{"url_path":"/sec/edbl/10-q/2026/item-2","section_key":"item-2","section_title":"Item 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1809750/0001477932-26-003238-index.html","accession_number":"0001477932-26-003238","cik":"0001809750","ticker":"EDBL","issuer_name":"Edible Garden AG Inc","edgar_url":"https://www.sec.gov/Archives/edgar/data/1809750/0001477932-26-003238-index.html","primary_entity_key":"0001809750","primary_entity_name":"Edible Garden AG Inc"},"word_count":4595,"has_tables":true,"body_markdown":"**ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**\n\n \n\n**FORWARD-LOOKING STATEMENTS**\n\n \n\nIn 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 “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “might,” “potential,” “projections,” “should,” “will,” “would,” 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.\n\n \n\nThese 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:\n\n \n\n \n\n·\nour history of losses and our ability to continue as a going concern;\n\n \n\n·\nour ability to obtain additional financing to fund our operations;\n\n \n\n·\nour ability to maintain the listing of our common stock on the Nasdaq Stock Market LLC (“Nasdaq”) and comply with Nasdaq’s listing standards;\n\n \n\n·\nthe departure of members of our management team;\n\n \n\n·\nour market opportunity;\n\n \n\n·\nour ability to effectively manage our growth;\n\n \n\n·\nour ability to complete and integrate business acquisitions;\n\n \n\n·\nthe effects of increased competition as well as innovations by new and existing competitors in our market;\n\n \n\n·\nour ability to retain our existing customers and to increase our customer base;\n\n \n\n·\nthe future growth of the indoor agriculture industry and demands of our customers;\n\n \n\n·\nour ability to maintain, or strengthen awareness of, our brand;\n\n \n\n·\nour ability to expand the product lines we offer;\n\n \n\n·\nour ability to maintain, protect, and enhance our intellectual property;\n\n \n\n·\nfuture revenue, hiring plans, expenses and capital expenditures;\n\n \n\n·\nour ability to pay our debts as they come due;\n\n \n\n·\nour ability to comply with new or modified laws and regulations that currently apply or become applicable to our business;\n\n \n\n·\nour ability to recruit and retain key employees and management personnel;\n\n \n\n·\nour financial performance and capital requirements; and\n\n \n\n·\nthe potential lack of liquidity and trading of our securities.\n\n \n\nThe 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”).\n\n \n\n \n\n23\n\n*Table of Contents*\n\n \n\n**OVERVIEW**\n\n \n\nWe 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 operate glass, hydroponic, and vertical greenhouse structures that enable us to grow organic herbs consistently year-round while using less land, less energy, and less water than conventional agriculture. In our hydroponic greenhouse, we grow plants without soil. Instead of planting one row of plants in the ground, by using a vertical growing system, we can grow many towers of plants 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.\n\n \n\nOur facilities utilize \"closed loop\" irrigation systems that recollect and reuse drain water—including water recycled through reverse osmosis—reducing overall water consumption and helping conserve natural resources. Our advanced systems are also designed to help mitigate contamination from harmful pathogens, including salmonella, e-coli and others.\n\n  \n\nOur operations are supported by GreenThumb®, our proprietary patented greenhouse management and demand-planning software (U.S. Patent Nos. 11,158,006 B1; 11,410,249 B2; and 11,830,088 B2). GreenThumb tracks plants through all stages of production and distribution, supporting quality control, traceability, fill-rate management, and logistics optimization, including maximizing truckload efficiency to reduce greenhouse gas emissions. We believe GreenThumb is a meaningful competitive differentiator and an important component of our Zero-Waste Inspired® model.\n\n \n\nAs of March 31, 2026, we offer more than 140 stock keeping units (\"SKUs\") spanning two principal product segments: (i) fresh produce, including cut herbs, hydroponic basil, potted herbs, and wheatgrass; and (ii) shelf-stable and refrigerated consumer packaged goods, including sports nutrition and nutraceuticals (Kick.™ and Vitamin Whey®/Vitamin Way®), fermented gourmet sauces and chili-based products (Pulp®), and functional fermented pickles and sauerkraut (Pickle Party™). We also supply products under private label arrangements to major retail customers. We have leveraged our brand recognition to offer co-manufactured consumer-packaged goods across protein, fermented foods, and flavoring categories in addition to our core fresh produce business. Our tagline \"Simply Local, Simply Fresh\" reflects our strategy of growing products in regional communities close to the retail locations where they are sold, extending shelf life and supporting local brand awareness.\n\n \n\nOur products are available in over 6,000 retail locations across the United States, the Caribbean, and South America. We operate vertically integrated greenhouses and processing facilities at Edible Garden Heartland in Grand Rapids, Michigan; Edible Garden Prairie Hills in Webster City, Iowa; and our headquarters at Edible Garden Belvidere in Belvidere, New Jersey. We also partner with a network of contract growers strategically located near major U.S. population centers.\n\n \n\nWe hold food safety certifications from Primus GFS (a Global Food Safety Initiative (\"GFSI\")-accredited program), USDA Organic certification for applicable products, and non-GMO verification from the non-GMO Project for select SKUs. We are licensed under the Perishable Agricultural Commodities Act (\"PACA\") and voluntarily comply with Hazard Analysis Critical Control Point (\"HACCP\") principles established by the U.S. Food and Drug Administration.\n\n \n\nWe have a history of operating losses since inception and expect to incur additional near-term losses. Our auditors have issued an opinion expressing substantial doubt about our ability to continue as a going concern. See \"Risk Factors\" and \"Management's Discussion and Analysis — Liquidity and Capital Resources\" for additional discussion of these matters.\n\n \n\nSince our initial public offering, our primary business strategy has been focused on the production and sale of fresh, locally grown, USDA Organic produce through a vertically integrated CEA model. During the fiscal year ended December 31, 2025, and continuing into 2026, we began executing a material expansion and evolution of that strategy.\n\n \n\nSpecifically, we are transitioning our Edible Garden Prairie Hills facility in Webster City, Iowa into a dedicated ready-to-drink (\"RTD\") and clean nutrition manufacturing hub. This initiative represents a significant broadening of our business from primarily fresh, perishable produce into what we expect will be higher-margin, shelf-stable beverage and nutrition categories. We have characterized this evolution as the development of a vertically integrated domestic clean-label nutrition platform that combines our existing controlled-environment agriculture capabilities with scalable aseptic processing capacity and differentiated branded products across sports nutrition, adult and children's performance nutrition, and GLP-1 supportive categories.\n\n \n\nThis strategic shift, which we refer to as our \"Farm-to-Formula®\" strategy, connects our CEA-sourced ingredients with advanced research and development and precision formulation capabilities to deliver finished functional RTD beverages at commercial scale. This represents a material change from our previously disclosed strategy of focusing principally on fresh produce, and investors should consider the risks and opportunities associated with this expansion when evaluating our business.\n\n \n\nOn March 4, 2026, we entered into two Interim Order Agreements (the \"IOAs\") with Tetra Pak Inc. (\"Tetra Pak\"), a global leader in food processing and packaging solutions, to commence engineering services and preliminary procurement activities for the Webster City, Iowa production project (the \"Project\"). The IOAs cover both processing equipment and aseptic packaging systems and are intended as the initial step toward a definitive final supply agreement governing the full scope of equipment installation and integration.\n\n \n\n \n\n24\n\n*Table of Contents*\n\n ** **\n\nThe planned facility will utilize Tetra Pak's Tetra Prisma® Aseptic 330 Edge package—a format made primarily from renewable, plant-based materials that is designed to be recyclable—together with the Tetra Pak® A3/Speed filling platform. These systems are expected to extend product shelf life without refrigeration or preservatives prior to opening, support ambient distribution, maintain clean-label standards, and reduce overall supply chain costs and food waste.\n\n \n\nPhase 1 production at the Webster City facility is anticipated to begin in 2027, subject to the execution of a final supply agreement with Tetra Pak, completion of engineering and installation, regulatory approvals, and adequate capital availability. There is no assurance that a final agreement will be executed, that the facility will be completed on the anticipated timeline, or that Phase 1 production will commence as planned. This initiative is in the early development stage, and investors should not place undue reliance on timing or scale projections, or our ability to complete the Project.\n\n \n\nThe Midwest facility encompasses more than 200,000 square feet of food-grade manufacturing space with warehousing and logistics infrastructure, and upon completion of the RTD buildout is expected to support aseptic and ultra-filtered beverage production across protein, plant-based, dairy, and functional categories. The Company intends for the facility to serve as a scalable innovation platform supporting product development and revenue diversification beyond fresh perishables.\n\n** **\n\n**RECENT DEVELOPMENTS**\n\n \n\nOn January 29, 2026, we filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-10 reverse stock split of its common stock (the “Reverse Stock Split”), effective as of 12:01 a.m. Eastern Time on February 3, 2026. As a result of the Reverse Stock Split, every 10 shares of our outstanding common stock were combined into one share of common stock. No fractional shares were issued in connection with the Reverse Stock Split; any fractional shares resulting from the Reverse Stock Split were rounded up to the nearest whole share. Proportionate adjustments were made to the per share exercise price and the number of shares issuable upon the exercise of outstanding warrants and to all then-outstanding awards under our equity incentive plan. The Reverse Stock Split did not change the par value of the common stock or the total number of authorized shares. All share and per share amounts in these condensed consolidated financial statements and related notes have been retroactively adjusted to reflect the Reverse Stock Split, unless otherwise noted.\n\n \n\nThe Reverse Stock Split was implemented, in part, to help maintain compliance with Nasdaq’s continued listing requirements. We were subject to a Panel Monitor, as defined by Nasdaq Listing Rule 5815(d)(4)(A), through April 8, 2026.\n\n \n\nDuring the three months ended March 31, 2026, we entered into exchange agreements (the “Exchange Agreements”) with Streeterville Capital, LLC, a Utah limited liability company (“Streeterville”) pursuant to which we agreed to exchange an aggregate of 1,910 shares of our Series B Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), for a total of 940,860 shares of our common stock, par value $0.0001 per share (“Exchange Shares”). The Preferred Stock had an aggregate stated value of $1.9 million. The number of Exchange Shares issued under the Exchange Agreements was determined by dividing the Stated Value by the Nasdaq Minimum Price of our common stock as reported on the Nasdaq Capital Market on the day immediately preceding the date the Exchange Agreements were entered into. The issuance of the Exchange Shares pursuant to the Exchange Agreements were not registered under the Securities Act of 1933, as amended (the “Securities Act”), and were conducted pursuant to the exemption provided in Section 3(a)(9) under the Securities Act.\n\n \n\nSubsequent to March 31, 2026, we entered into additional Exchange Agreements with Streeterville pursuant to which we agreed to exchange an aggregate of 4,620 shares of the Preferred Stock with an aggregate Stated Value of $4.6 million for a total of approximately 6,966,627 Exchange Shares on the same terms described above.\n\n \n\nIn January 2026, we completed the sale of its net operating losses under the New Jersey Economic Development Authority’s Technology Business Tax Certificate Transfer Program and received gross proceeds of approximately $3.1 million.\n\n \n\nDuring the three months ended March 31, 2026, we entered into a two-year distribution agreement with Busch’s Fresh Food Market and achieved chainwide distribution of its USDA Organic herbs at all The Fresh Market locations. On April 21, 2026, we were awarded new distribution with Target to supply a substantial portion of its fresh-cut herbs, with shipments expected to commence in May 2026.\n\n \n\nIn March 2026, we selected Tetra Pak® as its packaging and processing technology partner for its planned RTD beverage facility in Webster City, Iowa. On April 17, 2026, we secured a $2.7 million incentive package from the Iowa Economic Development Authority under the Business Incentives for Growth program to support the redevelopment of the our approximately 400,000 square-foot Webster City facility into a production plant for shelf-stable RTD nutritional beverages.\n\n \n\n \n\n25\n\n*Table of Contents*\n\n \n\n**CRITICAL ACCOUNTING ESTIMATES**\n\n \n\nThe preparation of the unaudited consolidated financial statements in conformity with U.S. generally accepted accounting principles 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.\n\n \n\nThe most significant accounting estimates involve a high degree of judgment or complexity. Management believes the estimates and judgments most critical to the preparation of our condensed consolidated financial statements and to the understanding of our reported financial results include allowance for doubtful accounts. The following are the accounting estimates most critical to the preparation of our condensed consolidated financial statements.\n\n \n\n***Revenue Recognition***\n\n \n\nRevenues are recognized when control of the promised goods or services is transferred our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.\n\n \n\nWe do 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.\n\n \n\n***Property, Equipment and Leasehold Improvements***\n\n \n\nProperty, 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.\n\n \n\nExpenditures 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. We continually monitor 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 Accounting Standards Codification (“ASC”) 360, *“Property, Plant, and Equipment.” *When such events or changes in circumstances are present, we assess 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, we recognize 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.\n\n \n\n***Income Taxes***\n\n \n\nThe provision for income taxes is determined in accordance with ASC 740, “*Income Taxes*.” We file a consolidated United States federal income tax return. We provide 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. We incurred net operating losses for financial-reporting and tax-reporting purposes. At March 31, 2026 and December 31, 2025, such net operating losses were offset entirely by a valuation allowance.\n\n \n\n \n\n26\n\n*Table of Contents*\n\n \n\nWe recognize uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, we recognize 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. We classify income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations.\n\n \n\n**RESULTS OF OPERATIONS**\n\n \n\n**COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**\n\n \n\n \n\n \n\n**Three Months Ended**\n\n**March 31**\n\n \n\n \n\n \n\n**2026**\n\n \n\n \n\n**2025**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**REVENUE**\n\n \n$3,341\n \n\n \n$2,718\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**OPERATING EXPENSES**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCost of goods sold, excluding depreciation\n\n \n\n \n4,390\n \n\n \n\n \n2,789\n \n\nSelling, general and administrative expenses\n\n \n\n \n2,905\n \n\n \n\n \n2,608\n \n\nDepreciation and amortization\n\n \n\n \n2,724\n \n\n \n\n \n248\n \n\nGain on sale of asset\n\n \n\n \n-\n \n\n \n\n \n(1 )\n\nTotal operating expense\n\n \n\n \n10,019\n \n\n \n\n \n5,644\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLoss from operations\n\n \n\n \n(6,678 )\n \n\n \n(2,926 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther income (expenses)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest expense, net\n\n \n\n \n(150 )\n \n\n \n(440 )\n\nLoss on sale of tax benefit\n\n \n\n \n(235 )\n \n\n \n-\n \n\nOther income / (loss)\n\n \n\n \n40\n \n\n \n\n \n42\n \n\nTotal other income (expenses)\n\n \n\n \n(345 )\n \n\n \n(398 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLoss before income taxes\n\n \n\n \n(7,023 )\n \n\n \n(3,324 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nIncome tax benefit\n\n \n\n \n3,354\n \n\n \n\n \n-\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**NET LOSS**\n\n \n$(3,669 )\n \n$(3,324 )\n\n \n\n*Revenue*\n\n \n\nRevenue was $3.3 million for the three months ended March 31, 2026, compared to $2.7 million for the three months ended March 31, 2025. The increase in revenue of $623 thousand, or 22.9%, is primarily attributable to continued growth in our cut herb portfolio across our retail client base, which grew $550 thousand, or 46%.\n\n \n\n*Operating Expenses*\n\n \n\nOperating expenses were $10.0 million for the three months ended March 31, 2026, compared to $5.6 million for the three months ended March 31, 2025. The increase of $4.4 million or 77.5% was primarily due to increase in cost of goods sold and depreciation expense and amortization.  Increase in cost of goods sold was primarily driven by increased sales and a portfolio shift to cut herbs, which is primarily sourced from third party growers at higher cost. Depreciation expense increase of $2.5 million was primarily due to accelerated depreciation of certain fixed assets as a result of the Company’s pivot to RTD clean nutrition manufacturing.\n\n \n\n \n\n27\n\n*Table of Contents*\n\n \n\n*Loss from operations*\n\n \n\nLoss from operations were $6.7 million for the three months ended March 31, 2026, compared to $2.9 million for the three months ended March 31, 2025.  The increase in the loss from operations was driven by higher overall expenses across cost of goods sold and depreciation expense, partially offset by an increase in revenue.\n\n \n\n*Interest expense*\n\n \n\nInterest expense was $150 thousand for the three months ended March 31, 2026, compared to $440 thousand for the three months ended March 31, 2025. Lower interest expense was driven by lower overall outstanding debt balances at lower interest rates.\n\n \n\n*Income tax benefit*\n\n* *\n\nIncome tax benefit was $3.4 million for the three months ended March 31, 2026. We transferred state tax benefit to a third-party buyer in exchange for a cash consideration and recorded a gain driven primarily due to valuation allowance release.\n\n* *\n\n*Net loss*\n\n \n\nNet loss was $3.7 million for the three months ended March 31, 2026, compared to a net loss of $3.3 million for the three months ended March 31, 2025. The reasons for the decrease in net loss are explained above.\n\n \n\n**LIQUIDITY AND CAPITAL RESOURCES**\n\n \n\n**Going Concern Considerations**\n\n \n\nWe have incurred significant losses since our inception. We recognized net losses of approximately $3.7 million during the three months ended March 31, 2026 and $17.3 million during the year ended December 31, 2025. 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.\n\n \n\nThe risks and uncertainties surrounding our ability to continue our business with limited capital resources raises substantial doubt as to our ability to continue as a going concern for twelve months from the issuance of these financial statements. To date, we have financed our operations with the proceeds from debt financings, public and private securities offerings, and operations, among other sources. If we are unable to raise additional capital, we believe that our existing cash will fund operations into the third quarter of 2026 and will not be sufficient to fund our operations through the next twelve months beyond the date of the issuance of our consolidated financial statements. Our operations have consumed substantial amounts of cash since inception. The net cash provided by (used in) operating activities was $251 thousand and ($3.3) million during the three months ended March 31, 2026 and 2025, respectively. Our financial statements have been prepared on a “going concern” basis.  However, substantial doubt exists regarding our ability to continue as a going concern 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.\n\n \n\n \n\nThere 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.\n\n \n\n \n\n28\n\n*Table of Contents*\n\n \n\n**Liquidity**\n\n \n\nOur 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. Our liquidity needs have been met primarily through public equity offerings, term loan borrowings, accounts receivable financing, convertible notes, and related party loans.\n\n \n\nAs of March 31, 2026 and December 31, 2025, we had $2.0 million and $1.1 million in cash and cash equivalents available, respectively. During the three months ended March 31, 2026, cash provided by operating activities was $251 thousand. As of March 31, 2026 and December 31, 2025, we had $2.7 million and $1.9 million of total debt outstanding, respectively. \n\n \n\nWe 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 March 31, 2026. \n\n \n\n**Capital Resources**\n\n \n\nIn January 2026, we completed the sale of our net operating losses under the New Jersey Economic Development Authority’s Technology Business Tax Certificate Transfer Program and received gross proceeds of approximately $3.4 million.\n\n \n\nOn March 3, 2026, we entered into a Note Purchase Agreement with Streeterville Capital, LLC (“Streeterville”), pursuant to which we issued to Streeterville a secured promissory note in the principal amount of $1.6 million (the “Streeterville Note”), which included an original issue discount of $120 thousand and reimbursement of Streeterville’s transaction expenses of $5 thousand, for a purchase price of $1.5 million. The Streeterville Note bears interest at a rate of 8.0% per annum and matures 13 months after its issuance date.\n\n \n\nWe expect to continue to incur losses and negative cash flows from operations for the foreseeable future. We may seek to raise additional capital through equity or debt financings, sales of assets, or other strategic alternatives. There can be no assurance that any additional financing will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly reduce our operations or delay, scale back or discontinue the development of one or more of our products or operations.\n\n \n\nFor more information on our outstanding debt as of March 31, 2026 and December 31, 2025, see Note 7“*Notes Payable.*” \n\n \n\n \n\n29\n\n*Table of Contents*\n\n \n\n**Cash Flows**\n\n \n\n*Operating activities*\n\n \n\nDuring the three months ended March 31, 2026, cash provided by operating activities was $251 thousand. During the three months ended March 31, 2025, cash used for operating activities was $3.3 million.  For the period ended March 31, 2026, the net loss of $3.7 million was offset by accelerated depreciation of certain fixed assets related to Company’s pivot to RTD manufacturing of $2.7 million, amortization of operating lease right of use assets related to Natural Shrimp totaling $304 thousand, and working capital decrease of $827 thousand. For the period ended March 31, 2025, the net loss of $3.3 million was offset by depreciation and amortization expense, as well as amortization of debt discount totaling $678 thousand, working capital increase of $686 thousand.\n\n \n\n*Investing activities*\n\n \n\nDuring the three months ended March 31, 2026 and 2025, cash used in investing activities was $104 thousand and $68 thousand, respectively. The increase is related to the cash flow impact from higher capital expenditures related to the Natural Shrimp asset purchase.\n\n \n\n*Financing activities*\n\n \n\nDuring the three months ended March 31, 2026 and 2025, cash provided by financing activities was $691 thousand and $279 thousand, respectively. The increase is driven by $1.5 million related to the Streeterville Note, offset by $798 thousand of debt repayments and $11 thousand of lease payments.\n\n \n\n \n\n30\n\n*Table of Contents*"}