{"url_path":"/sec/brls/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 A. Quantitative and Qualitative Disclosures About Market Risk.","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":609,"has_tables":true,"body_markdown":"Item\n7.A. Quantitative and Qualitative Disclosures About Market Risk.\n\n** **\n\nWe\nare exposed to market risk in the ordinary course of our business. Market Risk represents the risk of loss that may impact our financial\nposition due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations\nin foreign currency exchange rates.\n\n \n\nConcentration\nRisk\n\n** **\n\nThe\nCompany extends unsecured credit to its customers in the ordinary course of business. Payment terms are generally net 30 days with discounts\namounting up to 2.5% for early payments. Accounts receivables are written off when they are determined to be uncollectible based on the\nfinancial stability of its customers and existing economic conditions.\n\n \n\nSales to two customers accounted for approximately\n35% and 33% of net revenues for the years ended December 31, 2025 and 2024, respectively. Accounts receivable from three customers amounted\nto approximately 51% and 37% of total accounts receivable as of December 31, 2025 and 2024, respectively. Substantially all of the Company’s\nsales for the years ended December 31, 2025 and 2024 occurred in the United States, Canada, Central America, South America, and Europe.\n\n \n\nPurchases\nfrom 10 vendors accounted for approximately 54% and 47% of purchases during the fiscal years ended December 31, 2025 and 2024, respectively.\nAccounts payable to these vendors totaled approximately $2,764,000 and $3,217,000 as of December 31, 2025 and 2024, respectively\n\n \n\nForeign\nCurrency Risk\n\n** **\n\nOur\ncustomers are primarily located in the United States, Central America, South America, Germany, and Canada; therefore, foreign exchange\nrisk exposures arise from transactions denominated in currencies other than our functional and reporting currency (U.S. dollars). To\ndate, a majority of our sales have been denominated in U.S. dollars and a significant portion of our operating expenses are denominated\nin Canadian dollars. We also purchase certain of our key manufacturing inputs in Euros. As we expand our presence in international markets,\nour results of operations and cash flows may increasingly be subject to fluctuations due to changes in foreign currency exchange rates\nand may be adversely affected in the future due to changes in foreign currency exchange rates. To date, we have not entered into any\nhedging arrangements to minimize the impact of these fluctuations in the exchange rates. We will periodically reassess our approach to\nmanage our risk relating to fluctuations in currency rates.\n\n \n\nWe\ndo not believe that foreign currency risk had a material effect on our business, financial condition, or results of operations during\nthe periods presented.\n\n \n\nInflation\nRisk\n\n** **\n\nWe\ndo not believe that inflation had a significant impact on our results of operations for any periods presented in our consolidated financial\nstatements. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset\nsuch higher costs with product price increases, and our inability or failure to do so could harm our business, financial condition, and\nresults of operations.\n\n \n\nMatching\nRevenues with Costs\n\n** **\n\nCertain\nSelling, General and Administrative costs have been expensed in the period incurred. These costs, include business development costs,\ntransaction costs and research and development costs, consist primarily of personnel and related expenses including salaries, benefits,\nshare-based compensation, scale-up expenses, depreciation and amortization expenses, and facility lease costs. Scale-up expenses includes\nmaterial waste costs, production personnel costs and various related expenses. These costs are focused on enhancements to our existing\nproduct formulations and production processes, as well as the scientific development of new products and economic verticals. We believe\ncontinued innovation and these new verticals are expected to capture a larger share of consumers. Monetization of future opportunities\ncreated by the above investment are expected to be realized in future quarters."}