Borealis Foods Inc.

Limitations on effectiveness of controls and procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated, as of the end of the period covered by this Annual Report, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15e and 15d-15e under the Exchange Act). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective at the reasonable assurance level due to the material weakness in internal control over financial reporting described below.

Management’s annual report on internal control over financial reporting

As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Borealis Foods’ internal control over financial reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP. Borealis Foods’ internal control over financial reporting includes those policies and procedures that:

Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control — Integrated Framework (2013).” Based on this assessment, our management concluded that our internal control over financial reporting was not effective as of December 31, 2025, due to the material weakness described below

Material Weakness in Internal Control Over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the preparation of the Company’s consolidated financial statements for the fiscal year ended December 31, 2025, management identified the following material weakness in the Company’s internal control over financial reporting:

Insufficient Accounting and Financial Reporting Resources and Lack of Segregation of Duties

The Company does not employ a sufficient number of qualified accounting and financial reporting personnel to allow for adequate segregation of duties and timely, independent review of the Company’s financial statements and related disclosures. As of December 31, 2025, the Company’s finance function consisted of five full-time employees, including the Chief Financial Officer. This staffing level is insufficient to maintain effective internal controls given the complexity of the Company’s operations, capital structure, and reporting obligations as a public company. As a result, the Company lacks:

This material weakness contributed to the Company’s inability to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2025 within the time period prescribed by the SEC’s rules.

Inadequate Controls Over Related Party Transactions and Debt Covenant Compliance

The Company did not maintain effective controls over the identification, authorization, and monitoring of related party transactions and the assessment of compliance with restrictive covenants in its debt agreements. During fiscal year 2025, the Company issued approximately $11.4 million in promissory notes to entities controlled by its Chief Executive Officer and Non-Executive Chairman, and an additional $3.5 million in a promissory note to Oxus Capital PTE Ltd., a beneficial owner of more than 5% of the Company’s outstanding Common Shares, without adequate processes to evaluate whether the issuance of such notes complied with the debt incurrence restrictions of the Company’s then-existing Credit Agreement with Frontwell Capital Partners Inc. The issuance of these and other unsecured notes was subsequently identified as a contributing factor in the Events of Default under the Frontwell Credit Agreement disclosed in Part I, Item 1.A, “Risk Factors.”

The Company’s controls were insufficient to ensure that:

Remediation Efforts

Management, with oversight from the Audit Committee, is committed to remediating the material weakness described above.

The Company’s remediation plan includes the following measures, which are in various stages of implementation:

While the Company has begun to implement these measures, the material weakness will not be considered remediated until the applicable controls have been in operation for a sufficient period of time and management has concluded, through testing, that the controls are operating effectively. The Company cannot provide assurance that these remediation efforts will be successful or that additional material weaknesses will not be identified in the future.

Attestation report of the registered public accounting firm

This Annual Report does not include an attestation report of our independent registered public accounting firm due to an exemption established by the JOBS Act for “emerging growth companies.”

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The material weakness described above existed as of December 31, 2025 and throughout fiscal year 2025. The remediation efforts described above commenced subsequent to December 31, 2025.