Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 17, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2024 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Entity Information [Line Items] | ||
Entity Registrant Name | Borealis Foods Inc. | |
Entity Central Index Key | 0001852973 | |
Entity File Number | 001-40778 | |
Entity Tax Identification Number | 98-1638988 | |
Entity Incorporation, State or Country Code | A6 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Contact Personnel [Line Items] | ||
Entity Address, Address Line One | 1540 Cornwall Rd | |
Entity Address, Address Line Two | #104 | |
Entity Address, City or Town | Oakville | |
Entity Address, State or Province | ON | |
Entity Address, Postal Zip Code | L6J 7W5 | |
Entity Phone Fax Numbers [Line Items] | ||
City Area Code | (905) | |
Local Phone Number | 278-2200 | |
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 21,378,852 | |
Common Shares | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Common Shares | |
Trading Symbol | BRLS | |
Security Exchange Name | NASDAQ | |
Warrants | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Warrants | |
Trading Symbol | BRLSW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash | $ 8,211,050 | $ 7,615,630 |
Accounts receivable, net of allowance for credit losses of $530,433 and $224,433 as of March 31, 2024 and December 31, 2023, respectively | 4,770,512 | 1,775,756 |
Inventories, net | 6,803,482 | 6,945,028 |
Prepaid expenses | 2,397,475 | 845,878 |
Total current assets | 22,182,519 | 17,182,292 |
Property, plant and equipment, net | 45,965,322 | 46,408,540 |
Right-of-use asset, net | 98,083 | 108,469 |
Goodwill | 1,917,356 | 1,917,356 |
Other non-current assets | 169,685 | 169,685 |
Total assets | 70,332,965 | 65,786,342 |
Current liabilities: | ||
Accounts payable and accrued expenses | 7,240,197 | 10,887,730 |
Convertible notes payable, current portion | 47,300,000 | |
Notes payable, current portion, net of unamortized loan costs | 13,118,707 | 681,121 |
Operating lease liability, current portion | 53,338 | 43,794 |
Finance leases payable, current portion | 575,426 | 565,353 |
Total current liabilities | 28,813,458 | 67,303,788 |
Line of credit | 5,000,000 | |
Convertible note payable | 3,000,000 | 3,000,000 |
Notes payable, net of current portion | 14,184,293 | 13,509,189 |
Operating lease liability, net of current portion | 43,794 | 71,119 |
Finance leases payable, net of current portion | 1,525,497 | 1,683,308 |
Deferred tax liability | 1,566,233 | 1,566,233 |
Total liabilities | 54,133,275 | 87,133,637 |
Stockholders’ equity (deficit): | ||
Common stock | ||
Additional paid-in capital | 90,096,688 | 44,118,081 |
Accumulated deficit | (73,896,998) | (65,465,376) |
Total stockholders’ equity (deficit) | 16,199,690 | (21,347,295) |
Total liabilities and stockholders’ equity (deficit) | 70,332,965 | 65,786,342 |
Related Party | ||
Current liabilities: | ||
Due to related parties | $ 7,825,790 | $ 7,825,790 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance for credit losses | $ 530,433 | $ 224,433 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | ||
Gross Revenues | $ 8,484,021 | $ 8,778,540 | |
Discounts and allowances | (588,588) | (423,767) | |
Revenues, net | 7,895,433 | 8,354,773 | |
Cost of goods sold: | |||
Total Cost of goods sold | 7,652,860 | 8,699,260 | |
Gross profit (loss) | 242,573 | (344,487) | |
Selling, general and administrative expenses | 7,215,588 | 4,219,631 | |
Loss from operations | (6,973,015) | (4,564,118) | |
Other income (expense): | |||
South Carolina grant revenue | 158,995 | ||
Interest expense, net | (1,458,607) | (1,530,581) | |
Total other income (expense) | (1,458,607) | (1,371,586) | |
Net loss before income taxes | (8,431,622) | (5,935,704) | |
Income tax benefit | 124 | ||
Net loss | $ (8,431,622) | $ (5,935,580) | |
Earnings per share from net loss | |||
Basic (in Dollars per share) | $ (0.49) | $ (0.55) | |
Diluted (in Dollars per share) | [1] | $ (0.49) | $ (0.55) |
Weighted average shares outstanding | |||
Basic (in Shares) | 17,079,576 | 10,731,583 | |
Diluted (in Shares) | 17,079,576 | 10,731,583 | |
Raw materials | |||
Cost of goods sold: | |||
Total Cost of goods sold | $ 4,770,469 | $ 5,658,101 | |
Labor and overhead | |||
Cost of goods sold: | |||
Total Cost of goods sold | 1,877,803 | 2,079,203 | |
Depreciation | |||
Cost of goods sold: | |||
Total Cost of goods sold | $ 1,004,588 | $ 961,956 | |
[1] In periods where the Company has incurred a net loss, diluted earnings per share is based on the number of common shares issued and outstanding as including the effects of warrants would be anti-dilutive. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (Unaudited) - USD ($) | Common Stock Class A | Common Stock Class B | Common Stock Class C | Common Stock Class D | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2022 | $ 42,625,786 | $ (37,986,129) | $ 4,639,657 | ||||
Balance (in Shares) at Dec. 31, 2022 | 100,000,000 | 56,008,749 | 6,345,000 | ||||
Expense related to stock options (Note 8) | 193,554 | 193,554 | |||||
Net loss | (5,935,580) | (5,935,580) | |||||
Balance at Mar. 31, 2023 | 42,819,340 | (43,921,709) | (1,102,369) | ||||
Balance (in Shares) at Mar. 31, 2023 | 100,000,000 | 56,008,749 | 6,345,000 | ||||
Balance at Dec. 31, 2023 | 44,118,081 | (65,465,376) | (21,347,295) | ||||
Balance (in Shares) at Dec. 31, 2023 | 100,000,000 | 56,008,749 | 6,345,000 | ||||
Expense related to stock options (Note 8) | 1,273,053 | 1,273,053 | |||||
Convertible debt converted to equity from reverse recapitalization | 54,991,472 | 54,991,472 | |||||
Assumption of debt from reverse recapitalization | (10,285,918) | (10,285,918) | |||||
Conversion to Newco shares from reverse recapitalization | |||||||
Conversion to Newco shares from reverse recapitalization (in Shares) | (78,621,110) | (56,008,749) | (6,345,000) | ||||
Net loss | (8,431,622) | (8,431,622) | |||||
Balance at Mar. 31, 2024 | $ 90,096,688 | $ (73,896,998) | $ 16,199,690 | ||||
Balance (in Shares) at Mar. 31, 2024 | 21,378,890 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities | ||
Net loss | $ (8,431,622) | $ (5,935,580) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Non-cash compensation expense related to stock options | 1,273,053 | 193,554 |
Depreciation and amortization | 994,202 | 961,956 |
Amortization of loan costs | 77,316 | |
Provision for credit losses | 306,000 | |
Provision for inventory reserve | 42,449 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,300,756) | (450,618) |
Inventories | 99,097 | (726,369) |
Prepaid expenses and other | (1,551,597) | 251,260 |
Operating lease | (7,395) | |
Accounts payable and accrued expenses | 3,729,820 | (208,807) |
Net cash used in operating activities | (6,769,433) | (5,914,604) |
Cash flows from investing activities | ||
Proceeds from reverse capitalization | 63,575 | |
Purchases of property, plant and equipment, net | (550,984) | (922,041) |
Net cash used in investing activities | (487,409) | (922,041) |
Cash flows from financing activities | ||
Net payments to related parties | (500,000) | |
Proceeds from convertible notes payable | 3,000,000 | 15,000,000 |
Payments on finance leases payable | (147,738) | (128,708) |
Borrowings on line of credit | 5,000,000 | |
Net cash provided by financing activities | 7,852,262 | 14,371,292 |
Net change in cash | 595,420 | 7,534,647 |
Cash, beginning of period | 7,615,630 | 5,146,616 |
Cash, end of period | 8,211,050 | 12,681,263 |
Interest | 651,208 | 623,447 |
Non-cash investing and financing activities | ||
Conversion of notes payable into Class A shares (Note 4) | (54,991,472) | |
Note payable supplier finance (Note 4) | $ 10,349,494 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Description of Business and Summary of Significant Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | 1. Description of Business and Summary of Significant Accounting Policies Overview These unaudited condensed consolidated financial statements include the financial statements of Borealis Foods, Inc. (“ Borealis PGF PGF RE I PGF RE II Company Borealis is a food technology company that has developed a high-quality, affordable, sustainable, and nutritious range of plant-based, ready-to-eat meals, which are sold in the U.S., Canada, and Europe. Borealis has a mission to address global food security challenges by developing highly nutritious and functional food products that are both affordable and sustainable. Borealis’ focus on affordability and sustainability reflects its commitment to making a positive impact on both human life and the planet. Borealis, a Canadian corporation, is a food technology integrator that focuses on the development and commercialization of functional foods. PGF is an early growth stage food manufacturing company and has spent significant time and resources developing its recipes and fabricating production equipment to meet its product specifications. PGF is the first American producer of sustainable, nutritious, and affordable ramen noodles. PGF RE I and PGF RE II are holding companies that rent their fixed assets to PGF. Intercompany balances and transactions have been eliminated in consolidation. Reverse Recapitalization Transaction On February 23, 2023, Borealis Foods Inc., a corporation incorporated under the laws of Canada (“ Legacy Borealis Oxus Newco Reverse Recapitalization Plan of Arrangement Pursuant to the terms of the Business Combination Agreement, among other things: (i) Oxus domesticated and continued as a corporation under the laws of Ontario, Canada (“ New Oxus Legacy Borealis Amalgamation Amalco Borealis Amalgamation Corporations Act (Ontario)), with Borealis surviving the Borealis Amalgamation. Borealis will continue under the name “Borealis Foods Inc.” Accounting Impact of the Reverse Recapitalization The Reverse Recapitalization was accounted for as a reverse recapitalization. Oxus Acquisition Corp. was deemed the accounting predecessor and Borealis is the successor Securities and Exchange Commission (“ SEC Under this method of accounting, Oxus was treated as the acquired company for financial statement reporting purposes. For accounting purposes, Legacy Borealis was deemed to be the accounting acquiror in the transaction and, consequently, the transaction was treated as a recapitalization of Legacy Borealis. Accordingly, the consolidated balance sheets and results of operations of Legacy Borealis became the historical financial statements of Borealis, and Oxus’ assets, liabilities, and results of operations were consolidated with Legacy Borealis’ beginning on February 7, 2024. The net assets of Oxus were recognized at carrying value, with no goodwill or other intangible assets recorded. Transaction costs incurred and unpaid by Oxus were converted into debt (Note 4) and accounted for as a reduction in Additional Paid-In Capital. Going Concern The unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company suffered recurring losses from operations through March 31, 2024 that raise substantial doubt about its ability to continue as a going concern. The Company was in a net loss position and had negative cash flows from operations for the periods ended March 31, 2024 and 2023. The Company expects lower operating costs for the remainder of 2024 as the Company incurred approximately $1,506,000 of transaction expenses, and $1,273,000 of employee stock compensation expenses related to the Reverse Recapitalization. As a result, substantial doubt continues to exist about the ability of the Company to continue as a going concern within one year from May 20, 2024, the date that the condensed consolidated financial statements were available to be issued. Basis of Presentation The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“ US GAAP We have condensed certain categories of information in our consolidated financial statements to enhance the readability and understanding of those statements by making them more succinct. As a result, certain footnote disclosures we normally include in our annual consolidated financial statements have been omitted but remain prepared in accordance with US GAAP and the rules and regulations of the Securities and Exchange Commission. In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our unaudited condensed consolidated balance sheet and unaudited condensed consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2023 contained in Form 8-K/A filed by Borealis April 15, 2024. Certain prior period amounts have been reclassified to conform to current period presentation. Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents The Company classifies all highly liquid securities with stated maturities of three months or less from the date of purchase as cash equivalents. There were no cash equivalents as of March 31, 2024 and December 31, 2023. Inventories, net Inventories are stated at the lower of cost or net realizable value. The cost of raw materials is determined using the first-in, first-out method or net realizable value. The cost of finished goods is measured at weighted average cost. A reserve is recorded for any food inventory that is expired (or expected to expire before sale) and any raw materials for projects that have been discontinued. Prepaid Expenses Prepaid expenses include approximately $2,397,000 and $846,000 composed primarily of prepaid insurance, deposits on inventory purchases and property, plant and equipment purchases as of March 31, 2024 and December 31, 2023, respectively. Property, Plant and Equipment, net Property, plant and equipment are stated at cost. For financial statement purposes, depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Buildings and improvements 10-30 years Furniture, fixtures and equipment 3-12 years Construction in progress includes the cost of property, plant and equipment being constructed or otherwise not yet in service. Costs include materials, labor, capitalized interest, engineering and testing costs, and other costs necessary to get the assets ready for their intended use. Loan Costs The costs of obtaining equipment leases and debt issuance costs are amortized over the term of the respective obligations, using the straight-line method. US GAAP requires that the effective yield method be used to amortize debt issuance costs; however, the effect of using the straight-line method is not materially different from the results that would have been obtained under the effective yield method. Amortization of loan costs is included as a component of interest expense in the accompanying consolidated statements of operations. Loan costs are shown as reduction of related debt balances for financial statement presentation. Goodwill The Company’s goodwill resulted from a prior year acquisition. Goodwill is not amortized but is reviewed annually for impairment or more frequently as events or circumstances indicate its carrying amount may not be recoverable. No impairment losses were recorded for the three-month period ended March 31, 2024 or for the year ended December 31, 2023. Amounts Due to Related Parties Amounts due to related parties (Company stockholders and entities controlled by Company stockholders) at March 31, 2024 and December 31, 2023 totaling $7,325,790, respectively, are due on demand and bear interest at 10% annually. In addition, a note payable to a stockholder totaled $500,000 at March 31, 2024 and December 31, 2023, respectively, bearing interest at 10% annually due December 31, 2024. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Revenue and Cost Recognition and Accounts Receivable The Company’s revenue is primarily generated from the sale of food products. These sales contain a single performance obligation. Revenue is recognized at a point in time and the Company recognizes revenue upon shipment of goods when ownership, risk, and rewards transfer to the customer. Certain of the Company’s contracts with customers include variable consideration consisting of payment discounts and promotions. These programs include rebates, temporary on-shelf price reductions, off-invoice discounts, retailer advertisements, product coupons, slotting fees and other trade activities. Provision for discounts and incentives are recorded in the same period in which the related revenues are recognized. Gross revenues for the three months ended March 31, 2024 and 2023 were approximately $8,484,000 and $8,779,000, respectively. Total payment discounts and promotions were approximately $589,000 and $424,000 resulting in net revenues of approximately $7,895,000 and $8,355,000 for the three month periods ended March 31, 2024 and 2023, respectively. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. The incremental cost to obtain contracts was not material. Accounts receivable related to product sales typically have payment terms of 30 days. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The allowance for credit losses reflects the Company’s estimate of probable losses related to its accounts receivable. Collections from customers are continuously monitored and an allowance for credit losses is maintained based on historical experience adjusted for current conditions and reasonable forecasts taking into account geographical and industry-specific economic factors. The Company also considers specific customer collection issues. Since the Company’s accounts receivable are largely similar, the Company evaluates its allowance for credit losses as one portfolio segment. At origination, the Company evaluates credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit ratings, probabilities of default, industry trends and other internal metrics. On a continuing basis, data for each major customer is regularly reviewed based on past-due status to evaluate the adequacy of the allowance for credit losses; actual write-offs are charged against the allowance. The Company incurred significant production training expenses for the three-month periods ended March 31, 2024 and 2023, totaling approximately $482,000 and $780,000, respectively, due to PGF adding production capabilities during both periods. These costs are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations as it was not directly attributable to finished goods production. The Company’s cost of goods sold represent materials, direct labor costs, and allocated overheads associated with the sale of finished goods to customers. Advertising Costs associated with advertising are expensed as incurred and are included in selling, general and administrative expenses. Advertising costs expensed for the three-month periods ended March 31, 2024 and 2023 were approximately $1,526,000 and $39,000, respectively. In April 2023, the Company entered into a multi-year agreement for a marketing representative to assist in the recipes for three co-branded private label ramen noodles as well to be utilized in marketing of the Company for their name, image, likeness and voice. This agreement includes a service fee, an investment stake in the Company, and a royalty agreement on future co-branded sales. The service fee under this agreement is expensed on a straight-line basis under the terms of the contract. Prepayments made under the agreement are included in prepaid expenses. No sales subject to the royalty agreement were made for the three months ended March 31, 2024. The marketing representative has a world-wide reputation within the gourmet food industry. We believe this agreement will assist us to increase our presence in the ramen noodle market. Research and Development Costs Research and development costs have been expensed in the period incurred. Research and development costs consist primarily of personnel and related expenses for our research and development staff, including salaries, benefits, share-based compensation, scale-up expenses, depreciation and amortization expenses on research and development assets, and facility lease costs. Scale-up expenses include material waste costs, production personnel costs, and related expenses. Research and development efforts are focused on enhancements to our existing product formulations and production processes in addition to the development of new products. The Company expects to continue investing in research and development over time, as research and development and innovation are core elements of our business strategy, and the Company believes they represent a critical competitive advantage. The Company believes continued innovation will capture a larger share of consumers through additional revenue streams. Research and development expenses for the three months ended March 31, 2024 and 2023 were approximately $37,000 and $200,000, respectively, and are included in selling, general, and administrative expenses in the accompanying condensed consolidated statement of operations. Business Development Costs Business development expenses include all costs associated with directly growing and expanding a business segment, such as advertising, market research, and training. These costs include staff salaries, travel expenses, and consulting expenses that the Company incurs while searching for new opportunities and maintaining current relationships. Business development expenses for the three month periods ended March 31, 2024 and 2023 were approximately $759,000 and $199,000, respectively, and are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. Transaction Costs On February 23, 2023, the Company signed a definitive business combination agreement with Oxus which was consummated on February 7, 2024 and described further in Note 1. In connection with this agreement, the Company incurred transaction costs of approximately $1,506,000 and $1,455,000 for the three months ended March 31, 2024 and 2023 respectively. Transaction costs have been expensed as incurred and are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. Concentration of Risk The Company maintains cash balances at financial institutions in excess of federally insured limits as of March 31, 2024 and December 31, 2023. The Company has not experienced any losses related to these balances. The Federal Deposit Insurance Corporation insures eligible accounts up to $250,000 per depositor at each financial institution. The Company holds cash at well-known banks and does not believe that it is exposed to any significant credit risks on its cash. The Company extends unsecured credit to its customers in the ordinary course of business. Payment terms are generally net 30 days with discounts amounting up to 2% for early payments. Accounts receivables are written off when they are determined to be uncollectible based on the financial stability of its customers and existing economic conditions. Sales to two customers accounted for approximately 58% and sales to three customers accounted for approximately 73% of net revenues for the three month periods ended March 31, 2024 and 2023, respectively. Accounts receivable from two customers amounted to approximately 74% and 70% of total accounts receivable as of March 31, 2024 and 2023, respectively. Substantially all of the Company’s sales for the three month periods ended March 31, 2024 and 2023 occurred in the United States and Canada. Purchases from 10 vendors accounted for approximately 57% and 61% of purchases during the three month periods ended March 31, 2024 and 2023, respectively. Accounts payable to these vendors totaled approximately $1,880,000 and $1,802,000 as of March 31, 2024 and 2023, respectively. Fair Value Measurements In accordance with US GAAP, the Company defines fair value as the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. US GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1: Observable inputs, such as quoted market prices in active markets for the identical asset or liability that are accessible at the measurement date. Level 2: Inputs, other than quoted market prices included in Level 1, that are observable either directly or indirectly for the asset or liability. Level 3: Unobservable inputs that reflect the entity’s own assumptions about the exit price of the asset or liability. Unobservable inputs may be used if there is little or no market data for the asset or liability at the measurement date. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company does not have assets measured at fair value on a recurring basis. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, and accounts payable approximate their fair values due to the short-term nature of these instruments. There is no material difference between the carrying amounts and fair values of the Company’s debt obligations, including due to related parties, notes payable, line of credit and convertible notes payable, as interest rates approximate current market rates for similar types of debt instruments (Level 2). Disclosures about the fair value of financial instruments are based on pertinent information available to management as of March 31, 2024 and December 31, 2023. Although management is not aware of any factors that would significantly affect the reasonableness of the fair value amounts, such amounts were not comprehensively revalued for purposes of these unaudited condensed consolidated financial statements and current estimates of fair value may differ significantly from the amounts presented herein. Stock Based Compensation The Company accounts for its stock-compensation arrangements at fair value in accordance with ASC 718 – Compensation – Stock Compensation. Compensation cost relating to share-based payment transactions is recognized in the Company’s condensed consolidated financial statements based on the estimated fair value of the instruments issued. The Company measures the cost of employees’ services in exchange for stock awards based on the grant-date fair value of the award using the Black Scholes model and recognizes the cost over the period the employee is required to provide services for the award, which is the vesting period. The Company accounts for forfeitures as they occur. Warrants Outstanding warrants were assumed at the Reverse Recapitalization. The fair value of the warrants was determined using the Monte Carlo analysis at the time of the transaction. The Company accounts for its Public and Private warrants as equity-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. It was determined with the Transaction date that there were no changes to the classes or language that would impact the original assessment that the public and private warrants should be classified as equity. Recent Accounting Pronouncements Management does not expect the adoption of recently issued accounting standards to have a significant impact on the Company’s reported financial position, results of operations, or cash flows. |
Inventories, net
Inventories, net | 3 Months Ended |
Mar. 31, 2024 | |
Inventories, net [Abstract] | |
Inventories, net | 2. Inventories, net Inventories were as follows: March 31, December 31, Raw materials $ 5,263,143 $ 5,190,811 Finished goods 1,771,421 1,942,850 Reserve for obsolete inventory (231,082 ) (188,633 ) $ 6,803,482 $ 6,945,028 |
Property, Plant and Equipment,
Property, Plant and Equipment, net | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment, net [Abstract] | |
Property, Plant and Equipment, net | 3. Property, Plant and Equipment, net Property, plant and equipment were as follows: March 31, December 31, Building and improvements $ 10,108,916 $ 10,108,917 Furniture, fixtures and equipment 42,595,867 42,594,605 Construction in progress 5,627,827 5,078,103 58,332,610 57,781,625 Less: accumulated depreciation (12,367,288 ) (11,373,085 ) $ 45,965,322 $ 46,408,540 Depreciation expense recorded in the three month periods ended March 31, 2024 and 2023 was approximately $994,000 and $962,000, respectively, which is included as a component of cost of goods sold. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2024 | |
Debt [Abstract] | |
Debt | 4. Debt In 2022, the Company issued $20,000,000 of convertible notes payable that, after an extension was negotiated, mature in February 2024 (unless converted) and bear interest at 10% annually. On or before the earlier of the maturity date or a “qualified financing event”, as defined in the note agreements, the outstanding principal and interest may be converted, at the option of the holder, into common shares of the Company. The number of shares of common stock received in the conversion will equal the quotient of (i) the outstanding principal and interest as of the date immediately before the completion of the qualified financing event, divided by (ii) an amount equal to the “valuation cap” divided by the “fully diluted basis” (terms as defined in the agreements) and discounted by five (5%) percent. The notes and accrued interest were converted into 2,189,977 shares of common stock with the consummation of the Reverse Recapitalization with Oxus. In 2022, the Company issued $4,800,000 in convertible notes payable. During 2023, $4,500,000 of these notes matured without conversion and were repaid by the Company. The remaining $300,000 of convertible notes payable bear interest at 10% annually and, after an extension was negotiated, mature in February 2024 (unless converted). The outstanding principal and interest under the remaining convertible notes may be converted, at the option of the holder, into the same equity as issued upon the Company’s issuance of preferred or common stock of at least $10,000,000 (“qualified financing event”), either as a single round or a lead round, at 80% of the per share price paid during the qualified financing event. The notes and accrued interest were converted into 40,544 shares of common stock with the consummation of the Reverse Recapitalization with Oxus. In 2023, the Company issued $27,000,000 of convertible notes payable, of which $27,000,000 matures in 2024 (unless converted) and bear interest at 10% annually. On or before the earlier of the maturity date or a “qualified financing event”, as defined in the note agreements, the outstanding principal and interest may be converted, at the option of the holder, into common shares of the Company. The number of shares of common stock received in the conversion will equal the quotient of (i) the outstanding principal and interest as of the date immediately before the completion of the qualified financing event, divided by (ii) an amount equal to the “valuation cap” divided by the “fully diluted basis” (terms as defined in the agreements) and discounted by five (5%) percent. The notes and accrued interest were converted into 3,787,585 shares of common stock with the consummation of the Reverse Recapitalization with Oxus. In 2021, the Company issued a $3,000,000 convertible note that matures in 2026 (unless converted) and bears interest at 3% annually. Accrued interest is payable monthly. The outstanding principal and interest under the convertible note may be converted, at the option of the holder, into the same equity as issued upon the Company’s issuance of preferred or common stock of at least $10,000,000 (“qualified financing event”), either as a single round or a lead round, at 85% of the per share price paid during the qualified financing event. The note holder elected not to convert at the Reverse Recapitalization and therefore the note is due at maturity. In January 2024, the Company issued a $3,000,000 convertible note payable that matures in 2024 (unless converted) and bears interest at 10% annually. Accrued interest is payable upon maturity, or converted into equity. The convertible note may be converted into securities, at the option of the holder, based upon a formula considering the outstanding principal and interest and the Company’s value, including a valuation cap. The note and accrued interest was converted into 375,925 shares of common stock with the consummation of the Reverse Recapitalization with Oxus. During 2023, the Company entered into a $25,000,000 financing agreement with a maturity date in August 2026. Under this agreement, the Company has a $15,000,000 term facility which was used to pay off the existing line of credit. In March 2024, the company entered into an amendment to extend the maturity date of the term facility to March 2028. Under the amendment, principal only payments of $83,000 are due monthly beginning in March 2025 with a lump sum payment of $12,167,000 due at maturity. Interest accrues at the prime rate plus an applicable margin of 4.75% per annum and is payable monthly. In conjunction with this agreement, loan fees of approximately $931,000 were capitalized in 2023. Amortization expense of approximately $77,000 was recorded on the fees for the three month period ended March 31, 2024. In addition to the term facility, the Company obtained a $10,000,000 line of credit to fund working capital needs in support of its growth strategy. Interest accrues at the prime rate plus the applicable margin of 4.50%. Interest is due and payable monthly beginning in September 2023. The line of credit includes an unused line fee of 0.25% per annum beginning on closing date through six months and increases to 0.50% per annum thereafter. As of March 31, 2024 and December 31 2023, the line of credit had $5,000,000 and $0 In the period leading up to the Reverse Recapitalization, significant transaction costs were incurred by both parties. In total, four notes payable of $13,035,374 were issued for the transaction debt and mature in 2025. Details for the notes are as follows: Note A – Incurred by Borealis. The related expenses were recognized as incurred by Borealis and the trade payable was subsequently reclassified to notes payable. Note A was issued for $2,138,838. The note matures in February 2025, and bears interest at 10% per annum. Note B – Incurred by Borealis. The related expenses were recognized as incurred by Borealis and the trade payable was subsequently reclassified to notes payable. Note B was issued for $1,314,875. The note matures in February 2025, and bears interest at 10% per annum. Note C – Incurred by Oxus. The related expenses were recognized by Oxus and resulted in a reduction of contributed equity at the Reverse Recapitalization. Note C was issued for $1,980,000. The note matures in February 2025, and bears interest at 8% per annum. Note D – Incurred by Oxus. The related expenses were recognized by Oxus and resulted in a reduction of contributed equity at the Reverse Recapitalization. Note D was issued for $7,601,661. The note matures in February 2025, and is non-interest bearing. Debt balances outstanding as of March 31, 2024 are due as follows: $13,868,000 in 2025; $9,000,000 in 2026; $1,000,000 in 2027; and $12,167,000 in 2028. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Taxes [Abstract] | |
Income Taxes | 5. Income Taxes The Company accounts for income taxes using the liability method. Deferred income tax assets and liabilities are determined based on differences between the financial statement and income tax basis of the respective assets and liabilities, using enacted tax rates in effect for the years when the differences are expected to reverse. Borealis is taxed under Canadian tax laws at a rate of 26.5%. Borealis does not file a consolidated tax return. PGF, PGF RE I, and PGF RE II (the “United States subsidiaries”) are taxed as C corporations, with a statutory rate of 21%. The total income tax provision (benefit) expense recorded for the three month periods ended March 31, 2024 and 2023 was $0 and ($100), respectively, on consolidated pre-tax book loss of approximately $8,432,000 and $5,936,000 in the three-month periods ended March 31, 2024 and 2023, respectively. The Company’s tax provision is based on a projected effective rate based on annualized amounts applied to actual income to date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of capital loss and net operating loss (“NOL”) carryforwards is dependent upon the generation of future capital gains and taxable income in periods prior to their expiration. The Company currently provides a valuation allowance against the full amount of the NOLs since the Company is uncertain as to the realization of the full-amount of benefits in the future. The Company will continue to assess the need for, and the amount of, the valuation allowance at each reporting period. Transactions for which tax deductibility or the timing of tax deductibility is uncertain are analyzed by management based on their technical characteristics. The Company recognizes accrued interest and penalties, if any, related to uncertain tax positions in income tax expense. Management has determined that the Company does not have any uncertain tax positions or associated unrecognized tax benefits that materially impact the condensed consolidated financial statements or related disclosures. As a result, at March 31, 2024, the Company did not have a liability for unrecognized tax benefits, interest or penalties under United States or Canadian tax law. The Company paid no penalties during the three-month period ending March 31, 2024. The Company files income tax returns in the Canadian and U.S. federal jurisdictions, and in South Carolina. The Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2021. There are no tax examinations currently in progress. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Contingencies [Abstract] | |
Contingencies | 6. Contingencies From time to time, the Company is involved in legal proceedings in the normal course of business. Management does not believe that the final resolution of any such legal proceedings will have a material effect on the consolidated financial position or results of operations of the Company. |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2024 | |
Warrants [Abstract] | |
Warrants | 7. Warrants The following represents a summary of warrants outstanding and exercisable on March 31, 2024: Description Issue Date Classification Exercise Expiration Outstanding Exercisable Private Placement Warrants 9/13/2021 Equity $ 11.50 2/7/2029 9,300,000 9,300,000 Public Warrants 9/13/2021 Equity $ 11.50 2/7/2029 17,250,000 17,250,000 26,550,000 26,550,000 Following the closing, New Borealis has the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of New Borealis Common Shares equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 days within a 30 trading day period commencing once the warrants become exercisable and ending on the third trading day prior to the date on which New Borealis gives proper notice of such redemption and provided certain other conditions are met. The public warrants are identical to the private placement warrants in material terms and provisions, except the private placement warrants were not be transferrable, assignable or salable until 30 days after the completion of the Reverse Recapitalization. |
Stock Option Plan
Stock Option Plan | 3 Months Ended |
Mar. 31, 2024 | |
Stock Option Plan [Abstract] | |
Stock Option Plan | 8. Stock Option Plan During 2022, the Company created a stock option plan (the “Plan”) that provides for the granting of options to certain employees for the purchase of the Company’s class D common stock. The Plan provides for the grant of stock options for eligible employees as determined by the Board of Directors and does not guarantee employment rights. During the three-month period ended March 31, 2024, the Company granted options to purchase 333,574 shares of the Company’s common stock at an exercise price of $0.0001 per share. The weighted-average grant date fair values of options granted was $0.60 per share. The fair values of the stock-based awards granted were calculated with the following assumptions: Risk-free interest rate 3.81% Expected term (years) 5 -10 Expected volatility 80.00% Dividend yield 0.00% For the three-month periods ended March 31, 2024 and 2023, the Company recorded approximately $1,273,000 and $194,000, respectively, of stock-based compensation expense. On February 7, 2024, as a result of the Reverse Recapitalization (Note 1), 4,000,000 stock options were exercised and converted at an exchange ratio of 0.0661 into 264,400 shares of Newco Class A common stock. Stock option activity for the three-month periods ended March 31, 2024 and 2023 is summarized as follows: Shares Weighted Weighted Options outstanding at December 31, 2022 3,468,760 0.0001 6.65 Granted 227,666 0.0001 6.65 Exercised -- -- -- Expired or forfeited -- -- -- Options outstanding at March 31, 2023 3,696,426 0.0001 -- Options outstanding at December 31, 2023 3,666,426 0.0001 8.10 Granted 333,574 0.0001 8.10 Exercised (4,000,000 ) 0.0001 -- Expired or forfeited -- -- -- Options outstanding at March 31, 2024 -- -- -- |
Earnings per share
Earnings per share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings per share [Abstract] | |
Earnings per share | 9. Earnings per share Basic earnings or loss per share is based on the weighted average of number of common shares outstanding for the period. For the purposes of calculating diluted earnings per share, the number of shares outstanding has been adjusted for the dilutive effects of warrants. Three Months Ended 2024 2023 Basic earnings (loss) per share calculation $ (8,431,622 ) $ (5,935,580 ) Weighted average common shares outstanding (basic) 17,079,576 10,731,583 Basic earnings (loss) per share from net income $ (0.49 ) $ (0.55 ) Diluted earnings (loss) per share calculation $ (8,431,622 ) $ (5,935,580 ) Weighted average common shares outstanding (basic) 17,079,576 10,731,583 Warrants 26,550,000 Weighted average common shares outstanding (diluted) 17,079,576 10,731,583 Diluted earnings (loss) per share from net income* $ (0.49 ) $ (0.55 ) * In periods where the Company has incurred a net loss, diluted earnings per share is based on the number of common shares issued and outstanding as including the effects of warrants would be anti-dilutive. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 10. Subsequent Events The Company evaluated events and transactions after March 31, 2024 through May 20, 2024, the date the unaudited condensed consolidated financial statements were available to be issued, for subsequent events requiring disclosure in these condensed consolidated financial statements. The Company did not identify any subsequent events that required disclosure. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (8,431,622) | $ (5,935,580) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Reverse Recapitalization Transaction | Reverse Recapitalization Transaction On February 23, 2023, Borealis Foods Inc., a corporation incorporated under the laws of Canada (“ Legacy Borealis Oxus Newco Reverse Recapitalization Plan of Arrangement Pursuant to the terms of the Business Combination Agreement, among other things: (i) Oxus domesticated and continued as a corporation under the laws of Ontario, Canada (“ New Oxus Legacy Borealis Amalgamation Amalco Borealis Amalgamation Corporations Act (Ontario)), with Borealis surviving the Borealis Amalgamation. Borealis will continue under the name “Borealis Foods Inc.” |
Accounting Impact of the Reverse Recapitalization | Accounting Impact of the Reverse Recapitalization The Reverse Recapitalization was accounted for as a reverse recapitalization. Oxus Acquisition Corp. was deemed the accounting predecessor and Borealis is the successor Securities and Exchange Commission (“ SEC Under this method of accounting, Oxus was treated as the acquired company for financial statement reporting purposes. For accounting purposes, Legacy Borealis was deemed to be the accounting acquiror in the transaction and, consequently, the transaction was treated as a recapitalization of Legacy Borealis. Accordingly, the consolidated balance sheets and results of operations of Legacy Borealis became the historical financial statements of Borealis, and Oxus’ assets, liabilities, and results of operations were consolidated with Legacy Borealis’ beginning on February 7, 2024. The net assets of Oxus were recognized at carrying value, with no goodwill or other intangible assets recorded. Transaction costs incurred and unpaid by Oxus were converted into debt (Note 4) and accounted for as a reduction in Additional Paid-In Capital. |
Going Concern | Going Concern The unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company suffered recurring losses from operations through March 31, 2024 that raise substantial doubt about its ability to continue as a going concern. The Company was in a net loss position and had negative cash flows from operations for the periods ended March 31, 2024 and 2023. The Company expects lower operating costs for the remainder of 2024 as the Company incurred approximately $1,506,000 of transaction expenses, and $1,273,000 of employee stock compensation expenses related to the Reverse Recapitalization. As a result, substantial doubt continues to exist about the ability of the Company to continue as a going concern within one year from May 20, 2024, the date that the condensed consolidated financial statements were available to be issued. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“ US GAAP We have condensed certain categories of information in our consolidated financial statements to enhance the readability and understanding of those statements by making them more succinct. As a result, certain footnote disclosures we normally include in our annual consolidated financial statements have been omitted but remain prepared in accordance with US GAAP and the rules and regulations of the Securities and Exchange Commission. In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our unaudited condensed consolidated balance sheet and unaudited condensed consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2023 contained in Form 8-K/A filed by Borealis April 15, 2024. Certain prior period amounts have been reclassified to conform to current period presentation. |
Estimates | Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash Equivalents | Cash Equivalents The Company classifies all highly liquid securities with stated maturities of three months or less from the date of purchase as cash equivalents. There were no cash equivalents as of March 31, 2024 and December 31, 2023. |
Inventories, net | Inventories, net Inventories are stated at the lower of cost or net realizable value. The cost of raw materials is determined using the first-in, first-out method or net realizable value. The cost of finished goods is measured at weighted average cost. A reserve is recorded for any food inventory that is expired (or expected to expire before sale) and any raw materials for projects that have been discontinued. |
Prepaid Expenses | Prepaid Expenses Prepaid expenses include approximately $2,397,000 and $846,000 composed primarily of prepaid insurance, deposits on inventory purchases and property, plant and equipment purchases as of March 31, 2024 and December 31, 2023, respectively. |
Property, Plant and Equipment, net | Property, Plant and Equipment, net Property, plant and equipment are stated at cost. For financial statement purposes, depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Buildings and improvements 10-30 years Furniture, fixtures and equipment 3-12 years Construction in progress includes the cost of property, plant and equipment being constructed or otherwise not yet in service. Costs include materials, labor, capitalized interest, engineering and testing costs, and other costs necessary to get the assets ready for their intended use. |
Loan Costs | Loan Costs The costs of obtaining equipment leases and debt issuance costs are amortized over the term of the respective obligations, using the straight-line method. US GAAP requires that the effective yield method be used to amortize debt issuance costs; however, the effect of using the straight-line method is not materially different from the results that would have been obtained under the effective yield method. Amortization of loan costs is included as a component of interest expense in the accompanying consolidated statements of operations. Loan costs are shown as reduction of related debt balances for financial statement presentation. |
Goodwill | Goodwill The Company’s goodwill resulted from a prior year acquisition. Goodwill is not amortized but is reviewed annually for impairment or more frequently as events or circumstances indicate its carrying amount may not be recoverable. No impairment losses were recorded for the three-month period ended March 31, 2024 or for the year ended December 31, 2023. |
Amounts Due to Related Parties | Amounts Due to Related Parties Amounts due to related parties (Company stockholders and entities controlled by Company stockholders) at March 31, 2024 and December 31, 2023 totaling $7,325,790, respectively, are due on demand and bear interest at 10% annually. In addition, a note payable to a stockholder totaled $500,000 at March 31, 2024 and December 31, 2023, respectively, bearing interest at 10% annually due December 31, 2024. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. |
Revenue and Cost Recognition and Accounts Receivable | Revenue and Cost Recognition and Accounts Receivable The Company’s revenue is primarily generated from the sale of food products. These sales contain a single performance obligation. Revenue is recognized at a point in time and the Company recognizes revenue upon shipment of goods when ownership, risk, and rewards transfer to the customer. Certain of the Company’s contracts with customers include variable consideration consisting of payment discounts and promotions. These programs include rebates, temporary on-shelf price reductions, off-invoice discounts, retailer advertisements, product coupons, slotting fees and other trade activities. Provision for discounts and incentives are recorded in the same period in which the related revenues are recognized. Gross revenues for the three months ended March 31, 2024 and 2023 were approximately $8,484,000 and $8,779,000, respectively. Total payment discounts and promotions were approximately $589,000 and $424,000 resulting in net revenues of approximately $7,895,000 and $8,355,000 for the three month periods ended March 31, 2024 and 2023, respectively. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. The incremental cost to obtain contracts was not material. Accounts receivable related to product sales typically have payment terms of 30 days. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The allowance for credit losses reflects the Company’s estimate of probable losses related to its accounts receivable. Collections from customers are continuously monitored and an allowance for credit losses is maintained based on historical experience adjusted for current conditions and reasonable forecasts taking into account geographical and industry-specific economic factors. The Company also considers specific customer collection issues. Since the Company’s accounts receivable are largely similar, the Company evaluates its allowance for credit losses as one portfolio segment. At origination, the Company evaluates credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit ratings, probabilities of default, industry trends and other internal metrics. On a continuing basis, data for each major customer is regularly reviewed based on past-due status to evaluate the adequacy of the allowance for credit losses; actual write-offs are charged against the allowance. The Company incurred significant production training expenses for the three-month periods ended March 31, 2024 and 2023, totaling approximately $482,000 and $780,000, respectively, due to PGF adding production capabilities during both periods. These costs are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations as it was not directly attributable to finished goods production. The Company’s cost of goods sold represent materials, direct labor costs, and allocated overheads associated with the sale of finished goods to customers. |
Advertising | Advertising Costs associated with advertising are expensed as incurred and are included in selling, general and administrative expenses. Advertising costs expensed for the three-month periods ended March 31, 2024 and 2023 were approximately $1,526,000 and $39,000, respectively. In April 2023, the Company entered into a multi-year agreement for a marketing representative to assist in the recipes for three co-branded private label ramen noodles as well to be utilized in marketing of the Company for their name, image, likeness and voice. This agreement includes a service fee, an investment stake in the Company, and a royalty agreement on future co-branded sales. The service fee under this agreement is expensed on a straight-line basis under the terms of the contract. Prepayments made under the agreement are included in prepaid expenses. No sales subject to the royalty agreement were made for the three months ended March 31, 2024. The marketing representative has a world-wide reputation within the gourmet food industry. We believe this agreement will assist us to increase our presence in the ramen noodle market. |
Research and Development Costs | Research and Development Costs Research and development costs have been expensed in the period incurred. Research and development costs consist primarily of personnel and related expenses for our research and development staff, including salaries, benefits, share-based compensation, scale-up expenses, depreciation and amortization expenses on research and development assets, and facility lease costs. Scale-up expenses include material waste costs, production personnel costs, and related expenses. Research and development efforts are focused on enhancements to our existing product formulations and production processes in addition to the development of new products. The Company expects to continue investing in research and development over time, as research and development and innovation are core elements of our business strategy, and the Company believes they represent a critical competitive advantage. The Company believes continued innovation will capture a larger share of consumers through additional revenue streams. Research and development expenses for the three months ended March 31, 2024 and 2023 were approximately $37,000 and $200,000, respectively, and are included in selling, general, and administrative expenses in the accompanying condensed consolidated statement of operations. |
Business Development Costs | Business Development Costs Business development expenses include all costs associated with directly growing and expanding a business segment, such as advertising, market research, and training. These costs include staff salaries, travel expenses, and consulting expenses that the Company incurs while searching for new opportunities and maintaining current relationships. Business development expenses for the three month periods ended March 31, 2024 and 2023 were approximately $759,000 and $199,000, respectively, and are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. |
Transaction Costs | Transaction Costs On February 23, 2023, the Company signed a definitive business combination agreement with Oxus which was consummated on February 7, 2024 and described further in Note 1. In connection with this agreement, the Company incurred transaction costs of approximately $1,506,000 and $1,455,000 for the three months ended March 31, 2024 and 2023 respectively. Transaction costs have been expensed as incurred and are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. |
Concentration of Risk | Concentration of Risk The Company maintains cash balances at financial institutions in excess of federally insured limits as of March 31, 2024 and December 31, 2023. The Company has not experienced any losses related to these balances. The Federal Deposit Insurance Corporation insures eligible accounts up to $250,000 per depositor at each financial institution. The Company holds cash at well-known banks and does not believe that it is exposed to any significant credit risks on its cash. The Company extends unsecured credit to its customers in the ordinary course of business. Payment terms are generally net 30 days with discounts amounting up to 2% for early payments. Accounts receivables are written off when they are determined to be uncollectible based on the financial stability of its customers and existing economic conditions. Sales to two customers accounted for approximately 58% and sales to three customers accounted for approximately 73% of net revenues for the three month periods ended March 31, 2024 and 2023, respectively. Accounts receivable from two customers amounted to approximately 74% and 70% of total accounts receivable as of March 31, 2024 and 2023, respectively. Substantially all of the Company’s sales for the three month periods ended March 31, 2024 and 2023 occurred in the United States and Canada. Purchases from 10 vendors accounted for approximately 57% and 61% of purchases during the three month periods ended March 31, 2024 and 2023, respectively. Accounts payable to these vendors totaled approximately $1,880,000 and $1,802,000 as of March 31, 2024 and 2023, respectively. |
Fair Value Measurements | Fair Value Measurements In accordance with US GAAP, the Company defines fair value as the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. US GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1: Observable inputs, such as quoted market prices in active markets for the identical asset or liability that are accessible at the measurement date. Level 2: Inputs, other than quoted market prices included in Level 1, that are observable either directly or indirectly for the asset or liability. Level 3: Unobservable inputs that reflect the entity’s own assumptions about the exit price of the asset or liability. Unobservable inputs may be used if there is little or no market data for the asset or liability at the measurement date. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company does not have assets measured at fair value on a recurring basis. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, and accounts payable approximate their fair values due to the short-term nature of these instruments. There is no material difference between the carrying amounts and fair values of the Company’s debt obligations, including due to related parties, notes payable, line of credit and convertible notes payable, as interest rates approximate current market rates for similar types of debt instruments (Level 2). Disclosures about the fair value of financial instruments are based on pertinent information available to management as of March 31, 2024 and December 31, 2023. Although management is not aware of any factors that would significantly affect the reasonableness of the fair value amounts, such amounts were not comprehensively revalued for purposes of these unaudited condensed consolidated financial statements and current estimates of fair value may differ significantly from the amounts presented herein. |
Stock Based Compensation | Stock Based Compensation The Company accounts for its stock-compensation arrangements at fair value in accordance with ASC 718 – Compensation – Stock Compensation. Compensation cost relating to share-based payment transactions is recognized in the Company’s condensed consolidated financial statements based on the estimated fair value of the instruments issued. The Company measures the cost of employees’ services in exchange for stock awards based on the grant-date fair value of the award using the Black Scholes model and recognizes the cost over the period the employee is required to provide services for the award, which is the vesting period. The Company accounts for forfeitures as they occur. |
Warrants | Warrants Outstanding warrants were assumed at the Reverse Recapitalization. The fair value of the warrants was determined using the Monte Carlo analysis at the time of the transaction. The Company accounts for its Public and Private warrants as equity-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. It was determined with the Transaction date that there were no changes to the classes or language that would impact the original assessment that the public and private warrants should be classified as equity. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Management does not expect the adoption of recently issued accounting standards to have a significant impact on the Company’s reported financial position, results of operations, or cash flows. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Description of Business and Summary of Significant Accounting Policies [Abstract] | |
Schedule of Straight-line Method over the Estimated Useful Lives of the Assets | Property, plant and equipment are stated at cost. For financial statement purposes, depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Buildings and improvements 10-30 years Furniture, fixtures and equipment 3-12 years |
Inventories, net (Tables)
Inventories, net (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Inventories, net [Abstract] | |
Schedule of Inventories | Inventories were as follows: March 31, December 31, Raw materials $ 5,263,143 $ 5,190,811 Finished goods 1,771,421 1,942,850 Reserve for obsolete inventory (231,082 ) (188,633 ) $ 6,803,482 $ 6,945,028 |
Property, Plant and Equipment_2
Property, Plant and Equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment, net [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment were as follows: March 31, December 31, Building and improvements $ 10,108,916 $ 10,108,917 Furniture, fixtures and equipment 42,595,867 42,594,605 Construction in progress 5,627,827 5,078,103 58,332,610 57,781,625 Less: accumulated depreciation (12,367,288 ) (11,373,085 ) $ 45,965,322 $ 46,408,540 |
Warrants (Tables)
Warrants (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Warrants [Abstract] | |
Schedule of Warrants Outstanding and Exercisable | The following represents a summary of warrants outstanding and exercisable on March 31, 2024: Description Issue Date Classification Exercise Expiration Outstanding Exercisable Private Placement Warrants 9/13/2021 Equity $ 11.50 2/7/2029 9,300,000 9,300,000 Public Warrants 9/13/2021 Equity $ 11.50 2/7/2029 17,250,000 17,250,000 26,550,000 26,550,000 |
Stock Option Plan (Tables)
Stock Option Plan (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Stock Option Plan [Abstract] | |
Schedule of Fair Values of the Stock-Based Awards Granted | The fair values of the stock-based awards granted were calculated with the following assumptions: Risk-free interest rate 3.81% Expected term (years) 5 -10 Expected volatility 80.00% Dividend yield 0.00% |
Schedule of Stock Option Activity | Stock option activity for the three-month periods ended March 31, 2024 and 2023 is summarized as follows: Shares Weighted Weighted Options outstanding at December 31, 2022 3,468,760 0.0001 6.65 Granted 227,666 0.0001 6.65 Exercised -- -- -- Expired or forfeited -- -- -- Options outstanding at March 31, 2023 3,696,426 0.0001 -- Options outstanding at December 31, 2023 3,666,426 0.0001 8.10 Granted 333,574 0.0001 8.10 Exercised (4,000,000 ) 0.0001 -- Expired or forfeited -- -- -- Options outstanding at March 31, 2024 -- -- -- |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings per share [Abstract] | |
Schedule of Basic Earnings or Loss Per Share is Based on the Weighted Average of Number of Common Shares Outstanding | Basic earnings or loss per share is based on the weighted average of number of common shares outstanding for the period. For the purposes of calculating diluted earnings per share, the number of shares outstanding has been adjusted for the dilutive effects of warrants. Three Months Ended 2024 2023 Basic earnings (loss) per share calculation $ (8,431,622 ) $ (5,935,580 ) Weighted average common shares outstanding (basic) 17,079,576 10,731,583 Basic earnings (loss) per share from net income $ (0.49 ) $ (0.55 ) Diluted earnings (loss) per share calculation $ (8,431,622 ) $ (5,935,580 ) Weighted average common shares outstanding (basic) 17,079,576 10,731,583 Warrants 26,550,000 Weighted average common shares outstanding (diluted) 17,079,576 10,731,583 Diluted earnings (loss) per share from net income* $ (0.49 ) $ (0.55 ) * In periods where the Company has incurred a net loss, diluted earnings per share is based on the number of common shares issued and outstanding as including the effects of warrants would be anti-dilutive. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2023 | |
Organization And Description Of Business Operations [Line Items] | ||||
Transaction expenses | $ 1,506,000 | |||
Employee stock compensation expenses | 1,273,000 | |||
Prepaid expenses | $ 2,397,000 | $ 846,000 | ||
Bear interest | 10% | |||
Note payable | $ 13,035,374 | |||
Gross revenues | 8,484,000 | $ 8,779,000 | ||
Total payment discounts and promotion | 589,000 | 424,000 | ||
Net revenues | 8,484,021 | 8,778,540 | ||
Training expenses | 482,000 | 780,000 | ||
Advertising costs expensed | 1,526,000 | 39,000 | ||
Research and development expenses | 37,000 | 200,000 | ||
Business development expenses | 759,000 | 199,000 | ||
Transaction costs | 1,506,000 | 1,455,000 | ||
FDIC insures per depositor | 250,000 | |||
Accounts payable | $ 1,880,000 | 1,802,000 | ||
Notes Payable [Member] | ||||
Organization And Description Of Business Operations [Line Items] | ||||
Bear interest | 10% | |||
Revenue [Member] | ||||
Organization And Description Of Business Operations [Line Items] | ||||
Net revenues | $ 7,895,000 | $ 8,355,000 | ||
Related Party [Member] | ||||
Organization And Description Of Business Operations [Line Items] | ||||
Amounts due to related parties | 7,825,790 | 7,825,790 | ||
Note payable | 500,000 | 500,000 | ||
Related Party [Member] | Other Current Liabilities [Member] | ||||
Organization And Description Of Business Operations [Line Items] | ||||
Amounts due to related parties | $ 7,325,790 | $ 7,325,790 | ||
Customers [Member] | Customer Concentration Risk [Member] | Revenue [Member] | ||||
Organization And Description Of Business Operations [Line Items] | ||||
Concentration risk percentage | 2% | |||
Two Customer [Member] | Customer Concentration Risk [Member] | Sales [Member] | ||||
Organization And Description Of Business Operations [Line Items] | ||||
Concentration risk percentage | 58% | |||
Two Customer [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member] | ||||
Organization And Description Of Business Operations [Line Items] | ||||
Concentration risk percentage | 74% | 70% | ||
Three Customers [Member] | Customer Concentration Risk [Member] | Sales [Member] | ||||
Organization And Description Of Business Operations [Line Items] | ||||
Concentration risk percentage | 73% | |||
10 Vendors [Member] | Product Concentration Risk [Member] | Purchase [Member] | ||||
Organization And Description Of Business Operations [Line Items] | ||||
Concentration risk percentage | 57% | 61% |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies (Details) - Schedule of Straight-line Method over the Estimated Useful Lives of the Assets | Mar. 31, 2024 |
Minimum [Member] | Buildings and improvements [Member] | |
Schedule of Straight-line Method over the Estimated Useful Lives of the Assets [Line Items] | |
Property, plant and equipment estimated useful lives | 10 years |
Minimum [Member] | Furniture, fixtures and equipment [Member] | |
Schedule of Straight-line Method over the Estimated Useful Lives of the Assets [Line Items] | |
Property, plant and equipment estimated useful lives | 3 years |
Maximum [Member] | Buildings and improvements [Member] | |
Schedule of Straight-line Method over the Estimated Useful Lives of the Assets [Line Items] | |
Property, plant and equipment estimated useful lives | 30 years |
Maximum [Member] | Furniture, fixtures and equipment [Member] | |
Schedule of Straight-line Method over the Estimated Useful Lives of the Assets [Line Items] | |
Property, plant and equipment estimated useful lives | 12 years |
Inventories, net (Details) - Sc
Inventories, net (Details) - Schedule of Inventories - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Schedule of Inventories [Abstract] | ||
Raw materials | $ 5,263,143 | $ 5,190,811 |
Finished goods | 1,771,421 | 1,942,850 |
Reserve for obsolete inventory | (231,082) | (188,633) |
Inventories, net | $ 6,803,482 | $ 6,945,028 |
Property, Plant and Equipment_3
Property, Plant and Equipment, net (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Property, Plant and Equipment, net [Abstract] | ||
Depreciation expense | $ 994,000 | $ 962,000 |
Property, Plant and Equipment_4
Property, Plant and Equipment, net (Details) - Schedule of Property, Plant and Equipment - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Schedule of Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 58,332,610 | $ 57,781,625 |
Less: accumulated depreciation | (12,367,288) | (11,373,085) |
Property, plant and equipment, net | 45,965,322 | 46,408,540 |
Building and improvements [Member] | ||
Schedule of Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 10,108,916 | 10,108,917 |
Furniture, fixtures and equipment [Member] | ||
Schedule of Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 42,595,867 | 42,594,605 |
Construction in progress [Member] | ||
Schedule of Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 5,627,827 | $ 5,078,103 |
Debt (Details)
Debt (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||
Jan. 31, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2028 | Mar. 31, 2027 | Mar. 31, 2026 | Mar. 31, 2025 | |
Debt [Line Items] | |||||||||
Convertible notes payable | $ 3,000,000 | $ 27,000,000 | $ 4,800,000 | ||||||
Percentage of interest | 10% | 10% | 10% | ||||||
Agreements discount percentage | 5% | 5% | 3% | ||||||
Converted shares (in Shares) | 375,925 | ||||||||
Remaining convertible notes payable | $ 300,000 | ||||||||
Preferred stock issued | $ 10,000,000 | $ 10,000,000 | |||||||
Financing event percentage | 80% | 85% | |||||||
Convertible notes payable matures amount | $ 27,000,000 | ||||||||
Financing agreement | 25,000,000 | ||||||||
Line of credit | 15,000,000 | ||||||||
Principal payments | 83,000 | ||||||||
Lump sum payment | $ 12,167,000 | ||||||||
Applicable margin of percentage | 4.50% | 4.75% | |||||||
Loan fees | $ 931,000 | ||||||||
Amortization expense | $ 77,000 | ||||||||
Fund working capital | 10,000,000 | ||||||||
Line of credit | 5,000,000 | ||||||||
Note payable | 13,035,374 | ||||||||
Note One [Member] | |||||||||
Debt [Line Items] | |||||||||
Note payable | $ 2,138,838 | ||||||||
Maturity date | February 2025 | ||||||||
Bears interest percentage | 10% | ||||||||
Note Two [Member] | |||||||||
Debt [Line Items] | |||||||||
Note payable | $ 1,314,875 | ||||||||
Maturity date | February 2025 | ||||||||
Bears interest percentage | 10% | ||||||||
Note Three [Member] | |||||||||
Debt [Line Items] | |||||||||
Note payable | $ 1,980,000 | ||||||||
Maturity date | February 2025 | ||||||||
Bears interest percentage | 8% | ||||||||
Note Four [Member] | |||||||||
Debt [Line Items] | |||||||||
Note payable | $ 7,601,661 | ||||||||
Maturity date | February 2025 | ||||||||
Common Stock [Member] | |||||||||
Debt [Line Items] | |||||||||
Converted shares (in Shares) | 3,787,585 | 2,189,977 | |||||||
Minimum [Member] | |||||||||
Debt [Line Items] | |||||||||
Line of credit line fee percentage | 0.25% | ||||||||
Maximum [Member] | |||||||||
Debt [Line Items] | |||||||||
Lump sum payment | $ 0.5 | ||||||||
February 2024 [Member] | |||||||||
Debt [Line Items] | |||||||||
Convertible notes payable | $ 20,000,000 | ||||||||
2026 [Member] | |||||||||
Debt [Line Items] | |||||||||
Convertible notes payable | $ 3,000,000 | ||||||||
Convertible Notes Payable [Member] | |||||||||
Debt [Line Items] | |||||||||
Convertible notes payable | $ 4,500,000 | ||||||||
Percentage of interest | 10% | ||||||||
Convertible Notes Payable [Member] | Common Stock [Member] | |||||||||
Debt [Line Items] | |||||||||
Converted shares (in Shares) | 40,544 | ||||||||
Forecast [Member] | |||||||||
Debt [Line Items] | |||||||||
Debt balances | $ 12,167,000 | $ 1,000,000 | $ 9,000,000 | $ 13,868,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Taxes [Line Items] | ||
Total income tax provision (benefit) expense | $ 0 | $ 100 |
Consolidated pre-tax book loss | $ 8,432,000 | $ 5,936,000 |
Canadian [Memebr] | ||
Income Taxes [Line Items] | ||
Laws tax rate | 26.50% | |
United States Subsidiaries [Member] | ||
Income Taxes [Line Items] | ||
Statutory rate | 21% |
Warrants (Details)
Warrants (Details) | 3 Months Ended |
Mar. 31, 2024 $ / shares | |
Warrants [Line Items] | |
Exercise price | $ 18 |
Trading day period commencing threshold | 20 days |
Trading day period commencing once ending day | 30 days |
Private Warrants[Member] | |
Warrants [Line Items] | |
Exercise price | $ 0.01 |
Warrants (Details) - Schedule o
Warrants (Details) - Schedule of Warrants Outstanding and Exercisable | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Schedule of Warrants Outstanding and Exercisable [Line Items] | |
Exercise Price | $ / shares | $ 18 |
Outstanding Shares | 26,550,000 |
Exercisable Shares | 26,550,000 |
Private Placement Warrants [Member] | |
Schedule of Warrants Outstanding and Exercisable [Line Items] | |
Issue Date | Sep. 13, 2021 |
Classification | Equity |
Exercise Price | $ / shares | $ 11.5 |
Expiration Date | Feb. 07, 2029 |
Outstanding Shares | 9,300,000 |
Exercisable Shares | 9,300,000 |
Public Warrants [Member] | |
Schedule of Warrants Outstanding and Exercisable [Line Items] | |
Issue Date | Sep. 13, 2021 |
Classification | Equity |
Exercise Price | $ / shares | $ 11.5 |
Expiration Date | Feb. 07, 2029 |
Outstanding Shares | 17,250,000 |
Exercisable Shares | 17,250,000 |
Stock Option Plan (Details)
Stock Option Plan (Details) | 3 Months Ended | 12 Months Ended | ||||
Feb. 07, 2024 shares | Jan. 31, 2024 shares | Mar. 31, 2024 USD ($) $ / shares shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 shares | Dec. 31, 2022 shares | |
Stock Option Plan [Line Items] | ||||||
Granted options | 333,574 | |||||
Weighted-average grant date fair values of options granted, price per share (in Dollars per share) | $ / shares | $ 0.6 | |||||
Stock-based compensation expense (in Dollars) | $ | $ 1,273,000 | $ 194,000 | ||||
Stock option exercised | 4,000,000 | |||||
Exchange rate | 0.0661 | |||||
Converted shares | 375,925 | |||||
Common Stock [Member] | ||||||
Stock Option Plan [Line Items] | ||||||
Exercise price per share (in Dollars per share) | $ / shares | $ 0.0001 | |||||
Converted shares | 3,787,585 | 2,189,977 | ||||
Common Class A [Member] | ||||||
Stock Option Plan [Line Items] | ||||||
Converted shares | 264,400 |
Stock Option Plan (Details) - S
Stock Option Plan (Details) - Schedule of Fair Values of the Stock-Based Awards Granted | 3 Months Ended |
Mar. 31, 2024 | |
Stock Option Plan (Details) - Schedule of Fair Values of the Stock-Based Awards Granted [Line Items] | |
Risk-free interest rate | 3.81% |
Expected volatility | 80% |
Dividend yield | 0% |
Minimum [Member] | |
Stock Option Plan (Details) - Schedule of Fair Values of the Stock-Based Awards Granted [Line Items] | |
Expected term (years) | 5 years |
Maximum [Member] | |
Stock Option Plan (Details) - Schedule of Fair Values of the Stock-Based Awards Granted [Line Items] | |
Expected term (years) | 10 years |
Stock Option Plan (Details) -_2
Stock Option Plan (Details) - Schedule of Stock Option Activity - Stock Option [Member] - $ / shares | 3 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | |
Schedule of Stock Option Activity [Line Items] | ||||
Options outstanding,Shares ending | 3,666,426 | 3,468,760 | 3,696,426 | |
Options outstanding, Weighted Average Exercise Price ending | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Options outstanding, Weighted Remaining Contractual Life (Years) | 8 years 1 month 6 days | 6 years 7 months 24 days | ||
Granted, Shares | 333,574 | 227,666 | ||
Granted, Weighted Average Exercise Price | $ 0.0001 | $ 0.0001 | ||
Granted, Weighted Remaining Contractual Life (Years) | 8 years 1 month 6 days | 6 years 7 months 24 days | ||
Exercised, Shares | (4,000,000) | |||
Exercised, Weighted Average Exercise Price | $ 0.0001 | |||
Exercised, Weighted Remaining Contractual Life (Years) | ||||
Expired or forfeited, Shares | ||||
Expired or forfeited, Weighted Average Exercise Price | ||||
Expired or forfeited, Weighted Remaining Contractual Life (Years) |
Earnings per share (Details) -
Earnings per share (Details) - Schedule of Basic Earnings or Loss Per Share is Based on the Weighted Average of Number of Common Shares Outstanding - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | ||
Schedule of Basic Earnings or Loss Per Share is Based on the Weighted Average of Number of Common Shares Outstanding [Abstract] | |||
Basic earnings (loss) per share calculation Net income (loss) available to common stockholders (in Dollars) | $ (8,431,622) | $ (5,935,580) | |
Weighted average common shares outstanding (basic) | 17,079,576 | 10,731,583 | |
Warrants (in Dollars) | $ 26,550,000 | ||
Weighted average common shares outstanding (diluted) | 17,079,576 | 10,731,583 | |
Diluted earnings (loss) per share from net income (in Dollars per share) | [1] | $ (0.49) | $ (0.55) |
Basic earnings (loss) per share from net income (in Dollars per share) | $ (0.49) | $ (0.55) | |
Diluted earnings (loss) per share calculation Net income (loss) available to common stockholders (in Dollars) | $ (8,431,622) | $ (5,935,580) | |
[1] In periods where the Company has incurred a net loss, diluted earnings per share is based on the number of common shares issued and outstanding as including the effects of warrants would be anti-dilutive. |