Financial Analysis

4. Debt 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 its then existing line of credit. . In March 2024, the Company entered into an amendment that extended the date of the first principal payment to March 2025. In February 2025, a second amendment was executed that extended the first principal payment date to September 2025. Under the amendment, payments of $83,000 are due monthly beginning in September 2025 with a lump sum payment of $14,083,000 due at maturity. Interest accrues at the prime rate plus an applicable margin of 4.75% per annum and is payable monthly. The FrontWell financing agreement is secured by a collateral package that includes substantially all of the assets of PGF, PGF RE I, and PGF RE II. On November 13, 2025, the Company received a notice from FrontWell asserting the occurrence of a Default under the FrontWell Credit Agreement. On March 27, 2026, the Company, together with its subsidiaries Palmetto Gourmet Foods, Inc. (PGF), PGF Real Estate I, Inc., and PGF Real Estate II, Inc. (collectively, the Forbearance Parties), entered into a Forbearance and Amendment Agreement with FrontWell (the Forbearance Agreement), pursuant to which FrontWell agreed to forbear from exercising its rights and remedies with respect to specified defaults under the FrontWell Credit Agreement through April 27, 2026, subject to …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

9. Equity Based Compensation Stock Option Plan 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 Companys 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 years ended December 31, 2025 and 2024 the Company granted options to purchase 0 and 333,574 shares, respectively, of the Companys 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. The fair values of the stock-based awards granted were calculated with the following assumptions: Risk-free interest rate 3.81 % Expected term (years) 5-10 Expected volatility 80.00 % Dividend yield 0.00 % For the years ended December 31, 2025 and 2024, the Company recorded approximately $0 and $1,273,000, respectively, of employee 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 years ended December 31, 2025 and 2024 is summarized as follows: Shares Wei …

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5. Income Taxes The Company accounts for income taxes using the liability method. Deferred income tax assets and liabilities are determined based on differences between the financial statement and income tax basis of the respective assets and liabilities, using enacted tax rates in effect for the years when the differences are expected to reverse. Borealis is taxed under Canadian tax laws at a rate of 26.5%. Borealis does not file a consolidated tax return. PGF, PGF RE I, and PGF RE II (the United States subsidiaries) are taxed as C corporations, with a statutory rate of 21%. (Loss) income before income tax expense (benefit) for the years ended December 31, 2025 and 2024 is as follows 2025 2024 U.S. Income (Loss) before Tax $ (11,997,676 ) $ (4,635,408 ) Foreign Income (Loss) before Tax (7,048,667 ) (20,826,690 ) Total Income (Loss) Before Taxes $ (19,046,343 ) $ (25,462,098 ) Our income (loss) from continuing operations before income taxes is as follows 2025 2024 Continuing Operations pre-tax book income $ (19,046,343 ) $ (25,462,098 ) Discontinued Operations pre-tax book income $ - $ - The components of income tax provision (benefit) for the years ended December 31, 2025 and 2024 were as follows: For the Years Ended December 31, 2025 2024 Current provision Federal $ - $ (832 ) State (13,987 ) (14,116 ) Foreign - 43,540 Current benefit (provision) for income taxes $ (13,987 ) $ 28,592 Deferred provision Federal $ (2,021,580 ) $ (4,628,566 ) State (379,524 ) (903,382 ) Foreig …

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7. Leases The Company leases certain equipment from third-parties. The determination of whether an arrangement is a lease is made at the leases inception. In accordance with US GAAP, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Right-of-use ( ROU ) assets represent the Companys right to use an underlying asset for the lease term, and lease obligations represent the Companys obligation to make lease payments over that term. ROU assets and lease obligations are recognized at the lease commencement date based on the present value of lease payments calculated using the implicit rate when it is readily determinable. In the absence of an implicit rate, management may use the Companys incremental borrowing rate based on the information available at lease commencement. The Companys lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. ROU assets associated with operating leases recorded net of accumulated amortization were approximately $158,000 and $64,000 as of December 31, 2025 and December 31, 2024, respectively. ROU assets associated w …

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Recent Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 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 segment disclosures under Topic 280, and a public entity is permitted to disclose multiple measures of segment profit or loss if certain criteria are met. The ASU is effective for years beginning after December 15, 2023, and interim periods within years beginning after December 15, 2024. The adoption of ASU 2023-07 did not have a significant impact on the Companys consolidated financial statements. See Note 11, Segment Reporting, for the required disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , to enhance transparency into income tax disclosures. The amendments require annual disclosure of certain information relating to the rate reconciliation, incom …

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11. Segment Reporting The Company has a single reportable segment focused around sale of similar products. This reportable segment derives revenues from the manufacture and sale of high quality, affordable and nutritious ready to eat meals. The Company identifies its operating segments in accordance with ASC 280, Segment Reporting. An operating segment is a component of an entity (a) that engages in business activities from which it may earn revenues and incur expenses, (b) whose operating results are regularly reviewed by the chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance, and (c) for which discrete financial information is available. The Companys CODM is the Chief Executive Officer. The CODM reviews revenue by geographic region as the primary basis for resource allocation and performance assessment. Discrete revenue information is available for each region; however, operating expenses, assets, liabilities, and capital expenditures are not allocated to individual regions for internal reporting purposes and are managed on a consolidated basis. Accordingly, the Company is treated as a single reportable segment under ASC 280-10-50-1 for purposes of full segment disclosure. Revenue by Geographic Region The following table presents gross revenue disaggregated by geographic region for the years ended December 31, 2025 and 2024, respectively. Regions correspond to the sales territories through which …

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12. Subsequent Events The Company evaluated events and transactions occurring after December 31, 2025 through May 29, 2026, the date these consolidated financial statements were available to be issued, for subsequent events requiring recognition or disclosure. On November 13, 2025, the Company received a notice from its senior lender, FrontWell Capital Partners Inc. (FrontWell), asserting the occurrence of Default under the credit agreement dated August 10, 2023 (as amended, the FrontWell Credit Agreement). On March 27, 2026, the Company, together with its subsidiaries Palmetto Gourmet Foods, Inc., PGF Real Estate I, Inc., and PGF Real Estate II, Inc. (collectively, the Forbearance Parties), entered into a Forbearance and Amendment Agreement with FrontWell (the Forbearance Agreement), pursuant to which FrontWell agreed to forbear from exercising its rights and remedies with respect to specified defaults under the FrontWell Credit Agreement through April 27, 2026, subject to compliance with certain conditions, including the retention of a Chief Restructuring Officer. On April 27, 2026, the Companys subsidiaries, Palmetto Gourmet Foods, Inc., PGF Real Estate I, Inc., and PGF Real Estate II, Inc. (collectively, the Borrowers), entered into a Credit Agreement (the Oxus Credit Agreement) with Oxus Capital PTE Ltd. (Oxus Capital), a major shareholder of the Company, as lender. Borealis Foods Inc., Borealis IP Inc., and Palmetto Gourmet Foods (Canada) Inc. are party to the Oxus Cred …

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4. Debt In 2021, the Company issued a $3,000,000 convertible note that matures in December 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 Companys 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 During 2023, the Companys subsidiaries entered into a $25,000,000 financing agreement with FrontWell Capital Partners Inc. (FrontWell), comprised of a $15,000,000 term facility and a $10,000,000 revolving line of credit, with a maturity date in August 2026. In March 2024 and February 2025, the Company entered into amendments extending the first principal payment date; under the February 2025 amendment, monthly payments of $83,000 commenced in September 2025 with a lump-sum balloon payment of $14,083,000 due at maturity. 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. Interest accrues at the prime rate plus the applicable margin of 4.50%. Interest is due and payable monthly beginning in September 2023. The line of credi …

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8. Equity Based Compensation Restricted Stock Restricted Stock Units Weighted Average Grant Date Fair Value Outstanding at December 31, 2024 16,954 5.83 Granted Vested (3,000 ) 5.83 Forfeited Outstanding at March 31, 2025 13,954 $ 5.83 Outstanding at December 31, 2025 12,500 3.21 Granted Vested (12,500 ) 3.21 Forfeited Outstanding at March 31, 2026 Stock compensation expense related to restricted stock units (RSUs) was approximately $40,000 and $58,000 for the three months ended March 31, 2026 and 2025, respectively. RSUs represent the right to receive one common share of the Company or the cash equivalent of one common share upon vesting, subject to the terms and conditions of the Companys Equity Incentive Plan and the applicable award agreement. Vesting is generally subject to continued service and any other conditions established by the Compensation Committee. The Companys Equity Incentive Plan, adopted on February 7, 2024, provides for the grant of stock options, RSUs, performance share units (PSUs), deferred share units (DSUs) and stock appreciation rights (SARs) to directors, officers, employees and consultants. The purpose of the plan is to attract, retain and incentivize eligible participants and align their interests with those of shareholders through equity-based compensation. The 12,500 shares that vested in the three months ended March 31, 2026, have not been issued or registered and therefore, total shares outstanding remains unchanged since December 31, 2025. …

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5. Income Taxes The Company accounts for income taxes using the liability method. Deferred income tax assets and liabilities are determined based on differences between the financial statement and income tax basis of the respective assets and liabilities, using enacted tax rates in effect for the years when the differences are expected to reverse. Borealis is taxed under Canadian tax laws at a rate of 26.5%. Borealis does not file a consolidated tax return. 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 March 31, 2026 and 2025 was $0 and $0, respectively, on a consolidated pre-tax book loss of approximately $3,512,000 and $4,188,000 in the three month periods ended March 31, 2026 and 2025, respectively. The Companys tax provision is based on a projected effective rate based on annualized amounts applied to actual income to date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. 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 uncerta …

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Recent Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (ASU 2024-03) which requires entities to (i) disclose amounts of (a) purchase of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and, (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities, (ii) include certain amounts that are already required to be disclosed under current U.S. GAAP in the same disclosures as other disaggregation requirements, (iii) disclose a qualitative description of the amounts remaining in relevant expense captions that are not necessarily disaggregated quantitatively, and (iv) disclose the total amount of selling expenses, in annual reporting periods, an entitys definition of selling expense. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating ASU 2024-03 to determine the impact it may have on its consolidated financial statements. In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270), which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes …

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10. Segment Reporting The Company has a single reportable segment focused around sale of similar products. This reportable segment derives revenues from the manufacture and sale of high quality, affordable and nutritious ready to eat meals. The Company identifies its operating segments in accordance with ASC 280, Segment Reporting. An operating segment is a component of an entity (a) that engages in business activities from which it may earn revenues and incur expenses, (b) whose operating results are regularly reviewed by the chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance, and (c) for which discrete financial information is available. The Companys CODM is the Chief Executive Officer . The CODM reviews revenue by geographic region as the primary basis for resource allocation and performance assessment. Discrete revenue information is available for each region; however, operating expenses, assets, liabilities, and capital expenditures are not allocated to individual regions for internal reporting purposes and are managed on a consolidated basis. Accordingly, the Company is treated as a single reportable segment under ASC 280-10-50-1 for purposes of full segment disclosure. Revenue by Geographic Region The following table presents gross revenue disaggregated by geographic region for the three months ended March 31, 2026 and 2025, respectively. Regions correspond to the sales territories through w …

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11. Subsequent Events The Company evaluated subsequent events through the date these financial statements were issued. The following events occurring after March 31, 2026 require disclosure. Oxus Credit Agreement. On April 27, 2026, the Companys subsidiaries Palmetto Gourmet Foods, Inc., PGF Real Estate I, Inc., and PGF Real Estate II, Inc. (collectively, the Borrowers) entered into a Credit Agreement (the Oxus Credit Agreement) with Oxus Capital PTE Ltd. (Oxus Capital), a major related-party shareholder, as lender. Borealis Foods Inc., Borealis IP Inc., and Palmetto Gourmet Foods (Canada) Inc. are party as guarantors. The Oxus Credit Agreement provides for a term loan of up to $17,000,000, the proceeds of which were used to repay in full and discharge all outstanding obligations under the FrontWell Credit Agreement (approximately $16.2 million), with the balance applied to transaction expenses and general corporate purposes. The term loan matures on April 27, 2031, bears interest at 12% per annum (14% upon default), and is repayable in 48 consecutive monthly installments commencing May 1, 2027. Oxus Capital has the option, at its sole election, to convert all interest accrued during the first year of the loan (approximately $2.0 million) into common equity of the Company in lieu of cash. The term loan is secured by a first-priority lien on substantially all assets of the Borrowers, including mortgages on the Companys manufacturing facility and distribution center in Saluda, …

SubsequentEventsTextBlock · excerpt; the full note is in the filing