Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is: (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, 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 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 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;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles;
provide reasonable assurance that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and
provide re asonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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.
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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, 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.
Changes in Internal Control
There have been no changes in our internal control over financial reporting for the three months ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
During the three months ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “ non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Part III
Item 10. Directors, Executive Officers and Corporate Governance
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.
Item 11. Executive Compensation
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.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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.
Item 13. Certain Relationships and Related Transactions, and Director Independence
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.
Item 14. Principal Accountant Fees and Services
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, for Deloitte & Touche LLP (PCAOB ID No. 34 ).
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Part IV
Item 15. Exhibit and Financial Statement Schedules
List of Documents Filed as Part of this Report
1. Consolidated Financial Statements
The following consolidated financial statements are filed herewith in accordance with Item 8 of Part II above:
(i) Report of Independent Registered Public Accounting Firm
(ii) Consolidated Balance Sheets
(iii) Consolidated Statements of Operations and Comprehensive Loss
(iv) Consolidated Statements of Changes in Stockholders’ Equity
(v) Consolidated Statements of Cash Flows
(vi) Notes to Consolidated Financial Statements
2. Schedules
Schedules not listed are omitted because the required information is inapplicable or is presented in the consolidated financial statements.
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3. Exhibits
Exhibit Number
Exhibit Description
3.1*
Third Amended and Restated Certificate of Incorporation of AquaBounty Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).
3.2*
Certificate of Amendment of Third Amended and Restated Certificate of Incorporation of AquaBounty Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on January 6, 2017).
3.3*
Certificate of Amendment of Third Amended and Restated Certificate of Incorporation of AquaBounty Technologies, Inc. (incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form S-1, filed on January 15, 2020).
3.4*
Certificate of Amendment of Third Amended and Restated Certificate of Incorporation of AquaBounty Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on November 19, 2020).
3.5*
Certificate of Amendment of Third Amended and Restated Certificate of Incorporation of AquaBounty Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on May 27, 2022).
3.6*
Certificate of Validation dated October 18, 2022 relating to Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of AquaBounty Technologies, Inc. dated May 27, 2022 (incorporated by reference to Exhibit 3.5 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 8, 2022).
3.7*
Certificate of Amendment of Third Amended and Restated Certificate of Incorporation of AquaBounty Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on October 13, 2023).
3.8*
Amended and Restated Bylaws of AquaBounty Technologies, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).
4.1*
Specimen Certificate of Common Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).
4.2*
Specimen Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1, filed on January 9, 2018).
4.3 *
Description of Registrant’s securities. (incorporated by reference to Exhibit 4.3 to the Registration’s Annual Report on Form 10-K, filed on March 10, 2020).
10.1*†
AquaBounty Technologies, Inc. 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).
10.2*†
Amendment No. 1 to AquaBounty Technologies, Inc. 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).
10.3*†
Form of Stock Option Agreement pursuant to AquaBounty Technologies, Inc. 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).
10.4*†
Form of Restricted Stock Agreement pursuant to AquaBounty Technologies, Inc. 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).
10.5*†
AquaBounty Technologies, Inc. 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form 10, filed on November 7, 2016).
10.6*†
Amendment No. 1 to AquaBounty Technologies, Inc. 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on May 2. 2019).
10.7* †
Amendment No. 2 to AquaBounty Technologies, Inc. 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed on April 29, 2020).
10.8*†
Form of Stock Option Agreement pursuant to AquaBounty Technologies, Inc. 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.22 to the Registrant’s Registration Statement on Form 10, filed on December 12, 2016).
10.9*†
Form of Restricted Stock Purchase Agreement pursuant to AquaBounty Technologies, Inc. 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).
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10.10*†
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).
10.11*
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).
10.12 †
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).
10.13 †
Employment Agreement, by and between Angela Olsen and AquaBounty Technologies, Inc., dated November 1, 2019 (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q, filed on May 4, 2023).
10.14 †
Form of Restricted Stock Unit Agreement pursuant to AquaBounty Technologies, Inc. 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q, filed on May 4, 2023).
10.15 †
Amendment No. 3 to AquaBounty Technologies, Inc. 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on May 26, 2023).
10.16^
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).
10.17#
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).
10.18#
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).
19.1
Insider Trading Policy
21.1
List of Subsidiaries of AquaBounty Technologies, Inc.
23.1
Consent of Deloitte & Touche LLP
31.1
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1
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).
101.INS
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.
101.SCH
Inline XBRL taxonomy extension schema document.
101.CAL
Inline XBRL taxonomy extension calculation linkbase document.
101.DEF
Inline XBRL taxonomy extension definition linkbase document.
101.LAB
Inline XBRL taxonomy label linkbase document.
101.PRE
Inline XBRL taxonomy extension presentation linkbase document.
104
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in exhibit 101).
*Incorporated herein by reference as indicated.
# Schedules, exhibits, and similar supporting attachments or agreements to the Loan and Security Agreement are omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish a supplemental copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.
†Management contract or compensatory plan or arrangement.
^Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request.
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**The certification furnished in Exhibit 32.1 is deemed to be furnished and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certification will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.
The registrant hereby undertakes to file with the Securities and Exchange Commission, upon request, copies of any constituent instruments defining the rights of holders of long-term debt of the registrant or its subsidiaries that have not been filed herewith because the amounts represented thereby are less than 10% of the total assets of the registrant and its subsidiaries on a consolidated basis.
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Item 16. Form 10‑K Summary
Not applicable.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AQUABOUNTY TECHNOLOGIES, INC.
By:
/s/ David A. Frank
David A. Frank
Interim Chief Executive Officer, Chief Financial Officer and Treasurer
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David A. Frank and Angela M. Olsen, as his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendment to this Annual Report on Form 10‑K, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated below.
Signature
Title
Date
/s/ Sylvia A. Wulf
Board Chair
March 27, 2025
Sylvia A. Wulf
/s/ David A. Frank
Interim Chief Executive Officer, Chief Financial Officer and Treasurer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
March 27, 2025
David A. Frank
/s/ Ricardo Alvarez
Lead Independent Director
March 27, 2025
Ricardo Alvarez
/s/ Erin Sharp
Director
March 27, 2025
Erin Sharp
/s/ Gail Sharps Myers
Director
March 27, 2025
Gail Sharps Myers
/s/ Christine St.Clare
Director
March 27, 2025
Christine St.Clare
/s/ Rick Sterling
Director
March 27, 2025
Rick Sterling
/s/ Michael Stern
Director
March 27, 2025
Michael Stern
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RE PORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of AquaBounty Technologies, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AquaBounty Technologies, Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
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 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. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. 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.
Impairment of Long-Lived Assets – Refer to Notes 2 and 6 to the financial statements
Critical Audit Matter Description
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.
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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 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
March 27, 2025
We have served as the Company's auditor since 2021.
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AquaBounty Technologies, Inc.
Consolidated Balance Sheets
As of December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
230,362
$
8,203,869
Prepaid expenses and other current assets
292,018
1,148,730
Current assets held for sale
10,819,909
21,658,597
Total current assets
11,342,289
31,011,196
Property, plant and equipment, net
22,668,000
144,103,468
Right of use assets, net
51,509
77,877
Intangible assets, net
—
204,436
Restricted cash
—
1,000,000
Non-current assets held for sale
—
11,154,451
Total assets
$
34,061,798
$
187,551,428
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities
$
10,104,853
$
12,112,673
Accrued employee compensation
977,088
336,409
Current debt
1,261,039
524,462
Other current liabilities
28,527
26,368
Current liabilities held for sale
3,830,041
1,771,423
Total current liabilities
16,201,548
14,771,335
Long-term lease obligations
22,982
51,509
Non-current liabilities held for sale
—
3,215,513
Long-term debt, net
1,996,558
4,496,353
Total liabilities
18,221,088
22,534,710
Commitments and contingencies (Note 10)
Stockholders' equity:
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
3,866
3,847
Additional paid-in capital
386,297,611
385,998,213
Accumulated other comprehensive loss
( 688,229 )
( 405,464 )
Accumulated deficit
( 369,772,538 )
( 220,579,878 )
Total stockholders' equity
15,840,710
165,016,718
Total liabilities and stockholders' equity
$
34,061,798
$
187,551,428
See accompanying notes to the consolidated financial statements.
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AquaBounty Technologies, Inc.
Consolidated Statements of Operations and Comprehensive Loss
Years ended
December 31,
2024
2023
Costs and expenses
Sales and marketing
$
191,299
$
649,568
Research and development
203,296
506,243
General and administrative
9,129,645
12,515,834
Long-lived asset impairment
101,914,874
—
Total costs and expenses
111,439,114
13,671,645
Operating loss
111,439,114
13,671,645
Other expense
Interest expense
( 2,285,017 )
( 234,954 )
Other (expense) income, net
( 28,802 )
65,672
Total other expense
( 2,313,819 )
( 169,282 )
Loss from continuing operations
113,752,933
13,840,927
Loss from discontinued operations
35,439,727
13,716,974
Net loss
$
149,192,660
$
27,557,901
Other comprehensive (loss) income
Foreign currency (loss) gain
( 282,765 )
111,311
Comprehensive loss
$
149,475,425
$
27,446,590
Basic and diluted net loss per share
from continuing operations
$
( 29.47 )
$
( 3.60 )
from discontinued operations
( 9.18 )
( 3.57 )
Total basic and diluted net loss per share
$
( 38.65 )
$
( 7.17 )
Weighted average number of common shares -
basic and diluted
3,860,454
3,844,239
See accompanying notes to the consolidated financial statements.
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AquaBounty Technologies, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
Common stock issued and outstanding
Par value
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated deficit
Total
Balance at December 31, 2022
3,834,383
$
3,834
$
385,455,961
$
( 516,775 )
$
( 193,021,977 )
$
191,921,043
Net loss
( 27,557,901 )
( 27,557,901 )
Other comprehensive income
111,311
111,311
Share-based compensation
12,639
13
542,252
542,265
Balance at December 31, 2023
3,847,022
$
3,847
$
385,998,213
$
( 405,464 )
$
( 220,579,878 )
$
165,016,718
Balance at December 31, 2023
3,847,022
$
3,847
$
385,998,213
$
( 405,464 )
$
( 220,579,878 )
$
165,016,718
Net loss
( 149,192,660 )
( 149,192,660 )
Other comprehensive loss
( 282,765 )
( 282,765 )
Share-based compensation
18,756
19
299,398
299,417
Balance at December 31, 2024
3,865,778
$
3,866
$
386,297,611
$
( 688,229 )
$
( 369,772,538 )
$
15,840,710
See accompanying notes to the consolidated financial statements.
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AquaBounty Technologies, Inc.
Consolidated Statements of Cash Flows
Years Ended
December 31,
2024
2023
Operating activities
Net loss
$
( 149,192,660 )
$
( 27,557,901 )
Adjustment to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization
904,136
2,158,231
Share-based compensation
299,417
542,265
Long-lived asset impairment
129,826,403
—
Other non-cash items
43,393
16,604
Changes in operating assets and liabilities:
Inventory
1,723,559
546,847
Prepaid expenses and other assets
1,277,535
375,430
Accounts payable and accrued liabilities
614,562
( 50,602 )
Accrued employee compensation
640,679
( 267,119 )
Net cash used in operating activities
( 13,862,976 )
( 24,236,245 )
Investing activities
Purchases of and deposits on property, plant and equipment
( 2,929,908 )
( 68,889,540 )
Proceeds from asset sales
10,493,222
—
Other investing activities
—
( 3,263 )
Net cash provided by (used in) investing activities
7,563,314
( 68,892,803 )
Financing activities
Proceeds from issuance of debt
6,934,832
417,673
Repayment of term debt
( 9,598,544 )
( 726,140 )
Net cash used in financing activities
( 2,663,712 )
( 308,467 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash
( 10,133 )
2,827
Net change in cash, cash equivalents and restricted cash
( 8,973,507 )
( 93,434,688 )
Cash, cash equivalents and restricted cash at beginning of period
9,203,869
102,638,557
Cash, cash equivalents and restricted cash at end of period
$
230,362
$
9,203,869
Reconciliation of cash, cash equivalents and restricted cash reported
in the consolidated balance sheet:
Cash and cash equivalents
$
230,362
$
8,203,869
Restricted cash
—
1,000,000
Total cash, cash equivalents and restricted cash
$
230,362
$
9,203,869
Supplemental disclosure of cash flow information and non-cash transactions:
Interest paid in cash from continuing operations
$
2,157,195
$
220,125
Interest paid in cash from discontinued operations
$
107,260
$
69,013
Property and equipment included in accounts payable and accrued liabilities
$
9,205,819
$
11,670,996
See accompanying notes to the consolidated financial statements.
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Table of Contents
AquaBounty Technologies, Inc.
Notes to the Consolidated Financial Statements
for the years ended December 31, 2024 and 2023
1. Nature of business and organization
Nature of business
AquaBounty Technologies, Inc. (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 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
The consolidated financial statements include the accounts of the Parent and its wholly owned subsidiaries. The entities are collectively referred to herein as the “Company.” All inter-company transactions and balances have been eliminated upon consolidation.
On October 12, 2023, the stockholders of the Company approved a reverse stock split of the Company’s common stock, and the Board of Directors approved a split ratio of 1-for-20 . The reverse stock split was implemented on October 16, 2023. In conjunction with the reverse stock split, the number of shares of common stock authorized for issuance was reduced from 150 million to 75 million. 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.
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Table of Contents
AquaBounty Technologies, Inc.
Notes to the Consolidated Financial Statements
for the years ended December 31, 2024 and 2023
2. Summary of significant accounting policies
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates.
Comprehensive loss
The Company displays comprehensive loss and its components as part of its consolidated financial statements. Comprehensive loss consists of net loss and other comprehensive income (loss). Other comprehensive income (loss) includes foreign currency translation adjustments.
Foreign currency translation
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. Net translation gains or losses are adjusted directly to a separate component of other comprehensive income (loss) within stockholders’ equity.
Cash equivalents
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash equivalents consist primarily of business savings accounts, certificates of deposit and money market accounts.
Fair Value of Financial instruments
The Company groups its financial instruments measured at fair value, if any, in three levels based on the markets in which the instruments are traded and the reliability of the assumptions used to determine fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial instruments with readily available quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgement used in measuring fair value. The three levels of the fair value hierarchy are as follows:
Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets.
Level 2: Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs derived principally from, or that can be corroborated by, observable market data by correlation or other means.
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgement or estimation.
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. See Notes 4 and 6 for discussion of Level 3 non-recurring measurements used for long-lived assets.
Intangible assets
Definite lived intangible assets include patents and licenses. Patent costs consist primarily of legal and filing fees incurred to file patents on proprietary technology developed by the Company. Patent costs are amortized on a straight - line basis over 20 years beginning with the filing date of the applicable patent. License fees are capitalized and expensed over the term of the licensing agreement.
Property, plant and equipment
Property, plant and equipment are recorded at cost. The Company depreciates all asset classes over their estimated useful lives, as follows:
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AquaBounty Technologies, Inc.
Notes to the Consolidated Financial Statements
for the years ended December 31, 2024 and 2023
Building
20 - 25 years
Equipment
5 - 20 years
Office furniture and equipment
3 years
Leasehold improvements
shorter of asset life or lease term
Vehicles
3 years
The Company commences depreciation on an asset when it is placed into service.
Impairment of long-lived assets
The Company reviews the carrying value of its long-lived assets, definite lived intangible assets, and property, plant and equipment when facts and circumstances suggest that they may be impaired. The carrying values of such assets are considered impaired when the estimated undiscounted cash flows from such assets are less than their carrying values. An impairment loss, if any, is recognized in the amount of the difference between the carrying amount and the fair value of such assets.
Leases
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 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.
Income taxes
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 reverse. A valuation allowance is established to reduce net deferred tax assets to the amount expected to be realized. The Company follows accounting guidance regarding the recognition, measurement, presentation and disclosure of uncertain tax positions in the financial statements. Tax positions taken or expected to be taken in the course of preparing the Company’s tax returns are required to be evaluated to determine whether the tax positions are “more likely than not” to be upheld under regulatory review. The resulting tax impact of these tax positions is recognized in the financial statements based on the results of this evaluation. The Company did not recognize any tax liabilities associated with uncertain tax positions, nor has it recognized any interest or penalties related to unrecognized tax positions. The Company is not currently under exam and is no longer subject to federal and state tax examinations by tax authorities for years before 2021.
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:
Years Ended December 31,
Weighted Average Outstanding
2024
2023
Stock options
72,337
61,146
Warrants
-
917
Unvested stock awards
20,147
27,368
Share-based compensation
The Company measures and recognizes all share - based payment awards, including stock options and restricted share units made to employees and directors, based on estimated fair values. 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
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Table of Contents
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. Non - employee share - based compensation is accounted for using Black - Scholes to determine the fair value of warrants or options awarded to non - employees with the fair value of such issuances expensed over the period of service .
Recently Issued Accounting Standards
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 .
3. Risks and uncertainties
The Company is subject to risks and uncertainties associated with its current operations. Such risks and uncertainties include, but are not limited to: (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 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 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.
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Table of Contents
AquaBounty Technologies, Inc.
Notes to the Consolidated Financial Statements
for the years ended December 31, 2024 and 2023
4. 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
Current Assets
Inventory
$
-
$
1,733,603
Prepaid and other current assets
65,030
551,543
Property, plant and equipment, net
10,754,879
19,126,416
Other assets
-
247,035
Total current assets
$
10,819,909
$
21,658,597
Non-Current Assets
Property, plant and equipment, net
-
11,151,498
Other non-current assets
-
2,953
Total non-current assets
$
-
$
11,154,451
Current Liabilities
Accounts payable and accrued expenses
106,590
879,146
Accrued employee compensation
54,583
418,212
Current debt
3,260,005
270,838
Other current liabilities
408,863
203,227
Total current liabilities
$
3,830,041
$
1,771,423
Non-Current Liabilities
Long-term debt
-
3,215,513
Total non-current liabilities
$
-
$
3,215,513
Years ended December 31,
2024
2023
Revenue
$
788,701
$
2,472,659
Costs and expenses
Product costs
7,327,403
15,281,635
Sales and marketing
330
146,363
Research and development
27,015
197,580
General and administrative
863,760
492,035
Long-lived impairment
27,911,529
-
Operating loss
( 35,341,336 )
( 13,644,954 )
Other (expense) income
( 98,391 )
( 72,020 )
Loss from discontinued operations
$
( 35,439,727 )
$
( 13,716,974 )
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Table of Contents
AquaBounty Technologies, Inc.
Notes to the Consolidated Financial Statements
for the years ended December 31, 2024 and 2023
Years ended December 31,
2024
2023
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization
$
887,745
$
2,132,950
Long-lived asset impairment
27,911,529
-
Other non-cash items
3,518
1,775
Changes in working capital
1,731,996
461,830
Cash flows from investing activities
Purchases of and deposits on property, plant and equipment
( 97,837 )
( 3,799,253 )
Other investing activities
-
( 3,263 )
Cash flows from financing activities
Proceeds from issuance of debt
434,832
417,673
Repayment of term debt
( 206,781 )
( 216,883 )
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.
5. Prepaid and other current assets
Major classifications of prepaid and current assets are summarized as follows for December 31, 2024 and 2023:
December 31, 2024
December 31, 2023
Receivables
$
-
$
855,855
Prepaid insurance
203,999
213,208
Prepaid other
88,019
79,667
Total prepaid expenses and other current assets
$
292,018
$
1,148,730
6. Property, plant and equipment
Major classifications of property, plant and equipment are summarized as follows for December 31, 2024 and 2023:
December 31, 2024
December 31, 2023
Land
$
641,345
$
2,261,320
Construction in process
22,026,655
141,832,293
Vehicle
—
13,438
Total property and equipment
$
22,668,000
$
144,107,051
Less accumulated depreciation and amortization
—
( 3,583 )
Property, plant and equipment, net
$
22,668,000
$
144,103,468
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.
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Table of Contents
AquaBounty Technologies, Inc.
Notes to the Consolidated Financial Statements
for the years ended December 31, 2024 and 2023
7. Debt
The current terms and conditions of long-term debt outstanding as of December 31, 2024 and 2023 for continuing operations, are as follows:
Interest
rate
Monthly
repayment
Maturity
date
December 31, 2024
December 31, 2023
ACOA AIF Grant
0 %
Royalties
$
1,996,558
$
2,166,289
Term Note
0 %
—
Dec 2025
1,261,039
—
First Farmers Bank & Trust term loan
5.4 %
—
—
2,891,763
Total debt
$
3,257,597
$
5,058,052
less: debt issuance costs
—
( 37,237 )
less: current portion
( 1,261,039 )
( 524,462 )
Long-term debt, net
$
1,996,558
$
4,496,353
Principal payments due on the long-term debt are as follows:
Total
2025
$
1,261,039
2026
—
2027
—
2028
—
2029
—
Thereafter
1,996,558
Total
$
3,257,597
ACOA Atlantic Innovation Fund (“AIF”) Grant
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 (see Note 13).
Term Note
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.
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Table of Contents
AquaBounty Technologies, Inc.
Notes to the Consolidated Financial Statements
for the years ended December 31, 2024 and 2023
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 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 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. 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.
8. Stockholders’ equity
The Company’s stockholders have authorized 80 million shares of stock, of which 5 million are authorized as preferred stock and 75 million as common stock.
Common stock
The holders of the common stock are entitled to one vote for each share held at all meetings of stockholders. Dividends and distribution of assets of the Company in the event of liquidation are subject to the preferential rights of any outstanding preferred shares.
Share-based compensation
In 2006, the Company established the 2006 Equity Incentive Plan (as amended, the “2006 Plan”). The 2006 Plan provided for the issuance of incentive stock options to employees of the Company and non-qualified stock options and awards of restricted stock to directors, officers, employees, and consultants of the Company. In accordance with its original terms, the 2006 Plan terminated on March 18, 2016. All outstanding awards under the 2006 Plan will continue until their individual termination dates.
In March 2016, the Company’s Board of Directors adopted the AquaBounty Technologies, Inc. 2016 Equity Incentive Plan (as amended, the “2016 Plan”) to replace the 2006 Plan. The 2016 Plan provides for the issuance of incentive stock options, non-qualified stock options, and awards of restricted and direct stock purchases to directors, officers, employees, and consultants of the Company. Total common shares authorized under the 2016 Plan are 215,000 , of which 81,287 shares are reserved for future issuance as of December 31, 2024.
Restricted stock
The Company’s restricted stock activity under the 2016 Plan is summarized as follows:
Shares
Weighted
average grant
date fair value
Unvested at December 31, 2023
34,140
$
11.91
Granted
—
—
Vested
( 18,756 )
13.57
Forfeited
( 2,817 )
13.07
Unvested at December 31, 2024
12,567
$
9.18
During 2024 and 2023, the Company expensed $ 168 thousand and $ 360 thousand, respectively, related to restricted stock awards. At December 31, 2024, the balance of unearned share-based compensation to be expensed in future periods related to the restricted stock awards is $ 34 thousand. The period over which the unearned share-based compensation is expected to be earned is approximately 1.2 years.
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Table of Contents
AquaBounty Technologies, Inc.
Notes to the Consolidated Financial Statements
for the years ended December 31, 2024 and 2023
Stock options
The Company’s option activity under the 2006 Plan and the 2016 Plan is summarized as follows:
Number of
options
Weighted
average
exercise price
Outstanding at December 31, 2023
75,669
$
41.64
Issued
—
—
Exercised
—
—
Forfeited
( 6,456 )
8.36
Expired
( 4,308 )
137.81
Outstanding at December 31, 2024
64,905
$
38.57
Exercisable at December 31, 2024
56,500
$
43.07
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 2024 and 2023. As of December 31, 2024 and 2023, the total intrinsic value of exercisable and outstanding options was $ 0 .
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Table of Contents
AquaBounty Technologies, Inc.
Notes to the Consolidated Financial Statements
for the years ended December 31, 2024 and 2023
The following table summarizes information about options outstanding and exercisable as of December 31, 2024:
Weighted
average exercise
price of outstanding
options
Number of
options
outstanding
Weighted
average remaining
estimated life
(in years)
Number of
options
exercisable
< $ 10.00
26,701
8.5
18,688
$ 20.00 - $ 50.00
33,776
5.0
33,384
$ 100.00 - $ 200.00
2,253
5.3
2,253
$ 200.00 - $ 300.00
2,175
2.3
2,175
64,905
56,500
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:
2023
Expected volatility
86 %
Risk free interest rate
4.01 %
Expected dividend yield
0.0 %
Expected life (in years)
5
The risk-free interest rate is estimated using the Federal Funds interest rate for a period that is commensurate with the expected term of the awards. The expected dividend yield is zero because the Company has never paid a dividend and does not expect to do so for the foreseeable future. The expected life was based on a number of factors including historical experience, vesting provisions, exercise price relative to market price, and expected volatility. The Company believes that all groups of employees demonstrate similar exercise and post-vesting termination behavior and, therefore, does not stratify employees into multiple groups and forfeitures are recognized as they occur. The expected volatility was estimated using the Company’s historical price volatility over a period that is commensurate with the expected term of the awards.
Total share-based compensation on stock-option grants amounted to $ 132 thousand and $ 182 thousand for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the balance of unearned share-based compensation to be expensed in future periods related to unvested share-based awards is $ 49 thousand. The period over which the unearned share-based compensation is expected to be earned is 0.4 years.
Share-based compensation
The following table summarizes share-based compensation costs recognized in the Company’s Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023:
2024
2023
Sales and marketing
-
19,326
General and administrative
299,417
522,939
Total share-based compensation
$
299,417
$
542,265
9. Income taxes
The components of loss from continuing operations before income taxes for the years ended December 31, 2024 and 2023 are presented below:
2024
2023
Domestic
$
( 113,738,637 )
$
( 13,827,567 )
Foreign
( 14,296 )
( 13,360 )
Loss before income taxes
$
( 113,752,933 )
$
( 13,840,927 )
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AquaBounty Technologies, Inc.
Notes to the Consolidated Financial Statements
for the years ended December 31, 2024 and 2023
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:
2024
2023
Income tax benefit
$
( 23,888,116 )
$
( 2,906,595 )
State and provincial income tax
( 6,687,580 )
( 899,637 )
Permanent differences
30,587
39,924
Other, net
( 4,759,245 )
( 554,090 )
$
( 35,304,354 )
$
( 4,320,398 )
Change in valuation allowance
35,304,354
4,320,398
Total income tax
$
-
$
-
As of December 31, 2024, the Company had domestic net operating loss carryforwards of approximately $ 139 million, after consideration of limitations pursuant to section 382, to offset future federal taxable income, which begin to expire in 2033. Of this amount, the Company had domestic net operating loss carryforwards of approximately $ 11 0 million, which can be carried forward indefinitely. The future utilization of certain historic net operating loss and tax credit carryforwards, however, is subject to annual use limitations based on the change in stock ownership rules of Internal Revenue Code Sections 382 and 383. 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. 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.
The IRS released guidance which modified the procedures for taxpayers that incur specified research or experimental (R&E) expenditures to change their method of accounting to comply with the new capitalization and amortization rules provided in Section 174, as revised by the Tax Cuts and Jobs Act. The Section 174 rules require taxpayers to capitalize and amortize specified R&E expenditures over a period of five years (for domestic research) or 15 years (for foreign research), beginning with the midpoint of the taxable year in which the expenses are paid or incurred. The impact defers the tax benefit of R&E expenditures.
Significant components of the Company’s deferred tax assets and liabilities are as follows:
2024
2023
Deferred tax assets:
Net operating loss carryforwards
$
36,702,302
$
29,443,307
Property and equipment
27,363,037
(1,031,300)
Intangibles
2,172,310
2,366,372
R&D costs
837,054
827,227
Other
296,757
461,500
Total deferred tax assets
$
67,371,460
$
32,067,106
Valuation allowance
( 67,371,460 )
( 32,067,106 )
Net deferred tax assets
$
-
$
-
10. Commitments and contingencies
The Company recognizes and discloses commitments when it enters into executed contractual obligations with other parties. The Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.
The Company is subject to legal proceedings and claims arising in the normal course of business. 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.
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Table of Contents
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 right of use assets and obligations as of December 31, 2024 and 2023:
December 31, 2024
December 31, 2023
Operating lease right-of-use assets, net
$
51,509
$
77,877
Other current liabilities
28,527
26,368
Long-term lease obligations
22,982
51,509
Total operating lease liabilities
$
51,509
$
77,877
December 31, 2024
December 31, 2023
Operating lease expense
$
30,573
$
24,826
Short-term lease expense
-
48,968
Lease payments included in operating cash flows
30,573
75,885
Weighted average remaining lease term
1.8 years
2.8 years
Weighted average discount rate
8 %
8 %
Remaining payments under leases are as follows as of December 31, 2023:
Remaining payments under leases:
Year
Amount
2025
$
31,796
2026
21,826
Thereafter
-
Total lease payments
53,622
Less: imputed interest
( 2,113 )
Total operational lease liabilities
$
51,509
11. Retirement plan
The Company has a savings and retirement plan for its US employees that qualifies under Section 401(k) of the Internal Revenue Code. The plan covers substantially all employees and provides for voluntary contributions by participating employees up to the maximum contribution allowed under the Internal Revenue Code. Contributions by the Company can be made, as determined by the Board of Directors, provided the amount does not exceed the maximum permitted by the Internal Revenue Code. 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.
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Table of Contents
AquaBounty Technologies, Inc.
Notes to the Consolidated Financial Statements
for the years ended December 31, 2024 and 2023
12. 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.
December 31,
December 31,
$ thousands
2024
2023
Corporate
$
7,273
$
12,360
Indiana farm
3,340
12,075
Ohio farm
3,112
66,809
Canadian operations
3,869
5,573
Net cash expenditures
$
17,594
$
96,817
Reconciliation of net cash expenditures to
consolidated net loss:
Depreciation and amortization
904
2,158
Share-based compensation
299
542
Long-lived asset impairment
129,826
0
Capitalized expenditures
( 2,930 )
( 68,890 )
Loan principal payments
( 544 )
( 726 )
Product revenue
( 789 )
( 2,473 )
Net realizable value adjustments
1,093
0
Working capital changes
3,738
129
Consolidated net loss:
$
149,193
$
27,558
13. Subsequent events
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
46
Table of Contents
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.
47