Edible Garden AG Inc strikes a new warrant deal

Edible Garden AG Inc (NASDAQ:EDBL), a Delaware-based agricultural production company with a current market capitalization of $5.17 million, announced Wednesday that it has entered into an Inducement Letter Agreement with an institutional investor. The agreement involves the exercise of existing warrants for cash at a reduced price and the issuance of new five-year warrants. According to InvestingPro data, the company has been quickly burning through cash and may face challenges with interest payments on debt, making this capital raising effort particularly significant.

On May 21, 2025, the company and the holder of Class A and Class B warrants, originally priced at $9.00 per share, agreed to a reduced exercise price of $3.50 per share. The existing warrants were issued between September 30, 2024, and December 23, 2024, and were immediately exercisable. The stock, which has shown significant volatility with a beta of 1.57, has experienced a dramatic 96.67% decline over the past year, though it has recently shown signs of recovery with a 56.52% gain in the past week.

In return for the reduced exercise price, Edible Garden AG Inc will issue new unregistered warrants to purchase up to 1,999,200 shares of common stock, also at an exercise price of $3.50 per share. These new warrants will be immediately exercisable upon issuance and will be valid for five years.

The company also committed to file a Resale Registration Statement within 30 calendar days following the agreement date to facilitate the resale of shares issuable upon the exercise of the new warrants. Edible Garden aims to have the registration statement effective within 45 calendar days, or 90 days in case of a full SEC review.

As part of the agreement, the company will not issue or announce the issuance of any common stock or equivalents for five calendar days post-closing, with certain exceptions. Additionally, for 15 calendar days after closing, Edible Garden is prohibited from engaging in any Variable Rate Transaction (JO:NTUJ), as defined in the Inducement Letter Agreements.

Maxim Group LLC acted as the exclusive financial advisor for the transaction, earning a 6.5% cash fee on the total proceeds from the exercised warrants.

The exercise of the existing warrants is expected to generate approximately $3.5 million in gross proceeds for Edible Garden AG Inc before accounting for fees and other expenses. This capital injection comes at a crucial time, as InvestingPro analysis reveals the company’s current ratio stands at 0.82, indicating short-term obligations exceed liquid assets. With 14 additional exclusive ProTips and comprehensive financial analysis available, investors can access deeper insights into EDBL’s financial health through InvestingPro’s detailed research reports, part of its coverage of over 1,400 US stocks.

The company emphasized that the new warrants and the shares of common stock issuable upon their exercise will be sold without registration under the Securities Act of 1933, in reliance on exemptions provided by Section 4(a)(2) and/or Rule 506.

This move is part of Edible Garden AG Inc’s broader financial strategy, as disclosed in the SEC filing. The company’s actions reflect ongoing efforts to manage its capital structure and enhance shareholder value, particularly important given its negative EBITDA of -$7.3 million in the last twelve months. For comprehensive analysis of EDBL’s financial health and future prospects, investors can access the full InvestingPro Research Report, which provides detailed insights into the company’s valuation, growth potential, and risk factors.

In other recent news, Edible Garden AG reported a mixed performance for the first quarter of 2025. The company experienced a 13.2% decline in revenue, totaling $2.7 million, compared to the same period last year. Despite this, Edible Garden saw a significant increase in gross profit, which rose by 283% year-over-year, reaching $88,000, and a reduction in net loss from $4 million to $3.3 million. The company attributes these improvements to a strategic shift towards higher-margin products, exiting lower-margin categories like floral and lettuce. Additionally, Edible Garden’s nonperishable revenue increased by 15% year-over-year, highlighting the growing success of their shelf-stable product lines. In a strategic move to bolster its research and development capabilities, the company acquired Natural Shrimp Farms for $15.5 million. This acquisition is expected to enhance Edible Garden’s operational capabilities without increasing its debt burden. Analysts from Maxim Group have inquired about the synergies from this acquisition and the potential for growth in the sports nutrition line, indicating a cautious optimism about the company’s future prospects.

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