Edible Garden AG Inc
For the period ended Dec 31, 2024. Filed Apr 1, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Apr 1, 2025
EDBL$0.70+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-01.
0001477932-24-001638
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-04-01.
0001477932-25-002281
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 74 previous paragraphs and 77 current paragraphs.
36 unchanged; 20 reworded; 20 added; 17 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
Reverse Stock Split
Current report
As of March 3, 2025, we effected a 1-for-25 reverse stock split (the “Reverse Stock Split”) of our outstanding common stock. The conversion or exercise prices of our issued and outstanding stock options and warrants were adjusted in connection with the reverse stock split. All historical share and per share amounts reflected throughout this Annual Report on Form 10-K have been adjusted to reflect the Reverse Stock Split.
Current report
Nasdaq Compliance
Current report
On October 21, 2024, we received a letter from Listing Qualifications Staff (the “Staff”) of Nasdaq indicating that, based on the closing bid price of our common stock for 30 consecutive business days, we no longer meet Nasdaq Listing Rule 5550(a)(2), which requires listed companies to maintain a minimum bid price of at least $1.00 per share, (the “Bid Price Rule”). Under Nasdaq Listing Rule 5810(c)(3)(A)(iv), because we effected reverse stock splits in the last two years with a cumulative ratio greater than 250 shares to 1, we were not eligible for any compliance period to regain compliance with the Bid Price Rule. On October 28, 2024, we submitted a request for a hearing before the Nasdaq Hearings Panel (the “Panel”) to appeal the delisting notice from the Staff. On January 14, 2025, we attended our hearing with Nasdaq February 12, 2025, we received written notification (the “Notice”) from Nasdaq that the Panel granted an extension for us to regain compliance with the Bid Price Rule until March 31, 2025, subject to additional conditions outlined in the Notice. The extension by the Panel is contingent on us achieving certain milestones and notifying Nasdaq of such achievement. If the Company is not successful at satisfying these milestones within the prescribed time, the Panel may revoke the extension. There can be no assurance that we will ultimately meet all applicable criteria for continued listing on Nasdaq. The Panel may determine to delist our securities from Nasdaq.
Current report
Proposed Transaction with the Narayan Group
Current report
On March 4, 2025, we announced that we are continuing our pursuit of acquiring the Narayan Group, a sustainable food producer based in Slovenia with operations in Europe and Asia. In connection with the proposed transaction, on February 12, 2025, we advanced the Narayan Group $190,000 to support its operations and the Narayan Group issued a promissory note in favor of us in the principal amount of $190,000. The promissory note accrues interest at a rate of 6.0% per annum until June 30, 2025, after which interest will accrue at a rate of 10.0% per annum if the parties have not entered into a definitive agreement with respect to the proposed transaction. In that event, the Narayan Group is obligated to pay the outstanding principal and accrued interest in 12 equal monthly installments beginning on July 1, 2025. If the transaction is completed, we would acquire 100% of the share capital of the Narayan Group in exchange for issuing Narayan Group shareholders shares of our common stock.
Current report
Warrant Inducement Transaction
Current report
On December 23, 2024, we entered into an inducement letter agreement (the “Inducement Letter Agreement”) with an institutional investor and existing holder (the “Holder”) of existing Class B warrants originally issued on September 30, 2024 (the “Existing Warrants”) to purchase 333,200 shares of common stock. Pursuant to the Inducement Letter Agreement, the Holder agreed to exercise the Existing Warrants for cash at the exercise price of $9.00 per share in consideration for our agreement to issue: (i) new unregistered five-year warrants to purchase up to an aggregate of 333,200 shares of common stock at an exercise price of $9.00 per share (the “New Class A Warrants”), and (ii) new unregistered eighteen-month warrants to purchase up to an aggregate of 333,200 shares of common stock at an exercise price of $9.00 per share (the “New Class B Warrants”). The New Class A Warrants were immediately exercisable upon issuance and have a term of five years from the issuance date, and the New Class B Warrants were immediately exercisable and have a term of eighteen months from the issuance date. On December 23, 2024, we completed the warrant inducement transaction and received net proceeds of approximately $2.8 million.
Current report
Cedar Cash Advance Agreement
Current report
RESULTS OF OPERATIONS
Current report
Revenue was $13.86 million for the year ended December 31, 2024, a decrease of $192 thousand, or 1.4%, compared with $14.05 million for the year ended December 31, 2023. The decrease was primarily attributed to our strategic shift away from our lettuce and floral product lines. Combined, the exit from these categories drove a $1.65 million decrease in revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023. In addition, our vitamin business experienced a decrease of $0.28 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease was offset by growth in our core herb business of $1.75 million for the year ended December 31, 2024.
Current report
Cost of goods sold decreased $1.68 million, or 12.7% to $11.55 million for the year ended December 31, 2024, compared with $13.23 million for the year ended December 31, 2023. The decrease was primarily due to the reduction of our reliance on third-party growers by bringing our Edible Garden Heartland facility fully online to produce our herb product portfolio along with our shift away from low margin floral and lettuce products. These strategic decisions drove a decrease of $4.1 million offset by an increase of $2.4 million in costs related to the integration of these activities into our owned facilities.
Current report
Selling, general and administrative (“SG&A”) expenses increased by $1.58 million, or 15.8%, to $11.59 million for the year ended December 31, 2024, compared with $10.01 million for the year ended December 31, 2023. The increase was driven by higher legal, audit and accounting fees of $0.9 million related to our capital market activities and $0.7 million of severance related to the departure of our Chief Financial Officer in 2024.
Current report
Interest expense was $1.22 million for the year ended December 31, 2024, compared to $390 thousand for the year ended December 31, 2023. The increase in interest expense was due to our entering into and refinancing of the standard merchant cash advance agreements with Cedar (the “Cedar Agreements”). We incurred approximately $1.02 million in interest expense under the Cedar Agreements during 2024, compared to $390 thousand of interest expense paid to our lenders in 2023. See Note 7 to our financial statements.
Current report
On December 23, 2024, we entered into the Inducement Letter Agreement with the Holder of the Existing Warrants to purchase 333,200 shares of our common stock for total proceeds of $2.999 million. Maxim received an aggregate cash fee equal to 7.0% of the $2.999 million in total proceeds received from the exercise of the Existing Warrants exercised in connection with the Inducement Letter Agreement. See Note 8 to our financial statements for additional details.
Current report
On March 14, 2024, we entered into a standard merchant cash advance agreement with Cedar, pursuant to which we agreed to sell $1,491,000 of trade receivables to Cedar in exchange for $1,000,000 of cash proceeds, after deducting $50,000 for underwriting fees and other transaction expenses. On May 7, 2024, we entered into an amended and restated standard merchant cash advance agreement with Cedar (the “Cedar II Agreement”), pursuant to which we sold Cedar an additional $994,000 of our future accounts receivable for a purchase price of $700,000, less aggregate fees and expenses of $87,500, for additional net funds provided of $544,250, bringing the total financing with Cedar to $2,485,000 in accounts receivable sold for $1,544,250 of net funds provided. On December 4, 2024, we entered into the Cedar III Agreement with Cedar, pursuant to which we sold to Cedar $2.485 million of our future accounts receivable for a purchase price of $1.75 million, less fees and expenses of $87,500, for total net funds provided of $1.663 million. A portion of the net proceeds of the Cedar III Agreement were used to satisfy the remaining future accounts receivable $523 thousand to which Cedar was entitled under the Cedar II Agreement. See Note 7 to our financial statements for additional details.
Current report
On September 30, 2024, we closed a best-efforts public offering (the “September Offering”). Gross proceeds from the September Offering, before deducting placement agent fees and estimated offering expenses, were approximately $5.6 million. See Note 8 to our financial statements for additional details.
Current report
On May 23, 2024, we completed a best-efforts public offering (the “May Offering”). Gross proceeds from the May Offering, before deducting placement agent fees and estimated offering expenses, were approximately $6 million. See Note 8 to our financial statements for additional details.
Current report
On February 6, 2024, we entered into an equity distribution agreement with Maxim, pursuant to which we may, from time to time, issue and sell shares of common stock through Maxim in an at-the-market offering for an aggregate offering price of up to $1,146,893. During the year ended December 31, 2024, we sold 7,269 shares of common stock for total gross proceeds of $1,146,890 and paid commissions to the Agent of $40,141.
Current report
During the years ended December 31, 2024 and 2023, cash provided by financing activities was $11.84 million and $9.95 million, respectively. The increase of $2.87 million in cash provided by financing activities was primarily driven by an increase of $3.98 million of proceeds from the issuance of debt and an increase of $3.84 million in cash received for warrant exercises. These increases were offset by an increase of $4.49 million in payments of debt principal and debt issuance costs and a $452 thousand decrease in cash received from the sale of common stock, net of fees and commissions paid.
Removed paragraphs (17)
Previous report
Departure of Chief Financial Officer; Appointment of Interim Chief Financial Officer
Previous report
Effective January 25, 2024, Michael James retired from his positions as Chief Financial Officer, Treasurer, Secretary and Director of the Company. In connection with Mr. James’s retirement, on January 24, 2024, the Company and Mr. James entered into a separation agreement (the “Separation Agreement”). Pursuant to the terms of the Separation Agreement, the Company agreed to pay Mr. James a severance payment of $300,000 in the form of salary continuation until January 2025. In addition, Mr. James is eligible to earn milestone payments under the Separation Agreement in an aggregate amount up to $300,000 if he completes certain transitional deliverables for the Company. The Company agreed to grant Mr. James a restricted stock award with a fair value equal to $25,000 as of the trading day after the date the Company files its Annual Report on Form 10-K for the year ended December 31, 2023. Under the Separation Agreement, Mr. James provided a general release of claims in favor of the Company and its affiliates, subject to customary exceptions. Effective January 25, 2024, the Board appointed Kostas Dafoulas to serve as the Company’s interim Chief Financial Officer following the retirement of Mr. James.
Previous report
Supply Agreements
Previous report
On February 8, 2024, the Company and Meijer Distribution, Inc. (“Buyer”) entered into two agreements pursuant to which the Company will supply and sell products to Buyer until December 2026 (the “Supply Agreements”). Under the Supply Agreements, the Company will sell (i) fresh cut herbs, including basil, bay leaves, chives, cilantro, dill, mint, oregano, rosemary, sage, thyme; (ii) hydroponic basil; and (iii) potted herbs, including basil, chives, cilantro, mint, oregano, parsley, rosemary, sage, thyme, wheatgrass; in quantities and delivery schedule requested by the Buyer at prices per unit set in advance. Under the Supply Agreements, the Company and the Buyer will renegotiate the prices for each unit annually, provided that the price per unit will not increase or decrease at a rate greater than the change in the relevant Consumer Price Index in that year. Once set, the pricing terms will remain fixed for the remainder of the year. Any price increases will take affect after sixty days and any price decrease will be effective immediately. If the Company and the Buyer are unable to mutually agree on price increases, the Company will have the power to terminate the Supply Agreements immediately.
Previous report
Under the Supply Agreements, the Company agreed to fund the installation of fixtures in each of the Buyer’s stores to display potted herbs in an aggregate amount estimated to be approximately $800,000. These payments will be made as a weekly deduction from the Company’s receivables from the Buyer. The Supply Agreements will expire on December 31, 2026. The Supply Agreements may be renewed for an additional two-year term upon the mutual agreement but may be terminated by the Buyer without cause upon sixty days’ prior notice.
Previous report
Sale of Accounts Receivable
Previous report
Revenue was $14.049 million for the year ended December 31, 2023, an increase of $2.497 million, or 21.62%, compared with $11.552 million for the year ended December 31, 2022. The increase was attributed to an increase of $2.17 million in sales of our herb, produce and floral products, driven by a mix of organic growth and new customers. Additionally, sales of our vitamins and supplements increased $324 thousand during the year ended December 31, 2023, driven by consumer demand.
Previous report
Cost of goods sold increased $2.039 million, or 18.22% to $13.227 million for the year ended December 31, 2023, compared with $11.188 million for the year ended December 31, 2022. The increase was primarily due to $2.59 million of higher costs for operating the Edible Heartland facility, which transitioned to growing our herbs and lettuce products during 2023. Additionally, we incurred an additional $70 thousand of fuel and automobile expenses, $42 thousand of additional labor costs, and $35 thousand of additional cost related to our Pulp brand products, which we began selling during 2023. These increases were offset by a decline of $264 thousand of costs for supplies and raw materials for our Edible Garden flagship facility and a $377 thousand decrease in freight and shipping costs.
Previous report
Selling, general and administrative (“SG&A”) expenses increased by $641 thousand, or 6.84%, to $10.009 million for the year ended December 31, 2023, compared with $9.368 million for the year ended December 31, 2022. The increase was driven by $868 thousand of additional costs incurred to operate the Edible Garden Heartland facility, comprised primarily of $362 thousand for compensation and benefits, $194 thousand for utilities and facility maintenance, $177 thousand for equipment and vehicle repairs and maintenance, and $80 thousand paid for property taxes.
Previous report
Additionally, during the year ended December 31, 2023, we incurred $530 thousand of additional depreciation and amortization expenses, a $100 thousand increase in offering expenses, $150 thousand increase for public relations, $110 thousand of additional proxy expenses and $100 thousand of additional transfer agent expenses. We also saw an increase of $206 thousand of expense for license fees, insurance and taxes. These increases were offset by a decrease of $1.28 million of compensation (including stock compensation), benefits and professional fees, which was primarily driven by $1.0 million of bonuses paid during 2022 upon completion of our initial public offering. Additionally, repair and maintenance expenses and facility-related expenses for our Flagship Facility decreased $125 thousand and $29 thousand respectively.
Previous report
Interest expense was $390 thousand for the year ended December 31, 2023, versus $2.033 million for the year ended December 31, 2022. Lower interest expense was related to paying off debt previously outstanding with proceeds from our public offerings. See Note 8 to our financial statements.
Previous report
Other income (expense)
Previous report
Other income was $5 thousand for the year ended December 31, 2023, compared with other expense of $590 thousand for the year ended December 31, 2022. In the prior period, $189 thousand of expense was due to the revaluation of certain warrants issued to Evergreen, $401 thousand was due to a leak out provision for stock owned by Evergreen and $235 thousand was due to recognition of an accrual for a loss contingency for a lawsuit that has since been settled. These charges did not recur in the year ended December 31, 2023.
Previous report
On February 6, 2024, we entered into the EDA with the Agent, pursuant to which we may, from time to time, issue and sell Shares through the Agent in an at-the-market offering for an aggregate offering price of up to $1,146,893. Under the terms of the EDA, the Agent may sell the Shares at market prices by any method that is deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act. The offering of shares of our common stock pursuant to the EDA will terminate upon the earliest of (i) February 6, 2025, (ii) the sale of all Shares provided for in the EDA, and (iii) the termination of the EDA by written notice of the Company or the Agent. To date, the Company has received net proceeds of $112,118 from the sale of common stock under the EDA after deducting the Agent’s commission of 3.5% of the gross proceeds and other offering expenses.
Previous report
On September 8, 2023, we closed on an underwritten public offering of units, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock at an exercise price equal to $1.10 per share. Each unit was sold at a public offering price of $1.10 per unit. In the offering, we sold 2,850,726 shares of common stock and warrants to purchase 3,105,834 shares of common stock. Gross proceeds, before deducting underwriting discounts and commissions and estimated offering expenses, were approximately $3.1 million. After offering expenses, the Company retained approximately $2.8 million in net proceeds. The Company paid additional costs related to the public offering of $103 thousand.
Previous report
On February 7, 2023, we closed on an underwritten public offering of units, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock at an exercise price equal to $6.30 per share. Each unit was sold at a public offering price of $6.30 per unit. In the offering, we sold 1,619,000 shares of common stock and warrants to purchase 1,861,850 shares of common stock. Gross proceeds, before deducting underwriting discounts and commissions and estimated offering expenses, were approximately $10.2 million. After offering expenses, the Company retained approximately $9.4 million in net proceeds.
Previous report
During the years ended December 31, 2023 and 2022, cash provided by financing activities was $9.953 million and $11.297 million, respectively. The decrease in cash provided by financing activities was primarily driven by a $1.233 million decline in net proceeds from public offerings; the February 2023 and September 2023 offerings in total were smaller than the Company’s initial public offering during 2022. Additionally, there was a $107 thousand lower net cash outflow associated with debt in the year ended December 31, 2023, versus the prior year.
Reworded paragraphs (20)
Previous wording
We are a controlled environment agriculture (“CEA”) farming company. We use traditional agricultural growing techniques together with technology to grow fresh, organic food, sustainably and safely while improving traceability. We use the controlled environment of traditional greenhouse structures, such as glass greenhouses, together with hydroponic and vertical greenhouses to sustainably grow organic herbs, lettuces and floral products. In our hydroponic greenhouse, we grow plants without soil. Instead of planting one row of lettuce in the ground, by using a vertical greenhouse, we can grow many towers of lettuce in the same area by planting up instead of planting across. Growing these products sustainably means that we avoid depleting natural resources in order to maintain an ecological balance, such as by renewing, reusing and recycling materials in order to lower the overall one-time use of materials.
Current wording
We are a controlled environment agriculture (“CEA”) farming company. We use traditional agricultural growing techniques together with technology to grow fresh, organic food, sustainably and safely while improving traceability. We use the controlled environment of traditional greenhouse structures, such as glass greenhouses, together with hydroponic and vertical greenhouses to sustainably grow organic herbs. In our hydroponic greenhouse, we grow plants without soil. Instead of planting one row of plants in the ground, by using a vertical growing system, we can grow many towers of herbs in the same area by planting up instead of planting across. Growing these products sustainably means that we avoid depleting natural resources in order to maintain an ecological balance, such as by renewing, reusing and recycling materials in order to lower the overall one-time use of materials.
Previous wording
Our controlled greenhouse facilities allow us to grow consistent quality herbs and lettuces year-round, first by eliminating some of the variability of outdoor farming with our CEA techniques, and second by leveraging our proprietary software, GreenThumb. In addition to using hydroponic and vertical greenhouse systems, we use a “closed loop” system in our greenhouses. Generally, in a “closed loop” system, drain water is recollected and reused for irrigation. In our closed loop system, we also cycle water back into the system that has been collected through reverse osmosis. When compared with conventional agriculture, our closed looped systems and hydroponic methods use less land, less energy and less water (than legacy farms), thus conserving some of the planet’s limited natural resources. Our advanced systems are also designed to help mitigate contamination from harmful pathogens, including salmonella, e-coli and others.
Current wording
Our controlled greenhouse facilities allow us to grow consistent quality herbs year-round, first by eliminating some of the variability of outdoor farming with our CEA techniques, and second by leveraging our proprietary software, GreenThumb. In addition to using hydroponic and vertical greenhouse systems, we use a “closed loop” system in our greenhouses. Generally, in a “closed loop” system, drain water is recollected and reused for irrigation. In our closed loop system, we also cycle water back into the system that has been collected through reverse osmosis. When compared with conventional agriculture, our closed looped systems and hydroponic methods use less land, less energy and less water (than legacy farms), thus conserving some of the planet’s limited natural resources. Our advanced systems are also designed to help mitigate contamination from harmful pathogens, including salmonella, e-coli and others.
Previous wording
We also use our GreenThumb software to help monitor the quality of our products, and we have dedicated quality assurance and quality control personnel that check and monitor our products. We have customer service personnel that answer any questions the consumers of our products may have, and we regularly ask for feedback from our customers on the quality of our products. The combination of the GreenThumb software, quality assurance and control processes (including compliance with food safety standards), and feedback from consumers and purchasers holds us accountable for maintaining the quality of our herbs and lettuce.
Current wording
We also use our GreenThumb software to help monitor the quality of our products, and we have dedicated quality assurance and quality control personnel that check and monitor our products. We have customer service personnel that answer any questions the consumers of our products may have, and we regularly ask for feedback from our customers on the quality of our products. The combination of the GreenThumb software, quality assurance and control processes (including compliance with food safety standards), and feedback from consumers and purchasers holds us accountable for maintaining the quality of our products.
Previous wording
We focus our efforts on producing our herbs and vegetables in a sustainable manner that will reduce consumption of natural resources, by recycling water in our closed loop system and using LED lights instead of conventional lightbulbs to accelerate crop growth and yield, when necessary. In addition, the inventory management component of GreenThumb allows us to manage inventory levels, order quantities and fill rates while maximizing truck loads. This means that we are better able to control shipping our products in full truck loads, thus eliminating multiple deliveries and decreasing the excess emission of greenhouse gases that would result from many partially full trucks delivering our products. Together, these elements of our production and distribution process are intended to reduce our carbon footprint, or the total amount of greenhouse gases that are generated by our actions, as compared with a legacy farm business.
Current wording
We focus our efforts on producing our herbs and vegetables in a sustainable manner that will reduce consumption of natural resources, by recycling water in our closed loop system and using LED lights instead of conventional lightbulbs to accelerate crop growth and yield, when necessary. In addition, the inventory management component of GreenThumb allows us to manage inventory levels, order quantities and fill rates while maximizing truck loads. This means that we are better able to control shipping our products in full truck loads and retailer backhaul programs, thus eliminating multiple deliveries and decreasing the excess emission of greenhouse gases that would result from many partially full trucks delivering our products. Together, these elements of our production and distribution process are intended to reduce our carbon footprint, or the total amount of greenhouse gases that are generated by our actions, as compared with a legacy farm business.
Previous wording
We believe our focus on our brand “Edible Garden” is a significant differentiator. The brand not only lends itself to our current portfolio of products but allows us to develop other products in the “Consumer Brands” category. Our focus on sustainability, traceability, and social contribution, which we define as an ongoing effort to improve employee relations, working conditions, and local communities, presents our value proposition to our customers and supermarket partners and distributors.
Current wording
We believe our focus on our brand “Edible Garden” is a significant differentiator. The brand not only lends itself to our current portfolio of products but allows us to develop other products in the “Consumer Brands” category. Our focus on sustainability, traceability, and social contribution, which we define as an ongoing effort to improve employee relations, working conditions, and local communities, presents our value proposition to our customers and supermarket partners and distributors. We have recently leveraged our brand recognition to offer more consumer products that are in many cases co-manufactured, such as sauces, fermented products and flavor enhancers.
Previous wording
On February 6, 2024, the Company entered into an Equity Distribution Agreement (the “EDA”) with Maxim Group LLC, as sales agent (the “Agent”), pursuant to which the Company may, from time to time, issue and sell shares (the “Shares”) of common stock through the Agent in an at-the-market offering for an aggregate offering price of up to $1,146,893. Under the terms of the EDA, the Agent may sell the Shares at market prices by any method that is deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act. The offering of shares of our common stock pursuant to the EDA will terminate upon the earliest of (i) February 6, 2025, (ii) the sale of all Shares provided for in the EDA, and (iii) the termination of the EDA by written notice of the Company or the Agent. To date, the Company has received net proceeds of $122,118 from the sale of common stock under the EDA after deducting the Agent’s commission of 3.5% of the gross proceeds and other offering expenses.
Current wording
On January 31, 2025, the Company entered into an Equity Distribution Agreement (the “EDA”) with Maxim Group LLC, as sales agent (“Maxim”), pursuant to which the Company may, from time to time, issue and sell shares of common stock through the Agent in an at-the-market offering of up to $2,516,470. To date, the Company has received net proceeds of $1.167 million after deducting the Agent’s commission of 3.5% of the gross proceeds and other offering expenses from the sale of shares of common stock under the EDA.
Previous wording
On March 14, 2024, we entered into the Advance Agreement with Cedar, pursuant to which we sold $1,491,000 of trade receivables to Cedar in exchange for $1,000,000 of cash proceeds, after deducting $50,000 for underwriting fees and other transaction expenses. Weekly, we are required to pay Cedar 25.0% of all funds collected from customers for the sale of goods and services. Weekly, Cedar is authorized to withdraw $53,250 of funds from our bank account until such time a reconciliation is provided calculating the 25.0% of collections owed to Cedar, until such time the total balance of $1,491,000 is repaid. The Advance Agreement is collateralized by the Company’s cash and receivable accounts.
Current wording
On December 4, 2024, we entered into a standard merchant cash advance agreement (the “Cedar III Agreement”) with Cedar Advance LLC (“Cedar”), pursuant to which we agreed to sell $2,485,000 of future accounts receivable to Cedar in exchange for a purchase price of $1,750,000, less fees and expenses of $87,500, for net funds provided of $1,662,500. A portion of the net proceeds of the Cedar III Agreement were used to satisfy the remaining future accounts receivable of $523,150 to which Cedar was entitled under the amended and restated standard merchant cash advance agreement with Cedar, dated as of May 3, 2024. Weekly, we are required to pay Cedar 25.0% of all funds collected from customers for the sale of goods and services. Weekly, Cedar is authorized to withdraw $65,395 of funds from our bank account until such time a reconciliation is provided calculating the 25.0% of collections owed to Cedar or until the total balance of $2,485,000 is repaid. The Cedar III Agreement is collateralized by our cash and receivable accounts.
Previous wording
The most significant accounting estimates involve a high degree of judgment or complexity. Management believes the estimates and judgments most critical to the preparation of our consolidated financial statements and to the understanding of our reported financial results include allowance for doubtful accounts. The following are the accounting policies most critical to the preparation of our consolidated financial statements.
Current wording
The most significant accounting estimates involve a high degree of judgment or complexity. Management believes the estimates and judgments most critical to the preparation of our consolidated financial statements and to the understanding of our reported financial results include allowance for doubtful accounts. The following are the accounting estimates most critical to the preparation of our consolidated financial statements.
Previous wording
The Company continually monitors events and changes in circumstances that could indicate that the carrying balances of its property, equipment and leasehold improvements may not be recoverable in accordance with the provisions of ASC 360,*“Property, Plant, and Equipment.”*When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets.
Current wording
The Company continually monitors events and changes in circumstances that could indicate that the carrying balances of its property, equipment and leasehold improvements may not be recoverable in accordance with the provisions of Accounting Standards Codification (“ASC”) 360,*“Property, Plant, and Equipment.”*When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets.
Previous wording
Gross profit increased by $458 thousand, or 125.82%, to $822 thousand, or 5.85% of sales, for the year ended December 31, 2023, compared with $364 thousand, or 3.15% of sales, for the year ended December 31, 2022. Improvement in margins was primarily attributed to less reliance on contract growers in 2023 versus 2022.
Current wording
Gross profit increased by $1.49 million, or 181.3%, to $2.31 million, or 16.7% of sales, for the year ended December 31, 2024, compared with $822 thousand, or 5.9% of sales, for the year ended December 31, 2023. The improvement in margins was primarily attributed to our strategic decisions in 2024, detailed above in Cost of goods sold.
Previous wording
During the year ended December 31, 2023, management completed an impairment analysis and recorded an impairment loss of $686 thousand for certain fixed assets acquired from our predecessor company, Edible Garden Corp. This loss reflects the difference between the previous book value of the assets and the estimated salvage value. See Note 5 to our financial statements.
Current wording
During the year ended December 31, 2023, management completed an impairment analysis and recorded an impairment loss of $686 thousand for certain fixed assets acquired from our predecessor company, Edible Garden Corp. This loss reflects the difference between the previous book value of the assets and the estimated salvage value. No impairment of fixed assets was identified during the year ended December 31, 2024.
Previous wording
Higher gross profit, offset by higher SG&A costs resulted in an overall increase in loss from operations of $869 thousand to $9.873 million for the year ended December 31, 2023, compared with $9.004 million for the year ended December 31, 2022.
Current wording
Higher gross profit, partially offset by higher SG&A costs, resulted in a $598 thousand decrease in loss from operations to $9.28 million for the year ended December 31, 2024 as compared to the $9.87 million loss from operations recognized during the year ended December 31, 2023.
Previous wording
During the year ended December 31, 2023, the Company recognized a gain from the extinguishment of debt of $70 thousand by prepaying a promissory note owed to Sament Capital Investments (“Sament”). During the year ended December 31, 2022, the Company incurred a loss from the extinguishment of debt of $826 thousand due to the modification of the debt issued to Evergreen Capital Management LLC (“Evergreen”). See Note 8 to our financial statements.
Current wording
During the year ended December 31, 2024, the Company recognized a loss from extinguishment of debt of $562 thousand from modifications to our agreements with Cedar. See Note 7 to our financial statements. During the year ended December 31, 2023, the Company recognized a gain from the extinguishment of debt of $70 thousand by prepaying a promissory note owed to Sament Capital Investments. See Note 7 to our financial statements for additional details.
Previous wording
Net loss was $10.188 million for the year ended December 31, 2023, compared with a net loss of $12.453 million for the year ended December 31, 2022. The reasons for the decrease in net loss are explained above.
Current wording
Net loss was $11.05 million for the year ended December 31, 2024, compared with a net loss of $10.19 million for the year ended December 31, 2023. The reasons for the increase in net loss are explained above.
Previous wording
We have incurred significant losses since our inception. We have experienced net losses of approximately $10.188 million during the twelve months ended December 31, 2023 and $12.453 million in the year ended December 31, 2022. We expect our capital expenses and operational expenses to increase in the future due to expected increased sales and marketing expenses, operational costs, and general and administrative costs. Therefore, we believe our operating losses will continue or even increase at least through the near term.
Current wording
We have incurred significant losses since our inception. We have experienced net losses of approximately $11.05 million during the year ended December 31, 2024 and $10.19 million during the year ended December 31, 2023. We expect our capital and operational expenses to remain at historical levels as a percent of revenue in the future due to expected sales and marketing expenses, operational costs, packhouse construction costs, costs to continue our growth strategy, and general and administrative costs. Therefore, we believe our operating losses will continue through the near term.
Previous wording
The risks and uncertainties surrounding our ability to continue our business with limited capital resources raises substantial doubt as to our ability to continue as a going concern for twelve months from the issuance of these financial statements. To date, we have financed our operations with the proceeds from debt financings, public and private securities offerings, and operations, among other sources. If we are unable to raise additional capital, we believe that the existing cash will fund operations into the second quarter of 2024 and will not be sufficient to fund our operations through the next twelve months beyond the date of the issuance of our consolidated financial statements. Our operations have consumed substantial amounts of cash since inception. The net cash used in operating activities was $8.531 million and $9.185 million for the years ended December 31, 2023 and 2022, respectively. Our financial statements have been prepared on a “going concern” basis, which implies we may not continue to meet our obligations and continue our operations for the next twelve months. Our consolidated financial statements do not include any adjustments that might result if we are unable to continue as a going concern. If we are unable to continue as a going concern, holders of our securities might lose their entire investment. These factors, among others, may make it difficult to raise any additional capital and may cause us to be unable to continue to operate our business.
Current wording
The risks and uncertainties surrounding our ability to continue our business with limited capital resources raises substantial doubt as to our ability to continue as a going concern for twelve months from the issuance of these financial statements. To date, we have financed our operations with the proceeds from debt financings, public and private securities offerings, and operations, among other sources. If we are unable to raise additional capital, we believe that the existing cash will fund operations into the third quarter of 2025 and will not be sufficient to fund our operations through the next twelve months beyond the date of the issuance of our consolidated financial statements. Our operations have consumed substantial amounts of cash since inception. The net cash used in operating activities was $8.52 million and $8.53 million during the years ended December 31, 2024 and 2023, respectively. Our financial statements have been prepared on a “going concern” basis, which implies we may not continue to meet our obligations and continue our operations for the next twelve months. Our consolidated financial statements do not include any adjustments that might result if we are unable to continue as a going concern. If we are unable to continue as a going concern, holders of our securities might lose their entire investment. These factors, among others, may make it difficult to raise any additional capital and may cause us to be unable to continue to operate our business.
Previous wording
As of December 31, 2023 and December 31, 2022, we had $510 thousand and $110 thousand in cash and cash equivalents available, respectively. During the year ended December 31, 2023, we used $8.531 million of cash for operating activities. As of December 31, 2023 and 2022, we had working capital deficit of $257 thousand and $2.966 million, respectively. As of December 31, 2023 and December 31, 2022, we had $4.427 million and $6.324 million of total debt outstanding, respectively. To meet our cash needs, we are implementing cost savings strategies and in February 2024, we entered into the EDA with the Agent to sell shares of our common stock in an at-the-market offering for an aggregate offering price of up to $1,146,893. In addition, in March 2024, we entered into the Advance Agreement and received $1.0 million in cash proceeds by selling $1.491 million of trade receivables to Cedar. See Note 15 to our financial statements for additional details.
Current wording
As of December 31, 2024 and December 31, 2023, we had $3.5 million and $510 thousand in cash and cash equivalents available, respectively. During the year ended December 31, 2024, we used $8.5 million of cash for operating activities. As of December 31, 2024 and 2023, we had working capital of $1.17 million and a working capital deficit of $257 thousand, respectively. As of December 31, 2024 and December 31, 2023, we had $2.56 and $4.45 million of total gross debt outstanding, respectively. To meet our cash needs, we are implementing cost savings strategies and in January 2025, we entered into the EDA with the Agent to sell shares of our common stock in an at-the-market offering for an aggregate offering price of up to $2.516 million. In addition, in March, May and December 2024, we entered into and refinanced the Cedar Agreements and received $4.4 million in cash proceeds by selling $6.46 million of trade receivables to Cedar. See Note 7 to our financial statements for additional details.
Previous wording
From time to time, the Company enters into loans to purchase vehicles that are secured by the vehicle purchased. Some of these loans are also personally guaranteed by the Company’s chief executive officer and/or chief financial officer. These loans accrue interest at annual rates ranging from 7.64% to 18.66% and mature on dates between April 2024 and February 2028.
Current wording
From time to time, the Company enters into loans to purchase vehicles that are secured by the vehicle purchased. Some of these loans are also personally guaranteed by our Company’s chief executive officer. These loans accrue interest at annual rates ranging from 7.64% to 18.66% and mature on various dates through February 2028.
Previous wording
During the years ended December 31, 2023 and 2022, cash used for operating activities was $8.531 million and $9.185, respectively. Cash used for operating activities during the year ended December 31, 2023 decreased $654 thousand, primarily due to a $716 thousand decrease in our net loss (subsequent to removal of all non-cash expenses), offset by a $62 thousand cash impact for changes in our operating assets and liabilities.
Current wording
During the years ended December 31, 2024 and 2023, cash used for operating activities was $8.5 million and $8.53 million, respectively. Cash used for operating activities during the year ended December 31, 2024 increased $965 thousand, primarily due to a $0.86 million increase in our net loss, offset by a $268 thousand cash impact for changes in our operating assets and liabilities.
Previous wording
During the years ended December 31, 2023 and 2022, cash used in investing activities was $1.022 million and $2.033 million, respectively. The decrease in cash used for investing activities was primarily driven by our purchase of Edible Garden Heartland in the prior year. See Note 3 to our financial statements for more information about this asset acquisition.
Current wording
During the years ended December 31, 2024 and 2023, cash used in investing activities was $303 thousand and $1.022 million, respectively. The decrease in cash used for investing activities was driven by lower spending for fixed assets and leasehold improvements.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On March 14, 2024, the Company entered into the Advance Agreement with Cedar, pursuant to which the Company agreed to sell $1,491,000 of trade receivables to Cedar in exchange for $1,000,000 of cash proceeds, after deducting $50,000 for underwriting fees and other transaction expenses. Weekly, the Company is required to pay Cedar 25.0% of all funds collected from customers for the sale of goods and services. Weekly, Cedar is authorized to withdraw $53,250 of funds from Edible Garden’s bank account until such time a reconciliation is provided calculating the 25.0% of collections owed to Cedar, until such time the total balance of $1,491,000 is repaid. The Advance Agreement is collateralized by the Company’s cash and receivable accounts.