Edible Garden AG rporated(US:EDBL)2024-11-13 14:56Financial Performance - Revenue for the three months ended September 30, 2024, was $2.584 million, a decrease of $705 thousand (21.4%) from $3.289 million in the same period of 2023, primarily due to a strategic shift away from lower margin products[143]. - Cost of goods sold decreased by $1.392 million (42.5%) to $1.885 million for the three months ended September 30, 2024, compared to $3.277 million in 2023, driven by seasonally low sales and reduced reliance on third-party growers[144]. - Selling, general and administrative expenses (SG&A) were $2.189 million for the three months ended September 30, 2024, down $198 thousand (8.3%) from $2.387 million in 2023, due to reduced labor costs and professional fees[145]. - The loss from operations improved by $885 thousand (37.3%) to $1.490 million for the three months ended September 30, 2024, compared to a loss of $2.375 million in 2023[146]. - Net loss for the three months ended September 30, 2024, was $2.063 million, a decrease of $368 thousand (15.1%) from a net loss of $2.431 million in 2023, attributed to a 27% expansion in gross profit margin[148]. - Revenue for the nine months ended September 30, 2024, was $9.985 million, an increase of $20 thousand (0.2%) from $9.965 million in 2023, driven by increased demand for core products[149]. - Cost of goods sold for the nine months ended September 30, 2024, was $7.696 million, a decrease of $1.729 million (18.3%) from $9.425 million in 2023, due to reduced reliance on third-party growers[152]. - SG&A expenses increased by $1.365 million (18.3%) to $8.823 million for the nine months ended September 30, 2024, primarily due to a one-time severance charge and higher professional fees[153]. - Net loss for the nine months ended September 30, 2024, was $7.972 million, compared to a net loss of $5.948 million in 2023, with the previous year's loss including a one-time Employee Retention Credit of $1.233 million[157]. Cash Flow and Financing - As of September 30, 2024, the company had $2.214 million in cash and cash equivalents, an increase from $510 thousand as of December 31, 2023, and raised approximately $4.797 million from a public offering[162]. - The company entered into a merchant cash advance agreement with Cedar Advance LLC, selling $2,485,000 in accounts receivable for $1,544,250 in net funds provided[166]. - Cash used for operating activities during the nine months ended September 30, 2024, was $6.761 million, a slight decrease from $6.778 million in the same period of 2023[169]. - Cash used in investing activities decreased to $177 thousand in the nine months ended September 30, 2024, compared to $800 thousand in 2023, due to lower purchases related to the Michigan facility[169]. - Cash provided by financing activities was $8.642 million for the nine months ended September 30, 2024, down from $10.046 million in 2023, reflecting a $1.4 million decrease[170]. - The company received approximately $1.1 million in net proceeds from the sale of common stock under the Equity Distribution Agreement after deducting a 3.5% commission[167]. - The financing activities included an incremental $2.27 million in debt proceeds from the Cedar agreements, offset by $3.1 million in debt repayments[170]. - Cash provided by equity activities increased by $1.2 million due to sales under the EDA, despite a reduction of $686 thousand in public offering proceeds year over year[170]. - The company is required to pay Cedar 35.0% of all funds collected weekly from customers until the total balance of $2,485,000 is repaid[166]. - Cedar is authorized to withdraw $65,000 weekly from the company's bank account until a reconciliation is provided[166]. - The Cedar Agreement is collateralized by the company's cash and receivable accounts, with specific remedies in case of default[166]. Business Operations and Strategy - The company reported a gross proceeds of approximately $5.6 million from the September public offering, which included 4,240,650 common units and 11,460,000 pre-funded units[134]. - The company acquired Edible Garden Corp. for a nominal price of $1.00, assuming a lease with a monthly payment of approximately $22,189[130][132]. - The company prepaid $3,106,458 of outstanding principal and $9,061 of accrued interest on a secured promissory note, recognizing a loss from extinguishment of debt equal to $163,584[133]. - The company utilizes a proprietary software, GreenThumb, to enhance traceability and quality control, integrating real-time sales data and inventory management[124][125]. - The company focuses on sustainable practices, including a closed loop system that recycles water and uses LED lights to reduce resource consumption[126]. - The company is subject to risks regarding Nasdaq compliance, having received a notice for not meeting the minimum bid price requirement[128][129]. - The company has a history of losses and faces challenges in obtaining additional financing and managing growth effectively[120]. - The company emphasizes its brand "Edible Garden" as a differentiator, aiming to expand its product portfolio in the Consumer Brands category[127]. - The company reported that its controlled environment agriculture techniques allow for year-round production of consistent quality herbs and lettuces[123]. - The company has incurred net operating losses, fully offset by a valuation allowance as of September 30, 2024[140].