The future viability of Canada-based ramen noodles supplier Borealis Foods is in jeopardy unless the company secures new funds, as reported in a filing with the US Securities and Exchange Commission (SEC). The business experienced losses in the first quarter after debuting on the Nasdaq exchange earlier this year. Borealis Foods expressed concerns about its ability to continue as a going concern due to recurring losses and negative cash flows.
Founded in 2019 by CEO Reza Soltanzadesh, Borealis Foods entered a merger agreement with Oxus Acquisition Corp. in 2023, resulting in a SPAC merger this year. The company includes the subsidiary Palmetto Gourmet Foods, which manufactures plant-based instant noodles in a US factory in South Carolina.
Despite launching a new high-protein noodles range and increasing retail distribution, Borealis Foods disclosed in the SEC filing that a significant portion of its revenue came from just two customers in the first quarter. While gross profit improved, the company reported a net loss and negative operating profit.
To address its financial challenges, Borealis Foods secured a $50m cash injection from an undisclosed entity. However, the company faces upcoming debt obligations and the need for additional financing to sustain operations. Borealis Foods emphasized the importance of obtaining equity or debt financing to avoid defaults and potential enforcement actions by creditors.
We reached out to Borealis Foods for clarification on the seriousness of the financing situation highlighted in the SEC filing. The company also noted delays in school sales but anticipates increased orders for the upcoming school year. Overall, Borealis Foods remains focused on addressing financial constraints to ensure its continued operation in the food and beverage industry.
