Edible Garden AG Inc. - 10-Q Summary (Q2 2025)
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2025. Edible Garden AG Inc. is a controlled environment agriculture (CEA) company producing hydroponic herbs, nutraceuticals, and hot sauces. The company operates as a non-accelerated filer, smaller reporting company, and emerging growth company. As of June 30, 2025, the company had 2,924,932 shares of common stock outstanding.
Key Financial Metrics
| Metric | Q2 2025 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months) |
|---|---|---|---|
| Revenue | $3.15 million | $5.86 million | $7.40 million |
| Gross Profit | $0.63 million | $0.72 million | $1.59 million |
| Gross Margin | 20.1% | 12.3% | 21.5% |
| Net Loss | $(4.04) million | $(7.37) million | $(5.91) million |
| Net Loss Attributable to Common | $(13.88) million | $(17.20) million | $(5.91) million |
| Cash and Equivalents | $2.82 million | $2.82 million | $2.19 million |
| Total Debt (Net) | $1.65 million | $1.65 million | $2.48 million |
| Operating Cash Flow | N/A | $(6.76) million | $(5.65) million |
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased 26% in Q2 and 21% YTD compared to 2024. This is primarily due to the strategic exit from floral and lettuce categories, which accounted for approximately $1.1 million of the YTD decline.
- Margin Compression: Gross margin dropped to 12.3% YTD from 21.5% in the prior year, driven by inflationary pressures and higher labor costs.
- Increased Expenses: Selling, General, and Administrative (SG&A) expenses increased 54% in Q2 and 9% YTD. Significant one-time costs included $759,000 in legal fees for the NaturalShrimp acquisition and $268,000 related to the aborted Narayan transaction.
- Deemed Dividend: A significant non-cash charge of $9.83 million was recorded in Q2 2025 due to a warrant inducement agreement, which drastically increased the Net Loss Attributable to Common Stockholders.
- Asset Acquisition: The company acquired sustainable aquaculture assets from NaturalShrimp for $12 million, paid via the issuance of Series B Preferred Stock.
Outlook, Risks, and Contingencies
- Going Concern: Management has expressed substantial doubt about the company's ability to continue as a going concern for the next 12 months. Cash on hand ($2.82 million) is insufficient to fund operations without additional financing.
- Financing Activities: The company raised $3.0 million via Series B Preferred Stock issuance to Streeterville Capital and $1.44 million via a merchant cash advance (Arin II Agreement). It also raised approximately $1.76 million through an Equity Distribution Agreement (EDA).
- Nasdaq Compliance: The company regained compliance with the Nasdaq Bid Price Rule in April 2025 but remains under a discretionary panel monitor until April 2026. Failure to meet continued listing standards (specifically stockholders' equity or market value) could result in delisting.
- Failed Acquisition: The company abandoned the acquisition of Narayan Group in June 2025 after advancing approximately $392,000. The promissory notes from Narayan have defaulted, and the company is pursuing repayment.
- Customer Concentration: Four customers accounted for 84.7% of revenue in the first six months of 2025, creating significant concentration risk.
Investor Verification Checklist
- Liquidity Runway: Verify the sufficiency of the $2.82 million cash balance against weekly debt service obligations (e.g., $63,750/week to Arin) and operating burn rates.
- Series B Preferred Stock: Review the terms of the $15 million Series B Preferred Stock issued to Streeterville, specifically the 8% preferred return and voting rights, and its classification as mezzanine equity.
- Debt Structure: Analyze the high-cost merchant cash advance agreements (Arin and Cedar) and their impact on future cash flows.
- Recovery of Narayan Advances: Assess the likelihood of recovering the ~$392,000 advanced to the Narayan Group, which is currently in default.
- Nasdaq Listing Status: Monitor the company's ability to maintain the $2.5 million stockholders' equity requirement or market value standard to avoid delisting.