EDBL.NASDAQEdible Garden AG INC
10-Q: Edible Garden Q3 2025 Loss Widens Amid Strategic Shifts
Sentiment:
Quarterly Report
Edible Garden AG Incorporated reported a widened net loss for the third quarter and first nine months of 2025, driven by lower gross margins and increased operating expenses, despite a strategic shift in product focus and ongoing capital raises.
Capital raiseReceived $3.494 million gross proceeds from the May 2025 Inducement, involving warrant exercises at a reduced price of $3.50 per share.Entered into a secured promissory note with Avondale Capital LLC on August 29, 2025, providing net funds of $1.395 million from a $1.75 million note.Subsequent to the reporting period, received approximately $4.2 million gross proceeds from the October 2025 Inducement, involving warrant exercises at a reduced price of $2.06 per share.Sold 774,579 shares of common stock under the 2025 Equity Distribution Agreement for total gross proceeds of $2.478 million, with net proceeds of approximately $1.759 million.Issued 3,000 shares of Series B Preferred Stock to Streeterville Capital LLC for $3.0 million cash on May 14, 2025, with an additional 500 shares to be purchased for $500,000 on November 14, 2025.Entered into the Arin II Agreement on April 2, 2025, selling $2.04 million of future accounts receivable for net funds of $1.435 million.Entered into the Arin I Agreement on February 14, 2025, selling $272,000 of future accounts receivable for net funds of $190,000.
Worse than expectedNet loss for Q3 2025 increased to $4.045 million from $2.063 million in Q3 2024.Net loss for the nine months ended September 30, 2025, increased to $11.412 million from $7.972 million in the prior year period.Gross profit margin significantly declined to 10% in Q3 2025 from 27% in Q3 2024, and to 11% for the nine months from 23% in the prior year, indicating worsening profitability.Operating cash burn increased to $9.142 million for the nine months ended September 30, 2025, from $6.761 million in the prior year, showing increased cash consumption.The company shifted from a working capital surplus of $1.2 million at December 31, 2024, to a deficit of $1.2 million at September 30, 2025.
Summary
- Net loss for Q3 2025 increased to $4.045 million from $2.063 million in Q3 2024.
- Net loss for the nine months ended September 30, 2025, was $11.412 million, up from $7.972 million in the prior year period.
- Gross profit margin significantly declined to 10% in Q3 2025 from 27% in Q3 2024, and to 11% for the nine months from 23% in the prior year.
- Revenue for Q3 2025 increased 9% to $2.817 million, attributed to strong performance in shelf-stable product lines.
- Revenue for the nine months ended September 30, 2025, decreased 13% to $8.681 million, primarily due to a strategic exit from floral and lettuce categories.
- Cash used in operating activities increased to $9.142 million for the nine months ended September 30, 2025, from $6.761 million in the prior year.
- The company acquired sustainable aquaculture assets from NaturalShrimp Farms Inc. for $12 million, paid with Series B Preferred Stock.
- Substantial doubt exists regarding the company's ability to continue as a going concern, with existing cash projected to fund operations only into Q2 2026.
Sentiment
Score: 3
Explanation: The company faces severe financial distress, evidenced by widening net losses, sharply declining gross margins, increased cash burn, and a working capital deficit. While strategic shifts and capital raises are ongoing, the explicit 'going concern' warning and significant dilution indicate a highly precarious financial position.
Positives
- Q3 2025 revenue increased by 9% to $2.817 million, driven by strong performance in shelf-stable product lines (Kick.Sports Nutrition, Vitamin Whey, Pulp, Pickle Party).
- Strategic exit from floral and lettuce categories is believed to be behind the company, repositioning its portfolio for future growth.
- Successful capital raises, including $4.2 million from October 2025 warrant inducement and $3.0 million from Series B Preferred Stock sale, providing liquidity.
- Acquisition of NaturalShrimp Farms Inc.'s sustainable aquaculture assets for $12 million, expanding operational footprint and intellectual property.
Negatives
- Net loss significantly widened to $4.045 million in Q3 2025 from $2.063 million in Q3 2024, and to $11.412 million for the nine months from $7.972 million in the prior year.
- Gross profit margin sharply declined to 10% in Q3 2025 (from 27% in Q3 2024) and to 11% for the nine months (from 23% in Q3 2024), primarily due to increased greenhouse labor, freight costs, and raw material purchases.
- Selling, general and administrative expenses increased by 73% in Q3 2025 to $3.831 million and by 26% for the nine months to $11.073 million, driven by depreciation, legal, audit, and accounting expenses related to the NaturalShrimp acquisition.
- Operating cash burn increased to $9.142 million for the nine months ended September 30, 2025, compared to $6.761 million in the prior year.
- Cash balance significantly decreased to $828,000 as of September 30, 2025, from $3.530 million at December 31, 2024.
- Shift from a working capital surplus of $1.2 million at December 31, 2024, to a deficit of $1.2 million at September 30, 2025.
- Incurred a $9.833 million deemed dividend on warrants for the nine months ended September 30, 2025, indicating significant dilution.
- Narayan Group defaulted on repayment of $293,200 in promissory notes, which has been fully reserved.
Risks
- Substantial doubt exists about the ability to continue as a going concern, with current cash projected to fund operations only into Q2 2026.
- Inability to obtain additional financing to fund operations, which could lead to scaling back or ceasing operations.
- Risk of delisting from Nasdaq if compliance with listing standards is not maintained, which would negatively impact stock liquidity and ability to raise capital.
- High concentration of credit risk, with four customers accounting for 81.9% of total revenue for the nine months ended September 30, 2025, and three customers accounting for 70.6% of gross outstanding trade receivables.
- Challenges in effectively managing growth and integrating business acquisitions.
- Effects of increased competition and innovations by new and existing competitors in the market.
- Inability to retain existing customers and to increase the customer base.
- Dependence on the future growth of the indoor agriculture industry and demands of customers.
- Ability to maintain, protect, and enhance intellectual property.
- Ability to pay debts as they come due.
- Ability to comply with new or modified laws and regulations that currently apply or become applicable to the business.
- Ability to recruit and retain key employees and management personnel.
- Potential lack of liquidity and trading of securities.
Future Outlook
The company expects to experience further significant net losses in the foreseeable future. Existing cash is projected to fund operations only into the second quarter of 2026. Future success is dependent on achieving profitable operations, generating cash from operating activities, or raising additional funds through debt or equity financing, which may not be available on acceptable terms or at all.
Management Comments
- "We believe the drag on revenue from our strategic exit from the floral and lettuce categories, is now behind us, and this quarter represents the strength of our repositioned portfolio."
- "We are pursuing price adjustments to mitigate the impact of these inflationary pressures on cost of goods sold."
- "We are working to mitigate cost pressures, assessing price adjustments and supplier negotiations where market conditions permit."
Industry Context
Edible Garden operates in the controlled environment agriculture (CEA) sector, focusing on sustainable hydroponic produce, nutraceuticals, and shelf-stable consumer brands. The company leverages technology like its GreenThumb software for quality control and supply chain traceability, aiming to reduce its carbon footprint. The strategic shift towards shelf-stable products and away from floral and lettuce indicates an adaptation to market demands and profitability challenges within its diverse product portfolio.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Financial Officer | Former CFO (name not specified) | Kostas Dafoulas (Interim) | Prior to Q3 2025 (former CFO departed in 2024) | Departure of previous Chief Financial Officer in 2024, leading to appointment of an interim replacement. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Preferred Stock Rights | The Series B Preferred Stock, held by Streeterville Capital LLC, grants significant control rights, including the ability to cast votes equal to the lesser of 1,305,483 common shares or 9.99% of outstanding common stock (fully diluted). | May 13, 2025 (initial approval), July 29, 2025, and August 13, 2025 (amendments) | Concentrates significant influence and veto power over key corporate actions (e.g., equity issuances, authorized share increases, asset disposals over 25% of revenue/assets) with a single institutional investor. |
| Equity Incentive Plan Amendment | Stockholders approved the Second Amendment to the 2022 Equity Incentive Plan, increasing shares reserved for issuance by 26,000, updating recoupment provisions, and extending the plan term until August 21, 2034. | August 21, 2024 | Expands the pool for equity compensation, aligning with long-term incentive strategies and corporate governance best practices regarding clawback policies. |
Legal Proceedings
- Management does not believe that there is any pending or threatened proceeding against the company which, if determined adversely, would have a material adverse effect on its business, results of operations, or financial condition.
Related Party Transactions
- The acquisition of NaturalShrimp Farms Inc. assets was from NaturalShrimp, an affiliate of Streeterville Capital, LLC, which is the sole holder of the company's Series B Preferred Stock.
- A transition services agreement was entered into with NaturalShrimp for operational support and accounting services, incurring a $70,000 fee.
- The secured promissory note with Avondale Capital LLC is with an affiliate of Streeterville Capital, LLC.
- The lease agreement for the Iowa property is with Iowa Shrimp Holdings, LLC, an affiliate of NaturalShrimp and Streeterville.
Stakeholder Impact
- Shareholders: Face significant dilution from ongoing equity and warrant issuances, substantial risk of investment loss due to the going concern warning, and potential loss of liquidity and trading if delisted from Nasdaq.
- Employees: Potential job insecurity due to the company's precarious financial position and the need to scale back operations if additional financing is not secured.
- Creditors: Increased risk of default given the company's ongoing losses, cash burn, and working capital deficit, despite recent debt restructuring and new secured notes.
- Customers: Potential disruption in product supply or quality if the company's financial difficulties impact operations or ability to invest.
- Management: Under pressure to secure additional financing, improve operational efficiency, and navigate the company through its financial challenges while maintaining Nasdaq compliance.
Next Steps
- Streeterville Capital LLC is obligated to purchase an additional 500 shares of Series B Preferred Stock for $500,000 on November 14, 2025.
- The company continues to assess its cost structure for opportunities to reduce cash requirements.
- Management is evaluating various options to raise additional funds, including loans and selling securities, to support continued operations.
- The company will remain under a Nasdaq discretionary panel monitor until April 8, 2026, requiring continued compliance with listing standards.
Key Dates
| Date | Description |
|---|---|
| 2020-03-28 | Edible Garden Inc. (Wyoming corporation) incorporated to acquire operating assets of Edible Garden Corp. |
| 2020-03-30 | Acquisition of Edible Garden Corp. operating assets completed. |
| 2020-06-22 | Company entered into a $150,000 SBA Loan Authorization and Agreement. |
| 2020-10-14 | Declared a 20-for-1 forward stock split and increased authorized common shares to 20,000,000. |
| 2021-06-30 | Converted from Wyoming to Delaware corporation, declared a 1-for-2 reverse stock split, and increased authorized common shares to 50,000,000. |
| 2021-09-08 | Declared a 20-for-1 forward stock split and increased authorized common shares to 200,000,000. |
| 2022-01-18 | Board and stockholders approved a 1-for-5 reverse stock split, effective May 3, 2022. |
| 2022-05-03 | 1-for-5 reverse stock split became effective. |
| 2022-08-30 | Entered into a $1,136,000 promissory note with NJD Investments, LLC. |
| 2023-01-26 | Effected a 1-for-30 reverse stock split and decreased authorized common shares to 6,666,667. |
| 2023-06-08 | Increased authorized common stock shares from 6,666,667 to 10,000,000. |
| 2023-11-10 | Increased total authorized capital stock to 110,000,000 and authorized common stock to 100,000,000 shares. |
| 2024-01-01 | Agreements with Meijer Distribution, Inc. for product supply became effective. |
| 2024-02-07 | Entered into a 2024 Equity Distribution Agreement with Maxim Group LLC for at-the-market offering. |
| 2024-03-14 | Entered into a standard merchant cash advance agreement (Cedar Agreement) with Cedar Advance LLC. |
| 2024-04-05 | Declared a 1-for-20 reverse stock split of outstanding common stock. |
| 2024-05-07 | Entered into an amended and restated merchant cash advance agreement (Cedar II Agreement) with Cedar Advance LLC. |
| 2024-05-23 | Completed a best-efforts public offering (May Offering) of common and pre-funded units. |
| 2024-06-22 | Exercise price of May Warrants reset to $37.25. |
| 2024-09-27 | Entered into a placement agency agreement with Maxim Group LLC for the September Offering. |
| 2024-09-30 | Closed a best-efforts public offering (September Offering) of common and pre-funded units. |
| 2024-10-01 | Acquired Edible Garden Corp. (Predecessor) for $1.00 and assumed its lease agreement. |
| 2024-10-21 | Received a letter from Nasdaq indicating non-compliance with the Bid Price Rule. |
| 2024-12-04 | Entered into a standard merchant cash advance agreement (Cedar III Agreement) with Cedar Advance LLC. |
| 2024-12-23 | Entered into an inducement letter agreement (December 2024 Inducement) with an institutional investor. |
| 2025-01-14 | Attended Nasdaq hearing regarding Bid Price Rule non-compliance. |
| 2025-01-31 | Entered into a 2025 Equity Distribution Agreement with Maxim Group LLC for at-the-market offering. |
| 2025-02-12 | Received Nasdaq Notice granting extension to regain Bid Price Rule compliance until March 31, 2025. Advanced Narayan Group $193,200. |
| 2025-02-14 | Entered into a standard merchant cash advance agreement (Arin I Agreement) with Arin Funding LLC. |
| 2025-02-19 | Agreed to advance Narayan Group an additional $199,060. |
| 2025-03-03 | Declared a 1-for-25 reverse stock split of outstanding common stock. |
| 2025-03-31 | Deadline to regain Nasdaq Bid Price Rule compliance. |
| 2025-04-02 | Entered into a standard merchant cash advance agreement (Arin II Agreement) with Arin Funding LLC. Paid outstanding principal balance of Cedar III Agreement. |
| 2025-04-08 | Received letter from Nasdaq confirming regained compliance with Bid Price Rule. |
| 2025-05-13 | Board approved certificate of designation for Series B Preferred Stock. |
| 2025-05-14 | Completed asset purchase agreement with NaturalShrimp Farms Inc. and Streeterville Capital, LLC. Entered into a stock purchase agreement with Streeterville Capital LLC for Series B Preferred Stock. Entered into a lease agreement with Iowa Shrimp Holdings, LLC. |
| 2025-05-21 | Entered into an inducement letter agreement (May 2025 Inducement) with a warrant holder. |
| 2025-06-03 | Announced decision not to proceed with Narayan Group acquisition; negotiations ceased. |
| 2025-06-30 | Interest rate on Narayan Group promissory notes increased to 10.0% per annum. |
| 2025-07-01 | Narayan Group obligated to begin 12 equal monthly installments for promissory notes. |
| 2025-07-08 | Issued 154 shares of Series B Preferred Stock to Streeterville Capital, LLC as payment of quarterly preferred return. |
| 2025-07-29 | Amended certificate of designation for Series B Preferred Stock. |
| 2025-08-13 | Amended certificate of designation for Series B Preferred Stock, reclassifying it to permanent equity. |
| 2025-08-21 | Stockholders approved Second Amendment to the 2022 Equity Incentive Plan, increasing shares reserved and extending term. |
| 2025-08-29 | Entered into a secured promissory note with Avondale Capital LLC. Paid outstanding principal balance of Arin II Agreement. |
| 2025-09-30 | End of quarterly period. |
| 2025-10-16 | Entered into an inducement letter agreement (October 2025 Inducement) with a warrant holder. |
| 2025-11-10 | Common Stock outstanding: 5,126,655 shares. |
| 2025-11-14 | Streeterville Capital LLC shall purchase an additional 500 shares of Series B Preferred Stock. |
| 2026-01-31 | Termination date for the 2025 Equity Distribution Agreement. |
| 2026-04-08 | End of Nasdaq discretionary panel monitor period. |
| 2026-12-31 | Expiration date for agreements with Meijer Distribution, Inc. |
| 2050-06-22 | Maturity date of the SBA Loan. |
Recommendation
strong sellThe company is in severe financial distress, explicitly stating "substantial doubt exists as to our ability to continue as a going concern" and projecting existing cash to last only into Q2 2026. It has a history of significant net losses, sharply declining gross profit margins, and increasing operating cash burn. While it has engaged in multiple capital raises, these have resulted in substantial shareholder dilution and have not yet stabilized the company's financial health. The ongoing Nasdaq discretionary panel monitor adds further uncertainty regarding its listing status. Given the high risk of investment loss, continued operational challenges, and the need for continuous dilutive financing, a 'strong sell' recommendation is warranted.
Keywords
Edible Garden, EDBL, Quarterly Report, SEC Filing, Hydroponic Produce, Nutraceuticals, CEA Farming, Financial Results, Net Loss, Gross Margin, Capital Raise, Going Concern, Nasdaq Listing, NaturalShrimp Acquisition, Series B Preferred Stock, Warrant Inducement, Operating Cash Flow, Working Capital Deficit
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