Borealis Foods Inc. — financial distress indicators
Financial-health summary
Borealis Foods Inc.'s reported numbers place it in the 'Very weak' financial-health band (distress score 100/100). The main indicators are liabilities exceed assets (negative equity), cash runway under 12 months and market-implied default probability >20%. Independently, the Ohlson accounting model puts its 1-year failure probability at 100% and the market-implied (Merton) default probability is 63.4%. In its favour: high insider/promoter ownership (46%) aligns management with survival.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Total liabilities are 1.45× total assets.
Balance-sheet insolvency test: debts exceeding the fair value of assets is the statutory definition of 'insolvent' in 11 U.S.C. §101(32).
At the current free-cash-flow burn, cash covers ~1 months.
Going-concern standard: management must assess ability to continue for 12 months (ASC 205-40). Runway below that horizon forces dilution, asset sales or default.
Merton distance-to-default -0.34 σ → PD 63%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Current ratio is 0.09 (current assets cover 9% of near-term obligations).
Cash-flow insolvency test: inability to pay debts as they fall due is the trigger for both U.S. involuntary petitions and Indian IBC default.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Debt is 51% of assets while EBITDA is not positive.
With no operating earnings, repayment depends entirely on asset sales or fresh capital.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
O-score 8.65 → model probability 100%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Last price $0.96.
Below the $1 minimum-bid listing standard (Nasdaq Rule 5550(a)(2) / NYSE 802.01C); sustained breach leads to delisting and loss of capital-market access.
Price is -76% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- High insider/promoter ownership (46%) aligns management with survival.
📰 Recent news scan
- Borealis Foods Expands European Business through Foodvibez Gmbh Launch in GermanyYahoo Finance · 2026-09-14
- Borealis Foods Inc. Receives Expected Notification of Deficiency from Nasdaq Related to Delayed Filing of Quarterly Report on Form 10-Q for Fiscal Quarter Ended June 30, 2026Yahoo Finance · 2026-09-02
- Borealis Foods’ U.S. School Foodservice Revenue Grows 110% Year Over Year Amid National ExpansionYahoo Finance · 2026-08-26
- Borealis Foods Expands Access to Protein-Rich Chef Woo Noodles Through CostcoYahoo Finance · 2026-07-15
- Borealis Foods CEO Highlights Manufacturing Partnerships with Leading Global Food Companies as New Product Rollout Expands in U.S. and CanadaYahoo Finance · 2026-07-10
- Zacks Initiates Coverage of Borealis Foods With Underperform RecommendationYahoo Finance · 2026-07-06
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Borealis Foods Inc.'s financial-health indicators show?
As of 2026-10-08, Borealis Foods Inc.'s public financial data places it in the 'Very weak' band with a distress score of 100/100, driven by liabilities exceed assets (negative equity), cash runway under 12 months and market-implied default probability >20%. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Borealis Foods Inc.'s financial distress score?
100/100 ('Very weak'). Ohlson O-score 8.65 (model 1-year failure probability 100%). Merton distance-to-default -0.34 σ (model default probability 63.4%).
What works in Borealis Foods Inc.'s favour?
High insider/promoter ownership (46%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Consumer Staples companies with distress indicators
- AMASS Brands, Inc. (AMSS)Very weak 100/100
- Reed's, Inc. (REED)Very weak 100/100
- Sadot Group Inc. (SDOT)Very weak 100/100
- Rocky Mountain Chocolate Factory, Inc. (RMCF)Very weak 97/100
- Sow Good Inc. (SOWG)Very weak 97/100
- Local Bounti Corporation (LOCL)Very weak 96/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.