Edible Garden Announces Closing of $5.65 Million Public Offering

Rhea-AI Summary

Edible Garden AG Incorporated (Nasdaq: EDBL), a leader in controlled environment agriculture, has closed its previously announced public offering. The company raised approximately $5.65 million in gross proceeds through the sale of 15,700,650 shares of common stock (or pre-funded warrants) and accompanying Class A and Class B warrants. The combined public offering price was $0.36 per share (or $0.35 per pre-funded warrant) with accompanying warrants.

The Class A warrants expire in five years, while the Class B warrants expire in 18 months, both with an exercise price of $0.36 per share. Edible Garden plans to use the net proceeds to support growth initiatives, general corporate purposes, and repay approximately $3.2 million in short-term debt. Maxim Group acted as the sole placement agent for the offering.

Positive

• Raised $5.65 million in gross proceeds through public offering
• Funds to be used for growth initiatives and strengthening balance sheet
• Repayment of $3.2 million in short-term debt

Negative

• Potential dilution for existing shareholders due to issuance of 15,700,650 new shares
• Additional dilution possible if warrants are exercised

Insights

Financial Analyst

Edible Garden's $5.65 million public offering is a significant capital raise for a company with a market cap of only $805,900. This substantial dilution, increasing the share count by 15,700,650, will likely put downward pressure on the stock price in the short term. However, the $3.2 million debt repayment strengthens the balance sheet, potentially improving the company's financial health.

The offering structure, including common stock and two classes of warrants, provides flexibility but also introduces complexity. The $0.36 exercise price for both warrant classes suggests the company expects near-term upside. The 18-month expiration for Class B warrants could create selling pressure as that date approaches.

While the capital injection supports growth initiatives, investors should closely monitor how effectively management deploys the remaining funds after debt repayment. The company's ability to leverage this capital for revenue growth and operational improvements will be important for long-term value creation in the competitive CEA market.

Market Research Analyst

The controlled environment agriculture (CEA) sector is gaining traction due to increasing demand for locally grown, organic and sustainable produce. Edible Garden's focus on this niche positions it well for potential growth. However, the company's small size and need for substantial capital raise indicate challenges in achieving profitability and scale.

The $5.65 million offering, while dilutive, provides Edible Garden with necessary capital to pursue growth initiatives in a capital-intensive industry. The repayment of $3.2 million in short-term debt is prudent, potentially reducing interest expenses and improving financial flexibility.

Investors should monitor key performance indicators such as revenue growth, gross margins and progress on expansion projects to assess the company's execution. The CEA market is competitive, with larger, well-funded players, so Edible Garden's ability to differentiate and capture market share will be critical for long-term success and justifying its valuation post-offering.

BELVIDERE, N.J., Sept. 30, 2024 (GLOBE NEWSWIRE) -- Edible Garden AG Incorporated (“Edible Garden” or the “Company”) (Nasdaq: EDBL, EDBLW), a leader in controlled environment agriculture (CEA), locally grown, organic, and sustainable produce and products, today announced the closing of its previously announced public offering of an aggregate of 15,700,650 shares of its common stock (or pre-funded warrants in lieu thereof), Class A warrants to purchase up to 15,700,650 shares of common stock, and Class B warrants to purchase up to 15,700,650 shares of common stock, at a combined public offering price of $0.36 per share (or $0.35 per pre-funded warrant) and accompanying warrants. The warrants have an exercise price of $0.36 per share, and were exercisable immediately upon issuance. The Class A warrants will expire on the fifth anniversary of the original issuance date, and the Class B warrants will expire on the eighteen-month anniversary of the original issuance date. Gross proceeds, before deducting placement agent fees and offering expenses, were approximately $5.65 million.

The Company intends to use the net proceeds from the offering to support growth initiatives, general corporate purposes and to strengthen the balance sheet via the repayment of approximately $3.2M of short-term debt.

Maxim Group LLC acted as sole placement agent in connection with this offering.

The securities described above were offered pursuant to a registration statement on Form S-1, as amended (File No. 333-281957), which was declared effective by the Securities and Exchange Commission (the "SEC") on September 27, 2024. Copies of the final prospectus relating to this offering have been filed with the SEC and may be obtained from Maxim Group LLC, 300 Park Avenue, 16^th Floor, New York, NY 10022, at (212) 895-3745.

About Edible Garden®

Edible Garden AG Incorporated is a leader in controlled environment agriculture (CEA), locally grown, organic and sustainable produce and products backed by Zero-Waste Inspired® next generation farming. Offered at over 5,000 stores in the US, Edible Garden is disrupting the CEA and sustainability technology movement with its safety-in-farming protocols, use of sustainable packaging, patented GreenThumb software and self-watering in-store displays. The Company currently operates its own state-of-the-art greenhouses and processing facilities in Belvidere, New Jersey and Grand Rapids, Michigan, and has a network of contract growers, all strategically located near major markets in the U.S. Its proprietary GreenThumb 2.0 patented (US Nos.: US 11,158,006 B1, US 11,410,249 B2 and US 11,830, 088 B2) software optimizes growing in vertical and traditional greenhouses while seeking to reduce pollution-generating food miles. Its proprietary patented (U.S. Patent No. D1,010,365) Self-watering display is designed to increase plant shelf life and provide an enhanced in-store plant display experience. Edible Garden is also a developer of ingredients and proteins, providing an accessible line of plant and whey protein powders under the Vitamin Way® and Vitamin Whey® brands. In addition, the Company offers a line of sustainable food flavoring products such as Pulp gourmet sauces and chili-based products. For more information on Edible Garden go to https://ediblegardenag.com/.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that are difficult to predict including the timing of closing the offering. The words “expect,” “intend,” “may,” “seeking,” “will,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including market and other conditions, the Company’s ability to achieve its growth objectives, and other factors set forth in the Company’s filings with the Securities and Exchange Act Commission, including the Company’s annual report on Form 10-K for the year ended December 31, 2023 and subsequent quarterly reports. Actual results might differ materially from those explicit or implicit in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. The Company undertakes no obligation to update any such forward-looking statements after the date hereof to conform to actual results or changes in expectations, except as required by law.

Investor Relations Contact:

Crescendo Communications, LLC

212-671-1020

EDBL@crescendo-ir.com

FAQ

How much did Edible Garden (EDBL) raise in its recent public offering?

Edible Garden raised approximately $5.65 million in gross proceeds through its recent public offering.

What is the exercise price of the warrants issued by Edible Garden (EDBL)?

The warrants issued by Edible Garden have an exercise price of $0.36 per share.

How does Edible Garden (EDBL) plan to use the proceeds from its public offering?

Edible Garden plans to use the net proceeds to support growth initiatives, general corporate purposes, and repay approximately $3.2 million in short-term debt.

When do the Class A and Class B warrants issued by Edible Garden (EDBL) expire?

The Class A warrants expire on the fifth anniversary of the original issuance date, while the Class B warrants expire on the eighteen-month anniversary of the original issuance date.