What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-27 compared with 2024-04-01 · 272 added, 279 removed, 521 unchanged (51% of the section changed)

3 unchanged sentences

(1) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

As of December 31, 2023 (the “Evaluation Date”), our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

As of December 31, 2024 (the “Evaluation Date”), our management, with the participation of our Interim Chief Executive Officer, who is also our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our Chief Executive Officer and Chief Financial Officer have concluded based upon the evaluation described above that, as of the Evaluation Date, our disclosure controls and procedures were effective at the reasonable assurance level.

Our Interim Chief Executive Officer has concluded based upon the evaluation described above that, as of the Evaluation Date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our Company.

Internal control over financial reporting is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, as a process designed by, or under the supervision of, our Chief Executive and Chief Financial Officers and effected by our Board of Directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Internal control over financial reporting is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, as a process designed by, or under the supervision of, our Interim Chief Executive Officer and effected by our Board of Directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of our assets;

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Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023.

Our management, including our Interim Chief Executive Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024.

In conducting this evaluation, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013).

Based upon this evaluation and those criteria, management believes that, as of December 31, 2023, our internal control over financial reporting were effective.

Based upon this evaluation and those criteria, management believes that, as of December 31, 2024, our internal control over financial reporting was effective.

This Annual Report on Form 10‑K does not include an auditor’s attestation of management’s assessment of internal control over financial reporting as of December 31, 2024, as we are not an “accelerated filer” under SEC rules.

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The information required by this Item is set forth in our 2025 Proxy Statement to be filed with the SEC within 120 days of December 31, 2024, and is incorporated by reference into this Annual Report on Form 10‑K.

We have adopted an Insider Trading Policy, that governs the purchase, sale and/or other dispositions of our securities by directors, officers and employees that is reasonably designed to promote compliance with insider trading laws, rules and regulations and NASDAQ listing standards.

A copy of our Insider Trading Policy is filed as exhibit 19.1 to this Annual Report of Form 10-K.

Executive Compensation

39 unchanged sentences

(incorporated by reference to Exhibit 4.3 to the Registration’s Annual Report on Form 10-K, filed on March 10, 2020).

Stock Purchase Agreement, by and between AquaBounty Technologies, Inc.

and Intrexon Corporation, dated November 7, 2016 (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).

AquaBounty Technologies, Inc.

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2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.21 to the Registrant’s Registration Statement on Form 10, filed on December 12, 2016).

Form of Warrant Exercise Agreement, by and between AquaBounty Technologies, Inc.

and certain holders of its Common Stock Purchase Warrants, dated October 24, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on October 25, 2018).

Agreement, by and among Atlantic Canada Opportunities Agency and AQUA Bounty Canada Inc.

and AquaBounty Technologies Inc., dated December 16, 2009 (incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).

Offer Letter, dated as of July 10, 2018, from Prince Edward Island Century 2000 Fund Inc.

to AQUA Bounty Canada Inc.

and accepted by AQUA Bounty Canada Inc.

and AquaBounty Technologies, Inc.

on August 20, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 2, 2018).

Negotiable Promissory Note, dated as of October 16, 2018, issued by AQUA Bounty Canada Inc.

in favor of Prince Edward Island Century 2000 Fund Inc.

(incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 2, 2018).

Collateral Mortgage dated as of July 26, 2016, by and between AQUA Bounty Canada Inc.

and Prince Edward Island Century 2000 Fund Inc.

(incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 2, 2018).

Collateral Mortgage, dated as of October 9, 2018, by and between AQUA Bounty Canada Inc.

and Prince Edward Island Century 2000 Fund Inc.

(incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 2, 2018).

General Security Agreement, dated as of July 26, 2016, by and between AQUA Bounty Canada Inc.

and Prince Edward Island Century 2000 Fund Inc.

(incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 2, 2018).

Guarantee, dated as of October 9, 2018, made by AquaBounty Technologies, Inc.

in favor of Prince Edward Island Century 2000 Fund Inc.

(incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 2, 2018).

Executive Employment Agreement, by and between Sylvia Wulf and AquaBounty Technologies, Inc., dated November 27, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on November 28, 2018).

Employment Agreement, by and between David Frank and AquaBounty Technologies, Inc., dated October 1, 2007 (incorporated by reference to Exhibit 10.16 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).

Employment Agreement, by and between Alejandro Rojas and AquaBounty Technologies, Inc., dated December 30, 2013 (incorporated by reference to Exhibit 10.17 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).

Intellectual Property License and Full and Final Release among Genesis Group Inc., HSC Research and Development Partnership and AquaBounty Technologies, Inc., dated February 28, 2014 (incorporated by reference to Exhibit 10.19 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).

Asset Purchase Agreement by and between AquaBounty Technologies, Inc.

and Bell Fish Company LLC, dated as of June 9, 2017 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed on August 4, 2017).

Loan and Security Agreement by and between AquaBounty Farms Indiana LLC and First Farmers Bank and Trust, dated as of July 31, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, filed on August 6, 2020).

Term Note granted by AquaBounty Farms Indiana LLC in favor of First Farmers Bank and Trust, dated as of July 31, 2020 (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q, filed on August 6, 2020).

Mortgage, Assignment of Rents and Leases, Security Agreement, Fixture Filing and Financing Statement granted by AquaBounty Technologies, Inc.

in favor of First Farmers Bank and Trust, dated as of July 31, 2020 (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q, filed on August 6, 2020).

Guarantor Security Agreement by and between AquaBounty Technologies, Inc.

and First Farmers Bank and Trust, dated as of July 31, 2020 (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q, filed on August 6, 2020).

Unconditional and Continuing Secured Guaranty Agreement by and between AquaBounty Technologies, Inc.

and First Farmers Bank and Trust, dated as of July 31, 2020 (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q, filed on August 6, 2020).

Collateral Access Agreement by and between AquaBounty Technologies, Inc.

and First Farmers Bank and Trust, dated as of July 31, 2020 (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q, filed on August 6, 2020).

Unconditional and Continuing Guaranty Agreement by and between AquaBounty Farms, Inc.

and First Farmers Bank and Trust, dated as of July 31, 2020 (incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q, filed on August 6, 2020).

Environmental Indemnity Agreement by and among AquaBounty Technologies, Inc., AquaBounty Farms Indiana LLC and First Farmers Bank and Trust, dated as of July 31, 2020 (incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q, filed on August 6, 2020).

Letter Agreement between AquaBounty Technologies, Inc.

and Third Security And its affiliates dated July 30, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 4, 2021).

Agreement For Architectural/Engineering Services between AquaBounty Farms Ohio LLC and Clark, Richardson and Biskup Consulting Engineers, Inc.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on March 3, 2023).

Amended and Restated Employment Agreement, by and between David Frank and AquaBounty Technologies, Inc., dated March 29, 2023 (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, filed on May 4, 2023).

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Agreement For Construction Management Services Between AquaBounty Farms Ohio LLC and Gilbane Building Company (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on June 30, 2023).

Loan and Security Agreement, dated as of April 18, 2024, by and among AquaBounty Technologies, Inc., AquaBounty Farms, Inc., AquaBounty Farms Indiana, AquaBounty Farms Ohio and JMB Capital Partner Lenders LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on April 19, 2024).

Asset Purchase Agreement, dated as of June 28, 2024, by and among AquaBounty Farms Ohio LLC, AquaBounty Farms Indiana LLC, and Superior Fresh LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on July 2, 2024).

Insider Trading Policy

List of Subsidiaries of AquaBounty Technologies, Inc.

3 unchanged sentences

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Compensation Recovery Policy, Adopted November 1, 2023

Compensation Recovery Policy, Adopted November 1, 2023(incorporated by reference to Exhibit 97.1 to the

Registrant’s Annual Report on Form 10-K, filed on April 1, 2024).

Inline XBRL instance document-the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

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AQUABOUNTY TECHNOLOGIES, INC.

/s/ Sylvia A.

Chief Executive Officer and Board Chair

Interim Chief Executive Officer, Chief Financial Officer and Treasurer

Power of Attorney

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/s/ Sylvia A.

Chief Executive Officer and Board Chair (Principal Executive Officer)

April 1, 2024

Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

April 1, 2024

March 27, 2025

Interim Chief Executive Officer, Chief Financial Officer and Treasurer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

March 27, 2025

/s/ Ricardo Alvarez

Lead Independent Director

April 1, 2024

March 27, 2025

Ricardo Alvarez

/s/ Erin Sharp

April 1, 2024

March 27, 2025

/s/ Gail Sharps Myers

April 1, 2024

March 27, 2025

Gail Sharps Myers

/s/ Christine St.Clare

April 1, 2024

March 27, 2025

Christine St.Clare

/s/ Rick Sterling

April 1, 2024

March 27, 2025

Rick Sterling

/s/ Michael Stern

April 1, 2024

March 27, 2025

Michael Stern

Report of Independent Registered Public Accounting Firm

RE PORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of AquaBounty Technologies, Inc.

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The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has incurred cumulative operating losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has incurred cumulative net losses that raise substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter, in any way, our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

Inventory – Fish in Process – Refer to Notes 2 and 4 to the financial statements

Impairment of Long-Lived Assets – Refer to Notes 2 and 6 to the financial statements

Critical Audit Matter Description

Fish in process inventory is measured at the lower of cost or net realizable value, where net realizable value is defined as the estimated market price, less the estimated cost of processing, packaging and transportation.

The Company’s determination of net realizable value of fish in process inventory requires management to make various estimates and assumptions related to the estimated biomass of fish,

as well as the expected harvest yields, market price of biomass and costs of processing, packaging and transportation.

Changes in these assumptions could have a significant impact on the net realizable value of fish in process inventory.

Given the determination of net realizable value requires management to make significant estimates and assumptions relating to expected harvest yields, market price and future costs, performing audit procedures to evaluate the reasonableness of such estimates and assumptions required a high degree of auditor judgment and an increased extent of effort.

The Company reviews the carrying value of its long-lived assets when facts and circumstances suggest that they may be impaired.

The carrying values of such assets are considered impaired when the estimated undiscounted cash flow from such assets are less than their carrying values.

An impairment loss is recognized in the amount of the difference between the carrying amount and the fair value of such assets.

In December 2024, the Company executed a letter of intent with a third party to sell its Canadian operations, which was completed in March 2025.

This transaction ceased the Company’s current fish rearing operations and caused the Company to evaluate the Ohio farm site construction in process for impairment, resulting in a non-cash impairment charge of $57.3 million for the year ended December 31, 2024.

We identified the fair value measurement of the Ohio farm site construction in process as a critical audit matter because of the significant estimates and assumptions made by management including those related to the discount rate and capitalization rates.

This required a high degree of auditor judgment and subjectivity, including the need to involve fair value specialists, to evaluate the reasonableness of management’s estimates and assumptions related to future cash flows and selection of the discount rate.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to fish in process inventory included the following, among others:

 We tested the design and implementation of the Company's inventory controls, including the review of the net realizable value estimate and assumptions and compilation of inventory biomass.

 We evaluated management's method for determining the net realizable value of fish in process inventory.

 We observed and tested the Company’s physical inventory inspection, fish counting and fish weighing processes.

 We tested the completeness and accuracy of management's estimates and assumptions within the net realizable value calculation by comparing expected:

o Processing, packaging and transportation costs to historical amounts.

o Market price to historical sales prices and market benchmarks.

o Yield to the Company's historical results and industry peer data.

 We tested the changes in fish in process biomass from a physical observation date to December 31, 2023.

Our audit procedures related to the fair value of the Ohio farm site construction in process included the following, among others:

• Obtained an understanding of the design of controls associated with management’s process for recording impairment charges.

• Tested for the appropriate application of accounting guidance related to the impairment of long-lived assets, including judgments made by management related to the asset group subject to impairment.

• Evaluated the reasonableness of the methodology used by management and the assumptions used in the estimation of future cash flows.

• Verified the impairment calculations were mathematically accurate.

• Developed an independent estimate of the fair value of the Ohio farm site construction in process.

• Evaluated the Company’s disclosures related to the impairment of long-lived assets to assess their conformity with the applicable accounting standards.

• With the assistance of our fair value specialists, we evaluated the fair value of the impaired assets.

/s/ Deloitte & Touche LLP

Baltimore, Maryland

April 1, 2024

March 27, 2025

We have served as the Company's auditor since 2021.

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Prepaid expenses and other current assets

Current assets held for sale

Total current assets

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Restricted cash

Non-current assets held for sale

Liabilities and stockholders' equity

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Other current liabilities

Current liabilities held for sale

Total current liabilities

Long-term lease obligations

Non-current liabilities held for sale

Long-term debt, net

Total liabilities

Commitments and contingencies

Commitments and contingencies (Note 10)

Stockholders' equity:

Common stock, $ 0.001 par value, 75,000,000 and 150,000,000 shares authorized at

December 31, 2023 and 2022, respectively;

3,847,022 and 3,834,383 shares

outstanding at December 31, 2023 and 2022, respectively

Common stock, $ 0.001 par value, 75,000,000 shares authorized;

3,865,778 and 3,847,022 shares outstanding at December 31, 2024 and

2023, respectively

Additional paid-in capital

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‎ December 31,

Product revenues

Costs and expenses

Product costs

Sales and marketing

1 unchanged sentence

General and administrative

Long-lived asset impairment

Total costs and expenses

Operating loss

( 27,316,599 )

( 22,323,538 )

Other (expense) income

Other expense

Interest expense

Other income, net

Total other (expense) income

( 2,285,017 )

Other (expense) income, net

Total other expense

( 2,313,819 )

Other comprehensive income (loss):

Foreign currency gain (loss)

Unrealized gains on marketable securities

Total other comprehensive income (loss)

Loss from continuing operations

Loss from discontinued operations

Other comprehensive (loss) income

Foreign currency (loss) gain

Comprehensive loss

( 27,446,590 )

( 22,418,382 )

Basic and diluted net loss per share

from continuing operations

from discontinued operations

Total basic and diluted net loss per share

Weighted average number of common shares -

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( 27,557,901 )

Other comprehensive loss

Exercise of options

Other comprehensive income

Share-based compensation

1 unchanged sentence

( 220,579,878 )

Balance at December 31, 2023

( 220,579,878 )

( 149,192,660 )

Other comprehensive income

( 149,192,660 )

Other comprehensive loss

Share-based compensation

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Share-based compensation

Other non-cash charge

Long-lived asset impairment

Other non-cash items

Changes in operating assets and liabilities:

( 1,027,650 )

Prepaid expenses and other assets

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( 68,889,540 )

Maturities of marketable securities

Purchases of marketable securities

( 47,621,291 )

Proceeds from asset sales

Other investing activities

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

( 68,892,803 )

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Repayment of term debt

Proceeds from the exercise of stock options and warrants

( 9,598,544 )

Net cash used in financing activities

( 2,663,712 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash

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( 8,973,507 )

( 93,434,688 )

Cash, cash equivalents and restricted cash at beginning of period

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Supplemental disclosure of cash flow information and non-cash transactions:

Interest paid in cash

Interest paid in cash from continuing operations

Interest paid in cash from discontinued operations

Property and equipment included in accounts payable and accrued liabilities

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(the “Parent” and, together with its wholly owned subsidiaries, the “Company”) 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, the Parent obtained the exclusive licensing rights for a gene construct (transgene) used to create a breed of farm‑raised Atlantic salmon that exhibit growth rates that are substantially faster than conventional salmon.

In 2015, the Parent obtained regulatory approval from the U.S.

Food and Drug Administration for the production and sale of its genetically engineered AquAdvantage salmon product (“GE Atlantic salmon”) in the United States, and in 2016, the Parent obtained regulatory approval from Health Canada for the production and sale of its GE Atlantic salmon in Canada.

In 2021, the Parent obtained regulatory approval from the National Biosafety Technical Commission for the sale of its GE Atlantic salmon in Brazil.

In 2021, the Company began harvesting and selling its GE Atlantic salmon in the United States and Canada.

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

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

The Company had commenced construction of its 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 its ability to pursue municipal bond financing, which was a necessary component of its funding strategy.

The Company subsequently engaged an investment bank to pursue a range of funding and strategic alternatives and to assist management in the prioritization of the Company’s core assets.

These efforts resulted in the sale of the Company’s Indiana Farm in July 2024, recurring sales throughout the year of selected Ohio Equipment Assets, and the sale of the Company’s Canadian Farms and its Corporate IP in March 2025.

During 2024, the Company also focused on cost containment to preserve and extend its available cash.

After completion of these transactions, the Company’s primary remaining asset is its investment in the Ohio Farm Project, consisting of the remaining Ohio Equipment Assets and the Ohio Farm Site.

The Company continues to work with its investment bank to identify the optimal path forward for realizing the potential of this asset, either through new investment, partnership or other strategic options.

Going Concern Uncertainty

Since inception, the Company has incurred cumulative net losses of $ 370 million and expects that this will continue for the foreseeable future.

As of December 31, 2024, the Company had $ 230 thousand in cash and cash equivalents on its consolidated balance sheet.

The Company’s ability to continue as a going concern is dependent upon its ability to raise additional capital, including its ability to sell assets to generate liquidity to fund ongoing operations, and there can be no assurance that such capital will be available in sufficient amounts, on a timely basis, or on terms acceptable to the Company, or at all.

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

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of this uncertainty.

During the year ended December 31, 2024, the Company’s management conducted a comprehensive process to explore and evaluate strategic alternatives to raise funds with the goal of maximizing stockholder value.

Potential alternatives that were evaluated included, but were not limited to, equity or debt financing, a merger, and the sale of all or part of the Company.

Basis of presentation

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All share and per share information, as well as other related information on equity instruments in the consolidated financial statements and accompanying notes, have been adjusted to reflect this change.

Going Concern Uncertainty

Since inception, the Company has incurred cumulative net losses and negative cash flows from operations and expects that this will continue for the foreseeable future.

As of December 31, 2023, the Company has $ 9.2 million in cash and cash equivalents, and restricted cash.

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

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

Until such time as the Company reaches profitability, it will require additional financing to fund its operations and execute its business plan.

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2024 and 2023

Summary of significant accounting policies

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Comprehensive loss consists of net loss and other comprehensive income (loss).

Other comprehensive income (loss) includes foreign currency translation adjustments and unrealized gains (losses) on the Company’s marketable securities.

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2023 and 2022

Other comprehensive income (loss) includes foreign currency translation adjustments.

Foreign currency translation

The functional currency of the Parent is the US Dollar.

The functional currency of the Canadian Subsidiary is the Canadian Dollar (C$), and the functional currency of the US and Brazil Subsidiaries is the US Dollar.

The functional currency of the Parent and U.S.

subsidiaries is the US Dollar.

The functional currency of the Canadian Subsidiary is the Canadian Dollar (C$).

For the Canadian Subsidiary, assets and liabilities are translated at the exchange rates in effect at the balance sheet date, equity accounts are translated at the historical exchange rate, and the income statement accounts are translated at the average rate for each period during the year.

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The carrying amounts reported in the consolidated balance sheets for prepaid expenses and other current assets and accounts payable approximate fair value based on the short-term maturity of these instruments.

All of the Company’s interest-bearing debt is at fixed rates, except for the loan with First Farmer’s Bank and Trust, which has a rate reset in July 2025.

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 and expected harvest yields.

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

The Company measures 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.

The Company considers fish that has been harvested and transported from its farm to be fish for sale.

All of the Company’s interest-bearing debt is at fixed rates.

See Notes 4 and 6 for discussion of Level 3 non-recurring measurements used for long-lived assets.

Intangible assets

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The Company depreciates all asset classes over their estimated useful lives, as follows:

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2024 and 2023

20 - 25 years

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shorter of asset life or lease term

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2023 and 2022

The Company commences depreciation on an asset when it is placed into service.

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The Company leases certain facilities, property, and equipment under noncancelable operating leases.

A determination is made if an arrangement is a lease at its inception, and leases with an initial term of 12 months or less are not recorded on the balance sheet.

A determination is made if an arrangement is a lease at its inception, and leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

For operating leases, expense is recognized on a straight-line basis over the lease term.

Revenue recognition

The Company is comprised of one reporting segment and generates revenue from the sale of its products.

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

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

During the years ended December 31, 2023 and 2022, the Company recognized the following product revenue:

Year Ended December 31, 2022

GE Atlantic salmon

Non-GE Atlantic salmon eggs

Non-GE Atlantic salmon fry

Other revenue

Total Revenue

Year Ended December 31, 2023

GE Atlantic salmon

Non-GE Atlantic salmon eggs

Non-GE Atlantic salmon fry

Other revenue

Total Revenue

During the years ended December 31, 2023 and 2022, the Company had the following customer concentration of revenue:

Years Ended December 31,

Total of all customers

The Company uses the liability method of accounting for income taxes.

Under this method, deferred tax assets and liabilities are recorded for the expected future tax consequences of temporary differences between the financial reporting and income tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2023 and 2022

A valuation allowance is established to reduce net deferred tax assets to the amount expected to be realized.

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Net loss per share

Basic and diluted net loss per share available to common stockholders has been calculated by dividing net loss by the weighted average number of common shares outstanding during the year.

Basic net loss per share is based solely on the number of common shares outstanding during the year.

Fully diluted net loss per share includes the number of shares of common stock issuable upon the exercise of warrants and options with an exercise price less than the fair value of the common stock.

Since the Company is reporting a net loss for all periods presented, all potential common shares are considered anti - dilutive and are excluded from the calculation of diluted net loss per share.

Basic and diluted net loss per share available to common stockholders have been calculated by dividing net loss by the weighted average number of shares of common stock outstanding during the year.

Basic net loss per share is based solely on the number of shares of common stock outstanding during the year.

Fully diluted net loss per share includes the number of shares of common stock issuable upon the exercise of warrants or options with an exercise price less than the fair value of the common stock.

Since the Company is reporting a net loss for all periods presented, all potential shares of common stock are considered anti-dilutive and are excluded from the calculation of diluted net loss per share.

The following potentially dilutive securities have been excluded from the calculation of diluted net loss per share, as their effect is anti-dilutive:

6 unchanged sentences

The fair value of a share - based payment award is estimated on the date of grant using an option pricing model.

The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period in the Company’s consolidated statement of operations.

The value of the portion of the award that is ultimately expected to vest is recognized as an

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2024 and 2023

expense over the requisite service period in the Company’s consolidated statement of operations.

The Company uses the Black - Scholes option pricing model (“Black - Scholes”) as its method of valuation.

1 unchanged sentence

Recently Issued Accounting Standards

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

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No.

2023-07, Segment Reporting (“ASU 2023-07”), which requires that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

The reporting requirements for ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

See the Company’s adoption of these disclosure requirements in Note 12.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, to enhance the transparency of certain expense disclosures.

The update requires disclosure of specific expense categories in the notes to the financial statements at interim and annual reporting periods.

The update requires disaggregated information about certain prescribed expense categories underlying any relevant income statement expense caption.

The amendments in this update are effective for public entities for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

The amendments may be adopted either prospectively or retrospectively.

Early adoption is permitted.

The Company is currently evaluating the impacts of this update and plans to adopt these amendments for annual disclosures in for the year ended December 31, 2027 and interim disclosures in the year ended December 31, 2028 .

Risks and uncertainties

The Company is subject to risks and uncertainties common in the biotechnology and aquaculture industries.

The Company is subject to risks and uncertainties associated with its current operations.

Such risks and uncertainties include, but are not limited to:

(i) results from current and planned product development studies and trials;

(ii) decisions made by the FDA or similar regulatory bodies in other countries with respect to approval and commercial sale of any of the Company’s proposed products;

(iii) the commercial acceptance of any products approved for sale and the Company’s ability to produce, distribute, and sell for a profit any products approved for sale;

(iv) the Company’s ability to obtain the necessary patents and proprietary rights to effectively protect its technologies;

and (v) the outcome of any collaborations or alliances entered into by the Company.

(i) timing of securing additional sources of cash;

(ii) realization of asset values different than those recorded on the Company’s consolidated balance sheet;

and (iii) stockholder approval of any plans made by the Company’s management and board of directors that require stockholder approval.

Concentration of credit risk

Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents, and marketable securities.

This risk is mitigated by the Company’s policy of maintaining all balances with highly rated financial institutions, investing in cash equivalents with maturities of less than 90 days, and investing in marketable securities with maturities of less than 180 days.

Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents.

This risk is mitigated by the Company’s policy of maintaining all balances with highly rated financial institutions and investing in cash equivalents with maturities of less than 90 days.

The Company’s cash balances may at times exceed insurance limitations.

The Company holds cash balances in bank accounts located in Canada to fund its local operations.

These amounts are subject to foreign currency exchange risk, which is minimized by the

These amounts are subject to foreign currency exchange risk, which is minimized by the Company’s policy to limit the balances held in these accounts.

Balances in Canadian bank accounts at December 31, 2024 and 2023 totaled $ 166 thousand and $ 227 thousand, respectively.

AquaBounty Technologies, Inc.

1 unchanged sentence

for the years ended December 31, 2024 and 2023

Company’s policy to limit the balances held in these accounts.

Balances in Canadian bank accounts at December 31, 2023 and 2022 totaled $ 227 thousand and $ 518 thousand, respectively.

Major classifications of inventory are summarized as follows for December 31, 2023 and 2022:

Discontinued Operations and Assets Held for Sale

In July 2024, the Company sold its Indiana Farm for a sale price of $ 9.5 million less transaction expenses of $ 305 thousand, which included certain Ohio Equipment Assets with a carrying value of $ 13.0 million that had been purchased for the Company’s Ohio Farm Project.

In December 2024, the Company announced the winddown of its Canadian fish rearing operations and signed a Letter of Intent with a buyer to purchase the Canadian Farms (see Note 13).

These decisions by the Company represent a strategic shift that will have a major effect on the Company’s operations and financial results.

As a result, the operations of the Indiana Farm and the Canadian Farms have been reclassified as discontinued operations on a retrospective basis for all periods presented.

Accordingly, the assets and liabilities of these operations are separately reported as “assets and liabilities held for sale” as of December 31, 2024 and 2023.

The sale of the Indiana Farm resulted in a $ 22.5 million non-cash impairment charge against long-lived assets and a $ 1.0 million net realizable value adjustment of inventory at the Indiana Farm.

An impairment charge of $ 5.4 million was recorded against the long-lived assets of the Canadian Farms.

The impairments and net realizable value adjustments are reflected in discontinued operations.

Provided below are the major areas of the financial statements that constitute discontinued operations:

December 31, 2024

December 31, 2023

Fish in process

Fish for sale

Current Assets

Prepaid and other current assets

Property, plant and equipment, net

Total current assets

Non-Current Assets

Property, plant and equipment, net

Other non-current assets

Total non-current assets

Current Liabilities

Accounts payable and accrued expenses

Accrued employee compensation

Other current liabilities

Total current liabilities

Non-Current Liabilities

Long-term debt

Total non-current liabilities

Years ended December 31,

Costs and expenses

Product costs

Sales and marketing

Research and development

General and administrative

Long-lived impairment

Operating loss

( 35,341,336 )

( 13,644,954 )

Other (expense) income

Loss from discontinued operations

( 35,439,727 )

( 13,716,974 )

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2024 and 2023

Years ended December 31,

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation and amortization

Long-lived asset impairment

Other non-cash items

Changes in working capital

Cash flows from investing activities

Purchases of and deposits on property, plant and equipment

( 3,799,253 )

Other investing activities

Cash flows from financing activities

Proceeds from issuance of debt

Repayment of term debt

Included in the table above for Assets Held for Sale related to discontinued operations is $ 6.3 million of the Ohio Equipment Assets that are available for sale as of December 31, 2024.

See Note 6 for additional information on these assets.

Prepaid and other current assets

Major classifications of prepaid and current assets are summarized as follows for December 31, 2024 and 2023:

2 unchanged sentences

Prepaid insurance

Prepaid supplies

Prepaid professional services

Deposits and other

Prepaid other

Total prepaid expenses and other current assets

Certain prepaid professional services, consisting of $ 2.1 million in legal expenditures and fees related to a bond financing transaction for the Ohio farm site were expensed during the year ended December 31, 2023, as the transaction was postponed for an undetermined amount of time.

Property, plant and equipment

2 unchanged sentences

December 31, 2023

Building and improvements

Construction in process

Office furniture and equipment

Total property and equipment

Less accumulated depreciation and amortization

( 10,778,294 )

( 8,649,388 )

Property, plant and equipment, net

Depreciation and amortization expense for 2023 and 2022 on property, plant and equipment was $ 2.1 million and $ 2.0 million, respectively.

As of December 31, 2023, construction in process included $ 141.8 million, $ 4.3 million and $ 1.6 million for construction related to the Ohio, Rollo Bay and Indiana farm sites, respectively.

An additional $ 16.7 million has been contractually committed for these farm sites as of December 31, 2023.

The Company’s decision in 2024 to sell certain Ohio Equipment Assets, the Indiana Farm 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.

The Company 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, the Company proceeded to calculate the fair values of these different asset groups, representing a Level 3 fair value measurement.

The Company recorded non-cash impairment charges of $ 101.9 million against continuing operations during 2024, in addition to reclassifying $ 6.3 million of Ohio Equipment Assets to Assets Held for Sale as of December 31, 2024.

As of December 31, 2024, all construction in process related to the Ohio Farm Project and an additional $ 3.8 million remains contractually committed.

AquaBounty Technologies, Inc.

1 unchanged sentence

for the years ended December 31, 2024 and 2023

The current terms and conditions of long-term debt outstanding as of December 31, 2023 and 2022, are as follows:

The current terms and conditions of long-term debt outstanding as of December 31, 2024 and 2023 for continuing operations, are as follows:

December 31, 2024

1 unchanged sentence

ACOA AIF Grant

ACOA term loan #1

ACOA term loan #2

ACOA term loan #3

Kubota Canada Ltd.

DFO term loan

Finance PEI term loan

First Farmers Bank & Trust term loan

4 unchanged sentences

Principal payments due on the long-term debt are as follows:

Atlantic Canada Opportunities Agency (“ACOA”)

ACOA is a Canadian government agency that provides funding to support the development of businesses and promote employment in the Atlantic region of Canada.

ACOA Atlantic Innovation Fund (“AIF”) Grant

In January 2009, the Canadian Subsidiary was awarded an AIF grant from ACOA to provide a contribution towards the funding of a research and development project.

In January 2009, the Canadian Subsidiary was awarded an AIF grant from the Atlantic Canada Opportunities Agency to provide a contribution towards the funding of a research and development project.

Contributions under the grant were made through 2014, and no further funds are available.

Amounts claimed by the Canadian Subsidiary must be repaid in the form of a 10 % royalty on any products that are commercialized out of this research project until the loan is fully repaid.

Revenue from the sale of the Company’s GE Atlantic salmon is not subject to the royalty, and the Company does not expect to commercialize products that would be subject to the royalty in the next five years.

ACOA term loans

In February 2016, the Canadian Subsidiary executed an agreement with ACOA to partially finance the renovations to the Rollo Bay farm site.

All available funding under the agreement was disbursed through May 2017, and no further amounts are available.

The loan is being repaid over a 108 -month term at a zero percent interest rate.

In November 2018, the Canadian Subsidiary executed a second agreement with ACOA to partially finance the renovations to the Rollo Bay site.

All available funding under the agreement was disbursed through March 2019, and no further amounts are available.

The loan is being repaid over a 108 -month term with a zero percent interest rate.

In July 2021, the Canadian Subsidiary entered into a contribution agreement with ACOA under its REGI-Business Scale-up and Productivity program to provide funding assistance for the Rollo Bay farm site, and on August 20, 2021, the Canadian Subsidiary

On October 11, 2024, the Company entered into a secured promissory note (“Note”) for $ 1.3 million with a vendor for services provided during 2024.

The Note is secured by the assets of the Company’s Ohio Farm Project and is due in full on December 31, 2025 , with two intermediate scheduled payments .

The Note carries no interest, except in the event of a default, in which case any amount due for payment will be assessed accrued interest at 3 % per annum.

At December 31, 2024, the Company was in default on its first scheduled payment (see Note 13).

JMB Capital Partners Lending Bridge Loan

In April 2024, the Parent and certain of its subsidiaries entered into a Loan and Security agreement (“Loan Agreement”) with JMB Capital Partners Lending, LLC (“JMB”) 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 the Company’s term loan with First Farmers Bank & Trust.

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

AquaBounty Technologies, Inc.

1 unchanged sentence

for the years ended December 31, 2024 and 2023

received C$ 250,000 ($ 200,075 ).

All funds received are being repaid over a 36 -month term commencing January 2023 at a zero percent interest rate.

In January 2018, the Canadian Subsidiary financed the purchase of equipment through a loan with Kubota Canada Ltd.

The total amount is being repaid in monthly installments.

The loan is secured by the underlying equipment.

Department of Fisheries and Oceans (“DFO”)

DFO is a department of the government of Canada responsible for safeguarding its waters and managing its fisheries, oceans and freshwater resources.

DFO supports economic growth in the marine and fisheries sectors, and innovation in areas such as aquaculture and biotechnology .

In September 2020, the Canadian Subsidiary entered into a Contribution Agreement with DFO's Atlantic Fisheries Fund, whereby it is eligible to receive up to C$ 1.9 million ($ 1.4 million) to finance new equipment for its Rollo Bay farm (the “DFO Term Loan”).

As of December 31, 2022, the Canadian Subsidiary had borrowed C$ 1.2 million ($ 883 thousand) on the facility, and during 2023, the Canadian Subsidiary borrowed an additional C$ 572 thousand ($ 418 thousand) under the DFO Term Loan.

Borrowings are interest free and monthly repayments commence in August 2024 , with maturity in January 2034 .

The Company recognized interest expense of $ 304 thousand and $ 291 thousand for the years ended December 31, 2023 and 2022, respectively , on its interest-bearing debt.

Finance PEI (“FPEI”)

FPEI is a corporation of the Ministry of Economic Development and Tourism for Prince Edward Island, Canada, and administers business financing programs for the provincial government.

In August 2016, the Canadian Subsidiary obtained a loan from FPEI to partially finance the purchase of the assets of the former Atlantic Sea Smolt plant in Rollo Bay West on Prince Edward Island.

In 2018, the Canadian Subsidiary obtained a new loan from FPEI, which incorporated the existing loan and provided C$ 2.0 million ($ 1.5 million) of additional funds.

All funds have been dispersed and the loan is being repaid over a 147 -month term ending with a balloon payment, which was extended for five additional years to December 2028.

The loan has an interest rate of 6.5 % and is collateralized by a mortgage executed by the Canadian Subsidiary, which conveys a first security interest in all of its current and acquired assets.

The loan is guaranteed by the Parent.

First Farmers Bank & Trust (“FFBT”)

First Farmers Bank & Trust (“FFBT”) Term Loan

On July 31, 2020, the Company’s Indiana Subsidiary obtained a $ 4.0 million loan from First Farmers Bank and Trust.

Net proceeds were $ 3.9 million after deducting $ 90 thousand in loan costs.

The loan bears interest at a rate of 5.375 % for the first five years .

On July 31, 2025, the interest rate resets to the then U.S.

Treasury 5-year maturities rate plus 5 % and remains fixed at that rate through maturity on October 1, 2028 .

The loan bore an interest rate of 5.375 % for the first five years .

The note required interest only payments for the first 13 months, followed by monthly principal and interest payments of approximately $ 57 thousand through maturity.

The Company must comply with certain financial and non-financial covenants and provide certification of compliance quarterly.

The Company was required to comply with certain financial and non-financial covenants and provide certification of compliance quarterly.

During 2022, FFBT removed two of the loan’s negative covenants, and the Company increased its required restrictive cash balance amount from $ 500 thousand to $ 1.0 million.

This amount is reflected as restricted cash on the balance sheet.

At December 31, 2023, the Company was in compliance with its loan covenants.

The loan is also subject to certain prepayment penalties and is secured by the assets of the Indiana subsidiary and a guarantee by the Parent.

The loan was also subject to certain prepayment penalties and was secured by the assets of the Indiana subsidiary and a guarantee by the Parent.

The loan was repaid on April 18, 2024 from the proceeds of the JMB bridge loan.

Stockholders’ equity

2 unchanged sentences

Dividends and distribution of assets of the Company in the event of liquidation are subject to the preferential rights of any outstanding preferred shares.

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2023 and 2022

All outstanding warrants as of December 31, 2022 expired unexercised during the year ended December 31, 2023.

Share-based compensation

16 unchanged sentences

The period over which the unearned share-based compensation is expected to be earned is approximately 1.2 years.

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2024 and 2023

Stock options

5 unchanged sentences

Options issued to employees, members of the Board of Directors, and non-employees generally vest over a period of one year to three years and are exercisable for a term of 10 years from the date of issuance.

There were no stock options granted in 2024.

The weighted average fair value of stock options granted during 2023 was $ 5.02 .

There were no options exercised in 2023 (2022:

The total intrinsic value of options exercised in 2022 was $ 142 .

There were no options exercised in 2024 and 2023.

As of December 31, 2024 and 2023, the total intrinsic value of exercisable and outstanding options was $ 0 .

12 unchanged sentences

$ 200.00 - $ 300.00

The fair values of stock option grants to employees and members of the Board of Directors during 2023 and 2022 were measured on the date of grant using Black-Scholes, with the following weighted average assumptions:

The fair values of stock option grants to employees and members of the Board of Directors during 2023 were measured on the date of grant using Black-Scholes, with the following weighted average assumptions:

Expected volatility

Risk free interest rate

1.71 %- 3.95 %

Expected dividend yield

13 unchanged sentences

Total share-based compensation

The components of loss before income taxes for the years ended December 31, 2023 and 2022 are presented below:

( 23,732,417 )

( 20,673,855 )

The components of loss from continuing operations before income taxes for the years ended December 31, 2024 and 2023 are presented below:

( 113,738,637 )

6 unchanged sentences

for the years ended December 31, 2024 and 2023

We have made no provision for foreign or domestic income taxes on the cumulative unremitted earnings of our foreign subsidiaries.

We intend to permanently reinvest all foreign earnings and have no intention to repatriate foreign earnings for the foreseeable future.

Income taxes computed using the federal statutory income tax rate differs from the Company’s effective tax rate for the years ended December 31, 2023 and 2022 primarily due to the following:

Income taxes computed using the federal statutory income tax rate differ from the Company’s effective tax rate for the years ended December 31, 2024 and 2023 primarily due to the following:

Income tax benefit

3 unchanged sentences

( 6,687,580 )

( 1,031,963 )

Permanent differences

US-Foreign rate differential

( 4,759,245 )

7 unchanged sentences

The Company experienced a change in ownership under these rules during 2012 and revised its calculation of net operating loss carryforwards based on annual limitation rules.

The Company also had foreign research and development loss carryforwards totaling approximately $ 18 million and foreign research and development expense tax credits of approximately $ 3 million as of December 31, 2023, which expire at various times commencing in 2024.

Since the Company has incurred only losses from inception and there is uncertainty related to the ultimate use of the loss carryforwards and tax credits, a valuation allowance has been recognized to offset the Company’s deferred tax assets, and no benefit for income taxes has been recorded.

2 unchanged sentences

The impact defers the tax benefit of R&E expenditures.

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2023 and 2022

Significant components of the Company’s deferred tax assets and liabilities are as follows:

1 unchanged sentence

Net operating loss carryforwards

Foreign research and development tax credit carryforwards

Property and equipment

Total deferred tax assets

3 unchanged sentences

Net deferred tax assets

Deferred tax liabilities:

Property and equipment

( 1,197,261 )

Total deferred tax liabilities

( 1,197,261 )

Net deferred tax liabilities

Commitments and contingencies

3 unchanged sentences

Management believes that final disposition of any such matters existing at December 31, 2024, will not have a material adverse effect on the Company’s financial position or results of operations.

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2024 and 2023

Lease commitments

The table below summarizes the Company’s lease obligations as of December 31, 2023 and 2022:

The table below summarizes the Company’s lease right of use assets and obligations as of December 31, 2024 and 2023:

December 31, 2024

1 unchanged sentence

Operating lease right-of-use assets, net

Right-of-use assets obtained for new lease liabilities

Other current liabilities

Operating lease liabilities

Long-term lease obligations

Total operating lease liabilities

6 unchanged sentences

Weighted average discount rate

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2023 and 2022

Remaining payments under leases are as follows as of December 31, 2023:

Remaining payments under leases:

Total lease payments

6 unchanged sentences

Company contributions made and expensed in operations in connection with the plan during the years ended December 31, 2024 and 2023, amounted to $ 70 thousand and $ 77 thousand, respectively.

The Company also has a Registered Retirement Savings Plan for its Canadian employees.

Company contributions made and expensed in operations in connection with the plan during the years ended December 31, 2023 and 2022, amounted to $ 45 thousand and $ 44 thousand, respectively.

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2024 and 2023

Segment Reporting

The Company adopted ASU 2023-07 effective for the annual period beginning January 1, 2024.

The enhanced segment disclosure requirements were applied retrospectively to all prior periods presented in the financial statements, and prior period disclosures were based on the significant segment expense categories identified and disclosed in the period of adoption.

The financial information presented to and reviewed by the Company’s chief operating decision maker, who is the interim chief executive officer, chief financial officer and treasurer, is not prepared in accordance with GAAP, therefore, certain accounting policies

of the Company’s single operating and reportable segment differ significantly from those described in Note 2 - Summary of Significant Accounting Policies.

The significant difference between how management prepares financial information for internal purposes and GAAP is that internal information is focused on overall cash expenditures.

Management monitors the financial results for internal purposes under a cash expenditure approach rather than GAAP, because management believes such results more closely align to how the business is currently managed with consideration of the Company’s overall focus on liquidity.

Management has identified net cash expenditures as the key performance measure that is used for evaluating the business.

The chief operating decision maker uses this measure on a monthly basis when assessing performance and when making decisions about how to allocate operating resources, such as payments to vendors.

The Company believes that net cash expenditures, which is a non-GAAP measure, is the most directly comparable measure to GAAP.

As such, the required disclosures of reportable segment expenses and segment loss in the tables below are prepared in accordance with the financial information presented to management and reviewed by the Company’s chief operating decision maker on a regular basis.

Canadian operations

Net cash expenditures

Reconciliation of net cash expenditures to

consolidated net loss:

Depreciation and amortization

Share-based compensation

Long-lived asset impairment

Capitalized expenditures

Loan principal payments

Product revenue

Net realizable value adjustments

Working capital changes

Consolidated net loss:

Subsequent events

On February 14, 2024, the Company announced that it had made the decision to sell its Indiana farm as part of its strategy to increase liquidity.

On February 11, 2025, the Company conducted a virtual auction of certain Ohio Equipment Assets.

Gross proceeds from the sale were $ 2.4 million and transaction costs are estimated at $ 146 thousand.

On February 14, 2025, the Atlantic Canada Opportunities Agency terminated the outstanding loan with the Company’s Canadian subsidiary under its AIF Grant in the amount of C$ 2.9 million ($ 2.0 million).

The AIF Grant was awarded in 2009 and provided a

AquaBounty Technologies, Inc.

Notes to the Consolidated Financial Statements

for the years ended December 31, 2024 and 2023

contribution towards the funding of a research and development project.

Repayment was to be based on royalties from the resulting products from the research, however no product from the research was commercialized.

On March 3, 2025, the Company completed the sale of its Canadian subsidiary to Kelly Cove Salmon Ltd.

for C$ 7.7 million ($ 5.3 million), which included the assumption of the Canadian subsidiary’s outstanding debt of C$ 4.6 million ($ 3.2 million).

Net proceeds to the Company after deducting costs and fees was C$ 2.7 million ($ 1.9 million).

On March 18, 2025, the Company received a loan default waiver on its secured Term Note with a vendor.

The Company missed a loan payment in December, 2024, which among other things could have accelerated the due date on the full balance of the loan.

The Company made the loan payment on March 14, 2025 and is in compliance with the terms of the loan as of that date.

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 9A. Controls and Procedures