Borealis Foods Inc. annual report, FY2021

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Business context and reporting period

Registrant mismatch: The supplied filing is Oxus Acquisition Corp.’s Form 10-K, not a filing for Borealis Foods Inc. It covers the fiscal year ended December 31, 2021; the financial statements report activity from incorporation on February 3, 2021 through year-end, so there is no prior comparable period. Oxus is a Cayman Islands blank-check company (SPAC), not an operating food business. It had not selected a target or begun substantive operations by year-end. Its intended search focus was energy-transition businesses in the CIS, South and South-East Asia, and MENA regions.

Financial and operating highlights

  • Revenue and profitability: No operating revenue. Net loss was $407,624, including $428,376 of formation and operating expenses, partly offset by $3,964 of dividend income and a $16,788 gain from the change in fair value of the over-allotment liability. Basic and diluted loss per share was $0.04. Margins are not meaningful for this pre-operating SPAC.
  • Cash flow: Cash used in operating activities was $602,161. At December 31, cash outside the trust was $1.12 million; cash and marketable securities in the trust were $175.95 million.
  • Liquidity and balance sheet: Working capital was $1.20 million; current assets were $1.44 million and current liabilities $235,051. Total assets were $177.49 million. Public shares subject to redemption of $175.95 million were classified as temporary equity; shareholders’ equity was $1.30 million.
  • Debt: No long-term debt was reported. A $279,935 sponsor promissory note was repaid after the IPO. Sponsor or affiliated parties may, but are not required to, provide future working-capital loans.
  • IPO and trust: Oxus sold 17.25 million units at $10 each after full exercise of the over-allotment option and issued 9.3 million private warrants at $1 each. It deposited $175.95 million into the trust account. Each public warrant is exercisable for one share at $11.50, subject to terms and adjustments.

Changes, outlook, risks and unusual items

  • This was the company’s first reporting period, so the filing provides no comparable prior-year operating results. It states that substantially all trust funds are intended for a business combination; no target, operating forecast, or revenue guidance is provided.
  • The company must complete a business combination by March 8, 2023, or generally redeem public shares and liquidate. If it fails to complete a transaction, warrants are expected to expire worthless. Management said it intended to complete a transaction or obtain an extension, but acknowledged that success was uncertain.
  • The auditor’s report and management’s discussion identify substantial doubt about Oxus’s ability to continue as a going concern, given limited operating cash, expected ongoing costs, and the possibility of mandatory liquidation. The financial statements include no adjustments for a possible liquidation.
  • Management reported ineffective disclosure controls and a material weakness in internal control over financial reporting concerning accounting for complex financial instruments. Remediation was planned, but completion or effectiveness was not assured.
  • Key risks include failure to find or finance a transaction before the deadline; redemptions and dilution; sponsor and management conflicts; creditor claims potentially reducing trust distributions; competition for SPAC targets; COVID-19 and geopolitical disruption, including the Russia-Ukraine conflict and sanctions; and legal, political, currency, tax and enforcement risks in emerging markets.
  • No material litigation was reported. The filing reports no off-balance-sheet arrangements. It describes a $10,000 monthly sponsor administrative fee and a business-combination advisory fee of up to $5.23 million payable only if a transaction closes.
  • The filing contains figures that warrant reconciliation: transaction costs are reported as both $3.70 million and $4.15 million in different sections, with underwriting fees likewise reported as $3.00 million and $3.45 million. The conversion-limit disclosure also differs: some sections state a 15% cap, while a financial-statement note describes a 20% threshold.

Most important facts for investors to verify

  1. Confirm the issuer identity: this 10-K is for Oxus Acquisition Corp., not Borealis Foods Inc.
  2. Reconcile IPO transaction costs and underwriting-fee amounts across the filing.
  3. Confirm the applicable shareholder conversion limit and governing charter terms, given the 15%/20% inconsistency.
  4. Review the going-concern qualification, material weakness, and whether remediation has been completed in subsequent filings.
  5. Check subsequent filings for a target, any extension, financing or sponsor loans, redemptions, and status of the March 8, 2023 business-combination deadline.