{"url_path":"/sec/brls/10-k/2026/item-13","section_key":"item-13","section_title":"Item 13 Certain Relationships and Related Transactions, and Director Independence.","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-02","source_url":"https://www.sec.gov/Archives/edgar/data/1852973/0001213900-26-063777-index.html","accession_number":"0001213900-26-063777","cik":"0001852973","ticker":"BRLS","issuer_name":"Borealis Foods Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1852973/0001213900-26-063777-index.html","primary_entity_key":"0001852973","primary_entity_name":"Borealis Foods Inc."},"word_count":2385,"has_tables":true,"body_markdown":"Item\n13. Certain Relationships and Related Transactions, and Director Independence.\n\n** **\n\n**Policies and Procedures\nfor Related Party Transactions**\n\n \n\nWe have a written Related-Person Transactions\nPolicy that sets forth the Company’s policies and procedures regarding the identification, review, consideration and approval or\nratification of “related-persons transactions.” For purposes of the Company’s policy only, a “related-person transaction”\nis a transaction, arrangement or relationship (or any series of similar transactions, arrangements, or relationships) in which the Company\nand any “related person” are participants involving an amount that exceeds $120,000 and the related person will have either\ndirect or indirect interest. Transactions involving compensation for services provided to the Company as an employee, director, consultant,\nor similar capacity by a related person are not covered by this policy. A related person is any executive officer, director, or more than\n5% shareholder of the Company, including any of their immediate family members, and any entity owned or controlled by such persons.\n\n \n\n55\n\n \n\nUnder the policy, where a transaction has\nbeen identified as a related-person transaction, management must present information regarding the proposed related-person transaction\nto the Audit Committee (or, where Audit Committee approval would be inappropriate, to another independent body of the board of directors)\nfor consideration and approval or ratification. The presentation must include a description of, among other things, the material facts,\nthe interests, direct and indirect, of the related persons, the benefits to the Company of the transaction and whether any alternative\ntransactions were available. To identify related-person transactions in advance, the Company relies on information supplied by its executive\nofficers, directors and certain significant shareholders. In considering related-person transactions, the Audit Committee takes into account\nthe relevant available facts and circumstances including, but not limited to:\n\n \n\n(a)the\nrisks, costs and benefits to the Company;\n\n \n\n(b)the\nimpact on a director’s independence in the event the related person is a director, immediate family member of a director or an\nentity with which a director is affiliated;\n\n \n\n(c)the\nterms of the transaction;\n\n \n\n(d)the\navailability of other sources for comparable services or products; and\n\n \n\n(e)the\nterms available to or from, as the case may be, unrelated third parties or to or from employees generally.\n\n \n\nIn the event a director has an interest in\nthe proposed transaction, the director must recuse himself or herself from the deliberations and approval. The policy requires that, in\ndetermining whether to approve, ratify or reject a related-person transaction, the Audit Committee consider, in light of known circumstances,\nwhether the transaction is in, or is not inconsistent with, the best interests of the Company and its shareholders, as the Audit Committee\ndetermines in the good faith exercise of its discretion.\n\n \n\n**Related Party Transactions**\n\n \n\nThe following is a description of transactions since December 31, 2024,\nto which we have been a participant and in which (i) the amount involved exceeded or will exceed the lesser of $120,000 or one percent\nof the average of our total assets at year-end for the last two completed fiscal years, and (ii) any of our directors, executive officers\nor holders of more than 5% of our Common Shares, or any members of their immediate family, had or will have a direct or indirect material\ninterest, other than compensation arrangements which are described in the sections titled “Executive Compensation” and “Director\nCompensation.”\n\n \n\n**Our Relationship with Oxus Capital PTE Ltd.**\n\n \n\nOn April 27, 2026, certain of the Company’s wholly\nowned subsidiaries entered into a Credit Agreement (the “Oxus Credit Agreement”) with Oxus Capital PTE Ltd. (“Oxus”),\nas lender. Oxus is the Company’s former SPAC sponsor and, through its controlling shareholder Kenges Rakishev, a beneficial owner of approximately\n24.7% of the Company’s outstanding Common Shares. Pavel Mynzhanov, a director of the Company since May 2026, has served as a Director\nof Oxus since June 2022.\n\n \n\n*Credit Agreement.* Pursuant to the Oxus\nCredit Agreement, Oxus provided a term loan in an aggregate principal amount of $17.0 million, secured by substantially all assets of\nthe Company and certain of its subsidiaries. The term loan matures on April 27, 2031 and bears interest at 12% per annum (14% upon default).\nPrincipal is repayable in 48 consecutive monthly installments commencing May 1, 2027. The proceeds were used primarily to repay in full\napproximately $16.2 million in outstanding obligations under the Company’s former credit facility with Frontwell Capital Partners Inc.,\nwith the balance applied to transaction expenses and general corporate purposes.\n\n \n\nAt the Lender’s election, accrued interest from\nthe closing date through April 30, 2027 (approximately $2.0 million) may be converted into Common Shares at the average closing market\nprice for the 60 trading days preceding May 1, 2027. Thereafter, interest is payable in cash monthly.\n\n \n\n56\n\n \n\nThe Oxus Credit Agreement required the Company,\nno later than May 11, 2026, to reconstitute its Board by appointing Pavel Mynzhanov and Zaure Algaziyeva (or such other individuals acceptable\nto the Lender). Reza Soltanzadeh ceasing to serve as president or in a similar senior management position constitutes an event of default,\nsubject to a 180-day replacement cure period. A default under, or challenge to the validity of, the Conversion Agreement described below\nalso constitutes an event of default.\n\n \n\n*Conversion Agreement.* In connection with\nthe Oxus Credit Agreement, the Company entered into a Conversion Agreement (the “Conversion Agreement”) with Oxus, Mr. Soltanzadeh,\nand Mr. Helg (collectively, the “Shareholders”). Pursuant to the Conversion Agreement, approximately $29.1 million in aggregate\nprincipal amount of indebtedness, plus approximately $4.2 million in accrued interest (calculated through June 30, 2026), previously advanced\nby the Shareholders to the Company, will automatically convert into Common Shares if the Company does not consummate one or more equity\nfinancings resulting in aggregate gross proceeds of at least $70 million at a price of $9.00 per share on or before July 1, 2026. The\nterm loan under the Oxus Credit Agreement is expressly excluded from the indebtedness subject to conversion.\n\n \n\nThe conversion price will be based on the volume\nweighted average closing price of the Company’s Common Shares for the 20 consecutive trading days ending on and including the trading\nday immediately preceding July 1, 2026. Based on the Company’s approximately 21.4 million Common Shares currently outstanding, the conversion\nof the full amount of the indebtedness could result in the issuance of a significant number of additional Common Shares that would be\nsubstantially dilutive to existing shareholders.\n\n \n\n*Board Approval.* The Oxus Credit Agreement\nand the Conversion Agreement were approved by the disinterested members of the Board of Directors on April 24, 2026.\n\n \n\nThe foregoing descriptions do not purport to be\ncomplete and are qualified in their entirety by reference to the Oxus Credit Agreement and the Conversion Agreement, copies of which are\nincorporated by reference as Exhibits 10.12 and 10.13 to this Annual Report.\n\n \n\n**Our Relationship with Reza Soltanzadeh, Barthelemy Helg, Z Ventures,\nZagros Alpine Capital ULC, and Oxus Capital PTE Ltd.**\n\n \n\nDuring fiscal year 2025, the Company issued promissory notes to certain\nshareholders and entities controlled by its directors and executive officers to fund working capital needs. Mr. Soltanzadeh, the Company’s\nChief Executive Officer, is the President and controlling person of Z Ventures Inc. and Zagros Alpine Capital ULC. Mr. Helg, the Company’s\nNon-Executive Chairman, is a noteholder in his individual capacity. Oxus Capital PTE Ltd. is controlled by Kenges Rakishev, a beneficial\nowner of more than 5% of the Company’s outstanding Common Shares.\n\n \n\nThe following table summarizes the promissory notes issued during fiscal\nyear 2025:\n\n \n\nNote Date\n \nHolder Name\n \nAmount\n \n \nInterest Rate\n \n \nCurrency\n \nMaturity Date\n\n20-May-25\n \nZ Ventures Inc.\n \n$\n300,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n20-May-25\n \nZ Ventures Inc.\n \n$\n85,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n20-May-25\n \nBarthelemy Helg\n \n$\n200,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n20-May-25\n \nBarthelemy Helg\n \n$\n500,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n20-May-25\n \nZagros Alpine Capital\n \n$\n200,000.00\n \n \n \n10\n%\n \nCAD\n \nDemand Note\n\n20-May-25\n \nBarthelemy Helg\n \n$\n1,000,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n20-May-25\n \nBarthelemy Helg\n \n$\n700,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n15-Aug-25\n \nBarthelemy Helg\n \n$\n150,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n15-Aug-25\n \nBarthelemy Helg\n \n$\n30,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nOxus Capital PTE LTD.\n \n$\n3,500,000.00\n \n \n \n10\n%\n \nUSD\n \nJune 30,2026\n\n19-Nov-25\n \nZ Ventures Inc.\n \n$\n500,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nBarthelemy Helg\n \n$\n1,500,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nZ Ventures Inc.\n \n$\n100,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nBarthelemy Helg\n \n$\n300,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nZ Ventures Inc.\n \n$\n300,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nBarthelemy Helg\n \n$\n150,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nZ Ventures Inc.\n \n$\n150,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nBarthelemy Helg\n \n$\n150,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nZ Ventures Inc.\n \n$\n150,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nZ Ventures Inc.\n \n$\n120,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nBarthelemy Helg\n \n$\n120,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nZ Ventures Inc.\n \n$\n100,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nBarthelemy Helg\n \n$\n100,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nZ Ventures Inc.\n \n$\n86,305.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nBarthelemy Helg\n \n$\n85,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nZ Ventures Inc.\n \n$\n150,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nBarthelemy Helg\n \n$\n150,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nZ Ventures Inc.\n \n$\n150,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Nov-25\n \nBarthelemy Helg\n \n$\n150,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Dec-25\n \nZ Ventures Inc.\n \n$\n25,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n19-Dec-25\n \nBarthelemy Helg\n \n$\n25,000.00\n \n \n \n10\n%\n \nUSD\n \nDemand Note\n\n \n\n57\n\n \n\nThe aggregate principal\namount of notes issued to holders affiliated with Mr. Soltanzadeh (Z Ventures Inc. and Zagros Alpine Capital ULC) during fiscal year 2025\nwas approximately $2.27 million. The aggregate principal amount of notes issued to Mr. Helg during fiscal year 2025 was approximately\n$5.96 million. All such notes bear interest at 10% per annum.\n\n \n\n**Soltanzadeh Salary Deferral**\n\n \n\nAs\ndescribed in Item 11, “Executive Compensation,” effective February 1, 2025, Mr. Soltanzadeh deferred the payment of his annual\nbase salary of $500,000 through December 31, 2025. As of December 31, 2025, approximately $460,000 in deferred salary remained unpaid\nand is reflected as an obligation of the Company.\n\n \n\n**EarlyBirdCapital Escrow Shares**\n\n \n\nIn November 2025, in connection with the extension\nof a promissory note originally issued to EarlyBirdCapital, Inc. (“EBC”) in connection with the closing of the Company’s business\ncombination transaction on February 7, 2024, Mr. Helg and Mr. Soltanzadeh (through Zagros Alpine Capital ULC) each provided 500,000 Common\nShares as collateral for the Company’s obligations under the note. The indebtedness underlying the promissory note was originally an obligation\nof Oxus Acquisition Corp., the Company’s former SPAC sponsor, and was assumed by the Company in connection with the closing of the business\ncombination transaction. The shares were placed into escrow with Continental Stock Transfer & Trust Company.\n\n \n\nFollowing an alleged default under the note,\nthe escrowed shares were transferred to EBC. Despite ongoing discussions regarding repayment of the note, EBC advised the Company in late\nApril 2026 that a portion of such shares had been sold and the proceeds applied against amounts outstanding under the promissory note.\nThe Company was not aware prior to such time that the shares had been transferred out of escrow.\n\n \n\nOn May 8, 2026, the Board of Directors determined\nthat Mr. Helg and Mr. Soltanzadeh provided the shares solely for the benefit of the Company and not in respect of any personal indebtedness.\nAccordingly, the Board resolved that the Company will take appropriate steps to make Mr. Helg and Mr. Soltanzadeh whole for any escrowed\nshares through the issuance of replacement shares. The Company is also reviewing the matter with outside counsel.\n\n \n\nAny issuance of replacement shares would be\ndilutive to existing shareholders.\n\n \n\nThe Audit Committee in connection with the Board of Director reviewed,\napproved and ratified the transactions described above in accordance with the Company’s Related-Person Transactions Policy.\n\n \n\n**Limitation of Liability and Indemnification\nof Officers and Directors**\n\n \n\nThe Company provides indemnification for its\ndirectors and officers so that they will be free from undue concern about personal liability in connection with their service to the Company.\nUnder the Company’s bylaws, the Company is required to indemnify its directors and officers to the extent not prohibited under Ontario\nor other applicable law. The Company has also entered into indemnity agreements with its executive officers and directors. These agreements\nprovide, among other things, that the Company will indemnify the officer or director, under the circumstances and to the extent provided\nfor in the agreement, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings\nwhich he or she is or may be made a party by reason of his or her position as a director, officer or other agent of the Company, and otherwise\nto the fullest extent permitted under Ontario law and the Company’s bylaws.\n\n \n\n**Director Independence**\n\n \n\nWith the appointment of Mr. Amin Ajami to the Board, the Company is\nnow in compliance with Nasdaq’s independent director requirement as set forth in Listing Rule 5605.\n\n \n\nIn making this determination, our board of\ndirectors considered certain relationships and transactions that occurred in the ordinary course of business between the Company and entities\nwith which some of our directors are or have been affiliated. The board of directors determined that such transactions would not impair\nthe particular director’s independence or interfere with the exercise of independent judgment in carrying out director responsibilities.\n\n \n\nOur board of directors undertook a review\nof the independence of each director and considered whether any director has a material relationship that could compromise his or her\nability to exercise independent judgment in carrying out his or her responsibilities as a director. After review of all relevant transactions\nor relationships between each director, or any of his or her family members, and the Company, its senior management and its independent\nregistered public accounting firm, the board of directors affirmatively determined that all of our directors are independent directors\nwithin the meaning of the applicable Nasdaq listing standards, except for Mr. Soltanzadeh, who serves as the Company’s Chief Executive\nOfficer; and Mr. Helg, who serves as Non-Executive Chairman and, as described above under “Related Party Transactions,” is\na party to promissory note arrangements with the Company under which interest has accrued but has not been paid; and Mr. Mynzhanov, who\nserves as a Director of Oxus Capital PTE Ltd., the Company’s lender under the Credit Agreement described above.\n\n \n\n58"}