BRLS 10-K & 10-Q changes, risk factors and insider trading

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and our functional currency is the U.S. Dollar. The consolidated financial statements include the accounts of Borealis Foods Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. A summary of the significant accounting policies followed in the preparation of the consolidated financial statements is included in Note 1 to the consolidated financial statements included elsewhere in this Annual Report.

The Company continued to execute its strategic repositioning and channel diversification in 2025, with emphasis on institutional and food service growth, gross margin expansion, and structural cost reduction. Net revenue grew 8.7% year-over-year to $30.08 million, gross profit improved 60% to $3.51 million, and total SG&A declined 35.6% from the prior year. The net loss of $18.98 million for fiscal 2025 reflects the lingering burden of a capital structure shaped by the 2024 Reverse Recapitalization, not operational underperformance. Management is actively engaged in refinancing discussions and financing initiatives designed to resolve this mismatch and fully unlock the earnings power of our improving operations.

Oxus Capital Term Loan: Subsequent to December 31, 2025, the Company completed the refinancing of the FrontWell credit facility. In April 2026, Palmetto Gourmet Foods, Inc. and its affiliated entities entered into a $17.0 million term loan credit agreement with Oxus Capital Pte. Ltd., a major related party shareholder, which was used to repay and fully discharge the FrontWell credit facility. The Oxus Term Loan bears interest at 12% per annum, is interest-only during Year 1 (with Oxus Capital having the option to convert Year 1 accrued interest into common equity of Borealis Foods Inc.), amortizes on a straight-line basis over 48 months commencing May 2027, and matures in April 2031.

Additional Financing: We are pursuing equity offerings, convertible debt, strategic partnerships, and other financing alternatives to provide the working capital required to scale production and normalize vendor payment terms. Any completed financing transaction will be disclosed promptly in our SEC filings.

Revenue

Net revenues increased $2.4 million, or 8.7%, to $30.1 million for the year ended December 31, 2025, compared to $27.7 million for the year ended December 31, 2024. Gross sales increased $2.4 million, or 8.2%, to $31.5 million for the year ended December 31, 2025. This growth was driven by continued expansion of our institutional food service channel, increasing volumes from key partners and the ongoing ramp-up of our higher-margin Chef Woo branded products.

We have deliberately and successfully executed a channel diversification strategy. Our largest customer represented approximately 57% of revenues in 2023, approximately 22% of revenues in 2024 and approximately 23% of revenues in 2025. Our revenue mix reflects a substantially broader and higher-quality customer base across institutional food service, specialty retail, and select mass channel partners. This diversification strengthens our revenue resilience and supports margin improvement. In 2024, approximately 33% of our total revenues were derived from two customers. In 2025, our two largest customers in the aggregate represented approximately 35% of net revenues, with no single customer representing more than 23% of net revenues. Our revenue mix continues to broaden across institutional food service, specialty retail, and select mass channel partners.

Cost of Goods Sold and Gross Profit

Chef Woo, High Protein Ramen, our flagship brand, continued its strong growth trajectory in 2025, contributing to meaningful gross margin expansion. Combined with the growing contribution of Woodles to school meal programs and the ramp of our food service product lines, the mix shift toward higher-margin branded and institutional products is the primary driver of our gross margin improvement.

Operational Efficiencies: Tighter inventory management at PGF, with inventory spoilage charges of approximately $1.1 million concentrated in the first half of the year, declining materially in second half 2025 as we aligned inventory to contracted institutional demand Gross profit improved $1.32 million, or 60.4%, to $3.51 million for the year ended December 31, 2025, compared to $2.19 million in 2024 as compared to the negative gross margins of 2022 and 2023. Gross margin reached 11.7% for the full year, with the fourth quarter averaging 15.0%, its highest quarterly level of the year, primarily related to product mix with management’s focus on higher margin products.

Total selling, general and administrative expenses (“SG&A”) declined 35.6% year-over-year to $14.55 million, or 48.4% of net revenue, compared to $22.59 million, or 81.7% of net revenue, in the prior year. This is structural cost reduction, not cosmetic, it reflects the normalization of our cost base following the Reverse Recapitalization and the maturation of our food service channel investment.

General and administrative expenses were $9.03 million for 2025, compared to $12.75 million in 2024. The decrease reflects primarily lower freight and distribution costs, lower professional fees and stock compensation expense, as one-time transaction costs did not recur in 2025. The prior year also included approximately $1.51 million in one-time SPAC transaction-related costs and approximately $1.27 million in non-recurring stock-based compensation, neither of which recurred.

Sales and marketing expenses of $5.73 million recorded in 2024, primarily associated with the national launch of Chef Woo and Gordon Ramsay products and the build-out of our food service business development pipeline did not recur at the same level in 2025. In 2025, these costs have been substantially normalized as our channel strategy has matured.

Training costs declined to $0.95 million in 2025 from $1.72 million in 2024, reflecting the maturation of our production team at PGF as manufacturing capabilities stabilized. These costs are recorded in SG&A as they are not directly to finished goods production.

A non-cash goodwill impairment charge of $1.92 million and a trademark impairment charge of $0.09 million were recorded in Q4 2025, reducing the goodwill and trademark balance to zero. The impairment was determined following our annual goodwill impairment assessment under ASC 350, reflecting current market conditions and the Company’s capital structure. This charge has no impact on our liquidity, cash flows, or operational capacity and should not be read as indicative of any deterioration in our underlying business.

Our primary sources of liquidity are borrowings under the FrontWell credit facility and advances from related parties. While cash generated from operations has not yet been sufficient to fully fund our operating requirements at the current stage of development, we believe the trajectory of our operating results including 8.7% net revenue growth, 60.4% gross profit improvement, and 35.6% core SG&A reduction in 2025 demonstrates an operating business that is approaching the inflection point at which self-funded growth becomes achievable. Management is actively pursuing targeted refinancing and additional capital to bridge to that inflection point.

As of December 31, 2025, we had cash and cash equivalents of $0.06 million, compared to $0.65 million as of December 31, 2024. We have a working capital deficit of approximately $(61.76) million as of December 31, 2025 and a deficit of $(13.61) million as of December 31, 2024 The significant increase in the working capital deficit from the prior year is primarily attributable to the reclassification of the FrontWell term facility and certain related party advances to current liabilities as those obligations approach scheduled maturity. These reclassifications are accounting-driven; management is engaged in active discussions to refinance, extend, or restructure these obligations prior to their maturity dates.

Net cash used in operating activities for the year ended December 31, 2025, was $6.60 million, compared to $15.09 million for the year ended December 31, 2024, an improvement of $8.49 million. The improvement reflects lower operating losses driven by gross margin expansion and SG&A reduction, partially offset by changes in working capital including a reduction in accounts payable. Non-cash adjustments included depreciation and amortization of $1.84 million, non-cash compensation expense of $0.44 million, and the non-cash goodwill and trademark impairment of $2.0 million. We expect operating cash usage to continue to moderate as gross margins expand and revenue grows toward the volume levels at which fixed overhead is more fully leveraged.

Net cash used in investing activities was $(0.06) million for the year ended December 31, 2025, compared to $(1.91) million for the year ended December 31, 2024. Capital expenditures were minimal in 2025, reflecting management’s deliberate decision to preserve liquidity. Our manufacturing infrastructure requires limited incremental capital investment to support the revenue growth contemplated in management’s plans, as our Saluda, South Carolina facility has significant installed capacity available to deploy with working capital and customer demand rather than new capital expenditure Financing Activities Net cash from financing activities reflects payment activity on finance leases, borrowings and repayments under credit facilities, and related party advance activity during the year. In 2025, financing activities provided $6.08 million, driven by the advancement of related party loans and year 2024 of $10.03 million, driven primarily by proceeds from the $7.60 million line of credit draw and convertible debt proceeds.

We need additional capital to meet our funding requirements through fiscal 2026 to scale production toward the utilization levels at which our operating economics become self-reinforcing. The August 2026 balloon maturity risk associated with the FrontWell term facility has been eliminated as a result of the Oxus Term Loan described above, which extends our primary debt maturity to April 2031. As of December 31, 2025, we had cash on hand of $0.06 million and a negative working capital of approximately $(61.76) million.

Convertible Notes Payable. We have outstanding convertible notes payable of $3.00 million as of December 31, 2025. These notes are convertible into common shares at the option of the holder on or before the earlier of the maturity date or a qualified financing event, as defined in the note agreements.

The risk factors set forth below update and supplement the risk factors disclosed in the Annual Report. Except as set forth below, there have been no material changes from the risk factors disclosed in the Annual Report. The risk factors disclosed in the Annual Report, together with the updated and supplemental risk factors set forth below, should be carefully considered, together with the other information in this Quarterly Report and our other filings with the SEC, in evaluating the Company and our Common Shares and Warrants. The risks described in the Annual Report and below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, or results of operations.

Approximately $33.3 million of related-party indebtedness is subject to contractual automatic conversion into Common Shares on or after July 1, 2026, and any such conversion will result in substantial dilution to existing shareholders.

On April 27, 2026, in connection with the Oxus Credit Agreement, we entered into a Conversion Agreement with Oxus Capital PTE Ltd. (“Oxus Capital”), our Chief Executive Officer Reza Soltanzadeh, and our Non-Executive Chairman Barthelemy Helg (together, the “Shareholders”), and a Subscription Agreement with Oxus Capital. Pursuant to the Subscription Agreement, we are obligated to use commercially reasonable efforts to consummate one or more equity financings resulting in aggregate gross proceeds of at least $70.0 million at a price of not less than $9.00 per share on or before July 1, 2026 (the “Equity Financing Condition”). If the Equity Financing Condition is not satisfied, the Conversion Agreement provides for the automatic conversion of approximately $29.1 million of indebtedness previously advanced by the Shareholders to the Company, plus approximately $4.3 million of accrued interest (calculated through June 30, 2026), into Common Shares.

We do not currently have any commitments for the equity financing contemplated by the Subscription Agreement, and the $9.00 per share threshold is substantially above recent trading prices of our Common Shares. As a result, we expect that the Equity Financing Condition will not be satisfied by July 1, 2026, and that the conversion contemplated by the Conversion Agreement will be triggered. The number of Common Shares issuable upon conversion will depend on the conversion price determined under the Conversion Agreement, and the conversion price is expected to be substantially below the $9.00 per share threshold contemplated by the Subscription Agreement. Accordingly, if and when the conversion is effected, the conversion will result in substantial dilution to our existing shareholders and a significant further increase in the beneficial ownership and voting power of Oxus Capital and its affiliates, who are already our controlling shareholder group.

As described in the following risk factor, the issuance of Common Shares upon the conversion contemplated by the Conversion Agreement is expected to require shareholder approval under Nasdaq Listing Rules 5635(b) and potentially 5635(d). The Conversion Agreement contains a “Required Approvals” provision that defers the conversion and correspondingly extends the maturity of the related indebtedness until such shareholder approvals are obtained. The interaction between the July 1, 2026 contractual conversion trigger and the Nasdaq-driven deferral creates a continuing overhang on our Common Shares, the duration and ultimate resolution of which depends on factors outside our control, including the timing of any shareholder meeting we are able to convene and the outcome of the shareholder vote.

Issuances of Common Shares upon conversion of related-party indebtedness require shareholder approval under Nasdaq Listing Rules 5635(b) and 5635(d), which approval has not been obtained and was not sought at our June 29, 2026 annual meeting of shareholders.

The issuance of Common Shares upon (i) the conversion of approximately $29.1 million of related-party indebtedness (plus approximately $4.3 million of accrued interest as of June 30, 2026) under the Conversion Agreement and (ii) the conversion of the $3.0 million convertible promissory note issued to Oxus Capital on May 29, 2026 described in Note 11 (collectively, the “Required Issuances”) is expected to require the prior approval of our shareholders under Nasdaq Listing Rule 5635(b) (change of control) and potentially Nasdaq Listing Rule 5635(d) (issuance of 20% or more of the outstanding Common Shares at a price less than the Nasdaq minimum price).

The Required Issuances were not submitted to a vote of our shareholders at our June 29, 2026 annual meeting of shareholders. The Conversion Agreement and the Note each defer the applicable conversion and extend the applicable maturity until the required shareholder approvals are obtained. We intend to convene a special meeting of shareholders, or to include the required proposals at our next annual meeting of shareholders, to seek the required approvals.

We cannot assure you that we will obtain the required shareholder approvals on a timely basis or at all. Under Nasdaq’s voting requirements applicable to issuances under Listing Rule 5635, the shares to be issued in the transactions, and shares held by Oxus Capital and its affiliates as interested parties, may be subject to limitations on voting on the related proposals. If we fail to obtain the required shareholder approvals, the conversion contemplated by the Conversion Agreement will continue to be deferred, the related indebtedness will remain outstanding (subject to the corresponding maturity extensions and continuing accrual of interest at the contractual rates), and the overhang created by the Conversion Agreement will continue to weigh on the trading price of our Common Shares. In addition, if we are required to restructure or amend the Conversion Agreement or the Oxus Credit Agreement in order to address the deferral or to obtain shareholder approval, any such restructuring or amendment could be on terms less favorable to us and our non-affiliated shareholders than the existing terms. Failure to obtain the required approvals could also adversely affect our continued listing on the Nasdaq Capital Market.

Substantial doubt about our ability to continue as a going concern has not been alleviated.

As disclosed in the Annual Report, our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern. Notwithstanding the refinancing of the FrontWell Capital Partners credit facility through the April 27, 2026 Oxus Credit Agreement and the additional $3.0 million provided under the May 29, 2026 amendment thereto, management has concluded under ASC 205-40 that substantial doubt has not been alleviated, because management’s plans cannot be assessed as probable of being effectively implemented. Material conditions continue to exist, including our need to consummate at least $70.0 million of equity financing at $9.00 per share on or before July 1, 2026 (for which we have no commitments), the conversion overhang and Nasdaq shareholder-approval requirements described above, our continued reliance on demand and past-due obligations to related parties, and the fact that our total liabilities continue to exceed our total assets. See Note 1 to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.

Oxus Capital and its controlling shareholder exercise significant influence over our Company and may increase that influence further upon conversion of related-party indebtedness.

Oxus Capital, our former SPAC sponsor, beneficially owns, through its controlling shareholder Kenges Rakishev, approximately 39.09% of our outstanding Common Shares. Oxus Capital is also our senior secured lender under the Oxus Credit Agreement (as amended), holds a portion of the related-party indebtedness subject to the Conversion Agreement, and is entitled to appoint two members of our Board of Directors, one of whom (Pavel Mynzhanov) was appointed in May 2026. As a result, Oxus Capital and Mr. Rakishev have significant influence over our business, strategy, financing, and governance, including the ability to influence or determine the outcome of most matters submitted to our shareholders for approval. If the conversion contemplated by the Conversion Agreement is effected following receipt of the required shareholder approvals, the beneficial ownership and voting power of Oxus Capital and its affiliates will increase further, potentially to a level that constitutes majority ownership and control of the Company. The interests of Oxus Capital and Mr. Rakishev may differ from those of our other shareholders, and conflicts of interest may arise in connection with related-party transactions, financings, and other matters in which Oxus Capital has a direct or indirect interest.

We are not yet confirmed as compliant with Nasdaq Listing Rule 5620(a).

On January 12, 2026, we received a notice from the Nasdaq Listing Qualifications Department that we were not in compliance with Nasdaq Listing Rule 5620(a), which requires listed companies to hold an annual meeting of shareholders within twelve months of the end of each fiscal year. Nasdaq granted us an extension until June 29, 2026 to regain compliance. We held our annual meeting of shareholders on June 29, 2026. We expect to receive confirmation from Nasdaq that we have regained compliance with Listing Rule 5620(a); however, we have not received such confirmation as of the date of this Quarterly Report. If, contrary to our expectations, Nasdaq determines that we have not regained compliance, our Common Shares and Warrants could become subject to delisting from the Nasdaq Capital Market, which would materially and adversely affect the liquidity and trading price of our securities, our ability to raise additional capital, and our relationships with customers, suppliers, and other counterparties.

The first quarter of 2026 reflects continued operational progress against our core strategic priorities: institutional channel expansion, gross margin defense, and SG&A rationalization. Net revenue increased 8.0% year-over-year to $7.37 million, loss from operations improved 29.3% to $(2.06) million from $(2.92) million in Q1 2025, and total SG&A declined 24.0% to $2.90 million. Net loss improved 16.1% to $(3.51) million from $(4.19) million in the prior year period.

Consistent with Borealis Foods’ strategy of partnership with prominent national and international food producers, retailers and distributors, the Company expanded institutional manufacturing partnerships and food service customer base through the addition of two global food manufacturers. One production arrangement was entered into during the first quarter of 2026 and the second was entered shortly after quarter-end. Under these arrangements, a leading global cereal and snack food company and a major multinational consumer packaged goods company now have production arrangements with the Company for manufacturing at our Saluda, South Carolina facility.

These relationships build upon the Company’s existing network of institutional partnerships and further expand our contracted demand pipeline and accelerate the path toward higher capacity utilization. Management believes these partnerships are an important step in the continued development of the Company’s institutional manufacturing business. The Company believes these relationships reflect confidence in the quality and capabilities of the PGF facility; as production volumes under these arrangements increase, the Company expects they may contribute to improved capacity utilization and greater absorption of fixed manufacturing costs, although the timing and extent of such benefits will depend on customer demand and production schedules.

The unaudited condensed consolidated financial statements included in this Quarterly Report have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

Net revenue increased 8.0% year-over-year to $7.37 million for the three months ended March 31, 2026, compared to $6.85 million for the three months ended March 31, 2025. Gross sales increased 8.0% to $7.78 million from $7.23 million in the prior year period. The growth was driven by continued expansion of our institutional food service channel, including increased volumes from existing partners and the initial contribution from new major manufacturing partnerships entered into during the first quarter.

The quarter marks the beginning of a meaningful expansion in our customer base and contracted production volume. During Q1 2026, the Company entered into production arrangements with two globally recognized consumer food companies, one a leading global cereal and snack manufacturer and the other a major multinational consumer packaged goods company with an extensive food and beverage portfolio. These arrangements add two significant sources of contracted volume to our existing institutional relationships and are expected to contribute meaningfully to revenue and capacity utilization beginning in the second quarter of 2026 and accelerating through the remainder of the year.

The annualized revenue run-rate implied by Q1 2026 net revenue is approximately $29.47 million. Management anticipates this run-rate to increase materially as the new co-packing arrangements and expanded institutional volumes ramp through the remainder of 2026. Revenue concentration with any single mass retail partner has continued to decline, consistent with our strategic objective of building a diversified, high-quality institutional manufacturing portfolio that generates consistent large-order volume at favorable margins.

Sales discounts and allowances were $0.41 million for Q1 2026, or 6.0% of gross sales, consistent with Q1 2025 at $0.38 million (also 6.0% of gross sales), reflecting stable promotional discipline as our customer mix continues to evolve toward institutional and manufacturing channels with lower promotional requirements.

Gross profit for the three months ended March 31, 2026 was $0.84 million (11.0% of net revenue), compared to $0.90 million (13.0% of net revenue) for the three months ended March 31, 2025, a decrease of $0.06 million. Non-GAAP gross margin, less depreciation, was 16.0% for Q1 2026 compared to 20.0% for Q1 2025. The year-over-year margin comparison reflects a product mix shift in Q1 2026 as we onboard new partners initial production runs which typically carry lower per-unit margins as lines are qualified and production efficiencies are established. Management expects gross margin to recover and expand as these new relationships scale to full volume and line efficiencies are optimized.

The primary drivers of the gross profit variance are:

Volume-driven COGS increase: Cost of goods sold, excluding depreciation, increased $0.68 million year-over-year commensurate with the 8.0% increase in revenue, reflecting higher raw material and direct labor costs on the larger production base. As a percentage of net revenue, cost of goods sold (excluding depreciation) was 83.4% in Q1 2026 versus 80.0% in Q1 2025.

New customer onboarding costs: Q1 2026 reflects the initial production qualification runs and related efficiency ramp-up costs associated with the new major manufacturing partnerships. These are transitional costs that are expected to normalize as production volumes reach steady-state.

Depreciation reduction: Depreciation within cost of goods sold declined to $0.39 million in Q1 2026 from $0.48 million in Q1 2025, a reduction of $0.09 million, reflecting the continued benefit of the machine-hours depreciation method under which charges vary with actual production utilization.

The capacity utilization opportunity remains the most powerful lever available to the Company. Our Saluda, South Carolina facility operates at an installed capacity of 600 million meals per year, and current production levels represent a small fraction of that capacity. The addition of the new manufacturing partnerships in Q1 2026 is the most direct mechanism available to us for increasing utilization. We believe the contracted demand pipeline now in place with our institutional and co-packing partners provides the clearest pathway we have had to date toward achieving that utilization level.’

Total selling, general and administrative expenses declined 24.0% year-over-year to $2.90 million, or 39.0% of net revenue, for the three months ended March 31, 2026, compared to $3.82 million, or 56.0% of net revenue, for the three months ended March 31, 2025. This represents the continuation of the structural SG&A reduction that accelerated in the second half of fiscal 2025. The $0.92 million reduction in Q1 2026 SG&A is broad-based across all expense categories and reflects normalization of our cost base as the food service channel matures.

Key drivers of the Q1 2026 SG&A improvement include:

The Q1 2026 annualized SG&A run-rate of approximately $11.60 million continues the downward trajectory. Management expects this run-rate to remain stable or continue to improve, with the new manufacturing relationships not expected to require material incremental SG&A investment given the institutional nature of those arrangements.

As of March 31, 2026, our primary sources of liquidity were borrowings under the FrontWell Capital Partners credit facility and advances from related parties, as cash generated from operations were not sufficient to fund our operating requirements. As of the balance sheet date, we had cash and cash equivalents of approximately $0.48 million and a working capital deficit of approximately $(65.02) million. The Company was reliant on related party funding and vendor payment timing to meet near-term obligations as of March 31, 2026.

As of March 31, 2026, the FrontWell term facility carried a balloon payment of approximately $14.08 million due in August 2026, with an additional $2.21 million outstanding under the revolving line of credit. This scheduled maturity, occurring within twelve months of the balance sheet date, represented the most significant near-term capital structure risk as of March 31, 2026. Management was actively engaged in discussions with FrontWell and evaluating alternative secured financing arrangements supported by the Company’s $43.51 million net PP&E asset base in order to refinance or extend this obligation prior to its maturity.

The addition of two major global food manufacturers as manufacturing customers, one at the end of Q1 2026 and one shortly thereafter, is expected to improve the Company’s liquidity trajectory by generating contracted, large-order institutional volume that improves working capital predictability and strengthens the borrowing base. Management believes this expanded demand pipeline positions the Company to improve its working capital profile as these relationships reach full production volume in the quarters ahead.

Subsequent to March 31, 2026, the Company completed two related-party financing transactions that materially changed its capital structure and liquidity position. The April 27, 2026 Oxus Credit Agreement was previously disclosed in the Company's Annual Report on Form 10-K; the May 29, 2026 Oxus Convertible Promissory Note was not.

On April 27, 2026, the FrontWell credit facility was retired in full through a $17.00 million term loan from Oxus Capital, a related-party major shareholder controlled by Kenges Rakishev, eliminating the August 2026 balloon maturity. On May 29, 2026, the Company issued a separate $3.0 million senior unsecured convertible promissory note to Oxus Capital, bearing interest at 10% per annum and maturing August 29, 2026 (subject to automatic extension pending receipt of required shareholder approvals), convertible at Oxus Capital's election at maturity into Common Shares at $1.45 per share, subject to a 49.9% beneficial ownership blocker. These transactions are described in detail under “Subsequent Events” above and are not reflected in the March 31, 2026 balance sheet.

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of March 31, 2026, conditions existed that raised substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued. Those conditions included: (i) recurring net losses, including a net loss of $3.51 million for the three months ended March 31, 2026; (ii) net cash used in operating activities of approximately $0.12 millon for the three months ended March 31, 2026; (iii) a working capital deficit of approximately $(65.02) million as of March 31, 2026; and (iv) the FrontWell term facility balloon payment of approximately $14.08 million due in August 2026, which was within twelve months of the balance sheet date.

As of March 31, 2026, management’s plans to address the going concern conditions included the following:

FrontWell Refinancing: Management was actively engaged in discussions with FrontWell Capital Partners regarding the refinancing, amendment, or extension of the term facility prior to its August 2026 maturity. The Company’s $43.51 million net PP&E asset base, representing one of the most advanced ramen manufacturing facilities in North America, was expected to support asset-based refinancing at a scale sufficient to materially extend the Company’s debt runway.

New Institutional Manufacturing Partnerships: During the first quarter of 2026 and shortly thereafter, the Company entered into production arrangements with two major global food manufacturers. These relationships were expected to generate meaningful contracted production volume beginning in Q2 2026, improving capacity utilization, revenue predictability, and the Company’s borrowing base.

Continued Related Party Financial Support: The Company’s Chairman and CEO have historically provided, and as of March 31, 2026 were expected to continue providing, financial support as needed. Advances of $2.05 million and $0.28 million, respectively, had been provided by the Chairman and CEO subsequent to December 31, 2025 and prior to the filing date of the Annual Report on Form 10-K and their continued support was considered a mitigating factor in management’s going concern assessment.