Executive Summary

Net revenues were $7.895M, down 5% year over year due to delays in international distribution and institutional sales reviews; gross profit turned positive at $0.243M with a 3% margin vs (4)% in Q1 2023 .
Operating loss widened to $(6.973)M and net loss to $(8.432)M; diluted EPS was $(0.49), an improvement vs $(0.55) a year ago .
Management highlighted product mix optimization toward higher-margin items, significant marketing investments (including Gordon Ramsay as ambassador), and expected school program ramp in Q3 2024 (Woodles), positioning for stronger 2H performance .
Liquidity remains tight with $(6.769)M cash used in operations in Q1 and continued “going concern” disclosure; management expects to resolve going concern by end of 2024 via execution and financing activities .

What Went Well and What Went Wrong

What Went Well
- “Continued refinement of product mix is positively impacting gross margin – we’ve not only achieved gross profit for the past two quarters… we believe we have laid a solid foundation for future bottom-line growth” (CEO letter) .
- Marketing and R&D investments (ambassador Gordon Ramsay, influencer-led content) aimed at accelerating demand and sales expansion in retail/e-commerce .
- Woodles, “first whole-grain high-protein noodles served in U.S. schools,” targeted to ramp shipments in Q3, with expected positive sales impact; additional institutional channels (food distributors, military, corrections, humanitarian programs) pursued .
- Inclusion in Feeding America’s “Fight Hunger. Spark Change.” expanded Chef Woo distribution in ~600 Sam’s Clubs, adding endpoints and mission alignment .
What Went Wrong
- Net sales fell ~$0.46M YoY as mod review delays hit international and institutional channels; first half seasonally slow for soup products .
- Sub-20% plant capacity utilization drove disproportionately high labor/overhead rates; although supply pricing improved, utilization weighed on margins .
- SG&A rose sharply from professional fees for reverse recapitalization (~$1.5M) and stock comp (+$1.1M), while advertising spiked to ~$1.526M vs ~$0.039M YoY, pressuring operating loss .
- Cash burn increased with $(6.769)M used in operations, underscoring funding needs and going-concern risks .

Financial Results

Metric	Q1 2023	Q1 2024
Net Revenues ($USD)	$8.355M	$7.895M
Gross Profit ($USD)	$(0.344)M	$0.243M
Gross Margin (%)	(4)%	3%
SG&A ($USD)	$4.220M	$7.216M
Operating Income ($USD)	$(4.564)M	$(6.973)M
Net Income - (IS) ($USD)	$(5.936)M	$(8.432)M
Diluted EPS - Continuing Operations ($USD)	$(0.55)	$(0.49)
Cash from Operations ($USD)	$(5.915)M	$(6.769)M
Advertising Expense ($USD)	$0.039M	$1.526M
Training Expense ($USD)	$0.780M	$0.482M

Notes:

Prior quarter (Q4 2023) numeric detail not disclosed in public filings; management indicated gross profit was positive with product mix improvements (pre-business combination entity) .

Segment breakdown:

Company reports one segment; no segment table applicable .

KPIs:

Plant capacity utilization under 20% in Q1; expected to improve with volume ramp .
Customer concentration: two customers accounted for ~58% of net revenues; two customers were ~74% of A/R .
Advertising spend and training costs shown in table above .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Gross margin trajectory	FY 2024	Not quantified	Product mix refinement improving margins; gross profit last two quarters; ramp expected as scale improves	Maintained qualitative, positive trajectory
School channel rollout (Woodles)	Q3 2024	Not provided	Shipments expected to ramp in Q3, significant positive sales impact anticipated	Introduced (qualitative)
Going concern resolution	FY 2024	Going concern disclosed	Management expects to resolve going concern by end of 2024 via execution and financing	Raised confidence (qualitative)
Marketing approach	FY 2024	Marketing ongoing	Continued aggressive marketing, influencer content, AI-enabled geo-targeting to drive retail demand	Maintained with expanded tactics

No explicit quantitative guidance (revenue/EPS/margins ranges, OpEx, tax rate) was provided in Q1 materials .

Earnings Call Themes & Trends

No Q1 2024 earnings call transcript was available; themes compiled from 10-Q and CEO letters.

Topic	Previous Mentions (Q-2: Q3 2023)	Previous Mentions (Q-1: Q4 2023)	Current Period (Q1 2024)	Trend
AI/technology in marketing	SPAC stage; no operating themes (trust account, business combination process)	2023 highlights; e-commerce ramp; groundwork for 2024	Multi-platform marketing leveraging algorithmic and AI tools for geo-targeted ads	Expanding tech-enabled marketing
Supply chain/pricing	N/A (SPAC)	N/A	Supplier pricing improving; labor/energy costs high due to low utilization	Improving input pricing; utilization still a headwind
Product performance/mix	N/A (SPAC)	2023 retail growth; new EU distribution	Higher-margin products grew to 35% of net sales vs 10% YoY; gross profit inflected	Mix shifting favorable
Regional trends	N/A (SPAC)	EU store pipeline building	Sales primarily U.S. & Canada; delays in international mod review impacted Q1	EU build-out ongoing; Q1 delays
Regulatory/legal	N/A	N/A	No material legal proceedings; D&O insurance and controls remediation plan noted	Governance strengthening
R&D execution	N/A	Focus on innovation	Continued R&D with new flavors; sustainable, functional foods focus	Ongoing innovation
Health/nutrition features	N/A	Mission to alleviate malnutrition; partnerships (FSF)	Feeding America program; school nutrition (Woodles)	Mission-aligned growth

Management Commentary

“Continued refinement of product mix is positively impacting gross margin… we’ve achieved gross profit for the past two quarters… the path to delivering net income starts with earning a profit on the products we sell and then, as we scale and cover our overhead, we expect bottom-line profits to follow.” — Reza Soltanzadeh, CEO .
“We expect school systems to start serving Woodles to their students this coming fall and… as we begin ramping up shipments of this product in the third quarter, we expect to see a significant, positive impact on our sales.” — CEO letter .
“With the execution of our business development, investments, industry partnerships… we expect that by the end of 2024 we will resolve the going concern issue…” — CEO letter .
“Our strategic marketing approach… includes retailer-specific digital advertising, e-commerce programs, social media… and major celebrity alliances… leveraging advanced algorithmic and AI tools to… geo-target ads.” — 10-Q MD&A .

Q&A Highlights

No Q1 2024 earnings call transcript available for Borealis Foods (OXUS/BRLS); therefore, no Q&A highlights to report.

Estimates Context

S&P Global consensus EPS and revenue estimates were unavailable for the mapped ticker (OXUS/BRLS) during this review; as a result, we cannot assess beats/misses against Wall Street estimates at this time.

Key Takeaways for Investors

Mix-led margin improvement and positive gross profit are encouraging; scaling production to raise plant utilization (>20%) is the key swing factor for operating leverage in 2H 2024 .
Anticipated Woodles school program ramp in Q3 2024 and expanded institutional channels (military, corrections, humanitarian) are potential catalysts for sequential revenue acceleration .
Heavy Q1 marketing and R&D spend (advertising $1.526M; stock comp $1.273M) boosted brand presence but pressured P&L; monitor spend efficiency and conversion to sell-through .
Liquidity tightness and going-concern disclosure persist; management targets resolution by year-end 2024, but execution and financing remain critical near-term risks .
Customer concentration (two customers at 58% of net revenues; two at 74% of A/R) heightens counterparty and forecasting risk; diversification efforts should reduce volatility .
EU retail pipeline expansion and Feeding America partnership broaden endpoints; e-commerce growth (Amazon/Walmart.com) adds diversified demand channels .
Without Street estimates, focus near-term on operational metrics: mix, utilization, school shipments, and cash burn trajectory to gauge inflection ahead of 2H .

Sources:
- Q1 2024 10-Q: **[1852973_0001213900-24-045327_ea0206441-10q_borealis.htm:3]** **[1852973_0001213900-24-045327_ea0206441-10q_borealis.htm:5]** **[1852973_0001213900-24-045327_ea0206441-10q_borealis.htm:7]** **[1852973_0001213900-24-045327_ea0206441-10q_borealis.htm:9]** **[1852973_0001213900-24-045327_ea0206441-10q_borealis.htm:11]** **[1852973_0001213900-24-045327_ea0206441-10q_borealis.htm:21]** **[1852973_0001213900-24-045327_ea0206441-10q_borealis.htm:22]** **[1852973_0001213900-24-045327_ea0206441-10q_borealis.htm:26]** **[1852973_0001213900-24-045327_ea0206441-10q_borealis.htm:30]**
- CEO Letters: Apr 16, 2024 **[1852973_0001213900-24-033164_ea0203607-8kex99i_borealis.htm:0]** **[1852973_0001213900-24-033164_ea0203607-8kex99i_borealis.htm:2]**; May 23, 2024 **[1852973_0001213900-24-046088_ea0206699ex99-1_borealis.htm:0]** **[1852973_0001213900-24-046088_ea0206699ex99-1_borealis.htm:2]**
- Business Combination 8-K: Feb 13, 2024 **[1852973_0001213900-24-013332_ea193378-8k_borealis.htm:23]** **[1852973_0001213900-24-013332_ea193378-8k_borealis.htm:27]**
- Q3 2023 10-Q (SPAC): **[1852973_0001213900-23-088623_f10q0923_oxusacquisition.htm:27]** **[1852973_0001213900-23-088623_f10q0923_oxusacquisition.htm:33]**

Borealis Foods Inc. (OXUS)·Q1 2024 Earnings Summary