Borealis Foods Inc. — Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023. The report was signed April 15, 2024. Although the filing describes Borealis Foods’ operating business, the audited 2023 and 2022 financial statements are for Oxus Acquisition Corp., the pre-combination SPAC—not for the food operating business. The filing says Legacy Borealis’ audited financial statements would be provided separately. Therefore, this 10-K does not provide clear operating-company revenue, margins, profit, cash flow, or year-over-year financial comparisons for Borealis Foods.
Business context and reporting period
Borealis Foods develops and manufactures plant-based instant meals, including Chef Woo high-protein ramen and Ramen Express. Its wholly owned Palmetto Gourmet Foods facility in South Carolina has four production lines and stated capacity to produce up to 600 million meals annually. The company reported distribution in approximately 22,000 locations, primarily in the U.S., Canada, Mexico, and Europe.
The business combination with Oxus closed on February 7, 2024; shares began trading as BRLS on Nasdaq the following day. The filing says the combination will be accounted for as a common-control transaction, with Legacy Borealis as predecessor in future consolidated reporting. The 2023 financial statements in this filing are not those of the combined operating company.
Financial results and liquidity
Audited figures below relate to Oxus as a pre-combination SPAC, not Borealis Foods’ food operations. Amounts are U.S. dollars.
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | None; Oxus had not commenced operations | None |
| Operating expenses | $5.13 million | $2.89 million |
| Net loss | $2.94 million | $0.30 million |
| Operating cash used | $2.34 million | $2.11 million |
| Cash at year end | $93,115 | $680,792 |
| Trust-account securities | $21.92 million | $178.53 million |
| Current liabilities | $7.49 million | $2.50 million |
Oxus’ 2023 loss included $2.20 million of dividend income and $5,159 of interest income, which partly offset expenses; these are SPAC items, not Borealis operating revenue. Trust assets fell principally due to shareholder redemptions. At December 31, 2023, Oxus reported a $7.36 million shareholders’ deficit and a $7.36 million working-capital deficiency.
For Borealis, management stated that additional capital would be needed to fund anticipated needs through March 31, 2025, and that further financing was being sought without assurance it would be available on acceptable terms. The filing describes a $15 million term facility and a $10 million revolving credit line, secured by substantially all assets and bearing interest at prime plus 4.75% and prime plus 4.5%, respectively. As of March 31, 2024, $15 million was outstanding on the term facility and nothing on the revolving line. Approximately $50.3 million of convertible debt converted into equity when the business combination closed.
Material changes versus the prior comparable period
- Oxus’ net loss increased to $2.94 million from $0.30 million, while operating expenses rose to $5.13 million from $2.89 million.
- Cash used in Oxus operating activities increased to $2.34 million from $2.11 million.
- Trust-account securities declined to $21.92 million from $178.53 million, primarily following redemptions. In 2023, redemptions totaled approximately $159.45 million.
- The February 2024 combination changed the reporting entity and financial-reporting basis; the filing’s 2023 financial statements do not show the operating business’s results.
Outlook, risks, contingencies, and unusual items
Management intends to expand retail and e-commerce distribution and pursue NGO, government, foodservice, military, hospital, and nursing-home channels. It also plans product development and facility improvements. The company reduced planned capital needs by scaling back expansion beyond its existing four production lines. No quantified revenue or earnings guidance is provided.
- Going concern: The auditor’s report on Oxus’ financial statements includes an explanatory paragraph expressing substantial doubt about the company’s ability to continue as a going concern. Separately, management says Borealis needs additional capital through March 31, 2025 and cannot assure financing will be available. The financial statements contain no adjustments for a possible failure to continue as a going concern.
- Customer concentration: Approximately 74% of Borealis revenue came from three customers. Customer orders in 2023 were below the anticipated volume and pace, with the filing citing transportation costs, warehouse availability, and changes in retail consumption and inventory patterns.
- Supply and operating risks: Borealis relies on a single-source supplier for pea protein, has no long-term supplier contracts, and is exposed to input-cost volatility, crop and climate risks, and production-utilization risk.
- Debt and security: The $25 million credit arrangement is secured by substantially all assets. The company also disclosed historical related-party borrowing and convertible debt; about $50.3 million converted to equity at the 2024 transaction closing.
- Controls: Oxus reported ineffective disclosure controls and material weaknesses in internal control over financial reporting at year-end 2023, involving complex financial instruments, prepaid expenses and review procedures, as well as CEO administrative access to the financial reporting system. The filing does not establish whether these findings have been fully remediated for the combined company.
- Other risks: Competition, consumer preferences, regulatory compliance, cybersecurity, international expansion, and possible shareholder dilution may adversely affect results. The filing notes a past cybersecurity incident and ordinary-course pending or threatened litigation, but provides no clear quantified exposure.
Most important facts for investors to verify
- Obtain and review Legacy Borealis’ audited operating-company financial statements and subsequent combined-company filings; the 2023 SPAC statements are not a substitute.
- Verify current cash, liquidity runway, debt balances, interest terms, collateral, and financing availability, including the impact of the $50.3 million debt conversion and post-closing redemptions.
- Review actual revenue, gross margin, cash burn, inventory, and customer concentration trends, particularly for the three customers representing approximately 74% of revenue.
- Confirm remediation of the disclosed control weaknesses and assess the combined company’s going-concern position.
- Track production utilization, pea-protein supply alternatives, and whether planned distribution and new sales channels generate sustained orders.