AQUABOUNTY TECHNOLOGIES INC

Condensed Consolidated Balance Sheets

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Condensed Consolidated Statements of Operations and Comprehensive Loss

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Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

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Condensed Consolidated Statements of Cash Flows

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Notes to the condensed consolidated financial statements

(unaudited)

1. Nature of Business and Organization

AquaBounty Technologies, Inc. (the “Parent” and, together with its wholly owned subsidiaries, the “Company”) was incorporated in December 1991 in the State of Delaware for the purpose of conducting research and development of the commercial viability of a group of proteins commonly known as antifreeze proteins. In 1996, the Parent obtained the exclusive licensing rights for a gene construct (transgene) used to create a breed of farm-raised Atlantic salmon that exhibit growth rates that are substantially faster than conventional Atlantic salmon.

The Company has historically pursued a growth strategy that included the construction of large-scale recirculating aquaculture system (“RAS”) farms for producing its genetically engineered Atlantic salmon (“GE Atlantic salmon”). The Company had commenced construction of a 10,000 metric ton farm in Pioneer, Ohio (“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 the Company’s ability to pursue municipal bond financing, which was a necessary component of its funding strategy. The Company subsequently engaged an investment bank to pursue a range of funding and strategic alternatives and to assist management in the prioritization of the Company’s core assets. These efforts resulted in the sale of the Company’s grow-out farm in Indiana (“Indiana Farm”) in July 2024, recurring sales throughout 2024 and 2025 of selected equipment originally intended for the Ohio Farm Project (“Ohio Equipment Assets”), and the sale of the Company’s Canadian subsidiary, including the broodstock farms owned by the Canadian subsidiary in Prince Edward Island, Canada (“Canadian Farms”) and its intellectual property for GE Atlantic salmon, along with trademarks and patents (“Corporate IP”) in March 2025. After completion of these transactions, the Company’s primary remaining asset as of June 30, 2026 is its investment in the Ohio Farm Project, consisting of the remaining Ohio Equipment Assets and the land and construction in process (“Ohio Farm Site”). The Company continues to work with its investment bank to identify the optimal path forward for realizing the potential of this asset.

2. Going Concern Uncertainty

Since inception, the Company has incurred cumulative net losses of $391 million and expects that this will continue for the foreseeable future. As of June 30, 2026, the Company had $1.9 million in cash on its condensed consolidated balance sheet.

The Company’s ability to continue as a going concern is dependent upon its ability to raise additional capital, including its ability to sell assets to generate liquidity to fund ongoing operations, and there can be no assurance that such capital will be available in sufficient amounts, on a timely basis, or on terms acceptable to the Company, or at all. Limited operating assets, dependency on capital raising activities and cumulative net losses raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the accompanying condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of this uncertainty.

During the year ended December 31, 2025, the Company’s management continued to sell assets to generate cash for working capital, while exploring strategic alternatives to raise funds with the goal of maximizing stockholder value. Potential alternatives that were evaluated included, but were not limited to, equity or debt financing, a merger, and the sale of all or part of the Company.

On February 11, 2026, the Company completed an equity transaction with certain investors, pursuant to which the Company sold an aggregate of 1,269,509 shares of its common stock, par value $0.001 (“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, the Company entered into securities exchange agreements in a private placement with the holders of the Company’s 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 the Company’s Series A Convertible preferred stock, par value $0.01 per share (“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 are convertible into up to 5,275,060 shares of the Company’s Common Stock at the option of the holders.

On June 25, 2026, the Company entered into securities purchase agreements with certain purchasers, pursuant to which the Company issued and sold 109,223 shares of the Company’s Series B Convertible Preferred Stock, par value $0.01 per share

(“Series B PS”) for gross proceeds of $2.25 million. The Series B PS are convertible into up to 2,184,460 shares of the Company’s Common Stock at the option of the holders.

3. Basis of Presentation

The unaudited interim condensed consolidated financial statements include the accounts of AquaBounty Technologies, Inc. and its wholly owned direct subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation.

The unaudited interim condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) consistent with those applied in, and should be read in conjunction with, the Company’s audited financial statements and related notes for the year ended December 31, 2025. The unaudited interim condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of June 30, 2026, results of operations and cash flows for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. The unaudited interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements, as allowed by the relevant SEC rules and regulations; however, the Company believes that its disclosures are adequate to ensure that the information presented is not misleading.

Discontinued Operations

As noted above, the Company sold its Indiana Farm in July 2024 and its Canadian Farms in March 2025. At December 31, 2025, the Company determined that its actions and decisions during 2025 regarding its Ohio Farm Project constituted a triggering event for revaluing these assets. These farms have been designated as discontinued operations in these interim condensed consolidated financial statements for all periods presented (see Note 5).

Net Loss Per Share

Basic and diluted net loss per share available to common stockholders have been calculated by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Basic net loss per share is based solely on the number of shares of common stock outstanding during the period. Fully diluted net loss per share includes the number of shares of common stock issuable upon the exercise of warrants or options with an exercise price less than the fair value of the common stock. Since the Company is reporting a net loss for all periods presented, all potential shares of common stock are considered anti-dilutive and are excluded from the calculation of diluted net loss per share.

The following table contains the Company’s potentially dilutive securities:

The table does not include the potential dilutive shares that could be issued from preferred stock dividends.

Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2024-03, Disaggregation of Income Statement Expenses, to enhance the transparency of certain expense disclosures. The update requires disclosure of specific expense categories in the notes to the financial statements at interim and annual reporting periods. The update requires disaggregated information about certain prescribed expense categories underlying any relevant income statement expense caption. The amendments in this update are effective for public entities for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The amendments may be adopted either prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impacts of this update and plans to adopt these amendments for annual disclosures for the year ended December 31, 2027, and interim disclosures in the year ended December 31, 2028.

Management does not expect any other recently issued, but not yet effective, accounting standards to have a material effect on its results of operations or financial condition.

4. Risks and Uncertainties

The Company is subject to risks and uncertainties associated with its current operations. Such risks and uncertainties include, but are not limited to: (i) timing of securing additional sources of cash; (ii) realization of asset values different than those recorded on the Company’s consolidated balance sheet; and (iii) stockholder approval of any plans made by the Company’s management and board of directors that require stockholder approval.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist principally of cash balances. This risk is mitigated by the Company’s policy of maintaining all balances with highly rated financial institutions. The Company’s cash balances may at times exceed insurance limitations.

5. Discontinued Operations and Assets Held for Sale

In July 2024, the Company sold its Indiana Farm for a sale price of $9.5 million less transaction expenses of $305 thousand, which included certain Ohio Equipment Assets with a carrying value of $13.0 million that had been purchased for the Company’s Ohio Farm Project. In December 2024, the Company announced the winddown of its Canadian fish rearing operations and sold its Canadian Farms in March 2025 for a sale price of $5.2 million, including the assumption of $3.2 million in outstanding loans, less transaction expenses of $216 thousand. These decisions by the Company represented a strategic shift that has had a major effect on the Company’s operations and financial results. Consequently, each of these farms has been designated as discontinued operations in the condensed consolidated financial statements for the periods presented.

Additionally, the Company has been working with its investment bank to identify the optimal path forward for realizing the potential of its assets, including the possible sale of the Ohio Farm Project. The Company received a non-binding Letter of Interest to purchase the Ohio subsidiary, and consequently the Company determined that the actions and decisions that occurred leading up to receiving this offer constituted a triggering event for revaluing these assets and has included the Ohio Farm Project in discontinued operations in the condensed consolidated financial statements for the periods presented.

Provided below are the major areas of the financial statements that constitute discontinued operations.

6. Prepaid and Other Current Assets

Major classifications of prepaid and other current assets are summarized as follows:

7. Debt

Senior Notes

On October 28, 2025, the Company entered into Note Purchase Agreements with certain investors providing for the issuance and sale of senior notes (“Senior Notes”) in an aggregate principal amount of $4.0 million in a private placement transaction. The Senior Notes were unsecured, nonconvertible, bore interest at 18% per annum, and were scheduled to mature 18 months from closing.

On April 7, 2026, the Company entered into securities exchange agreements in a private placement with the holders of the Company’s 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 the Company’s Series A Convertible preferred stock, par value $0.01 per share, which are convertible into up to 4,727,340 shares of the Company’s Common Stock at the option of the holder.

The Company recognized interest expense of $829 thousand and $0 for the six months ended June 30, 2026 and 2025, respectively, on its interest-bearing debt.

8. Stockholders’ Equity

The Company’s stockholders have authorized 80 million shares of stock, of which 5 million are authorized as preferred stock and 75 million as common stock.

Recent Issuances of Preferred Stock, Common Stock, and Warrants

On February 11, 2026, the Company completed an equity transaction with certain investors, pursuant to which the Company sold an aggregate of 1,269,509 shares of its 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 can be converted to Common Stock at the option of the holder and there is no expiration date.

On April 7, 2026, the Company entered into securities exchange agreements in a private placement with the holders of the Company’s 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 the Company’s Series A Convertible preferred stock, par value $0.01 per share (“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 are convertible into up to 5,275,060 shares of the Company’s Common Stock at the option of the holders.

On June 25, 2026, the Company entered into securities purchase agreements with certain purchasers, pursuant to which the Company issued and sold 109,223 shares of the Company’s Series B Convertible Preferred Stock, par value $0.01 per share (“Series B PS) for gross proceeds of $2.25 million. The Series B PS are convertible into up to 2,184,460 shares of the Company’s Common Stock, at the option of the holders.

Preferred Stock

There are a total of 5,000,000 shares of preferred stock authorized, with 400,000 shares designated as Series A Convertible Preferred Stock and 200,000 shares designated as Series B Convertible Preferred Stock. The shares of both series of preferred stock rank senior to the Company’s Common Stock and have the additional characteristics set below.

Dividends – Dividends accrue on each share of preferred stock at the rate of 18.0% per annum on a quarterly basis in arrears, calculated on the liquidation value. Dividends are payable in cash when declared on a bi-annual schedule and the Company’s Board of Directors (“Board”) may permit dividends to accumulate rather than be paid out.

Conversion –Each share of preferred stock is convertible at any time at the holder’s election into shares of Common Stock based on the applicable conversion price, as adjusted, which conversion price is determined based on the liquidation value. In addition, subject to compliance with applicable exchange rules, the Board may elect to convert accrued and unpaid dividends into shares of Common Stock.

Liquidation Preference – Upon any liquidation, dissolution or winding up, preferred stockholders are entitled to receive, before any distribution to junior securities, at the holder’s election, either cash or non-cash consideration valued at fair market value as determined by the Board in good faith, in each case equal to the aggregate liquidation value plus all unpaid accrued and accumulating dividends.

Voting –Each share of preferred stock votes together with the Common Stock as a single class on all matters submitted to stockholders, with each share having a number of votes equal to the number of shares of Common Stock into which it is then convertible.

At June 30, 2026, the Company’s outstanding preferred stock consists of the following:

Share-based compensation

At June 30, 2026, the Company has reserved 37,594 and 0 shares of common stock issuable upon the exercise of outstanding stock options and unvested stock awards, respectively, under its 2016 Equity Incentive Plan. No shares of Common Stock are reserved for future equity awards under the 2016 Equity Incentive Plan.

Unvested Stock Awards

During the six months ended June 30, 2026 and 2025, the Company expensed $0 and $33 thousand, respectively, related to the stock awards.

Stock options

The Company’s option activity is summarized as follows:

Unless otherwise indicated, options issued to employees, members of the Board, and non-employees generally vest over a period ofone year tothree years and are exercisable for a term of 10 years from the date of issuance. There wereno stock options granted during the six months ended June 30, 2026.

There wasno intrinsic value for options outstanding or exercisable at June 30, 2026 and December 31, 2025.

The following table summarizes information about options outstanding and exercisable at June 30, 2026:

Total share-based compensation on stock-option grants amounted to $5 thousand and $24 thousand for the six months ended June 30, 2026 and 2025, respectively. At June 30, 2026, the balance of unearned share-based compensation to be expensed in future periods related to unvested share-based awards was $0.

9. Commitments and Contingencies

The Company recognizes and discloses commitments when it enters into executed contractual obligations with other parties. The Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

The Company is subject to legal proceedings and claims arising in the normal course of business. Management believes that final disposition of any such matters existing at June 30, 2026, will not have a material adverse effect on the Company’s financial position or results of operations.

Lease commitments

The Company’s lease right of use assets and obligations as of June 30, 2026 and 2025 were $8 thousand and $38 thousand, respectively and there was 0.25 years remaining on its lease commitment. Operating lease expenses for the six months ended June 30, 2026 and 2025 were $16 thousand each.

10. Segment Reporting

The Company adopted ASU 2023-07 effective for the annual period beginning January 1, 2024.

The financial information presented to and reviewed by the Company’s chief operating decision maker, who is the interim chief executive officer, chief financial officer and treasurer, is not prepared in accordance with GAAP, therefore certain accounting policies

of the Company’ssingle operating and reportable segment differ significantly from those described in the Company’s 2025 Annual Report on Form 10-K, which was filed on March 31, 2026. Since the Company operates asone operating segment, all required significant financial segment information can be found in the condensed consolidated financial statements. There are no other significant segment expenses that would require disclosure. The measure of segment assets is reported on the condensed consolidated balance sheets as total consolidated assets.

Management monitors the financial results for internal purposes using consolidated net loss (income) and net cash expenditures, as these are the key performance measures used for evaluating the business. The chief operating decision maker uses these measures on a monthly basis when assessing performance and when making decisions about how to allocate operating resources, such as payments to vendors.

11. Income Taxes

The Company reported a net loss for the six months ended June 30, 2026, and is forecasting losses through the remainder of the year, resulting in an estimated net loss for both financial statement and tax purposes for the year ending December 31, 2026. Therefore, no federal or state income taxes are expected andnone have been recorded at this time. Income taxes have been accounted for using the liability method.

Due to the Company’s history of losses since inception, there is not enough evidence at this time to support that the Company will generate future income of a sufficient amount and nature to utilize the benefits of its net deferred tax assets. Accordingly, the deferred tax assets have been reduced by a full valuation allowance, since the Company does not currently believe that realization of its deferred tax assets is more likely than not.

As of June 30, 2026, the Company hadno unrecognized income tax benefits that would reduce the Company’s effective tax rate if recognized.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations