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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-03-27 · 70 added, 71 removed, 100 unchanged (59% of the section changed)

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

These efforts resulted in the sale of our Indiana Farm in July 2024, recurring sales throughout the year of selected Ohio Equipment Assets originally intended for the Ohio Farm Project, and the sale of our Canadian Farms, and our Corporate IP in March 2025.

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

These efforts resulted in the sale of our Indiana Farm in July 2024, recurring sales throughout 2024 and 2025 of selected Ohio Equipment Assets originally intended for the Ohio Farm Project, and the sale of our Canadian Farms, and our Corporate IP in March 2025.

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

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

We continue to work with an investment bank to identify the optimal path forward for realizing the potential of this asset, including its possible sale.

Discontinued Operations

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

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

Impairment Charges

As noted above, we sold our Indiana Farm in July 2024, our Canadian Farms in March 2025, and have been selling Ohio Equipment Assets to generate liquidity.

In conjunction with the work that our investment bank has done to help us realize the value of our Ohio Farm Project, we received a non-binding Letter of Interest to purchase our Ohio subsidiary.

Though this offer is currently being considered by the Company, we determined the actions in 2025 that contributed to receiving the non-binding Letter of Interest to be a triggering event for revaluing these assets and we designated the Ohio Farm Project as a discontinued operation, along with the Indiana Farm and the Canadian Farms in our consolidated financial statements for the years ended December 31, 2025 and 2024 in this Form 10-K (see Note 4 to our consolidated financial statements for additional information).

Impairment Charges on Discontinued Operations

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

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

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

We continued to sell Ohio Equipment Assets during the remainder of 2024, and based on these additional transactions, we conducted an impairment analysis at year-end on the remaining Ohio Equipment Assets that were held for sale, along with the Ohio Farm Site.

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

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

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

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

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

The transaction closed in March 2025 and we recorded an impairment charge of $5.4 million based on the net sale price.

During 2025, we continued to sell Ohio Equipment Assets to generate liquidity and at December 31, 2025, we reassessed the value of the Ohio Farm Project.

Based on the potential net sale value of the assets, we recorded an impairment charge of $14.4 million and reclassified the Ohio Farm Project assets as Assets Held for Sale on our consolidated balance sheet.

The table below depicts the impairments charges recorded for our discontinued operations during 2025 and 2024 by asset group totaling $14.4 million and $129.6 million, respectively.

Impairment Charges

Impairment Item

Ohio Equipment Assets

Ohio Farm Site

Canadian Farms

Total Discontinued Operations

Financial Overview

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

With the exit from our fish rearing operations, we have significantly reduced our headcount and on-going operating costs.

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

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

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

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

As of December 31, 2025, we had an accumulated deficit of $388 million and $501 thousand in cash on our consolidated balance sheet.

We require new funding to provide liquidity for working capital and to fund our evolving strategic plan.

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

Sales and Marketing Expenses

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

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

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

Our sales and marketing expenses have historically included agency fees for investor-related activities.

With the sale of our Canadian Farms and the corresponding cessation of our salmon rearing activities in March 2025, we no longer have sales and marketing expenses.

Research and Development Expenses

We recognize research and development expenses as they are incurred.

Our research and development expenses consist primarily of salaries and related overhead expenses for personnel in research and development functions;

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

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

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

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

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

General and Administrative Expenses

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

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

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

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

Long-lived Asset Impairment

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

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

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

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

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

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

We had three and five employees in our general and administrative group at December 31, 2025 and 2024, respectively.

We expect our general and administrative expenses to remain stable until a new strategic direction of the Company is selected.

Asset Impairment

Asset impairment includes the non-cash charges recorded for the sale of our Corporate IP.

Other Income (Expense), Net

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

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

Loan forgiveness relates to the termination of an outstanding loan.

Other income (expense) includes bank charges, fees, and interest income from our continuing operations.

Loss from Discontinued Operations

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

Loss from Discontinued Operations includes all operating costs for our Ohio Farm Project, our Indiana Farm and our Canadian Farms, including fish and egg production costs, sales and marketing, research and development, general and administrative expenses, non-cash long-lived asset impairment charges, a net realizable value adjustment of inventory, interest expense and banking fees.

Critical Accounting Policies and Estimates

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

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

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

Fair value of the Ohio Farm Project as of December 31, 2025 was determined based on information derived from our asset sales activities and the non-binding Letter of Interest we received to purchase our Ohio subsidiary.

This purchase offer is currently being considered by the Company, as part of our deliberations on our strategic shift.

The Ohio Farm Project was classified as a discontinued operation and its assets and liabilities were reclassified as current assets held for sale and current liabilities held for sale, respectively based on the potential sale.

The value recorded in our consolidated financial statements under current assets held for sale is the expected net proceeds from the possible sale of $9.6 million.

During the years ended December 31, 2025 and 2024, we recorded $14.4 million and $129.8 million, respectively of impairment charges to write down the carrying value of long-lived assets.

See additional discussion regarding this impairment in "Note 4 – Discontinued Operations and Assets Held for Sale” of the notes to the consolidated financial statements contained within this Annual Report on Form 10-K.

Recent Accounting Pronouncements

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General and administrative

Long-lived asset impairment

Asset impairment, net

Operating loss

Other expense

Other income (expense)

Loss from continuing operations

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Sales and Marketing Expenses

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

Sales and marketing expenses for the year ended December 31, 2025 decreased by $185 thousand from the year ended December 31, 2024 due to decreases in personnel costs and program spending related to the sale of our Indiana Farm and Canadian Farms.

We are no longer incurring sales and marketing expenses.

Research and Development Expenses

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

There were no research and development expenses for the year ended December 31, 2025, as we no longer have research and development operations after the sale of our Canadian Farms and the corresponding cessation of our salmon rearing activities.

General and Administrative Expenses

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

Long-lived Asset Impairment

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

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

Other Expense

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

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

General and administrative expenses for the year ended December 31, 2025 decreased $5.0 million from the year ended December 31, 2024, primarily due to reductions in personnel costs, legal fees, state excise tax liabilities, share-based compensation costs, professional fees, audit fees, and travel, partly offset by legal settlement expenses.

Asset Impairment

There were no asset impairment charges for continuing operations for the year ended December 31, 2025.

For the year ended December 31, 2024, we recorded a non-cash impairment charge of $191 thousand against Corporate IP.

Other Income (Expense)

Other expense for 2025 and 2024 is comprised of interest income, interest on debt, and bank charges.

Other income for 2025 is related to the forgiveness of an outstanding loan.

Loss from Discontinued Operations

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

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

The loss from discontinued operations for the year ended December 31, 2025 was significantly lower than for the year ended December 31, 2024, as the Indiana Farm and the Canadian Farms were sold in July 2024 and March 2025, respectively.

The loss in 2025 is primarily due to a non-cash asset impairment charge of $14.4 million recorded against the Ohio Farm Project in conjunction with its potential sale.

Liquidity and Capital Resources

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We have incurred losses from operations since our inception in 1991, and, as of December 31, 2025, we had an accumulated deficit of $388 million.

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

We expect to continue to experience significant losses for the foreseeable future, and we will require additional cash to provide liquidity for working capital and to fund our evolving strategic plan.

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

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

During 2024, we sold $10.5 million of assets.

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

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

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

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

During 2025 and 2024, we received $3.3 million and $6.9 million, respectively, in debt proceeds.

During 2025 and 2024, we sold $7.1 million and $10.5 million, respectively of assets.

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

As of December 31, 2025, we had $501 thousand in cash balances.

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

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

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Cash Flows from Operating Activities

Net cash used in operating activities during the year ended December 31, 2025, was primarily due to our $18.5 million net loss, offset by non-cash share-based compensation charges of $71 thousand and long-lived asset impairment charges of $14.4 million, and increased by loan forgiveness and other non-cash gains of $2.4 million and working capital uses of $2.4 million.

Spending on both continuing and discontinued operations decreased in the current year, due to the sales of the Indiana Farm and the Canadian Farms, and the associated reductions in personnel, marketing programs, outside research projects, professional services, and share-based compensation.

The decrease in c ash related to working capital uses was primarily due to reductions in accounts payable and accrued liabilities and increases in prepaid and other assets.

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

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

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

Net cash used in operating activities during the year ended December 31, 2023, was primarily due to our $27.6 million net loss, partially offset by non-cash depreciation and share-based compensation charges of $2.7 million and working capital sources of $604 thousand.

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

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

Spending on both continuing and discontinued operations decreased in 2024 as compared to 2023, before the recording of non-cash impairment charges, due to the sale of the Indiana Farm, and reductions in personnel, marketing programs, outside research projects, professional services, and share-based compensation.

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

Cash Flows from Investing Activities

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

Net cash provided by investing activities was $7.1 million during the year ended December 31, 2025, compared to $7.6 million during the year ended December 31, 2024.

During 2025, we received $7.1 million from the sale of our Canadian Farms and certain Ohio Equipment Assets.

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

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

Cash Flows from Financing Activities

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

Net cash provided by financing activities was $1.9 million during the year ended December 31, 2025, compared to net cash used in financing activities of $2.7 million during the year ended December 31, 2024.

During 2025, we received $3.3 million in proceeds from new debt, and we repaid $1.4 million of outstanding debt.

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

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

Future Capital Requirements

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

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

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

As of December 31, 2025, we had $501 thousand in cash balances.

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

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

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

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

During 2025, we completed multiple sales of certain Ohio Equipment Assets for cumulative gross proceeds of $5.0 million and we completed the sale of our Canadian Farms for gross proceeds of $2.1 million.

In October 2025, we completed an issuance of senior notes for net proceeds of $3.3 million.

We plan to continue to sell assets, or to issue equity or debt securities to increase our cash liquidity and fund our evolving strategic plan.

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

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

What changed 10-K

Item 7. Management’s Discussion and Analysis