Quarterly Report for Quarter Ending September 30, 2026 (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, 2025, which was filed on March 31, 2026.

Overview

AquaBounty has historically pursued a growth strategy that included the construction of large-scale RAS farms for producing our GE Atlantic salmon. We had commenced construction of our 10,000 metric ton Ohio Farm Project, but paused the construction in June 2023, as the cost estimate to complete the farm continued to substantially increase due to inflation and other factors. Further, these cost increases impaired 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 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 have been engaged in efforts to monetize the Ohio Farm Project through discussions with parties in the aquaculture industry. While those discussions remain ongoing, evolving market conditions have led us to broaden our evaluation of strategic alternatives to maximize shareholder value. The Ohio Farm Site possesses a unique combination of infrastructure assets that we believe may be attractive to participants in the rapidly expanding power generation and digital infrastructure sectors. As part of an expanded strategic review, we intend to engage with developers, utilities, independent power producers, infrastructure investors, and other strategic partners regarding a range of potential transactions. These may include an outright sale of the property, joint development arrangements, long-term leasing opportunities, or other structures that could realize the value of the Ohio Farm Site's infrastructure assets. We will also evaluate opportunities to participate more directly in infrastructure or energy development where doing so could enhance long-term shareholder value.

Discontinued Operations

As noted above, we sold our Indiana Farm in July 2024, our Canadian Farms in March 2025, and in 2024 and 2025 we sold 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 determined these actions 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 condensed consolidated financial statements for the periods included in this Form 10-Q (see Note 5 to our condensed consolidated financial statements for additional information).

Financial Overview

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 September 30, 2026, we had an accumulated deficit of $393 million and $122 thousand in cash on our condensed 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.

On February 11, 2026, we completed an equity transaction with certain investors, pursuant to which we sold an aggregate of 1,269,509 shares of our Common Stock and pre-funded warrants to purchase an aggregate of 67,706 shares of Common Stock for gross proceeds of $1.15 million. The warrants were converted to Common Stock during August 2026.

On April 7, 2026, we entered into securities exchange agreements in a private placement with the holders of our outstanding Senior Notes, pursuant to which an aggregate of $4.0 million of principal and $316 thousand of accrued and unpaid interest was exchanged for an aggregate of 236,367 shares of our Series A PS. The transaction also included the issuance of 27,386 shares of Series A PS to a certain investor for gross proceeds of $500 thousand. The Series A PS issued in the transaction were convertible into shares of our Common Stock at the option of the holders

On June 25, 2026, we entered into securities purchase agreements with certain purchasers, pursuant to which we issued and sold 109,223 shares of our Series B PS for gross proceeds of $2.25 million. The Series B PS were convertible into shares of our Common Stock at the option of the holders.

On October 7, 2026, we entered into conversion agreements with the holders of our Series A PS and Series B PS (the "Conversion Agreements"), pursuant to which all outstanding shares of Series A PS and Series B PS would automatically convert into shares of our Common Stock, on the earlier of (i) the date on which a resale registration statement was declared effective by the Securities and Exchange Commission and (ii) October 30, 2026 (the "Conversion Date"). Pursuant to the Conversion Agreements, the number of shares of Common Stock issuable upon conversion was calculated in accordance with the applicable Certificate of Designations. The holders waived any dividends accruing after October 15, 2026. On October 23, 2026, the Securities and Exchange Commission declared the resale registration statement effective, and all outstanding shares of Series A PS and Series B PS automatically converted into shares of our Common Stock. Upon conversion, we issued an aggregate of 5,771,929 shares of Common Stock to the holders of the Series A PS and 2,305,114 shares of Common Stock to the holders of the Series B PS, for a total of 8,077,043 shares of Common Stock. Upon conversion, the shares of preferred stock were cancelled and retired and ceased to be outstanding, and the holders have no further rights with respect to the preferred stock.

On October 29, 2026, we issued a promissory note to Commas International LLC (the "Lender"), an affiliate of Univest Securities, LLC, under which the Lender may make advances to us from time to time in an aggregate principal amount of up to $1.0 million. As of the date of this filing, we have received advances totaling $500 thousand under the promissory note.

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

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, rent and utilities, insurance, and legal services. We expect our general and administrative expenses to remain stable until a new strategic direction of the Company is selected.

Other Income (Expense), Net

Interest expense includes the interest on our loans 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 remaining operating costs for our Ohio Farm Project, our Indiana Farm and our Canadian Farms, including general and administrative expenses, non-cash long-lived asset impairment charges, and interest expense and banking fees.

Results of Operations

Comparison of the three months ended September 30, 2026, to the three months ended September 30, 2025

The following table summarizes our results of operations for the three months ended September 30, 2026 and 2025, 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, 2026 or 2025, due to the sale of our Indiana Farm and Canadian Farms.

General and Administrative Expenses

General and administrative expenses for the three months ended September 30, 2026, were up from the corresponding period in 2025, primarily due to increases in professional fees, state excise tax liabilities and legal fees, offset by reductions in personnel costs, insurance fees, share-based compensation costs, and Board compensation fees.

Other (Expense) Income

Other expense for the three months ended September 30, 2026 and 2025, is comprised of bank charges.

Loss from Discontinued Operations

The loss from discontinued operations for the three months ended September 30, 2026, was comprised of general administrative expenses and interest expense. The loss from discontinued operations for the three months ended September 30, 2025 was comprised of a long-lived asset impairment, general and administrative expenses and interest expense and banking fees related to the Ohio Farm.

Comparison of the nine months ended September 30, 2026, to the nine months ended September 30, 2025

The following table summarizes our results of operations for the nine months ended September 30, 2026 and 2025, 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 nine months ended September 30, 2026, due to the sale of our Indiana Farm and Canadian Farms.

General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2026, were down from the corresponding period in 2025, primarily due to reductions in personnel costs, audit fees, legal fees, insurance fees, state excise tax liabilities, share-based compensation costs, and Board compensation fees, offset by increases in professional fees.

Other (Expense) Income

Other expense for the nine months ended September 30, 2026, is comprised of interest expense and bank charges. 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.

Loss from Discontinued Operations

The loss from discontinued operations for the nine months ended September 30, 2026, was comprised of general administrative expenses and interest expense. The loss from discontinued operations for the nine months ended September 30, 2025, was comprised of a long-lived asset impairment, general and administrative expenses and interest expense and banking fees related to the Ohio farm.

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, 2026, was primarily comprised of our $4.3 million net loss, which included $514 thousand in non-cash loan amortization costs, non-cash share-based compensation charges of $5 thousand and working capital uses of $2 thousand. 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.

Spending decreased in the current period due to reductions in personnel and other general administrative costs, such as, audit fees, legal fees, insurance fees, state excise tax liabilities, share-based compensation costs, and Board compensation fees. Uses of cash from changes in working capital were due to decreases in accounts payable and accrued expenses and prepaid expenses and other assets.

Cash Flows from Investing Activities

During the nine months ended September 30, 2026, there were no investing activities, and during the nine months ended September 30, 2025, we received $7.1 million from the sale of assets.

Cash Flows from Financing Activities

During the nine months ended September 30, 2026, we received $3.7 million in net proceeds from the issuance of preferred stock, common stock and warrants. During the nine months ended September 30, 2025, we made $832 thousand in 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, 2026, we had $122 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. This raises substantial doubt about our ability to continue as a going concern within one year after the date that the accompanying consolidated financial statements are issued.

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.

On February 11, 2026, we completed an equity transaction with certain investors, pursuant to which we sold an aggregate of 1,269,509 shares of our Common Stock and pre-funded warrants to purchase an aggregate of 67,706 shares of Common Stock for gross proceeds of $1.15 million.

On April 7, 2026, we entered into securities exchange agreements in a private placement with the holders of our outstanding Senior Notes, pursuant to which an aggregate of $4.0 million of principal and $316 thousand of accrued and unpaid interest was exchanged

for an aggregate of 236,367 shares of our Series A PS. The transaction also included the issuance of 27,386 shares of Series A PS to a certain investor for gross proceeds of $500 thousand.

On June 25, 2026, we entered into securities purchase agreements with certain purchasers, pursuant to which we issued and sold 109,223 shares of our Series B PS for gross proceeds of $2.25 million.

On October 29, 2026, we issued a promissory note to Commas International LLC, an affiliate of Univest Securities, LLC, under which the lender may make advances to us from time to time in an aggregate principal amount of up to $1.0 million. As of November 2, 2026, we had received advances totaling $500 thousand under the note. The initial advance bears interest at 9% per annum and is due on October 29, 2028. The note is unsecured, is not convertible into equity securities of the Company, and no warrants or other equity securities were issued to the lender in connection with the note. We intend to use advances under the note for working capital and to meet our short-term liquidity needs.

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 assets, equity offerings, debt financings, government or other third-party funding, strategic alliances, and licensing arrangements. 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.

In addition, JobsOhio has demanded repayment of a $1.0 million economic development grant and requested payment by November 22, 2026. We are evaluating our response, which may include discussing repayment options with JobsOhio, although there can be no assurance that JobsOhio will agree to any payment schedule or other accommodation. Repayment of the grant would reduce our available cash resources and could adversely affect our liquidity, financial condition and ability to fund our operations and pursue our strategic review of the Ohio Farm Project.

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, 2026. 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 2025 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.