus and Amalco amalgamated (the “Borealis Amalgamation,” and together with the Legacy Borealis Amalgamation, the “Amalgamations,” and the corporation resulting therefrom, “Borealis,” as a corporation amalgamated under the Business Corporations Act (Ontario)), with Borealis surviving the Borealis Amalgamation.

and (b) following the Legacy Borealis Amalgamation, New Oxus and Amalco amalgamated (the “ Borealis Amalgamation, ” and together with the Legacy Borealis Amalgamation, the “ Amalgamations ,” and the corporation resulting therefrom, “ Borealis ,” as a corporation amalgamated under the Business Corporations Act (Ontario)), with Borealis surviving the Borealis Amalgamation.

Borealis continues under the name “ Borealis Foods Inc.

4 unchanged sentences

Under this method of accounting, Oxus was treated as the acquired company for financial statement reporting purposes.

For accounting purposes, Legacy Borealis was deemed to be the accounting acquiror in the transaction and, consequently, the transaction was treated as a recapitalization of Legacy Borealis.

For accounting purposes, Legacy Borealis was deemed to be the accounting acquirer in the transaction and, consequently, the transaction was treated as a recapitalization of Legacy Borealis.

Accordingly, the consolidated balance sheets and results of operations of Legacy Borealis became the historical financial statements of Borealis, and Oxus’ assets, liabilities, and results of operations were consolidated with Legacy Borealis’ beginning on February 7, 2024.

3 unchanged sentences

The unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

The Company suffered recurring losses from operations through June 30, 2024 that raise substantial doubt about its ability to continue as a going concern.

The Company was in a net loss position and had negative cash flows from operations for the periods ended June 30, 2024 and 2023.

The Company suffered recurring losses from operations through September 30, 2024 that raise substantial doubt about its ability to continue as a going concern.

The Company was in a net loss position and had negative cash flows from operations for the periods ended September 30, 2024 and 2023.

The Company expects lower operating costs for the remainder of 2024 as the Company incurred approximately $ 1,506,000 of transaction expenses, and $ 1,273,000 of employee stock compensation expenses related to the Reverse Recapitalization.

As a result, substantial doubt continues to exist about the ability of the Company to continue as a going concern within one year from August 14, 2024, the date that the condensed consolidated financial statements were available to be issued.

As a result, substantial doubt continues to exist about the ability of the Company to continue as a going concern within one year from November 13, 2024, the date that the condensed consolidated financial statements were available to be issued.

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.

Borealis Foods Inc.

1 unchanged sentence

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

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 US Dollar.

For the Three and Nine Months Ended September 30, 2024 and 2023

Basis of Presentation (continued)

We have condensed certain categories of information in our 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.

In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our unaudited condensed consolidated balance sheet and unaudited condensed consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows.

In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our unaudited condensed consolidated balance sheets and unaudited condensed consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows.

Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year.

These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2023 contained in Form 8-K/A filed by Borealis April 15, 2024.

Certain prior period amounts have been reclassified to conform to current period presentation .

3 unchanged sentences

The Company classifies all highly liquid securities with stated maturities of three months or less from the date of purchase as cash equivalents.

There were no cash equivalents as of June 30, 2024 and December 31, 2023.

There were no cash equivalents as of September 30, 2024 and December 31, 2023.

Inventories, net

Inventories are stated at the lower of cost or net realizable value.

The cost of raw materials is determined using the first-in, first-out method or net realizable value.

The cost of finished goods is measured at weighted average cost.

The cost of raw materials is determined using the first-in, first-out method.

The cost of finished goods is determined using the weighted average cost method.

A reserve is recorded for any food inventory that is expired (or expected to expire before sale) and any raw materials for projects that have been discontinued.

Prepaid Expenses

Prepaid expenses include approximately $ 1,811,000 and $ 846,000 composed primarily of prepaid insurance, of deposits on inventory purchases and property, plant and equipment purchases as of June 30, 2024 and December 31, 2023, respectively.

Borealis Foods, Inc.

and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

Prepaid expenses include approximately $ 1,048,000 and $ 846,000 composed primarily of prepaid insurance, deposits on inventory purchases and property, plant and equipment purchases as of September 30, 2024 and December 31, 2023, respectively.

Property, Plant and Equipment, net

1 unchanged sentence

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.

Borealis Foods Inc.

and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2024 and 2023

Property, Plant and Equipment, net (continued)

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.

1 unchanged sentence

This change in depreciation method was a change in estimate effected by a change in accounting principle and accordingly was accounted for prospectively in accordance with relevant guidance.

The change in the method of calculating depreciation resulted in an increase in net income of $ 590,000 for both the three-month and six-month periods ended June 30, 2024.

The change in the method of calculating depreciation resulted in an increase in net income of $ 548,000 for the three-month period ended and $ 1,158,000 for the nine-month period ended September 30, 2024.

Since this adjustment is applied prospectively, it has no impact on the financial results for periods prior to June 30, 2024.

The total cost basis of machinery subject to depreciation over machine hours was approximately $ 35,275,000 as of June 30, 2024 and $ 35,255,000 as of December 31, 2023.

The total cost basis of machinery subject to depreciation over machine hours was approximately $ 35,275,000 as of September 30, 2024 and $ 35,255,000 as of December 31, 2023.

Straight-line assets:

1 unchanged sentence

Furniture, fixtures and equipment 3 - 15 years

Machine hours assets:

Furniture, fixtures and equipment

89,232 machine hours

Construction in progress includes the cost of property, plant and equipment being constructed or otherwise not yet in service.

11 unchanged sentences

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

The Company’s goodwill resulted from a prior year acquisition.

Goodwill is not amortized but is reviewed annually for impairment or more frequently as events or circumstances indicate its carrying amount may not be recoverable.

No impairment losses were recorded for the six month period ended June 30, 2024 or for the year ended December 31, 2023.

Goodwill is not amortized but is reviewed annually for impairment or more frequently as events or circumstances indicate its carrying amount may not be

No impairment losses were recorded for the nine month period ended September 30, 2024 or for the year ended December 31, 2023.

Amounts Due to Related Parties

Amounts due to related parties (Company shareholders and entities controlled by Company shareholders) total $ 15,427,453 as of June 30, 2024 and $ 7,825,790 as of December 31, 2023.

Amounts due to related parties (Company shareholders and entities controlled by Company shareholders) total $ 15,427,453 as of September 30, 2024 and $ 7,825,790 as of December 31, 2023.

This related party liability is comprised of a note payable to a shareholder in the amount of $ 7,325,790 , due on demand and bearing interest at 10 % annually.

An additional note payable to a shareholder in the amount $ 500,000 at June 30, 2024 and December 31, 2023, respectively, bears interest at 10 % annually and is due December 31, 2024.

An additional note payable to a shareholder in the amount of $ 500,000 as of September 30, 2024 and December 31, 2023, respectively, bears interest at 10 % annually and is due December 31, 2024.

The remaining $ 7,601,661 shareholder note payable was a result of expenses recognized by Oxus and resulted in reduction of contributed equity at the Reverse Recapitalization.

11 unchanged sentences

Provision for discounts and incentives are recorded in the same period in which the related revenues are recognized.

Gross revenues for the three and six month periods ended June 30, 2024 and 2023 were approximately $ 5,476,000 and $ 6,827,000 for the three months ended and $ 13,960,000 and $ 15,605,000 for the six months ended June 30, 2024 and 2023, respectively.

Total payment discounts and promotions were approximately $ 151,000 and $ 380,000 resulting in net revenues of approximately $ 5,325,000 and $ 6,447,000 for the three month periods ended June 30, 2024 and 2023, respectively.

Total payment discounts and promotions were approximately $ 740,000 and $ 803,000 resulting in net revenues of approximately $ 13,221,000 and $ 14,802,000 for the six month periods ended June 30, 2024 and 2023, respectively.

Gross revenues for the three and nine month periods ended September 30, 2024 and 2023 were approximately $ 8,076,000 and $ 8,265,000 for the three months ended and $ 22,036,000 and $ 23,870,000 for the nine months ended September 30, 2024 and 2023, respectively.

Total payment discounts and promotions were approximately $ 388,000 and $ 539,000 resulting in net revenues of approximately $ 7,688,000 and $ 7,725,000 for the three month periods ended September 30, 2024 and 2023, respectively.

Total payment discounts and promotions were approximately $ 1,128,000 and $ 1,343,000 resulting in net revenues of approximately $ 20,909,000 and $ 22,527,000 for the nine month periods ended September 30, 2024 and 2023, respectively.

Borealis Foods Inc.

1 unchanged sentence

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

Revenue and Cost Recognition and Accounts Receivable (continued)

11 unchanged sentences

actual write-offs are charged against the allowance.

The Company incurred significant production training expenses for the three and six month periods ended June 30, 2024 and 2023, totaling approximately $ 405,000 and $ 699,000 for the three months ended and $ 887,000 and $ 1,479,000 for the six months ended, respectively, due to PGF adding production capabilities during both periods.

These costs are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations as it was not directly attributable to finished goods production.

The Company incurred significant production training expenses for the three and nine month periods ended September 30, 2024 and 2023, totaling approximately $ 478,000 and $ 651,000 for the three months ended and $ 1,364,000 and $ 2,130,000 for the nine months ended, respectively, due to PGF adding production capabilities during both periods.

The Company’s cost of goods sold represent materials, direct labor costs, and allocated overheads associated with the sale of finished goods to customers.

Costs associated with advertising are expensed as incurred and are included in selling, general and administrative expenses.

Advertising costs expensed for the three and six month periods ended June 30, 2024 and 2023 were approximately $ 2,424,000 and $ 1,327,000 for the three months ended and $ 3,950,000 and $ 1,366,000 for the six months ended, respectively.

Advertising costs expensed for the three and nine month periods ended September 30, 2024 and 2023 were approximately $ 1,123,000 and $ 312,000 for the three months ended and $ 5,074,000 and $ 1,677,000 for the nine months ended, respectively.

In April 2023, the Company entered into a multi-year agreement for a marketing representative to assist in the recipes for three co-branded private label ramen noodles as well to be utilized in marketing of the Company for the marketing representative's name, image, likeness and voice.

2 unchanged sentences

Prepayments made under the agreement are included in prepaid expenses.

No sales subject to the royalty agreement were made for the six months ended June 30, 2024 and 2023.

No sales subject to the royalty agreement were made for the three and nine months ended September 30, 2024 and 2023.

The marketing representative has a world-wide reputation within the gourmet food industry.

3 unchanged sentences

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

Research and Development Costs

5 unchanged sentences

The Company believes continued innovation will capture a larger share of consumers through additional revenue streams.

Research and development expenses for the three and six months ended June 30, 2024 and 2023 were approximately $ 50,000 and $ 0 for the three months ended and $ 86,000 and $ 200,000 for the six months ended, respectively, and are included in selling, general, and administrative expenses in the accompanying condensed consolidated statements of operations.

Research and development expenses for the three and nine months ended September 30, 2024 and 2023 were approximately $ 56,000 and $ 37,000 for the three months ended and $ 142,000 and $ 423,000 for the nine months ended, respectively, and are included in selling, general, and administrative expenses in the accompanying condensed consolidated statements of operations.

Business Development Costs

1 unchanged sentence

These costs include staff salaries, travel expenses, and consulting expenses that the Company incurs while searching for new opportunities and maintaining current relationships.

Business development expenses for the three and six months ended June 30, 2024 and 2023 were approximately $ 411,000 and $ 211,000 for the three months ended and $ 1,170,000 and $ 314,000 for the six months ended, respectively, and are included in selling, general, and administrative expenses in the accompanying condensed consolidated statements of operations.

Business development expenses for the three and nine months ended September 30, 2024 and 2023 were approximately $ 1,307,000 and $ 196,000 for the three months ended and $ 2,476,000 and $ 435,000 for the nine months ended, respectively.

Transaction Costs

On February 23, 2023, the Company signed a definitive business combination agreement with Oxus which was consummated on February 7, 2024 and described further in Note 1.

In connection with this agreement, the Company has incurred transaction costs of approximately $ 0 and $ 1,311,000 for the three months ended and $ 1,506,000 and $ 2,866,000 for the six months ended June 30, 2024 and 2023, respectively.

In connection with this agreement, the Company has incurred transaction costs of approximately $ 0 and $ 1,241,000 for the three months ended and $ 1,506,000 and $ 4,005,000 for the nine months ended September 30, 2024 and 2023, respectively.

Transaction costs have been expensed as incurred and are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

Concentration of Risk

The Company maintains cash balances at financial institutions in excess of federally insured limits as of June 30, 2024 and December 31, 2023.

The Company maintains cash balances at financial institutions in excess of federally insured limits as of September 30, 2024 and December 31, 2023.

The Company has not experienced any losses related to these balances.

The Federal Deposit Insurance Corporation insures eligible accounts up to $ 250,000 per depositor at each

financial institution.

The Federal Deposit Insurance Corporation insures eligible accounts up to $ 250,000 per depositor at each financial institution.

The Company holds cash at well-known banks and does not believe that it is exposed to any significant credit risks on its cash.

The Company extends unsecured credit to its customers in the ordinary course of business.

Payment terms are generally net 30 days with discounts amounting up to 2% for early payments.

Accounts receivable are written

Borealis Foods Inc.

1 unchanged sentence

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

Concentration of Risk (continued)

The Company extends unsecured credit to its customers in the ordinary course of business.

Payment terms are generally net 30 days with discounts amounting up to 2% for early payments.

Accounts receivables are written off when they are determined to be uncollectible based on the financial stability of its customers and existing economic conditions.

Sales to three customers accounted for approximately 52 % and sales to two customers accounted for approximately 74 % of net revenues for the three month periods ended June 30, 2024 and 2023, respectively.

Sales to three customers accounted for approximately 53 % and 74 % of net revenues for the six month periods ended June 30, 2024 and 2023, respectively.

Accounts receivable from three and two customers amounted to approximately 55 % and 84 % of total accounts receivable as of June 30, 2024 and 2023, respectively.

Substantially all of the Company’s sales for the three and six month periods ended June 30, 2024 and 2023 sales occurred in the United States and Canada.

Purchases from 10 vendors accounted for approximately 51 % and 55 % of purchases during the three months ended and 48 % and 55 % of purchases for the six month periods ended June 30, 2024 and 2023, respectively.

Accounts payable to these vendors totaled approximately $ 689,000 and $ 971,000 as of June 30, 2024 and 2023, respectively.

off when they are determined to be uncollectible based on the financial stability of its customers and existing economic conditions.

Sales to four customers accounted for approximately 53 % and sales to three customers accounted for approximately 77 % of net revenues for the three month periods ended September 30, 2024 and 2023, respectively.

Sales to three customers accounted for approximately 45 % and 74 % of net revenues for the nine month periods ended September 30, 2024 and 2023, respectively.

Accounts receivable from one and three customers amounted to approximately 19 % and 80 % of total accounts receivable as of September 30, 2024 and 2023, respectively.

Substantially all of the Company’s sales for the three and nine month periods ended September 30, 2024 and 2023 occurred in the United States, Canada, Central America, South America, and Europe.

Purchases from 10 vendors accounted for approximately 51 % and 52 % of purchases during the three months ended and 54 % and 52 % of purchases during the nine month periods ended September 30, 2024 and 2023, respectively.

Accounts payable to these vendors totaled approximately $ 2,570,000 and $ 1,218,000 as of September 30, 2024 and 2023, respectively.

Fair Value Measurements

11 unchanged sentences

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

Fair Value Measurements (continued)

3 unchanged sentences

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

The carrying amounts reported in the condensed consolidated balance sheets for cash, accounts receivable, and accounts payable approximate their fair values due to the short-term nature of these instruments.

The carrying amounts reported in the condensed consolidated balance sheets for accounts receivable and accounts payable approximate their fair values due to the short-term nature of these instruments.

There is no material difference between the carrying amounts and fair values of the Company’s debt obligations, notes payable, line of credit and convertible notes payable, as interest rates approximate current market rates for similar types of debt instruments (Level 2).

Disclosures about the fair value of financial instruments are based on pertinent information available to management as of June 30, 2024 and December 31, 2023.

Disclosures about the fair value of financial instruments are based on pertinent information available to management as of September 30, 2024 and December 31, 2023.

Although management is not aware of any factors that would significantly affect the reasonableness of the fair value amounts, such amounts were not comprehensively revalued for purposes of these unaudited condensed consolidated financial statements and current estimates of fair value may differ significantly from the amounts presented herein.

Stock Based Compensation

The Company accounts for its stock compensation arrangements at fair value in accordance with ASC 718 - Compensation - Stock Compensation.

The Company accounts for its stock compensation arrangements at fair value in accordance with Accounting Standards Codification (" ASC ") 718 - Compensation - Stock Compensation.

Compensation cost relating to share-based payment transactions is recognized in the Company’s condensed consolidated financial statements based on the estimated fair value of the instruments issued.

8 unchanged sentences

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

Warrants (continued)

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

It was determined with the Transaction date that there were no changes to the classes or language that would impact the original assessment that the public and private warrants should be classified as equity.

It was determined at the Transaction Date that there were no changes to the classes or language that would impact the original assessment that the Public and Private warrants should be classified as equity.

Recent Accounting Pronouncements

Management does not expect the adoption of recently issued accounting standards to have a significant impact on the Company’s reported financial position, results of operations, or cash flows.

In November 2023, the FASB issued 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, to enhance disclosures about significant segment expenses for public entities reporting segment information under ASC Topic 280.

The amendments require public entities to disclose significant expense categories for each reportable segment, other segment items, the title and position of the chief operating decision-maker, and interim disclosures of certain segment-related information previously required only on an annual basis.

The amendments clarify that entities reporting single segments must disclose both the new and existing disclosures under Topic 280, and a pubic entity is permitted to disclose multiple measures of segment profit or loss if certain criteria are met.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements and related disclosures.

Inventories, net

Inventories were as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Raw materials $ 6,759,946 $ 5,190,811

2 unchanged sentences

$ 8,750,399 $ 6,945,028

Borealis Foods Inc.

and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2024 and 2023

Property, Plant and Equipment, net

Property, plant and equipment were as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Building and improvements $ 10,110,188 $ 10,108,917

4 unchanged sentences

$ 46,066,397 $ 46,408,540

Depreciation expense recorded in the three and six month periods ended June 30, 2024 and 2023 was approximately $ 395,000 and $ 962,000 for the three months ended and $ 1,400,000 and $ 1,900,000 for the six months ended, respectively, which is included as a component of cost of goods sold.

Borealis Foods, Inc.

and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

In 2022, the Company issued $ 20,000,000 of convertible notes payable that, after an extension was negotiated, mature in February 2024 (unless converted) and bear interest at 10 % annually.

On or before the earlier of the maturity date or a “qualified financing event”, as defined in the note agreements, the outstanding principal and interest may be converted, at the option of the holder, into common shares of the Company.

The number of shares of common shares received in the conversion will equal the quotient of (i) the outstanding principal and interest as of the date immediately before the completion of the qualified financing event, divided by (ii) an amount equal to the “valuation cap” divided by the “fully diluted basis” (terms as defined in the agreements) and discounted by five ( 5 %) percent.

Depreciation expense recorded in the three and nine month periods ended September 30, 2024 and 2023 was approximately $ 462,000 and $ 997,000 for the three months ended and $ 1,861,000 , and $ 2,938,000 for the nine months ended, respectively, which is included as a component of cost of goods sold.

In 2022, the Company issued $ 20,000,000 of convertible notes payable that, after an extension was negotiated, had a maturity in February 2024 (unless converted) and bore interest at 10 % annually.

On or before the earlier of the maturity date or a “qualified financing event”, as defined in the note agreements, the outstanding principal and interest were convertible, at the option of the holder, into common shares of the Company.

The notes and accrued interest were converted into 2,189,997 common shares with the consummation of the Reverse Recapitalization with Oxus.

1 unchanged sentence

During 2023, $ 4,500,000 of these notes matured without conversion and were repaid by the Company.

The remaining $ 300,000 of convertible notes payable bear interest at 10 % annually and, after an extension was negotiated, mature in February 2024 (unless converted).

The outstanding principal and interest under the remaining convertible notes may be converted, at the option of the holder, into the same equity as issued upon the Company’s issuance of preferred or common shares of at least $ 10,000,000 (“qualified financing event”), either as a single round or a lead round, at 80 % of the per share price paid during the qualified financing event.

The notes and accrued interest were converted into 40,544 common shares with the consummation of the Reverse Recapitalization of Oxus.

In 2023, the Company issued $ 27,000,000 of convertible notes payable, of which $ 27,000,000 matures in 2024 (unless converted) and bear interest at 10 % annually.

The number of common shares received in the conversion will equal the quotient of (i) the outstanding principal and interest as of the date immediately before the completion of the qualified financing event, divided by (ii) an amount equal to the “valuation cap” divided by the “fully diluted basis” (terms as defined in the agreements) and discounted by five ( 5 %) percent.

The remaining $ 300,000 of convertible notes payable bore interest at 10 % annually and, after an extension was negotiated, mature in February 2024 (unless converted).

The outstanding principal and interest under the remaining convertible notes were convertible, at the option of the holder, into the same equity as issued upon the Company’s issuance of preferred or common shares of at least $ 10,000,000 .

The notes and accrued interest were converted into 40,544 common shares with the consummation of the Reverse Recapitalization with Oxus.

In 2023, the Company issued $ 27,000,000 of convertible notes payable, of which $ 27,000,000 had a maturity date in 2024 (unless converted) and bore interest at 10 % annually.

The notes and accrued interest were converted into 3,787,585 common shares in connection with the consummation of the Reverse Recapitalization with Oxus.

In 2021, the Company issued a $ 3,000,000 convertible note that matures in 2026 (unless converted) and bears interest at 3 % annually.

Accrued interest is payable monthly.

The outstanding principal and interest under the convertible note may be converted, at the option of the holder, into the same equity as issued upon the Company’s issuance of preferred or common shares of at least $ 10,000,000 (a “qualified financing event”), either as a single round or round, at 85 % of the per share price paid during the qualified financing event.

The note holder elected not to convert at the Reverse Recapitalization and therefore the note is due at maturity.

Borealis Foods Inc.

1 unchanged sentence

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

Debt (continued)

In January 2024, the Company issued a $ 3,000,000 convertible note payable that matures in 2024 (unless converted) and bears interest at 10% annually.

Accrued interest is payable upon maturity, or converted into equity.

The convertible note may be converted into securities, at the option of the holder, based upon a formula considering the outstanding principal and interest and the Company’s value, including a valuation cap.

In 2021, the Company issued a $ 3,000,000 convertible note that matures in 2026 (unless converted) and bears interest at 3 % annually.

Accrued interest is payable monthly.

The outstanding principal and interest under the convertible note may be converted, at the option of the holder, into the same equity as issued upon the Company’s issuance of preferred or common shares of at least $ 10,000,000 (a “qualified financing event”), either as a single round or a lead round, at 85 % of the per share price paid during the qualified financing event.

The note holder elected not to convert at the Reverse Recapitalization and therefore the note is due at maturity.

In January 2024, the Company issued a $ 3,000,000 convertible note payable that had a maturity date in 2024 (unless converted) and bore interest at 10 % annually.

The note was converted into 375,925 common shares with the consummation of the Reverse Recapitalization with Oxus.

During 2023, the Company entered into a $ 25,000,000 financing agreement with a maturity date in August 2026.

Under this agreement, the Company has a $ 15,000,000 term facility which was used to pay off the existing line of credit.

Under this agreement, the Company has a $ 15,000,000 term facility which was used to pay off its then existing line of credit.

In March 2024, the company entered into an amendment to extend the maturity date of the term facility to March 2028.

2 unchanged sentences

In conjunction with this agreement, loan fees of approximately $ 931,000 were capitalized in 2023.

Amortization expense of approximately $ 77,000 and $ 155,000 was recorded on the fees for the three and six month periods ended June 30, 2024.

Amortization expense of approximately $ 78,000 and $ 233,000 was recorded on the fees for the three and nine month periods ended September 30, 2024.

In addition to the term facility, the Company obtained a $ 10,000,000 line of credit to fund working capital needs in support of its growth strategy.

2 unchanged sentences

The line of credit includes an unused line fee of 0.25 % per annum beginning on closing date through six months and increases to 0.50 % per annum thereafter.

As of June 30, 2024 and December 31, 2023 the line of credit had $ 5,000,000 and $ 0 drawn upon it, respectively.

As of September 30, 2024 and December 31, 2023 the line of credit had $ 6,500,000 and $ 0 drawn upon it, respectively.

In the period leading up to the Reverse Recapitalization, significant transaction costs were incurred by both parties.

9 unchanged sentences

The note matures in February 2025, and bears interest at 10 % per annum.

Note 3 – Incurred by Oxus.

The related expenses were recognized by Oxus and resulted in a reduction of contributed equity at the reverse recapitalization.

Note 3 was issued in the original principal amount of $ 1,980,800 .

The note matures in February 2025, and bears interest at 8 % per annum.

Borealis Foods Inc.

1 unchanged sentence

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

Debt (continued)

2 unchanged sentences

Note 3 was issued in the original principal amount of $ 1,980,800 .

The note matures in February 2025, and bears interest at 8 % per annum.

Note 4 – Incurred by Oxus.

The related expenses were recognized by Oxus and resulted in a reduction of contributed equity at the Reverse Recapitalization.

Note 4 was issued in the original principal amount of $ 7,601,661 .

The note matures in February 2025, is non-interest bearing and payable to a related party.

Debt balances outstanding as of June 30, 2024 are due as follows:

Debt balances outstanding as of September 30, 2024 are due as follows:

$ 6,267,000 in 2025;

7 unchanged sentences

PGF, PGF RE I, and PGF RE II (the “United States subsidiaries”) are taxed as C corporations, with a statutory rate of 21%.

The total income tax provision (benefit) expense recorded for the three months ended June 30, 2024 and 2023 was $ 14,000 and $ 15,000 , respectively, on a consolidated pre-tax book loss of approximately $ 6,284,000 and $ 8,287,000 in the three month periods ended June 30, 2024 and 2023, respectively.

The total income tax provision (benefit) expense recorded for the six months ended June 30, 2024 and 2023 was approximately $ 14,000 and $ 15,000 , respectively, on a consolidated pre-tax book loss of approximately $ 14,715,000 and $ 14,222,000 in the six month periods ended June 30, 2024 and 2023, respectively.

The total income tax (benefit) expense recorded for the three months ended September 30, 2024 and 2023 was $ 1,000 and $ 0 , respectively, on a consolidated pre-tax book loss of approximately $ 4,831,000 and $ 6,585,000 in the three month periods ended September 30, 2024 and 2023, respectively.

The total income tax expense recorded for the nine months ended September 30, 2024 and 2023 was approximately $ 15,000 and $ 15,000 , respectively, on a consolidated pre-tax book loss of approximately $ 19,547,000 and $ 20,808,000 in the nine month periods ended September 30, 2024 and 2023, respectively.

The Company’s tax provision is based on a projected effective rate based on annualized amounts applied to actual income to date.

1 unchanged sentence

The ultimate realization of capital loss and net operating loss (“NOL”) carryforwards is dependent upon the generation of future capital gains and taxable income in periods prior to their expiration.

The Company currently provides a valuation allowance against the full amount of the NOLs since the Company is uncertain as to the realization of the full amount of benefits in the future.

The Company currently provides a

valuation allowance against the full amount of the NOLs since the Company is uncertain as to the realization of the full amount of benefits in the future.

The Company will continue to assess the need for, and the amount of, the valuation allowance at each reporting period.

1 unchanged sentence

The Company recognizes accrued interest and penalties, if any, related to uncertain tax positions in income tax expense.

Management has determined that the Company does not have any uncertain tax positions or associated unrecognized tax benefits that materially impact the condensed consolidated financial statements or related disclosures.

As a result, at June 30, 2024, the Company did not have a liability for unrecognized tax benefits, interest or penalties under United States or Canadian tax law.

The Company paid no penalties during the three and six month period ending June 30, 2024.

Management has determined that the Company does not have any uncertain tax positions or associated unrecognized tax benefits that materially impact the

Borealis Foods Inc.

1 unchanged sentence

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

Income Taxes (continued)

condensed consolidated financial statements or related disclosures.

As a result, at September 30, 2024, the Company did not have a liability for unrecognized tax benefits, interest or penalties under United States or Canadian tax law.

The Company paid no penalties during the three and nine month period ending September 30, 2024.

The Company files income tax returns in the Canadian and U.S.

7 unchanged sentences

Management does not believe that the final resolution of any such legal proceedings will have a material effect on the unaudited condensed consolidated financial position or results of operations of the Company.

The following represents a summary of warrants outstanding and exercisable on June 30, 2024:

The following represents a summary of warrants outstanding and exercisable on September 30, 2024:

Description Issue Date Classification Exercise Price Expiration Date Outstanding Shares Exercisable Shares

2 unchanged sentences

26,550,000 26,550,000

Following the closing of the Reverse Recapitalization, New Borealis has the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $ 0.01 per warrant, provided that the last reported sales price of New Borealis Common Shares equals or exceeds $ 18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 days within a 30 trading day period commencing once the warrants become exercisable and ending on the third trading day prior to the date on which New Borealis gives proper notice of such redemption and provided certain other conditions are met.

Following the closing of the Reverse Recapitalization, Borealis has the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $ 0.01 per warrant, provided that the last reported sales price of Borealis Common Shares equals or exceeds $ 18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 days within a 30 trading day period commencing once the warrants become exercisable and ending on the third trading day prior to the date on which New Borealis gives proper notice of such redemption and provided certain other conditions are met.

The public warrants are identical to the private placement warrants in material terms and provisions, except the private placement warrants were not transferable, assignable or salable until 30 days after the completion of the Reverse Recapitalization.

1 unchanged sentence

During 2022, the Company created a stock option plan (the “Plan”) that provides for the granting of options to certain employees for the purchase of the Company’s class D common shares.

The Plan provides for the grant of stock options for eligible employees as determined by the Board of Directors and does not guarantee employment rights.

During the six month period ended June 30, 2024 and 2023 the Company granted options to purchase 333,574 and 227,666 shares, respectively, of the Company’s common shares at an exercise price of

The Plan provides for the grant

Borealis Foods Inc.

1 unchanged sentence

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

Stock Option Plan (continued)

$ 0.0001 per share.

of stock options for eligible employees as determined by the Board of Directors and does not guarantee employment rights.

During the nine month period ended September 30, 2024 and 2023 the Company granted options to purchase 333,574 and 227,666 shares, respectively, of the Company’s common shares at an exercise price of $ 0.0001 per share.

The weighted-average grant date fair values of options granted was $ 0.60 per share.

4 unchanged sentences

Dividend yield 0.00 %

For the three and six month periods ended June 30, 2024 and 2023, the Company recorded approximately $ 0 and $ 98,000 for the three months ended and $ 1,273,000 and $ 292,000 for the six months ended, respectively, of stock-based compensation expense.

On February 7, 2024, as a result of the Reverse Recapitalization (Note 1),

4,000,000 stock options were exercised and converted at an exchange ratio of 0.0661 into 264,400 shares of Newco Class A common stock.

For the three and nine month periods ended September 30, 2024 and 2023, the Company recorded approximately $ 0 and $ 100,000 for the three months ended and $ 1,273,000 and $ 392,000 for the nine months ended, respectively, of stock-based compensation expense.

On February 7, 2024, as a result of the Reverse Recapitalization (Note 1), 4,000,000 stock options were exercised and converted at an exchange ratio of 0.0661 into 264,400 shares of Newco Class A common stock.

This stock option plan was closed upon the business combination and a new equity incentive plan was approved and implemented as of February 7, 2024.

Stock option activity for the periods ended June 30, 2024 and 2023 is summarized as follows:

Stock option activity for the periods ended September 30, 2024 and 2023 is summarized as follows:

Borealis Foods Inc.

and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2024 and 2023

Shares Weighted Average Exercise Price Weighted Remaining Contractual Life(Years)

3 unchanged sentences

Expired or forfeited — — —

Options outstanding at June 30, 2023 3,696,426 0.0001 6.15

Options outstanding at September 30, 2023 3,696,426 $ 0.0001 5.90

Options outstanding at December 31, 2023 3,666,426 $ 0.0001 8.10

2 unchanged sentences

Expired or forfeited

Options outstanding at June 30, 2024 — — —

Borealis Foods, Inc.

and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2024 and 2023

Options outstanding at September 30, 2024 — — —

Earnings per share

1 unchanged sentence

For the purposes of calculating diluted earnings per share, the number of shares outstanding has been adjusted for the dilutive effects of warrants.

Basic earnings (loss) per share calculation Three months ended Six Months ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Borealis Foods Inc.

and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2024 and 2023

Basic earnings (loss) per share calculation Three months ended Nine Months ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Net income (loss) available to common shareholders $ ( 4,832,169 ) $ ( 6,585,101 ) $ ( 19,561,531 ) $ ( 20,822,676 )

9 unchanged sentences

Subsequent Events

The Company evaluated events and transactions after June 30, 2024 through August 14, 2024, the date the condensed consolidated financial statements were available to be issued, for subsequent events requiring disclosure in these financial statements.

The Company identified the following subsequent events:

Subsequent to the balance sheet date, the Company entered into a contract manufacturing agreement with a major multi-national food company, expected to enhance its market presence and operational capabilities.

The Company evaluated events and transactions after September 30, 2024 through November 14, 2024, the date the unaudited condensed consolidated financial statements were available to be issued, for subsequent events requiring disclosure in these financial statements.

The Company did not identify any subsequent events that required disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements