Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed on March 27, 2025.

Overview

AquaBounty has historically pursued a growth strategy that included the construction of large-scale recirculating aquaculture system ("RAS") farms for producing our genetically engineered Atlantic salmon ("GE Atlantic salmon"). We had commenced construction of a 10,000 metric ton farm in Pioneer, Ohio (the "Ohio Farm Project"), but paused the construction in June 2023, as the cost estimate to complete the farm continued to substantially increase due to inflation and other factors. Further, these cost increases impaired our ability to pursue municipal bond financing, which was a necessary component of our funding strategy. We subsequently engaged an investment bank to pursue a range of funding and strategic alternatives, and to assist management in the prioritization of our core assets. These efforts resulted in the sale of our grow-out farm in Indiana ("Indiana Farm") in July 2024, recurring sales throughout the remainder of 2024 and the first half of 2025 of selected equipment originally intended for the Ohio Farm Project (the "Ohio Equipment Assets"), and the sale of our Canadian subsidiary, including the broodstock farms owned by the Canadian subsidiary in Prince Edward Island, Canada ("Canadian Farms"), and our intellectual property for the GE Atlantic salmon, along with trademarks and patents ("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 land and construction in process (the "Ohio Farm Site"). We continue to work with our investment bank to identify the optimal path forward for realizing the potential of this asset, either through new investment, partnership or other strategic options.

Discontinued Operations

As noted above, we sold our Indiana Farm in July 2024 and our Canadian Farms in March 2025. These farms have been designated as discontinued operations in our condensed consolidated financial statements for the three and nine months ended September 30, 2025 and 2024 in this Form 10-Q (see Note 5 to our condensed consolidated financial statements for additional information).

Financial Overview

With the winding down of our fish rearing operations, we have significantly reduced our headcount and on-going operating costs. We maintain a small core group of corporate individuals to oversee our strategic options, our asset sale transactions and our books and records. As of September 30, 2025, we had an accumulated deficit of $374 million and $951 thousand in cash and cash equivalents on our interim condensed consolidated balance sheet. We require new funding to provide liquidity for working capital in order to realize the potential value of our assets. 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 have historically included agency fees for investor-related activities. With the sale of our Canadian Farms in March 2025, we no longer have sales and marketing expenses.

Research and Development Expenses

With the sale of our Canadian Farms 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 expect our general and administrative expenses to decrease as a result of our reduced operations.

Asset Impairment, Net

Net asset impairment includes the non-cash impairment charges on the Ohio Equipment Assets and the gains or losses realized on the disposition of Assets Held for Sale.

Other Income (Expense), Net

Interest expense includes the interest on our loans and accounts payable for our continuing operations. Loan forgiveness relates to the termination of an outstanding loan. Other expense, net includes bank charges, fees, and interest income.

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, non-cash long-lived asset impairment charges, a net realizable value adjustment of inventory, interest expense and banking fees.

Results of Operations

Comparison of the three months ended September 30, 2025, to the three months ended September 30, 2024

The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024, together with the changes in those items in dollars and as a percentage (all dollar amounts in thousands):

Sales and Marketing Expenses

There were no sales and marketing expenses for the three months ended September 30, 2025, due to the sale of our Indiana Farm and Canadian Farms.

Research and Development Expenses

There were no research and development expenses for the three months ended September 30, 2025, as we no longer have research and development operations after the sale of our Canadian Farms.

General and Administrative Expenses

General and administrative expenses for the three months ended September 30, 2025, were down slightly from the corresponding period in 2024 due to reductions in personnel costs, legal fees, share-based compensation costs, and professional fees, offset by increases in insurance costs and a legal settlement expense.

Asset Impairment, Net

During the three months ended September 30, 2025, we sold Ohio Equipment Assets for net proceeds of $27 thousand. These assets had been partially impaired in 2024 and further impaired during the first quarter of 2025. As of September 30, 2025, we concluded that the value of the remaining Ohio Equipment Assets was $5 thousand, and thus we recorded a non-cash impairment charge of $69 thousand.

Other Expense

Other expense for the three months ended September 30, 2025 and 2024 is comprised of interest expense and bank charges, less interest income.

Income (Loss) from Discontinued Operations

The income from discontinued operations for the three months ended September 30, 2025 was primarily due to a gain on the settlement of an outstanding payable balance for the Indiana Farm. For the three months ended September 30, 2024, the loss was comprised of all operating costs for 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, interest expense and banking fees.

Comparison of the nine months ended September 30, 2025, to the nine months ended September 30, 2024

The following table summarizes our results of operations for the ninemonths ended September 30, 2025 and 2024, together with the changes in those items in dollars and as a percentage (all dollar amounts in thousands):

Sales and Marketing Expenses

Sales and marketing expenses for the nine months ended September 30, 2025, were down from the corresponding period in 2024 due to decreases in personnel costs and program spending related to the sale of our Indiana Farm and Canadian Farms.

Research and Development Expenses

There were no research and development expenses for the nine months ended September 30, 2025, as we no longer have research and development operations after the sale of our Canadian Farms.

General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2025 were down from the corresponding period in 2024 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 a legal settlement expense.

Asset Impairment, Net

During the nine months ended September 30, 2025, we sold Ohio Equipment Assets for net proceeds of $4.7 million. These assets had been partially impaired in 2024 and further impaired during the first quarter of 2025, then written down to $5 thousand as of September 30, 2025. We recorded a non-cash impairment charge of $1.3 million.

Other Income (Expense)

Other income for the nine months ended September 30, 2025, is comprised of the forgiveness of an outstanding loan and interest income, less interest expense and bank charges. Other expense for the nine months ended September 30, 2024 is comprised of interest expense and bank charges, less interest income.

Loss from Discontinued Operations

The loss from discontinued operations for the nine months ended September 30, 2025 was comprised of remaining operating costs for the Indiana Farm and Canadian Farms. For the nine months ended September 30, 2024, the loss was comprised of all operating costs for 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.

Cash Flows

The following table sets forth the significant sources and uses of cash for the periods set forth below (in thousands):

Cash Flows from Operating Activities

Net cash used in operating activities during the nine months ended September 30, 2025, was primarily comprised of our $4.4 million net loss, which included $2.1 million in non-cash gains, and working capital uses of $452 thousand, partially offset by non-cash share-based compensation charges of $64 thousand and an asset impairment charge of $1.3 million. Net cash used in operating activities during the nine months ended September 30, 2024, was primarily comprised of our $65.1 million net loss, partially offset by non-cash depreciation and share-based compensation charges of $1.1 million, long-lived asset impairment charges of $48.7 million, and working capital sources of $2.5 million.

Spending on operations decreased in the current period due to reductions in personnel, farm operating costs, depreciation charges, and share-based compensation. Uses of cash from changes in working capital were due to decreases in accounts payable and accrued expenses, partially offset by increases in prepaid expenses and other assets.

Cash Flows from Investing Activities

During the nine months ended September 30, 2025, we received $7.1 million from the sale of assets, and during the nine months ended September 30, 2024, we used $2.7 million for the purchase of property, plant and equipment at our farm sites, and we received $9.5 million from the sale of our Indiana farm and certain equipment from our Ohio farm.

Cash Flows from Financing Activities

During the nine months ended September 30, 2025, we made $832 thousand in debt repayments. During the nine months ended September 30, 2024, we received $6.8 million from new debt and made $9.5 million in term debt repayments.

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 September 30, 2025, we had $951 thousand of cash and cash equivalents. Our ability to continue as a going concern is dependent upon our ability to raise additional capital, and there can be no assurance that such capital will be available in sufficient amounts, on a timely basis, on terms acceptable to us, or at all. This raises substantial doubt about our ability to continue as a going concern within one year after the date that the accompanying condensed consolidated financial statements are issued.

In April 2024, we entered into a Loan Agreement with JMB Capital Partners Lending, LLC to fund working capital through a secured term loan of up to $10 million that was scheduled to mature on July 31, 2024 or, if earlier, upon the sale of certain collateral or upon an Event of Default (as defined in the Loan Agreement). Of the total loan amount, $5 million was advanced in April 2024 and $1.5 million was advanced in July 2024. The loan bore interest at a rate of 15% on its outstanding principal balance and was subject to a

commitment fee equal to 5% and an exit fee equal to 8%. Of the initial loan advancement, approximately $2.8 million was used to pay the remaining outstanding balance of our term loan with First Farmers Bank & Trust, upon which the $1 million of restricted cash held by us as of December 31, 2023 was no longer deemed to be restricted. The outstanding loan balance of $6.5 million was repaid on July 26, 2024 from the net proceeds of the Indiana farm sale.

During 2024, we completed the sale of our Indiana Farm, along with certain Ohio Equipment Assets for net proceeds of $9.2 million. We also focused on cost containment to preserve and extend our available cash. In February 2025, we completed an auction of certain Ohio Equipment Assets for net proceeds of $2.3 million, and in March 2025, we completed the sale of our Canadian Farms for net proceeds of $1.9 million. In June 2025, we sold Ohio Equipment Assets for net proceeds of $2.4 million. Going forward, we plan to continue to sell available Ohio Equipment Assets.

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, and strategic alliances. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of holders of our common stock will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of our common stock. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional funds through government or other third-party funding, marketing and distribution arrangements, or other collaborations, or strategic alliances, we may have to relinquish future revenue streams, research programs, or product candidates or to grant licenses on terms that may not be favorable to us.

If we are unable to generate additional funds in a timely manner, we will exhaust our resources and will be unable to maintain our currently planned operations. If we cannot continue as a going concern, our stockholders would likely lose most or all of their investment in us.

Critical Accounting Policies and Estimates

This Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our condensed consolidated financial statements, which we have prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to these estimates, or the policies related to them, during the nine months ended September 30, 2025. For a full discussion of these estimates and policies, see "Critical Accounting Policies and Estimates" within "Management's Discussion and Analysis of Financial Results of Operations" in our 2024 Annual Report on Form 10-K.

Smaller Reporting Company Status

We are a "smaller reporting company," meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.

As a smaller reporting company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and smaller reporting companies have reduced disclosure obligations regarding executive compensation.