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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________

Form 10-Q

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________ to _____________________

Commission File Number: 001-36426

____________

AquaBounty Technologies, Inc.

(Exact name of the registrant as specified in its charter)

Delaware

04-3156167

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

2 Mill & Main Place, Suite 395

Maynard, Massachusetts 01754

(978) 648-6000

(Address and telephone number of the registrant’s principal executive offices)

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock, par value $0.001 per share

AQB

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit such files).

Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

o

Accelerated filer

o

Non-accelerated filer

x

Smaller reporting company

x

Emerging growth company

o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨    No x 

At July 31, 2023, the registrant had 71,358,249 shares of common stock, par value $0.001 per share (“Common Shares”) outstanding.

 

 

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than present and historical facts and conditions contained in the Quarterly Report on Form 10-Q, are forward looking statements, including statements regarding the implementation and likelihood of achieving our business plan; statements regarding future capital requirements, revenue, expenses and operating results, as well as the impact of inflation; our plans for development of new farms and renovations to existing farms (including costs, timing, locations, third-party involvement and output therefrom); our cash position and ability to raise additional capital to finance our activities and the terms of such financing; and statements regarding compliance with the listing rules of Nasdaq. We sometimes use the words “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “is designed to,” “may,” “might,” “plan,” “potential,” “predict,” “objective,” “should,” or the negative of these and similar expressions to identify forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates, and projections. While we believe these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks, uncertainties, and other factors, many of which are outside of our control, which could cause our actual results, performance, or achievements to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: our ability to continue as a going concern; the potential for delays and increased costs related to construction of our new farms and renovations to existing farms; a failure to raise additional capital to finance our activities on acceptable terms; an inability to produce and sell our products in sufficient volume and at acceptable cost and prices; any inability to protect our intellectual property and other proprietary rights and technologies; the effects of changes in applicable laws, regulations and policies; our ability to secure any necessary regulatory approvals; the degree of market acceptance of our products our failure to retain and recruit key personnel; the price and volatility of our common stock; our ability to regain compliance or otherwise maintain compliance with the listing requirements of, and remain listed on, the Nasdaq Capital Market; and other risks identified in our public filings with the Securities and Exchange Commission (“SEC”), including the section titled “Risk Factors” in this Quarterly Report on Form 10-Q, our most recently filed Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, as updated by our subsequent filings with the SEC. New risks emerge from time to time, and it is not possible for us to predict all such risks. Given these risks and uncertainties, may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you are cautioned not to place undue reliance on such forward-looking statements.

These forward-looking statements are made only as of the date of this Quarterly Report on Form 10-Q. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments unless required by federal securities law.

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

 

AquaBounty Technologies, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

June 30,

December 31,

2023

2022

Assets

Current assets:

Cash and cash equivalents

$

42,842,280

$

101,638,557

Inventory

2,353,616

2,276,592

Prepaid expenses and other current assets

3,375,949

2,133,583

Total current assets

48,571,845

106,048,732

Property, plant and equipment, net

160,174,487

106,286,186

Right of use assets, net

205,565

222,856

Intangible assets, net

211,287

218,139

Restricted cash

1,000,000

1,000,000

Other assets

52,793

64,859

Total assets

$

210,215,977

$

213,840,772

Liabilities and stockholders' equity

Current liabilities:

Accounts payable and accrued liabilities

$

20,875,113

$

12,000,592

Accrued employee compensation

943,248

1,021,740

Current debt

2,406,147

2,387,231

Other current liabilities

4,586

20,830

Total current liabilities

24,229,094

15,430,393

Long-term lease obligations

200,979

203,227

Long-term debt, net

6,441,077

6,286,109

Total liabilities

30,871,150

21,919,729

Commitments and contingencies

 

 

Stockholders' equity:

Common stock, $0.001 par value, 150,000,000 shares authorized at June 30, 2023

and December 31, 2022; 71,345,649 and 71,110,713 shares outstanding at June 30,

2023 and December 31, 2022, respectively

71,346

71,111

Additional paid-in capital

385,691,274

385,388,684

Accumulated other comprehensive loss

(401,002)

(516,775)

Accumulated deficit

(206,016,791)

(193,021,977)

Total stockholders' equity

179,344,827

191,921,043

Total liabilities and stockholders' equity

$

210,215,977

$

213,840,772

See accompanying notes to these condensed interim consolidated financial statements.

 

AquaBounty Technologies, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,

2023

2022

2023

2022

Revenues

Product revenues

$

788,430

$

1,069,706

$

1,186,276

$

2,032,587

Costs and expenses

Product costs

3,790,878

3,250,106

7,350,118

6,525,796

Sales and marketing

194,254

349,917

392,539

597,489

Research and development

178,394

208,292

301,311

375,481

General and administrative

3,067,533

2,831,930

6,068,015

5,208,166

Total costs and expenses

7,231,059

6,640,245

14,111,983

12,706,932

Operating loss

(6,442,629)

(5,570,539)

(12,925,707)

(10,674,345)

Other expense

Interest expense

(65,789)

(74,694)

(132,063)

(149,982)

Other (expense) income, net

(328)

109,191

62,956

176,559

Total other (expense) income

(66,117)

34,497

(69,107)

26,577

Net loss

$

(6,508,746)

$

(5,536,042)

$

(12,994,814)

$

(10,647,768)

Other comprehensive income (loss):

Foreign currency translation gain (loss)

111,346

(153,602)

115,773

(70,697)

Unrealized gain on marketable securities

121,796

7,731

Total other comprehensive income (loss)

111,346

(31,806)

115,773

(62,966)

Comprehensive loss

$

(6,397,400)

$

(5,567,848)

$

(12,879,041)

$

(10,710,734)

Basic and diluted net loss per share

$

(0.09)

$

(0.08)

$

(0.18)

$

(0.15)

Weighted average number of Common Shares -

basic and diluted

71,344,025

71,068,671

71,256,782

71,036,562

See accompanying notes to these condensed interim consolidated financial statements.

 

AquaBounty Technologies, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

Common stock issued and outstanding

Par value

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total

Balance at December 31, 2021

71,025,738

$

71,026

$

384,852,107

$

(255,588)

$

(170,864,782)

$

213,802,763

Net loss

(5,111,726)

(5,111,726)

Other comprehensive loss

(31,160)

(31,160)

Share based compensation

83,963

84

211,244

211,328

Balance at March 31, 2022

71,109,701

$

71,110

$

385,063,351

$

(286,748)

$

(175,976,508)

$

208,871,205

Net loss

(5,536,042)

(5,536,042)

Other comprehensive loss

(31,806)

(31,806)

Exercise of options for common stock

1,012

1

1,537

1,538

Share based compensation

107,280

107,280

Balance at June 30, 2022

71,110,713

$

71,111

$

385,172,168

$

(318,554)

$

(181,512,550)

$

203,412,175

Common stock issued and outstanding

Par value

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total

Balance at December 31, 2022

71,110,713

$

71,111

$

385,388,684

$

(516,775)

$

(193,021,977)

$

191,921,043

Net loss

(6,486,068)

(6,486,068)

Other comprehensive income

4,427

4,427

Share based compensation

228,225

228

196,413

196,641

Balance at March 31, 2023

71,338,938

$

71,339

$

385,585,097

$

(512,348)

$

(199,508,045)

$

185,636,043

Net loss

(6,508,746)

(6,508,746)

Other comprehensive income

111,346

111,346

Share based compensation

6,711

7

106,177

106,184

Balance at June 30, 2023

71,345,649

$

71,346

$

385,691,274

$

(401,002)

$

(206,016,791)

$

179,344,827

See accompanying notes to these condensed interim consolidated financial statements.


AquaBounty Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Six Months Ended
June 30,

2023

2022

Operating activities

Net loss

$

(12,994,814)

$

(10,647,768)

Adjustment to reconcile net loss to net cash used in

operating activities:

Depreciation and amortization

1,066,476

988,292

Share-based compensation

302,825

318,608

Other non-cash charge

9,408

14,860

Changes in operating assets and liabilities:

Inventory

(74,789)

(661,090)

Prepaid expenses and other assets

(1,225,343)

(2,883,505)

Accounts payable and accrued liabilities

748,443

1,705,335

Accrued employee compensation

(78,492)

(91,140)

Net cash used in operating activities

(12,246,286)

(11,256,408)

Investing activities

Purchases of and deposits on property, plant and equipment

(46,586,998)

(30,472,704)

Maturities of marketable securities

120,047,915

Purchases of marketable securities

(47,621,291)

Other investing activities

(3,263)

12,500

Net cash (used in) provided by investing activities

(46,590,261)

41,966,420

Financing activities

Proceeds from issuance of debt

394,156

42,338