BRLS · Borealis Foods Inc.

Borealis Foods Inc. faces severe financial distress, as evidenced by multiple Specified Defaults under its August 10, 2023 Credit Agreement with Frontwell Capital Partners, including failures to maintain Excess Availability, overadvances from October 2025 to March 2026, issuance of $26.7 million in prohibited unsecured Blocked Notes to insiders like Chairman Barthelemy Helg and CEO Reza Soltanzadeh's affiliates, delivery failures of financial statements and certificates, and a qualified auditor's opinion for fiscal 2024. The Forbearance Agreement provides temporary relief until April 27, 2026, but imposes strict milestones such as installing a CRO by March 30 (met with Jeffrey T. Varsalone) and delivering a Refinancing Plan by April 9 sufficient to repay all $16.1 million-plus Obligations. Failure triggers immediate termination, allowing the Lender to accelerate and foreclose on collateral. The CRO holds executive authority at least as broad as the CEO, with overruling him constituting a Forbearance Default. Increased costs include default-rate interest (up 2%), higher margins, a $50,000 fee, and a $600,000 reserve, signaling heightened borrowing expenses. No further loans are obligated, and payments on Blocked Notes are blocked. The company is evaluating strategic alternatives like equity raises but warns of material adverse effects, potential going concern issues, and Lender remedies if unresolved. This heightens default and liquidity risks for investors.