What changed in this filing

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Item 1. Business

2025-03-27 compared with 2024-04-01 · 64 added, 317 removed, 54 unchanged (88% of the section changed)

Company Update

AquaBounty has been pursuing a growth strategy that includes the construction of large-scale recirculating aquaculture system farms for producing our GE Atlantic salmon.

Our farm in Pioneer, Ohio is under construction and roughly 30% complete, but construction activities have been paused.

To fund the construction cost, we were using cash on hand, which would be supplemented by a municipal bond financing.

However, during the initial two years of construction, the cost estimate for the farm increased substantially and eventually exceeded our ability to complete the proposed financing.

Consequently, the Company requires new financing to provide liquidity for working capital and to fund the construction of our farm in Pioneer, Ohio.

To meet this need, we have engaged an investment bank to pursue a range of funding and strategic alternatives, including the recently announced sale process for our Indiana farm, potential debt financing secured by our unencumbered assets, and potential joint venture partnerships or other strategic transactions.

Feed a growing world by developing and deploying new aquaculture technologies.

AquaBounty has historically pursued a growth strategy that included the construction of large-scale recirculating aquaculture system (“RAS”) farms for producing our genetically engineered Atlantic salmon (the “GE Atlantic salmon”).

We had commenced construction of a 10,000 metric ton farm in Pioneer, Ohio (the “Ohio Farm Project”), but paused the construction in June 2023, as the cost estimate to complete the farm continued to substantially increase due to inflation and other factors.

Further, these cost increases impaired our ability to pursue municipal bond financing, which was a necessary component of our funding strategy.

We subsequently engaged an investment bank to pursue a range of funding and strategic alternatives, and to assist management in the prioritization of our core assets.

These efforts resulted in the sale of our grow-out farm in Indiana (“Indiana Farm”) in July 2024, recurring sales throughout the year of selected equipment originally intended for the Ohio Farm Project (“Ohio Equipment Assets”), and the sale of our Canadian subsidiary, including the broodstock farms owned by the Canadian subsidiary in Prince Edward Island, Canada (“Canadian Farms”), and our intellectual property for the GE Atlantic salmon, along with trademarks and patents (“Corporate IP”) in March 2025.

During 2024, we also focused on cost containment to preserve and extend our available cash.

After completion of these transactions, our primary remaining asset is our investment in the Ohio Farm Project, consisting of the remaining Ohio Equipment Assets and the land and construction in process (the “Ohio Farm Site”).

We continue to work with our investment bank to identify the optimal path forward for realizing the potential of this asset, either through new investment, partnership or other strategic options.

Discontinued Operations

As noted above, we sold our Indiana Farm in July 2024 and our Canadian Farms in March 2025.

These farms have been designated as discontinued operations in our consolidated financial statements for the years ended December 31, 2024 and 2023 in this Form 10-K (see Note 4 to our consolidated financial statements for additional information).

Impairment Charges

During the second quarter of 2024, we began to market our Indiana Farm for sale.

The sale was completed in July and included certain Ohio Equipment Assets that had been purchased for the Ohio Farm Project.

Based on the net sale price, we recorded an impairment charge against the Indiana Farm of $22.5 million.

We then conducted an impairment analysis of the remaining Ohio Equipment Assets, resulting in an impairment charge of $26.3 million.

At that time, we made the decision to continue to sell certain of our Ohio Equipment Assets in order to generate cash for liquidity, and therefore we reclassified our Ohio Equipment Assets as Assets Held for Sale on our consolidated balance sheet.

We continued to sell Ohio Equipment Assets during the remainder of the year, and based on these additional transactions, we conducted an impairment analysis at year-end on the remaining Ohio Equipment Assets that were held for sale, along with the Ohio Farm Site.

As a result of this analysis, we recorded impairment charges of $18.2 million and $57.3 million against the Ohio Equipment Assets and the Ohio Farm Site, respectively.

In December of 2024, we entered into a Letter of Intent with a buyer to purchase the Canadian Farms.

The transaction closed in March 2025 and included all of our Corporate IP.

Based on the net sale price, we recorded impairment charges of $5.4 million and $0.2 million against the Canadian Farms and Corporate IP, respectively.

The table below depicts the impairments charges recorded during 2024 by asset group totaling $129.8 million.

Corporate History

AquaBounty was incorporated in December 1991 in the State of Delaware for the purpose of conducting research and development of the commercial viability of a group of proteins commonly known as antifreeze proteins.

In 1996, we obtained the exclusive licensing rights for a gene construct (transgene) used to create a breed of farm-raised Atlantic salmon that exhibits growth rates that are substantially faster than conventional salmon.

At AquaBounty, our Purpose is to “Feed a growing world by transforming aquaculture through the use of technology, creating a safe, secure and sustainable future.” We demonstrate our care for our people, our environment and our fish through our EPIC Values which include:

“Excellence, Passion, Innovation and Collaboration.” We believe we are a leader in the field of land-based aquaculture and the use of technology for improving its productivity and sustainability.

Our objective is to ensure the availability of high-quality seafood to meet growing global consumer demand, while addressing critical production constraints in one of the most popular farmed species.

Aquaculture is the farming of aquatic organisms such as fish, shellfish, crustaceans, and aquatic plants.

It involves cultivating freshwater or saltwater species under controlled conditions, as an alternative to the commercial harvesting of wild species of aquatic organisms.

According to the Food and Agriculture Organization of the United Nations (“FAO”), aquaculture was a $265 billion industry in 2020, and we are targeting the $22 billion salmon farming segment of that industry.

We believe that AquaBounty has four core competencies that provide us with a competitive advantage over other land-based salmon farmers:

our proprietary genetically engineered Atlantic salmon (“GE Atlantic salmon” or “AquAdvantage salmon”), our experience operating land-based farms, our vertical integration, and our expertise in biotechnology.

Our GE Atlantic salmon is based upon proprietary salmon genetics and grows to harvest size faster, while consuming less feed, than conventional Atlantic salmon.

With our salmon, we can produce more output at a lower cost in a land-based farm than with conventional salmon.

Our GE Atlantic salmon was approved for production, sale, and consumption in the United States on November 19, 2015 by the FDA.

This was followed by an approval from Health Canada for the production, sale, and consumption of our salmon in Canada on May 19, 2016 and an approval from the National Biosafety Technical Commission for the sale and consumption of our salmon in Brazil on May 12, 2021.

Consequently, we have received approvals for our GE Atlantic salmon from what we believe are three of the most respected and rigorous regulatory agencies in the world.

We farm our GE Atlantic salmon in land-based, recirculating aquaculture systems (“RAS”), which allow land-based fish farms to be established close to major demand centers in a profitable and environmentally sustainable manner.

We have over 25 years of experience growing salmon in RAS farms, which are bio-secure, so we do not need to use vaccines or antibiotics to protect our fish.

We control and optimize their living environment to promote their general health.

By locating our farms near to major food markets, we reduce our transportation costs and carbon footprint.

We are vertically integrated and maintain our own broodstock hatchery, which produces the eggs that we grow-out to harvest size in our production farms.

This hatchery also produces non-GE eggs for external sales.

We have our own research and development team with expertise in biology, chemistry and RAS operations.

This allows us to continuously focus on improving the breeding, genetics and health of our fish and improving the efficiency of our farm operations.

We currently operate two salmon farms:

a refurbished production grow-out farm in Indiana and a broodstock farm on Prince Edward Island, Canada.

Our plans include completing the construction of a 10,000 metric ton production grow-out farm in Pioneer, Ohio and expanding our egg production and sales.

In February 2024, we announced our plan to sell our Indiana farm operations to provide needed liquidity, while focusing on financing alternatives necessary to resume construction on the Ohio farm.

We are also pursuing regulatory approval for our GE Atlantic salmon in Israel, with the goal of entering that market with a local partner in the form of a joint venture or licensing arrangement.

Additionally, we plan to utilize our expertise in biotechnology and RAS operations to enter complimentary areas of the aquaculture industry, with an initial focus on shrimp.

Our strategy is to continually strengthen our core capabilities, scale our business and pursue growth opportunities.

We have striven to be a leader in the field of land-based aquaculture and the use of technology for improving its productivity and sustainability, and our objective has been to ensure the availability of high-quality seafood to meet growing global consumer demand, while addressing critical production constraints in one of the most popular farmed species.

Our strategy has been based on our four core competencies:

our proprietary GE Atlantic salmon, our experience operating land-based farms, our vertical integration, and our expertise in biotechnology.

We do not currently operate any salmon farms, as we have sold our Indiana Farm and our Canadian Farms.

We have also sold the intellectual property for our GE Atlantic salmon, included in our Corporate IP.

Our primary asset is our Ohio Farm Site, which consists of the land and the construction in process for a commercial scale recirculating aquaculture production facility, for which we have engaged an investment banker to advise us on a range of strategic alternatives.

Reverse Stock Split

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All share and per share information in this Annual Report on Form 10-K have been adjusted to reflect this change.

Aquaculture Industry

Aquaculture is the farming of aquatic organisms such as fish, shellfish, crustaceans, and aquatic plants.

It involves cultivating freshwater or saltwater species under controlled conditions, as an alternative to the commercial harvesting of wild species of aquatic organisms.

According to the Food and Agriculture Organization of the United Nations (“FAO”), aquaculture was a $296 billion industry in 2022, with salmon farming accounting for $22 billion.

Market Drivers

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According to FAO, global population is projected to reach 9.7 billion people by 2050, or roughly 20% growth over the next 26 years.

In addition to the increased demand for food from the rising population, increased incomes and urbanization from a growing middle class will drive increased demand for protein food sources.

In addition to the increased demand for food from the rising population, increased incomes and urbanization from a growing middle

class will drive increased demand for protein food sources.

According to FAO, global fish consumption has been growing faster than all other animal protein foods.

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FAO research indicates that 25% of all major marine fisheries are subjected to severe overfishing, while an additional 52% are fully exploited.

Total production from global capture fisheries has been relatively stable since the late-1980s, with catches generally fluctuating between 86 million metric tons and 96 million metric tons per year, with 90 million metric tons recorded in 2020, the last year for which data is available from FAO.

In contrast, over the same period, aquaculture fish production has grown from 14 million metric tons to a level of 88 million metric tons in 2020 and now accounts for 49% of global fish production.

Total production from global capture fisheries has been relatively stable since the late-1980s, with catches generally fluctuating between 86 million metric tons and

96 million metric tons per year, with 91 million metric tons recorded in 2022, the last year for which data is available from FAO.

In contrast, over the same period, aquaculture fish production has grown from 14 million metric tons to a level of 94 million metric tons

in 2022 and now accounts for 51% of global fish production.

Feeding the growing population and meeting the demand for fish protein will require aquaculture production to nearly double by 2050.

The chart below depicts the projected gap between supply and demand over the projected period.

FAO – The State of World Fisheries and Aquaculture 2022 for actual data

through 2020.

Company estimates based on FAO growth projections.

Salmon Farming

Atlantic salmon farming is a major industry in the cold-water countries of the northern and southern hemispheres.

According to Kontali, global Atlantic salmon aquaculture harvests grew by approximately 5% annually between 2017 and 2022, reaching 2.9

million metric tons with a value of $22 billion.

We believe that the aquaculture industry – and in particular salmon farming – is poised for significant growth in the coming years, as the global population continues to expand and consumers seek out high-quality proteins.

Below is a break-down by major producing country for the time period 2017 through 2022 from Kontali.

Worldwide Harvest of Atlantic Salmon in thousands of metric tons (whole fish equivalent)

United Kingdom

North America

Faroe Islands

Volume-Worldwide

Kontali, Salmon World 2023

According to Kontali, global Atlantic salmon aquaculture harvests grew by approximately 5% annually between 2017 and 2022, reaching 2.9 million metric tons with a value of $22 billion.

Limitations of Conventional Sea-Cage Salmon Farming

Conventional salmon aquaculture takes place in large cages (sea-cages) in coastal waterways exposed to currents, which can bring a variety of pathogens in contact with the farmed salmon.

The presence of pathogens in an uncontrolled environment such as this is a universally accepted fact in human and animal health.

Such disease agents in these uncontrolled water currents can result in infection and spread of infection within the captive population.

The presence of pathogens in an uncontrolled environment is a universally accepted fact in human and animal health.

Such disease agents in these uncontrolled water currents can result in infection that spreads within the captive population.

The risks and outcomes of conventional, open sea-cage systems are well established, including the susceptibility to extreme weather conditions, and are often evidenced by outbreaks of a variety of bacterial and viral diseases, as well as water fouling and contamination due to algal blooms and similar events.

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Another limitation of the conventional salmon production system is that the farms are not located near the ultimate consumers, and thus, an additional carbon footprint is created in transporting the fish from its production to its consumption location.

We believe we offer a better, more sustainable alternative to conventional salmon production.

AquaBounty Solution

Land-Based RAS Production

The closed, contained, land-based production systems using RAS technology that we use for the grow-out of our fish are less susceptible to the disease-related pressures of conventional salmon farming, because this type of culture system is isolated from the environment.

Closed, contained, land-based production systems using RAS technology can be used for the grow-out of fish and are less susceptible to disease-related pressures of conventional salmon farming, because this type of culture system is isolated from the environment.

RAS facilities employ sophisticated water treatment technology, including the use of ozone, salt treatment and ultraviolet radiation to kill potential bacterial, fungal, or viral pathogens which might enter the system.

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RAS facilities employ effective biosecurity to prevent disease by reducing or eliminating the introduction of pathogens and continuously treating the water to assure optimal fish health.

RAS production allows our fish to be raised in optimized conditions with total control of the water coming in and going out of the system, while recirculating greater than 95% of the water used.

Further, stocking our RAS farms with disease-free eggs from our own hatchery results in a much higher degree of biosecurity and protection from disease.

In addition to biosecurity measures to optimize fish health, our farms feature multiple layers of containment designed to prevent escapes.

We have been growing fish in RAS facilities for over two decades, and we have never experienced an escape.

The multiple layers of containment redundancy, coupled with the fact that our salmon are sterile female fish, pose a much-needed solution to raising

fresh, healthy seafood in a manner that prevents harming native fish populations.

The method of land-based fish farming that we employ has been promoted by many environmental non-governmental organizations (“NGOs”), and it does not pose a threat to wild salmon populations.

We have significant experience in operating land-based RAS facilities.

Our operating practices and procedures have been developed and honed over two decades and are geared towards meeting stringent regulatory requirements.

Our experience operating land-based RAS salmon farms enables us to protect both the fish and the environment.

Our GE Atlantic Salmon

Our GE Atlantic salmon program began over 30 years ago and is based upon a single, specific molecular modification in our salmon that results in more rapid growth during early development.

The result is a genetically engineered Atlantic salmon that can grow to market size faster than a conventional farmed Atlantic salmon.

The original research on the Atlantic salmon was conducted at Memorial University in Newfoundland, Canada, by a team seeking to protect the fish from the effects of the cold waters of the North Atlantic Ocean.

They discovered that the single genetic change made by placing a second copy of the salmon growth hormone gene under the control of an alternative genetic promoter (gene switch) from the ocean pout resulted in more consistent levels of growth hormone being released, which accelerated the early stages of the salmon’s development, a time period when the salmon are more susceptible to disease and mortality.

The accelerated growth allows these fish to reach a marketable size sooner.

This can reduce farming time in a RAS facility from roughly 26 to 28 months for conventional Atlantic salmon to roughly 18 to 20 months for our salmon.

This accelerated growth has economic and environmental advantages.

The faster life cycle from hatch to harvesting of our salmon, as compared to conventional salmon, allows it to be produced more economically in contained, land-based RAS farms.

Although RAS farms require greater capital investment than the sea-cage approach, we believe that the higher costs are offset by more efficient growth and a shorter transportation distance to market.

Compared to conventional salmon grown in a RAS farm with a similar capital investment, we can produce approximately 70% more of our GE Atlantic salmon each year.

Our fish are also 25% more efficient at converting their feed to biomass, which represents a significant cost advantage as feed is the largest variable cost of growing salmon.

Further, locating our farms closer to major food markets allows us to realize savings on transportation of the harvested stock, while maintaining a reduced carbon footprint, and an improved ability to get fresh product to market faster.

Intellectual Property

Our GE Atlantic salmon is based upon a single, specific molecular modification in the fish that results in more rapid growth in early development.

The patent for the underlying technology, which had been issued in certain salmon producing countries, expired in August 2013, and we currently hold a global, perpetual, royalty-free, fully paid, sub-licensable, assignable, non-exclusive right to the technology covering genetically engineered salmonid fish that express endogenous growth hormone under the control of a protein gene promoter from an edible fish.

Despite the expiration of the patent for the licensed technology, we believe that the degree of know-how in the molecular modification process and the regulatory timescales associated with approval of genetically engineered fish present significant barriers to entry and a competitive advantage.

We rely on a combination of patent, trademark, and trade secret laws in the United States and applicable foreign jurisdictions, as well as confidentiality procedures and contractual provisions, to protect our proprietary technology, processes, and brand.

In December 2015, we were granted a U.S.

patent for our molecular sterility system, which renders sterile the progeny of any female fish carrying a defined maternal sterility gene.

Subsequently, the maternal sterility patent has been issued in Australia, Brazil, Canada, Chile, Japan, and the Republic of Korea.

While the technology described in the sterility system patent is not required under any of our current regulatory approvals, the technology may be desirable in the future to obtain or maintain regulatory approvals.

Regulatory Aspects of Genetically Engineered Fish

The genetic engineering of food using the tools of modern biotechnology is regulated in the United States by two government organizations, the USDA for genetically engineered plants and the FDA for genetically engineered animals.

The regulatory process for genetically engineered food and animal feed is based upon the Coordinated Framework issued by the Office of Science and Technology Policy in 1986, but the enabling legislation is the Federal Food, Drug, and Cosmetic Act (“FFDCA”).

The FDA is also required to determine the environmental impact of a proposed application under the National Environmental Policy Act (“NEPA”).

In the case of animals intended for food or materials for feed, the FDA process is a pre-approval review followed by an approval if the application is acceptable under the relevant legislation, with ongoing oversight following approval.

We opened an Investigational New Animal Drug file for AquAdvantage salmon with the FDA in 1995.

At that time, there was no defined regulatory framework for the regulation of bioengineered animals.

There were, however, certain studies that were generally acknowledged to be necessary for an eventual approval process.

We commenced work on those studies and began a phased submission of studies to the FDA that ultimately was responsive to each technical section of the New Animal Drug Application (“NADA”).

These technical sections require submission of studies relating to molecular characterization of the construct;

molecular characterization of AquAdvantage salmon lineage;

phenotypic characterization of AquAdvantage salmon;

a genotypic and phenotypic durability plan;

support for environmental, food, and feed safety;

and claim validation.

The FDA’s phased review process, which included a cycle of study conduct, submission, review, and acceptance, continued over the period from 1995 to 2010.

Following this process, the FDA concluded that AquAdvantage salmon “is as safe as food from conventional salmon, and that there is a reasonable certainty of no harm from consumption of food” from AquAdvantage salmon.

On November 19, 2015, the FDA issued an approval letter for the NADA for AquAdvantage salmon, along with a final Environmental Assessment (“EA”) and a finding of No Significant Impact on the EA under NEPA.

Regulatory Legal Challenge

On March 30, 2016, a coalition of NGOs filed a complaint in the United States District Court for the Northern District of California against the FDA, the United States Fish and Wildlife Service, and related individuals for their roles in the approval of AquAdvantage salmon.

Subsequently, AquaBounty joined the case as an intervenor to protect our interests.

Shortly thereafter, the Fish and Wildlife Service was dismissed from the case.

The NGOs, including the Center for Food Safety and Friends of the Earth, claimed that the FDA had no statutory authority to regulate genetically engineered animals, and, if it did, that the agency failed to adequately analyze and implement measures to mitigate ecological, environmental, and socioeconomic risks that could impact wild salmon and the environment, including the risk that AquAdvantage salmon could escape and threaten endangered wild salmon stocks.

In December 2019, the court found that the FDA did have authority/jurisdiction over genetically engineered animals under the FFDCA, and in November 2020, the court remanded the EA to the FDA for further work on its NEPA and Endangered Species Act (“ESA”) assessments.

In December 2020, the plaintiffs filed a motion to alter or amend the judgment.

In February 2021, the judge denied that motion.

The court’s decisions do not have a current business impact on AquaBounty’s egg production on Prince Edward Island, Canada or AquaBounty’s salmon production in Albany, Indiana.

AquaBounty is working with the FDA on the NEPA and ESA regulatory matters.

On-going Regulatory Requirements

In addition to the FDA approval of the NADA for AquAdvantage salmon, our operating sites in the United States and on Prince Edward Island, as well as those we plan to operate in the future, must be registered with, and periodically inspected by, the FDA as drug manufacturing establishments.

Drug manufacturing establishments that supply FDA-regulated products for use in the United States must comply with the product’s conditions for approval, whether located in the United States or in a foreign country.

Each of our operating sites in Indiana and on Prince Edward Island is currently registered with the FDA, and the FDA has performed inspections and site visits at each of those facilities.

Going forward, we must continue to comply with FDA requirements not only for manufacturing but also for labeling, advertising, record keeping, and reporting to the FDA of adverse events and other information.

We also need to comply with USDA disclosure

requirements pertaining to bioengineered foods under the National Bioengineered Food Disclosure Law.

Failure to comply with these requirements could subject us to administrative or judicial enforcement actions, including but not limited to, product seizures, injunctions, civil penalties, criminal prosecution, refusals to approve new products, or withdrawal of existing approvals, as well as increased product liability exposure.

Production of AquAdvantage salmon in the United States also requires compliance with environmental regulations and local site permitting statutes.

In addition, every production site for AquAdvantage salmon in the United States requires approval by the FDA of both a Supplemental NADA and satisfaction of corresponding obligations under NEPA, as well as compliance with local permitting requirements for construction of grow-out facilities.

We expect that we may incur significant costs to comply with these environmental and regulatory requirements, which could be a multi-year process to complete for each production site, though conducted in parallel with our construction timelines.

Labeling and Disclosure Standard

There have been surveys cited by various NGOs that indicate consumers are reluctant to purchase genetically engineered food and they would like to see labeling in order to avoid it.

Many states reacted to this by enacting genetically engineered food labeling laws.

Consequently, in response to the potential for state-by-state labeling laws, Congress passed the National Bioengineered Food Disclosure Law (“Disclosure Standard”) in 2016, which directed the USDA to establish a national mandatory standard for disclosing foods that are or may be bioengineered.

The Disclosure Standard requires food manufacturers, importers, and certain retailers to ensure bioengineered foods are appropriately disclosed.

The Disclosure Standard came into effect on January 1, 2022, but we began complying in 2021 on a voluntary basis when our salmon began to be harvested and sold.

In conjunction with the bioengineered disclosure, we also have begun to educate consumers on the benefits of our GE Atlantic salmon versus conventional Atlantic salmon, including its 25% improved feed conversion (meaning less feed is needed to produce the same harvest), a lower carbon footprint due to local production, reduced impact on the environment, reduced exposure of the fish to environmental toxins due to use of land-based aquaculture systems, and reduced reliance on vaccines or antibiotics due to improved biosecurity.

In December 2019, the 2020 Appropriations Act was signed into law, which was reintroduced and passed in 2021, 2022 and 2023, which contained an amendment that requires any genetically engineered animal approved by FDA prior to the effective date of the Disclosure Standard shall include the words ‘‘genetically engineered’’ prior to the existing acceptable market name.

While we believe that this labeling requirement is unnecessary and redundant to the requirement of the Disclosure Standard, we have and will continue to comply with all applicable laws.

Our compliance with these laws and regulations may be onerous and could increase our cost of doing business, impact our competitive position relative to our peers or otherwise have an adverse impact on our business, reputation, financial condition and operating results.

For more information about government regulations applicable to our business, refer to “ Risk Factors ” in Item 1A.

RAS production allows fish to be raised in optimized conditions with total control of the water coming in and going out of the system, while recirculating greater than 95% of the water used.

In addition to biosecurity measures to optimize fish health, RAS farms feature multiple layers of containment designed to prevent escapes.

The multiple layers of containment provide a much-needed solution to raising fresh, healthy seafood in a manner that prevents harming native fish populations.

This method of land-based fish farming has been promoted by many environmental non-governmental organizations (“NGOs”), and it does not pose a threat to wild salmon populations.

According to Kontali, in 2022, the supply of Atlantic salmon to the U.S.

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According to Kontali, a net of only 8 thousand pounds (4 thousand metric tons) of farmed Atlantic salmon was available in the United States in 2022, representing less than 1.0% of the total farmed Atlantic salmon supplied to the country.

Supply of Atlantic salmon to U.S.

market in thousands of metric tons (whole fish equivalent)

Faroe Islands

United Kingdom

– own production, net

Other countries

Kontali, Salmon World 2023

Despite intensive public consumer education campaigns promoting its health benefits, seafood consumption in the United States still lags behind other protein sources and trails consumption in overseas markets.

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In comparison, according to FAO, seafood consumption worldwide averaged 45 pounds per capita in the period from 2018 to 2020.

Consumer Sentiment Regarding Genetically Engineered Fish

Though Atlantic salmon is the second most consumed seafood in the United States, activist groups opposing genetically engineered foods have pressured a number of distributors, food service operations, retail food outlets and grocery chains to publicly state that they will not carry genetically engineered salmon.

However, we do not expect that this will have a significant impact on overall consumer demand and product placement in the marketplace generally, and in particular the distributor and wholesale marketplace.

To date, we have seen large distributors and wholesalers not follow the pressure from activist groups, and we have sold our GE Atlantic salmon from our farms since commencing harvesting in May 2021.

We believe that there will be sufficient demand from smaller retailers, distributors, wholesalers, and institutional seafood buyers to absorb our projected production.

We believe that the FDA approval reinforces the message that our salmon is a safe and nutritious seafood product that is identical to conventional farmed Atlantic salmon.

Consumer sentiment towards genetically engineered foods is evolving.

Based on market research that we commissioned, the top attributes for consumer selection of farm-raised salmon are availability, affordability, freshness, safety, and taste.

According to the poll conducted, 53% of respondents had a first impression of genetically engineered food that was neutral to very positive;

60% were neutral to very likely to purchase genetically engineered products they buy regularly if labeled as such;

70% were neutral to very likely to purchase genetically engineered products they buy regularly if labeled with the USDA Bioengineered Disclosure Symbol;

81% were neutral to very positive to the AquaBounty and our GE Atlantic salmon story and product benefits;

and 70% were likely to purchase and try our salmon at least once.

According to a study conducted by the Boyce Thompson Institute, which looked at the number and tone of over 100,000 online and print articles published in top-ranked media between 2018 and 2020 as well as 1.7 million social media interactions, the overall tone of the conversation on GE foods is “surprisingly positive, averaging 73% favorable if neutral and positive reporting are combined.” The positive reporting became more favorable over the time period studied.

Their findings suggest a drop in the importance of GE, with a more favorable and less polarized conversation across the globe.

The salmon distribution system in the United States is complex and varied.

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share of total volume and an increasing share of salmon being sold directly by large fish-farming companies and large wild salmon processors to major retail and food service chains.

Our GE Atlantic salmon is currently being sold into this distribution network with an initial focus on seafood distributors and wholesalers.

This is due to our limited supply of fish, which necessitates our being selective in bringing on new customers.

We expect that once our Ohio farm is in commercial operation, we will be able to expand our customer depth and breadth and increase our channel coverage.

As a commodity food item, the price of Atlantic salmon is variable based on the supply and demand for product weekly.

We base our pricing on a published index by Urner Barry, which provides comprehensive market coverage across all major center-of-the-plate food proteins, taking into account differences for fish size and quality.

Urner Barry publishes an index that provides comprehensive market coverage across all major center-of-the-plate food proteins, taking into account differences for fish size and quality.

The global Atlantic salmon farming industry includes several very large companies with operations in each of the major producing countries.

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It is estimated that these eight companies accounted for approximately 53% of the Atlantic salmon produced in 2022.

Since salmon is primarily sold as a commodity in the United States, we compete against these well-established, sea-cage production companies.

In addition, new entrants to salmon production have emerged that use, or plan to use, land-based RAS facilities.

Atlantic Sapphire is operating a facility in Florida, with stated plans to increase production to over 220 thousand metric tons.

Other entrants include Nordic Aquafarms, with plans for facilities in Maine and California, and Whole Oceans with plans for a farm in Maine.

Current Production

We currently operate two salmon farms:

a refurbished production grow-out farm in Indiana and a broodstock farm on Prince Edward Island, Canada.

However, as noted above, in February 2024, we announced our plan to sell our Indiana farm operations.

Our first harvests of conventional salmon in Indiana commenced in June 2020, and our first harvests of our GE Atlantic salmon commenced in June 2021 at both of our U.S.

and Canadian farms.

During 2022, we transitioned the grow-out operation at the Canadian farm to egg production.

At December 31, 2023, we had a total grow-out production biomass of 412 metric tons.

Impact of Inflation

Recent increases in global inflation rates have impacted all areas of our business.

We are experiencing higher costs for farming supplies, transportation costs, wage rates, and other direct operating expenses.

Additionally, inflation has impacted the total project cost estimate for our Ohio farm, which has increased to a range of $485 million to $495 million.

We expect inflation to continue to negatively impact our results of operations for at least the near-term.

North America Plan

Our business plan contemplates that we will complete the construction of a 10,000 metric ton production grow-out farm in Pioneer, Ohio.

During 2021, we selected Pioneer, Ohio as the site location for our first large-scale commercial farm.

Based on the engineering design that has been completed, we have estimated that the project, which includes a roughly 479,000 square foot facility, land, insurance and other ancillary items will cost between $485 million and $495 million.

Site construction activities are currently paused, as we pursue additional financing, which is expected to include both equity and debt components.

In October 2022, the Board of Directors of the Toledo-Lucas County Port Authority approved the issuance of up to $425 million in municipal bonds for our project, and they continue to support our efforts for the transaction.

The work that we have done to date on the design of the Ohio farm will serve as a template for future farm projects, though we will continue to incorporate the learnings from our current farm operations and our philosophy of continual improvement.

The picture below shows a design rendering of the inside of the farm.

Egg Production

We have scaled-up our egg production capability at our Fortune and Rollo Bay hatcheries on Prince Edward Island and we can now produce over 10 million eyed eggs annually, which is more than our current internal demand.

As there is a shortage of supply of salmon eggs in the market, we have begun to sell our excess conventional (“non-GE”) salmon eggs and fry to other salmon farmers.

We also made the decision to transition the grow-out operation at our Canada farm to egg production in order to increase our egg production capacity over the next three to four years to 30 million eyed eggs annually, which would be sufficient to stock six 10,000 metric ton farms.

International Plans

While our primary focus is on North America, we are also considering international expansion, targeting those markets that are net salmon importers, unable to supply their domestic needs and where we believe we will have success in gaining further regulatory approvals and consumer acceptance.

Once approved in these locations, we may decide to commercialize through a combination of partnerships, joint ventures, and licensing arrangements.

Growth Strategy

Optimizing Technology and Innovating for the Future

We are exploring the potential development of a range of additional products, including a second generation of our GE Atlantic salmon to help ensure 100% sterility, molecular sterility systems to provide an improved means of sterility for farmed fish, and improved methods for generating genetically engineered fish.

Our primary research and development operations are located in our owned hatcheries on Prince Edward Island.

As of December 31, 2023, we employed 37 scientists and technicians to oversee our broodstock, as well as the lines of fish we maintain for research and development purposes.

In addition, we contract some research activities to third parties.

In the future, we may enter into other partnerships and collaboration agreements to advance our research and development efforts.

Vertical and horizontal integration

We may have multiple opportunities to vertically integrate and strategically increase our value-added capabilities within the seafood industry.

These capabilities can be obtained by building and developing in-house, forming partnerships, direct investment or through acquisition.

We could also seek to expand our production capabilities in adjacent markets, including:

 Di versify into additional high value species, such as shrimp, trout, or tuna.

 Evaluate markets for inputs and by-products such as animal feed, fish meal and fish oil.

 Acquire new production technologies, such as cellular aquaculture, in the rapidly growing bio-engineered food market.

Ohio Farm Project

Current Status

We commenced construction on the Ohio Farm Site and began ordering Ohio Equipment Assets (together, the “Ohio Farm Project”) in the first quarter of 2022 and spent roughly $145 million on the project before construction was halted in June 2023, due to increases in costs from inflation and other factors.

At the time of the construction stoppage, roughly 30 percent of the facility had been completed.

Cost to Complete

Preparing cost and timing estimates for complex RAS farms is inherently difficult and subject to change based on a number of factors, including design changes, elevated inflationary pressure on costs of materials and labor, the impact of health epidemics, construction delays, dependence on contractors, the impact of increasing interest rates on financing costs, customer requirements and unexpected complications.

At the time that we halted construction on the Ohio Farm Site, our estimate for the total cost for the Ohio Farm Project, including construction, land, equipment, insurance and ancillary costs was in the range of $485 million to $495 million, substantially above our previous estimates, and significantly higher than what we could finance.

Plan for Completion

We have been working with our investment bank on strategic alternatives for the Ohio Farm Site, including new investment to allow for the completion of the Ohio Farm Project construction.

Alternatives include new equity funding, partnerships or joint ventures.

We believe that funding of roughly $400 million will be required to complete the construction and replace the Ohio Equipment Assets that have been sold.

This figure, however, is based on the current design and expected use of the facility as a salmon grow-out farm.

Depending on the strategic alternative that we follow, the design (smaller or larger production volume) and use of the farm (salmon or other species) could be changed, which could result in a different cost of completion number.

The picture below shows a design rendering of the inside of the Ohio Farm Project once completed.

Human Capital Resources

We believe in the positive impact that a team-based management structure delivers.

We empower our people by placing decision making power at the team level;

driven by those closest to the work.

We provide training opportunities to our teams to continually improve their decision-making skills.

Our recent development initiatives included introduction to lean and continuous improvement, leadership coaching skills, goal setting and coaching performance, creation of detailed work instructions and operations training based upon our standard operating procedures.

We believe such initiatives ensure our team’s alignment with our company’s expectations, and when coupled with our confidence in our people’s abilities, our team is positioned to succeed.

As of December 31, 2023, we had 104 team members, 82 of which were in our farm operations and 6 in research and technical support functions.

As of December 31, 2023, we had 16 corporate team members who provided support to all of our operations and were responsible for the execution of all corporate functions, including executive, operational, finance, information technology, legal, sales and corporate communications.

None of our team members are represented by a labor union, and we consider our employee relations to be good.

We structure our compensation packages to compete for the best talent.

Our compensation packages include a competitive base salary and health and wellness benefits, along with a retirement plan that includes a Company match.

ESG Leadership

We continue to believe Environmental, Social and Governance (“ESG”) concerns are fundamental to our Purpose and Values and serve as a critical foundation as to how we operate our business.

Our focus on ESG has been important in driving continuous improvement, building our culture and has resulted in delivering increased efficiencies and effectiveness throughout our operations.

We believe taking ESG considerations into account in our decision-making process contributes to a disciplined approach to risk management.

Our ESG Committee, comprised of our executive management team with oversight by our Board of Directors, has worked cross functionally to develop our strategy, structure, process and the roadmap for the standards that are relevant to our business.

Environmental

Energy Management

Our current operating farms utilize energy from the grid, but we are acutely aware of the need to diversify into green energy sources for existing facilities, as well as incorporate alternative energy sources for future farming operations.

We are evaluating various alternative energy sources.

Greenhouse Gas Emissions

We are collecting, monitoring, and managing data on a monthly basis that supports our Scope 1 and Scope 2 emission inventory.

Water Management

Fresh water provides critical support for our farming operations.

We draw all the water supply for our farms from aquifers, via the underground wells located at or in the immediate proximity of our Indiana and Prince Edward Island facilities.

We understand that our business is water-intensive and that we share this resource with other members of surrounding communities.

Ensuring ample supply and quality of fresh water in order to comfortably operate our business without disadvantaging local communities is one of the most important factors we use in determining locations for our commercial operations.

Waste Management

Our facilities feature RAS technology, which utilizes fresh, clean water to grow our salmon from hatch to harvest.

Water in the system is continuously recirculated and filtered, at a rate of 95+% per hour, meaning that less than 5% of each cycle is safely discharged back to the environment.

The RAS system features biological filters to remove waste and return fresh water to maintain an optimal growing environment for our salmon.

The resulting wastewater is cleaned before being moved to settling ponds.

Solid waste is separated and removed from the system through the filtering process, and often recycled as fertilizer for local agricultural farmers.

Social Impact

Consumer Welfare:

Antibiotic Use in Animal Production

Unlike wild caught or offshore sea-cage farmed salmon, our fish live in indoor tanks, which are designed to prevent them from escaping and reduce the risk of disease and contaminants.

This allows the fish to be raised without the use of antibiotics and chemicals frequently used in sea-cage operations.

We have developed and implemented Standard Operating Procedures (“SOPs”) that govern the physical containment and every significant fish husbandry activity on our farms.

Human Capital Management

Recruiting, developing, engaging, and protecting our workforce is critical to executing our strategy and achieving business success.

We work to equip our employees with critical skills and expand their contributions over time by providing a range of training and career development opportunities, including hands-on experiences via challenging work assignments and job rotations, coaching and mentoring opportunities, and training programs.

To foster employee engagement and commitment, we follow a robust process to listen to employees, take action, and measure our progress with on-going employee conversations, transparent communications, and employee engagement surveys.

Employee Health, Safety and Advancement

We are committed to maintaining a safe and secure workplace for our employees.

We set specific safety standards to identify and manage critical risks.

We use global safety management systems and employee trainings to ensure consistent implementation of safety protocols and accurate measurement and tracking of incidents.

To provide a safe and secure working environment for our employees, we prohibit workplace discrimination, and we do not tolerate abusive conduct or harassment.

Our attention to the health and safety of our workforce extends to the workers and communities in our supply chain.

We believe that respect for human rights is fundamental to our strategy and to our commitment to ethical business conduct.

Governance and Business Ethics

Our ESG strategy, risk management and reporting is overseen by our ESG Committee, with advice from external experts.

The Committee is chaired by our President and includes all members of our Executive Leadership Team, including our:

Chief Scientific Officer;

Chief Operating Officer;

General Counsel;

Chief People Officer;

Vice President Facilities & Continuous Improvement;

and Chief Financial Officer.

Our Board of Directors have oversight over our ESG Committee and initiatives.

Diversity and Inclusion

We are making gender, cultural, and racial diversity one of our key priorities for the next 10 years both at the Board of Directors level and within our workforce.

We are focused on adding diverse, creative, talented, and seasoned personnel to our mid and upper management, as well as young, driven, collaborative and environmentally responsible team members to our entry-level positions.

Ethical Innovation in Our Supply Chain

With a goal of receiving the best equipment, feed, and other key inputs into our production process, our global supplier and vendor network spans across many states in the U.S.

and several countries, such as Chile, Norway, Brazil, and Canada.

In selecting suppliers, we perform due diligence including review of sustainability and environmental impact information.

One of the advantages of our land-based farms is that we can locate them close to market consumption, which minimizes transportation costs and therefore, our carbon footprint.

This allows us to minimize our transportation requirement to fulfill local and regional distribution as compared to farmed salmon that is imported into the U.S.

by some of the largest farmed salmon producers (i.e., Chile, Norway, and Canada).

Animal Welfare

We raise salmon in natural, safe, and humane ways at every stage of life, from egg to harvest.

We utilize technology and skilled human oversight to continually monitor and manage water quality and fish health.

Our focus and targets are based on veterinary expertise and counsel, industry standards, and customer expectations for quality.

We use industry-leading technology to help ensure fish are harvested humanely and with the least possible stress.

 Animal Care and Welfare

We constantly monitor welfare conditions, such as:

Fish Transfer, Stunning and Bleeding;

and Usage of Emerging Technologies.

As part of our welfare indicators, we are monitoring:

Skin and Fin Conditions;

Scale Losses;

Mortality Rate;

Reflex Behavior;

Appetite – Hunger – Satiation;

Gill Bleaching;

Sex Maturation;

Eye Damage and Cataracts;

and Jaw Opercula and Spinal Deformities.

 Animal & Feed Sourcing

We do not source animals.

We are a 100% vertically integrated entity, with our own Broodstock and egg production that are used in our farms from hatch to harvest.

At this time, we are not growing our own feed stock or manufacturing feed for our GE salmon.

We purchase all of our feed, which is BAP or GlobalGAP certified, for our operations from third parties.

Feed is a critical input to growing healthy salmon.

We evaluate suppliers that have high product safety and ethical standards, consistent with what we set for ourselves.

We believe in supporting local communities in which we operate.

We strive to create jobs and contribute to the economic development of these communities.

Whenever feasible, we contract with local businesses for the sources of inputs utilized in our farm operations.

United Nations Sustainable Development Goals

Our corporate Purpose and operations are aligned with a number of the United Nations Sustainable Development Goals (“UNSDGs”).

We are committed to pursuing solutions to help end hunger, achieve food security and improve nutrition, while also promoting sustainable land-based aquaculture to provide a resilient and domestic supply of fresh salmon.

We continually transform the aquaculture segment through our research, innovation and genetics-based technology.

Our management makes conscious decisions to locate our farms close to key consumption markets, providing greater access to all consumers including underserved communities.

We work hard to supply populations with high-quality, healthy, affordable and nutritious salmon that is cultivated with the well-being of the planet in mind and provides a much needed relief for our oceans and rivers.

Our plans are to bring our technology and expertise to other countries, including developing regions.

As of March 24, 2025, our total headcount was four, all of whom have corporate roles.

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 1. Business