EDBL

Business Context and Reporting Period

Company: Edible Garden AG Inc (EDBL)
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2025
Business Overview: Edible Garden is a controlled environment agriculture (CEA) company growing organic herbs and producing consumer packaged goods (CPG) including nutraceuticals, sauces, and pickles. The company operates vertically integrated greenhouses in New Jersey and Michigan and utilizes contract growers. In 2025, the company executed a strategic pivot toward a "Farm-to-Formula" model, transitioning its Iowa facility into a ready-to-drink (RTD) beverage manufacturing hub.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Revenue decreased 7.6% to $12.81 million, primarily due to the strategic exit from floral and lettuce categories, which accounted for approximately $1.0 million in 2024 revenue.
• Gross Margin Compression: Gross margin turned negative (-1.6%) from 16.7% in 2024. This was driven by elevated procurement and logistics costs in Q4 2025 to meet surging demand from new and existing customers.
• Increased Operating Loss: Loss from operations widened to $15.8 million from $9.3 million, fueled by higher SG&A expenses ($15.6 million vs. $11.6 million) due to depreciation, rent, and professional fees associated with acquisitions and capital markets activities.
• Acquisition Activity: Completed the acquisition of NaturalShrimp Farms assets in May 2025 for $12.0 million (paid via Series B Preferred Stock), adding aquaculture technology and a facility in Iowa.
• Capital Structure: Issued Series B Preferred Stock and secured multiple debt facilities (Arin Funding, Avondale Capital) to fund operations and acquisitions. Effected a 1-for-10 reverse stock split in February 2026.

Guidance, Outlook, and Risks

Strategic Outlook

The company is transitioning from a pure-play fresh produce business to a vertically integrated clean-label nutrition platform. Key initiatives include:

• RTD Manufacturing: Developing a ready-to-drink beverage hub at the Webster City, Iowa facility. Phase 1 production is anticipated to begin in 2027, subject to capital availability and final agreements with Tetra Pak.
• Product Diversification: Expanding into higher-margin shelf-stable categories including sports nutrition, fermented foods, and functional beverages.

Material Risks and Contingencies

• Going Concern: Auditors have expressed substantial doubt about the company's ability to continue as a going concern. Management estimates existing cash will fund operations only into the second quarter of 2026.
• Liquidity Needs: Significant additional financing is required to fund the RTD build-out and ongoing operations. Failure to secure capital could force a scale-back or cessation of operations.
• Customer Concentration: Five customers accounted for 88.2% of 2025 revenue, with one customer representing 42.7%. Loss of a major customer would materially impact results.
• Nasdaq Compliance: The company remains under a Nasdaq discretionary panel monitor until April 8, 2026, following a reverse stock split to regain compliance with the minimum bid price rule.
• Debt Covenants: Outstanding debt is secured by cash, receivables, and assets. Default could result in the loss of critical assets.

Investor Verification Checklist

• Cash Runway: Verify the sufficiency of current cash ($1.1 million) against the burn rate and the timeline for the next financing round.
• RTD Project Viability: Assess the status of the definitive supply agreement with Tetra Pak and the capital requirements for the Iowa facility build-out.
• Customer Retention: Monitor the stability of relationships with the top five customers, particularly Meijer, given the high concentration risk.
• Debt Servicing: Review the terms of the Avondale and Arin Funding notes, including weekly repayment schedules and default triggers.
• Nasdaq Status: Confirm continued compliance with Nasdaq listing standards to avoid delisting.