Borealis Foods Inc.

Previous wording

The Company continued to diversify its customer base in the first quarter of 2025.

Current wording

The Company continued to diversify its customer base during the first half of 2025, reflecting strategic progress in reducing dependency on any single retail partner.

Previous wording

The continued shift toward Chef Woo, Gordon Ramsay Cups, and food service SKUs has allowed the Company to sustain margin improvements. Key drivers of margin expansion in the quarter included:

Current wording

Key drivers of margin expansion in the period included:

Previous wording

Net cash used in operating activities for the three months ended March 31, 2025 was $1.37 million, primarily driven by the net loss of $4.19 million, adjusted for non-cash charges of $0.48 million for depreciation and amortization, and $0.06 million for stock-based compensation. This represents an improvement from the $6.77 million used in the same period of 2024, as Borealis benefited from enhanced gross profit due to the performance of high-margin products like Chef Woo and Woodles, which partially offset operational expenses.

Current wording

Net cash used in operating activities for the six months ended June 30, 2025 was $3.57 million, primarily driven by the net loss of $8.79 million, adjusted for non-cash charges of $0.95 million for depreciation and amortization, and $0.31 million for stock-based compensation. This represents an improvement from the $11.00 million used in the same period of 2024, as Borealis benefited from enhanced gross profit due to the performance of high-margin products like Chef Woo and Woodles, which partially offset operational expenses.

Previous wording

Net cash used in investing activities was $0.03 million for the three months ended March 31, 2025, primarily attributable to purchases of property and equipment to support production scale and efficiency improvements. This decrease from $0.49 million in 2024 aligns with our focused approach to capital expenditures, particularly as the Company seeks to improve asset utilization and operational efficiencies without significant expansion of its production line.

Current wording

Net cash used in investing activities was $0.03 million for the six months ended June 30, 2025, primarily attributable to purchases of property and equipment to support production scale and efficiency improvements. This decrease from $1.21 million in 2024 aligns with our focused approach to capital expenditures, particularly as the Company seeks to improve asset utilization and operational efficiencies without significant expansion of its production line.

Previous wording

Net cash provided by financing activities during the three months ended March 31, 2025, was $0.94 million, financing was driven by advances from related parties. In comparison, net cash provided by financing activities in the three months ended, was $7.85 million, and largely attributable to borrowings on the line of credit and proceeds from convertible debt. The financing activities in 2025 primarily support working capital needs and strategic investments in growth initiatives.

Current wording

Net cash provided by financing activities during the six months ended June 30, 2025, was $3.15 million, financing was driven by advances from related parties. In comparison, net cash provided by financing activities in the six months ended, was $7.73 million, and largely attributable to borrowings on the line of credit and proceeds from convertible debt. The financing activities in 2025 primarily support working capital needs and strategic investments in growth initiatives.

Previous wording

We need additional capital to meet our funding requirements through fiscal year 2025, particularly to support our expansion into the premium retail segment with a prominent global brand. As of March 31, 2025, we had cash-on-hand of $0.19 million and negative working capital of $25.30 million. Our current business plan has mitigated some capital expenditure requirements, as operational efficiencies in existing production lines have reduced the need for immediate expansion. We are actively exploring additional financing options to strengthen liquidity; however, there can be no assurance that such funding will be available on favorable terms or at all. If we cannot obtain adequate additional financing, among other things, we may have to substantially curtail or limit our research, marketing, production or distribution activities, sell assets of the Company or seek protection from creditors under bankruptcy laws, which could materially and adversely affect our business plan. Inadequate financial resources could also continue to raise substantial doubt about our ability to continue as a going concern.

Current wording

We need additional capital to meet our funding requirements through fiscal year 2025, particularly to support our expansion into the premium retail segment with a prominent global brand. As of June 30, 2025, we had cash-on-hand of $0.21 million and negative working capital of $29.49 million. Our current business plan has mitigated some capital expenditure requirements, as operational efficiencies in existing production lines have reduced the need for immediate expansion. We are actively exploring additional financing options to strengthen liquidity; however, there can be no assurance that such funding will be available on favorable terms or at all. If we cannot obtain adequate additional financing, among other things, we may have to substantially curtail or limit our research, marketing, production or distribution activities, sell assets of the Company or seek protection from creditors under bankruptcy laws, which could materially and adversely affect our business plan. Inadequate financial resources could also continue to raise substantial doubt about our ability to continue as a going concern.

Previous wording

Management has implemented several strategic and operational initiatives aimed at improving liquidity and financial performance. For the three months ended March 31, 2025, the Company significantly reduced sales, general, and administrative expenses by 47% year-over-year, driven by the conclusion of one-time transaction-related costs and a disciplined reduction in discretionary spending. Gross margin, excluding depreciation, a non-GAAP measurement, improved to 20% from 16% in the prior year period, reflecting a shift toward higher-margin branded and institutional sales.

Current wording

Management has implemented several strategic and operational initiatives aimed at improving liquidity and financial performance. For the six months ended June 30, 2025, the Company significantly reduced sales, general, and administrative expenses by 51% year-over-year, driven by the conclusion of one-time transaction-related costs and a disciplined reduction in discretionary spending. Gross margin, excluding depreciation, a non-GAAP measurement, improved to 17% from 16% in the prior year period, reflecting a shift toward higher-margin branded and institutional sales.

Previous wording

The Company has not raised external capital in the first quarter of 2025 but is actively evaluating financing alternatives, including debt and equity issuances, to support ongoing operations and strengthen the balance sheet.

Current wording

The Company has not raised external capital in the first half of 2025 but is actively evaluating financing alternatives, including debt and equity issuances, to support ongoing operations and strengthen the balance sheet.

Previous wording

These results reflect the Company’s strategic focus on food service and institutional markets, which provide improved pricing power and margin stability.

Current wording

These results underscore the Company’s strategic focus on food service and institutional markets, which provide greater pricing power, improved margins, and more stable demand patterns.

Previous wording

Operating Expenses and SG&A Trends (continued)

Current wording

Operating Expenses and SG&A Trends

Previous wording

For the three months ended March 31, 2025, “Adjusted EBITDA,” a non-GAAP measure, is defined as net income attributable to us before (1) depreciation and amortization, of $0.5 million, (2) interest expense, of $1.3 million, (3) new product launch of $0.6 million, (4) training, of $0.2 million, (5) deferred stock compensation $0.1 million, (6) business transaction costs, of $0.5 million, and (7) business development and other extraordinary charges, of $0.6 million. Management and our Board of Directors use this non-GAAP measure for purposes of evaluating our performance. Furthermore, the Compensation Committee of our Board of Directors uses such measure to evaluate management’s performance. We, therefore, believe that the use of this non-GAAP measure provides useful information to investors and other stakeholders by allowing them to view our business through the eyes of management and our Board of Directors, facilitating comparisons of results across historical periods and focus on the underlying ongoing operating performance of our business. As noted above, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.

Current wording

For the six months ended June 30, 2025, “Adjusted EBITDA,” a non-GAAP measure, is defined as net income attributable to us before (1) income taxes, (2) depreciation and amortization, of $1.0 million, (3) interest expense, of $2.5 million, (4) new product launch of $1.2 million, (5) training, of $0.4 million, (6) deferred stock compensation $0.3 million, (7) business transaction costs, of $1.0 million, and (8) business development and other extraordinary charges, of $1.1 million. For the three months ended June 30, 2025, “Adjusted EBITDA,” a non-GAAP measure, is defined as net income attributable to us before (1) income taxes, (2) depreciation and amortization, of $0.5 million, (3) interest expense, of $1.2 million, (4) new product launch of $0.7 million, (5) training, of $0.2 million, (6) deferred stock compensation $0.3 million, (7) business transaction costs, of $0.5 million, and (8) business development and other extraordinary charges, of $0.5 million. Management and our Board of Directors use this non-GAAP measure for purposes of evaluating our performance. Furthermore, the Compensation Committee of our Board of Directors uses such measure to evaluate management’s performance. We, therefore, believe that the use of this non-GAAP measure provides useful information to investors and other stakeholders by allowing them to view our business through the eyes of management and our Board of Directors, facilitating comparisons of results across historical periods and focus on the underlying ongoing operating performance of our business. As noted above, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.

Previous wording

For the three months ended March 31, 2024, “Adjusted EBITDA,” a non-GAAP measure, is defined as net income attributable to us before (1) income taxes, (2) interest expense, of $1.5 million, (3) depreciation and amortization, of $1.0 million, (4) other non-operating items, net, of $1.5 million, (5) training, of $0.5 million, (6) deferred stock compensation, of $1.3 million ( 7) M&A due diligence costs, of $1.5 million, (8) new product launch of $0.8 million. Management and our Board of Directors use this non-GAAP measure for purposes of evaluating our performance. Furthermore, the Compensation Committee of our Board of Directors uses such measure to evaluate management’s performance. We, therefore, believe that the use of this non-GAAP measure provides useful information to investors and other stakeholders by allowing them to view our business through the eyes of management and our Board of Directors, facilitating comparisons of results across historical periods and focus on the underlying ongoing operating performance of our business. As noted above, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.

Current wording

For the six months ended June 30, 2024, “Adjusted EBITDA,” a non-GAAP measure, is defined as net income attributable to us before (1) income taxes, (2) depreciation and amortization, of $1.4 million, (3) interest expense, of $2.6 million, (4) new product launch of $4.0 million, (5) training, of $0.9 million, (6) deferred stock compensation $1.3 million, (7) business transaction costs, of $1.5 million, and (8) business development and other extraordinary charges, of $2.1 million. For the three months ended June 30, 2024, “Adjusted EBITDA,” a non-GAAP measure, is defined as net income attributable to us before (1) income taxes, (2) depreciation and amortization, of $0.4 million, (3) interest expense, of $1.1 million, (4) new product launch of $2.4 million, (5) training, of $0.4 million, (6) deferred stock compensation $1.3 million, (7) business transaction costs, of $0.4 million, and (8) business development and other extraordinary charges, of $0.4 million. Management and our Board of Directors use this non-GAAP measure for purposes of evaluating our performance. Furthermore, the Compensation Committee of our Board of Directors uses such measure to evaluate management’s performance. We, therefore, believe that the use of this non-GAAP measure provides useful information to investors and other stakeholders by allowing them to view our business through the eyes of management and our Board of Directors, facilitating comparisons of results across historical periods and focus on the underlying ongoing operating performance of our business. As noted above, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.