Borealis Foods(BRLS) - 2024 Q3 - Quarterly Results

Financial Performance - Third quarter net sales reached $7.7 million, a 45% increase from $5.3 million in Q2 2024[2] - Gross margin improved to 17%, more than doubling from 8% in Q2 2024, and non-GAAP gross margin reached 23%[2] - Gross profit for the third quarter was $1.3 million, more than tripling from $0.4 million in the second quarter[2] - Net loss improved to $(4.8) million from $(6.3) million in Q2 2024[4] - Net loss for the nine months ended September 30, 2024, was $19.56 million, a slight improvement from a net loss of $20.82 million in the same period of 2023, representing a 6.06% decrease[29] - Adjusted EBITDA for the nine months ended September 30, 2024, was $(1.96) million, compared to $(3.70) million in the same period of 2023, indicating a 47.03% improvement[33] Revenue Sources - The Chef Woo and Woodles product lines accounted for approximately 39% of third quarter revenue[2] - Full-scale shipments of Woodles to schools began in Q3, with further expansion expected in Q4 and 2025[2] - The company announced a partnership for its Palmetto Gourmet Foods subsidiary to be the exclusive US ramen manufacturing partner for a global food conglomerate, expected to contribute revenue in Q1 2025[2] Cash Flow and Liquidity - As of September 30, 2024, the company had $0.7 million in cash and $3.5 million in borrowing capacity available[4] - Cash flows from operating activities showed a net cash used of $14.27 million for the nine months ended September 30, 2024, down from $16.06 million in the same period of 2023, reflecting a 10.93% reduction[29] - Cash at the end of the period was $721,542, a significant decrease from $8.97 million at the end of the same period in 2023, representing an 91.93% decline[29] - The company incurred non-cash compensation expense related to stock options of $1.27 million for the nine months ended September 30, 2024, compared to $392,141 in the same period of 2023, reflecting a 224.67% increase[29] - The company’s cash flows from investing activities showed a net cash used of $1.71 million for the nine months ended September 30, 2024, down from $3.52 million in the same period of 2023, indicating a 51.32% reduction[29] - Proceeds from convertible notes payable were $3 million for the nine months ended September 30, 2024, compared to $25 million in the same period of 2023, representing an 88% decrease[29] Operational Expansion - Borealis expanded its retail presence to over 23,000 stores in the US and Canada, with new Walmart locations added[2] - Anticipated sales expansion is expected to drive improving operating cash flow to support future growth[4] - The company aims to leverage strategic partnerships to enhance technological capabilities and expand its offerings in the food manufacturing sector[35] Expenses - Total non-recurring expenses for the nine months ended September 30, 2024, amounted to $11.96 million, compared to $8.64 million in the same period of 2023, marking a 38.88% increase[33] - The company reported a provision for credit losses of $96,217 for the nine months ended September 30, 2024, compared to $49,642 in the same period of 2023, indicating a 93.83% increase[29]