Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2024

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

Commission File Number: 001-41371

EDIBLE GARDEN AG INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware		85-0558704
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

283 County Road 519

Belvidere, NJ 07823

(Address of principal executive offices) (Zip Code)

(908) 750-3953

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	EDBL	The Nasdaq Stock Market LLC
Warrants to purchase Common Stock	EDBLW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒

As of May 6, 2024, the registrant had 549,392 shares of Common Stock, $0.0001 par value per share, outstanding.

PART I — FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	3
	Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023	4
	Unaudited Condensed Consolidated Statements of Stockholders' Deficit for the Three Months Ended March 31, 2024 and 2023	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 6.	Exhibits	32

Signatures		33

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EDIBLE GARDEN AG INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except shares)

	March 31,			December 31,
	2024			2023

ASSETS

Current assets:
Cash	$	388		$	510
Accounts receivable, net		1,139			1,249
Inventory		814			678
Prepaid expenses and other current assets		276			210

Total current assets		2,617			2,647

Property, equipment and leasehold improvements, net		3,646			3,893
Intangible assets, net		46			47
Other assets		38			69

TOTAL ASSETS	$	6,347		$	6,656

LIABILITIES AND STOCKHOLDERS’ DEFICIT
LIABILITIES:
Current liabilities:
Accounts payable and other accrued expenses	$	5,145		$	2,517
Short-term debt, net of discounts		4,438			387

Total current liabilities		9,583			2,904

Long-term liabilities:
Long-term debt, net of discounts		852			4,040

Total long-term liabilities		852			4,040

Total liabilities		10,435			6,944

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS’ DEFICIT:
Common stock ($0.0001 par value, 100,000,000 shares authorized, 307,820 and 285,282 shares outstanding as of March 31, 2024 and December 31, 2023, respectively (1))		1			1
Series A Convertible Preferred stock ($0.0001 par value, 10,000,000 shares authorized; nil shares outstanding as of March 31, 2024 and December 31, 2023)		-			-
Additional paid-in capital		30,148			29,971
Accumulated deficit		(34,237	)		(30,260	)

Total stockholders’ deficit		(4,088	)		(288	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	6,347		$	6,656

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

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EDIBLE GARDEN AG INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share and per-share information)

	Three Months Ended March 31,
	2024			2023

Revenue	$	3,132		$	2,455
Cost of goods sold		3,109			2,479

Gross profit (loss)		23			(24	)

Selling, general and administrative expenses		3,884			2,691

Loss from operations		(3,861	)		(2,715	)

Other expenses
Interest expense, net		(117	)		(234	)
Gain from extinguishment of debt		-			70
Other income / (loss)		1			-
Total other expenses		(116	)		(164	)

NET LOSS	$	(3,977	)	$	(2,879	)

Net Income / (Loss) per common share - basic and diluted (1)	$	(13.65	)	$	(44.19	)

Weighted-Average Number of Common Shares Outstanding – Basic and Diluted (1)		291,372			65,147

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

The accompanying notes are an integral part of the consolidated financial statements.

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EDIBLE GARDEN AG INCORPORATED

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except for shares) ⁽¹⁾

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

	Common Stock				Preferred Series A				Additional Paid-In		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance at December 31, 2023		285,282	$	1		-	$	-	$	29,971	$	(30,260	)	$	(288	)

Sale of common stock pursuant to Equity Distribution Agreement		16,538		-		-		-		139		-			139
Issuance of common stock to employees and consultants		6,000		-		-		-		38		-			38
Net Income (Loss)		-		-		-		-		-		(3,977	)		(3,977	)
Balance at March 31, 2024		307,820	$	1		-	$	-	$	30,148	$	(34,237	)	$	(4,088	)

	Three months ending March 31, 2023
	Common Stock				Preferred Series A				Additional Paid-In			Accumulated
	Shares		Amount		Shares		Amount		Capital			Deficit			Total
Balance at December 31, 2022		18,136	$	1		-	$	-	$	17,891		$	(20,072	)	$	(2,180	)

Issuance of common stock and warrants in public offering, net of expenses		80,950		-		-		-		9,258			-			9,258
Issuance of common stock for Directors' fees		279		-		-		-		70			-			70
Issuance of common stock to employees and consultants		117		-		-		-		30			-			30
Series A Preferred dividend		-		-		-		-		(4	)		-			(4	)
Net Income (Loss)		-		-		-		-		-			(2,879	)		(2,879	)
Balance at March 31, 2023		99,482	$	1		-	$	-	$	27,245		$	(22,951	)	$	4,295

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

The accompanying notes are an integral part of the consolidated financial statements.

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EDIBLE GARDEN AG INCORPORATED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended March 31,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$	(3,977	)	$	(2,879	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense		9			-
Depreciation and amortization		302			334
Amortization of operating lease right of use asset		26			22
Amortization of debt discount		7			-
Gain from extinguishment of debt		-			(70	)
Stock-based compensation		38			30
Stock issued to Directors		-			70
Change in operating assets and liabilities:
Accounts receivable		100			215
Inventory		(136	)		(436	)
Prepaid expenses and other current assets		(66	)		(97	)
Other assets		5			-
Accounts payable and accrued expenses		2,659			(497	)
Operating lease liabilities		(26	)		(11	)
NET CASH USED FOR OPERATING ACTIVITIES		(1,059	)		(3,319	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, equipment and leasehold improvements		(55	)		(361	)
NET CASH USED FOR INVESTING ACTIVITIES		(55	)		(361	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt, including related parties		1,050			175
Payment of debt issuance costs		(50	)		-
Payments of debt principal, including related parties		(142	)		(1,911	)
Proceeds from sales of common stock from Equity Distribution Agreement		139			-
Payment of commissions related to sale of common stock		(5	)		-
Proceeds from common stock and warrants issued in public offering		-			9,398
Payment of costs related to public offering		-			(140	)
Payment of preferred stock dividends		-			(4	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		992			7,518

NET CHANGE IN CASH		(122	)		3,838
Cash at beginning of period		510			110

CASH AT END OF PERIOD	$	388		$	3,948

SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash paid for interest	$	95		$	247

SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Trucks acquired with debt	$	-		$	152

The accompanying notes are an integral part of the consolidated financial statements.

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EDIBLE GARDEN AG, INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION, NATURE OF BUSINESS, AND BASIS OF PRESENTATION

Organization and Recent Developments

Edible Garden Corp., a Nevada corporation, was incorporated on April 9, 2013. On March 28, 2020, Edible Garden Inc., a Wyoming corporation, was incorporated for the purpose of acquiring substantially all of the operating assets of Edible Garden Corp., which was a separately identified reportable segment of its parent company Blum Holdings, Inc. (formerly known as Terra Tech Corporation). The acquisition was completed on March 30, 2020. Prior to March 30, 2020 Edible Garden AG Incorporated had no operations. Hereafter, Edible Garden AG Incorporated and its subsidiaries will collectively be referred to as “Edible Garden,” “we,” “us,” “our,” or the “Successor.” Edible Garden Corp., a wholly owned subsidiary of Blum Holdings, Inc. will be referred to as the “Predecessor.” Throughout these financial statements, the Successor and the Predecessor are also referred to as “the Company” and used interchangeably, unless otherwise noted.

We authorized 100,000 shares of common stock, par value $0.0001 per share (“common stock”), at formation. On October 14, 2020, we simultaneously declared a 20-for-1 forward stock split of our common stock and increased the number of authorized common shares to 20,000,000. On June 30, 2021, we simultaneously (1) converted Edible Garden from a Wyoming into a Delaware corporation, (2) declared a 1-for-2 reverse stock split of our common stock, and (3) increased the total number of authorized common shares to 50,000,000. On September 8, 2021, we simultaneously declared a 20-for-1 forward stock split of our common stock and increased the number of authorized common shares to 200,000,000. On January 18, 2022, the Company’s board of directors and stockholders approved a 1-for-5 reverse stock split of its outstanding common stock, which became effective on May 3, 2022. On January 26, 2023, we effected a reverse stock split of 1-for-30 and decreased the total number of authorized common shares to 6,666,667. On June 8, 2023, we increased the number of authorized shares of common stock from 6,666,667 shares to 10,000,000 shares.

On November 10, 2023, we increased the total number of authorized shares of capital stock of the Company from 20,000,000 to 110,000,000 and increased the total authorized shares of common stock from 10,000,000 shares to 100,000,000 shares. On April 5, 2024, we declared a 1-for-20 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 report have been adjusted to reflect the stock splits described above.

Nature of Business

Edible Garden is a retail seller of locally grown hydroponic produce, nutraceuticals and hot sauce, which is distributed throughout the Northeast and Midwest. Currently, Edible Garden’s products are sold at over 5,000 supermarkets. Our target customers are those individuals seeking fresh produce locally grown using environmentally sustainable methods.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) pursuant to Section 13 or 15(d) under the Securities Exchange Act of 1934. The December 31, 2023 balances reported herein are derived from the audited consolidated financial statements for the year ended December 31, 2023. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

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All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company’s unaudited condensed consolidated financial position as of March 31, 2024 and December 31, 2023, and the unaudited condensed consolidated results of operations and cash flows for the three-month periods ended March 31, 2024 and 2023 have been included.

Going Concern

The accompanying financial statements have been prepared assuming that we will continue as a going concern. In an effort to achieve liquidity that would be sufficient to meet all of our commitments, the Company may seek funding through additional debt or equity financing arrangements, implement incremental expense reduction measures or a combination thereof to continue financing its operations.

However, we believe that even after taking these actions, we will not have sufficient liquidity to satisfy all of our future financial obligations. The risks and uncertainties surrounding our ability to continue our business with limited capital resources raise substantial doubt as to our ability to continue as a going concern. See Note 11, “Going Concern” for additional information.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Pronouncements to Be Adopted in Future Periods

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). The amendments in ASU 2023-07 primarily require entities to disclose certain significant segment expenses and other segment items on both an annual and interim basis. ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact this ASU will have on our financial statement disclosures for the year ended December 31, 2025.

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is permitted. This ASU will result in the required additional disclosures being included in our consolidated financial statements, once adopted. We are currently evaluating the impact of this ASU and expect to adopt this ASU for the year ending December 31, 2025.

Use of Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reported period. Changes in these estimates and assumptions may have a material impact on the consolidated financial statements and accompanying notes.

Examples of significant estimates and assumptions include provisions for doubtful accounts, accrued liabilities, discount rates used in the measurement and recognition of lease liabilities and valuation of our warrants. These estimates generally involve complex issues and require us to make judgments, involving an analysis of historical and future trends, that can require extended periods of time to resolve, and are subject to change from period to period. In all cases, actual results could differ materially from our estimates.

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Trade Receivables

The Company extends non-interest-bearing trade credit to its customers in the ordinary course of business which is not collateralized. Accounts receivable are shown on the face of the consolidated balance sheets net of an allowance for doubtful accounts. The Company analyzes the aging of accounts receivable, historical bad debts, customer creditworthiness and current economic trends, in determining the allowance for doubtful accounts. The Company does not accrue interest receivable on past due accounts receivable. The reserve for credit losses was $146,080 and $136,858 as of March 31, 2024 and December 31, 2023, respectively.

Concentration of Credit Risk

During the three months ended March 31, 2024 and 2023, three customers accounted for approximately 78.7% and 69.0% of our total revenue, respectively. As of March 31, 2024, approximately 76.0% of our gross outstanding trade receivables were attributed to three customers, 41.0% of which was due from one customer. As of December 31, 2023, approximately 80.4% of our gross outstanding trade receivables were attributed to four customers, 41.1% of which was due from one customer.

This concentration of customers leaves us exposed to the risks associated with the loss of one or more of these significant customers, which would materially and adversely affect our revenues and results of operations.

Inventory

We value our inventory at the lower of the actual cost of our inventory, as determined using the first-in, first-out method, or its net realizable value. We periodically review our physical inventory for excess, obsolete, and potentially impaired items and reserve accordingly. Our reserve estimate for excess and obsolete inventory is based on expected future use. Our reserve estimates have historically been consistent with our actual experience as evidenced by actual sale or disposal of the goods. The reserve for excess and obsolete inventory was not material as of March 31, 2024 and December 31, 2023.

Prepaid Expenses

Prepaid expenses consist of various payments that the Company has made in advance for goods or services to be received in the future. These prepaid expenses include advertising, insurance, and service or other contracts requiring up-front payments.

Property, Equipment and Leasehold Improvements, Net

Expenditures for major renewals and improvements are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. 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. See Note 4, “Property, Equipment and Leasehold Improvements, Net” for further information.

Intangible Assets

Intangible assets continue to be subject to amortization, and any impairment is determined in accordance with ASC 360, “Property, Plant, and Equipment.” Intangible assets are stated at historical cost and amortized over their estimated useful lives. The Company uses a straight-line method of amortization, unless a method that better reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up can be reliably determined.

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The Company reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, a product recall, or an adverse action or assessment by a regulator. If an impairment indicator exists, we test the intangible asset for recoverability. For purposes of the recoverability test, we group our amortizable intangible assets with other assets and liabilities at the lowest level of identifiable cash flows if the intangible asset does not generate cash flows independent of other assets and liabilities. If the carrying value of the intangible asset (asset group) exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the intangible asset (asset group), the Company will write the carrying value down to the fair value in the period the impairment is identified.

Revenue Recognition and Performance Obligations

Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company does not offer returns, discounts, loyalty programs or other sales incentive programs that are material to revenue recognition. Payments from our customers are due upon delivery or within a short period after delivery.

Disaggregation of Revenue

The following table includes revenue disaggregated by revenue stream for the three months ended March 31, 2024 and 2023:

	(in thousands)
	Three Months Ended,
	March 31, 2024		March 31, 2023
Herbs & Produce	$	2,754	$	1,943
Vitamins and Supplements		378		512
Total	$	3,132	$	2,455

Contract Balances

Due to the nature of the Company’s revenue from contracts with customers, the Company does not have material contract assets or liabilities that fall under the scope of ASC Topic 606.

Contract Estimates and Judgments

On January 1, 2024, the Company and Meijer Distribution, Inc. (“Buyer”) entered into two agreements pursuant to which the Company will supply and sell products to Buyer (the “Agreements”). Under the 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 by the Company and the Buyer. Under the 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 effect 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 Agreements immediately.

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In addition, under the agreement governing the purchase of potted herbs, the Company has agreed to fund the installation of fixtures in each of the Buyer’s stores to display the potted herbs in an aggregate amount estimated to be approximately $806,947. These payments will be made as a weekly deduction from the Company’s receivables from the Buyer.

The Agreements became effective as of January 1, 2024 and expire on December 31, 2026. The Agreements may be renewed for an additional two-year term upon the mutual agreement of the Company and the Buyer. The Agreements may be terminated by the Buyer without cause upon sixty days’ prior notice.

Management has determined the payments for the fixtures should be treated as a reduction in revenue under the guidance of ASC 606. As we do not expect the agreement to be terminated before the end of the three-year term, the aggregate cost of the fixtures of approximately $806,947 will be treated as a reduction in the transaction price of products sold to the Buyer during the three year term of the contract.

Cost of Goods Sold

Cost of goods sold includes materials, labor and overhead costs incurred in cultivating, producing, and shipping our products.

Advertising Expenses

The Company expenses advertising costs as incurred in accordance with ASC 720-35, “Other Expenses – Advertising Cost.” During the three months ended March 31, 2024 and 2023, advertising expenses totaled $34,571 and $26,727, respectively.

Loss Per Common Share

In accordance with the provisions of ASC 260, “Earnings Per Share,” net loss per share is computed by dividing net loss by the weighted-average shares of common stock outstanding during the period. During a loss period, the effect of the potential exercise of stock options, warrants, convertible preferred stock, and convertible debt are not considered in the diluted loss per share calculation since the effect would be anti-dilutive. The results of operations were a net loss for the three months ended March 31, 2024 and 2023. Therefore, the basic and diluted weighted-average shares of common stock outstanding were the same for all periods.

Income Taxes

The provision for income taxes is determined in accordance with ASC 740, “Income Taxes”. The Company files a consolidated United States federal income tax return. The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expense are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred income taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating losses for financial-reporting and tax-reporting purposes. At March 31, 2024 and December 31, 2023, such net operating losses were offset entirely by a valuation allowance.

The Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50.0% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations.

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Segment Reporting

The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment. The Company’s principal decision makers are the Chief Executive Officer and its Interim Chief Financial Officer. Management believes that its business operates as one reportable segment because: a) the Company measures profit and loss as a whole; b) the principal decision makers do not review information based on any operating segment; c) the Company does not maintain discrete financial information on any specific segment; d) the Company has not chosen to organize its business around different products and services, and e) the Company has not chosen to organize its business around geographic areas.

NOTE 3 – INVENTORY

The following table summarizes inventory as of March 31, 2024 and December 31, 2023:

	(in thousands)
	March 31,		December 31,
	2024		2023

Raw materials	$	288	$	341
Work-in-progress		489		258
Finished goods		37		79

Total inventory	$	814	$	678

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NOTE 4 – PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

The following table summarizes property, equipment and leasehold improvements as of March 31, 2024 and December 31, 2023:

	(in thousands)
	March 31,			December 31,
	2024			2023

Furniture and equipment	$	1,276		$	1,276
Computer hardware		7			6
Leasehold improvements		3,134			3,121
Vehicles		456			456
Land		202			202
Construction in progress		219			182

Subtotal		5,294			5,243
Less accumulated depreciation		(1,648	)		(1,350	)
Property, equipment and leasehold improvements, net	$	3,646		$	3,893

Depreciation expense related to property, equipment and leasehold improvements for the three months ended March 31, 2024 and 2023 was $301,582 and $333,536, respectively.

NOTE 5 – INTANGIBLE ASSETS

The following table summarizes intangible assets as of March 31, 2024 and December 31, 2023:

			(in thousands)
			March 31, 2024							December 31, 2023
	Estimated		Gross					Net		Gross					Net
	Useful Life in Years		Carrying Value		Accumulated Amortization			Carrying Value		Carrying Value		Accumulated Amortization			Carrying Value

Amortizing Intangible Assets:
Pulp brand recipes		15	$	50	$	(4	)	$	46	$	50		(3	)	$	47
Non-compete agreement		2		62		(62	)		-		62		(62	)		-

Total Intangible Assets, net			$	112	$	(66	)	$	46	$	112	$	(65	)	$	47

Amortization expense for the three months ended March 31, 2024 and 2023 was $833. Annual amortization expense for each of the next five years is estimated to be $3,333 and thereafter $33,333.

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NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The following table summarizes accounts payable and accrued expenses as of March 31, 2024 and December 31, 2023:

	(in thousands)
	March 31, 2024		December 31, 2023

Accounts payable	$	3,307	$	1,233
General accrued expenses		107		3
Employee retention credit funds		865		865
Accrued interest payable		29		32
Accrued payroll		59		270
Accrued severance and Director's fees		647		-
Accrued vacation		122		80
Current lease liability		9		34

Total Accounts Payable and Accrued Expenses	$	5,145	$	2,517

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NOTE 7 – NOTES PAYABLE

The following table summarizes notes payable as of March 31, 2024 and December 31, 2023:

	(in thousands)
	March 31,			December 31,
	2024			2023
Secured promissory note	$	3,106		$	3,106
Future receivables financing agreement with Cedar Advance, LLC		1,003			-
NJD Investments, LLC promissory note		791			864
SBA loan		150			150
Vehicle loans		305			325
Total Gross Debt	$	5,355		$	4,445

Less: Gross short term debt		(4,438	)		(387	)
Less: Debt discount		(65	)		(18	)
Net Long Term Debt	$	852		$	4,040

Scheduled maturities of long-term debt as of March 31, 2024, are as follows (in thousands):

Years Ending December 31,	Secured Promissory Notes		Cedar Advance, LLC loan		NJD Investments, LLC Promissory Note		SBA Loan		Vehicle Loans		Total
2024 (remaining)		-		1,003		228		-		65		1,296
2025		3,106		-		316		-		92		3,514
2026		-		-		247		-		82		329
2027		-		-		-		-		59		59
Thereafter		-		-		-		150		7		157
Total	$	3,106	$	1,003	$	791	$	150	$	305	$	5,355

Secured Promissory Note

On March 30, 2020, the Company entered into a promissory note (the “First Sament Note”) for $3,000,000 with Sament Capital Investments, Inc., a wholly owned subsidiary of the Predecessor, (“Sament”) in connection with the acquisition of the Predecessor’s assets. The First Sament Note accrues interest at a rate of 3.5% per annum on a 360-day year basis and matures March 30, 2025. The First Sament Note is secured by the Company’s operating assets purchased from the Predecessor. On November 15, 2023, Sament assigned the note to various third parties who are not affiliated with the Company. As of March 31, 2024, the total outstanding balance of $3,106,458 is included in “Short-term debt, net of discounts” on the consolidated balance sheet. As of December 31, 2023, the total outstanding balance of $3,106,458 is included in “Long-term debt, net of discounts” on the consolidated balance sheet. As of March 31, 2024 and December 31, 2023, the unamortized discount related to the promissory note was $16,068 and $19,429, respectively. Total accrued interest on the First Sament Note as of March 31, 2024 and December 31, 2023 was $9,363.

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On June 2, 2020, the Company entered into a promissory note for $653,870 with Sament (the “Second Sament Note”), which accrued interest at a rate of 3.50% per annum and had a maturity date of June 3, 2023. The Second Sament Note was secured by the Company’s operating assets purchased from the Predecessor. During the year ended December 31, 2021, accrued interest of $23,203 was added to the principal of the Second Sament Note. On February 17, 2023, the Company prepaid the principal and accrued interest due under the Second Sament Note in exchange for Sament agreeing to reduce the principal amount of the Second Sament Note by approximately 10%. As a result of the agreement, the Company repaid $606,653 of outstanding principal, and $27,125 of accrued interest, and recognized a gain from extinguishment of the debt of $70,420 during the three months ended March 31, 2023.

Future Receivables Financing Agreement with Cedar Advance, LLC

On March 14, 2024, the Company entered into a standard merchant cash advance agreement (the “Cedar Agreement”) with Cedar Advance LLC (“Cedar”), dated as of March 12, 2024, pursuant to which the Company sold to Cedar $1,491,000 of its future accounts receivable for a purchase price of $1,050,000, less fees and expenses of $50,000, for net funds provided of $1,000,000.

Pursuant to the Cedar Agreement, Cedar is expected to withdraw $53,250 a week directly from the Company’s bank account until the $1,491,000 due to Cedar under the Cedar Agreement is paid in full. To secure the Company’s obligations under the Cedar Agreement, the Company granted Cedar a security interest in all accounts, including all deposit accounts, accounts receivable, and other receivables, and proceeds as those terms are defined by Article 9 of the Uniform Commercial Code (the “Collateral”). In addition, the Company agreed not to incur, directly or indirectly, any lien on or with respect to the Collateral. In the event of a default (as defined in the Cedar Agreement), Cedar, among other remedies, can enforce its security interest in the Collateral and demand payment in full of the uncollected amount of receivables purchased plus all fees due under the Cedar Agreement.

As of March 31, 2024, the total outstanding balance of $1,003,187 is included in “Short-term debt, net of discounts” on the consolidated balance sheet. Subsequent to March 31, 2024, the Company entered into an amended and restated agreement with Cedar. See Note 12, “Subsequent Events.”

NJD Investments, LLC Promissory Note

On August 30, 2022, the Company entered into a promissory note (the “NJDI Note”) for $1,136,000 with NJDI in connection with its purchase of the assets of 2900 Madison Ave. SE, Grand Rapids, Michigan (“the Property”). The NJDI Note accrues interest at a rate of 5% per annum and will mature on September 1, 2026. The Company may prepay the outstanding amount due at any time without penalty. The Company makes monthly payments of principal and interest of $28,089. The NJDI Note is secured by a mortgage on the Property (the “Mortgage”) and a security interest in the assets owned by the Subsidiary in favor of NJDI (the “Security Agreement”).

In addition, the Company’s obligation to repay the amounts due under the NJDI Note, or up to $1,136,000 plus any accrued interest, is guaranteed by the Company under a guaranty in favor of NJDI (the “Guaranty”) entered into on August 30, 2022. Under the Guaranty, in the event that the Company defaulted on the NJDI Note, the Company would be responsible for any sum remaining due after NJDI foreclosed on the Mortgage and exercised its rights under the Security Agreement.

During the year ended December 31, 2022, accrued interest of $19,210 was added to the principal of the NJDI Note. As of March 31, 2024 and December 31, 2023, $305,726 and $300,683 of the outstanding balance is included in “Short-term debt, net of discounts” and $484,872 and $563,685 is included in “Long-term debt, net of discounts” within the consolidated balance sheets, respectively.

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Small Business Administration (“SBA”) Loans

On June 22, 2020, the Company entered into a U.S. Small Business Administration Loan Authorization and Agreement pursuant to which the Company received loan proceeds of $150,000 (the “SBA Loan”). The SBA Loan was made under, and is subject to the terms and conditions of, the Economic Injury Disaster Loan Program, which was a program expanded for COVID-19 relief under the CARES Act and is administered by the U.S. Small Business Administration. The term of the SBA Loan is thirty (30) years with a maturity date of June 22, 2050 and the annual interest rate of the SBA Loan is a fixed rate of 3.75%. Under the terms of the CARES Act, the use of loan proceeds for the SBA Loan is limited to alleviating economic injury caused by the COVID-19 pandemic. The outstanding balance on the SBA Loan of $150,000 is included in “Long-term debt, net of discounts” within the consolidated balance sheets as of March 31, 2024 and December 31, 2023. As of March 31, 2024 and December 31, 2023, total accrued interest on the SBA Loan was $19,208 and $18,756, respectively.

Vehicle Loans

During the year ended December 31, 2020, the Company entered into a financing agreement for the purchase of a vehicle. The loan, which accrues interest at a rate of 17.51%, matures on April 26, 2024. The loan is secured by the vehicle purchased.

During the year ended December 31, 2021, the Company entered into three financing agreements totaling $102,681 for the purchase of vehicles. The loans, which accrue interest at rates of 16.84% - 18.66%, mature in 2026. The loans are secured by the vehicles purchased.

During the year ended December 31, 2022, the Company entered into two financing agreements totaling $158,214 for the purchase of vehicles. The loans, which accrue interest at a rate of 7.64%, mature in 2027. The loans are secured by the vehicles purchased.

During the year ended December 31, 2023, the Company entered into three financing agreements totaling $151,850 for the purchase of vehicles. The loans, which accrue interest at a rate of 10.49%, mature in 2028. The loans are secured by the vehicles purchased.

As of March 31, 2024, $88,464 of the total outstanding balance of the vehicle loans is included within “Short-term debt, net of discounts” and $216,233 is included in “Long-term debt, net of discounts” on the consolidated balance sheet.

As of December 31, 2023, $85,885 of the total outstanding balance of the vehicle loans is included within “Short-term debt, net of discounts” and $239,343 is included in “Long-term debt, net of discounts” on the consolidated balance sheet.

NOTE 8 – STOCKHOLDERS’ EQUITY (DEFICIT)

2024 Equity Distribution Agreement

On February 7, 2024, we entered into an Equity Distribution Agreement with Maxim Group LLC (“Maxim” or the “sales agent”), relating to shares of our common stock. In accordance with the terms of the Equity Distribution Agreement, we may offer and sell shares of our common stock, $0.0001 par value per share (“common stock”), having an aggregate offering price of up to $1,146,893 (the “Aggregate Offering Amount”) from time to time through Maxim acting as our agent. The offering of shares of our common stock pursuant to the Equity Distribution Agreement will terminate upon the earliest of (i) February 6, 2025, (ii) the sale of a number of shares of common stock equal to the Aggregate Offering Amount, and (iii) the termination of the Equity Distribution Agreement by written notice of us or Maxim. Maxim will be entitled to compensation at a fixed commission rate of 3.5% of the gross sales price per share sold. During the three months ended March 31, 2024, we sold 16,538 shares of common stock for total gross proceeds of $139,060 and paid commissions to Maxim of $4,867.

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2023 Public Offering

On February 7, 2023, the Company issued an aggregate of 80,950 shares of common stock and warrants to purchase an aggregate of 93,093 shares of common stock (“February Follow-On Warrants”) pursuant to an underwriting agreement between the Company and Maxim Group LLC, as representative of the underwriters (the “Representative”) and raised approximately $10.2 million in gross proceeds. The February Follow-On Warrants, which became exercisable on February 7, 2023, grant the holder the right to purchase one share of common stock at an exercise price equal to $126.00 per share. The February Follow-On Warrants expire on February 7, 2028. In addition to customary cashless exercise, the holders have the right to effect an “alternative cashless exercise” on or after April 10, 2023. In an “alternative cashless exercise,” the aggregate number of shares of common stock issuable is equal to the product of (i) the aggregate number of shares of common stock that would be issuable upon exercise of the February Follow-On Warrant if it was exercised for cash and (ii) 0.5. Also on February 7, 2023, the Company issued warrants to the Representative to purchase up to 4,048 shares of Common Stock at an exercise price of $139.60 per share. These warrants became exercisable on August 2, 2023 and will expire on February 2, 2028.

Common Stock

The Company has authorized 100,000,000 shares of common stock with $0.0001 par value. As of March 31, 2024 and December 31, 2023, 307,820 and 285,282 common shares were issued and outstanding, respectively.

During the three months ended March 31, 2024, the Company issued 22,538 shares of common stock, as summarized below:

	Number of Shares

Sale of common stock pursuant to Equity Distribution Agreement		16,538
Issuances of common stock to employees and consultants		6,000
Total of common stock issuances during the three months ended March 31, 2024		22,538

Summary table of common stock share transactions:
Shares outstanding at December 31, 2023		285,282
Common stock issuances		22,538
Shares outstanding at March 31, 2024		307,820

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Stock-Based Compensation

On January 18, 2022 in connection with the IPO, the board of directors (the “Board”) approved the Edible Garden AG Incorporated 2022 Equity Incentive Plan (the “2022 Plan”). The 2022 Plan provides for equity incentive compensation for employees, non-employee directors, and any other individuals who perform services for the Company. The number of shares initially available for grant under the 2022 Plan was 50,000. A variety of discretionary awards are authorized under the 2022 Plan, including stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. The vesting of such awards may be conditioned upon either a specified period of time or the attainment of specific performance goals as determined by the administrator of the 2022 Plan. The option price and terms are also subject to determination by the administrator with respect to each grant.

On June 8, 2023 the stockholders of the Company approved the First Amendment to the 2022 Plan, which increased the number of shares of common stock reserved for issuance thereunder by 15,000 shares and extended the term of the 2022 Plan until June 8, 2033.

During the three months ended March 31, 2024, the Company issued 6,000 restricted stock awards to employees and consultants of the Company as compensation. We recognized stock-based compensation expense of $38,280 for the awards, which vested immediately.

Shares available for future stock compensation grants totaled 9,957 at March 31, 2024.

Warrants

There was no warrant activity during the three months ended March 31, 2024. Total outstanding warrants of 179,345 as of March 31, 2024 and December 31, 2023 have a weighted-average exercise price per share of $133.65.

NOTE 9 – LEASES

A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. Operating lease right-of-use assets (“Lease Assets”) are included within “Other Assets” on the Company’s consolidated balance sheet.

Lease Assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. Lease Assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its secured borrowing rate. Lease Assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both Lease Assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions, or covenants.

We are currently party to an ongoing arrangement with our predecessor company, Edible Garden Corp., whereby we make lease payments of approximately $21,860 per month to the lessor of the land on which our flagship facility is built and for which our predecessor company is the lessee. Our month-to-month arrangement meets the definition of a short-term lease and is therefore excluded from the recognition requirements of ASC 842, “Leases”.

During the three months ended March 31, 2024, total operating lease cost was $73,445, of which $46,685 was associated with short-term leases. During the three months ended March 31, 2023, total operating lease cost was $75,170, of which $48,410 was associated with short-term leases. As of March 31, 2024 and December 31, 2023, short term lease liabilities of $8,791 and $34,415 are included within “Accounts Payable and Accrued Expenses” on the consolidated balance sheets, respectively.

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The table below presents total operating lease assets and lease liabilities as of March 31, 2024 and December 31, 2023:

	(in thousands)
	March 31,		December 31,
	2024		2023
Operating lease assets	$	4	$	34
Operating lease liabilities	$	9	$	34

The table below presents the maturities of operating lease liabilities as of March 31, 2024:

	(in thousands)
	Operating
	Leases
2024 (remaining)		9
Total lease payments		9
Total operating lease liabilities	$	9

The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating operating lease right-of-use assets:

	March 31,
	2024
Remaining lease term (months)		1
Discount rate		17.5	%

NOTE 10 – COMMITMENTS AND CONTINGENCIES

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 granted Mr. James a restricted stock award with a fair value equal to $25,000 as of April 2, 2024.

As described in detail in Note 2, "Summary of Significant Accounting Policies,” on February 8, 2024, the Company entered into two agreements with the Buyer to supply and sell products over a three-year period. Pursuant to the agreement, the Company will pay approximately $806,947 to the Buyer for product displays and fixtures during 2024. In the quarter ended March 31, 2024, the Company funded $329,290 of this commitment.

From time to time, we may be party to or otherwise involved in legal proceedings arising in the ordinary course of business. Management does not believe that there is any pending or threatened proceeding against us, which, if determined adversely, would have a material adverse effect on our business, results of operations or financial condition.

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NOTE 11 – GOING CONCERN

These financial statements are prepared on a going concern basis. The Company began operating in 2020. For the three months ended March 31, 2024, we incurred a net loss of $4.0 million. We expect to experience further significant net losses in the foreseeable future. As of March 31, 2024, we had cash available for operations of $0.4 million. We have not been able to generate sufficient cash from operating activities to fund our ongoing operations. Since our inception, we have raised capital through our issuance of debt and equity securities. Our future success is dependent upon our ability to achieve profitable operations and generate cash from operating activities. There is no guarantee that we will be able to generate enough revenue and/or raise capital to support our operations.

We will be required to raise additional funds through public or private financing, additional collaborative relationships or other arrangements until we are able to raise revenue and reduce costs to a point of positive cash flow. We are evaluating various options to further reduce our cash requirements to operate at a reduced rate, as well as options to raise additional funds, including obtaining loans and selling securities. There is no guarantee that we will be able to generate enough revenue and/or raise capital to support our operations, or if we are able to raise capital, that it will be available to us on acceptable terms, on an acceptable schedule, or at all.

The issuance of additional securities may result in a significant dilution in the equity interests of our current stockholders. Obtaining loans, assuming these loans would be available, will increase our liabilities and future cash commitments. There is no assurance that we will be able to obtain further funds required for our continued operations or that additional financing will be available for use when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease our operations.

The risks and uncertainties surrounding our ability to continue raise capital and to continue our business with limited capital resources raise substantial doubt as to our ability to continue as a going concern for twelve months from the issuance of these financial statements.

NOTE 12 – SUBSEQUENT EVENTS

On May 7, 2024, the Company entered into an amended and restated standard merchant cash advance agreement (the “Restated Agreement”) with Cedar, dated as of May 3, 2024, that amends and restates the Cedar Agreement. Under the Restated Agreement, the Company sold to Cedar an additional $994,000 of its 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. Pursuant to the Restated Agreement, we are required to pay Cedar 35.0% of all funds collected weekly from customers and Cedar is expected to withdraw $65,000 a week directly from the Company’s bank account until the $2,485,000 due to Cedar under the Restated Agreement is paid in full. Except as amended by the Restated Agreement, the remaining terms of the Cedar Agreement remain in full force and effect.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which provides a “safe harbor” for forward-looking statements made by us. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends, and other information, may be forward-looking statements. Words such as “might,” “will,” “would,” “could,” “should,” “may,” “can,” “estimates,” “expects,” “anticipates,” “projections,” “plans,” “potential,” “intends,” “believes,” “future,” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs, estimates, and projections will occur or can be achieved. Actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results, including:

	·	our history of losses and our ability to continue as a going concern;
	·	our ability to obtain additional financing to fund our operations;
	·	the departure of members of our management team;
	·	our ability to continue to access and operate our Belvidere, New Jersey facility;
	·	our ability to regain 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 material weaknesses in our internal control over financial reporting and the potential insufficiency of our disclosure controls and procedures to detect errors or acts of fraud; and
	·	the potential lack of liquidity and trading of our securities;

The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this report and our other reports filed with the Securities and Exchange Commission (“SEC”).

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OVERVIEW

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.

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.

We have also developed patented software called GreenThumb that assists in tracking plants through our supply chain. Utilizing our GreenThumb software to track the status of our plants as they grow and move throughout the greenhouse allows us to add a layer of quality control due to the frequent monitoring of the growing process, leading to improved traceability. In this context, traceability means being able to track a plant through all stages of production and distribution. In addition to improving traceability, GreenThumb helps us better manage the day-to-day operations of our business. GreenThumb is a web-based greenhouse management and demand planning system that does the following:

	•	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.

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.

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.

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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.

RECENT DEVELOPMENTS

Departure of Chief Financial Officer

Equity Distribution Agreement

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 of common stock through the Agent in an at-the-market offering for an aggregate offering price of up to $1,146,893. To date, the Company has received net proceeds of $1.1 million after deducting the Agent’s commission of 3.5% of the gross proceeds and other offering expenses from the sale of 181,710 shares of common stock under the EDA.

Supply Agreements

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.

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 $806,947. 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.

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Cedar Cash Advance Agreement

On March 14, 2024, the Company entered into a standard merchant cash advance agreement (the “Advance Agreement” with Cedar Advance LLC (“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. On May 7, 2024, the Company entered into an amended and restated standard merchant cash advance agreement (the “Restated Agreement”) with Cedar that amends and restates the Advance Agreement. Except as amended by the Restated Agreement, the remaining terms of the Advance Agreement remain in full force and effect. Under the Restated Agreement, the Company sold to Cedar an additional $994,000 of its 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. Pursuant to the Restated Agreement, the Company is required to pay Cedar 35.0% of all funds collected from customers for the sale of goods and services. Weekly, Cedar is authorized to withdraw $65,000 of funds from Edible Garden’s bank account until such time a reconciliation is provided calculating the 35.0% of collections owed to Cedar, until such time the total balance of $2,485,000 is repaid. The Restated Agreement is collateralized by the Company’s cash and receivable accounts. In the event of a default (as defined in the Restated Agreement), Cedar, among other remedies, can enforce its security interest in the collateral and demand payment in full of the uncollected amount of receivables purchased plus all fees due under the Restated Agreement.

Reverse Stock Split

As of April 5, 2024, we effected a 1-for-20 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.

Nasdaq Compliance

On April 11, 2024, we received letters from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that we do not comply with the minimum stockholders’ equity requirement for continued listing on Nasdaq under Nasdaq Listing Rule 5550(b)(1) (the “Stockholders’ Equity Rule”) and Nasdaq Listing Rule 5550(a)(4), which requires us to have a minimum of 500,000 publicly held shares (the “Publicly Held Shares Rule”). These notices of noncompliance have no immediate impact on the continued listing or trading of our securities on Nasdaq, which will continue to be listed and traded on Nasdaq, subject to our compliance with the other Nasdaq continued listing requirements. By May 28, 2024, we must submit a plan to Nasdaq showing how we intend to regain compliance with the Stockholders’ Equity Rule. Because there are 549,392 shares of common stock outstanding as of May 6, 2024, (of which 3,360 are held by our officers and directors), we believe we are in compliance with the Publicly Held Shares Rule.

We intend to take all reasonable measures available to regain compliance under Nasdaq’s listing rules and remain listed on Nasdaq. There can be no assurance that we will ultimately regain compliance with all applicable requirements for continued listing. If we do not regain compliance with Nasdaq’s listing rules within the time period permitted by Nasdaq, then our securities will be delisted from Nasdaq.

On April 19, 2024, we received a letter from the Listing Qualifications Staff of Nasdaq indicating that we had regained compliance with the minimum bid price requirement under Nasdaq Rule 5550(a)(2).

CRITICAL ACCOUNTING ESTIMATES

The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. The following accounting policies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. Management’s estimates are based on historical experience, the relevant information available at the end of each period, and their judgment. Although management believes the judgment applied in preparing estimates is reasonable based on circumstances and information known at the time, actual results could differ materially from these estimates under different assumptions or market conditions.

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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.

Revenue Recognition

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 the Company expects to be entitled to in exchange for those goods or services. The Company does not offer returns, discounts, loyalty programs or other sales incentive programs that are material to revenue recognition. Payments from our customers are due upon delivery or within a short period after delivery.

Property, Equipment and Leasehold Improvements

Property, equipment and leasehold improvements are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Our fixed assets, which are comprised of leasehold improvements, equipment and vehicles, have useful lives of five years. Expenditures for major renewals and improvements are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations.

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.

Income Taxes

The provision for income taxes is determined in accordance with ASC 740, “Income Taxes.” The Company files a consolidated United States federal income tax return. The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expense are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating losses for financial-reporting and tax-reporting purposes. At March 31, 2024 and December 31, 2023, such net operating losses were offset entirely by a valuation allowance.

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RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(in thousands):	Three Months Ended March 31,
	2024			2023
Revenue	$	3,132		$	2,455
Cost of goods sold		3,109			2,479
Gross profit		23			(24	)

Selling, general and administrative expenses		3,884			2,691
Loss from operations		(3,861	)		(2,715	)

Other expenses
Interest expenses, net		(117	)		(234	)
Gain from extinguishment of debt		-			70
Other income / (loss)		1			-
Total other expenses		(116	)		(164	)
NET LOSS	$	(3,977	)	$	(2,879	)

Revenue

Revenue was $3.132 million for the three months ended March 31, 2024, compared to $2.455 million for the three months ended March 31, 2023. The increase in revenue of $677 thousand, or 27.6%, was primarily attributed to an increase in customer demand for our cut herbs and potted herbs products. Revenue from cut herbs increased from $412 thousand in the three months ended March 31, 2023 to $997 thousand in the three months ended March 31, 2024. Revenue from potted herbs increased from $1.1 million in the three months ended March 31, 2023 to $1.4 million in the three months ended March 31, 2024. Offsetting these increases was a decrease in vitamins and supplements revenue of $190 thousand, from $589 thousand in the three months ended March 31, 2023 to $399 thousand in the three months ended March 31, 2024.

During the three months ended March 31, 2024, total revenue was reduced by approximately $67 thousand as we adjusted the transaction price of our sales to a customer to account for funds we agreed to pay to the customer for the installation of fixtures in their stores. See Note 2, "Summary of Significant Accounting Policies.”

Cost of goods sold

Cost of goods sold were $3.109 million for the three months ended March 31, 2024, compared to $2.479 million for the three months ended March 31, 2023. Cost of goods sold increased $630 thousand, or 25.4%, in line with the increase in revenue for the same period.

Selling, general and administrative

Selling, general and administrative expenses (“SG&A”) were $3.884 million for the three months ended March 31, 2024, compared to $2.691 million for the three months ended March 31, 2023. SG&A increased $1.193 million, or 44.3%, due to a one-time severance charge of $0.6 million and higher audit, accounting and legal fees related to the departure of our Chief Financial Officer.

Loss from operations

Higher SG&A expense resulted in a loss from operations of $3.861 million for the three months ended March 31, 2024, compared to $2.715 million for the three months ended March 31, 2023. The increase in net loss from operations was $1.146 million, or 42.2% compared with the three months ended March 31, 2023.

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Interest expense

Interest expense was $117 thousand for the three months ended March 31, 2024, compared to $234 thousand for the three months ended March 31, 2023. Lower interest expense was related to paying off debt previously outstanding with proceeds from public offerings.

Gain from extinguishment of debt

During the three months ended March 31, 2023, the Company recognized a gain from the extinguishment of debt of $70 thousand by prepaying a promissory note owed to our Predecessor company.

Net loss

Net loss was $3.977 million for the three months ended March 31, 2024, compared to a net loss of $2.879 million for the three months ended March 31, 2023. The reasons for the increase in net loss are explained above.

LIQUIDITY AND CAPITAL RESOURCES

Going Concern Considerations

We have incurred significant losses since our inception. We recognized net losses of approximately $3.977 million during the three months ended March 31, 2024 and $10.188 million during the twelve months ended December 31, 2023. 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.

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. 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.

There is no assurance that we will ever be profitable or that debt or equity financing will be available to us in the amounts, on terms, and at times deemed acceptable to us, if at all. The issuance of additional equity or equity-linked securities by us would result in significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, would increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business as planned and as a result may be required to scale back or cease operations, which could cause our stockholders to lose some or all of their investment in us. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.

Liquidity

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.

As of March 31, 2024 and December 31, 2023, we had $388 thousand and $510 thousand in cash and cash equivalents available, respectively. During the three months ended March 31, 2024, we used $1.06 million of cash for operating activities. As of March 31, 2024 and December 31, 2023, we had a working capital deficit of $6.966 million and $257 thousand, respectively. As of March 31, 2024 and December 31, 2023, we had $5.290 million and $4.427 million of total debt outstanding, respectively. To meet our cash needs, we entered into the Advance Agreement and the Restated 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.

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We may not be able to access the capital markets in the future on commercially acceptable terms or at all. Our ability to fund future operating expenses and capital expenditures and our ability to meet future debt service obligations or refinance our indebtedness will depend on our future operating performance, which will be affected by general economic, financial and other factors beyond our control, including those described under “Risk Factors” in our Annual Report on Form 10-K, filed with the SEC on April 1, 2024.

Capital Resources

On February 6, 2024, we entered into the EDA with Maxim as sales agent, 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. To date, we have received net proceeds of approximately $1.1 million from the sale of common stock under the EDA after deducting Maxim’s commission of 3.5% of the gross proceeds and other offering expenses.

On March 14, 2024, we entered into the 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 the Restated Agreement with Cedar, 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. Pursuant to the Restated Agreement, we are required to pay Cedar 35.0% of all funds collected weekly from customers for the sale of goods and services. Weekly, Cedar is authorized to withdraw $65,000 of funds from our bank account until such time a reconciliation is provided calculating the 35.0% of collections owed to Cedar, until such time the total balance of $2,485,000 is repaid. The Restated Agreement is collateralized by our cash and receivable accounts. In the event of a default (as defined in the Restated Agreement), Cedar, among other remedies, can enforce its security interest in the collateral and demand payment in full of the uncollected amount of receivables purchased plus all fees due under the Restated Agreement.

For more information on our outstanding debt as of March 31, 2024 and December 31, 2023, see Note 7 to our financial statements.

Cash Flows

Operating activities

During the three months ended March 31, 2024 and 2023, cash used for operating activities was $1.059 million and $3.319 million, respectively. Cash expenditures for the three months ended March 31, 2024 decreased primarily due to a decrease in payments to vendors, higher collections and the impact of depreciation, offset by a higher operating loss.

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Investing activities

During the three months ended March 31, 2024 and 2023, cash used in investing activities was $55 thousand and $361 thousand, respectively. The decrease was due to lower purchases of property, equipment and leasehold improvements.

Financing activities

During the three months ended March 31, 2024 and 2023, cash provided by financing activities was $992 thousand and $7.518 million, respectively. The decrease in cash provided by financing activities was primarily driven by completion of the February 2023 public offering, which resulted in a net cash inflow after offering expenses of $9.26 million in the prior period. The decrease was offset by an increase in net proceeds from debt of $2.59 million in the three months ended March 31, 2024 versus the prior period, as proceeds from debt issuances were higher and payments of debt principal were lower in the current versus the prior period. The decrease was also offset by $134 thousand of proceeds from the EDA, net of commissions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Interim Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2024 pursuant to Rule 13a-15 under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that, as of March 31, 2024, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were ineffective as of March 31, 2024, due to the existence of material weaknesses in our internal control over financial reporting that we have yet to fully remediate.

Because we are a small company with few employees in our finance department, we lacked the ability to have adequate segregation of duties in the financial statement preparation process. Since these entity level controls have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. In addition, we have a material weakness in our internal control over financial reporting because we lack maintenance of appropriate documentation to support our internal controls and we have insufficiently reviewed reports identifying user entity controls.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should consider the risks described in Part I, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2023. Except as set forth below, there have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K. Any of these risks and uncertainties, including those discussed below, could materially and adversely affect our business, results of operations, financial condition, and/or the market price of our common stock. The risks described below and in our Annual Report on Form 10-K, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our financial condition and/or operating results.

We are currently not in compliance with the Nasdaq continued listing requirements. If we are unable to regain compliance with Nasdaq’s listing requirements, our securities could be delisted, which could affect our common stock’s market price and liquidity and reduce our ability to raise capital.

On April 11, 2024, we received a letter from the Listing Qualifications Department of Nasdaq indicating that we do not comply with the minimum stockholders’ equity requirement for continued listing on Nasdaq under the Stockholders’ Equity Rule because: (i) our stockholders’ equity was less than the required minimum of $2,500,000; and (ii) as of August 19, 2022, we did not meet the alternative compliance standards of market value of listed securities of $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years. As of March 31, 2024, our stockholders’ deficit is $4,088,000 and, we have not regained compliance with the Stockholders’ Equity Rule.

In addition, on April 11, 2024, we received a letter from the Listing Qualifications Staff of Nasdaq indicating that we were not in compliance with the Publicly Held Shares Rule, which requires us to have a minimum of 500,000 publicly held shares. This notice of noncompliance has no immediate impact on the continued listing or trading of our securities on Nasdaq, which will continue to be listed and traded on Nasdaq, subject to our compliance with the other Nasdaq continued listing requirements. We have until May 28, 2024 to submit a letter to Nasdaq with our plan to regain compliance with the Stockholders’ Equity Rule and the Publicly Held Shares Rule. If Nasdaq does not accept our plan, Nasdaq will provide notice that our common stock will be subject to delisting, and we would then be entitled to appeal that determination to a Nasdaq hearings panel.

We cannot assure you that we will be able to regain compliance with Nasdaq listing standards. Our failure to continue to meet these requirements would result in our common stock being delisted from Nasdaq, and if our common stock is delisted, our warrants will also be delisted. We and holders of our securities could be materially adversely impacted if our securities are delisted from Nasdaq. In particular:

	•	we may be unable to raise equity capital on acceptable terms or at all;
	•	we may lose the confidence of our customers, which would jeopardize our ability to continue our business as currently conducted;
	•	the price of our common stock will likely decrease as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws;
	•	holders may be unable to sell or purchase our securities when they wish to do so;
	•	we may become subject to stockholder litigation;
	•	we may lose the interest of institutional investors in our common stock;
	•	we may lose media and analyst coverage;
	•	our common stock could be considered a “penny stock,” which would likely limit the level of trading activity in the secondary market for our common stock; and
	•	we would likely lose any active trading market for our common stock, as it may only be traded on one of the over-the-counter markets, if at all.

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ITEM 6. EXHIBITS

		Incorporated by Reference
Exhibit Number	Description	Form	File No.	Filing Date
10.1+	Form of Indemnification Agreement.	8-K	001-41371	January 26, 2024
10.2+±	Separation Agreement, dated January 24, 2024, between Edible Garden AG Incorporated and Michael James.	8-K	001-41371	January 26, 2024
10.3	Equity Distribution Agreement, dated February 6, 2024, by and between Edible Garden AG Incorporated and Maxim Group LLC.	8-K	001-41371	February 7, 2024
10.4±#	Purchase Agreement: Fresh Cut Herbs & Basil, dated as of January 1, 2024, by and between the Company and Meijer Distribution, Inc.	8-K	001-41371	February 12, 2024
10.5±#	Purchase Agreement: Potted Herbs & Wheatgrass, dated as of January 1, 2024, by and between the Company and Meijer Distribution, Inc.	8-K	001-41371	February 12. 2024
10.6	Standard Merchant Cash Advance Agreement, dated as of March 12, 2024, by and between the Company and Cedar Advance LLC.	8-K	001-41371	March 20, 2024
10.7	Amended and Restated Standard Merchant Cash Advance Agreement, dated as of May 3, 2024, by and between the Company and Cedar Advance LLC.	8-K	001-41371	May 8, 2024
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.			Furnished herewith
101	Materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Extensible Business Reporting Language (XBRL); (i) Unaudited Consolidated Balance Sheet, (ii) Unaudited Consolidated Statements of Operations, (iii) Unaudited Consolidated Statements of Cash Flows, (iv) Unaudited Consolidated Statements of Stockholders’ Deficit, and (v) related Notes to Consolidated Financial Statements.			Filed herewith
104	Cover Page Interactive Data File (included in Exhibit 101).			Filed herewith

+	Management contract or compensatory arrangement.
±	Certain information has been omitted from this exhibit in reliance upon Item 601(a)(5) of Regulation S-K and will be furnished to the Securities and Exchange Commission upon request.
#	Certain portions of this exhibit have been omitted (indicated by asterisks) pursuant to Item 601(b) of Regulation S-K because the omitted information is (i) not material and (ii) the type of information that the Company treats as private or confidential.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

EDIBLE GARDEN AG INCORPORATED

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

By:	/s/ Kostas Dafoulas
	Kostas Dafoulas
	Interim Chief Financial Officer (principal financial and accounting officer)

Date: May 15, 2024

nullnullnull

Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2024	May 06, 2024
Document Information Line Items
Entity Registrant Name	EDIBLE GARDEN AG INCORPORATED
Entity Central Index Key	0001809750
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Current Reporting Status	Yes
Document Period End Date	Mar. 31, 2024
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2024
Entity Ex Transition Period	true
Entity Common Stock Shares Outstanding		549,392
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-41371
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	85-0558704
Entity Address Address Line 1	283 County Road 519
Entity Address City Or Town	Belvidere
Entity Address State Or Province	NJ
Entity Address Postal Zip Code	07823
Entity Interactive Data Current	Yes
City Area Code	908
Local Phone Number	750-3953
Common Stocks
Document Information Line Items
Security 12b Title	Common Stock, par value $0.0001 per share
Trading Symbol	EDBL
Security Exchange Name	NASDAQ
Warrant
Document Information Line Items
Security 12b Title	Warrants to purchase Common Stock
Trading Symbol	EDBLW
Security Exchange Name	NASDAQ

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets:
Cash	$ 388	$ 510
Accounts receivable, net	1,139	1,249
Inventory	814	678
Prepaid expenses and other current assets	276	210
Total current assets	2,617	2,647
Property, equipment and leasehold improvements, net	3,646	3,893
Intangible assets, net	46	47
Other assets	38	69
TOTAL ASSETS	6,347	6,656
Current liabilities:
Accounts payable and other accrued expenses	5,145	2,517
Short-term debt, net of discounts	4,438	387
Total current liabilities	9,583	2,904
Long-term liabilities:
Long-term debt, net of discounts	852	4,040
Total long-term liabilities	852	4,040
Total Liabilities	10,435	6,944
STOCKHOLDERS' DEFICIT:
Common stock ($0.0001 par value, 100,000,000 shares authorized, 307,820 and 285,283 shares outstanding as of March 31, 2024 and December 31, 2023, respectively (1))	1	1
Series A Convertible Preferred stock ($0.0001 par value, 10,000,000 shares authorized; nil shares outstanding as of March 31, 2024 and December 31, 2023)	0	0
Additional paid-in capital	30,148	29,971
Accumulated deficit	(34,237)	(30,260)
Total Stockholders' Deficit	(4,088)	(288)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 6,347	$ 6,656

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Common stock, shares par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares outstanding	307,820	285,282
Series A Convertible Preferred Stocks [Member]
Preffered Stock, shares par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares outstanding	0	0

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Revenue	$ 3,132	$ 2,455
Cost of goods sold	3,109	2,479
Gross profit (loss)	23	(24)
Selling, general and administrative expenses	3,884	2,691
Loss from operations	(3,861)	(2,715)
Other income / (expense)
Interest expense, net	(117)	(234)
Gain from extinguishment of debt	0	(70)
Other income / (loss)	1	0
Total other expense	(116)	(164)
NET LOSS	$ (3,977)	$ (2,879)
Net Income / (Loss) per common share - basic and diluted (1)	$ (13.65)	$ (44.19)
Weighted-Average Number of Common Shares Outstanding - Basic and Diluted (1)	291,372	65,147

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT) - USD ($) $ in Thousands	Total	Common Stock	Preferred Stock Series A	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)
Balance, shares at Dec. 31, 2022		18,136
Balance, amount at Dec. 31, 2022	$ (2,180)	$ 1	$ 0	$ 17,891	$ (20,072)
Issuance of common stock and warrants in public offering, net of expenses, shares		80,950
Issuance of common stock and warrants in public offering, net of expenses, amount	9,258	$ 0	0	9,258	0
Issuance of common stock for Directors' fees, shares		279
Issuance of common stock for Directors' fees, amount	70	$ 0	0	70	0
Issuance of common stock to employees and consultants, shares		117
Issuance of common stock to employees and consultants, amount	30	$ 0	0	30	0
Series A Preferred dividend	(4)	0	0	(4)	0
Net Income (Loss)	(2,879)	$ 0	0	0	(2,879)
Balance, shares at Mar. 31, 2023		99,482
Balance, amount at Mar. 31, 2023	4,295	$ 1	0	27,245	(22,951)
Balance, shares at Dec. 31, 2023		285,282
Balance, amount at Dec. 31, 2023	(288)	$ 1	0	29,971	(30,260)
Issuance of common stock to employees and consultants, shares		6,000
Issuance of common stock to employees and consultants, amount	38	$ 0	0	38	0
Net Income (Loss)	(3,977)	$ 0	0	0	(3,977)
Sale of common stock pursuant to Equity Distribution Agreement, shares		16,538
Sale of common stock pursuant to Equity Distribution Agreement, amount	139	$ 0	0	139	0
Balance, shares at Mar. 31, 2024		307,820
Balance, amount at Mar. 31, 2024	$ (4,088)	$ 1	$ 0	$ 30,148	$ (34,237)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$ (3,977)	$ (2,879)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense	9	0
Depreciation and amortization	302	334
Amortization of operating lease right of use asset	26	22
Amortization of debt discount	7	0
Gain from extinguishment of debt	0	(70)
Stock-based compensation	38	30
Stock issued to Directors	0	70
Change in operating assets and liabilities:
Accounts receivable	100	215
Inventory	(136)	(436)
Prepaid expenses and other current assets	(66)	(97)
Other assets	5	0
Accounts payable and accrued expenses	2,659	(497)
Operating lease liabilities	(26)	(11)
NET CASH USED FOR OPERATING ACTIVITIES	(1,059)	(3,319)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, equipment and leasehold improvements	(55)	(361)
NET CASH USED FOR INVESTING ACTIVITIES	(55)	(361)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt, including related parties	1,050	175
Payment of debt issuance costs	(50)	0
Payments of debt principal, including related parties	(142)	(1,911)
Proceeds from sales of common stock from Equity Distribution Agreement	139	0
Payment of commissions related to sale of common stock	(5)	0
Proceeds from common stock and warrants issued in public offering	0	9,398
Payment of costs related to public offering	0	(140)
Payment of preferred stock dividends	0	(4)
NET CASH PROVIDED BY FINANCING ACTIVITIES	992	7,518
NET CHANGE IN CASH	(122)	3,838
Cash at beginning of period	510	110
CASH AT END OF PERIOD	388	3,948
SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash paid for interest	95	247
SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Trucks acquired with debt	$ 0	$ 152

ORGANIZATION, NATURE OF BUSINESS, AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2024

ORGANIZATION, NATURE OF BUSINESS, AND BASIS OF PRESENTATION

ORGANIZATION, NATURE OF BUSINESS, AND BASIS OF PRESENTATION

NOTE 1 – ORGANIZATION, NATURE OF BUSINESS, AND BASIS OF PRESENTATION

Organization and Recent Developments

All historical share and per share amounts reflected throughout this report have been adjusted to reflect the stock splits described above.

Nature of Business

Basis of Presentation

Going Concern

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Pronouncements to Be Adopted in Future Periods

Use of Estimates

Trade Receivables

Concentration of Credit Risk

Inventory

Prepaid Expenses

Property, Equipment and Leasehold Improvements, Net

Intangible Assets

Revenue Recognition and Performance Obligations

Disaggregation of Revenue

The following table includes revenue disaggregated by revenue stream for the three months ended March 31, 2024 and 2023:

	(in thousands)
	Three Months Ended,
	March 31, 2024		March 31, 2023
Herbs & Produce	$	2,754	$	1,943
Vitamins and Supplements		378		512
Total	$	3,132	$	2,455

Contract Balances

Due to the nature of the Company’s revenue from contracts with customers, the Company does not have material contract assets or liabilities that fall under the scope of ASC Topic 606.

Contract Estimates and Judgments

Cost of Goods Sold

Cost of goods sold includes materials, labor and overhead costs incurred in cultivating, producing, and shipping our products.

Advertising Expenses

Loss Per Common Share

Income Taxes

Segment Reporting

INVENTORY

3 Months Ended

Mar. 31, 2024

INVENTORY

INVENTORY

NOTE 3 – INVENTORY

The following table summarizes inventory as of March 31, 2024 and December 31, 2023:

	(in thousands)
	March 31,		December 31,
	2024		2023

Raw materials	$	288	$	341
Work-in-progress		489		258
Finished goods		37		79

Total inventory	$	814	$	678

PROPERTY EQUIPMENT AND LEASEHOLD IMPROVEMENTS NET

3 Months Ended

Mar. 31, 2024

PROPERTY EQUIPMENT AND LEASEHOLD IMPROVEMENTS NET

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

NOTE 4 – PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

The following table summarizes property, equipment and leasehold improvements as of March 31, 2024 and December 31, 2023:

	(in thousands)
	March 31,			December 31,
	2024			2023

Furniture and equipment	$	1,276		$	1,276
Computer hardware		7			6
Leasehold improvements		3,134			3,121
Vehicles		456			456
Land		202			202
Construction in progress		219			182

Subtotal		5,294			5,243
Less accumulated depreciation		(1,648	)		(1,350	)
Property, equipment and leasehold improvements, net	$	3,646		$	3,893

Depreciation expense related to property, equipment and leasehold improvements for the three months ended March 31, 2024 and 2023 was $301,582 and $333,536, respectively.

INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2024

INTANGIBLE ASSETS

INTANGIBLE ASSETS

NOTE 5 – INTANGIBLE ASSETS

The following table summarizes intangible assets as of March 31, 2024 and December 31, 2023:

			(in thousands)
			March 31, 2024							December 31, 2023
	Estimated		Gross					Net		Gross					Net
	Useful Life in Years		Carrying Value		Accumulated Amortization			Carrying Value		Carrying Value		Accumulated Amortization			Carrying Value

Amortizing Intangible Assets:
Pulp brand recipes		15	$	50	$	(4	)	$	46	$	50		(3	)	$	47
Non-compete agreement		2		62		(62	)		-		62		(62	)		-

Total Intangible Assets, net			$	112	$	(66	)	$	46	$	112	$	(65	)	$	47

Amortization expense for the three months ended March 31, 2024 and 2023 was $833. Annual amortization expense for each of the next five years is estimated to be $3,333 and thereafter $33,333.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

3 Months Ended

Mar. 31, 2024

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The following table summarizes accounts payable and accrued expenses as of March 31, 2024 and December 31, 2023:

	(in thousands)
	March 31, 2024		December 31, 2023

Accounts payable	$	3,307	$	1,233
General accrued expenses		107		3
Employee retention credit funds		865		865
Accrued interest payable		29		32
Accrued payroll		59		270
Accrued severance and Director's fees		647		-
Accrued vacation		122		80
Current lease liability		9		34

Total Accounts Payable and Accrued Expenses	$	5,145	$	2,517

NOTES PAYABLE

3 Months Ended

Mar. 31, 2024

NOTES PAYABLE

NOTES PAYABLE

NOTE 7 – NOTES PAYABLE

The following table summarizes notes payable as of March 31, 2024 and December 31, 2023:

	(in thousands)
	March 31,			December 31,
	2024			2023
Secured promissory note	$	3,106		$	3,106
Future receivables financing agreement with Cedar Advance, LLC		1,003			-
NJD Investments, LLC promissory note		791			864
SBA loan		150			150
Vehicle loans		305			325
Total Gross Debt	$	5,355		$	4,445

Less: Gross short term debt		(4,438	)		(387	)
Less: Debt discount		(65	)		(18	)
Net Long Term Debt	$	852		$	4,040

Scheduled maturities of long-term debt as of March 31, 2024, are as follows (in thousands):

Years Ending December 31,	Secured Promissory Notes		Cedar Advance, LLC loan		NJD Investments, LLC Promissory Note		SBA Loan		Vehicle Loans		Total
2024 (remaining)		-		1,003		228		-		65		1,296
2025		3,106		-		316		-		92		3,514
2026		-		-		247		-		82		329
2027		-		-		-		-		59		59
Thereafter		-		-		-		150		7		157
Total	$	3,106	$	1,003	$	791	$	150	$	305	$	5,355

Secured Promissory Note

Future Receivables Financing Agreement with Cedar Advance, LLC

NJD Investments, LLC Promissory Note

Small Business Administration (“SBA”) Loans

Vehicle Loans

STOCKHOLDERS EQUITY (DEFICIT)

3 Months Ended

Mar. 31, 2024

STOCKHOLDERS EQUITY (DEFICIT)

STOCKHOLDERS' EQUITY (DEFICIT)

NOTE 8 – STOCKHOLDERS’ EQUITY (DEFICIT)

2024 Equity Distribution Agreement

2023 Public Offering

Common Stock

During the three months ended March 31, 2024, the Company issued 22,538 shares of common stock, as summarized below:

	Number of Shares

Sale of common stock pursuant to Equity Distribution Agreement		16,538
Issuances of common stock to employees and consultants		6,000
Total of common stock issuances during the three months ended March 31, 2024		22,538

Summary table of common stock share transactions:
Shares outstanding at December 31, 2023		285,282
Common stock issuances		22,538
Shares outstanding at March 31, 2024		307,820

Stock-Based Compensation

Shares available for future stock compensation grants totaled 9,957 at March 31, 2024.

Warrants

LEASES

3 Months Ended

Mar. 31, 2024

LEASES

LEASES

NOTE 9 – LEASES

The table below presents total operating lease assets and lease liabilities as of March 31, 2024 and December 31, 2023:

	(in thousands)
	March 31,		December 31,
	2024		2023
Operating lease assets	$	4	$	34
Operating lease liabilities	$	9	$	34

The table below presents the maturities of operating lease liabilities as of March 31, 2024:

	(in thousands)
	Operating
	Leases
2024 (remaining)		9
Total lease payments		9
Total operating lease liabilities	$	9

The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating operating lease right-of-use assets:

	March 31,
	2024
Remaining lease term (months)		1
Discount rate		17.5	%

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2024

COMMITMENTS AND CONTINGENCIES (Note 12)

COMMITMENTS AND CONTINGENCIES

NOTE 10 – COMMITMENTS AND CONTINGENCIES

GOING CONCERN

3 Months Ended

Mar. 31, 2024

GOING CONCERN

GOING CONCERN

NOTE 11 – GOING CONCERN

SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2024

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 12 – SUBSEQUENT EVENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Standards to Be Adopted in Future Periods

Use of Estimate

Trade Receivables

Concentration of Credit Risk

Inventory

Prepaid Expenses

Property, Equipment and Leasehold Improvements, Net

Intangible Assets

Revenue Recognition and Performance obligations

Disaggregation of Revenue

The following table includes revenue disaggregated by revenue stream for the three months ended March 31, 2024 and 2023:

	(in thousands)
	Three Months Ended,
	March 31, 2024		March 31, 2023
Herbs & Produce	$	2,754	$	1,943
Vitamins and Supplements		378		512
Total	$	3,132	$	2,455

Contract Balances

Due to the nature of the Company’s revenue from contracts with customers, the Company does not have material contract assets or liabilities that fall under the scope of ASC Topic 606.

Contract Estimates and Judgments

Cost of Goods sold

Cost of goods sold includes materials, labor and overhead costs incurred in cultivating, producing, and shipping our products.

Advertising Expense

Loss Per Common Share

Income Taxes

Segment Reporting

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of disaggregated revenue

	(in thousands)
	Three Months Ended,
	March 31, 2024		March 31, 2023
Herbs & Produce	$	2,754	$	1,943
Vitamins and Supplements		378		512
Total	$	3,132	$	2,455

INVENTORY (Tables)

3 Months Ended

Mar. 31, 2024

INVENTORY

Inventory

	(in thousands)
	March 31,		December 31,
	2024		2023

Raw materials	$	288	$	341
Work-in-progress		489		258
Finished goods		37		79

Total inventory	$	814	$	678

PROPERTY EQUIPMENT AND LEASEHOLD IMPROVEMENTS NET (Tables)

3 Months Ended

Mar. 31, 2024

PROPERTY EQUIPMENT AND LEASEHOLD IMPROVEMENTS NET

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

	(in thousands)
	March 31,			December 31,
	2024			2023

Furniture and equipment	$	1,276		$	1,276
Computer hardware		7			6
Leasehold improvements		3,134			3,121
Vehicles		456			456
Land		202			202
Construction in progress		219			182

Subtotal		5,294			5,243
Less accumulated depreciation		(1,648	)		(1,350	)
Property, equipment and leasehold improvements, net	$	3,646		$	3,893

INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2024

INTANGIBLE ASSETS

Intangible assets

			(in thousands)
			March 31, 2024							December 31, 2023
	Estimated		Gross					Net		Gross					Net
	Useful Life in Years		Carrying Value		Accumulated Amortization			Carrying Value		Carrying Value		Accumulated Amortization			Carrying Value

Amortizing Intangible Assets:
Pulp brand recipes		15	$	50	$	(4	)	$	46	$	50		(3	)	$	47
Non-compete agreement		2		62		(62	)		-		62		(62	)		-

Total Intangible Assets, net			$	112	$	(66	)	$	46	$	112	$	(65	)	$	47

ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables)

3 Months Ended

Mar. 31, 2024

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

	(in thousands)
	March 31, 2024		December 31, 2023

Accounts payable	$	3,307	$	1,233
General accrued expenses		107		3
Employee retention credit funds		865		865
Accrued interest payable		29		32
Accrued payroll		59		270
Accrued severance and Director's fees		647		-
Accrued vacation		122		80
Current lease liability		9		34

Total Accounts Payable and Accrued Expenses	$	5,145	$	2,517

NOTES PAYABLE (Tables)

3 Months Ended

Mar. 31, 2024

NOTES PAYABLE

Schedule of notes payable

	(in thousands)
	March 31,			December 31,
	2024			2023
Secured promissory note	$	3,106		$	3,106
Future receivables financing agreement with Cedar Advance, LLC		1,003			-
NJD Investments, LLC promissory note		791			864
SBA loan		150			150
Vehicle loans		305			325
Total Gross Debt	$	5,355		$	4,445

Less: Gross short term debt		(4,438	)		(387	)
Less: Debt discount		(65	)		(18	)
Net Long Term Debt	$	852		$	4,040

Scheduled maturities of long-term debt

Years Ending December 31,	Secured Promissory Notes		Cedar Advance, LLC loan		NJD Investments, LLC Promissory Note		SBA Loan		Vehicle Loans		Total
2024 (remaining)		-		1,003		228		-		65		1,296
2025		3,106		-		316		-		92		3,514
2026		-		-		247		-		82		329
2027		-		-		-		-		59		59
Thereafter		-		-		-		150		7		157
Total	$	3,106	$	1,003	$	791	$	150	$	305	$	5,355

STOCKHOLDERS EQUITY (DEFICIT) (Tables)

3 Months Ended

Mar. 31, 2024

STOCKHOLDERS EQUITY (DEFICIT)

Schedule of shares of common stock

	Number of Shares

Sale of common stock pursuant to Equity Distribution Agreement		16,538
Issuances of common stock to employees and consultants		6,000
Total of common stock issuances during the three months ended March 31, 2024		22,538

Summary table of common stock share transactions:
Shares outstanding at December 31, 2023		285,282
Common stock issuances		22,538
Shares outstanding at March 31, 2024		307,820

LEASES (Tables)

3 Months Ended

Mar. 31, 2024

LEASES

Operating Lease assets and lease Liabilities

	(in thousands)
	March 31,		December 31,
	2024		2023
Operating lease assets	$	4	$	34
Operating lease liabilities	$	9	$	34

Scheduled maturities of lease liability

	(in thousands)
	Operating
	Leases
2024 (remaining)		9
Total lease payments		9
Total operating lease liabilities	$	9

Weighted average Reamining lease Term

	March 31,
	2024
Remaining lease term (months)		1
Discount rate		17.5	%

ORGANIZATION NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details Narrative) - $ / shares				1 Months Ended			3 Months Ended
	Nov. 10, 2023	Sep. 08, 2021	Oct. 14, 2020	Jan. 26, 2023	Jan. 18, 2022	Jun. 30, 2021	Mar. 31, 2024	Dec. 31, 2023	Jun. 08, 2023
Authorized shares of common stock		200,000,000	20,000,000	6,666,667		50,000,000	100,000
Description of reverse stock split		declared a 20-for-1 forward stock split of our common stock	declared a 20-for-1 forward stock split of our common stock	reverse stock split of 1-for-30 and decreased	1-for-5 reverse stock split of its outstanding common stock	declared a 1-for-2 reverse stock split of our common stock
Common stock, par value							$ 0.0001	$ 0.0001
Initial public offering shares	10,000,000						100,000,000
Minimum Member \| Capital Stock Of The Company Member
Authorized shares of common stock	20,000,000						10,000,000		6,666,667
Maximum Member \| Capital Stock Of The Company Member
Authorized shares of common stock	110,000,000

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenue	$ 3,132	$ 2,455
Herbs & Produce [Member]
Revenue	2,754	1,943
Vitamins and Supplements [Member]
Revenue	$ 378	$ 512

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Reserve for credit losses	$ 146,080		$ 136,858
Description of payments for the fixtures treated as a reduction in revenue	expect the agreement to be terminated before the end of the three-year term, the aggregate cost of the fixtures of approximately $806,947 will be treated as a reduction in the transaction price of products sold to the Buyer during the three year term of the contract
Advertising expenses	$ 34,571	$ 26,727
Installation of fixtures amount	$ 806,947
Agreement expiry date	December 31, 2026
One Customers [Member] \| Sales Member
Revenue percentage			41.10%
Gross outstanding trade receivables, Percentage	41.00%
Four Customers [Member]
Gross outstanding trade receivables, Percentage			80.40%
Three Customers [Member]
Gross outstanding trade receivables, Percentage	76.00%
Total revenue from five customer percentage	78.70%	69.00%

INVENTORY (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
INVENTORY
Raw materials	$ 288	$ 341
Work-in-progress	489	258
Finished goods	37	79
Total inventory	$ 814	$ 678

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Subtotal	$ 5,294	$ 5,243
Less accumulated depreciation	(1,648)	(1,350)
Property, equipment and leasehold improvements, net	3,646	3,893
Construction in progress [Member]
Subtotal	219	182
Leasehold improvements [Member]
Subtotal	3,134	3,121
Land [Member]
Subtotal	202	202
Furniture and equipment [Member]
Subtotal	1,276	1,276
Computer hardware [Member]
Subtotal	7	6
Vehicles [Member]
Subtotal	$ 456	$ 456

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Property, Equipment and Leasehold Improvements [Member]
Depreciation expense	$ 301,582	$ 333,536

INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Amortizing Intangible Assets, net carrying value	$ 46	$ 47
Pulp Brand Recipes [Member]
Amortizing Intangible Assets, gross carrying value	50	50
Amortizing Intangible Assets, accumulated amortization	(4)	(3)
Amortizing Intangible Assets, net carrying value	$ 46	47
Amortizing Intangible Assets, estimated useful life in years	15 years
Non-compete agreement [Member]
Amortizing Intangible Assets, gross carrying value	$ 62	62
Amortizing Intangible Assets, accumulated amortization	(62)	(62)
Amortizing Intangible Assets, net carrying value	$ 0	0
Amortizing Intangible Assets, estimated useful life in years	2 years
Total Intangible Assets [Member]
Amortizing Intangible Assets, gross carrying value	$ 112	112
Amortizing Intangible Assets, accumulated amortization	(66)	(65)
Amortizing Intangible Assets, net carrying value	$ 46	$ 47

INTANGIBLE ASSETS (Details Narrative) - USD ($)	3 Months Ended
INTANGIBLE ASSETS (Details Narrative) - USD ($)	Mar. 31, 2024	Mar. 31, 2023
INTANGIBLE ASSETS
Amortization expense	$ 833	$ 833
Amortization expense thereafter	33,333
Annual amortization expense	$ 3,333
Term of annual amortization expense	five years

ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable	$ 3,307	$ 1,233
Accrued expense	107	3
Employee retention credit funds	865	865
Accrued interest payable	29	32
Accrued payroll	59	270
Accrued severance and Director's fees	647	0
Accrued vacation	122	80
Current lease liability	9	34
Total Accounts Payable and Accrued Expenses	$ 5,145	$ 2,517

NOTES PAYABLE (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
NOTES PAYABLE
Secured promissory note	$ 3,106	$ 3,106
Future receivables financing agreement with Cedar Advance, LLC	1,003	0
NJD Investments, LLC promissory note	791	864
SBA loan	150	150
Vehicle loan	305	325
Total gross debt	5,355	4,445
Less: Gross short term debt	(4,438)	(387)
Less: Debt discount	(65)	(18)
Net long term debt	$ 852	$ 4,040

NOTES PAYABLE (Details 1) $ in Thousands	Mar. 31, 2024 USD ($)
Secured Promissory Notes [Member]
2024 (remaining)	$ 0
2025	3,106
2026	0
2027	0
Thereafter	0
Long term debt total	3,106
NJD Investments, LLC Promissory [Member]
2024 (remaining)	228
2025	316
2026	247
2027	0
Thereafter	0
Long term debt total	791
SBA Loan [Member]
2024 (remaining)	0
2025	0
2026	0
2027	0
Thereafter	150
Long term debt total	150
Vehicle Loans [Member]
2024 (remaining)	65
2025	92
2026	82
2027	59
Thereafter	7
Long term debt total	305
Total [Member]
2024 (remaining)	1,296
2025	3,514
2026	329
2027	59
Thereafter	157
Long term debt total	5,355
Cedar Advance, LLC Loan [Member]
2024 (remaining)	1,003
2025	0
2026	0
2027	0
Thereafter	0
Long term debt total	$ 1,003

NOTES PAYABLE (Details Narrative) - USD ($)			1 Months Ended			3 Months Ended	12 Months Ended
NOTES PAYABLE (Details Narrative) - USD ($)	Mar. 14, 2024	Jun. 02, 2020	Aug. 30, 2022	Jun. 22, 2020	Mar. 30, 2020	Mar. 31, 2024	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Unamortized discount						$ 65,000	$ 18,000
Future Receivables Financing Agreement with Cedar Advance, LLC [Member]
Fees and expenses	$ 50,000
Prior payment	1,050,000
Net funds	1,000,000
Sale	1,491,000
Withdrawal amount	53,250
Payment due	$ 1,491,000
Vehicle Loan [Member]
Outstanding balance						88,464	$ 85,885
Long term debt balance outstanding						239,343
Short-term debt, net of discounts						216,233
Accrued interest rate							10.49%	7.64%		17.51%
financing agreements							$ 151,850	$ 158,214	$ 102,681
Loan Maturity date							2028	2027	2026	April 26, 2024
Vehicle Loan [Member] \| Minimum Member
Accrued interest rate									16.84%
Vehicle Loan [Member] \| Maximum Member
Accrued interest rate									18.66%
NJD Investments, LLC Promissory Note [Member]
Accrued interest								$ 19,210
Outstanding balance						305,726	$ 300,683
Promissory note			$ 1,136,000
Interest rate			5.00%
Monthly installment			$ 28,089
Guaranteed amount			$ 1,136,000
Long term debt balance outstanding						484,872	563,685
Short-term debt, net of discounts						1,003,187
Maturity date			Sep. 01, 2026
First Sament Note Member
Accrued interest						9,363	9,363
Unamortized discount						16,068	19,429
Outstanding balance						3,106,458	3,106,458
Promissory note		$ 653,870			$ 3,000,000
Interest rate		3.50%			3.50%
Maturity date		Jun. 03, 2023			Mar. 30, 2025
First Sament Note One Member
Accrued interest						27,125
Outstanding balance						606,653
Debt principal						70,420			$ 23,203
SBA Loan [Member]
Accrued interest						19,208	18,756
Outstanding balance						$ 150,000	$ 150,000
Interest rate				3.75%
Proceeds from loan				$ 150,000
Maturity date				Jun. 22, 2050

STOCKHOLDERS EQUITY (DEFICIT) (Details)	3 Months Ended
STOCKHOLDERS EQUITY (DEFICIT) (Details)	Mar. 31, 2024 shares
STOCKHOLDERS EQUITY (DEFICIT)
Sale of common stock pursuant to Equity Distribution Agreement	16,538
Issuances of common stock to employees and consultants	6,000
Total common stock issuanced during the year ended	22,538
Shares outstanding	285,282
Common stock issuances	22,538
Shares outstanding	307,820

STOCKHOLDERS EQUITY (DEFICIT) (Details Narrative) - USD ($)				1 Months Ended	3 Months Ended
	Feb. 07, 2024	Jun. 08, 2023	Feb. 07, 2023	Jan. 18, 2022	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Oct. 26, 2022
Stock-based compensation expense					$ 38,280
Restricted stock awards to employees and consultants					6,000
Exercise price			$ 126.00
Common stock description			the Company issued an aggregate of 80,950 shares of common stock and warrants to purchase an aggregate of 93,093 shares of common stock (“February Follow-On Warrants”) pursuant to an underwriting agreement between the Company and Maxim Group LLC, as representative of the underwriters (the “Representative”) and raised approximately $10.2 million in gross proceeds. The February Follow-On Warrants, which became exercisable on February 7, 2023, grant the holder the right to purchase one share of common stock at an exercise price equal to $126.00 per share. The February Follow-On Warrants expire on February 7, 2028. In addition to customary cashless exercise, the holders have the right to effect an “alternative cashless exercise” on or after April 10, 2023. In an “alternative cashless exercise,” the aggregate number of shares of common stock issuable is equal to the product of (i) the aggregate number of shares of common stock that would be issuable upon exercise of the February Follow-On Warrant if it was exercised for cash and (ii) 0.5. Also on February 7, 2023, the Company issued warrants to the Representative to purchase up to 4,048 shares of Common Stock at an exercise price of $139.60 per share. These warrants became exercisable on August 2, 2023 and will expire on February 2, 2028
Common stock authorized					100,000,000		100,000,000
Gross proceeds					$ 23,000	$ (24,000)
Common stock par value					$ 0.0001		$ 0.0001
Common stock issued during the year					22,538
Common stock issued					307,820		285,282
Common stock outstanding					307,820		285,282
Warrant to purchase common stock shares					179,345
Warrant to purchase common stock per shares amount							$ 133
Granted share for future stock compensation					9,957
Underwriting discounts and commissions and expenses					$ 4,867
Initial Public Offering [Member]
Stock Option Plan		15,000		50,000
Series A Convertible Preferred Stocks [Member]
Aggregate offering price	$ 1,146,893
Commission rate	3.50%
Par value per share	$ 0.0001							$ 0.0001
Common stock shares sold					16,538
Gross proceeds					$ 139,060

LEASES (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
LEASES
Operating lease assets	$ 4	$ 34
Operating lease liabilities	$ 9	$ 34

LEASES (Details 1) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
LEASES
2024 (remaining)	$ 9
Total lease payments	9
Total operating lease liabilities	$ 9	$ 34

LEASES (Details 2)	3 Months Ended
LEASES (Details 2)	Mar. 31, 2024
LEASES
Remaining lease term (months)	1 month
Discount rate	17.50%

LEASES (Details Narrative) - USD ($)	3 Months Ended	12 Months Ended
LEASES (Details Narrative) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
LEASES
Lease payments per month during the period	$ 21,860
Total operating lease cost	73,445	$ 75,170
Short term lease liabilities	8,791	34,415
Short-term leases	$ 46,685	$ 48,410

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2024	Feb. 04, 2024	Jan. 25, 2024
Payment of products	$ 806,947
Michael James [Member]
Separation Agreement terms, description	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.
Salary			$ 300,000
Restricted stock award with a fair value		$ 25,000
Payment of products	$ 806,947
Payment pursuant to Agreement	$ 329,290

GOING CONCERN (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
GOING CONCERN (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Net Income (Loss)	$ (3,977)	$ (2,879)
Going Concern [Member]
Net Income (Loss)	(4,000)
Cash balance	$ 400

SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - Cedar [Member]	May 07, 2024 USD ($)
Future accounts receivable	$ 994,000
Purchase price	$ 700,000
Merchant cash advance agreement terms, description	Cedar is expected to withdraw $65,000 a week directly from the Company’s bank account until the $2,485,000 due to Cedar under the Restated Agreement is paid in full. Except as amended by the Restated Agreement, the remaining terms of the Cedar Agreement remain in full force and effect.
Aggregate fees and expenses	$ 87,500
Additional net funds	544,250
Total financing with Cedar in accounts receivable	2,485,000
Accounts receivable sold for net funds	$ 1,544,250
Funds payment percentage required	35.00%

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