{"url_path":"/sec/brls/10-k/2026/item-15","section_key":"item-15","section_title":"Item 15 Exhibits and Financial Statement Schedules**","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":13175,"has_tables":true,"body_markdown":"** **\n\n**Item\n15. Exhibits and Financial Statement Schedules**\n\n** **\n\n(a)(1)\nFinancial Statements.\n\n \n\nThe\nfollowing documents are included on pages F-1 through F-22 attached hereto and are filed as part of this Annual Report on Form\n10-K.\n\n \n\n(a)(2)\nFinancial Statement Schedules.\n\n \n\nAll\nfinancial statement schedules have been omitted because they are not applicable, not required or the information required is shown in\nthe financial statements or the notes thereto.\n\n \n\n(a)(3)\nExhibits.\n\n \n\nThe\nfollowing is a list of exhibits filed, furnished, or incorporated by reference as part of this Annual Report on Form 10-K.\n\n \n\n**Exhibit\n\nNumber**\n \n**Description**\n\n3.1*\n \n[Form\nof Borealis Foods Inc.’s By-Laws (incorporated by reference to Exhibit 10.9 to Oxus Acquisition Corp.’s Registration\nStatement on S-4, filed with the SEC on August 14, 2023).](https://www.sec.gov/Archives/edgar/data/1852973/000121390023066968/fs42023_oxusacq.htm#T110)\n\n3.2*\n \n[Form of Borealis Articles of Continuance (incorporated by reference to Exhibit 10.8 to Oxus Acquisition Corp.’s Registration Statement on S-4, filed with the SEC on August 14, 2023).](https://www.sec.gov/Archives/edgar/data/1852973/000121390023066968/fs42023_oxusacq.htm#T109)\n\n4.1*\n \n[Description of Borealis Food Inc.’s Securities (incorporated by reference to Exhibit 4.1 to Borealis Food Inc.’s Form 10-K filed on April 15, 2025)](https://www.sec.gov/Archives/edgar/data/1852973/000162828025017861/a41descriptionofsecurities.htm)\n\n4.2 +\n \n[Warrant issued by Borealis Foods Inc. to EarlyBirdCapital, Inc. dated June 13, 2025.](ea028611801ex4-2.htm)\n\n4.3 +\n \n[Warrant issued by Borealis Foods Inc. To EarlyBirdCapital, Inc. dated November 19, 2025.](ea028611801ex4-3.htm)\n\n10.1+\n \n[Credit Agreement, dated August 10, 2023, by and between Borealis Foods Inc. and Frontwell Capital Partners Inc. (incorporated herein by reference to Exhibit 10.1 to Borealis Foods Inc.’s Form 8-K filed on May 1, 2026)](http://www.sec.gov/Archives/edgar/data/1852973/000121390026050957/ea028874901ex10-1.htm)\n\n10.2*+\n \n[Forbearance and Amendment Agreement, dated March 27, 2026 by and between Borealis Foods Inc., Palmetto Gourmet Foods (Canada) Inc., Borealis IP Inc., Palmetto Gourmet Foods, Inc., PGF Real Estate I, Inc., PGF Real Estate II, Inc. and Frontwell Captial Partners (incorporated by reference to Exhibit 10.1 to Borealis Foods Inc.’s Form 8-K filed on April 2, 2026).](https://www.sec.gov/Archives/edgar/data/1852973/000121390026039351/ea028482601ex10-1.htm)\n\n10.4*\n \n[Form of Promissory Note for Barthelemy Helg, Z Ventures Inc., Zagros Alpine Capital ULC and Amira Holding AG (incorporated by reference to Exhibit 10.1 to Borealis Foods Inc., Form 10-Q, filed with the SEC on November 19, 2025).](https://www.sec.gov/Archives/edgar/data/1852973/000121390025112699/ea026607301ex10-1_borealis.htm)\n\n10.5*\n \n[Form of Promissory Note for Oxus Capital PTE Ltd. (incorporated by reference to Exhibit 10.2 to Borealis Foods Inc., Form 10-Q, filed with the SEC on November 19, 2025).](https://www.sec.gov/Archives/edgar/data/1852973/000121390025112699/ea026607301ex10-2_borealis.htm)\n\n10.6\n \n[Form of Borealis Foods Inc. Director and Officer Indemnification Agreement.](ea028611801ex10-6.htm)\n\n10.12*\n \n[Credit Agreement, dated as of April 27, 2026, by and among Palmetto Gourmet Foods, Inc., PGF Real Estate I, Inc., PGF Real Estate II, Inc., as borrowers, Borealis Foods Inc., Borealis IP Inc., and Palmetto Gourmet Foods (Canada) Inc., as guarantors, and Oxus Capital PTE Ltd., as lender (incorporated herein by reference to Exhibit 10.1 to Borealis Foods Inc.’s Current Report on Form 8-K, filed with the SEC on May 1, 2026).](http://www.sec.gov/Archives/edgar/data/1852973/000121390026050957/ea028874901ex10-1.htm)\n\n \n\n60\n\n \n\n10.13*\n \n[Conversion\nAgreement, dated as of April 27, 2026, by and among Borealis Foods Inc., certain of its subsidiaries, Oxus Capital PTE Ltd., Reza\nSoltanzadeh, and Barthelemy Helg (incorporated herein by reference to Exhibit 10.2 to Borealis Foods Inc.’s Current Report\non Form 8-K, filed with the SEC on May 1, 2026).](http://www.sec.gov/Archives/edgar/data/1852973/000121390026050957/ea028874901ex10-2.htm)\n\n14.1*\n \n[Borealis\nFoods Inc. Code of Business Conduct and Ethics (incorporated herein by reference to Exhibit 14.1 to Borealis Foods Inc.’s Form\n8-K, filed with the SEC on February 13, 2024).](https://www.sec.gov/Archives/edgar/data/1852973/000121390024013332/ea193378ex14-1_borealis.htm)\n\n16.1*\n \n[Letter\nfrom Berkowitz Pollack Brant Advisors + CPAs, LLP (incorporated herein by reference to Exhibit 16.1 to Borealis Food Inc.’s\nForm 8-K filed with the SEC on January 20, 2026).](https://www.sec.gov/Archives/edgar/data/1852973/000121390024013332/ea193378ex16-1_borealis.htm)\n\n19.1*\n \n[Borealis\nFoods Inc. Insider Trading Policy (incorporated herein by reference to Exhibit 19.1 to Borealis Foods Inc.’s Form 10-K filed\nwith the SEC on April 15, 2025).](https://www.sec.gov/Archives/edgar/data/1852973/000162828025017861/a191insidertradingpolicy.htm)\n\n23.1\n \n[Consent of Independent Registered Public Accounting Firm](ea028611801ex23-1.htm)\n\n31.1\n \n[Certification\nof Principal Executive Officer Pursuant to Rules 13A-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant\nto Section 302 of the Sarbanes-Oxley Act of 2002.](ea028611801ex31-1.htm)\n\n31.2\n \n[Certification\nof Principal Financial Officer Pursuant to Rules 13A-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant\nto Section 302 of the Sarbanes-Oxley Act of 2002.](ea028611801ex31-2.htm)\n\n32.1\n \n[Certification\nof Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of\n2002.](ea028611801ex32-1.htm)\n\n32.2\n \n[Certification\nof Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of\n2002.](ea028611801ex32-2.htm)\n\n97.1*\n \n[Borealis\nFoods Inc. Executive Compensation Recovery (“Clawback”) Policy (incorporated herein by reference to Exhibit 97.0 to Borealis\nFoods Inc.’s Annual Report on Form 10-K, filed with the SEC on April 15, 2024).](https://www.sec.gov/Archives/edgar/data/1852973/000121390024032953/ea020255401ex97_borealis.htm)\n\n101.INS*\n \nInline\nXBRL Instance Document.\n\n101.SCH*\n \nInline\nXBRL Taxonomy Extension Schema Document.\n\n101.CAL*\n \nInline\nXBRL Taxonomy Extension Calculation Linkbase Document.\n\n101.DEF*\n \nInline\nXBRL Taxonomy Extension Definition Linkbase Document.\n\n101.LAB*\n \nInline\nXBRL Taxonomy Extension Label Linkbase Document.\n\n101.PRE*\n \nInline\nXBRL Taxonomy Extension Presentation Linkbase Document.\n\n104\n \nCover\nPage Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).\n\n \n\n*Previously\nfiled.\n\n \n\n+Annexes,\nschedules, and exhibits to this Exhibit omitted pursuant to Item 601(b)(2) of Regulation\nS-K. The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit\nto the SEC upon request.\n\n \n\n61\n\n \n\nSIGNATURES\n\n** **\n\nPursuant\nto the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed\non its behalf by the undersigned, thereunto duly authorized.\n\n** **\n\n **Borealis Foods Inc.**\n\n  \n\n**By:**/s/\nReza Soltanzadeh\n\n  Reza Soltanzadeh\n\n  Chief\nExecutive Officer and Director\n\n \n\nPursuant\nto the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the\nRegistrant in the capacities and on the dates indicated.\n\n \n\n**Name**\n \n**Title**\n \n**Date**\n\n \n \n \n \n \n\n/s/ Reza Soltanzadeh\n \nChief Executive Officer and Director\n \nJune 2, 2026\n\n**Reza Soltanzadeh**\n \n*(principal executive officer)*\n \n \n\n \n \n \n \n \n\n/s/ Stephen Wegrzyn\n \nChief Financial Officer\n \nJune 2, 2026\n\n**Stephen Wegrzyn**\n \n*(principal financial officer)*\n \n \n\n \n \n \n \n \n\n/s/ Barthelemy Helg\n \nDirector\n \nJune 2, 2026\n\n**Barthelemy Helg**\n \n \n \n \n\n \n \n \n \n \n\n/s/ Ertharin Cousin\n \nDirector\n \nJune 2, 2026\n\n**Ertharin Cousin**\n \n \n \n \n\n \n \n \n \n \n\nSignature not provided\n \nDirector\n \nJune 2, 2026\n\n**Shukhrat Ibragimov**\n \n \n \n \n\n \n \n \n \n \n\n/s/ Steven Oyer\n \nDirector\n \nJune 2, 2026\n\n**Steven Oyer**\n \n \n \n \n\n \n \n \n \n \n\n/s/ Pavel Mynzhanov\n \nDirector\n \nJune 2, 2026\n\n**Pavel Mynzhanov**\n \n \n \n \n\n \n \n \n \n \n\n/s/ Zaure Algaziyeva\n \nDirector\n \nJune 2, 2026\n\n**Zaure Algaziyeva**\n \n \n \n \n\n \n \n \n \n \n\n/s/ Amin Ajami\n \nDirector\n \nJune 2, 2026\n\n**Amin Ajami**\n \n \n \n \n\n \n\n62\n\n \n\n**BOREALIS FOODS INC.**\n\n**FORM 10-K FOR THE YEAR\nENDED DECEMBER 31, 2025**\n\n** **\n\n**Table of Contents**\n\n** **\n\n**PART I. FINANCIAL INFORMATION**   Page\n\n     \n\n[Reports of Independent Registered Public Accounting Firms (PCAOB ID: 213 & 52)](#F_001)   F-2\n\n     \n\n**Financial Statements**    \n\n     \n\n[Consolidated Balance Sheets as of December 31, 2025 and 2024](#F_002)   F-3\n\n     \n\n[Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024](#F_003)   F-4\n\n     \n\n[Consolidated Statements of Changes in Shareholders’ Deficit for the Years Ended December 31, 2025 and 2024](#F_004)   F-5\n\n     \n\n[Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024](#F_005)   F-6\n\n     \n\n[Notes to Consolidated Financial Statements](#F_006)   F-7\n\n** **\n\nF-1\n\n** **\n\n**REPORT\nOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n** **\n\nTo the Board of Directors and\n\nStockholders of and Subsidiaries\n\n \n\n**Opinion on the Financial Statements**\n\n \n\nWe have audited the accompanying balance sheet\nof and Subsidiaries (the Company) as of December 31, 2025, and the related consolidated statements of operations, stockholders’\ndeficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial\nstatements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position\nof the Company as of December 31, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with\naccounting principles generally accepted in the United States of America.\n\n \n\nThe financial statements of the Company as of\nand for the year ended December 31, 2024, were audited by other auditors whose report dated April 15, 2025, expressed an unqualified opinion\non those statements.\n\n \n\n**Substantial Doubt about the Company’s\nAbility to Continue as a Going Concern**\n\n** **\n\nThe accompanying consolidated financial statements\nhave been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements,\nthe substantial amount of debt coming due within the next 12 months and negative cash flow position along with other conditions as set\nforth in Note 1, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in\nregard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might\nresult from the outcome of this uncertainty.\n\n \n\n**Basis for Opinion**\n\n** **\n\nThese consolidated financial statements are the\nresponsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial\nstatements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)\n(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws\nand the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audit in accordance with the\nstandards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated\nfinancial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we\nengaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding\nof internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s\ninternal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur audit included performing procedures to assess\nthe risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures\nthat respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the\nconsolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by\nmanagement, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provide\na reasonable basis for our opinion.\n\n \n\n**Critical Audit Matters**\n\n** **\n\nCritical audit matters are matters arising from\nthe current period audit of the financial statements that were communicated or required to be communicated to the audit committee and\nthat: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,\nsubjective, or complex judgments. We determined that there are no critical audit matters.\n\n \n\n/s/ Carr, Riggs & Ingram, L.L.C.\n\n   \n\nWe have served as the Company’s auditor since 2026.\n\n   \n\nPalm Beach Gardens, FL\n\n   \n\nJune 1, 2026  \n\n \n\nF-2\n\n** **\n\n**Borealis Foods Inc. and Subsidiaries\nConsolidated Balance Sheets**\n\n \n\n  \nDecember 31,\n\n2025  \nDecember 31,\n\n2024 \n\nAssets \n   \n  \n\nCurrent\nAssets \n   \n  \n\nCash \n$63,859  \n$652,965 \n\nAccounts receivable, net of allowance for credit losses of $230,000 and $247,653 as of December 31, 2025 and December 31, 2024, respectively \n 2,648,229  \n 1,965,748 \n\nInventories,\nnet \n 4,582,576  \n 8,046,259 \n\nPrepaid\nexpenses and other current assets \n 760,616  \n 1,134,611 \n\nTotal\ncurrent assets \n 8,055,280  \n 11,799,583 \n\n  \n    \n   \n\nProperty,\nplant and equipment, net \n 43,891,964  \n 45,736,326 \n\nIntangible\nassets \n 298,041  \n 319,307 \n\nRight\n- of-use asset, net \n 158,361  \n 63,826 \n\nGoodwill \n \n-\n  \n 1,917,356 \n\nOther\nnon-current assets \n 169,685  \n 169,685 \n\nTotal\nassets \n$52,573,331  \n$60,006,083 \n\n  \n    \n   \n\nLiabilities\nand Shareholders’ (deficit) \n    \n   \n\nCurrent\nliabilities: \n    \n   \n\nAccounts\npayable and accrued expenses \n$16,046,886  \n$11,529,803 \n\nDue\nto related parties \n 27,295,885  \n 7,825,792 \n\nLine\nof credit, current portion \n 2,691,096  \n \n-\n \n\nConvertible\nnotes payable, current portion \n 3,000,000  \n \n-\n \n\nNotes\npayable, current portion, net of capitalized loan costs \n 20,100,380  \n 5,456,934 \n\nOperating\nlease payable, current portion \n 39,982  \n 55,116 \n\nFinance\nleases payable, current portion \n 642,474  \n 538,845 \n\nTotal\ncurrent liabilities \n 69,816,703  \n 25,406,490 \n\n  \n    \n   \n\nDue\nto related parties, net of current portion \n \n-\n  \n 7,601,661 \n\nLine\nof credit, net of current portion \n \n-\n  \n 7,600,000 \n\nConvertible\nnotes payable, net of current portion \n \n-\n  \n 3,000,000 \n\nNotes\npayable, net of current portion \n \n-\n  \n 14,478,051 \n\nOperating\nlease payable, net of current portion \n 118,528  \n 12,015 \n\nFinance\nleases payable, net of current portion \n 489,461  \n 1,143,829 \n\nDeferred\ntax liability \n 1,379,226  \n 1,459,923 \n\nTotal\nliabilities \n 71,803,918  \n 60,701,969 \n\n  \n    \n   \n\nShareholders’\n(deficit) \n    \n   \n\nCommon\nshares, no par value \n \n-\n  \n \n-\n \n\nAdditional\npaid-in capital \n 90,540,605  \n 90,096,688 \n\nAccumulated\ndeficit \n (109,771,192) \n (90,792,574)\n\nTotal\nshareholders’ (deficit) \n (19,230,587) \n (695,886)\n\nTotal\nliabilities and shareholders’ (deficit) \n$52,573,331  \n$60,006,083 \n\n \n\nSee accompanying notes to the consolidated financial\nstatements.\n\n \n\nF-3\n\n \n\nBorealis Foods Inc. and Subsidiaries\n\nConsolidated Statements of Operations\n\n** **\n\n \n \nFor the Years Ended\nDecember 31,\n \n\n \n \n2025\n \n \n2024\n \n\nGross sales\n \n$\n31,475,628\n \n \n$\n29,100,391\n \n\nSales discounts & allowances\n \n \n(1,396,057\n)\n \n \n(1,431,497\n)\n\nRevenue, net\n \n \n30,079,571\n \n \n \n27,668,894\n \n\nCost of goods sold\n \n \n24,726,916\n \n \n \n23,155,766\n \n\nDepreciation and amortization\n \n \n1,841,285\n \n \n \n2,323,617\n \n\nTotal cost of goods sold\n \n \n26,568,201\n \n \n \n25,479,383\n \n\nGross profit\n \n \n3,511,370\n \n \n \n2,189,511\n \n\nTotal sales, general & administrative expenses\n \n \n14,547,355\n \n \n \n22,594,486\n \n\nLoss from operations\n \n \n(11,035,985\n)\n \n \n(20,404,975\n)\n\nOther income (expense):\n \n \n \n \n \n \n \n \n\nImpairment loss\n \n \n(2,007,438\n)\n \n \n\n-\n\n \n\n(Loss)\ngain on foreign exchange rates\n \n \n(15,943\n)\n \n \n3,554\n \n\nInterest expense\n \n \n(5,985,962\n)\n \n \n(5,060,678\n)\n\nTotal other expense\n \n \n(8,009,343\n)\n \n \n(5,057,124\n)\n\nLoss before income taxes\n \n \n(19,045,328\n)\n \n \n(25,462,099\n)\n\nIncome tax benefit\n \n \n66,710\n \n \n \n134,901\n \n\nNet loss\n \n$\n(18,978,618\n)\n \n$\n(25,327,198\n)\n\nLoss per share from net loss\n \n \n \n \n \n \n \n \n\nBasic\n \n$\n(0.89\n)\n \n$\n(1.25\n)\n\nDiluted\n \n \n(0.89\n)\n \n \n(1.25\n)\n\nWeighted average shares outstanding\n \n \n \n \n \n \n \n \n\nBasic\n \n \n21,428,650\n \n \n \n20,309,934\n \n\nDiluted\n \n \n21,428,650\n \n \n \n20,309,934\n \n\n** **\n\nSee accompanying notes to the consolidated financial\nstatements.\n\n \n\nF-4\n\n \n\nBorealis Foods Inc. and Subsidiaries\n\nConsolidated\nStatements of Changes in Stockholders’ Equity (Deficit)\n\n \n\n  \nYears Ended December 31, 2025 and 2024 \n\n  \nClass A\n\nCommon Stock  \nClass B\n\nCommon Stock  \nClass C\n\nCommon Stock  \nAdditional  \n   \n  \n\n  \nNumber of Shares  \nCommon Stock  \nNumber of Shares  \nCommon Stock  \nNumber of Shares  \nCommon Stock  \nPaid-In Capital  \nAccumulated Deficit  \nTotal \n\nBalance at December 31, 2023 \n 100,000,000  \n \n       --\n  \n 57,117,774  \n \n--\n  \n 6,345,000  \n \n    --\n  \n 44,118,081  \n (65,465,376) \n (21,347,295)\n\nExpense related to stock options (Note 9) \n --  \n \n--\n  \n --  \n \n--\n  \n --  \n \n--\n  \n 1,273,053  \n \n--\n  \n 1,273,053 \n\nConvertible debt converted to equity from reverse recapitalization \n --  \n \n--\n  \n --  \n \n--\n  \n --  \n \n--\n  \n 54,991,472  \n \n--\n  \n 54,991,472 \n\nAssumption of debt from reverse recapitalization \n --  \n \n--\n  \n --  \n \n--\n  \n --  \n \n--\n  \n (10,285,918) \n \n--\n  \n (10,285,918)\n\nConversion to Newco shares from reverse recapitalization \n (78,621,110) \n \n--\n  \n (57,117,774) \n \n--\n  \n (6,345,000) \n \n--\n  \n \n--\n  \n \n--\n  \n \n--\n \n\nNet loss \n --  \n \n--\n  \n --  \n \n--\n  \n --  \n \n--\n  \n \n--\n  \n (25,327,198) \n (25,327,198)\n\nBalance at December 31, 2024 \n 21,378,890  \n$\n--\n  \n \n--\n  \n$\n--\n  \n \n--\n  \n$\n--\n  \n$90,096,688  \n$(90,792,574) \n$(695,886)\n\nExercise of restricted share units \n 2,962  \n \n--\n  \n --  \n \n--\n  \n --  \n \n--\n  \n 17,490  \n \n--\n  \n 17,490 \n\nExpense related to restricted share units \n --  \n \n--\n  \n --  \n \n--\n  \n --  \n \n--\n  \n 81,353  \n \n--\n  \n 81,353 \n\nIssuance of restricted share units \n 81,454  \n \n--\n  \n --  \n \n--\n  \n --  \n \n--\n  \n 345,074  \n \n--\n  \n 345,074 \n\nNet loss \n --  \n \n--\n  \n --  \n \n--\n  \n --  \n \n--\n  \n \n--\n  \n (18,978,618) \n (18,978,618)\n\nBalance at December 31, 2025 \n 21,463,306  \n$\n-\n  \n$\n-\n  \n$\n-\n  \n$\n-\n  \n$\n-\n  \n$90,540,605  \n$(109,771,192) \n$(19,230,587)\n\n \n\nClass A shares, no par value, unlimited number of shares authorized\n(21,463,306 Issued and Outstanding)\n\n \n\nClass B shares, no par value, unlimited number of\nshares authorized\n\n \n\nClass C shares, no par value, unlimited number of shares authorized\n\n \n\nSee accompanying notes to the consolidated\nfinancial statements\n\n \n\nF-5\n\n \n\n**Borealis Foods Inc.\nand Subsidiaries\nConsolidated Statements of Cash Flows**\n\n \n\n \n \nFor the\nYear Ended\nDecember 31,\n2025\n \n \nFor the\nYear Ended\nDecember 31,\n2024\n \n\nCash Flows from Operating Activities:\n \n \n \n \n \n \n\nNet loss\n \n$\n(18,978,618\n)\n \n$\n(25,327,198\n)\n\n \n \n \n \n \n \n \n \n \n\nAdjustments to reconcile net loss to net cash used in operating activities:\n \n \n \n \n \n \n \n \n\nNon-cash compensation expense related to restricted share units and stock options\n \n$\n443,917\n \n \n$\n1,273,053\n \n\nDepreciation and amortization\n \n \n1,841,286\n \n \n \n2,323,617\n \n\nAmortization of loan costs\n \n \n498,728\n \n \n \n310,964\n \n\nImpairment loss\n \n \n2,007,438\n \n \n \n\n-\n\n \n\nProvision for credit losses\n \n \n(17,653\n)\n \n \n23,220\n \n\nProvision for inventory reserve\n \n \n(716,528\n)\n \n \n703,450\n \n\nDeferred income taxes\n \n \n(80,697\n)\n \n \n(106,309\n)\n\nChanges in operating assets and liabilities:\n \n \n \n \n \n \n \n \n\nAccounts receivable\n \n \n(664,828\n)\n \n \n(213,212\n)\n\nInventories\n \n \n4,180,210\n \n \n \n(1,804,681\n)\n\nPrepaid expenses and other\n \n \n373,995\n \n \n \n(288,734\n)\n\nOperating lease\n \n \n(3,157\n)\n \n \n(3,138\n)\n\nAccounts payable and accrued expenses\n \n \n4,517,084\n \n \n \n8,019,425\n \n\nNet cash used in operating activities\n \n$\n(6,598,823\n)\n \n$\n(15,089,543\n)\n\n \n \n \n \n \n \n \n \n \n\nCash flows from investing activities\n \n \n \n \n \n \n \n \n\nProceeds from reverse capitalization\n \n$\n\n-\n\n \n \n$\n63,575\n \n\nPurchases of intangible assets\n \n \n(68,816\n)\n \n \n(319,307\n)\n\nPurchases of property, plant and equipment\n \n \n3,078\n \n \n \n(1,651,403\n)\n\nNet cash used in investing activities\n \n$\n(65,738\n)\n \n$\n(1,907,135\n)\n\n \n \n \n \n \n \n \n \n \n\nCash flows from financing activities\n \n \n \n \n \n \n \n \n\nNet payments from related parties\n \n$\n11,868,432\n \n \n \n\n-\n\n \n\nProceeds from convertible notes payable\n \n \n\n-\n\n \n \n \n3,000,000\n \n\nPayments on finance leases payable\n \n \n(550,740\n)\n \n \n(565,987\n)\n\nBorrowings on line of credit\n \n \n8,410,937\n \n \n \n7,600,000\n \n\nPayments on line of credit\n \n \n(13,319,841\n)\n \n \n\n-\n\n \n\nPayments on notes payable\n \n \n(333,333\n)\n \n \n\n-\n\n \n\nNet cash provided by financing activities\n \n$\n6,075,455\n \n \n$\n10,034,013\n \n\nNet change in cash\n \n$\n(589,106\n)\n \n$\n(6,962,665\n)\n\nCash, beginning of period\n \n \n652,965\n \n \n \n7,615,630\n \n\nCash, end of period\n \n$\n63,859\n \n \n$\n652,965\n \n\n \n \n \n \n \n \n \n \n \n\nSupplemental cash flow data\n \n \n \n \n \n \n \n \n\nCash paid during the period for:\n \n \n \n \n \n \n \n \n\nInterest\n \n$\n1,036,259\n \n \n$\n2,636,181\n \n\nIncome taxes\n \n$\n13,987\n \n \n$\n14,948\n \n\nNon-cash investing and financing activities\n \n \n \n \n \n \n \n \n\nConversion of notes payable into Class A shares\n \n \n\n-\n\n \n \n$\n(54,991,472\n)\n\nNote payable supplier finance\n \n \n\n-\n\n \n \n \n2,747,833\n \n\nNote payable accounted for as due to related party\n \n \n\n-\n\n \n \n \n7,601,661\n \n\nOperating lease renewal\n \n \n222,771\n \n \n \n\n \n\n \n\n \n\nSee accompanying notes to the consolidated\nfinancial statements.\n\n \n\nF-6\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\n1.\nDescription of Business and Summary of Significant Accounting Policies Overview\n\n \n\nThe accompanying consolidated\nfinancial statements include the financial statements of Borealis Foods Inc. (“**Borealis**”), and its subsidiaries: Palmetto\nGourmet Foods (Canada) Inc., (“**PGF Canada**”), Palmetto Gourmet Foods, Inc. (“**PGF**”), PGF Real Estate\nI, Inc. (“**PGF RE I**”), PGF Real Estate II, Inc. (“**PGF RE II**”), and Borealis IP (“**Borealis\nIP**”) (collectively, the “**Company**”).\n\n \n\nBorealis is a food technology\nintegrator with a mission to address global food security challenges through the development and commercialization of tasty, affordable\nand sustainable functional foods. Borealis has developed a range of high-quality, affordable, sustainable, and nutritious premium, ready-to-eat\nmeals sold in the United States, Canada, Central America, South America and Europe.\n\n \n\nPGF Canada is a holding company,\nholding the shares of PGF.\n\n \n\nPGF is a food manufacturing company with a BRC AA+\nrated food grade facility. PGF RE I and PGF RE II are holding companies that rent their fixed assets to PGF. Borealis IP holds the intellectual\nproperty of the Company.\n\n \n\nIntercompany balances and transactions have been eliminated\nin consolidation.\n\n \n\nReverse Recapitalization Transaction\n\n** **\n\nOn February 23, 2023, Borealis\nFoods Inc., a corporation incorporated under the laws of Canada (“**Legacy Borealis**”) entered into a Business Combination\nAgreement (as amended, amended and restated, supplemented, or otherwise modified from time to time, the “**Business Combination\nAgreement**”) with Oxus Acquisition Corp. (“**Oxus**”) and 1000397116 Ontario Inc., an Ontario corporation and\na wholly owned subsidiary of Oxus (“**Newco**”). On February 7, 2024, Legacy Borealis, Oxus, and Newco consummated the\ntransactions (collectively, the “**Reverse Recapitalization**”) contemplated by the Business Combination Agreement by\nmeans of a statutory arrangement under the Canada Business Corporations Act and the Business Corporations Act (Ontario), implemented\nin accordance with the terms and conditions set forth in the Business Combination Agreement and the related plan of arrangement (as amended,\namended and restated, supplemented, or otherwise modified from time to time, the “**Plan of Arrangement**”) following\nthe approval at an extraordinary general meeting of the shareholders of Oxus held on February 2, 2024.\n\n \n\nPursuant to the terms of the Business Combination\nAgreement, among other things: (i) Oxus domesticated and continued as a corporation under the laws of Ontario, Canada (“**New\nOxus**”); and (ii) pursuant to the Plan of Arrangement, (a) Newco and Legacy Borealis amalgamated (the “**Legacy Borealis\nAmalgamation**”, and the amalgamated corporation resulting therefrom, “**Amalco**”), with Amalco surviving the\nLegacy Borealis Amalgamation as a wholly-owned subsidiary of New Oxus; and (b) following the Legacy Borealis Amalgamation, New Oxus and\nAmalco amalgamated (the “**Borealis Amalgamation,**” and together with the Legacy Borealis Amalgamation, the “**Amalgamations**,”\nand the corporation resulting therefrom, “**Borealis**,” as a corporation amalgamated under the Business Corporations\nAct (Ontario)), with Borealis surviving the Borealis Amalgamation. Borealis continues under the name “**Borealis Foods Inc.**”\n\n \n\nThe equity structure prior to\nthe reverse merger (Class A, B and C) with unlimited amounts authorized all had the same rights and privileges. With the reverse recapitalization,\nall outstanding shares of Class A, B and C were combined into common shares of the newly formed Company.\n\n \n\nAccounting Impact of the Reverse Recapitalization\n\n** **\n\nThe transaction was accounted for as a reverse recapitalization.\nOxus was deemed the accounting predecessor and Borealis is the successor Securities and Exchange Commission (“**SEC**”)\nregistrant.\n\n \n\nUnder this method of accounting,\nOxus was treated as the acquired company for financial statement reporting purposes. For accounting purposes, Legacy Borealis was deemed\nto be the accounting acquirer in the transaction and, consequently, the transaction was treated as a recapitalization of Legacy Borealis.\nAccordingly, the consolidated balance sheets and results of operations of Legacy Borealis became the historical financial statements\nof Borealis, and Oxus’ assets, liabilities, and results of operations were consolidated with Legacy Borealis’ beginning on\nFebruary 7, 2024. The net assets of Oxus were recognized at carrying value, with no goodwill or other intangible assets recorded. Transaction\ncosts incurred and unpaid by Oxus were converted into debt (Note 4) and shown as a reduction in additional paid-in capital.\n\n \n\nF-7\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\nGoing Concern\n\n \n\nThe consolidated financial statements have been\nprepared assuming that the Company will continue as a going concern. During the year ended December 31, 2025, the Company incurred a net\nloss of $18,978,618 and experienced recurring losses from operations, including negative cash flows from operations. At December 31, 2025,\ncash and cash equivalents were approximately $64,000 and the Company had negative working capital of approximately $61,762,000, reflecting\ncurrent liabilities of approximately $69,817,000 against current assets of approximately $8,055,000. These conditions raise substantial\ndoubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.\n\n \n\nIn assessing its ability to continue as a going\nconcern, management has considered all available information about the future, which is at least, but is not limited to, twelve months\nfrom the date these financial statements are issued. Management has developed plans intended to mitigate the conditions that raise substantial\ndoubt. These plans include: (i) continued reduction of selling, general, and administrative expenses, which declined by approximately\n$8,047,000, or 35.6%, to approximately $14,547,000 in 2025, with further reductions anticipated as sales and marketing costs normalize;\n(ii) growth in production volumes to improve overhead absorption and gross margin; (iii) conversion of a portion of related party debt\nto equity to reduce the annual interest burden; and (iv) pursuit of additional debt or equity financing to provide working capital. Subsequent\nto December 31, 2025, the Company completed the refinancing of its senior credit facility through a new Credit Agreement with Oxus Capital\nPTE Ltd. (“Oxus Capital”), a related party and major shareholder of the Company, providing a term loan facility of up to $17,000,000,\nthe proceeds of which were used to repay in full all outstanding obligations under the FrontWell Credit Agreement and eliminate the August\n2026 balloon maturity. See Note 4 for further details.\n\n \n\nAlthough management’s plans are intended\nto mitigate the relevant conditions and events, these plans are not fully within the Company’s control and cannot be assessed as\nprobable of being effectively implemented. Accordingly, substantial doubt about the Company’s ability to continue as a going concern\nwithin one year after the date these financial statements are issued has not been alleviated.\n\n \n\nBasis of Presentation\n\n \n\nThe accompanying consolidated\nfinancial statements are prepared in accordance with accounting principles generally accepted in the United States (“**US GAAP**”)\nand the Company’s functional currency is the U.S. Dollar.\n\n \n\n**Estimates**\n\n \n\nThe preparation of the consolidated\nfinancial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts\nof assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and\nreported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.\n\n \n\nCash Equivalents\n\n \n\nThe Company classifies all highly\nliquid securities with stated maturities of three months or less from the date of purchase as cash equivalents. There were no cash equivalents\nas of December 31, 2025 and December 31, 2024.\n\n \n\nInventories, net\n\n \n\nInventories are stated at the lower of cost or net\nrealizable value. The cost of raw materials is determined using the first-in, first- out method. The cost of finished goods is determined\nusing the weighted average cost method.\n\n \n\nA reserve is recorded for any food inventory that\nis expired (or expected to expire before sale) and any raw materials for projects that have been discontinued.\n\n \n\nF-8\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\nPrepaid Expenses\n\n \n\nPrepaid expenses include approximately $761,000 and $1,135,000 composed\nprimarily of prepaid insurance, deposits on inventory purchases and property, plant and equipment purchases as of December 31, 2025 and\nDecember 31, 2024, respectively.\n\n \n\nProperty, Plant and Equipment,\nnet\n\n \n\nProperty, plant, and equipment\nare recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets or, where\napplicable, based on actual machine hours utilized.\n\n \n\nManagement has opted to depreciate\nthe manufacturing lines and related assets using the machine hours method, as it provides a more accurate reflection of the actual utilization\nand wear of these assets. This approach ensures that the depreciation expense aligns more closely with the assets’ usage patterns, thereby\nimproving the matching of costs with related revenues.\n\n** **\n\nThis change in depreciation method was a change in\nestimate effected by a change in accounting principle and accordingly was accounted for prospectively in accordance with relevant guidance.\nThe change in the method of calculating depreciation resulted in an increase in net income of $2,488,000 and $1,796,000 for the years\nended December 31, 2025 and 2024, respectively. This increase in net income resulted in an improvement of $0.12 and $0.08, respectively,\nto loss per share. The total cost basis of machinery subject to depreciation over machine hours was approximately $38,717,000 as of December\n31, 2025 and $38,601,000 as of December 31, 2024.\n\n \n\nStraight-line assets:\n\n \n\nBuildings and improvements\n10-30 years\n\nFurniture, fixtures and equipment\n3-15 years\n\n \n\nMachine hours assets:\n \n\n \n \n\nFurniture, fixtures and equipment\n89,232 machine hours\n\n \n\nConstruction in progress includes\nthe cost of property, plant and equipment being constructed or otherwise not yet in service. Costs include materials, labor, capitalized\ninterest, engineering and testing costs, and other costs necessary to get the assets ready for their intended use.\n\n \n\nIntangible Assets\n\n \n\nPatents are recorded at cost and are amortized\non a straight-line basis over their estimated useful lives. The carrying value of patents is reviewed for impairment whenever events or\nchanges in circumstances indicate that the carrying amount may not be recoverable. A trademark impairment charge of $90,082 was recorded\nin Q4 2025, reducing the trademark balance to zero at December 31, 2025.\n\n \n\nLoan Costs\n\n \n\nThe costs of obtaining equipment\nleases and debt issuance costs are amortized over the term of the respective obligations, using the straight-line method. US GAAP requires\nthat the effective yield method be used to amortize debt issuance costs; however, the effect of using the straight-line method is not\nmaterially different from the results that would have been obtained under the effective yield method. Amortization of loan costs is included\nas a component of interest expense in the accompanying consolidated statements of operations. Loan costs are shown as reduction of related\ndebt balances for financial statement presentation.\n\n \n\nGoodwill\n\n \n\nThe Company’s goodwill resulted from a prior year acquisition.\nGoodwill is not amortized but is reviewed annually for impairment or more frequently as events or circumstances indicate its carrying\namount may not be recoverable. A goodwill impairment charge of $1,917,356 was recorded in Q4 2025, reducing the goodwill balance to zero\nat December 31, 2025.\n\n \n\nF-9\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\nAmounts Due to Related Parties\n\n \n\nAmounts due to related parties (Company shareholders\nand entities controlled by Company shareholders) totaled $27,295,885 as of December 31, 2025, and $15,427,453 as of December 31, 2024.\nThis related party liability is comprised of multiple notes payable to a shareholder in the amount of $13,285,792 and $7,325,790 as of\nDecember 31, 2025, and December 31, 2024, respectively, and is due on demand and bears interest at 10% annually. An additional note payable\nto a shareholder in the amount of $500,000 as of December 31, 2025 and December 31, 2024, bears interest at 10% annually and is due December\n31, 2025. Additional notes payable to a shareholder in the amount of $2,408,432 as of December 31, 2025, bears interest at 10% annually\nand are due on demand. The remaining $11,101,661 is comprised of two shareholder notes payable. The first note for $7,601,661 was a result\nof expenses recognized by Oxus and resulted in reduction of contributed equity at the Reverse Recapitalization. This note matures on June\n30, 2026 after extension and is non-interest bearing. An additional note payable to this shareholder in the amount of $3,500,000\nis due on June 30, 2026 and bears interest at 10% annually.\n\n \n\nRelated parties debt balances outstanding as of December\n31, 2025 are due as follows: $27,295,885 in 2026.\n\n \n\nThe\nsalary of the Company’s CEO was accrued and not paid during the year ended December 31, 2025.  The Company recorded $458,328\nin accrued payroll expense to reflect compensation for services performed.\n\n \n\nImpairment of Long-Lived Assets\n\n \n\nThe Company reviews long-lived\nassets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.\nRecoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future\nnet cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is\nmeasured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.\n\n \n\nRevenue and Cost Recognition\nand Accounts Receivable\n\n \n\nThe Company’s revenue is primarily\ngenerated from the sale of food products. These sales contain a single performance obligation. Revenue is recognized at a point in time\nand the Company recognizes revenue upon shipment of goods when ownership, risk, and rewards transfer to the customer. Certain of the\nCompany’s contracts with customers include variable consideration consisting of payment discounts and promotions. These programs include\nrebates, temporary on-shelf price reductions, off-invoice discounts, retailer advertisements, product coupons, slotting fees and other\ntrade activities. Provision for discounts and incentives are recorded in the same period in which the related revenues are recognized.\nGross revenues were approximately $31,476,000 and $29,100,000 for the years ended December 31, 2025 and 2024, respectively.\n\n \n\nTotal payment discounts and promotions were approximately\n$1,396,000 and $1,431,000 resulting in net revenues of approximately $30,080,000 and $27,669,000 for the years ended December 31, 2025\nand 2024, respectively.\n\n \n\nThe Company recognizes the incremental\ncosts of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have\nrecognized is one year or less. The incremental cost to obtain contracts was not material.\n\n \n\nAccounts receivable related\nto product sales typically have payment terms of 30 days. The Company performs ongoing credit evaluations of its customers and\ngenerally does not require collateral. The allowance for credit losses reflects the Company’s estimate of probable losses\nrelated to its accounts receivable. Collections from customers are continuously monitored and an allowance for credit losses is\nmaintained based on historical experience adjusted for current conditions and reasonable forecasts taking into account geographical\nand industry-specific economic factors. The Company also considers specific customer collection issues. Since the Company’s\naccounts receivable are largely similar, the Company evaluates its allowance for credit losses as one portfolio segment. At\norigination, the Company evaluates credit risk based on a variety of credit quality factors including prior payment experience,\ncustomer financial information, credit ratings, probabilities of default, industry trends and other internal metrics. On a\ncontinuing basis, data for each major customer is regularly reviewed based on past-due status to evaluate the adequacy of the\nallowance for credit losses; actual write-offs are charged against the allowance.\n\n \n\nThe Company incurred significant production training\nexpenses for the years ended December 31, 2025 and 2024, totaling approximately $949,000 and $1,715,000 respectively, due to PGF adding\nproduction capabilities during both periods. Such amounts are recorded in sales, general and administrative costs in the accompanying\nconsolidated statement of operations as these costs are not directly attributable to finished goods production.\n\n \n\nThe Company’s cost of goods\nsold represent materials, direct labor costs, and allocated overheads associated with the sale of finished goods to customers.\n\n \n\nF-10\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\nAdvertising\n\n \n\nCosts associated with advertising\nare expensed as incurred and are included in selling, general and administrative expenses. Advertising costs expensed for the years ended\nDecember 31, 2025 and 2024 were approximately $2,354,000 and $5,733,000, respectively.\n\n \n\nResearch and Development Costs\n\n \n\nResearch and development costs\nhave been expensed in the period incurred. Research and development costs consist primarily of personnel and related expenses for our\nresearch and development staff, including salaries, benefits, share-based compensation, scale-up expenses, depreciation and amortization\nexpenses on research and development assets, and facility lease costs. Scale-up expenses include material waste costs, production personnel\ncosts, and related expenses. Research and development efforts are focused on enhancements to our existing product formulations and production\nprocesses in addition to the development of new products. The Company expects to continue investing in research and development over\ntime, as research and development and innovation are core elements of our business strategy, and the Company believes they represent\na critical competitive advantage. The Company believes continued innovation will capture a larger share of consumers through additional\nrevenue streams. Research and development expenses for the years ended December 31, 2025 and 2024 were approximately $202,000 and $197,000,\nrespectively, and are included in selling, general, and administrative expenses in the accompanying consolidated statements of operations.\n\n** **\n\n**Business Development Costs**\n\n \n\nBusiness development expenses\ninclude all costs associated with directly growing and expanding a business segment, such as advertising, market research, and training.\nThese costs include staff salaries, travel expenses, and consulting expenses that the Company incurs while searching for new opportunities\nand maintaining current relationships. Business development expenses for the years ended December 31, 2025 and 2024 were approximately\n$2,210,000 and $2,395,000, respectively. Business development expenses are included in sales, general and administrative expenses in\nthe accompanying consolidated statements of operations.\n\n \n\nIn April 2023, the Company entered into a multi-year agreement for a marketing\nrepresentative to assist in the recipes for three co-branded private label ramen noodles as well to be utilized in marketing of the Company\nfor the marketing representative’s name, image, likeness and voice. This agreement included a service fee, an investment stake in\nthe Company, and a royalty agreement on future co-branded sales. The service fee under this agreement has been expensed on a straight-line\nbasis under the terms of the contract. This agreement expired in March 2026\n\n \n\nTransaction Costs\n\n \n\nOn February 23, 2023, the Company signed a definitive\nbusiness combination agreement with Oxus which was consummated on February 7, 2024 and described further in Note 1. In connection with\nthis agreement, the Company has incurred transaction costs of approximately $0 and $1,506,000 for the years ended December 31, 2025 and\n2024, respectively. Transaction costs have been expensed as incurred and are included in selling, general and administrative expenses\nin the accompanying consolidated statements of operations.\n\n \n\nF-11\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\nConcentration of Risk\n\n \n\nThe Company maintains cash balances\nat financial institutions in excess of federally insured limits as of December 31, 2025 and December 31, 2024. The Company has not experienced\nany losses related to these balances. The Federal Deposit Insurance Corporation insures eligible accounts up to $250,000 per depositor\nat each financial institution. The Company holds cash at well-known banks and does not believe that it is exposed to any significant\ncredit risks on its cash.\n\n \n\nThe Company extends unsecured\ncredit to its customers in the ordinary course of business. Payment terms are generally net 30 days with discounts amounting up to 10%\nfor early payments. Accounts receivables are written off when they are determined to be uncollectible based on the financial stability\nof its customers and existing economic conditions.\n\n \n\nSales to two customers accounted for approximately 35% and 33% of net\nrevenues for the years ended December 31, 2025 and 2024, respectively. Accounts receivable from three customers amounted to approximately\n51% and 37% of total accounts receivable as of December 31, 2025 and 2024, respectively. Substantially all of the Company’s sales\nfor the years ended December 31, 2025 and 2024 occurred in the United States, Canada, Central America, South America, and Europe.\n\n \n\nPurchases from 10 vendors accounted for approximately 54% and 47% of\npurchases during the years ended December 31, 2025 and 2024, respectively. Accounts payable to these vendors totaled approximately $2,764,000\nand $3,217,000 as of December 31, 2025 and 2024, respectively.\n\n \n\nFair Value Measurements\n\n \n\nIn accordance with US GAAP, the\nCompany defines fair value as the price that would be received to sell an asset or the price paid to transfer a liability in an orderly\ntransaction between market participants at the measurement date. US GAAP establishes a hierarchy for inputs used in measuring fair value\nthat maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs\nbe used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market\ndata obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about\nthe assumptions market participants would use in pricing the asset or liability based on the best information available.\n\n \n\nThe hierarchy is broken down\ninto three levels based on the reliability of inputs as follows:\n\n \n\nLevel 1: Observable inputs, such as quoted market prices in active\nmarkets for the identical asset or liability that are accessible at the measurement date.\n\n \n\nLevel 2:Inputs, other than quoted market prices included in Level\n1, that are observable either directly or indirectly for the asset or liability.\n\n \n\nLevel 3:Unobservable inputs that reflect the entity’s own assumptions\nabout the exit price of the asset or liability. Unobservable inputs may be used if there is little or no market data for the asset or\nliability at the measurement date.\n\n \n\nThe Company does not have assets\nmeasured at fair value on a recurring basis. The following methods and assumptions were used to estimate the fair value of each class\nof financial instruments:\n\n \n\nThe carrying amounts reported\nin the consolidated balance sheets for accounts receivable and accounts payable approximate their fair values due to the short-term nature\nof these instruments.\n\n \n\nThere is no material difference\nbetween the carrying amounts and fair values of the Company’s debt obligations, notes payable, line of credit and convertible notes\npayable, as interest rates approximate current market rates for similar types of debt instruments (Level 2).\n\n \n\nDisclosures about the fair value\nof financial instruments are based on pertinent information available to management as of December 31, 2025 and December 31, 2024. Although\nmanagement is not aware of any factors that would significantly affect the reasonableness of the fair value amounts, such amounts were\nnot comprehensively revalued for purposes of these consolidated financial statements and current estimates of fair value may differ significantly\nfrom the amounts presented herein.\n\n \n\nF-12\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\nStock Based Compensation\n\n \n\nThe Company accounts for its\nstock compensation arrangements at fair value in accordance with Accounting Standards Codification (“**ASC**”) 718 - Compensation\n- Stock Compensation. Compensation cost relating to share-based payment transactions is recognized in the Company’s consolidated\nfinancial statements based on the estimated fair value of the instruments issued. The Company measures the cost of employees’ services\nin exchange for stock awards based on the grant- date fair value of the award using the Black Scholes model and recognizes the cost over\nthe period the employee is required to provide services for the award, which is the vesting period. The Company accounts for forfeitures\nas they occur.\n\n \n\nWarrants\n\n \n\nOutstanding warrants were assumed\nat the Reverse Recapitalization. The fair value of the warrants was determined using the Monte Carlo analysis at the date of the transaction.\nThe Company accounts for its Public and Private warrants as equity- classified instruments based on an assessment of the warrant’s\nspecific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“**ASC 480**”)\nand ASC 815, Derivatives and Hedging (“**ASC 815**”). The assessment considers whether the warrants are freestanding financial\ninstruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements\nfor equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among\nother conditions for equity classification.\n\n \n\nThis assessment, which requires\nthe use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent year end date while the warrants\nare outstanding. It was determined at the Transaction Date that there were no changes to the classes or language that would impact the\noriginal assessment that the Public and Private warrants should be classified as equity.\n\n \n\nShipping and Handling Costs\n\n** **\n\nShipping and handling costs are\nexpensed as incurred and are included in general and administrative expense in the consolidated statements of operations.\n\n \n\nRecent Accounting Pronouncements\n\n** **\n\nIn November 2023, the Financial Accounting Standards\nBoard (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements\nto Reportable Segment Disclosures, to enhance disclosures about significant segment expenses for public entities reporting segment information\nunder ASC Topic 280. The amendments require public entities to disclose significant expense categories for each reportable segment, other\nsegment items, the title and position of the chief operating decision-maker, and interim disclosures of certain segment- related information\npreviously required only on an annual basis. The amendments clarify that entities reporting single segments must disclose both the new\nand existing segment disclosures under Topic 280, and a public entity is permitted to disclose multiple measures of segment profit or\nloss if certain criteria are met. The ASU is effective for years beginning after December 15, 2023, and interim periods within years beginning\nafter December 15, 2024. The adoption of ASU 2023-07 did not have a significant impact on the Company’s consolidated financial statements.\nSee Note 11, Segment Reporting, for the required disclosures.\n\n \n\nIn December 2023, the FASB issued ASU 2023-09,\n*Income Taxes (Topic 740): Improvements to Income Tax Disclosures*, to enhance transparency into income tax disclosures. The amendments\nrequire annual disclosure of certain information relating to the rate reconciliation, income taxes paid by jurisdiction, income (or loss)\nfrom continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, income tax expense (or benefit)\nfrom continuing operations disaggregated by federal (national), state, and foreign. The amendments also eliminate certain requirements\nrelating to unrecognized tax benefits and certain deferred tax disclosure relating to subsidiaries and corporate joint ventures. The ASU\nis effective for years beginning after December 15, 2024, and interim periods within years beginning after December 15, 2025. See notes\n5, income taxes, for the required disclosures.\n\n \n\nF-13\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\nIn November 2024, the FASB issued\nASU 2024-03, *Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures*(“**ASU 2024-03**”)\nwhich requires entities to (i) disclose amounts of (a) purchase of inventory, (b) employee compensation, (c) depreciation, (d) intangible\nasset amortization, and, (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities, (ii) include\ncertain amounts that are already required to be disclosed under current U.S. GAAP in the same disclosures as other disaggregation requirements,\n(iii) disclose a qualitative description of the amounts remaining in relevant expense captions that are not necessarily disaggregated\nquantitatively, and (iv) disclose the total amount of selling expenses, in annual reporting periods, an entity’s definition of\nselling expense. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods\nbeginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating ASU 2024-03 to determine the impact\nit may have on its consolidated financial statements.\n\n \n\nIn July 2025, the FASB issued ASU No. 2025-05, *Financial\nInstruments - Credit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and Contract Assets*, which provides\na practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets\nthat arise from transactions accounted for under ASC 606, *Revenue from Contracts with Customers*. Under ASU No. 2025-05, an entity\nis required to disclose whether it has elected to use the practical expedient. An entity that makes the accounting policy election is\nrequired to disclose the date through which subsequent cash collection are evaluated. ASU No. 2025-05 is effective for annual reporting\nperiods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted.\nThe Company is currently evaluating ASU 2025-05 to determine the impact it may have on its consolidated financial statements.\n\n \n\nIn December 2025, the FASB issued ASU No. 2025-11,\n*Interim Reporting (Topic 270),* which is intended to improve the navigability of the guidance in ASC 270, *Interim Reporting*,\nand clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes\nin accordance with GAAP. ASU No. 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements,\nand establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material\nimpact on the entity. ASU No. 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December\n15, 2027. Early adoption is permitted. The Company is currently evaluating ASU No. 2025-11 to determine the impact it may have on its\nconsolidated financial statements.\n\n \n\n**2. Inventories,\nnet**\n\n \n\nInventories were as follows:\n\n \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nRaw materials \n$3,930,750  \n$6,712,529 \n\nFinished goods \n 827,381  \n 2,225,813 \n\nReserve for obsolete inventory \n (175,555) \n (892,083)\n\n  \n$4,582,576  \n$8,046,259 \n\n \n\n**3.****Property, Plant\nand Equipment, Net**\n\n \n\nProperty, plant and equipment were as follows:\n\n \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nBuilding and improvements \n$10,110,188  \n$10,110,188 \n\nFurniture, fixtures and equipment \n 48,632,985  \n 48,517,228 \n\nConstruction in progress \n 760,387  \n 879,220 \n\n  \n 59,503,560  \n 59,506,636 \n\nLess: accumulated depreciation \n (15,611,596) \n (13,770,310)\n\n  \n$43,891,964  \n$45,736,326 \n\n \n\nDepreciation and amortization expense recorded in\nthe years ended December 31, 2025 and 2024 was approximately $1,841,000 and $2,324,000, respectively, which is included as a\ncomponent of cost of goods sold.\n\n \n\nDuring the years ended\nDecember 31, 2025 and 2024, there was no interest capitalized to property and plant equipment under construction.\n\n \n\nF-14\n\n \n\n**Borealis Foods Inc. and\nSubsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\n4. Debt\n\n** **\n\nDuring 2023, the Company entered\ninto a $25,000,000 financing agreement with a maturity date in August 2026. Under this agreement, the Company has a $15,000,000 term\nfacility which was used to pay off its then existing line of credit. . In March 2024, the Company entered into an amendment that extended\nthe date of the first principal payment to March 2025. In February 2025, a second amendment was executed that extended the first principal\npayment date to September 2025. Under the amendment, payments of $83,000 are due monthly beginning in September 2025 with a lump sum\npayment 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\nmonthly. The FrontWell financing agreement is secured by a collateral package that includes substantially all of the assets of PGF, PGF\nRE I, and PGF RE II.\n\n \n\nOn November 13, 2025, the Company received a\nnotice from FrontWell asserting the occurrence of a Default under the FrontWell Credit Agreement. On March 27, 2026, the Company,\ntogether with its subsidiaries Palmetto Gourmet Foods, Inc. (“PGF”), PGF Real Estate I, Inc., and PGF Real Estate II,\nInc. (collectively, the “Forbearance Parties”), entered into a Forbearance and Amendment Agreement with FrontWell (the\n“Forbearance Agreement”), pursuant to which FrontWell agreed to forbear from exercising its rights and remedies with\nrespect to specified defaults under the FrontWell Credit Agreement through April 27, 2026, subject to compliance with certain\nconditions, including the retention of a Chief Restructuring Officer. On April 27, 2026, the Company repaid and satisfied in full\nall obligations outstanding under the FrontWell Credit Agreement and entered into a new senior secured credit agreement with Oxus\nCapital PTE Ltd. In connection therewith, the engagement of the Chief Restructuring Officer was terminated.\n\n \n\nAmortization expense of approximately $499,000\nand $311,000 was recorded on the fees for the years ended December 31, 2025 and 2024, respectively.\n\n \n\nIn addition to the term facility,\nthe Company obtained a $10,000,000 line of credit to fund working capital needs in support of its growth strategy. Interest accrues at\nthe prime rate plus the applicable margin of 4.50%.\n\n \n\nInterest is due and payable monthly\nbeginning in September 2024. The line of credit includes an unused line fee of 0.25% per annum beginning on closing date through six\nmonths and increases to 0.50% per annum thereafter. As of December 31, 2025 and December 31, 2024 the line of credit had $2,691,000 and $7,600,000 drawn upon it, respectively.\n\n \n\nIn the period leading up to the Reverse Recapitalization, significant\ntransaction costs were incurred by both parties. In total, four notes payable of $13,035,374 were issued for the transaction debt and\nmatured in 2025. Details for the notes are as follows:\n\n \n\nNote 1 – Incurred by Borealis. The related expenses\nwere recognized as incurred by Borealis and the trade payable was subsequently reclassified to notes payable. Note 1 was issued in the\noriginal principal amount of $2,138,838. The note matures in June 2026, and bears interest at 10% per annum.\n\n \n\nNote 2 – Incurred by Borealis. The related expenses\nwere recognized as incurred by Borealis and the trade payable was subsequently reclassified to notes payable. Note 2 was issued in the\noriginal principal amount of $1,314,875. The note matures in June 2026, and bears interest at 10% per annum.\n\n** **\n\nNote 3 – Incurred by Oxus. The related expenses\nwere recognized by Oxus and resulted in a reduction of contributed equity at the Reverse Recapitalization. Note 3 was issued in the original\nprincipal amount of $1,980,000. The note matured in December 2025, and bears interest at 8% per annum.\n\n \n\nNote 4 – Incurred by Oxus. The related expenses\nwere recognized by Oxus and resulted in a reduction of contributed equity at the Reverse Recapitalization. Note 4 was issued in the original\nprincipal amount of $7,601,661. The note matures in June 2026, is non-interest bearing and payable to a related party.\n\n \n\nDebt balances outstanding as of December 31, 2025 are due as follows: $25,792,000\nin 2026; $0 in 2027; and $0 in 2028.\n\n \n\nOn April 27, 2026, the Company’s subsidiaries,\nPalmetto Gourmet Foods, Inc., PGF Real Estate I, Inc., and PGF Real Estate II, Inc. (collectively, the “Borrowers”), entered\ninto a Credit Agreement (the “Oxus Credit Agreement”) with Oxus Capital PTE Ltd. (“Oxus Capital”), a major shareholder\nof the Company, as lender. Borealis Foods Inc., Borealis IP Inc., and Palmetto Gourmet Foods (Canada) Inc. are party to the Oxus Credit\nAgreement as guarantors. The Oxus Credit Agreement provides for a term loan facility in an amount of up to $17,000,000 (the “Term\nLoan”), the proceeds of which were used to repay in full and discharge all outstanding obligations under the FrontWell Credit Agreement\nand to pay associated transaction fees and expenses. The Term Loan bears interest at 12% per annum and matures on April 27, 2031. Principal\nis repayable in 48 consecutive monthly installments calculated on a straight-line basis over the amortization period, commencing on the\nfirst payment date. Interest payments commence on May 1, 2027; provided that Oxus Capital has the option, at its sole election, to convert\nall interest accrued during the first year of the loan into common equity of the Company in lieu of cash payment. The Term Loan is secured\nby a first-priority lien on substantially all assets of the Borrowers, including mortgages on the Company’s manufacturing facility\nand distribution center located in Saluda, South Carolina. In connection with the Oxus Credit Agreement, Oxus Capital is entitled to appoint\ntwo members to the Company’s Board of Directors. Additionally, Oxus Capital and the Company entered into a Subscription Agreement\npursuant to which the Company is obligated to raise not less than $70,000,000 in additional equity from investors acceptable to Oxus Capital\nat a price of not less than $9.00 per share on or before June 30, 2026; in the event such equity financing is not consummated by such\ndate, the Subscription Agreement provides for the conversion of outstanding convertible notes held by Oxus Capital into equity interests\nof the Company. The Oxus Credit Agreement constitutes a related party transaction as Oxus Capital is a major shareholder of the Company.\n\n \n\nIn\nNovember 2025, in connection with the extension of a promissory note originally issued to EarlyBirdCapital, Inc. (“EBC”)\nin connection with the closing of the Company’s business combination transaction on February 7, 2024, Mr. Helg and Mr. Soltanzadeh\n(through Zagros Alpine Capital ULC) each provided 500,000 Common Shares as collateral for the Company’s obligations under the note.\nThe indebtedness underlying the promissory note was originally an obligation of Oxus Acquisition Corp., the Company’s former SPAC\nsponsor, and was assumed by the Company in connection with the closing of the business combination transaction. The shares were placed\ninto escrow with Continental Stock Transfer & Trust Company.\n\n \n\nFollowing\nan alleged default under the note, the escrowed shares were transferred to EBC. Despite ongoing discussions regarding repayment of the\nnote, EBC advised the Company in late April 2026 that a portion of such shares had been sold and the proceeds applied against amounts\noutstanding under the promissory note. The Company was not aware prior to such time that the shares had been transferred out of escrow.\n\n \n\nF-15\n\n \n\n**Borealis Foods Inc.\nand Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\n5. Income\nTaxes\n\n \n\nThe Company accounts for income\ntaxes using the liability method. Deferred income tax assets and liabilities are determined based on differences between the financial\nstatement and income tax basis of the respective assets and liabilities, using enacted tax rates in effect for the years when the differences\nare expected to reverse.\n\n \n\nBorealis is taxed under Canadian\ntax 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\nsubsidiaries”) are taxed as C corporations, with a statutory rate of 21%.\n\n \n\n(Loss) income before income tax expense (benefit) for the years ended\nDecember 31, 2025 and 2024 is as follows\n\n \n\n  \n2025  \n2024 \n\nU.S. Income (Loss) before Tax \n$(11,997,676) \n$(4,635,408)\n\nForeign Income (Loss) before Tax \n (7,048,667) \n (20,826,690)\n\nTotal Income (Loss) Before Taxes \n$(19,046,343) \n$(25,462,098)\n\n \n\nOur income (loss) from continuing operations before income taxes is\nas follows\n\n \n\n  \n2025  \n2024 \n\nContinuing Operations pre-tax book income \n$(19,046,343) \n$(25,462,098)\n\nDiscontinued Operations pre-tax book income \n$\n-\n  \n$\n-\n \n\n \n\nThe components of income tax provision (benefit) for the years ended\nDecember 31, 2025 and 2024 were as follows:\n\n \n\n  \n\n**For the Years Ended**\n\n**December 31,**\n \n\n  \n2025  \n2024 \n\nCurrent provision \n   \n  \n\nFederal \n$\n-\n  \n$(832)\n\nState \n (13,987) \n (14,116)\n\nForeign \n \n-\n  \n 43,540 \n\nCurrent benefit (provision) for income taxes \n$(13,987) \n$28,592 \n\n  \n    \n   \n\nDeferred provision \n    \n   \n\nFederal \n$(2,021,580) \n$(4,628,566)\n\nState \n (379,524) \n (903,382)\n\nForeign \n (1,750,184) \n (891,677)\n\nValuation allowance for unrealizable net deferred tax assets \n 4,231,985  \n 6,529,934 \n\nDeferred benefit/(provision) for income taxes \n$80,697  \n$106,309 \n\n  \n    \n   \n\nTotal benefit/(provision) for income taxes \n$66,710  \n$134,901 \n\n \n\nF-16\n\n \n\n**Borealis\nFoods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\nThe Company adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements\nTo Income Tax Disclosures” on a prospective basis beginning with the year ended December 31, 2025. The following table presents required\ndisclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount\nand rate for the year ended December 31, 2025:\n\n \n\n \n \n\n**For the Year Ended**\n\n**December 31, 2025**\n\n \n\n \n \n**Amount**\n \n \n**Percent**\n \n\n**U.S. federal statutory tax rate**\n \n$\n(3,999,732\n)\n \n \n21.00\n%\n\n**State income taxes, net of federal income tax effect**\n \n$\n(391,090\n)\n \n \n2.05\n%\n\n**Foreign tax effects**\n \n$\n- \n \n \n \n0.00\n%\n\n**Canada**\n \n$\n- \n \n \n \n0.00\n%\n\n**Statutory tax rate difference between Canada and United States**\n \n$\n(363,246\n)\n \n \n1.91\n%\n\n**Stock Options**\n \n$\n93,223\n \n \n \n(0.49)\n%\n\n**Other Adjustments**\n \n$\n59\n \n \n \n0.00\n%\n\n**Changes in valuation allowance**\n \n$\n1,750,184\n \n \n \n(9.19)\n%\n\n**Changes in valuation allowance**\n \n$\n2,481,801\n \n \n \n(13.03)\n%\n\n**Nontaxable or nondeductible items**\n \n$\n-\n \n \n \n0.00\n%\n\n**Impairment Loss**\n \n$\n402,645\n \n \n \n(2.11)\n%\n\n**Other Adjustments**\n \n$\n3,494\n \n \n \n(0.02)\n%\n\n**Deferred tax true-ups**\n \n$\n(44,048\n)\n \n \n0.23\n%\n\n**Other adjustments**\n \n$\n- \n \n \n \n0.00\n%\n\n**Other Effective tax rate - (Benefit)/provision**\n \n$\n- \n \n \n \n0.00\n%\n\n \n \n$\n(66,710\n)\n \n \n0.35\n%\n\n \n\nThe following table presents the required disclosures prior to the\nadoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective income tax rate for the\nyear ended December 31, 2024:\n\n \n\n  \n2024 \n\n  \nAmount \n\nFederal tax expense \n 21.00%\n\nState tax expense \n 3.23%\n\nStatutory tax rate difference between Puerto Rico and United States \n (27.81)%\n\nChanges in valuation allowance \n 1.39%\n\nOther \n 1.77%\n\nProvision for income taxes \n (0.42)%\n\n \n\nSignificant components of the Company’s deferred tax assets are\nas follows:\n\n \n\n \n \n**As\nof December 31,**\n \n\n**Deferred\ntax assets:**\n \n**2025**\n \n \n**2024**\n \n\n**Net operating losses carried\nforward**\n \n$\n31,762,682\n \n \n$\n26,153,662\n \n\n**Other deferred tax assets**\n \n \n164,721\n \n \n \n294,263\n \n\n**Total deferred tax assets**\n \n$\n31,927,403\n \n \n$\n26,447,925\n \n\n**Deferred tax (liabilities):**\n \n \n \n \n \n \n \n \n\n**Property, plant and equipment**\n \n$\n(6,832,156\n)\n \n$\n(5,663,837\n)\n\n**Total deferred tax (liabilities)**\n \n \n(6,832,156\n)\n \n \n(5,663,837\n)\n\n \n \n \n \n \n \n \n \n \n\n**Valuation allowance**\n \n \n(26,474,473\n)\n \n \n(22,244,011\n)\n\n**Net deferred tax assets/(liabilities)**\n \n$\n(1,379,226\n)\n \n$\n(1,459,923\n)\n\n \n\nAs of December 31, 2025 and 2024, the Company had a net operating\nloss carryforward for federal income tax purposes of $31,762,682 and $26,153,662, respectively, all of which have indefinite carryforward\nperiods. As of December 31, 2025 and 2024, the Company had a net operating loss carryforward for state income tax purposes of $31,762,682\nand $26,153,662, respectively, which will begin to expire in 2039. The Company has foreign net operating loss carryforwards of $4,343,723\nand $2,592,992 as of December 31, 2025 and 2024, respectively, which expire beginning in 2039.\n\n \n\nF-17\n\n \n\n**Borealis Foods Inc. and\nSubsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\nManagement has established a valuation allowance against the deferred\ntax assets as management does not believe it is more likely than not that these assets will be realized. The Company’s valuation\nallowance decreased by approximately $4,230,462 from 2024 to 2025.\n\n \n\nThe Company complies with the provisions of ASC 740-10 in accounting\nfor its uncertain tax positions. ASC 740-10 addresses the determination of whether tax benefits claimed or expected to be claimed on a\ntax return should be recorded in the financial statements. Under ASC 740-10, the Company may recognize the tax benefit from an uncertain\ntax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based\non the technical merits of the position. The Company has determined that the Company has no significant uncertain tax positions requiring\nrecognition under ASC 740-10 and therefore has not included a tabular roll forward of unrecognized tax benefits. As there are no uncertain\ntax positions recognized, interest and penalties have not been accrued.\n\n \n\nThe Company is subject to income tax in the United States, South Carolina\nand Canada. The Company has not been audited by any federal, state or foreign tax authorities in connection with income taxes.\n\n \n\nThe Company’s tax years December 31, 2019 through December 31,\n2025 generally remain open to adjustment for all federal, state and foreign tax matters until its net operating loss and tax credit carryforwards\nare utilized or expire prior to utilization, and the applicable statutes of limitation have expired in the utilization year. The federal\nand state tax authorities can generally reduce a net operating loss (but not create taxable income) for a period outside the statute of\nlimitations in order to determine the correct amount of net operating loss which may be allowed as a deduction against income for a period\nwithin the statute of limitations.\n\n \n\nThe Company recognizes interest accrued related to unrecognized tax\nbenefits and penalties, if incurred, as a component of income tax expense.\n\n \n\nThe Company adopted ASU 2023-09 on a prospective basis for the year\nended December 31, 2025. The company made no state or foreign tax payments for the year ended December 31, 2025; therefore, no table is\nneeded as a result of the adoption.\n\n \n\nOne Big Beautiful Bill\n\n \n\nOn July 4, 2025, President Trump signed into law the One Big Beautiful\nBill Act (“OBBBA”), which resulted in the extension of many provisions of the current tax law as well as other rule changes\nthat could impact the Company’s tax provision in 2025 or 2026. Examples of the new tax law include the following:\n\n \n\n●Full expensing of U.S. research and development costs under\nSection 174A.\n\n \n\n●Retroactive expensing of unamortized U.S. research and development\ncosts capitalized between 2022 and 2024; either all in 2025, or over two years in 2025 and 2026.\n\n \n\n●Return of the Section 163(j) taxable income base excluding the\ndeductions for depreciation and amortization in 2025 (change from “Tax EBIT” to “Tax EBITDA”).\n\n \n\n●Decrease in the Section 250 deduction for Net CFC Tested Income\n(formerly GILTI) to 40% (from 50%) in 2026, instead of the scheduled decrease to 37.5% prior to the OBBBA.\n\n \n\n●Decrease in the Section 250 deduction for foreign-derived income\nto 33.34% (from 37.5%) in 2026, instead of the scheduled decrease to 21.875% prior to the OBBBA.\n\n \n\n●Increase in the foreign tax credit rate on Net CFC Tested Income\n(formerly GILTI) to 90% (from 80%), and a 10% disallowance on repatriation, in 2026.\n\n \n\n●Removal of the allocation of interest expense and research and\ndevelopment expense to Net CFC Tested Income (formerly GILTI) in calculating the foreign tax credit limitation, effective in 2026.\n\n \n\nThe Company has determined the legislation will not have a material\nimpact on the Company’s financial statements.\n\n \n\nF-18\n\n \n\n**Borealis Foods Inc. and\nSubsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\n**6. Contingencies**\n\n** **\n\nFrom time to time, the Company is involved in\nlegal proceedings in the normal course of business. Management does not believe that the final resolution of any such legal proceedings\nwill have a material effect on the consolidated financial position or results of operations of the Company.\n\n \n\n**7. Leases**\n\n \n\nThe Company leases certain equipment from third-parties.\nThe determination of whether an arrangement is a lease is made at the lease’s inception. In accordance with US GAAP, a contract\nis (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.\nControl is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to\ndirect the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed.\n\n \n\nRight-of-use (“**ROU**”) assets\nrepresent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s\nobligation to make lease payments over that term. ROU assets and lease obligations are recognized at the lease commencement date based\non the present value of lease payments calculated using the implicit rate when it is readily determinable. In the absence of an implicit\nrate, management may use the Company’s incremental borrowing rate based on the information available at lease commencement. The\nCompany’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be\nexercised.\n\n \n\nROU assets associated with operating leases recorded\nnet of accumulated amortization were approximately $158,000 and $64,000 as of December 31, 2025 and December 31, 2024, respectively. ROU\nassets associated with finance leases recorded net of accumulated amortization of approximately $754,000 and $1,390,000 at December 31,\n2025 and 2024, respectively, and are included with property, plant and equipment, net. The Company recognized interest expense on its\nlease obligations of approximately $282,000 and $417,000 during the years ended December 31, 2025 and 2024, respectively.\n\n \n\nFor the years ended December 31, 2025 and 2024,\nthe Company recognized rent expense associated with leases as follows:\n\n \n\n  \n2025  \n2024 \n\nOperating lease cost: \n   \n  \n\nFixed rent expense \n$46,123  \n$44,643 \n\nFinance lease cost: \n    \n   \n\nAmortization of ROU assets \n 636,034  \n 636,034 \n\nNet lease cost \n$682,157  \n$680,677 \n\nLease cost - SG&A \n$46,123  \n$44,643 \n\nLease cost - Depreciation and Amortization \n 636,034  \n 636,034 \n\nNet lease cost \n$682,157  \n$680,677 \n\n \n\nF-19\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\nROU assets and lease liabilities consist of the following as of December\n31, 2025 and 2024:\n\n \n\n  \n2025  \n2024 \n\nOperating leases - ROU assets: \n   \n  \n\nOperating lease, ROU assets, gross \n$161,598  \n$179,849 \n\nAccumulated amortization \n (3,237) \n (116,023)\n\nOperating leases - ROU assets, net \n$158,361  \n$63,826 \n\nOperating lease liabilities: \n    \n   \n\nOperating leases, current portion \n$39,982  \n$55,116 \n\nOperating leases, non-current portion \n 118,528  \n 12,015 \n\nTotal operating lease liabilities \n$158,510  \n$67,131 \n\nFinance leases, ROU assets: \n    \n   \n\nProperty and equipment, gross \n$3,180,169  \n$3,180,169 \n\nAccumulated depreciation \n (2,425,725) \n (1,789,691)\n\nFinance leases, ROU assets, net \n$754,444  \n$1,390,478 \n\nFinance lease liabilities: \n    \n   \n\nFinance leases payable, current portion \n$642,474  \n$538,845 \n\nFinance leases payable, non-current portion \n 489,461  \n 1,143,829 \n\nTotal finance lease liabilities: \n$1,131,935  \n$1,682,674 \n\n \n\nFuture minimum payments due under operating and\nfinance leases as of December 31, 2025 consisted of the following:\n\n \n\nYears Ending December 31, \n\nOperating\n\nLeases\n  \n\nFinance\n\nLeases\n \n\n2026 \n$54,051  \n$776,818 \n\n2027 \n 54,795  \n 519,093 \n\n2028 \n 55,751  \n \n-\n \n\n2029 \n 23,484  \n \n-\n \n\nTotal \n 188,081  \n 1,295,911 \n\nLess: effect of discounting \n (29,571) \n (163,976)\n\nLease liability recognized \n$158,510  \n$1,131,935 \n\n \n\nAs of December 31, 2025 the weighted average remaining\nlease term and weighted average discount rate for operating leases was 3.4 years and 10.00%, respectively.\n\n \n\nAs of December 31, 2024 the weighted average remaining\nlease term and weighted average discount rate for operating leases was 1.41 years and 10.00%, respectively.\n\n \n\nAs of December 31, 2025 the weighted average remaining\nlease term and weighted average discount rate for finance leases was 1.67 years and 19.04%, respectively.\n\n \n\nAs of December 31, 2024 the weighted average remaining\nlease term and weighted average discount rate for finance leases was 2.64 years and 18.89%, respectively.\n\n \n\nF-20\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\n**8. Warrants**\n\n** **\n\nThe following represents a summary of warrants\noutstanding and exercisable on December 31, 2025:\n\n \n\nDescription  Issue Date  Classification Exercise  Price   Expiration\nDate \nOutstanding\n\nShares\n  \nExercisable\n\nShares\n \n\nPrivate Placement Warrants  9/13/2021  Equity  $11.50   2/7/2029   9,300,000    9,300,000 \n\nPublic Warrants  9/13/2021  Equity  $11.50   2/7/2029   17,250,000    17,250,000 \n\nPrivate Placement Warrants  6/13/2025  Equity  $5.00   7/18/2027   100,000    100,000 \n\nPrivate Placement Warrants  11/19/2025  Equity  $2.50   11/19/2028   250,000    250,000 \n\n                  26,900,000    26,900,000 \n\n \n\nFollowing the closing of the Reverse Recapitalization,\nBorealis has the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a\nprice of $0.01 per warrant, provided that the last reported sales price of Common Shares equals or exceeds $18.00 per share (as adjusted\nfor share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 days within a 30 trading day period commencing\nonce the warrants become exercisable and ending on the third trading day prior to the date on which Borealis Foods Inc. gives proper notice\nof such redemption and provided certain other conditions are met.\n\n \n\nThe public warrants are identical to the 2021\nprivate placement warrants in material terms and provisions, except the private placement warrants were not transferable, assignable or\nsalable until 30 days after the completion of the Reverse Recapitalization.\n\n \n\n**9. Equity Based Compensation**\n\n** **\n\n**Stock Option Plan**\n\n** **\n\nDuring 2022, the Company created a stock option\nplan (the “**Plan**”) that provides for the granting of options to certain employees for the purchase of the Company’s\nclass D common shares. The Plan provides for the grant of stock options for eligible employees as determined by the Board of Directors\nand does not guarantee employment rights. During the years ended December 31, 2025 and 2024 the Company granted options to purchase 0\nand 333,574 shares, respectively, of the Company’s common shares at an exercise price of $0.0001 per share. The weighted-average\ngrant date fair values of options granted was $0.60 per share. The fair values of the stock-based awards granted were calculated with\nthe following assumptions:\n\n \n\nRisk-free interest rate \n 3.81%\n\nExpected term (years) \n 5-10 \n\nExpected volatility \n 80.00%\n\nDividend yield \n 0.00%\n\n \n\nFor the years ended December 31, 2025 and 2024,\nthe Company recorded approximately $0 and $1,273,000, respectively, of employee stock-based compensation expense. On February 7, 2024,\nas a result of the Reverse Recapitalization (Note 1), 4,000,000 stock options were exercised and converted at an exchange ratio of 0.0661\ninto 264,400 shares of Newco Class A common stock. This stock option plan was closed upon the business combination and a new equity incentive\nplan was approved and implemented as of February 7, 2024.\n\n \n\nStock option activity for the years ended December 31, 2025 and 2024\nis summarized as follows:\n\n \n\n   Shares   Weighted\nAverage\nExercise\nPrice   Weighted\nRemaining\nContractual\nLife(Years) \n\nOptions outstanding at December 31, 2023   3,666,426   $0.0001    8.10 \n\nGranted   333,574    0.0001    8.10 \n\nExercised   (4,000,000)   0.0001    \n—\n \n\nExpired or forfeited   \n—\n    \n—\n    \n—\n \n\nOptions outstanding at December 31, 2024   \n—\n    \n—\n    \n \n \n\nGranted   \n—\n    \n—\n    \n—\n \n\nExercised   \n—\n    \n—\n    \n—\n \n\nExpired or forfeited   \n—\n    \n—\n    \n—\n \n\nOptions outstanding at December 31, 2025   \n—\n    \n—\n    \n \n \n\n \n\nF-21\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\n**Restricted Stock**\n\n** **\n\n  \n\nRestricted\n\nStock\nUnits  \n\nWeighted\n\nAverage\n\nGrant Date\n\nFair Value\n \n\n  \n   \n  \n\nOutstanding at December 31, 2023 \n \n—\n  \n \n—\n \n\nGranted \n 16,954  \n 5.83 \n\nVested \n \n—\n  \n \n—\n \n\nForfeited \n \n—\n  \n \n—\n \n\nOutstanding at December 31, 2024 \n 16,954  \n 5.83 \n\nGranted \n 120,000  \n 3.21 \n\nVested \n (124,454) \n 3.57 \n\nForfeited \n \n—\n  \n \n—\n \n\nOutstanding at December 31, 2025 \n 12,500  \n 3.21 \n\n \n\nStock compensation expense related to\nrestricted stock units (“RSUs”) was approximately $444,000 and $0 for the years ended December 31, 2025 and 2024,\nrespectively.\n\n \n\nRSUs\nrepresent the right to receive one common share of the Company or the cash equivalent of one common share upon vesting, subject to the\nterms and conditions of the Company’s Equity Incentive Plan and the applicable award agreement. Vesting is generally subject to continued\nservice and any other conditions established by the Compensation Committee.\n\n \n\nThe\nCompany’s Equity Incentive Plan, adopted on February 7, 2024, provides for the grant of stock options, RSUs, performance share units\n(PSUs), deferred share units (DSUs) and stock appreciation rights (SARs) to directors, officers, employees and consultants. The purpose\nof the plan is to attract, retain and incentivize eligible participants and align their interests with those of shareholders through\nequity-based compensation.\n\n \n\n**10. Earnings per share**\n\n \n\nBasic earnings or loss per share is based on the\nweighted average number of common shares outstanding for the period. For the purposes of calculating diluted earnings per share, the number\nof shares outstanding has been adjusted for the dilutive effects of warrants.\n\n \n\n  \nFor Years Ended \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nBasic (loss) per share calculation \n   \n  \n\nNet (loss) available to common shareholders \n$(18,978,618) \n$(25,327,198)\n\nWeighted average common shares outstanding (basic) \n 21,428,650  \n 20,309,934 \n\nBasic (loss) per share from net loss \n$(0.89) \n$(1.25)\n\nDiluted (loss) per share calculation \n    \n   \n\nNet (loss) available to common shareholders \n$(18,978,618) \n$(25,327,198)\n\nWeighted average common shares outstanding (basic) \n 21,428,650  \n 20,309,934 \n\nWarrants \n \n—\n  \n \n—\n \n\nWeighted average common shares outstanding (diluted) \n 21,428,650  \n 20,309,934 \n\nDiluted (loss) per share from net loss * \n$(0.89) \n$(1.25)\n\n \n\n* In periods where the Company has incurred a net loss, diluted earnings per share is based on the number of common shares issued and outstanding as including the effects of warrants would be anti-dilutive.\n\n \n\n**11. Segment Reporting**\n\n** **\n\nThe Company has a single reportable segment focused\naround sale of similar products. This reportable segment derives revenues from the manufacture and sale of high quality, affordable and\nnutritious ready to eat meals.\n\n \n\nThe Company identifies its operating segments\nin accordance with ASC 280, Segment Reporting. An operating segment is a component of an entity (a) that engages in business activities\nfrom which it may earn revenues and incur expenses, (b) whose operating results are regularly reviewed by the chief operating decision\nmaker (CODM) to make decisions about resources to be allocated to the segment and assess its performance, and (c) for which discrete financial\ninformation is available.\n\n \n\nF-22\n\n \n\n**Borealis Foods Inc. and Subsidiaries\nNotes to Consolidated Financial Statements**\n\n \n\nThe Company’s CODM is the Chief Executive\nOfficer. The CODM reviews revenue by geographic region as the primary basis for resource allocation and performance assessment. Discrete\nrevenue information is available for each region; however, operating expenses, assets, liabilities, and capital expenditures are not allocated\nto individual regions for internal reporting purposes and are managed on a consolidated basis. Accordingly, the Company is treated as\na single reportable segment under ASC 280-10-50-1 for purposes of full segment disclosure.\n\n \n\n**Revenue by Geographic Region**\n\n \n\nThe following table presents gross revenue disaggregated\nby geographic region for the years ended December 31, 2025 and 2024, respectively. Regions correspond to the sales territories through\nwhich the Company distributes its products in the United States, Canada, and international markets.\n\n \n\n  \nYear ended December 31 \n\n  \n2025  \n2024 \n\nSoutheast \n$10,695,000  \n$11,933,000 \n\nMidwest \n 9,446,000  \n 4,307,000 \n\nSouthwest \n 3,400,000  \n 2,731,000 \n\nNortheast \n 2,441,000  \n 1,547,000 \n\nMountain \n 2,186,000  \n 1,422,000 \n\nPacific \n 1,839,000  \n 5,109,000 \n\nInternational \n 1,469,000  \n 2,051,000 \n\nTotal Gross Revenue \n$31,476,000  \n$29,100,000 \n\n \n\n**12. Subsequent Events**\n\n \n\nThe Company evaluated events and transactions\noccurring after December 31, 2025 through May 29, 2026, the date these consolidated financial statements were available to be issued,\nfor subsequent events requiring recognition or disclosure.\n\n \n\nOn November 13, 2025, the Company received a notice\nfrom its senior lender, FrontWell Capital Partners Inc. (“FrontWell”), asserting the occurrence of Default under the credit\nagreement dated August 10, 2023 (as amended, the “FrontWell Credit Agreement”). On March 27, 2026, the Company, together with\nits subsidiaries Palmetto Gourmet Foods, Inc., PGF Real Estate I, Inc., and PGF Real Estate II, Inc. (collectively, the “Forbearance\nParties”), entered into a Forbearance and Amendment Agreement with FrontWell (the “Forbearance Agreement”), pursuant\nto which FrontWell agreed to forbear from exercising its rights and remedies with respect to specified defaults under the FrontWell Credit\nAgreement through April 27, 2026, subject to compliance with certain conditions, including the retention of a Chief Restructuring Officer.\n\n \n\nOn April 27, 2026, the Company’s subsidiaries,\nPalmetto Gourmet Foods, Inc., PGF Real Estate I, Inc., and PGF Real Estate II, Inc. (collectively, the “Borrowers”), entered\ninto a Credit Agreement (the “Oxus Credit Agreement”) with Oxus Capital PTE Ltd. (“Oxus Capital”), a major shareholder\nof the Company, as lender. Borealis Foods Inc., Borealis IP Inc., and Palmetto Gourmet Foods (Canada) Inc. are party to the Oxus Credit\nAgreement as guarantors. The Oxus Credit Agreement provides for a term loan facility in an amount of up to $17,000,000 (the “Term\nLoan”), the proceeds of which were used to repay in full and discharge all outstanding obligations under the FrontWell Credit Agreement\nand to pay associated transaction fees and expenses. The Term Loan bears interest at 12% per annum and matures on April 27, 2031. Principal\nis repayable in 48 consecutive monthly installments calculated on a straight-line basis over the amortization period, commencing on the\nfirst payment date. Interest payments commence on May 1, 2027; provided that Oxus Capital has the option, at its sole election, to convert\nall interest accrued during the first year of the loan into common equity of the Company in lieu of cash payment. The Term Loan is secured\nby a first-priority lien on substantially all assets of the Borrowers, including mortgages on the Company’s manufacturing facility\nand distribution center located in Saluda, South Carolina. In connection with the Oxus Credit Agreement, Oxus Capital is entitled to appoint\ntwo members to the Company’s Board of Directors. Additionally, Oxus Capital and the Company entered into a Subscription Agreement\npursuant to which the Company is obligated to raise not less than $70,000,000 in additional equity from investors acceptable to Oxus Capital\nat a price of not less than $9.00 per share on or before June 30, 2026; in the event such equity financing is not consummated by such\ndate, the Subscription Agreement provides for the conversion of outstanding convertible notes held by Oxus Capital into equity interests\nof the Company. The Oxus Credit Agreement constitutes a related party transaction as Oxus Capital is a major shareholder of the Company.\n\n \n\nBetween January 1, 2026 and May 29, 2026, the\nCompany received additional unsecured advances from the Chairman of the Board of Directors and Chief Executive Officer in the amounts\nof $2,050,000 and $282,500, respectively. In addition, the Chief Executive Officer deferred approximately $208,000 in compensation during\nthis same period.\n\n \n\nF-23\n\n \n\nhttp://fasb.org/us-gaap/2025#PropertyPlantAndEquipmentNet\nhttp://fasb.org/us-gaap/2025#PropertyPlantAndEquipmentNet\n\nhttp://fasb.org/srt/2025#ChiefExecutiveOfficerMember\n1\n0001852973\nfalse\nFY\n\n0001852973\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:CommonShares1Member\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:Warrants1Member\n\n2025-01-01\n2025-12-31\n\n0001852973\n\n2026-05-28\n\n0001852973\n\n2025-12-31\n\n0001852973\n\n2024-12-31\n\n0001852973\n\nus-gaap:RelatedPartyMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:RelatedPartyMember\n\n2024-12-31\n\n0001852973\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nus-gaap:CommonClassAMember\nus-gaap:CommonStockMember\n\n2023-12-31\n\n0001852973\n\nus-gaap:CommonClassBMember\nus-gaap:CommonStockMember\n\n2023-12-31\n\n0001852973\n\nus-gaap:CommonClassCMember\nus-gaap:CommonStockMember\n\n2023-12-31\n\n0001852973\n\nus-gaap:AdditionalPaidInCapitalMember\n\n2023-12-31\n\n0001852973\n\nus-gaap:RetainedEarningsMember\n\n2023-12-31\n\n0001852973\n\n2023-12-31\n\n0001852973\n\nus-gaap:CommonClassAMember\nus-gaap:CommonStockMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nus-gaap:CommonClassBMember\nus-gaap:CommonStockMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nus-gaap:CommonClassCMember\nus-gaap:CommonStockMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nus-gaap:AdditionalPaidInCapitalMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nus-gaap:RetainedEarningsMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nus-gaap:CommonClassAMember\nus-gaap:CommonStockMember\n\n2024-12-31\n\n0001852973\n\nus-gaap:CommonClassBMember\nus-gaap:CommonStockMember\n\n2024-12-31\n\n0001852973\n\nus-gaap:CommonClassCMember\nus-gaap:CommonStockMember\n\n2024-12-31\n\n0001852973\n\nus-gaap:AdditionalPaidInCapitalMember\n\n2024-12-31\n\n0001852973\n\nus-gaap:RetainedEarningsMember\n\n2024-12-31\n\n0001852973\n\nus-gaap:CommonClassAMember\nus-gaap:CommonStockMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:CommonClassBMember\nus-gaap:CommonStockMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:CommonClassCMember\nus-gaap:CommonStockMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:AdditionalPaidInCapitalMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:RetainedEarningsMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:CommonClassAMember\nus-gaap:CommonStockMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:CommonClassBMember\nus-gaap:CommonStockMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:CommonClassCMember\nus-gaap:CommonStockMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:AdditionalPaidInCapitalMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:RetainedEarningsMember\n\n2025-12-31\n\n0001852973\n\nsrt:MinimumMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nsrt:MaximumMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:NotesPayableMember\n\n2025-12-31\n\n0001852973\n\nbrls:RevenueAndCostRecognitionAndAccountsReceivableMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:RevenueAndCostRecognitionAndAccountsReceivableMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nbrls:OneCustomerMember\nus-gaap:SalesRevenueNetMember\nus-gaap:CustomerConcentrationRiskMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:TwoCustomerMember\nus-gaap:SalesRevenueNetMember\nus-gaap:CustomerConcentrationRiskMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nbrls:ThreeCustomersMember\nus-gaap:AccountsReceivableMember\nus-gaap:CustomerConcentrationRiskMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:ThreeCustomersMember\nus-gaap:AccountsReceivableMember\nus-gaap:CustomerConcentrationRiskMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nbrls:PurchaseMember\nus-gaap:SupplierConcentrationRiskMember\nbrls:OneZeroVendorsMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:PurchaseMember\nus-gaap:SupplierConcentrationRiskMember\nbrls:OneZeroVendorsMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nsrt:MinimumMember\nus-gaap:BuildingImprovementsMember\n\n2025-12-31\n\n0001852973\n\nsrt:MaximumMember\nus-gaap:BuildingImprovementsMember\n\n2025-12-31\n\n0001852973\n\nsrt:MinimumMember\nus-gaap:FurnitureAndFixturesMember\n\n2025-12-31\n\n0001852973\n\nsrt:MaximumMember\nus-gaap:FurnitureAndFixturesMember\n\n2025-12-31\n\n0001852973\n\nbrls:FurnitureFixturesEquipmentAndMachineHoursMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:BuildingImprovementsMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:BuildingImprovementsMember\n\n2024-12-31\n\n0001852973\n\nus-gaap:FurnitureAndFixturesMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:FurnitureAndFixturesMember\n\n2024-12-31\n\n0001852973\n\nus-gaap:ConstructionInProgressMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:ConstructionInProgressMember\n\n2024-12-31\n\n0001852973\n\nus-gaap:DebtMember\n\n2023-12-31\n2023-12-31\n\n0001852973\n\n2025-09-30\n2025-09-30\n\n0001852973\n\n2025-09-30\n\n0001852973\n\nus-gaap:LineOfCreditMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:LineOfCreditMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:LineOfCreditMember\n\n2024-12-31\n\n0001852973\n\nbrls:NoteFourMember\n\n2025-12-31\n\n0001852973\n\nbrls:NoteOneMember\n\n2025-12-31\n\n0001852973\n\nbrls:NoteOneMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:NoteTwoMember\n\n2025-12-31\n\n0001852973\n\nbrls:NoteTwoMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:NoteThreeMember\n\n2025-12-31\n\n0001852973\n\nbrls:NoteThreeMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:NoteFourMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nsrt:ScenarioForecastMember\n\n2026-04-27\n\n0001852973\n\nbrls:SubscriptionAgreementMember\n\n2026-04-27\n2026-04-27\n\n0001852973\n\nbrls:SubscriptionAgreementMember\n\n2026-04-27\n\n0001852973\n\n2025-11-01\n2025-11-30\n\n0001852973\n\ncountry:CA\n\n2025-01-01\n2025-12-31\n\n0001852973\n\ncountry:US\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:DomesticCountryMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:DomesticCountryMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nsrt:MinimumMember\nbrls:OBBBAMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nsrt:MaximumMember\nbrls:OBBBAMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:OBBBAMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:RightofuseAssetsMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:RightofuseAssetsMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nus-gaap:RestrictedStockUnitsRSUMember\n\n2024-12-31\n\n0001852973\n\nus-gaap:RestrictedStockUnitsRSUMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:SellingGeneralAndAdministrativeExpensesMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:SellingGeneralAndAdministrativeExpensesMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nbrls:LeaseCostDepreciationAndAmortizationMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:LeaseCostDepreciationAndAmortizationMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nus-gaap:WarrantMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:PrivatePlacementMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:PrivatePlacementMember\n\n2025-12-31\n\n0001852973\n\nbrls:PublicWarrantsMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:PublicWarrantsMember\n\n2025-12-31\n\n0001852973\n\nbrls:PrivatePlacementOneMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:PrivatePlacementOneMember\n\n2025-12-31\n\n0001852973\n\nbrls:PrivatePlacementTwoMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:PrivatePlacementTwoMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:StockOptionMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:StockOptionMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:StockOptionMember\n\n2024-02-07\n2024-02-07\n\n0001852973\n\nus-gaap:CommonStockMember\n\n2024-02-07\n2024-02-07\n\n0001852973\n\nus-gaap:RestrictedStockMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:RestrictedStockMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\n2022-12-31\n\n0001852973\n\n2023-01-01\n2023-12-31\n\n0001852973\n\nus-gaap:RestrictedStockMember\n\n2023-12-31\n\n0001852973\n\nus-gaap:RestrictedStockMember\n\n2024-12-31\n\n0001852973\n\nus-gaap:RestrictedStockMember\n\n2025-12-31\n\n0001852973\n\nus-gaap:SoutheastRegionMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:SoutheastRegionMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nus-gaap:MidwestRegionMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:MidwestRegionMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nus-gaap:SouthwestRegionMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:SouthwestRegionMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nus-gaap:NortheastRegionMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nus-gaap:NortheastRegionMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nbrls:MountainMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:MountainMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nbrls:PacificMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:PacificMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nbrls:InternationalMember\n\n2025-01-01\n2025-12-31\n\n0001852973\n\nbrls:InternationalMember\n\n2024-01-01\n2024-12-31\n\n0001852973\n\nsrt:ScenarioForecastMember\n\n2026-04-27\n2026-04-27\n\n0001852973\n\nsrt:ScenarioForecastMember\nus-gaap:SubsequentEventMember\n\n2026-04-27\n2026-04-27\n\n0001852973\n\nsrt:ScenarioForecastMember\nus-gaap:SubsequentEventMember\n\n2026-04-27\n\n0001852973\n\nsrt:BoardOfDirectorsChairmanMember\nus-gaap:SubsequentEventMember\n\n2026-01-01\n2026-01-01\n\n0001852973\n\nsrt:ScenarioForecastMember\nsrt:ChiefExecutiveOfficerMember\n\n2026-05-29\n2026-05-29\n\n0001852973\n\nsrt:ChiefExecutiveOfficerMember\n\n2025-12-31\n\niso4217:USD\n\nxbrli:shares\n\niso4217:USD\n\nxbrli:shares\n\nxbrli:pure\n\nbrls:Hours\n\nbrls:Segments"}