EDBL

Edible Garden AG Inc. - 10-Q Filing Summary (Q1 2026)

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended March 31, 2026. Edible Garden AG Inc. is a controlled environment agriculture (CEA) company producing organic fresh produce and consumer packaged goods. The company is currently executing a strategic pivot known as "Farm-to-Formula," transitioning its Webster City, Iowa facility into a ready-to-drink (RTD) clean nutrition manufacturing hub. The company is classified as a non-accelerated filer, smaller reporting company, and emerging growth company.

Key Financial Metrics

Note: Working Capital is calculated as Total Current Assets minus Total Current Liabilities.

Material Changes vs. Prior Period

• Revenue Growth: Revenue increased 22.9% year-over-year, driven primarily by a 46% increase in the cut herb portfolio.
• Expense Surge: Operating expenses rose 77.5% to $10.02 million. This was driven by a $2.48 million increase in Cost of Goods Sold (due to higher-cost third-party sourcing) and a $2.48 million spike in depreciation and amortization due to accelerated depreciation of assets related to the RTD manufacturing pivot.
• Income Tax Benefit: The company recorded a $3.35 million income tax benefit in Q1 2026 (compared to zero in Q1 2025) resulting from the sale of New Jersey state net operating loss carryforwards.
• Debt Financing: The company entered into a new $1.625 million secured promissory note with Streeterville Capital, LLC in March 2026, increasing total debt obligations.
• Stock Structure: A 1-for-10 reverse stock split was effected on February 3, 2026, to maintain Nasdaq listing compliance. All share data in this filing is adjusted to reflect this split.

Outlook, Risks, and Management Commentary

• Going Concern Warning: Management has expressed substantial doubt about the company's ability to continue as a going concern for the next twelve months. The company expects to incur further significant net losses and requires additional financing to fund operations and the RTD facility buildout.
• Strategic Pivot: The company is investing heavily in the "Farm-to-Formula" strategy. Phase 1 production at the Iowa RTD facility is anticipated to begin in 2027, pending capital availability and final agreements with Tetra Pak.
• Liquidity: Cash on hand ($1.95 million) is projected to fund operations only into the third quarter of 2026. The company is actively seeking additional debt or equity financing, which may result in significant dilution.
• Customer Concentration: Revenue is highly concentrated; four customers accounted for approximately 69.4% of total revenue in Q1 2026.
• Recent Developments: The company secured a $2.7 million incentive package from the Iowa Economic Development Authority and won new distribution contracts with Target and Busch's Fresh Food Market.

Investor Verification Checklist

• Capital Runway: Verify the timeline and terms of any new financing arrangements required to bridge the gap between current cash reserves and the projected Q3 2026 liquidity shortfall.
• RTD Project Viability: Assess the execution risk and capital requirements for the Webster City facility conversion, noting that Phase 1 production is not expected until 2027.
• Debt Covenants: Review the terms of the new Streeterville Note (8.0% interest, secured by substantially all assets) and existing debt obligations for potential default triggers given the current loss position.
• Customer Dependency: Evaluate the risk associated with the top four customers representing nearly 70% of revenue.
• Preferred Stock Exchanges: Monitor the ongoing exchange of Series B Preferred Stock for common stock, which impacts the capital structure and potential dilution.