AquaBounty Technologies, Inc. — FY2021 Form 10-K
Business context and reporting period. The filing covers the fiscal year ended December 31, 2021. AquaBounty develops land-based recirculating aquaculture systems (RAS) and genetically engineered AquAdvantage Atlantic salmon. The company began harvesting and selling its GE salmon in 2021 and operated farms in Indiana and Prince Edward Island, Canada. Its U.S. and Canadian product approvals were in place; Brazil approved sale and consumption in May 2021.
Financial performance and position
| Metric | FY2021 | FY2020 |
|---|---|---|
| Product revenue | $1.175 million | $128,000 |
| Product costs | $10.786 million | $6.680 million |
| Operating loss | $22.122 million | $16.248 million |
| Net loss | $22.323 million | $16.400 million |
| Net loss per share | $0.32 | $0.45 |
| Net cash used in operating activities | $20.472 million | $14.289 million |
- Revenue grew 818%, primarily reflecting initial sales of GE salmon from both farms, but remained small relative to costs. Product costs exceeded revenue by about $9.6 million; the filing does not present a formal gross margin.
- Production costs included $8.0 million of net realizable value inventory adjustments. Management cited market prices, production yields, and external processing and transportation costs. The company also recorded $514,000 related to donating conventional salmon in 2021.
- At year-end, cash and cash equivalents were $88.5 million, marketable securities were $101.8 million, and restricted cash was $1.0 million—$191.2 million combined. Total current assets were $193.0 million and current liabilities were $5.9 million.
- Debt totaled $9.2 million gross ($9.15 million net of debt issuance costs), including $627,000 current debt. Year-end stockholders’ equity was $213.8 million; accumulated deficit was $170.9 million.
- Investing activities used $107.5 million, including $101.8 million for marketable securities and $5.7 million for property and equipment. Financing activities provided $121.2 million, including $119.1 million net proceeds from a public stock offering. Shares outstanding rose to 71.0 million from 55.5 million.
Material changes versus FY2020
- Revenue increased from $128,000 as commercial GE salmon sales commenced; operating and net losses widened by 36% as production, sales, and corporate costs rose.
- Operating cash use increased by 43%, to $20.5 million. R&D expense fell 9% to $2.1 million, while sales and marketing expense rose 137% to $1.3 million and general and administrative expense rose 34% to $9.1 million.
- Marketable securities increased from zero to $101.8 million, following the company’s equity financing and investment of proceeds. The 2021 offering raised approximately $119.1 million net.
Outlook, commentary, risks, and unusual items
- Management expected modest revenue growth in 2022 as Indiana harvesting capacity increased. It believed existing liquidity could fund requirements for at least 12 months from the filing date, while forecasting about $130 million of 2022 cash use for operations and the first year of Ohio construction.
- The planned Pioneer, Ohio farm is designed for 10,000 metric tons annually, with estimated construction costs of $290–$320 million. The company targeted introducing the first GE salmon eggs by year-end 2023, subject to FDA facility approval. A port authority approved issuance of up to $300 million in municipal bonds; the company expected financing to close in Q2 2022. Approval was not a completed financing.
- Management cited labor shortages, increased third-party processing and transportation costs, supply-chain delays, and COVID-19 effects on demand and salmon prices. These factors reduced revenue and inventory values and constrained harvesting; management did not expect Indiana to reach 1,200 metric tons of annual harvest within the next 12 months.
- Key risks include continuing losses and need for substantial capital; execution, permitting, and cost-overrun risk for new farms; consumer acceptance and labeling of GE food; fish health, mortality, and product quality; dependence on third-party processing and distribution; and commodity-price volatility.
- Ongoing litigation resulted in a court remand to the FDA for further NEPA and Endangered Species Act work. The filing said the decisions had no current impact on existing production or sales; regulatory matters remained ongoing.
- The company reported $171 million of cumulative net losses since incorporation and stated it may never achieve profitability. It had no cash dividend plans. Management reported disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal-control effectiveness.
Important facts for investors to verify
- Whether Ohio construction financing actually closed, the final project cost and schedule, and FDA and local approvals for the facility.
- Whether Indiana can increase harvest volumes despite staffing constraints, and whether production yields, processing costs, and realized selling prices support positive unit economics.
- How much of future inventory adjustments reflects market prices versus yields and processing or transportation costs, and whether inventory NRV stabilizes.
- Progress in customer adoption, distribution, and international approvals, including Brazil commercialization and applications in Israel and China.
- Future capital needs, debt and covenant compliance, and potential dilution after the substantial 2021 equity issuance.
- Developments in the FDA’s NEPA and ESA review and any changes to regulatory requirements or litigation that could affect sales or planned farm sites.