Borealis Foods Reports Q1 2025 Revenue Decline to $6.8 Million Amid Strategic Changes

Borealis Foods Inc. reported its financial results for the first quarter of 2025, revealing a net revenue of $6.8 million, a 14% decrease from $7.9 million in the same period last year. The decline is attributed to ongoing SKU rationalization efforts and a strategic pullback from low-margin retail accounts. Despite the drop in revenue, the company achieved a gross profit of $0.9 million, a significant improvement from $0.2 million in the prior year, driven by a favorable product mix and enhanced cost controls. The gross margin, excluding depreciation, improved to 20% from 16% year-over-year, reflecting a shift towards higher-margin branded products and institutional sales.

In terms of operational changes, Borealis Foods has focused on diversifying its customer base, significantly reducing revenue concentration from a previously dominant retail partner. A major institutional customer contributed $2.0 million in its first full quarter, while two additional clients expanded their volume, generating $1.95 million and $0.30 million, respectively. The company also launched a prominent global brand in the premium retail segment, indicating early traction in this market. The Chef Woo High Protein Ramen brand remained a key player, generating $1.66 million in sales, accounting for approximately 24% of total sales.

Borealis Foods has made substantial cuts to its sales, general, and administrative expenses, which decreased by 47% year-over-year to $3.82 million. This reduction is attributed to the conclusion of non-recurring professional fees and a disciplined approach to marketing expenditures. The company did not raise external capital during the quarter but received advances from its Chairman and CEO totaling $1.5 million. As of March 31, 2025, Borealis reported cash on hand of $192,536 and a negative working capital of $25.3 million, raising concerns about its ability to continue as a going concern.

The company is actively exploring financing options to strengthen its liquidity and support ongoing operations. Management is aligning inventory and production levels with committed demand from stable institutional customers, which is expected to enhance working capital efficiency and cash flow conversion throughout the year. However, the company faces significant risks, including a substantial debt burden and the need for additional financing to avoid curtailing operations or seeking bankruptcy protection. The management's ability to execute its strategic initiatives and secure necessary funding will be critical for Borealis Foods' future stability and growth.