What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-03-10 compared with 2021-03-09 · 103 added, 103 removed, 75 unchanged (73% of the section changed)

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We believe that we are a leader in the field of land-based aquaculture and the use of technology for improving its productivity and sustainability.

Our lead product is the AquAdvantage salmon, which received FDA approval in 2015 as the first bioengineered animal available for sale for human consumption.

Our lead product is our GE Atlantic salmon, which received FDA approval in 2015 as the first genetically engineered animal available for sale for human consumption.

We have commenced commercial activities with operations in the United States and Canada where we have received regulatory approval.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus, SARS-CoV-2, as a pandemic, which continues to spread throughout the United States and worldwide.

Because infections of this virus and the incidences of the disease it causes, certain national, provincial, state, and local governmental authorities in the United States and Canada have issued proclamations and directives aimed at minimizing the spread of the virus.

Additional, more restrictive proclamations and directives may be issued in the future.

The ultimate impact of the COVID-19 pandemic on our operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 pandemic, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or we, may direct, which may result in an extended period of continued business disruption and reduced operations.

To date, our farm operations have not been materially affected by the pandemic, although we have made modifications to biosecurity procedures and our farm sites to adapt to local requirements and to provide a safe work environment.

We are actively engaged in genetic, genomic, fish health and fish nutrition research, which drive continuous improvement in our operations and may lead to new, disruptive technologies and products that could further expand our competitive offerings.

Although COVID-19 vaccines have become more readily available in the United States and other parts of the world, several variants of the virus continue to spread.

Local governmental authorities in the United States and Canada have issued, and continue to update, directives aimed at minimizing the spread of the virus and we continue to monitor their status.

The ultimate impact of the evolving COVID-19 pandemic on our operations will depend on future developments, which cannot be predicted with confidence, and we cannot predict the extent or impact of the extended period of continued business interruption and reduced operations caused by the COVID-19 pandemic or any additional preventative or protective measures taken in response.

In connection with the COVID-19 pandemic, we made modifications to our biosecurity procedures at our farm sites in early 2020 to adapt to local requirements and to provide a safe work environment.

Our current preventative and protective measures include, but are not limited to, segregating farm workers to specific locations, rotating shifts, and monitoring worker temperatures upon arrival at our facilities.

To the extent possible, work-from-home is utilized for employees that do not have fish care responsibilities.

We have experienced delays in capital projects due to the pandemic, including a six-month delay in the completion of the processing facility at our Indiana farm, which did not become operational until November 2020.

We utilized third party alternatives for fish processing during the delay.

We have been primarily impacted by a reduction in the market price and demand for Atlantic salmon due to the pandemic’s impact on the food service sector.

This had and continues to have a negative impact on our revenue and inventory value, as we are not yet an established vendor and customers do not need a new supplier during a period of depressed demand.

Consequently, in December 2020, we made the decision to donate substantially all of our conventional salmon to local food charities, which are experiencing unprecedented need during the pandemic.

This decision was made to ease the capacity constraints at our Indiana farm to provide space for our growing biomass of AquAdvantage salmon.

The donation program commenced in February 2021.

The financial impact of the pandemic is likely to continue through at least the first half of 2021, as the industry waits for the roll-out of COVID-19 vaccines and the subsequent reopening of the food service sector.

Any financial impact beyond the near-term cannot be reasonably estimated at this time but may have a material adverse impact on our business, financial condition, and results of operations in 2021.

We remain focused on maintaining a strong balance sheet, liquidity, and financial flexibility and continue to monitor developments as we deal with the disruptions and uncertainties from a business and financial perspective relating to the COVID-19 pandemic.

In certain circumstances, we utilized, and continue to utilize, work-from-home arrangements for employees that do not have fish care responsibilities.

Due to the pandemic, we have experienced delays and cost increases in capital projects, additional challenges in our efforts to meet the capacity expectations at our existing facilities and continue to experience extended lead times on equipment purchases.

We may continue to experience delays and cost increases on farm construction, purchases of capital equipment and supplies and other materials required in our operations due to vendor shortages and other labor shortages.

We also expect to continue to be impacted by transportation or supply chain disruptions to our partners or customers.

In addition, we are carefully managing and monitoring the impact of labor shortages on our ability to meet the annual capacity expectations at our existing facilities.

Our operations were initially impacted by a reduction in the market price and demand for Atlantic salmon due to the pandemic’s impact on the food service sector.

This had a negative impact on revenue and inventory value, as we were not yet an established vendor and customers appeared reluctant to add a new supplier during a period of depressed demand.

During the second half of 2021, we were impacted by a shortage of labor at our Indiana farm and increased costs for third-party processing and transportation.

This had a negative effect on revenue and inventory values and resulted in higher than expected sales costs for the period.

We expect this to continue for the foreseeable future.

Financial Overview

We have incurred significant losses since our inception.

We expect to continue to incur significant losses for the foreseeable future, and we may never achieve or maintain profitability.

We expect to generate product revenue primarily through the sales of our AquAdvantage salmon.

We have incurred significant losses since our inception, which we expect to continue for the foreseeable future, and we may never achieve or maintain profitability.

We expect to generate product revenue primarily through the sales of our GE Atlantic salmon.

We also sell conventional Atlantic salmon, salmon eggs, fry, and byproducts.

We expect revenues to be

modest and infrequent in the first half of 2021 until the U.S.

economy begins to recover from the COVID-19 pandemic and food service operations begin to return to normal capacity.

We expect our future capital requirements may be substantial, particularly as we continue to develop our business and expand our commercial activities, as discussed in “Liquidity and Capital Resources”.

We expect revenues to grow modestly in 2022, as we increase our weekly harvesting capability at our Indiana farm and as the U.S.

economy continues to recover from the COVID-19 pandemic.

We expect our future capital requirements will be substantial, particularly as we continue to develop our business and expand our commercial activities, as discussed in “Liquidity and Capital Resources”.

During the next several years, we expect that our working capital requirements and our capital expenditures will increase substantially due to our plans to construct four to five new land-based production farms.

Product Revenue

We currently generate product revenue through the sales of our conventional Atlantic salmon, salmon eggs, fry, and byproducts.

We expect revenues in 2021 to include our AquAdvantage salmon, but to be modest and infrequent for at least the first half of the year until the U.S.

economy begins to recover from the COVID-19 pandemic and food service operations begin to return to normal capacity.

We currently generate product revenue through the sales of our GE Atlantic salmon, conventional Atlantic salmon eggs and fry, and salmon byproducts.

We expect revenues to grow modestly in 2022, as we increase our weekly harvesting capability at our Indiana farm.

In the future, we believe that our revenue will depend upon the number and capacity of grow-out farms we have in operation and the market acceptance we achieve.

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Production costs include the labor and related costs to grow out our fish, including feed, oxygen, and other direct costs;

an application of overhead;

and the cost to process and ship our products to customers.

A portion of production costs are absorbed into inventory as fish in process to the extent that these costs do not exceed the net realizable value of the fish in process.

The costs that are not absorbed into inventory, as well as any valuation reserves against inventory are classified as other production costs.

As of December 31, 2020, we had forty-three employees engaged in production activities.

A portion of production costs is absorbed into inventory as fish in process to the extent that these costs do not exceed the net realizable value of the fish biomass.

The costs that are not absorbed into inventory, as well as any net realizable inventory value adjustments, are classified as production costs .

As of December 31, 2021 and 2020, we had sixty-one and forty-three employees, respectively engaged in production activities.

Sales and Marketing Expenses

Our sales and marketing expenses currently include consulting fees for market-related activities.

As of December 31, 2020, we had no employees dedicated to sales and marketing.

Our sales and marketing expenses currently include salaries and related costs for our sales personnel and consulting fees for market-related activities.

During 2021, we also included the cost of our conventional salmon donation program.

As of December 31, 2021 and 2020, we had one and zero employees, respectively dedicated to sales and marketing.

We expect our sales and marketing expenses to increase as our production output and revenues grow.

Research and Development Expenses

As of December 31, 2020, we employed fifteen scientists and technicians at our facilities on Prince Edward Island to oversee our broodstock of AquAdvantage salmon, as well as the lines of fish we maintain for research and development purposes.

As of December 31, 2021 and 2020, we employed nineteen and fifteen scientists and technicians, respectively at our facilities on Prince Edward Island to oversee our broodstock of GE Atlantic salmon, as well as the lines of fish we maintain for research and development purposes.

We recognize research and development expenses as they are incurred.

Our research and development expenses consist primarily of:

 sala ries and related overhead expenses for personnel in research, development functions, and brood-stock husbandry;

 salaries and related overhead expenses for personnel in research, development functions, and brood-stock husbandry;

 fees paid to contract research organizations and consultants who perform research for us;

 costs related to laboratory supplies used in our research and development efforts;

 costs relate d to the operation of our field trials.

 costs related to the operation of our field trials.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs for employees in executive, corporate, and finance functions.

Other significant general and administrative expenses include corporate governance and public company costs, regulatory compliance, rent and utilities, insurance, and legal service.

We had fourteen employees in our general and administrative group at December 31, 2020.

Other significant general and administrative expenses include corporate governance and public company costs, regulatory affairs, rent and utilities, insurance, and legal services.

We had fourteen employees in our general and administrative group at December 31, 2021 and 2020.

Other Income (Expense), Net

Interest expense includes the interest on our outstanding loans and amortization of debt issuance costs.

Other income (expense) includes bank charges, fees, interest income, and miscellaneous gains or losses on asset disposals.

Interest expense includes the interest on our outstanding loans and the amortization of debt issuance costs.

Other income (expense) includes bank charges, fees, interest income, miscellaneous gains or losses on asset disposals and realized gains or losses on investments.

Critical Accounting Policies and Estimates

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While our significant accounting policies are more fully described in Note 2 to our audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies and estimates are the most critical for fully understanding and evaluating our financial condition and results of operations.

Inventories are mainly comprised of feed, eggs, fish in process and packaging materials.

Fish in process inventory is a biological asset that is measured based on the estimated biomass of fish on hand.

The Company has established a standard procedure to estimate the biomass of fish on hand using counting and sampling techniques.

As of December 31, 2020, all of our fish in process is carried at net realizable value (NRV).

Our NRV calculation contains various estimates and assumptions in regard to the calculation of the biomass, including expected yield, the market value of the biomass and estimated costs of completion and transportation.

As of December 31, 2020, the NRV of our conventional salmon biomass was valued at $0 as a result of our intent to harvest and donate this fish.

The NRV of our AquAdvantage salmon biomass was valued at $1.2 million.

The Company also considers capacity utilization in calculating its inventory value with any excess capacity charged to production costs as idle capacity.

Inventory reserves are recorded as needed to represent the difference between the carrying value and the NRV calculation, taking into consideration the expected timing and disposition of the inventory.

Inventories are mainly comprised of feed, eggs and fish in process.

Fish in process inventory is measured based on the estimated biomass of fish on hand.

We have established a standard procedure to estimate the biomass of fish on hand using counting and sampling techniques.

We measure inventory at the lower of cost or net realizable value (“NRV”).

The NRV calculation contains various estimates and assumptions in regard to the calculation of the biomass, including expected yield, the market value of the biomass and estimated costs of processing and transportation.

The estimates and assumptions used in calculating the NRV can introduce variability in the inventory value from period to period.

This is primarily due to the variability in the market price for salmon;

the yield we can achieve in processing and the mix of products sold;

and the number and frequency of shipments from our farm to our customers.

Each of these factors in the calculation of NRV can change from week to week based on market conditions.

In our estimates, we rely on a combination of our actual experience, along with an estimation of foreseeable trends in the market.

Revenue Recognition

The Company records revenue on the sale of a product when all revenue recognition criteria are fulfilled, including identifying the contract with a customer;

identifying the performance obligations in the contract;

determining the transaction price;

allocating the transaction price to the performance obligations in the contract;

and recognizing revenue when (or as) the Company satisfies a performance obligation.

The Company evaluates customer credit risk in order to conclude it is “probable” it will collect the amount of consideration due in exchange for the goods.

We generate revenue from the sale of our products.

Revenue is recognized when the customer takes physical control of the goods, in an amount that reflects the transaction price consideration that we expect to receive in exchange for the goods.

Revenue excludes any sales tax collected and includes any estimate of future credits.

Our revenue can vary from period to period based on the available biomass of fish that are ready to be harvested;

our resource capability to harvest, process and ship salmon from our farms;

the percentage of fish that meet our quality requirements;

and the market price for salmon.

Additionally, once our product is received by a customer, it is subject to a quality review before acceptance.

To date, credits issued to customers for quality issues have been negligible, but we will continue to monitor and evaluate our customer quality experience as our shipments increase.

We started harvesting our GE Atlantic salmon in June of 2021 and we are still ramping up our internal harvesting resources and our customer base.

Recent Accounting Pronouncements

We do not expect any recently issued, but not yet effective, accounting standards to have a material effect on our results of operations or financial condition.

Results of Operations

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Operating expenses:

Production costs

Product costs

Sales and marketing

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Operating loss

Total other (income) expense, net

Total other expense

Product Revenue

Product revenue for the year ended December 31, 2020 consisted of conventional Atlantic salmon, fry and eggs.

For the comparative period in 2019, revenue included the sale of AquAdvantage salmon from our Panama demonstration farm.

Product revenue for the year ended December 31, 2021 consisted of sales of our GE Atlantic salmon and conventional Atlantic salmon fry and eggs.

For the comparative period in 2020, revenue included the sale of conventional Atlantic salmon, fry and eggs.

During the current year, we began harvesting and selling our GE Atlantic salmon from both our Indiana and Rollo Bay farms.

Production Costs

Production costs for the year ended December 31, 2020, were up from the corresponding period in 2019, due to production cost increases related to increasing fish biomass at the Indiana and Rollo Bay farms as they continued their ramp-up.

Costs for the current year include a $1.53 million reserve against the carrying value of the conventional salmon biomass due to management’s plans to donate substantially all of its conventional salmon to local food charities during Q1 2021.

This decision was made in order to ease the capacity constraints at our Indiana farm to provide space for our growing biomass of AquAdvantage salmon.

In addition, current year costs include charges of $900 thousand to reduce the carrying value of all other fish-in-process biomass to its NRV as a result of reduced market price expectations due primarily to the impact of COVID-19 on the food service industry.

Production costs for the year ended December 31, 2021, were up from the corresponding period in 2020, due to production cost increases related to the commencement of harvesting at the Indiana and Rollo Bay farms.

Increases included headcount additions, feed costs and other direct supplies, as well as the costs for processing and transportation to bring our product to market.

The current year includes net realizable inventory value adjustments of $8.0 million based on the market price for salmon, our production yields and external processing and transportation costs.

Costs for 2020 include net realizable inventory value adjustments of $4.2 million and a $1.5 million write-off against the carrying value of the conventional salmon biomass due to management’s decision to donate substantially all of the conventional salmon to local food charities during Q1 2021.

Sales and Marketing Expenses

Sales and marketing expenses for the year ended December 31, 2020, were down from the corresponding period in 2019 due to a decrease in personnel cost, partially offset by an increase in charges related to the commencement of marketing activities for our salmon.

Sales and marketing expenses for the year ended December 31, 2021, were up from the corresponding period in 2020 due to an increase in headcount and promotional expenses related to marketing activities for our salmon.

Costs for the period also include a $514 thousand charge related to the donation program of conventional Atlantic salmon to local food charities.

Research and Development Expenses

Research and development expenses for the year ended December 31, 2020, were slightly up from the corresponding period in 2019 due to an increase in outside contract service fees, offset by lower personnel costs and lower field trial costs, primarily related to the closing of our demonstration farm in Panama.

Research and development expenses for the year ended December 31, 2021 , were down from the corresponding period in 2020 due to an increase in broodstock cost transferred to production costs for related product revenue during the period and a decrease in field trials, offset by increased outside contract service fees and personnel costs.

During the current period, research activities included feed nutrition trials, discovery research in salmon immunology and work on a genome study to identify genes associated with economically important traits in salmon.

General and Administrative Expenses

General and administrative expenses for the year ended December 31, 2020, were slightly up from the corresponding period in 2019 due to an increase in personnel costs, regulatory legal fees associated with the FDA legal challenge, and outside consulting fees, offset by a decrease in travel and stock compensation charges.

General and administrative expenses for the year ended December 31, 2021, were up from the corresponding period in 2020 due to increases in personnel, outside consulting and advisory fees, auditing fees, insurance costs, and travel, partly offset by decreases in legal fees and stock compensation charges.

Total Other (Income) Expense

Total other (income) expense for 2020 is comprised of interest on debt, bank charges, interest income, and a net gain on the disposal of assets.

Total other (income) expense for 2021 is comprised of interest on debt, bank charges, and interest income.

Total other (income) expense for 2020 is comprised of interest on debt, bank charges, interest income, and a net gain on the disposal of assets.

Liquidity and Capital Resources

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We have incurred losses from operations since our inception in 1991, and, as of December 31, 2021, we had an accumulated deficit of $171 million.

In January 2018, we completed a public offering of 3,692,307 Common Shares and warrants for 4,246,153 Common Shares.

Net proceeds to the Company were $10.6 million.

Precigen, our controlling shareholder at the time, participated in the offering, purchasing 1,538,461 Common Shares and warrants for 1,538,461 Common Shares for gross proceeds of $5.0 million.

During 2018, 249,824 Common Shares were issued through the conversion of outstanding warrants for total proceeds of $0.8 million and on October 24, 2018, 2,250,461 Common Shares were issued through the exercise of outstanding warrants at a discounted price of $2.00.

Net proceeds to the Company were $4.3 million.

Precigen participated in the exercise, converting warrants for 1,538,461 Common Shares, resulting in gross proceeds of $3.1 million.

During 2019, we completed two public offerings totaling 6,246,360 Common Shares for net proceeds of approximately $12.4 million and we issued 83,564 Common Shares through the conversion of outstanding warrants for total proceeds of $0.3 million.

During 2020, we completed three public offerings totaling 33,028,000 Common Shares for net proceeds of approximately $104.6 million and we issued 713,449 Common Shares through the conversion of outstanding warrants for total proceeds of $2.3 million.

On February 8, 2021, we completed a public offering of 14,950,000 Common Shares for net proceeds of approximately $119.2 million.

As of December 31, 2020, we had a cash and cash equivalents balance of $95.8 million.

We expect to continue to experience losses from operations for the foreseeable future and we will require substantial additional cash to fund our business plans.

Liquidity has primarily come from equity financings, supplemented by debt transactions.

During 2020, we completed three public equity offerings totaling 33,028,000 shares of common stock for net proceeds of approximately $104.6 million and we issued 713,449 shares of common stock through the conversion of outstanding warrants for total proceeds of $2.3 million.

During 2021, we completed a public equity offering of 14,950,000 shares of common stock for net proceeds of approximately $119.1 million.

In the future, we expect to use bond issuances to fund the construction of our farms and we may use additional equity issuances to supplement these costs or to fund other growth opportunities.

As of December 31, 2021, we had $191.2 million in cash and cash equivalents, marketable securities and restricted cash.

Our principal contractual commitments include capital expenditure obligations, repayments of debt and related interest, and payments under operating leases.

Refer to the notes in our consolidated financial statements for further information about our share capital expenditure commitments (Note 6), debt (Note 7), and lease payment obligations (Note 10).

The following table sets forth the significant sources and uses of cash for the periods set forth below (in thousands):

‎ December 31,

Net cash provided by (used in):

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Effect of exchange rate changes on cash

Net increase (decrease) in cash

Net increase in cash

Cash Flows from Operating Activities

Net cash used in operating activities during the year ended December 31, 2021, was primarily comprised of our $22.3 million net loss, offset by non-cash depreciation and stock compensation charges of $2.2 million and increased by working capital uses of $349 thousand.

Spending on operations increased in 2021 due to increases in production activities at our Rollo Bay and Indiana farm sites and outside consulting and advisory fees.

Cash used for working capital was due primarily to increases in receivables and prepaid expenses, partially offset by increases in accounts payable and accrued expenses and a decrease in inventory.

Net cash used in operating activities during the year ended December 31, 2020, was primarily comprised of our $16.4 million net loss, offset by non-cash depreciation and stock compensation charges of $1.9 million and by working capital sources of $136 thousand.

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Cash provided by working capital was due primarily to an increase in accounts payable and accrued liabilities, partially offset by increases in inventory and prepaid expenses.

Net cash used in operating activities during the year ended December 31, 2019, was primarily comprised of our $13.2 million net loss, offset by non-cash depreciation and stock compensation charges of $2.2 million and a non-cash charge of $253 thousand, and increased by working capital uses of $420 thousand.

Spending on operations increased in 2019 due to headcount additions and production ramp up costs at our Rollo Bay and Indiana farm sites.

The use of cash in working capital in 2019 was primarily due to an increase in inventory, offset by increases in accounts payable and accrued liabilities, other receivables and in prepaid expenses and other current assets.

Cash Flows from Investing Activities

During 2021, we used $5.7 million for renovations to our Indiana farm site, construction charges at our Rollo Bay farm site and renovations at our Fortune Bay hatchery, $45 thousand for deposits on equipment purchases and $101.8 million on the purchase of marketable securities.

During 2020, we used $4.0 million for renovations to our Indiana farm site and for construction charges at our Rollo Bay site, offset by $100 thousand in proceeds from the sale of equipment and $1 million in net proceeds from a settlement agreement.

During 2019, we used $2.5 million for property and equipment purchases for renovations to our Indiana farm site and for construction charges at our Rollo Bay site, offset by $16 thousand in proceeds from the sale of equipment.

We expect expenditures on capital projects to increase in future periods as we commence construction of our Ohio farm.

We currently estimate the construction costs to be in the range of $290 million to $320 million, including a reserve for potential contingencies of $30 million.

We expect to finance this project cost through a combination of cash on hand and debt.

Estimating the cost and timing for the completion of this new and complex capital project is inherently difficult and subject to change based on a number of factors, including design changes, fluctuating costs of materials, labor shortages, the impact of the COVID-19 pandemic, construction delays, dependence on contractors, financing costs, customer requirements and unexpected complications.

For more information, see “ Our business plans include the need for substantial additional capital and without it we may not be able to implement our strategy as planned or at all .”

Cash Flows from Financing Activities

During 2020, we received approximately $104.6 million in net proceeds from the issuance of Common Shares in three public offerings, $2.3 million from the exercise of warrants, and $4.1 million from the issuance of debt, net of repayments and debt issuance costs.

During 2019, we received approximately $12.4 million in net proceeds from the issuance of Common Shares in two public offerings, $272 thousand from the exercise of warrants, and $815 thousand from the issuance of debt, net of repayments.

During 2021, we received approximately $119.1 million in net proceeds from the issuance of shares of common stock in a public equity offering, $1.7 million from the exercise of warrants, and $606 thousand from new debt.

This was offset by $272 thousand in debt repayment.

During 2020, we received approximately $104.6 million in net proceeds from the issuance of shares of common stock in three public equity offerings, $2.3 million from the exercise of warrants, and $4.1 million from the issuance of debt, net of repayments and debt issuance costs.

Future Capital Requirements

The Company completed multiple equity raises in 2020 and has $95.8 million in cash and cash equivalents as of December 31, 2020.

Subsequent to year end, in February 2021, the Company raised an additional $119.2 million.

While we have experienced net losses

and negative cash flows from operations since inception, management believes that it has sufficient cash to meet the Company's requirements for at least the next twelve months from the filing date.

In February 2021, we completed an equity raise with net proceeds of $119.1 million and we had $191.2 million of cash, cash equivalents, marketable securities and restricted cash as of December 31, 2021.

While we have experienced net losses and negative cash flows from operations since inception, we believe that we have sufficient cash to meet our requirements for at least the next twelve months from the filing date.

During 2022, we expect to use approximately $130 million of cash to fund our operations and the first year of construction costs for our Ohio farm.

In 2020, we entered into a term loan agreement with First Farmers Bank and Trust in the amount of $4 million, which is secured by the assets of our Indiana subsidiary and a corporate guarantee.

The agreement contains certain financial and non-financial covenants, which if not met, could result in an event of default pursuant to the terms of the loan.

The ability of the Indiana subsidiary to meet its debt covenants over the next twelve months is dependent upon its operating performance.

Until such time, if ever, as we can generate positive operating cash flows, we may finance our cash needs through a combination of equity offerings, debt financings, government or other third-party funding, strategic alliances, and licensing arrangements.

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If we cannot continue as a going concern, our stockholders would likely lose most or all of their investment in us.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under SEC rules.

Contractual Obligations

The following table summarizes our significant contractual obligations and commercial commitments at December 31, 2020, and the effects such obligations are expected to have on our liquidity and cash flows in future periods (in thousands):

PEI Finance term loan

ACOA term loans

Kubota Canada Ltd

ACOA AIF grant (1)

FFBT term loan

Maynard office lease

Indiana auto lease

Indiana well lease

(1) Repayment of the AIF grant is royalty-based and estimated on revenue projections of products resulting from the project.

Recent Accounting Pronouncements

We do not expect any recently issued, but not yet effective, accounting standards to have a material effect on our results of operations or financial condition.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis