What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-27 compared with 2024-04-01 · 110 added, 93 removed, 61 unchanged (77% of the section changed)

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Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10‑K, particularly in “Risk Factors.”

We believe that we are a distinctive brand in the field of land-based aquaculture, leveraging decades of technology expertise to deliver innovative solutions that address food insecurity and climate change issues, while improving efficiency and sustainability.

We provide fresh Atlantic salmon to nearby markets by raising our fish in carefully monitored land-based fish farms through a safe, secure and sustainable process.

Our land-based Recirculating Aquaculture System farms, including our grow-out farm located in Indiana in the United States and our broodstock and egg production farm located on Prince Edward Island in Canada, are close to key consumption markets and are designed to prevent disease and to include multiple levels of fish containment to protect wild fish populations.

We are raising nutritious salmon that is free of antibiotics and other contaminants and provides a solution with a reduced carbon footprint without the risk of pollution to marine ecosystems as compared to traditional sea-cage farming.

Our primary 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 commenced commercial activities in 2021 with operations in the United States and Canada.

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.

Company Update

We have 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, we require 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.

Recently elevated global inflation rates continue to impact all areas of our business.

We are experiencing higher costs for farming supplies, transportation costs, wage rates, and other direct operating expenses, as well as for capital expenditures related to the construction of our farm in Ohio.

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

AquaBounty has historically pursued a growth strategy that included the construction of large-scale RAS farms for producing our GE Atlantic salmon.

We had commenced construction of our 10,000 metric ton 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 Indiana Farm in July 2024, recurring sales throughout the year of selected Ohio Equipment Assets originally intended for the Ohio Farm Project, and the sale of our Canadian Farms, and our 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 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 reclassed 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.

Financial Overview

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”.

Product Revenue

We have generated product revenue primarily through the sales of our GE Atlantic salmon, supplemented by sales of conventional Atlantic salmon, salmon eggs, fry, and byproducts.

With the expected sale of our Indiana farm, our product revenues will consist of conventional Atlantic salmon eggs and fry for the near term.

Product Costs

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

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

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 value inventory adjustments, are classified as product costs .

Our product costs also include the labor and related costs to maintain our salmon broodstock.

As of December 31, 2023 and 2022, we had 82 and 70 employees, respectively, engaged in production activities.

With the winding down of our fish rearing operations, we have significantly reduced our headcount and on-going operating costs.

We maintain a small core group of corporate individuals to oversee our strategic options, our asset sale transactions and our books and records.

As of December 31, 2024, we had an accumulated deficit of $370 million and $230 thousand in cash and cash equivalents on our consolidated balance sheet.

With the sale of our Canadian Farms and additional sales of our Ohio Equipment Assets, we have $557 thousand in cash as of March 24, 2025.

We require new funding to provide liquidity for working capital and to fund the completion of our Ohio Farm Project.

Consequently, our ability to continue as a going concern is dependent upon our ability to raise additional capital, and there can be no assurance that such capital will be available in sufficient amounts, on a timely basis, on acceptable terms, or at all.

Sales and Marketing Expenses

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

As of December 31, 2023 and 2022, we had one and two employees, respectively, dedicated to sales and marketing.

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

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

As of December 31, 2024 and 2023, we had zero and one employee, respectively, dedicated to sales and marketing.

We do not expect sales and marketing expenses in the near term.

Research and Development Expenses

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

As of December 31, 2023 and 2022, we employed six and 12 scientists and technicians, respectively, at our farms to oversee the lines of fish we maintain for research and development purposes.

As of December 31, 2024 and 2023, we employed four and six scientists and technicians, respectively, at our farms to oversee the lines of fish we maintain for research and development purposes.

With the sale of our Canadian Farms in March 2025, we no longer have research and development operations.

General and Administrative Expenses

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

We had 15 and 16 employees in our general and administrative group at December 31, 2023 and 2022, respectively.

We had five and 15 employees in our general and administrative group at December 31, 2024 and 2023, respectively.

We expect our general and administrative expenses to decrease substantially as a result of the winding down of our fish rearing activities and the sales of our Indiana Farm and Canadian Farms.

Long-lived Asset Impairment

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

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.

We also recorded an impairment charge of $0.2 million against Corporate IP in conjunction with the sale of our Canadian Farms.

Other Income (Expense), Net

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.

Interest expense includes the interest on our loans and accounts payable for our continuing operations.

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

Loss from Discontinued Operations

Loss from Discontinued Operations includes all operating costs for our Indiana Farms and our Canadian Farms, including fish and egg production costs, sales and marketing, research and development, general and administrative expenses, $27.9 million of non-cash long-lived asset impairment charges recorded in conjunction with the sales of the Indiana Farm and the Canadian Farms, a $1.0 million net realizable value adjustment of inventory for the Indiana Farm, interest expense, banking fees and other charges.

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, fry, fish in process and fish for sale.

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

The estimate of fish biomass contains uncertainty, as we cannot weigh each individual fish until harvest.

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

Historically, our estimate of fish biomass has had a variability of approximately 4%.

We measure inventory at the lower of cost or net realizable value (“NRV”), where NRV is defined as the estimated market price, less the estimated costs of processing, packaging and transportation.

We consider fish that have been harvested and transported from its farm to be fish for sale.

Revenue Recognition

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.

Valuation of Long-Lived Assets

We evaluate long-lived assets to be held and used, which include property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable.

Our decision in 2024 to sell certain Ohio Equipment Assets and the Canadian Farms to provide additional liquidity indicated the carrying amount of all Ohio Farm Project property, plant and equipment may not be recoverable.

We compared future anticipated undiscounted cash flows for the different Ohio Farm Project asset groups to the carrying value of such asset groups, noting that the carrying value of these assets exceeded the cash flows.

Therefore, we proceeded to engage a third-party valuation consultant to assist in the calculation of the fair values of these different asset groups.

Fair value of the Ohio Equipment Assets as of December 31, 2024 was determined based upon our actual experience of similar sales for these assets in 2024 and early 2025.

The fair value of the Ohio Farm Site land and construction in process was primarily determined based on the income approach.

The income approach is a valuation technique in which fair value is based on forecasted future cash flows, discounted at the appropriate rate of return commensurate with the risk, as well as current rates of return for equity and debt capital as of the valuation date.

The forecast used in our estimation of fair value was developed by management based on various established business models, incorporating adjustments to reflect management's planned changes in operations and market considerations.

The discount rate utilizes a risk adjusted weighted average cost of capital.

To assess the reasonableness of the calculated fair value, we compared the ratio of fair value to carrying value prior to the recording of any impairment to the ratio of net realizable values to the carrying value prior to impairment to our transactions involving the Indiana Farm, Canadian Farms and Ohio Equipment Asset sales.

During the year ended December 31, 2024, we recorded $101.9 million of impairment charges from continuing operations to write down the carrying value of long-lived assets.

See additional discussion regarding this impairment in "Notes to the Consolidated Financial Statements - Notes 4 and 6 appearing elsewhere in this Annual Report on Form 10-K.

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.

For a discussion of these items, see “Note 2 – Recently Issued Accounting Standards” of the notes to the consolidated financial statements contained within this Annual Report on Form 10-K.

Results of Operations

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‎ December 31,

Product revenue

Operating expenses:

Product costs

Costs and expenses

Sales and marketing

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General and administrative

Long-lived asset impairment

Operating loss

Total other (expense) income

Product Revenue

Product revenue for the year ended December 31, 2023 consisted of sales of our GE Atlantic salmon and conventional Atlantic salmon eggs, fry and byproducts.

During the current year, we increased the volume of harvests of GE Atlantic salmon from our Indiana farm and completed the transition of our Rollo Bay farm to a broodstock and egg production facility.

Our Indiana farm required extensive repairs to one of its buildings during the fourth quarter of 2022, which impacted the number of fish that could be harvested and sold during the final two months of 2022 and the first two months of 2023.

The decrease in revenue during the year ended December 31, 2023 was primarily due to changes in product mix during the first half of 2023 and decreases in market prices for Atlantic salmon in the second half of 2023.

‎ December 31,

Harvest of GE Atlantic salmon (mt)

Product revenue

GE Atlantic salmon revenue

Non-GE Atlantic salmon revenue

Other revenue

Total product revenue

Product Costs

Product costs for the year ended December 31, 2023 were up from the year ended December 31, 2022, due to production cost increases for labor and other direct costs related to increased production output and inflation.

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

Other expense

Loss from continuing operations

Loss from discontinued operations

Sales and Marketing Expenses

Sales and marketing expenses for the year ended December 31, 2023 were down from the year ended December 31, 2022, primarily due to a decrease in marketing program costs.

Sales and marketing expenses for the year ended December 31, 2024 decreased $459 thousand or 71% from the year ended December 31, 2023, primarily due to decreases in personnel costs, marketing programs, and share-based compensation costs related to the sale of our production grow-out Indiana Farm.

Research and Development Expenses

Research and development expenses for the year ended December 31, 2023 were down from the year ended December 31, 2022, due to the receipt of provincial government grant funds in support of local hiring and a reduction in outside research costs.

Gross research and development expenses for the year ended December 31, 2023, excluding the grant funds, were $816 thousand versus $935 thousand in 2022.

During the current period, research activities continued in key strategic areas of genomics and breeding, gene editing, fish health and operational optimization.

Research and development expenses for the year ended December 31, 2024 decreased $303 thousand or 60% from the year ended December 31, 2023, primarily due to decreases in personnel costs and project spending in our efforts to reduce operating spend.

General and Administrative Expenses

General and administrative expenses for the year ended December 31, 2023 were up from the year ended December 31, 2022, due to increases in legal fees, state excise taxes, personnel, audit fees, consulting fees and share-based compensation charges.

Total Other (Expense) Income

Total other (expense) income for 2023 and 2022 is comprised of interest income, interest on debt, bank charges, and miscellaneous gains and losses on the disposal of assets.

The change in total other (expense) income in the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily due to interest income, which was down considerably in 2023 compared to 2022, due to a reduction in marketable securities.

General and administrative expenses for the year ended December 31, 2024 decreased $3.4 million or 27% from the year ended December 31, 2023, primarily due to decreases in personnel costs, professional service fees, legal costs, state excise tax liabilities, share-based compensation costs, and travel, related to the sale of our production grow-out farm in Indiana, and our efforts to reduce operating spend.

Long-lived Asset Impairment

For the year ended December 31, 2024, we recorded non-cash impairment charges of $101.7 million and $0.2 million against the long-lived assets of the Ohio Farm Project and Corporate IP, respectively.

We determined the impairment charges based on the estimate of potential market value of the asset group compared to the carrying value of those assets.

Other Expense

Other expense for 2024 and 2023 is comprised of interest income, interest on debt, bank charges, and miscellaneous gains and losses on the disposal of assets.

The increase in other expense of $2.1 million in the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to interest expense related to the cost of our bridge loan.

Loss from Discontinued Operations

The loss from discontinued operations for the year ended December 31, 2024 was significantly higher than for the year ended December 31, 2023 as a result of $27.9 million in non-cash asset impairment charges recorded in conjunction with the sales of the Indiana Farm and the Canadian Farms and a $1.0 million net realizable value adjustment of inventory for the Indiana Farm.

The 2024 loss was partly offset by lower Indiana Farm losses, as we owned the farm for only seven months in 2024, as compared to twelve months in 2023.

Liquidity and Capital Resources

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We have incurred losses from operations since our inception in 1991, and, as of December 31, 2024, we had an accumulated deficit of $370 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 2023 and 2022, we received $418 thousand and $476 thousand, respectively, in debt proceeds on an existing loan facility.

In the future, we expect to use both debt and equity issuances to fund our continued operations and growth opportunities.

As of December 31, 2023, we had $9.2 million in cash, cash equivalents, and restricted cash.

We expect to continue to experience significant losses for the foreseeable future, and we will require additional cash to provide liquidity for working capital and to fund the completion of our Ohio Farm Project.

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

During 2024 and 2023, we received $6.9 million and $418 thousand, respectively, in debt proceeds.

During 2024, we sold $10.5 million of assets.

In the future, we expect to use a combination of asset sales and debt issuances to fund our remaining operations.

As of December 31, 2024, we had $230 thousand in cash and cash equivalents.

With the sale of our Canadian Farms and additional sales of our Ohio Equipment Assets, we have $557 thousand in cash as of March 24, 2025.

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

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Cash Flows from Operating Activities

Net cash used in operating activities during the year ended December 31, 2023, was primarily due to our $27.6 million net loss, partially offset by non-cash depreciation and share-based compensation charges of $2.7 million and decreased by working capital sources of $0.6 million.

Spending on operations increased in 2023 due to increases in production activities at our Rollo Bay and Indiana farm sites, increases in headcount and increases in costs for excise taxes, legal fees and professional fees.

The decrease in cash provided by working capital was due primarily to a decrease in inventory and prepaid expenses, partially offset by an increase in accrued expenses.

We expect cash flows from operating activities to remain negative and roughly flat in the near term.

Net cash used in operating activities during the year ended December 31, 2022, was primarily comprised of our $22.2 million net loss, partially offset by non-cash depreciation and share-based compensation charges of $2.6 million and increased by working capital uses of $1.4 million.

Spending on operations increased in 2022 due to increases in production activities at our Rollo Bay and Indiana farm sites, increases in headcount and increases in costs for insurance, taxes, and professional fees.

The increase in cash used for working capital was due primarily to increases in inventory and prepaid expenses, partially offset by an increase in accrued expenses.

Net cash used in operating activities during the year ended December 31, 2024, was primarily due to our $149.2 million net loss, partially offset by non-cash depreciation and share-based compensation charges of $1.2 million, long-lived asset impairment charges of $129.8 million, and working capital sources of $4.3 million.

Spending on both continuing and discontinued operations decreased in the current year, before the recording of non-cash asset impairment charges, due to the sale of the Indiana Farm, and reductions in personnel, marketing programs, outside research projects, professional services, and share-based compensation.

The increase in c ash provided by working capital sources was due to reductions in inventory and other current assets, along with increases in accounts payable and accrued liabilities.

Spending on operations increased in 2023 as compared to 2022 due to increases in production activities at our Rollo Bay and Indiana farm sites, increases in headcount and increases in costs for excise taxes, legal fees and professional fees.

Increase in cash provided by working capital was primarily due to a decrease in inventory and prepaid expenses, partially offset by an increase in accounts payable and accrued expenses.

Cash Flows from Investing Activities

During 2023, we used $65.1 million for construction charges and equipment deposits for our Ohio farm, and $2.2 million and $1.6 million for equipment purchases and deposits for our Indiana and Rollo Bay farms, respectively.

During 2022, we used $65.1 million for construction charges and equipment deposits for our Ohio farm, and $1.4 million and $1.0 million for equipment purchases and deposits for our Indiana and Rollo Bay farms, respectively, and we received $101.8 million on the net sales of marketable securities.

We have paused construction at our Ohio farm, but we expect expenditures on capital projects to increase in future periods once we secure additional funding and resume construction at the site.

For more information, see “ Our current 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 .”

Net cash provided by investing activities was $7.6 million during the year ended December 31, 2024, compared to net cash used in investing activities of $68.9 million during the year ended December 31, 2023.

During 2024, we used $2.9 million for the purchase of property, plant and equipment at our farm sites, and we received $10.5 million from the sale of our Indiana Farm and certain Ohio Equipment Assets.

During 2023, we used $65.1 million for construction charges and equipment deposits for our Ohio Farm Project, and $2.2 million and $1.6 million for equipment purchases and deposits for our Indiana Farm and Canadian Farms, respectively.

Cash Flows from Financing Activities

During 2023, we received approximately $418 thousand in proceeds from new debt, and we repaid $726 thousand of outstanding debt.

During 2022, we received approximately $476 thousand in proceeds from new debt, and we repaid $640 thousand of outstanding debt.

Net cash used in financing activities was $2.7 million during the year ended December 31, 2024, compared to $309 thousand during the year ended December 31, 2023.

During 2024, we received $6.9 million in proceeds from new debt, and we repaid $9.6 million of outstanding debt.

During 2023, we received $418 thousand in proceeds from new debt, and we repaid $726 thousand of outstanding debt.

Future Capital Requirements

Since inception, we have incurred cumulative net losses and negative cash flows from operating activities, and we expect this to continue for the foreseeable future.

As of December 31, 2023, we had $9.2 million of cash, cash equivalents, and restricted cash, a significant portion of which is required to fund our current liabilities and other contractual obligations.

As of December 31, 2024, we had $230 thousand of cash and cash equivalents.

With the sale of our Canadian Farms and additional sales of our Ohio Equipment Assets, we have $557 thousand in cash as of March 24, 2025.

Our ability to continue as a going concern is dependent upon our ability to raise additional capital, and there can be no assurance that such capital will be available in sufficient amounts, on a timely basis, on terms acceptable to us, or at all.

This raises substantial doubt about our ability to continue as a going concern within one year after the date that the accompanying consolidated financial statements are issued.

Until such time, if ever, as we can generate positive cash flows from operating activities, 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, as well as our announced plan to sell our Indiana farm.

In April 2024, we entered into a Loan Agreement with JMB Capital Partners Lending, LLC to fund working capital through a secured term loan of up to $10 million that was scheduled to mature on July 31, 2024 or, if earlier, upon the sale of certain collateral or upon an Event of Default (as defined in the Loan Agreement).

Of the total loan amount, $5 million was advanced in April 2024 and $1.5 million was advanced in July 2024.

The loan bore interest at a rate of 15% on its outstanding principal balance and was subject to a commitment fee equal to 5% and an exit fee equal to 8%.

Of the initial loan advancement, approximately $2.8 million was used to pay the remaining outstanding balance of our term loan with First Farmers Bank & Trust, upon which the $1 million of restricted cash held by us as of December 31, 2023 was no longer deemed to be restricted.

The outstanding loan balance of $6.5 million was repaid on July 26, 2024 from the net proceeds of the Indiana farm sale.

During 2024, we completed the sale of our Indiana Farm, along with certain Ohio Equipment Assets for net proceeds of $9.2 million.

In March 2025, we completed the sale of our Canadian operations for net proceeds of $1.9 million.

We plan to continue to sell available Ohio Equipment Assets to increase our cash liquidity and fund our working capital and the construction of our Ohio Farm Project.

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

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of holders of our common stock will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of our common stock.

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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