Edible Garden AG Inc. (EDBL) - Q3 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended September 30, 2025. Edible Garden AG Inc. is a controlled environment agriculture (CEA) company producing hydroponic produce, nutraceuticals, and hot sauces. The company operates as a single segment and is classified as a smaller reporting company and an emerging growth company. As of November 10, 2025, there were 5,126,655 shares of common stock outstanding.
Key Financial Metrics
| Metric | Q3 2025 (3 Months) | Q3 2024 (3 Months) | YTD 2025 (9 Months) | YTD 2024 (9 Months) |
|---|---|---|---|---|
| Revenue | $2.82 million | $2.58 million | $8.68 million | $9.99 million |
| Gross Profit | $0.27 million | $0.70 million | $0.99 million | $2.29 million |
| Gross Margin | 9.7% | 27.1% | 11.5% | 22.9% |
| Net Loss | $(4.05) million | $(2.06) million | $(11.41) million | $(7.97) million |
| Net Loss Attributable to Common | $(4.05) million | $(2.06) million | $(21.25) million | $(7.97) million |
| Cash and Equivalents | $0.83 million | (Balance Sheet: $3.53M at Dec 31, 2024) | ||
| Total Debt (Gross) | $2.69 million | (Balance Sheet: $3.20M at Dec 31, 2024) | ||
| Working Capital | $(1.25) million | (Deficit vs. $1.17M surplus at Dec 31, 2024) |
Material Changes vs. Prior Period
- Revenue: Q3 revenue increased 9% year-over-year, driven by shelf-stable product lines (Kick.Sports Nutrition, Vitamin Whey). However, YTD revenue decreased 13% due to a strategic exit from floral and lettuce categories.
- Margins: Gross margin contracted significantly to 9.7% in Q3 (from 27.1% in Q3 2024) and 11.5% YTD (from 22.9% YTD 2024). This was driven by increased greenhouse labor, freight costs, and raw material inflation.
- Expenses: Selling, General, and Administrative (SG&A) expenses surged 73% in Q3 and 26% YTD. Increases were primarily due to depreciation from the NaturalShrimp asset acquisition, legal fees, and audit costs.
- Acquisitions: In May 2025, the company acquired sustainable aquaculture assets from NaturalShrimp for $12 million, paid via issuance of Series B Preferred Stock. This significantly increased property, equipment, and leasehold improvements.
- Debt Restructuring: The company engaged in multiple debt extinguishments and refinancing activities, including agreements with Arin Funding and Avondale Capital, resulting in losses on extinguishment of debt.
Outlook, Risks, and Contingencies
- Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern for the next 12 months. Cash on hand ($0.83 million) is insufficient to fund operations without additional financing. The company expects to fund operations only into Q2 2026 with current resources.
- Liquidity Strategy: The company is actively raising capital through warrant inducements (including a $4.2 million inducement in October 2025), preferred stock sales, and at-the-market offerings. It is also evaluating cost reduction measures.
- Customer Concentration: Revenue is highly concentrated; four customers accounted for 81.9% of revenue in the first nine months of 2025. Loss of a major customer would materially impact operations.
- Nasdaq Listing: 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 maintain compliance could result in delisting.
- Contingencies: The company advanced funds to the Narayan Group for a potential acquisition that was terminated in June 2025. The promissory notes have defaulted, and the company has fully reserved the receivable as collection is deemed remote.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $4.2 million October 2025 warrant inducement proceeds to extend the operating runway beyond Q2 2026.
- Debt Covenants: Review the terms of the Avondale Secured Promissory Note and Arin agreements, specifically the weekly repayment obligations ($43,750 and $63,750 respectively) and collateral requirements.
- Preferred Stock Terms: Analyze the impact of the Series B Preferred Stock (8% preferred return) on future cash flows and common shareholder dilution.
- Margin Recovery: Assess management's plan to mitigate inflationary pressures on COGS and restore gross margins to historical levels.
- Customer Retention: Confirm the status of contracts with the top four customers representing ~82% of revenue.