AQUABOUNTY TECHNOLOGIES INC 10-K

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 SEC’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure. As of December 31, 2025 (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. 18 Table of Contents 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, 2025. 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, 2025, 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, 2025, 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, 2025, 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, 2025, 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 2026 Proxy Statement to be filed with the SEC within 120 days of December 31, 2025, 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 2026 Proxy Statement to be filed with the SEC within 120 days of December 31, 2025, 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 2026 Proxy Statement to be filed with the SEC within 120 days of December 31, 2025, 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 2026 Proxy Statement to be filed with the SEC within 120 days of December 31, 2025, 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 2026 Proxy Statement to be filed with the SEC within 120 days of December 31, 2025, and is incorporated by reference into this Annual Report on Form 10‑K, for Deloitte & Touche LLP (PCAOB ID No. 34 ). 19 Table of Contents 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. ‎ 20 Table of Contents 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* Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 8-K, filed on February 12, 2026). 4.3 Description of Registrant’s securities. 10.1*† 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). 10.2*† 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). 10.3* † 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). 10.4*† 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). 10.5* † 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). 10.6* † 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). 21 Table of Contents 10.7† Employment Agreement, by and between Alejandro Rojas and AquaBounty Technologies, Inc., dated September 1, 2023 10.8* † 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). 10.9* Placement Agency Agreement between the Company and Univest Securities, LLC. (incorporated by reference to Exhibit 10.2 to the Registrant’s Report on Form 8-K, filed on October 28, 2025). 10.11 AquaBounty Farms Ohio LLC Secured Promissory Note dated June 11, 2025 19.1* Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Registrant’s Annual Report on Form 10-K, filed on March 27, 2025). 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. 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. †Management contract or compensatory plan or arrangement. **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. ‎ 22 Table of Contents 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 31, 2026 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 31, 2026 David A. Frank /s/ Graydon Bensler Director March 31, 2026 Graydon Bensler /s/ Braeden Lichti Director March 31, 2026 Braeden Lichti /s/ Rick Sterling Director March 31, 2026 Rick Sterling 23 Table of Contents 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, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, changes in stockholders' (deficit) 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, 2025 and 2024, 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 limited operating assets and 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 4 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 is less than the carrying value. An impairment loss is recognized in the amount of the difference between the carrying value and the fair value of such assets. 24 Table of Contents In 2025, the Company proceeded with negotiations to sell its Ohio Farm Project and received a non-binding Letter of Interest from a third party. The actions and decisions leading up to the receipt of the non-binding Letter of Interest caused the Company to evaluate the Ohio Farm Project for impairment, resulting in a non-cash impairment charge of $14.4 million for the year ended December 31, 2025. We identified the impairment of the Ohio Farm Project as a critical audit matter due to the significant estimates and assumptions made by management, including those related to costs to prepare the asset for transfer to a third party and complete the sale. This required a high degree of auditor judgment and subjectivity to evaluate the reasonableness of management’s estimates and assumptions related to future cash flow. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the impairment of the Ohio Farm Project 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 costs to prepare the asset for transfer to a third party and complete the sale.  Verified the impairment calculations were mathematically accurate.  Inspected documents distributed between the Company and a third party regarding the intended sale of the Ohio Farm Project and confirmed key terms with a third party.  Evaluated the Company’s disclosures related to the impairment of long-lived assets to assess conformity with the applicable accounting standards. /s/ Deloitte & Touche LLP Baltimore, Maryland March 31, 2026 We have served as the Company's auditor since 2021. ‎ 25 Table of Contents AquaBounty Technologies, Inc. Consolidated Balance Sheets As of December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 501,295 $ 230,362 Prepaid expenses and other current assets 266,862 292,018 Current assets held for sale 9,552,454 10,819,909 Total current assets 10,320,611 11,342,289 Right of use assets, net 22,982 51,509 Non-current assets held for sale — 22,668,000 Total assets $ 10,343,593 $ 34,061,798 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued liabilities $ 337,038 $ 893,034 Accrued employee compensation 912,103 977,088 Current debt — 1,261,039 Other current liabilities 22,982 28,527 Current liabilities held for sale 7,476,254 13,041,860 Total current liabilities 8,748,377 16,201,548 Long-term lease obligations — 22,982 Long-term debt, net 3,486,141 1,996,558 Total liabilities 12,234,518 18,221,088 Commitments and contingencies (Note 9) Stockholders' (deficit) equity: Common stock, $ 0.001 par value, 75,000,000 shares authorized; 3,877,695 and 3,865,778 shares issued and outstanding at December 31, 2025 and 2024, respectively 3,878 3,866 Additional paid-in capital 386,368,222 386,297,611 Accumulated other comprehensive loss — ( 688,229 ) Accumulated deficit ( 388,263,025 ) ( 369,772,538 ) Total stockholders' (deficit) equity ( 1,890,925 ) 15,840,710 Total liabilities and stockholders' (deficit) equity $ 10,343,593 $ 34,061,798 See accompanying notes to the consolidated financial statements. ‎ 26 Table of Contents AquaBounty Technologies, Inc. Consolidated Statements of Operations and Comprehensive Loss Years ended ‎ December 31, 2025 2024 Costs and expenses Sales and marketing $ 6,613 $ 191,299 Research and development — 203,296 General and administrative 4,011,679 9,041,470 Asset impairment, net — 190,732 Total costs and expenses 4,018,292 9,626,797 Operating loss ( 4,018,292 ) ( 9,626,797 ) Other income (expense) Interest expense ( 206,052 ) ( 1,735,303 ) Loan forgiveness 2,008,046 — Other expense, net ( 13,388 ) ( 17,078 ) Total other income (expense) 1,788,606 ( 1,752,381 ) Loss from continuing operations ( 2,229,686 ) ( 11,379,178 ) Loss from discontinued operations ( 16,260,801 ) ( 137,813,482 ) Net loss $ ( 18,490,487 ) $ ( 149,192,660 ) Other comprehensive income (loss) Foreign currency gain (loss) 688,229 ( 282,765 ) Comprehensive loss $ ( 17,802,258 ) $ ( 149,475,425 ) Basic and diluted net loss per share from continuing operations $ ( 0.57 ) $ ( 2.95 ) from discontinued operations ( 4.20 ) ( 35.70 ) Total basic and diluted net loss per share $ ( 4.77 ) $ ( 38.65 ) Weighted average number of common shares - basic and diluted 3,873,797 3,860,454 See accompanying notes to the consolidated financial statements. ‎ 27 Table of Contents AquaBounty Technologies, Inc. Consolidated Statements of Changes in Stockholders’ (Deficit) Equity Common stock issued and outstanding Par value Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total 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 Balance at December 31, 2024 3,865,778 $ 3,866 $ 386,297,611 $ ( 688,229 ) $ ( 369,772,538 ) $ 15,840,710 Net loss ( 18,490,487 ) ( 18,490,487 ) Other comprehensive income 688,229 688,229 Share-based compensation 11,917 12 70,611 70,623 Balance at December 31, 2025 3,877,695 $ 3,878 $ 386,368,222 $ — $ ( 388,263,025 ) $ ( 1,890,925 ) See accompanying notes to the consolidated financial statements. ‎ 28 Table of Contents AquaBounty Technologies, Inc. Consolidated Statements of Cash Flows Years Ended ‎ December 31, 2025 2024 Operating activities Net loss $ ( 18,490,487 ) $ ( 149,192,660 ) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation and amortization — 904,136 Share-based compensation 70,623 299,417 Long-lived asset impairment 14,440,413 129,826,403 Loan forgiveness ( 2,008,046 ) — Other non-cash items ( 374,011 ) 43,393 Changes in operating assets and liabilities: Inventory — 1,723,559 Prepaid expenses and other assets ( 141,612 ) 1,277,535 Accounts payable and accrued liabilities ( 2,171,551 ) 614,562 Accrued employee compensation ( 64,985 ) 640,679 Net cash used in operating activities ( 8,739,656 ) ( 13,862,976 ) Investing activities Purchases of and deposits on property, plant and equipment — ( 2,929,908 ) Proceeds from asset sales 7,129,884 10,493,222 Net cash provided by investing activities 7,129,884 7,563,314 Financing activities Proceeds from issuance of debt 3,280,089 6,934,832 Repayment of term debt ( 1,408,153 ) ( 9,598,544 ) Net cash provided by (used in) financing activities 1,871,936 ( 2,663,712 ) Effect of exchange rate changes on cash and cash equivalents 8,769 ( 10,133 ) Net change in cash and cash equivalents 270,933 ( 8,973,507 ) Cash and cash equivalents at beginning of period 230,362 9,203,869 Cash and cash equivalents at end of period $ 501,295 $ 230,362 Supplemental disclosure of cash flow information and non-cash transactions: Interest paid in cash from continuing operations $ — $ 1,698,066 Interest paid in cash from discontinued operations $ 18,716 $ 566,389 Non-cash conversion of accounts payable to current debt $ 7,386,235 $ — Property and equipment included in accounts payable and accrued liabilities $ — $ 9,205,819 See accompanying notes to the consolidated financial statements. 29 Table of Contents AquaBounty Technologies, Inc. Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024 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 recirculating aquaculture system (“RAS”) farms for producing its genetically engineered Atlantic salmon (“GE Atlantic salmon”). The Company had commenced construction of a 10,000 metric ton farm in Pioneer, Ohio (“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 the Company’s 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 grow-out farm in Indiana (“Indiana Farm”) in July 2024, recurring sales throughout 2024 and 2025 of selected equipment originally intended for the Ohio Farm Project (“Ohio Equipment Assets”), and the sale of the Company’s Canadian subsidiary, including the broodstock farms owned by the Canadian subsidiary in Prince Edward Island, Canada (“Canadian Farms”) and its intellectual property for GE Atlantic salmon, along with trademarks and patents (“Corporate IP”) in March 2025. After completion of these transactions, the Company’s primary remaining asset as of December 31, 2025 is its investment in the Ohio Farm Project, consisting of the remaining Ohio Equipment Assets and the land and construction in process (“Ohio Farm Site”). The Company continues to work with an investment bank to identify the optimal path forward for realizing the potential of this asset. Going Concern Uncertainty Since inception, the Company has incurred cumulative net losses of $ 388 million and expects that this will continue for the foreseeable future. As of December 31, 2025, the Company had $ 501 thousand in cash 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. Limited operating assets, dependency on capital raising activities and cumulative net losses 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, 2025, the Company’s management continued to sell assets to generate cash for working capital, while exploring 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. During 2025, the Company completed multiple sales of certain Ohio Equipment Assets for cumulative gross proceeds of $ 5.0 million and the sale of the Canadian Subsidiary for gross proceeds of $ 2.1 million. On October 28, 2025, the Company completed an issuance of $ 4.0 million in senior notes. The net proceeds of $ 3.3 million were used for working capital and for the payment of certain outstanding liabilities. 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. 30 Table of Contents AquaBounty Technologies, Inc. Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024 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 was the Canadian Dollar (C$). For the Canadian Subsidiary, assets and liabilities were translated at the exchange rates in effect at the balance sheet date, equity accounts were translated at the historical exchange rate, and the income statement accounts were translated at the average rate for each period during the year. Net translation gains or losses were adjusted directly to a separate component of other comprehensive income (loss) within stockholders’ equity. With the sale of the Canadian Subsidiary in March 2025, the Company does not expect to incur foreign translation gains or losses in the future. 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. In March 2025, all of the Company’s intangible assets were sold in conjunction with the sale of the Canadian Subsidiary. 31 Table of Contents AquaBounty Technologies, Inc. Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024 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: 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 no t recognize any tax liabilities associated with uncertain tax positions, no r 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 2022. 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 2025 2024 Stock options 48,896 72,337 Unvested stock awards 3,986 20,147 32 Table of Contents AquaBounty Technologies, Inc. Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024 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 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 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 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 did hold cash balances in bank accounts located in Canada, prior to the sale of the Canadian Subsidiary in March 2025. These amounts were subject to foreign currency exchange risk, which was minimized by the Company’s policy to limit the balances held in these accounts. Balances in Canadian bank accounts at December 31, 2025 and 2024 totaled $ 0 and $ 166 thousand, respectively. 33 Table of Contents AquaBounty Technologies, Inc. Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024 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 sold its Canadian Farms in March 2025 for a sale price of $ 5.2 million, including the assumption of $ 3.2 million in outstanding loans, less transaction expenses of $ 216 thousand. These decisions by the Company represented a strategic shift that has had a major effect on the Company’s operations and financial results. Consequently, each of these farms have been designated as discontinued operations in the consolidated financial statements for the years ended December 31, 2025 and 2024. The Company has been working with its investment bank to identify the optimal path forward for realizing the potential of its assets, including a possible sale of the Ohio Farm Project. The Company received a non-binding Letter of Interest to purchase the Ohio subsidiary. Though this offer is currently under consideration, the Company has determined that the actions and decisions that occurred leading up to receiving this offer constituted a triggering event for revaluing these assets and has included the Ohio Farm Project in discontinued operations in the consolidated financial statements for the years ended December 31, 2025 and 2024. Provided below are the major areas of the financial statements that constitute discontinued operations: December 31, December 31, 2025 2024 Current Assets Prepaid and other current assets $ 32,454 $ 65,030 Property, plant and equipment, net 9,520,000 10,754,879 Total current assets held for sale $ 9,552,454 $ 10,819,909 Non-Current Assets Property, plant and equipment, net - 22,668,000 Total non-current assets held for sale $ - $ 22,668,000 Current Liabilities Accounts payable and accrued expenses $ 90,019 $ 9,318,409 Accrued employee compensation — 54,583 Current debt 7,386,235 3,260,005 Other current liabilities - 408,863 Total current liabilities held for sale $ 7,476,254 $ 13,041,860 Years ended December 31, 2025 2024 Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization $ — $ 890,433 Long-lived asset impairment 14,440,413 129,635,671 Other non-cash items ( 456,063 ) 9,678 Changes in working capital ( 1,496,488 ) 2,572,418 Cash flows from investing activities Purchases of and deposits on property, plant and equipment — ( 2,929,908 ) Proceeds from asset sales 4,993,688 993,222 Cash flows from financing activities Proceeds from issuance of debt — 434,832 Repayment of term debt ( 32,194 ) ( 206,781 ) 34 Table of Contents AquaBounty Technologies, Inc. Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024 Years ended December 31, 2025 2024 Revenue $ — $ 788,701 Costs and expenses Product costs — 7,327,403 Sales and marketing — 330 Research and development — 27,015 General and administrative 1,526,852 951,935 Long-lived impairment 14,440,413 129,635,671 Operating income (loss) ( 15,967,265 ) ( 137,153,653 ) Other expense ( 293,536 ) ( 659,829 ) Loss from discontinued ops $ ( 16,260,801 ) $ ( 137,813,482 ) 5. Prepaid and other current assets Major classifications of prepaid and current assets are summarized as follows for December 31, 2025 and 2024: December 31, 2025 December 31, 2024 Prepaid insurance $ 172,032 $ 203,999 Prepaid other 94,830 88,019 Total prepaid expenses and other current assets $ 266,862 $ 292,018 6. Debt The current terms and conditions of long-term debt outstanding as of December 31, 2025 and 2024 for continuing operations, are as follows: Interest ‎ rate Monthly ‎ repayment Maturity ‎ date December 31, 2025 December 31, 2024 ACOA AIF Grant 0 % Royalties $ — $ 1,996,558 Senior Notes 18 % — Apr 2027 4,124,000 — Term Note 0 % 200,000 Dec 2025 — 1,261,039 Total debt $ 4,124,000 $ 3,257,597 less: loan origination costs ( 637,859 ) — less: current portion — ( 1,261,039 ) Long-term debt, net $ 3,486,141 $ 1,996,558 Principal payments due on the long-term debt are as follows: Total 2026 $ — 2027 4,124,000 Thereafter — Total $ 4,124,000 ACOA Atlantic Innovation Fund Grant In January 2009, the Canadian Subsidiary was awarded an Atlantic Innovation Fund (“AIF”) grant from the Atlantic Canada Opportunities Agency (“ACOA”) to provide a contribution towards the funding of a research and development project. Contributions under the grant were made through 2014 and were to be repaid in the form of a 10 % royalty on any products that were commercialized out of this research project until the loan was fully repaid. 35 Table of Contents AquaBounty Technologies, Inc. Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024 On February 14, 2025, ACOA terminated the outstanding loan with the Company’s Canadian Subsidiary and forgave the outstanding balance of C$ 2.9 million ($ 2.0 million). Senior Notes On October 28, 2025, the Company entered into Note Purchase Agreements with certain investors providing for the issuance and sale of senior notes (“Senior Notes”) in an aggregate principal amount of $ 4.0 million in a private placement transaction. The Senior Notes have the following characteristics and terms: (i) unsecured, (ii) nonconvertible, (iii) bear interest at 18 % per annum, (iv) scheduled maturity date of 18 months from closing, and (v) principal and interest payable at maturity, or earlier if accelerated pursuant to an event of default. The Senior Notes provide for certain restrictive covenants of the Company, as well as events of default including, but not limited to, (a) non-payment, (b) breach of covenants, (c) insolvency, (d) unauthorized changes to board composition, (e) failure to maintain Nasdaq listing compliance, (f) delayed SEC filings, and (g) financial restatements with material adverse effect. The Company anticipates it will receive a notice from Nasdaq in early 2026 regarding the Company’s deficiency in Nasdaq’s minimum book equity compliance, which could result in an event of default if the deficiency is not cured. Among other remedies, the Senior Notes provide the Investors the right to nominate an additional director to the Board upon the occurrence of an event of default, subject to certain conditions. The Agreements required certain resignations from and appointments to the Board at the time of the transaction closing date and upon the occurrence of certain events and criteria. The net proceeds from the issuance of the Senior Notes are to be used for general corporate purposes, including working capital and operational funding, as well as the repayment of certain debts. Term Note In October 2024, the Company entered into a secured promissory note (“Term Note”) for $ 1.3 million with a vendor for services provided during 2024. The Term Note was secured by the assets of the Company’s Ohio Farm Project and was due in full on December 31, 2025 , with two intermediate scheduled payments . On March 18, 2025, an amendment to the Term Note was executed to alter the amount and timing of the intermediate payments. The Term Note carried no interest, except in the event of a default, in which case any amount due for payment would be assessed accrued interest at 3 % per annum. On July 22, 2025, the Term Note was again amended to alter the timing of the remaining payments. The Company completed its scheduled payments on the Term Note on December 18, 2025. Vendor Note On June 11, 2025, the Company converted $ 7.4 million of outstanding accounts payable with a vendor into a secured promissory note (“ Vendor Note”). The Vendor Note is secured by the assets of the Company’s Ohio Farm Site, has a 12 -month term and carries an 8 % interest rate, with the first six-months interest free . This Vendor Note has been reclassified within Current Liabilities Held for Sale for discontinued operations at December 31, 2025 (see Note 4). 7. 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. 36 Table of Contents AquaBounty Technologies, Inc. Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024 Total common shares authorized under the 2016 Plan are 215,000 , of which 107,704 shares are reserved for future issuance as of December 31, 2025. 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, 2024 12,567 $ 9.18 Vested ( 11,917 ) 8.96 Forfeited ( 650 ) 13.05 Unvested at December 31, 2025 — $ — During 2025 and 2024, the Company expensed $ 33 thousand and $ 168 thousand, respectively, related to restricted stock awards. At December 31, 2025, the balance of unearned share-based compensation to be expensed in future periods related to the restricted stock awards is $ 0 . Stock options The Company’s stock 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, 2024 64,905 $ 38.57 Forfeited ( 19,125 ) 31.69 Expired ( 6,861 ) 32.88 Outstanding at December 31, 2025 38,919 $ 42.95 Exercisable at December 31, 2025 36,950 $ 44.85 Stock options issued to employees, members of the Board, 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 2025 or 2024 and there were no stock options exercised in 2025 or 2024. As of December 31, 2025 and 2024, the total intrinsic value of exercisable and outstanding stock options was $ 0 . The following table summarizes information about stock 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 13,923 7.5 11,954 $ 20.00 - $ 50.00 22,065 3.8 22,065 $ 100.00 - $ 200.00 1,256 4.8 1,256 $ 200.00 - $ 300.00 1,675 1.3 1,675 38,919 36,950 Total share-based compensation on stock option grants amounted to $ 38 thousand and $ 132 thousand for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the balance of unearned share-based compensation to be expensed in future periods related to unvested share-based awards is $ 5 thousand. The period over which the unearned share-based compensation is expected to be earned is 0.2 years. 37 Table of Contents AquaBounty Technologies, Inc. Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024 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, 2025 and 2024: 2025 2024 Sales and marketing $ — $ — General and administrative 70,623 299,417 Total share-based compensation $ 70,623 $ 299,417 8. Income taxes The components of loss from continuing operations before income taxes for the years ended December 31, 2025 and 2024 are presented below: 2025 2024 Domestic $ ( 2,229,686 ) $ ( 11,364,882 ) Foreign — ( 14,296 ) Loss before income taxes $ ( 2,229,686 ) $ ( 11,379,178 ) Income taxes computed using the federal statutory income tax rate differ from the Company’s effective tax rate for the years ended December 31, 2025 and 2024 primarily due to the following: 2025 2024 Income tax benefit $ ( 468,234 ) $ ( 2,389,627 ) State and provincial income tax ( 121,110 ) ( 617,306 ) Permanent differences ( 387,981 ) 28,125 Other, net ( 1,325,356 ) ( 3,728,681 ) $ ( 2,302,681 ) $ ( 6,707,489 ) Change in valuation allowance 2,302,681 6,707,489 Total income tax $ — $ — As of December 31, 2025, the Company had domestic net operating loss carryforwards of approximately $ 278 million, after consideration of limitations pursuant to section 382, to offset future federal taxable income, which begin to expire in 2034. Of this amount, the Company had domestic net operating loss carryforwards of approximately $ 250 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. 38 Table of Contents AquaBounty Technologies, Inc. Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024 Significant components of the Company’s deferred tax assets and liabilities are as follows: 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 38,977,895 $ 36,533,697 Property and equipment 1,566,849 ( 1,062,124 ) Intangibles — 2,172,310 R&D costs — 837,054 Other 532,532 293,658 Total deferred tax assets $ 41,077,276 $ 38,774,595 Valuation allowance ( 41,077,276 ) ( 38,774,595 ) Net deferred tax assets $ — $ — 9. 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, 2025, will not have a material adverse effect on the Company’s financial position or results of operations. Lease commitments The Company’s lease right of use assets and obligations as of December 31, 2025 and 2024 were $ 23 thousand and $ 52 thousand, respectively and there was 0.8 years remaining on its lease commitment. Operating lease expenses for the years ended December 31, 2025 and 2024 were $ 32 thousand and $ 41 thousand, respectively. 10. 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, 2025 and 2024, amounted to $ 29 thousand and $ 70 thousand, respectively. 39 Table of Contents AquaBounty Technologies, Inc. Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024 11. 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. Years Ended December 31, $ thousands 2025 2024 Corporate $ 5,942 $ 7,273 Indiana farm 196 3,340 Ohio farm 3,213 3,112 Canadian operations 272 3,869 Net cash expenditures $ 9,623 $ 17,594 Reconciliation of net cash expenditures to consolidated net loss: Depreciation and amortization — 904 Share-based compensation 71 299 Long-lived asset impairment 14,440 129,826 Loan forgiveness and other non-cash items ( 2,382 ) — Capitalized expenditures — ( 2,930 ) Net realizable value adjustments — 1,093 Working capital changes ( 3,261 ) 2,406 Consolidated net loss: $ 18,490 $ 149,193 12. Subsequent events On February 11, 2026, the Company completed a public offering of 1,269,509 Common Shares and 67,706 warrants for Common Shares for net proceeds of approximately $ 1.0 million. 40