Edible Garden AG Inc

Previous wording

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”). On January 14, 2025, we attended our hearing with Nasdaq and on February 12, 2025, we received written notification (the “Notice”) from Nasdaq that a Nasdaq Hearings 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. On April 8, 2025, we received a letter from Nasdaq confirming that we had regained compliance with the Bid Price Rule but will remain under a Nasdaq discretionary panel monitor until April 8, 2026.

Current wording

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 met 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”). On January 14, 2025, we attended our hearing with Nasdaq and on February 12, 2025, we received written notification (the “Notice”) from Nasdaq that a Nasdaq Hearings 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. On April 8, 2025, we received a letter from Nasdaq confirming that we had regained compliance with the Bid Price Rule but will remain under a Nasdaq discretionary panel monitor until April 8, 2026.

Previous wording

Also, on May 14, 2025, we entered into a stock purchase agreement (the “SPA”) with Streeterville, pursuant to which we issued 3,000 shares of Series B Preferred Stock, at a stated value of $1,000 per share, to Streeterville, in exchange for the payment of an aggregate purchase price of $3,000,000. Additionally, pursuant to the SPA, Streeterville shall purchase an additional 500 shares of Series B Preferred Stock, at a stated value of $1,000 per share, on November 13, 2025 for a purchase price of $500,000, provided we remain listed on Nasdaq. The shares of Series B Preferred Stock were issued and sold to Streeterville without registration under the Securities Act, in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering.

Current wording

Also on May 14, 2025, we entered into a stock purchase agreement (the “SPA”) with Streeterville, pursuant to which we issued 3,000 shares of Series B Preferred Stock, at a stated value of $1,000 per share, to Streeterville, for the purchase price of $3,000,000. Additionally, pursuant to the SPA, Streeterville shall purchase an additional 500 shares of Series B Preferred Stock, at a stated value of $1,000 per share, on November 13, 2025 for a purchase price of $500,000, provided we remain listed on Nasdaq. The shares of Series B Preferred Stock were issued and sold to Streeterville without registration under the Securities Act, in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering. Pursuant to the certificate of designation, subsequent to June 30, 2025, we issued 154 shares of Series B Preferred Stock to Streeterville as payment of the preferred return for the quarter ended June 30, 2025, in reliance on the exemption provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering.

Previous wording

In connection with the integration of the Seller’s assets into our business and operations following the closing of the transactions contemplated by the APA, the Subsidiary entered into a transition services agreement with the Seller on May 14, 2025 (the “TSA”), pursuant to which the Seller will provide ongoing operational support and accounting and bookkeeping services for a period of two months. The TSA will automatically renew for additional one-month terms unless either party provides 30 days advance written notice prior to the end of the initial term or any additional term. Pursuant to the TSA, we will pay the Seller a fee of $35,000 per calendar month.

Current wording

In connection with the integration of the Seller’s assets into our business and operations following the closing of the transactions contemplated by the APA, the Subsidiary entered into a transition services agreement with the Seller on May 14, 2025 (the “TSA”), pursuant to which the Seller will provide ongoing operational support and accounting and bookkeeping services for a period of two months. Pursuant to the TSA, we paid the Seller a fee of $35,000 per calendar month. The TSA was not renewed after the initial two-month term.

Previous wording

On May 13, 2025, the Board approved the issuance of 94,118 shares of our common stock to Maxim Group LLC (“Maxim”) in connection with the amended letter agreement between us and Maxim, pursuant to which Maxim provides advisory services to the Company. The shares of common stock were issued to Maxim without registration under the Securities Act, in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering.

Current wording

On May 13, 2025, the Board approved the issuance of 94,118 shares of our common stock to Maxim Group LLC (“Maxim”) in connection with the amended letter agreement between us and Maxim, pursuant to which Maxim provides advisory services to the Company. The shares of common stock were issued to Maxim without registration under the Securities Act, in reliance on the exemption provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering.

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 condensed 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 condensed 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 condensed consolidated financial statements and to the understanding of our reported financial results include the following.

Previous wording

Revenues is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

Current wording

Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

Previous wording

Loss from operations were $2.926 million for the three months ended March 31, 2025, compared to $3.861 million for the three months ended March 31, 2024. The decrease in the loss from operations was driven by lower overall expenses across cost of goods sold and SG&A, offset by a decline in revenue.

Current wording

Loss from operations were $3.6 million for the three months ended June 30, 2025, compared to $1.2 million for the three months ended June 30, 2024. The increase in the loss from operations was driven by higher SG&A expenses as previously described and the decline in revenue.

Previous wording

Net loss was $3.324 million for the three months ended March 31, 2025, compared to a net loss of $3.977 million for the three months ended March 31, 2024. The reasons for the decrease in net loss are explained above.

Current wording

Net loss was $4.0 million for the three months ended June 30, 2025, compared to a net loss of $1.9 million for the three months ended June 30, 2024. The reasons for the increase in net loss are explained above.

Previous wording

Revenue was $2.718 million for the three months ended March 31, 2025, compared to $3.132 million for the three months ended March 31, 2024. The decrease in revenue of $414 thousand, or 13.2%, is primarily attributed to our strategic exit from the floral and lettuce categories, which contributed $334 thousand of the decline year over year. Revenue from our core portfolio decreased from $2.62 million to $2.50 million year-over-year, or 5%, while revenue from our non-perishable portfolio increased from $462 thousand to $531 thousand year-over-year.

Current wording

Revenue was $5.9 million for the six months ended June 30, 2025, compared to $7.4 million for the six months ended June 30, 2024. The decrease in revenue of $1.5 million, or 21%, is primarily attributed to our strategic exit from the floral and lettuce categories, which contributed $1.1 million of the decline year over year. Excluding these exited categories, revenue decreased $87 thousand, or 2%. Revenue from our core herb portfolio, which excludes the legacy lettuce and floral lines, decreased from $5.5 million to $5.4 million year-over-year, or 2%, while revenue from our vitamin and supplement portfolio decreased from $1 million to $996 thousand year-over-year.

Previous wording

Interest expense was $440 thousand for the three months ended March 31, 2025, compared to $117 thousand for the three months ended March 31, 2024. Higher interest expense was related to the company entering into standard merchant cash advance agreement with Arin (the “Arin I Agreement”).

Current wording

Interest expense was $829 thousand for the six months ended June 30, 2025, compared to $536 thousand for the six months ended June 30, 2024. Higher interest expense was related to the company entering into the Arin II Agreement.

Previous wording

We have incurred significant losses since our inception. We recognized net losses of approximately $3.324 million during the three months ended March 31, 2025 and $11.051 million during the twelve months ended December 31, 2024. 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 recognized net losses of approximately $7.4 million during the six months ended June 30, 2025 and $11.1 million during the twelve months ended December 31, 2024. 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.

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 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 $3.332 million and $1.059 million during the three months ended March 31, 2025 and 2024, 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 $6.8 million and $5.6 million during the six months ended June 30, 2025 and 2024, respectively. 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

The Company’s primary liquidity requirements are for working capital, continued investments in capital expenditures, repayment of indebtedness, and other strategic investments. Although income taxes are not currently a significant use of funds, after the benefits of our net operating loss carryforwards are fully recognized, they could become a material use of funds, depending on our future profitability and future tax rates. The Company’s liquidity needs have been met primarily through public equity offerings, term loan borrowings, accounts receivable financing, convertible notes, and related party loans.

Current wording

The Company’s primary liquidity requirements are for working capital, continued investments in capital expenditures, repayment of indebtedness, payment of the preferred return to the holder of our Series B Preferred Stock, and other strategic investments. Although income taxes are not currently a significant use of funds, after the benefits of our net operating loss carryforwards are fully recognized, they could become a material use of funds, depending on our future profitability and future tax rates. The Company’s liquidity needs have been met primarily through public and private equity offerings, term loan borrowings, accounts receivable financing, convertible notes, and related party loans.

Previous wording

As of March 31, 2025 and December 31, 2024, we had $409 thousand and $3.530 million in cash and cash equivalents available, respectively. During the three months ended March 31, 2025, we used $3.332 million of cash for operating activities. As of March 31, 2025 and December 31, 2024, we had $2.387 million and $3.203 million of total debt outstanding, respectively. To meet our cash needs, we entered into the Arin I Agreement, raised approximately $1.1 million in an at-the-market offering and are implementing cost savings strategies. See “Capital Resources” below for additional details.

Current wording

As of June 30, 2025 and December 31, 2024, we had $2.8 million and $3.5 million in cash and cash equivalents available, respectively. During the six months ended June 30, 2025, we used $6.8 million in cash for operating activities. As of June 30, 2025 and December 31, 2024, we had $2.0 million and $3.2 million of total debt outstanding, respectively. To meet our cash needs, we raised $3.0 million via the sale of preferred stock to Streeterville, entered into the Arin II Agreement, raised approximately $1.86 million in an at-the-market offering, received approximately $3.3 million from warrant exercises and are implementing cost savings strategies. See “Capital Resources” below for additional details.

Previous wording

On April 2, 2025, we entered into the Arin II Agreement with Arin, pursuant to which we agreed to sell $2,040,000 of future accounts receivable to Arin in exchange for a purchase price of $1,500,000, less fees and expenses of $65,000, for net funds provided of $1,435,000. In connection with the Arin II Agreement, we negotiated with Cedar to discount the outstanding balance under the Cedar III Agreement, from $1,373,285 to $1,263,422, in exchange for us agreeing to prepay the future amounts payable under the Cedar III Agreement. A portion of the net proceeds of the Arin II Agreement were used to satisfy the remaining amount to which Cedar was entitled under the Cedar III Agreement. Weekly, we are required to pay Arin 20.0% of all funds collected from customers for the sale of goods and services and Arin is authorized to withdraw $63,750 of funds from our bank account until the total balance of $2,040,000 is repaid.

Current wording

On April 2, 2025, we entered into the Arin II Agreement with Arin, pursuant to which we agreed to sell $2.0 million of future accounts receivable to Arin in exchange for a purchase price of $1.5 million, less fees and expenses of $65 thousand, for net funds provided of $1.4 million. In connection with the Arin II Agreement, we negotiated with Cedar to discount the outstanding balance under the Cedar III Agreement, from $1.4 million to $1.3 million, in exchange for us agreeing to prepay the future amounts payable under the Cedar III Agreement. A portion of the net proceeds of the Arin II Agreement were used to satisfy the remaining amount to which Cedar was entitled under the Cedar III Agreement. Weekly, we are required to pay Arin 20.0% of all funds collected from customers for the sale of goods and services and Arin is authorized to withdraw $63,750 of funds from our bank account until the total balance of $2.0 million is repaid.

Previous wording

On February 14, 2025, we entered into the Arin I Agreement with Arin, pursuant to which the Company sold to Arin $272,000 of its future accounts receivable for a purchase price of $200,000, less fees and expenses of $10,000, for net funds provided of $190,000. Pursuant to the Arin I Agreement, the Company is required to pay Arin 10.0% of all funds collected weekly from customers and Arin is expected to withdraw $9,714 a week directly from the Company’s bank account until the $272,000 due to Arin under the Arin I Agreement is paid in full.

Current wording

On February 14, 2025, we entered into the Arin I Agreement with Arin, pursuant to which the Company sold to Arin $272 thousand of its future accounts receivable for a purchase price of $200 thousand, less fees and expenses of $10,000, for net funds provided of $190 thousand. Pursuant to the Arin I Agreement, the Company is required to pay Arin 10.0% of all funds collected weekly from customers and Arin is expected to withdraw $9,714 a week directly from the Company’s bank account until the $272 thousand due to Arin under the Arin I Agreement is paid in full.

Previous wording

On February 12, 2025, we advanced the Narayan Group $299,000 to support its operations and the Narayan Group issued a promissory note in favor of us in the principal amount of $299,000. 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.

Current wording

On February 12, 2025, we advanced the Narayan d.o.o. and its subsidiaries (the “Narayan Group”) $193 thousand to support its operations and the Narayan Group issued a promissory note in favor of us in the principal amount of $190 thousand. On February 19, 2025, we agreed to advance Narayan Group an additional $199 thousand that was to be paid in weekly installments and the Narayan Group issued a promissory note in favor of us in the principal amount of $199 thousand (the “second promissory note”). On June 3, 2025, we announced the decision not to proceed with the transaction contemplated under the letter of intent to purchase outstanding shares of Narayan Group and negotiations ceased. Prior to our decision not to proceed with the transaction, we had advanced the Narayan Group $100 thousand under the second promissory note. The promissory notes accrued interest at a rate of 6.0% per annum until June 30, 2025, after which interest accrues at a rate of 10.0% per annum because the parties have not entered into a definitive agreement with respect to the proposed transaction. The Narayan Group is obligated to pay the outstanding principal and accrued interest in 12 equal monthly installments beginning on July 1, 2025. To date, the Narayan Group has not paid amounts due under the promissory notes and has defaulted on the repayment of the promissory notes.

Previous wording

On January 31, 2025, we entered into the 2025 EDA with Maxim, as sales agent, pursuant to which the Company may, from time to time, issue and sell shares of its common stock through Maxim in an at-the-market offering for an aggregate offering price of up to $2,516,470. To date, we have received net proceeds of approximately $1.3 million from the sale of common stock under the 2025 EDA after deducting Maxim’s commission of 3.5% of the gross proceeds and other offering expenses.

Current wording

On January 31, 2025, we entered into an Equity Distribution Agreement (the “2025 EDA”) with Maxim, as sales agent, pursuant to which the Company may, from time to time, issue and sell shares of its common stock through Maxim in an at-the-market offering for an aggregate offering price of up to $2.5 million. To date, we have received net proceeds of approximately $1.759 million from the sale of common stock under the 2025 EDA after deducting Maxim’s commission of 3.5% of the gross proceeds and other offering expenses.

Previous wording

During the three months ended March 31, 2025 and 2024, cash used for operating activities was $3.332 million and $1.059 million, respectively. The increase in cash used for operating activities was primarily driven by timing of payments to vendors that caused an increase in accounts payable and accrued expenses of $2.659 million in Q1 2024, compared to a decrease in accounts payable and accrued expenses of $714 thousand in Q1 2025 and an increase in prepaid expenses and other current assets related to the cash advance to the Narayan Group, offset by a higher debt discount amortization from our cash advance.

Current wording

During the six months ended June 30, 2025 and 2024, cash used for operating activities was $6.8 million and $5.6 million, respectively. The increase in cash used for operating activities was primarily driven by the decrease in revenue and the reduction in accounts payable, offset by a reduction in accounts receivables.

Previous wording

During the three months ended March 31, 2025 and 2024, cash used in investing activities was $68 thousand and $55 thousand, respectively. The increase in cash used in investing activities is attributable to normal course of business purchases of property, equipment and leasehold improvements.

Current wording

During the six months ended June 30, 2025 and 2024, cash used in investing activities was $122 thousand and $167 thousand, respectively. The decrease in cash used in investing activities is attributable to lower normal course of business purchases of property, equipment and leasehold improvements.