Edible Garden AG rporated(US:EDBL)2025-05-15 20:20PART I — FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited statements for Q1 2025 show decreased assets, a net loss of $3.3 million, and raise substantial doubt about its going concern status Condensed Consolidated Balance Sheets Total assets decreased to $8.5 million and stockholders' equity fell to $1.9 million as of March 31, 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash | $409 | $3,530 | ($3,121) | | Total Current Assets | $4,228 | $7,377 | ($3,149) | | Total Assets | $8,535 | $11,915 | ($3,380) | | Liabilities & Equity | | | | | Total Current Liabilities | $5,183 | $6,210 | ($1,027) | | Total Liabilities | $6,617 | $7,821 | ($1,204) | | Total Stockholders' Equity (Deficit) | $1,918 | $4,094 | ($2,176) | Condensed Consolidated Statements of Operations Revenue declined 13.2% in Q1 2025, but a reduced net loss of $3.3 million was achieved due to lower operating expenses Condensed Consolidated Statements of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $2,718 | $3,132 | -13.2% | | Cost of goods sold | $2,630 | $3,109 | -15.4% | | Gross profit | $88 | $23 | +282.6% | | Selling, general and administrative expenses | $3,015 | $3,884 | -22.4% | | Loss from operations | ($2,926) | ($3,861) | +24.2% | | Net Loss | ($3,324) | ($3,977) | +16.4% | | Net Loss per common share - basic and diluted | ($2.47) | ($341.14) | N/A | Condensed Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' equity decreased to $1.9 million in Q1 2025, driven by a $3.3 million net loss offset by $1.1 million in stock sale proceeds - In Q1 2025, the company issued 221,132 shares through its Equity Distribution Agreement, raising net proceeds of $1.148 million17 - The accumulated deficit increased by $3.324 million during the quarter, reaching a total of $44.635 million as of March 31, 202517 Condensed Consolidated Statements of Cash Flows Net cash used in operations increased significantly to $3.3 million, resulting in a quarter-end cash balance of only $0.4 million Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($3,332) | ($1,059) | | Net Cash Used in Investing Activities | ($68) | ($55) | | Net Cash Provided by Financing Activities | $279 | $992 | | Net Change in Cash | ($3,121) | ($122) | | Cash at End of Period | $409 | $388 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail significant risks, including customer concentration, going concern doubts, and major subsequent events like an asset purchase - The company has undergone multiple reverse stock splits, including a 1-for-20 split in April 2024 and a 1-for-25 split in March 202526 - For the three months ended March 31, 2025, four customers accounted for approximately 92.1% of total revenue, indicating significant customer concentration risk38 - Management has concluded that substantial doubt exists about its ability to continue as a going concern due to recurring losses and limited cash resources32121124 - Subsequent to the quarter end, the company acquired sustainable aquaculture assets from NaturalShrimp Farms Inc for $12 million, paid via the issuance of Series B Preferred Stock128130 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 13.2% revenue decrease, an improved net loss, and significant liquidity challenges that threaten its going concern status Results of Operations Q1 2025 revenue fell 13.2% to $2.7 million due to a strategic product exit, while reduced SG&A expenses lowered the operating loss - The $414 thousand decrease in revenue was primarily attributed to the company's strategic exit from the floral and lettuce categories174 - SG&A expenses decreased by $869 thousand (22.4%) year-over-year, mainly because prior-year severance expenses were not repeated176 - Interest expense increased significantly to $440 thousand from $117 thousand, driven by new merchant cash advance agreements178 Liquidity and Capital Resources The company faces significant liquidity issues with only $409 thousand in cash and has raised capital through debt and equity offerings - The company has incurred significant losses, including a net loss of $3.3 million in Q1 2025, and believes existing cash will only fund operations into Q3 2025180181 - To meet cash needs, the company entered into merchant cash advance agreements, raising net proceeds of $190,000 in February and $1.435 million in April 2025188189 - The company utilized its at-the-market offering to raise net proceeds of approximately $1.3 million191 Cash Flow Activity Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Cash Used for Operating Activities | $3,332 | $1,059 | | Cash Used in Investing Activities | $68 | $55 | | Cash Provided by Financing Activities | $279 | $992 | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Edible Garden AG Incorporated is not required to provide the information for this item - The company is exempt from this disclosure requirement due to its status as a smaller reporting company195 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025 - The Chief Executive Officer and Interim Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025196 - No material changes in internal control over financial reporting occurred during the quarter197 PART II — OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings - Management does not believe there are any pending or threatened legal proceedings that would have a material adverse effect on the company198 Risk Factors The company faces a primary risk of delisting from Nasdaq due to non-compliance with stockholders' equity requirements - The company regained compliance with Nasdaq's minimum bid price rule but remains under a discretionary panel monitor until April 8, 2026200201 - As of March 31, 2025, the company's stockholders' equity was below the required $2.5 million for continued listing on Nasdaq202 - A potential delisting from Nasdaq could severely reduce stock liquidity, hinder capital raising, and damage customer confidence205 Exhibits This section lists key agreements and officer certifications filed as exhibits with the Form 10-Q - Key exhibits filed include the Equity Distribution Agreement and the Standard Merchant Cash Advance Agreement with Arin Funding204 Signatures The report was duly signed by the Chief Executive Officer and Interim Chief Financial Officer on May 15, 2025