Edible Garden AG Inc 10-Q for FY2023 Q2

Edible Garden AG Inc (EDBL)

10-Q 2023-08-10 For: 2023-06-30

Added on April 09, 2026

About this 10-Q

Edible Garden AG Inc filed this 10-Q on August 10, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $4.22M; up 41.4% from $2.99M a year earlier
Net loss: $638K; compared with a net loss of $4.78M a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

Large Accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

PART I — FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022	3
	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022	4
	Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit) for the Three and Six Months Ended June 30, 2023 and 2022	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	32

Item 6.	Exhibits	32

Signatures		33

EDIBLE GARDEN AG, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares)

	June 30,			December 31,
	2023 (unaudited)			2022

ASSETS

Current assets:
Cash	$	1,368		$	110
Accounts receivable, net		2,672			1,105
Inventory		482			586
Prepaid expenses and other current assets		177			62

Total current assets		4,699			1,863

Property, equipment and leasehold improvements, net		4,929			4,891
Intangible assets, net		48			50
Other assets		117			161

TOTAL ASSETS	$	9,793		$	6,965

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
LIABILITIES:
Current liabilities:
Accounts payable and other accrued expenses	$	1,528		$	2,787
Short-term debt, net of discounts		374			2,042

Total current liabilities		1,902			4,829

Long-term liabilities:
Long-term debt, net of discounts		4,231			4,282
Long-term lease liabilities		-			34

Total long-term liabilities		4,231			4,316

Total liabilities		6,133			9,145

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS’ EQUITY (DEFICIT):
Common stock ($0.0001 par value, 10,000,000 shares authorized, 2,827,082 and 362,716 shares outstanding as of June 30, 2023 and December 31, 2022, respectively (1))		-			-
Series A Convertible Preferred stock ($0.0001 par value, 10,000,000 shares authorized; nil shares outstanding as of June 30, 2023 and December 31, 2022)		-			-
Additional paid-in capital		27,249			17,892
Accumulated deficit		(23,589	)		(20,072	)


Total stockholders’ equity (deficit)		3,660			(2,180	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	9,793		$	6,965

⁽¹⁾ Adjusted to reflect the stock splits as described in Note 1.

EDIBLE GARDEN AG, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share information)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022

Revenue	$	4,221		$	2,985		$	6,676		$	5,722
Cost of goods sold		3,668			2,779			6,148			5,611

Gross profit		553			206			528			111

Selling, general and administrative expenses		2,380			2,733			5,071			4,340

Loss from operations		(1,827	)		(2,527	)		(4,543	)		(4,229	)

Other income (expenses)
Interest expense, net		(44	)		(1,234	)		(277	)		(1,737	)
Gain (Loss) from extinguishment of debt		-			(826	)		70			(826	)
Employee retention credit		1,233			-			1,233			-
Other income / (loss)		-			(189	)		-			(590	)
Total other income (expenses)		1,189			(2,249	)		1,026			(3,153	)

NET LOSS	$	(638	)	$	(4,776	)	$	(3,517	)	$	(7,382	)

Net Income / (Loss) per common share - basic and diluted (1)	$	(0.24	)	$	(20.44	)	$	(1.78	)	$	(36.64	)

Weighted-Average Number of Common Shares Outstanding – Basic and Diluted (1)		2,641,485			233,617			1,975,907			201,461

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022
(in thousands, except for shares) ⁽¹⁾

					Additional
	Common Stock				Paid-In		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance at March 31, 2023		1,989,645	$	-	$	27,246	$	(22,951	)	$	4,295

Issuance of common stock for Directors' fees		1,397		-		3		-			3
Exercises of warrants		836,040		-		-		-			-
Net Income (Loss)		-		-		-		(638	)		(638	)
Balance at June 30, 2023		2,827,082	$	-	$	27,249	$	(23,589	)	$	3,660

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance at March 31, 2022		169,333	$	-	$	1,013	$	(10,225	)	$	(9,212	)

Issuance of common stock		104,333		-		13,469		-			13,469
Conversion of debt to common stock		14,831		-		1,878		-			1,878
Modification of warrants		-		-		189		-			189
Net Income (Loss)		-		-		-		(4,776	)		(4,776	)
Balance at June 30, 2022		288,498	$	-	$	16,549	$	(15,001	)	$	1,548

⁽¹⁾ Adjusted to reflect the stock splits as described in Note 1.

EDIBLE GARDEN AG, INCORPORATED
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except for shares) ⁽¹⁾
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

	Common Stock				Preferred Series A				Additional Paid-In			Accumulated
	Shares		Amount		Shares		Amount		Capital			Deficit			Total
Balance at December 31, 2022		362,716	$	-		-	$	-	$	17,892		$	(20,072	)	$	(2,180	)

Issuance of common stock and warrants in public offering, net of expenses		1,619,000		-		-		-		9,258			-			9,258
Exercises of warrants		836,040		-		-		-		-			-			-
Issuance of common stock for Directors' fees		6,985		-		-		-		73			-			73
Issuance of common stock to employees and consultants		2,341		-		-		-		30			-			30
Series A Preferred dividend		-		-		-		-		(4	)		-			(4	)
Net Income (Loss)		-		-		-		-		-			(3,517	)		(3,517	)
Balance at June 30, 2023		2,827,082	$	-		-	$	-	$	27,249		$	(23,589	)	$	3,660

EDIBLE GARDEN AG, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Six Months Ended June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$	(3,517	)	$	(7,382	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		707			386
Amortization of operating lease right of use asset		44			37
Amortization of debt discount		5			888
(Gain) / Loss on extinguishment of debt		(70	)		826
Stock-based compensation		30			-
Stock issued as payment for fees and services		-			400
Stock issued to Directors		73			-
Expense for modification of warrants		-			189
Other non-cash expenses		5			-
Change in operating assets and liabilities:
Accounts receivable		(1,568	)		(23	)
Inventory		104			(34	)
Prepaid expenses and other current assets		(115	)		(78	)
Other assets		-			(11	)
Accounts payable and accrued expenses		(1,222	)		(762	)
Operating lease liabilities		(44	)		(37	)
NET CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES		(5,568	)		(5,601	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, equipment and leasehold improvements		(591	)		(33	)
NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES		(591	)		(33	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt, including related parties		175			1,565
Payments of debt principal, including related parties		(2,012	)		(3,289	)
Payment of debt issuance costs		-			(180	)
Proceeds from common stock and warrants issued in public offering		9,398			14,654
Payment of costs related to public offerings		(140	)		(1,443	)
Payment of preferred stock dividends		(4	)		-
NET CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES		7,417			11,307

NET CHANGE IN CASH		1,258			5,673
Cash at beginning of period		110			31

CASH AT END OF PERIOD	$	1,368		$	5,704

SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash paid for interest	$	275		$	90

SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Trucks acquired with debt	$	152		$	-
Debt and interest converted into common stock	$	-		$	1,878
Stock issued for debt extinguishment	$	-		$	258
Warrants issued with debt	$	-		$	101

	(in thousands)
	Six Months Ended,
	June 30, 2023		June 30, 2022
Herbs, Produce & Floral	$	5,578	$	5,054
Vitamins and Supplements		1,098		668
Total	$	6,676	$	5,722

			(in thousands)
			June 30, 2023							December 31, 2022
	Estimated Useful Life in Years		Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value

Pulp brand recipes		15	$	50	$	(2	)	$	48	$	50	$	-		$	50
Non-compete agreement		2		62		(62	)		-		62		(62	)		-

Total Intangible Assets, net			$	112	$	(64	)	$	48	$	112	$	(62	)	$	50

	(in thousands)
	June 30, 2023		December 31, 2022

Accounts payable	$	993	$	1,728
Accrued expenses		50		542
Accrued interest payable		39		185
Accrued payroll		229		187
Accrued vacation		135		53
Current lease liability		82		92

Total Accounts Payable and Accrued Expenses	$	1,528	$	2,787

Years Ending December 31,	Secured Promissory Notes		NJD Investments, LLC Promissory Note		SBA Loan		Vehicle Loans		Total
2023 (remaining)	$	-	$	145	$	-	$	61	$	206
2024		-		301		-		88		389
2025		3,106		316		-		93		3,515
2026		-		247		-		76		323
2027		-		-		-		47		47
Thereafter		-		-		150		-		150
Total	$	3,106	$	1,009	$	150	$	365	$	4,630

	Number of Shares

Issuances of common stock in public offering		1,619,000
Issuance of common stock for Directors' fees		6,985
Issuances of common stock to employees and consultants		2,341
Issuances of common stock for warrant exercises		836,040
Common stock issued during the six months ended June 30, 2023		2,464,366

Summary table of common stock share transactions:
Shares outstanding at December 31, 2022		362,716
Common stock issuances		2,464,366
Shares outstanding at June 30, 2023		2,827,082

	Warrants (Underlying Shares)			Weighted-Average Exercise Price Per Share

Outstanding December 31, 2022		125,299		$	151.17
Warrants issued in public offering		1,942,800		$	6.33
Warrants exercised		(1,672,080	)		6.30
Outstanding June 30, 2023		396,019		$	52.26

	(in thousands)
	June 30,		December 31,
	2023		2022

Raw materials	$	157	$	298
Work-in-progress		278		288
Finished goods		47		-

Total inventory	$	482	$	586

	(in thousands)
	June 30,			December 31,
	2023			2022

Furniture and equipment	$	1,998		$	1,408
Computer hardware		6			4
Leasehold improvements		5,191			5,192
Vehicles		456			304
Land		202			202
Construction in progress		4			4

Subtotal		7,857			7,114
Less accumulated depreciation		(2,928	)		(2,223	)
Property, equipment and leasehold improvements, net
	$	4,929		$	4,891

	(in thousands)
	June 30,			December 31,
	2023			2022

Secured promissory note	$	3,106		$	3,783
NJD Investments, LLC promissory note		1,009			1,155
Evergreen private placement		-			1,022
SBA loan		150			150
Vehicle loans		365			244
Total Gross Debt	$	4,630		$	6,354

Less: Gross short term debt		(374	)		(2,042	)
Less: Debt discount		(25	)		(30	)
Net Long Term Debt	$	4,231		$	4,282

	(in thousands)
	Operating
	Leases
2023 (remaining)		54
2024		36
Total lease payments		90
Less: discount		(8	)
Total operating lease liabilities	$	82

	June 30,
	2023
Remaining lease term (months)		9
Discount rate		17.5	%

	·	our history of losses and our ability to continue as a going concern;
	·	our ability to continue to access and operate our Belvidere, New Jersey facility;
	·	our ability to maintain compliance with the listing standards of Nasdaq;
	·	our market opportunity;
	·	our ability to effectively manage our growth;
	·	our ability to integrate business acquisitions;
	·	the effects of increased competition as well as innovations by new and existing competitors in our market;
	·	our ability to retain our existing customers and to increase our customer base;
	·	the future growth of the indoor agriculture industry and demands of our customers;
	·	our ability to maintain, or strengthen awareness of, our brand;
	·	our ability to expand the product lines we offer;
	·	our ability to maintain, protect, and enhance our intellectual property;
	·	future revenue, hiring plans, expenses and capital expenditures;

	·	our ability to comply with new or modified laws and regulations that currently apply or become applicable to our business;
	·	our ability to recruit and retain key employees and management personnel;
	·	our financial performance and capital requirements;
	·	the potential insufficiency of our disclosure controls and procedures to detect errors or acts of fraud;
	·	the potential lack of liquidity and trading of our securities; and
	·	our potential ability to obtain additional financing.

	·	integrates in real-time with our cloud business software suite for monitoring daily sales data;
	·	generates reports by category, product, customer, and farm to allow us to analyze sales, trends, margins and retail shrink (spoiled product);
	·	provides dynamic pallet mapping for packout, which enables us to more efficiently ship our products;
	·	utilizes a proprietary algorithm that uses year-over-year and trending sales data to develop customer specific and aggregate product specific forecasting for our greenhouses;
	·	aggregates all greenhouse activity input to provide real-time inventory and availability reports of all products in our greenhouses;
	·	manages our online ordering system with user controlled product availability based upon greenhouse inventory;
	·	provides a route management system for coordinating the logistics of our direct store delivery program; and
	·	tracks all production activities at greenhouses, including sowing, spacing, dumping, spraying, picking and packing, using hand held devices.

	(in thousands)
(in thousands)	Three Months Ended June 30, 2023			Three Months Ended June 30, 2022
Revenue	$	4,221		$	2,985
Cost of goods sold		3,668			2,779
Gross Profit		553			206
Selling, general and administrative expenses		2,380			2,733
Loss from operations		(1,827	)		(2,527	)
Other income / (expense)
Interest expense, net		(44	)		(1,234	)
Gain (Loss) from extinguishment of debt		-			(826	)
Employee retention credit		1,233			-
Other income / (loss)		-			(189	)
Total other income / (expense)		1,189			(2,249	)

NET LOSS	$	(638	)	$	(4,776	)

	(in thousands)
(in thousands)	Six Months Ended June 30, 2023			Six Months Ended June 30, 2022
Revenue	$	6,676		$	5,722
Cost of goods sold		6,148			5,611
Gross Profit		528			111
Selling, general and administrative expenses		5,071			4,340
Loss from operations		(4,543	)		(4,229	)
Other income / (expense)
Interest expense, net		(277	)		(1,737	)
Gain (loss) from extinguishment of debt		70			(826	)
Employee retention credit		1,233			-
Other income / (loss)		-			(590	)
Total other income / (expense)		1,026			(3,153	)

NET LOSS	$	(3,517	)	$	(7,382	)

		Incorporated by Reference
Exhibit Number	Description	Form	File No.	Filing Date
3.1	Certificate of Amendment to the Certificate of Incorporation, filed June 8, 2023.	8-K	001-41371	June 9, 2023
10.1	First Amendment to the Edible Garden AG Incorporated 2022 Equity Incentive Plan.	8-K	001-4371	June 9, 2023
31.1	Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002			Filed herewith
31.2	Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002			Filed herewith
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002			Filed herewith
101	Materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Extensible Business Reporting Language (XBRL); (i) Unaudited Consolidated Balance Sheet, (ii) Unaudited Condensed Consolidated Statements of Operations, (iii) Unaudited Condensed Consolidated Statements of Cash Flows, (iv) Unaudited Condensed Consolidated Statements of Stockholders’ Deficit, and (v) related Notes to the Unaudited Consolidated Financial Statements.			Filed herewith
104	Cover Page Interactive Data File (included in Exhibit 101)			Filed herewith

EDIBLE GARDEN AG INCORPORATED

By:	/s/ James E. Kras
	James E. Kras
	Chief Executive Officer and President (principal executive officer)

By:	/s/ Michael James
	Michael James
	Chief Financial Officer, Treasurer and Secretary (principal financial and accounting officer)

1.	I have reviewed this Quarterly Report on Form 10-Q of Edible Garden AG Incorporated;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b.	[Paragraph omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a)];

	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2023

/s/ James E. Kras
James E. Kras
President and Chief Executive Officer

	1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.