AquaBounty Technologies, Inc. — FY 2023 Form 10-K
Reporting period: Year ended December 31, 2023; comparative figures are for FY 2022. This filing reports annual results, not standalone fourth-quarter results.
Business context and reporting period
AquaBounty develops and sells genetically engineered (GE) Atlantic salmon and conventional salmon eggs and fry, using land-based recirculating aquaculture systems. Its GE salmon is approved for sale in the United States, Canada, and Brazil. The company remained in an early commercialization and expansion phase, with an Indiana grow-out farm and Canadian hatchery and broodstock operations.
Financial performance and liquidity
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Product revenue | $2.47 million | $3.14 million |
| Product costs | $15.28 million | $13.63 million |
| Operating loss | $27.32 million | $22.32 million |
| Net loss | $27.56 million | $22.16 million |
| Net cash used in operating activities | $24.24 million | $21.01 million |
- Revenue declined 21%, while net loss increased 24%. GE salmon revenue was $2.33 million, down 20%; harvest volume increased 14% to 492 metric tons. Management attributed lower revenue primarily to product mix in the first half and weaker salmon market prices in the second half of 2023.
- Product costs rose 12%, reflecting higher output, labor, feed, supplies, maintenance, processing, and transportation costs. Revenue less product costs was a loss of approximately $12.81 million; the filing does not present a separate gross-margin measure.
- Cash, cash equivalents, and restricted cash totaled $9.20 million at year-end, down from $102.64 million. Operating cash use was $24.24 million; investing cash use was $68.89 million, including $65.1 million for Ohio construction and equipment deposits. The prior year’s investing cash inflow included $101.8 million of net marketable-security sales.
- Total debt was $8.54 million before debt issuance costs; balance-sheet current debt was $0.80 million and long-term debt, net, was $7.71 million. Total liabilities were $22.53 million. Most debt bears fixed rates; the First Farmers Bank and Trust loan resets in July 2025.
- Year-end total assets were $187.55 million, including $174.38 million of net property, plant, and equipment. The company reported cumulative losses of approximately $221 million and an accumulated deficit of $220.58 million.
Material changes and unusual items
- The Ohio farm’s estimated total project cost increased to $485–$495 million. Construction was paused in July 2023 at approximately 30% completion; year-end construction in progress included $141.8 million for Ohio. The company reported $16.7 million of contractual commitments for farm sites.
- Prepaid legal and bond-financing costs of approximately $2.1 million were expensed in 2023 after the Ohio bond transaction was postponed for an undetermined period.
- General and administrative expense increased 33%, primarily from higher legal fees, state excise taxes, personnel, audit and consulting fees, and share-based compensation. Sales and marketing and research and development expenses decreased.
- A 1-for-20 reverse stock split took effect October 16, 2023. All share and per-share amounts in the filing reflect the split.
Outlook, risks, and contingencies
- Going concern and funding: The auditor’s report and management’s disclosure state that substantial doubt exists about the company’s ability to continue as a going concern within one year after the financial statements were issued. Continued operations depend on raising additional capital; no assurance is given that funding will be available on acceptable terms or in time. Management expects operating cash flows to remain negative in the near term.
- Financing and strategic alternatives: The company is pursuing funding and strategic options, including debt secured by unencumbered assets, joint ventures or other transactions, and a sale of the Indiana farm. A municipal authority had approved up to $425 million in Ohio project bonds, but increased project costs exceeded the company’s ability to complete the proposed financing.
- Subsequent event: In February 2024, AquaBounty announced a decision to sell its Indiana farm to increase liquidity. The sale price, timing, and completion are not assured; a sale below book value could result in a loss.
- Business and execution risks: Key risks include further capital needs and dilution or restrictive debt terms; construction delays and cost inflation; customer concentration (the top three customers represented 76% of 2023 revenue); commodity price fluctuations; fish health, mortality, and inventory valuation; and the company’s unproven ability to produce profitably at commercial scale.
- Regulatory and market risks: Continued approvals and permitting are needed for additional farms and markets. Litigation challenging FDA’s environmental review led to a remand for further NEPA and Endangered Species Act work; the filing says this has no current business impact on existing Canadian egg production, Indiana production, or sales. Consumer acceptance and required GE labeling remain risks.
- Other disclosures: The company reported no material cybersecurity breach in 2023. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not provide an ICFR attestation because the company is a non-accelerated filer. The auditor issued an unmodified opinion on the financial statements with a going-concern emphasis.
Most important facts for investors to verify
- Whether the company secures sufficient working capital and Ohio construction financing, and on what terms, dilution, and covenants.
- Whether the Indiana farm sale closes, its proceeds and timing, and any resulting gain or loss.
- Updated Ohio construction costs, remaining funding needs, vendor availability, permits, and a credible restart and completion schedule.
- Cash burn, near-term obligations, debt covenant compliance, and the runway provided by available cash and any new financing.
- Customer retention and diversification, salmon pricing and margins, and evidence that production can scale profitably.
- Progress on regulatory environmental review and approvals, and any material changes in litigation or labeling requirements.