PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's unaudited statements show increased revenue and costs, leading to a larger net loss and significant capital investment Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $118,888,889 | $88,454,988 | | Marketable securities | $29,354,888 | $101,773,781 | | Total current assets | $154,609,571 | $193,025,163 | | Property, plant and equipment, net | $63,978,895 | $33,815,119 | | **Total assets** | **$220,139,761** | **$228,435,992** | | **Liabilities & Equity** | | | | Total current liabilities | $8,407,224 | $5,885,838 | | Total liabilities | $16,727,586 | $14,633,229 | | Total stockholders' equity | $203,412,175 | $213,802,763 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Product revenues | $1,069,706 | $227,393 | $2,032,587 | $301,765 | | Total costs and expenses | $6,640,245 | $5,406,808 | $12,706,932 | $9,566,228 | | Operating loss | ($5,570,539) | ($5,179,415) | ($10,674,345) | ($9,264,463) | | Net loss | ($5,536,042) | ($5,230,737) | ($10,647,768) | ($9,389,628) | | Basic and diluted net loss per share | ($0.08) | ($0.07) | ($0.15) | ($0.14) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($11,256,408) | ($10,457,833) | | Net cash provided by (used in) investing activities | $41,966,420 | ($74,151,566) | | Net cash (used in) provided by financing activities | ($274,724) | $121,171,061 | | Net change in cash, cash equivalents and restricted cash | $30,433,901 | $36,594,191 | - The company began selling its GE Atlantic salmon in the United States, Canada, and Brazil after receiving regulatory approvals[26](index=26&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses higher revenue from salmon sales offset by rising costs, and the significant capital needed for the new Ohio farm [Results of Operations](index=16&type=section&id=Results%20of%20Operations) Revenue grew significantly due to higher harvest volumes, but increased production costs and inventory charges widened net losses Q2 2022 vs Q2 2021 Performance | Metric | Q2 2022 | Q2 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product Revenue | $1.07M | $0.23M | +$0.84M | +371% | | GE Salmon Harvest (mt) | 129 | 69 | +60 | +87% | | Product Costs | $3.25M | $1.85M | +$1.40M | +76% | | Net Loss | ($5.54M) | ($5.23M) | +$0.31M | +6% | H1 2022 vs H1 2021 Performance | Metric | H1 2022 | H1 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product Revenue | $2.03M | $0.30M | +$1.73M | +573% | | GE Salmon Harvest (mt) | 262 | 69 | +193 | +280% | | Product Costs | $6.53M | $3.40M | +$3.13M | +92% | | Net Loss | ($10.65M) | ($9.39M) | +$1.26M | +13% | - Production costs were higher than the net realizable value of the salmon produced, resulting in inventory value charges of **$2.0 million for Q2 2022** and **$4.1 million for H1 2022**[83](index=83&type=chunk)[90](index=90&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) The company has sufficient liquidity for the next year but requires substantial additional financing for its Ohio farm construction - The company's plans include the construction of a 10,000 metric ton salmon farm in Ohio, with a current estimated cost **exceeding $320 million**[103](index=103&type=chunk) - Management believes its cash position of **$149.2 million** is sufficient for more than twelve months but requires additional financing to execute its business plan[29](index=29&type=chunk)[103](index=103&type=chunk) - Cash from investing activities was **$42.0 million** in H1 2022, primarily from the net sale of marketable securities to fund construction and equipment purchases[97](index=97&type=chunk)[99](index=99&type=chunk) - Financing activities in H1 2021 provided **$121.2 million** from a public stock offering, whereas H1 2022 financing activities used **$0.3 million**[97](index=97&type=chunk)[101](index=101&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks involve interest rates on debt and foreign currency fluctuations from its Canadian operations - The company's primary market risk exposures are **interest rate risk** on debt and **foreign currency exchange risk** from its Canadian operations[115](index=115&type=chunk) - Most of the company's existing interest-bearing debt is at **fixed rates**, mitigating immediate risk from rate changes[116](index=116&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - Management concluded that as of June 30, 2022, the company's disclosure controls and procedures were **effective**[118](index=118&type=chunk) - No changes occurred during the fiscal quarter that materially affected the company's internal control over financial reporting[120](index=120&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any legal proceedings that would materially impact its business or financial condition - The company is **not party to any material legal proceedings**[122](index=122&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) Key risks include the need for substantial capital for the Ohio farm, compounded by rising inflation and interest rates - The company's business plan requires substantial additional capital, particularly for the Ohio farm, which is estimated to cost **over $320 million**[124](index=124&type=chunk)[125](index=125&type=chunk) - The company **does not have the financial resources to fully fund the Ohio farm** and will need to raise funds through debt financing[126](index=126&type=chunk) - Due to inflationary pressures, the company has **slowed its planned timeline for pursuing debt financing** to re-estimate construction costs[125](index=125&type=chunk) - Rising inflation poses a risk to profitability if cost increases cannot be passed on to customers or if consumer spending declines[133](index=133&type=chunk)[134](index=134&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - None[136](index=136&type=chunk) [Item 3. Defaults Upon Senior Securities](index=25&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - None[137](index=137&type=chunk) [Item 4. Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable as the company is not engaged in mining operations - Not applicable[137](index=137&type=chunk) [Item 5. Other Information](index=25&type=section&id=Item%205.%20Other%20Information) No other material information was required to be reported during the period - None[137](index=137&type=chunk) [Item 6. Exhibits](index=26&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including required CEO and CFO certifications under the Sarbanes-Oxley Act - The report includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002[140](index=140&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ 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 char ...