Edible Garden AG rporated(EDBL) - 2025 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Edible Garden AG's unaudited condensed consolidated financial statements for interim periods, prepared under U.S. GAAP Condensed Consolidated Balance Sheets These balance sheets provide a financial position snapshot, detailing changes in assets, liabilities, and stockholders' equity ASSETS (in thousands) | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :------------------ | | Cash | $2,821 | $3,530 | | Accounts receivable, net| $1,211 | $1,968 | | Inventory, net | $1,367 | $1,544 | | Total current assets | $5,889 | $7,377 | | Property, equipment and leasehold improvements, net | $11,006 | $3,145 | | Operating lease right-of-use assets | $4,480 | $1,202 | | Intangible assets, net | $313 | $43 | | TOTAL ASSETS | $21,814 | $11,915 | LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) (in thousands) | LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------------------ | :------------ | :------------------ | | Accounts payable and other accrued expenses | $2,375 | $4,018 | | Short-term debt, net of discounts | $1,317 | $1,939 | | Total current liabilities | $3,954 | $6,210 | | Total long-term liabilities | $1,268 | $1,611 | | Total liabilities | $5,222 | $7,821 | | Series B redeemable preferred stock | $15,000 | $- |\ | Total stockholders' equity (deficit) | $1,592 | $4,094 | | TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY | $21,814 | $11,915 | - Total assets increased significantly from $11.9 million at December 31, 2024, to $21.8 million at June 30, 2025, primarily due to an increase in property, equipment, and leasehold improvements, and operating lease right-of-use assets, driven by the NaturalShrimp acquisition[8][66] - The company introduced Series B redeemable preferred stock, totaling $15.0 million, classified under mezzanine equity as of June 30, 2025[11][92] Condensed Consolidated Statements of Operations These statements detail financial performance, including revenue, costs, gross profit, operating expenses, and net loss (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- |\ | Revenue | $3,146 | $4,268 | $5,864 | $7,401 | | Cost of goods sold | $2,512 | $2,702 | $5,142 | $5,811 | | Gross profit | $634 | $1,566 | $722 | $1,590 | | Selling, general and administrative expenses | $4,227 | $2,748 | $7,242 | $6,632 | | Loss from operations | $(3,593) | $(1,182) | $(6,519) | $(5,042) | | Interest expense, net | $(389) | $(419) | $(829) | $(536) | | NET LOSS | $(4,043) | $(1,932) | $(7,367) | $(5,909) | | NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $(13,876) | $(1,932) | $(17,200) | $(5,909) | | Net Income / (Loss) per common share - basic and diluted | $(6.58) | $(30.02) | $(9.95) | $(155.46) | - Net loss increased significantly for both the three-month period (from $1.9 million to $4.0 million) and six-month period (from $5.9 million to $7.4 million) ended June 30, 2025, compared to 2024[14] - Revenue decreased by 26% for the three months and 21% for the six months ended June 30, 2025, primarily due to strategic exit from floral and lettuce categories[13][177][185] - Selling, general and administrative expenses increased by 54% for the three months and 9% for the six months ended June 30, 2025, driven by legal charges related to the NaturalShrimp acquisition and Narayan transactions[13][179][187] Condensed Consolidated Statements of Stockholders' Equity (Deficit) These statements show changes in equity components, including common stock, paid-in capital, and accumulated deficit (in thousands, except for shares) | (in thousands, except for shares) | Balance at Dec 31, 2024 | Issuances of common stock for warrant exercises | Sale of common stock pursuant to Equity Distribution Agreement, net of fees | Series B preferred stocks dividends payable | Net Loss | Balance at June 30, 2025 | | :-------------------------------- | :---------------------- | :---------------------------------------------- | :-------------------------------------------------------- | :------------------------------------------ | :------- | :----------------------- | | Common Stock Shares | 1,065,402 | 1,055,682 | 613,459 | - | - | 2,828,661 | | Additional Paid-In Capital | $44,946 | $3,720 | $1,759 | $(155) | - | $50,270 | | Accumulated Deficit | $(41,311) | - | - | - | $(7,367) | $(48,678) | | Total | $4,094 | $3,261 | $1,759 | $(155) | $(7,367) | $1,592 | - Total stockholders' equity decreased from $4.094 million at December 31, 2024, to $1.592 million at June 30, 2025, primarily due to a net loss of $7.367 million[20] - Common stock shares outstanding increased significantly from 1,065,402 at December 31, 2024, to 2,828,661 at June 30, 2025, driven by warrant exercises and sales through the Equity Distribution Agreement[20][113][114] Condensed Consolidated Statements of Cash Flows These statements present cash flows from operating, investing, and financing activities for the six-month periods (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :----------------------------- | :----------------------------- | | Net loss | $(7,367) | $(5,909) | | NET CASH USED IN OPERATING ACTIVITIES | $(6,764) | $(5,649) | | NET CASH USED IN INVESTING ACTIVITIES | $(122) | $(167) | | NET CASH PROVIDED BY FINANCING ACTIVITIES | $6,177 | $7,494 | | NET CHANGE IN CASH | $(709) | $1,678 | | CASH AT END OF PERIOD | $2,821 | $2,188 | - Net cash used in operating activities increased to $6.8 million for the six months ended June 30, 2025, from $5.6 million in the prior year, primarily due to decreased revenue and reduction in accounts payable[23][202] - Cash provided by financing activities decreased to $6.2 million in 2025 from $7.5 million in 2024, driven by lower debt financing, partially offset by warrant inducement and preferred stock issuance[23][204] - Cash at the end of the period decreased to $2.8 million as of June 30, 2025, from $3.5 million at the beginning of the period[23] Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed explanations for financial statement figures, covering policies, assets, liabilities, equity, and going concern NOTE 1 – ORGANIZATION, NATURE OF BUSINESS, AND BASIS OF PRESENTATION This note outlines the company's history, business as a hydroponic produce retailer, and U.S. GAAP basis of financial presentation - Edible Garden AG Incorporated acquired substantially all operating assets of Edible Garden Corp. on March 30, 2020, and later acquired the Predecessor on October 1, 2024, for $1.00[24] - The company is a retail seller of locally grown hydroponic produce, nutraceuticals, and hot sauce, distributed across the Northeast and Midwest to over 5,000 supermarkets[29] - The financial statements are prepared on a going concern basis, but management believes substantial doubt exists regarding the company's ability to continue as a going concern due to insufficient liquidity[32][33] NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note details significant accounting policies, including estimates, receivables, inventory, assets, revenue, and income taxes - The company's allowance for credit losses increased from $0.203 million as of December 31, 2024, to $0.557 million as of June 30, 2025[38] - Four customers accounted for approximately 84.7% of total revenue for the six months ended June 30, 2025, indicating a high concentration of credit risk[39] Revenue Disaggregation (in thousands) | Revenue Stream | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Herbs, Produce & Floral | $2,886 | $3,835 | $5,433 | $6,589 | | Vitamins and Supplements | $260 | $433 | $431 | $812 | | Total | $3,146 | $4,268 | $5,864 | $7,401 | - The company recorded an out-of-period adjustment of $0.091 million to cost of goods sold and $0.192 million to operating expenses for the six months ended June 30, 2025, related to the year ended December 31, 2024, which was deemed immaterial[62] NOTE 3 – INVENTORY This note breaks down inventory components: raw materials, work-in-progress, and finished goods Inventory Summary (in thousands) | Inventory Category | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :------------------ | | Raw materials | $616 | $1,000 | | Work-in-progress | $726 | $517 | | Finished goods | $25 | $27 | | Total inventory | $1,367 | $1,544 | - Total inventory decreased from $1.544 million at December 31, 2024, to $1.367 million at June 30, 2025, primarily due to a reduction in raw materials[65] NOTE 4 – NATURALSHRIMP ACQUISITION This note details the $12.0 million acquisition of NaturalShrimp assets, paid via Series B Preferred Stock issuance - On May 14, 2025, the company acquired sustainable aquaculture assets from NaturalShrimp Farms Inc. for $12.0 million[66] - Consideration for the acquisition was 12,000 shares of Series B Preferred Stock, valued at $1,000 per share, issued to Streeterville Capital, LLC[66] Purchase Price Allocation (in thousands) | Asset Category | Acquisition Date Fair Value | | :-------------------- | :-------------------------- | | Furniture and equipment | $8,005 | | Vehicles | $187 | | Favorable contracts | $3,533 | | Intellectual property | $275 | NOTE 5 – PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET This note summarizes net carrying values of property, equipment, and leasehold improvements, and depreciation expense Property, Equipment and Leasehold Improvements, Net (in thousands) | Asset Category | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :------------------ | | Furniture and equipment | $9,335 | $1,330 | | Leasehold improvements | $3,156 | $3,134 | | Vehicles | $634 | $456 | | Land | $202 | $202 | | Construction in progress | $496 | $410 | | Subtotal | $13,833 | $5,542 | | Less accumulated depreciation | $(2,827) | $(2,397) | | Property, equipment and leasehold improvements, net | $11,006 | $3,145 | - Net property, equipment, and leasehold improvements increased significantly from $3.145 million at December 31, 2024, to $11.006 million at June 30, 2025, largely due to the NaturalShrimp acquisition[69] - Depreciation expense for the six months ended June 30, 2025, was $0.455 million, a decrease from $0.560 million in the same period of 2024[69] NOTE 6 – INTANGIBLE ASSETS This note summarizes intangible assets, including intellectual property, their useful lives, and net carrying value Intangible Assets, Net (in thousands) | Intangible Asset | Estimated Useful Life (Years) | Gross Carrying Value (June 30, 2025) | Accumulated Amortization (June 30, 2025) | Net Carrying Value (June 30, 2025) | | :------------------ | :---------------------------- | :----------------------------------- | :--------------------------------------- | :--------------------------------- | | Intellectual property | 15 | $275 | $(3) | $272 | | Pulp brand recipes | 15 | $50 | $(9) | $41 | | Non-compete agreement | 2 | $62 | $(62) | $- | | Total Intangible Assets, net | | $387 | $(74) | $313 | - Net intangible assets increased from $0.043 million at December 31, 2024, to $0.313 million at June 30, 2025, primarily due to the acquisition of intellectual property[70][72] - Amortization expense for the six months ended June 30, 2025, was $0.0047 million, compared to $0.0017 million in the prior year[72] NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES This note details accounts payable and various accrued expenses as of June 30, 2025, and December 31, 2024 Accounts Payable and Accrued Expenses (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :------------------ | | Accounts payable | $898 | $2,290 | | Accrued payroll | $14 | $302 | | Accrued vacation | $92 | $133 | | Accrue dividends payable | $155 | $- | | Other accrued expenses | $351 | $175 | | Employee retention credit funds | $865 | $865 | | Total Accounts Payable and Accrued Expenses | $2,375 | $4,018 | - Total accounts payable and accrued expenses decreased from $4.018 million at December 31, 2024, to $2.375 million at June 30, 2025, primarily due to a reduction in accounts payable and accrued payroll[73] NOTE 8 – NOTES PAYABLE This note summarizes notes payable, including financing agreements, promissory notes, and principal payment schedules Notes Payable (in thousands) | Debt Instrument | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------- | :------------ | :------------------ | | Future receivables financing agreement with Cedar Advance, LLC | $- | $2,223 | | NJD Investments, LLC promissory note | $408 | $564 | | SBA loan | $150 | $150 | | Vehicle loans | $179 | $240 | | ARIN note | $1,275 | $- | | Insurance financing agreement | $18 | $26 | | Total Gross Debt | $2,030 | $3,203 | | Less: Debt discount | $(379) | $(720) | | Total Net Debt | $1,651 | $2,483 | - Total net debt decreased from $2.483 million at December 31, 2024, to $1.651 million at June 30, 2025, largely due to the payoff of the Cedar Advance agreement and new financing with Arin[74][80][90] Principal Payments Due on Notes Payable (in thousands) | Years Ending December 31, | Amount | | :------------------------ | :----- | | 2025 (remaining) | $1,496 | | 2026 | $318 | | 2027 | $59 | | 2028 | $7 | | 2029 | $- | | Thereafter | $150 | | Total | $2,030 | NOTE 9 – MEZZANINE EQUITY This note describes Series B Preferred Stock terms, voting rights, dividend preferences, and mezzanine equity classification - The company issued 15,000 shares of Series B Preferred Stock at a stated value of $1,000 per share, totaling $15.0 million, to Streeterville Capital, LLC[92][93] - Series B Preferred Stock ranks senior to common stock for dividends and liquidation, with an 8.0% annual preferred return payable quarterly in cash or additional shares[94] - The Series B Preferred Stock is classified as mezzanine equity due to certain redemption features and restrictions not solely within the company's control, as per ASC 480-10-S99[96] NOTE 10 – STOCKHOLDERS' EQUITY (DEFICIT) AND STOCK-BASED COMPENSATION This note details changes in stockholders' equity, including public offerings, warrant inducements, and stock issuances - The company completed public offerings in May and September 2024, raising net proceeds of $5.498 million and $4.795 million, respectively, through the sale of common units and pre-funded units[102][106] - Warrant inducement letters in December 2024 and May 2025 resulted in proceeds of $3.841 million and $3.495 million, respectively, but also led to deemed dividends of $3.873 million and $9.833 million[108][109] - Under the 2025 Equity Distribution Agreement, the company sold 519,341 shares of common stock for gross proceeds of $1.932 million during the six months ended June 30, 2025[112][113] Warrant Transactions (Six Months Ended June 30, 2025) | Category | Warrants (Underlying Shares) | Weighted Average Exercise Price Per Share | | :---------------------------- | :--------------------------- | :---------------------------------------- | | Outstanding December 31, 2024 | 1,744,337 | $25.82 | | Warrants issued in public offering | 1,999,200 | $3.50 | | Warrants exercised | (999,600) | $3.50 | | Outstanding June 30, 2025 | 2,743,937 | $10.10 | NOTE 11 – LEASES This note details operating and finance lease agreements, including acquired leases and associated assets and liabilities - The company assumed a lease for a 5-acre greenhouse in Belvidere, New Jersey, with a term ending December 31, 2029, and monthly payments of approximately $0.022 million in 2025[125] - A new operating lease for aquaculture assets in Webster City, Iowa, commenced on May 14, 2025, with an initial term of 12 months and a monthly payment of $1.00, subject to significant increases if the company becomes a holdover tenant[126] Operating Lease Assets and Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :------------------ | | Operating lease assets | $4,480 | $1,202 | | Current maturities of operating lease liabilities | $219 | $212 | | Long-term operating lease liabilities | $881 | $992 | Finance Lease Assets and Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :------------------ | | Financing lease assets | $92 | $114 | | Current maturities of finance lease liabilities | $43 | $41 | | Long-term finance lease liabilities | $53 | $75 | NOTE 12 – RELATED PARTY TRANSACTIONS This note discloses a transition services agreement with NaturalShrimp for operational and accounting support - The company entered into a transition services agreement with NaturalShrimp, an affiliate of Streeterville, for two months of operational support and accounting services, incurring a fee of $0.07 million for the three months ended June 30, 2025[131] NOTE 13 – COMMITMENTS AND CONTINGENCIES Management believes no pending legal proceedings will materially adversely affect the company's financial condition - Management believes there are no pending or threatened legal proceedings that would materially adversely affect the company's business, results of operations, or financial condition[132] NOTE 14 – GOING CONCERN This note highlights substantial doubt about going concern due to net losses and insufficient liquidity, requiring funding - The company incurred a net loss of $7.4 million for the six months ended June 30, 2025, and expects further significant net losses[133] - As of June 30, 2025, the company had $2.8 million in cash, which is believed to be insufficient to fund operations through the next twelve months, raising substantial doubt about its ability to continue as a going concern[133][136] - Future success is dependent on achieving profitable operations, generating cash from operating activities, or securing additional debt or equity financing[134] NOTE 15 – SUBSEQUENT EVENTS This note describes subsequent events, including Series B Preferred Stock amendments to clarify voting and support reclassification - As of July 29, 2025, the Certificate of Designation for Series B Preferred Stock was amended to clarify Streeterville's voting rights, limiting them to the lesser of 1,305,483 common shares or 9.99% of outstanding common stock[137] - On August 13, 2025, the Certificate of Designation was further amended to remove certain filing requirements and modify default consequences, aiming to reclassify Series B Preferred Stock as permanent equity[138] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and results, covering business overview, recent developments, accounting estimates, performance, liquidity, and capital FORWARD-LOOKING STATEMENTS This subsection cautions that forward-looking statements are subject to risks and uncertainties, potentially altering actual results - The report contains forward-looking statements based on current expectations, beliefs, estimates, and projections, which are subject to inherent uncertainties and risks[139][140] - Key risks include historical losses, ability to obtain financing, Nasdaq listing compliance, management team changes, market competition, growth management, acquisition integration, customer retention, brand awareness, intellectual property, future financial performance, debt repayment, regulatory compliance, and liquidity of securities[145] OVERVIEW Edible Garden is a CEA farming company using hydroponic systems and GreenThumb software for sustainable organic produce - Edible Garden is a CEA farming company utilizing hydroponic and vertical greenhouses with a 'closed loop' system for sustainable, year-round production of organic herbs[142][143] - The proprietary GreenThumb software enhances traceability, manages daily operations, monitors sales data, forecasts demand, and optimizes logistics to reduce the carbon footprint[144][146][148][153] - The company focuses on its 'Edible Garden' brand, emphasizing sustainability, traceability, and social contribution, and has expanded into co-manufactured consumer products like sauces and supplements[149] RECENT DEVELOPMENTS This section outlines recent developments: Nasdaq compliance, financing, NaturalShrimp acquisition, and executive employment changes - The company regained compliance with Nasdaq's minimum bid price rule on April 8, 2025, but remains under a discretionary panel monitor until April 8, 2026[150] - On April 2, 2025, Edible Garden entered into the Arin II Agreement, selling $2.04 million of future accounts receivable for $1.5 million, with net funds of $1.435 million used partly to prepay the Cedar III Agreement[151] - On May 14, 2025, the company acquired sustainable aquaculture assets from NaturalShrimp Farms Inc. for $12.0 million, issuing 12,000 shares of Series B Preferred Stock to Streeterville Capital, LLC[154][156] - The CEO, James E. Kras, entered into an amended employment agreement with a base salary of $0.45 million, eligibility for a 100% target annual cash bonus, and a $0.5 million transaction bonus related to the NaturalShrimp acquisition[161][162] CRITICAL ACCOUNTING ESTIMATES This section highlights critical accounting estimates requiring significant judgment, including revenue, assets, acquisitions, and taxes - Revenue is recognized when control of goods or services is transferred to customers, with no material returns, discounts, or loyalty programs[167][168] - Property, equipment, and leasehold improvements are depreciated using the straight-line method over five years, with impairment assessed when events indicate carrying balances may not be recoverable[169][170] - Acquisitions are evaluated to determine if they constitute a business combination or asset acquisition, with assets recognized at fair value and goodwill not recognized in asset acquisitions[171] - Income taxes are provided based on enacted tax law, with deferred taxes recognized for temporary differences and operating losses, offset by valuation allowances when necessary[173] RESULTS OF OPERATIONS This section compares financial performance for Q2 and H1 2025 vs 2024, analyzing revenue, costs, expenses, and net loss COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2025 AND 2024 Q2 2025 saw a 26% revenue decrease, gross profit margin decline, and increased SG&A, resulting in higher net loss Financial Performance (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------- | :------ | :------ | :--------- | :--------- | | Revenue | $3,146 | $4,268 | $(1,122) | -26% | | Cost of goods sold | $2,512 | $2,702 | $(190) | -7% | | Gross profit | $634 | $1,566 | $(932) | -59% | | Selling, general and administrative expenses | $4,227 | $2,748 | $1,479 | 54% | | Loss from operations | $(3,593)| $(1,182)| $(2,411) | 204% | | Interest expense, net | $(389) | $(419) | $30 | -7% | | NET LOSS | $(4,043)| $(1,932)| $(2,111) | 109% | - Revenue decreased by $1.2 million (26%) due to strategic exit from floral and lettuce categories ($0.741 million decline) and a 7% decrease in core herb portfolio revenue[177] - Gross profit as a percentage of revenue decreased from 37% to 20%, driven by inflationary pressures and higher labor costs[178] - SG&A expenses increased by $1.5 million (54%) due to legal charges for the NaturalShrimp acquisition ($0.759 million), Narayan transactions ($0.268 million), and franchise tax expense ($0.234 million)[179] COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024 H1 2025 experienced a 21% revenue decrease, gross profit margin decline, and increased SG&A, leading to higher net loss Financial Performance (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------- | :------ | :------ | :--------- | :--------- | | Revenue | $5,864 | $7,401 | $(1,537) | -21% | | Cost of goods sold | $5,142 | $5,811 | $(669) | -12% | | Gross profit | $722 | $1,590 | $(868) | -55% | | Selling, general and administrative expenses | $7,242 | $6,632 | $610 | 9% | | Loss from operations | $(6,519)| $(5,042)| $(1,477) | 29% | | Interest expense, net | $(829) | $(536) | $(293) | 55% | | NET LOSS | $(7,367)| $(5,909)| $(1,458) | 25% | - Revenue decreased by $1.5 million (21%) due to the strategic exit from floral and lettuce categories ($1.1 million decline)[185] - Gross profit as a percentage of revenue decreased from 21% to 12%, attributed to inflationary pressures and higher labor costs[186] - Interest expense increased by $0.293 million (55%) due to the company entering into the Arin II Agreement[189] LIQUIDITY AND CAPITAL RESOURCES This section discusses the company's ability to meet obligations, covering losses, going concern, and cash sources/uses Going Concern Considerations Significant losses and rising expenses create substantial doubt about the company's ability to continue as a going concern - The company incurred net losses of $7.4 million for the six months ended June 30, 2025, and $11.1 million for the twelve months ended December 31, 2024[191] - Substantial doubt exists about the company's ability to continue as a going concern for the next twelve months due to insufficient liquidity and expected increasing capital and operational expenses[191][192] - Future success depends on raising additional funds through public/private financing, collaborative relationships, or expense reduction measures[192] Liquidity Primary liquidity needs for working capital, capital expenditures, debt, and preferred returns are met via financing - Primary liquidity requirements include working capital, capital expenditures, debt repayment, and preferred return payments[194] - Cash and cash equivalents were $2.8 million as of June 30, 2025, down from $3.5 million at December 31, 2024[195] - The company raised $3.0 million from preferred stock sales, entered the Arin II Agreement, received $1.86 million from an at-the-market offering, and $3.3 million from warrant exercises to meet cash needs[195] Capital Resources This section details capital-raising activities, including warrant inducements, preferred stock sales, and cash advances - On May 21, 2025, a warrant inducement letter agreement generated $2.999 million in proceeds from warrant exercises[197] - On May 14, 2025, the company issued 3,000 shares of Series B Preferred Stock to Streeterville for $3.0 million, with an additional $0.5 million purchase expected by November 13, 2025[197] - The Arin II Agreement on April 2, 2025, provided $1.4 million in net funds from the sale of future accounts receivable, used partly to discount and prepay the Cedar III Agreement[198] - The company advanced $0.293 million to Narayan Group in February 2025, which has since defaulted on repayment of the promissory notes[200] Cash Flows This section analyzes cash flows from operating, investing, and financing activities for H1 2025 versus 2024 - Net cash used in operating activities increased to $6.8 million for the six months ended June 30, 2025, from $5.6 million in 2024, driven by decreased revenue and reduced accounts payable[202] - Net cash used in investing activities decreased to $0.122 million in 2025 from $0.167 million in 2024, due to lower purchases of property, equipment, and leasehold improvements[203] - Net cash provided by financing activities decreased to $6.2 million in 2025 from $7.5 million in 2024, primarily due to lower debt financing offset by higher cash flows from warrant inducements, preferred stock issuance, and the EDA[204] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Edible Garden AG is exempt from market risk disclosures - The company is exempt from providing quantitative and qualitative disclosures about market risk as a smaller reporting company[205] Item 4. Controls and Procedures This section confirms effective disclosure controls and procedures, with no material changes in internal control - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[207] - There were no material changes in internal control over financial reporting during the most recent fiscal quarter[208] PART II — OTHER INFORMATION Item 1. Legal Proceedings Management believes no pending legal proceedings will materially adversely affect the company's financial condition - Management does not believe any pending or threatened legal proceedings would have a material adverse effect on the company's business, results of operations, or financial condition[209] Item 1A. Risk Factors This section highlights risk factors from the 10-K, focusing on Nasdaq listing compliance and potential delisting - The company regained compliance with Nasdaq's minimum bid price rule but remains under a discretionary panel monitor until April 8, 2026, with strict consequences for future non-compliance[211][212] - As of June 30, 2025, the company did not meet Nasdaq's stockholders' equity ($2.5 million) or market value of listed securities ($35 million) standards for continued listing[213] - Delisting from Nasdaq could severely impact the company's ability to raise capital, stock liquidity, investor confidence, and potentially lead to stockholder litigation[215][220] Item 5. Other Information This section provides information on the 2025 annual meeting and deadlines for 2026 stockholder proposals - The 2025 annual meeting of stockholders will be held on September 24, 2025[216] - Stockholder proposals for the 2026 annual meeting must be submitted by April 10, 2026, for inclusion in proxy materials, or between May 27, 2026, and June 26, 2026, for presentation at the meeting[217][218] Item 6. Exhibits This section lists all exhibits filed with Form 10-Q, including certificates, agreements, and employment contracts - Exhibits include Amended and Restated Certificates of Designation for Series B Preferred Stock, various financing and acquisition agreements (Arin, NaturalShrimp), and the Amended and Restated Executive Employment Agreement for James E. Kras[219][221]