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Good morning, welcome to the Edible Garden Incorporated 2026 first quarter business update conference call. At this time, all participants are in a listen-only mode, and the floor will be open for questions following the presentation. If anyone should require operator assistance during the conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the call over to your host, Ted Ayvas, Investor Relations at Crescendo Communications. Ted, the floor is yours.

Thanks, Jenny. Good morning, and thank you for joining Edible Garden's 2026 first quarter earnings conference call and business update. On the call with us today are Jim Kras, Chief Executive Officer of Edible Garden, and Kostas Dafoulas, Interim Chief Financial Officer of Edible Garden. Earlier today, the company announced its operating results for the three months ended March 31st, 2026. The press release is posted on the company's website, ediblegardenag.com. In addition, the company has filed its quarterly report on Form 10-Q with the U.S. Securities and Exchange Commission, which can also be accessed on the company's website as well as the SEC's website at sec.gov. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020.

Before Mr. Kras reviews the company's operating results for the quarter ended March 31st, 2026 and provides a business update, we would like to remind everyone that this conference call may contain forward-looking statements. All statements other than statements of historical facts contained in the conference call, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations are forward-looking statements. The words aim, anticipate, believe, could, expect, may, plan, project, strategy, will, and the negative of such terms. In other words, in terms of similar expressions, are intended to identify forward-looking statements. These forward-looking statements are based largely on the company's current expectations and projections about future events and trends that it believes may affect its financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs.

These forward-looking statements are subject to several risks, uncertainties and assumptions as described in the company's filings with the SEC, including the company's annual report on Form 10-K for the year ended December 31st, 2025. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in the conference call may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statement. You should not rely upon forward-looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements. In addition, neither the company nor any person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements except as required by law.

All forward-looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements as well as others made on this conference call. You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties. With that, I would now like to turn the call over to Jim Kras, Chief Executive Officer of Edible Garden. Jim.

Thanks, Ted. Good morning, everyone. The first quarter of 2026 reflected continued progress across the business as we began seeing stronger traction for many of the investments and strategic initiatives we put in place over the past year. Revenue increased approximately 22.9% year-over-year to approximately $3.3 million, supported by continued retail expansion and growth across multiple categories. One of the strongest contributors during the quarter was our cut herb business, where sales increased approximately 46% year-over-year, driven by continued growth within existing accounts as well as new account contributions from Kroger and Weis Markets. That momentum also extended beyond our core produce categories. Vitamin and supplement sales increased approximately 27% year-over-year, while condiment sales increased approximately 51%.

We also continued seeing strong growth internationally, with sales increasing approximately 50% year-over-year, reflecting continued expansion of our distribution footprint and our growing demand for clean label, better for you products across multiple markets and categories. As a result, we continued expanding distribution with both existing and new retail partners during the quarter, including Target, Safeway, The Fresh Market, Hannaford, Busch's Fresh Food Market, and Woodman's Market. At the same time, we broadened distribution across our branded consumer product portfolio, including Pickle Party, Pulp, Kick. Sports Nutrition, Vitamin Whey, and JEALOUSY GLP-1 support products. We believe this momentum reflects the broader platform we have been building over the past years, leveraging the controlled environment, foundation, vertically integrated infrastructure, retail relationships, operational capabilities, and product development expertise established through our core business. We continue expanding into adjacent higher margin and shelf-stable categories.

As we continue evolving beyond our traditional greenhouse and fresh herb business, one of the areas we are most focused on is the ready to drink or the RTD category. We believe RTDs represent a compelling long-term opportunity with the global market projected to grow from approximately $842.5 billion in 2025 to roughly $1.26 trillion in 2033 according to Phoenix Research. Through ongoing discussions with both existing and prospective retail partners, we continue seeing increasing demand for scalable domestic production solutions that can deliver clean label, shelf-stable, functional nutrition products with consistency, transparency, and operational reliability. We believe this reflects a meaningful unmet need as retailers and brands continue searching for reliable U.S.-based partners across functional beverage and wellness-focused nutrition categories.

To support that opportunity, we continue advancing our Iowa Midwest RTD initiative during the quarter, which including ongoing work related to the integration of Tetra Pak processing and packaging solutions. Tetra Pak is a globally recognized leader in food processing and aseptic packaging solutions, and we believe this relationship significantly strengthens the operational foundation of our RTD platform. Our retail footprint now exceeds 6,000 locations across the United States, Caribbean, and South America. During Q1, we added new retail partners including Target, Safeway, Busch's Fresh Food Market, and The Fresh Market. This expanding distribution network is not only driving current revenue growth, but also represents the foundation for our future RTD product placement. These are relationships that are already in place that we will nurture and look to leverage.

More broadly, our foundation is in controlled environment agriculture has allowed us to build deep expertise in traceability, sustainability, operational discipline, supply chain management, and retail execution. We believe those capabilities naturally support a broader Farm-to-Formula strategy and Zero-Waste inspired initiative while supporting our continued expansion into shelf stable and functional nutrition categories. While we're in the early stages of this evolution, we believe the foundation is firmly in place through expanding retail network, growing branded product portfolio, and continued advancement of our RTD manufacturing initiative. At the same time, we remain focused on improving operational execution, scaling higher margin categories, strengthening margins over time, and positioning the company for long-term scalable growth and value creation. With that, I'll turn the call over to Kostas to review the financials. Kostas?

Thanks, Jim. Good morning, everyone. Revenue for the three months ended March 31st, 2026 increased approximately 22.9% year-over-year to approximately $3.3 million, compared to approximately $2.7 million in the prior year period. The increase was primarily driven by continued growth across the company's Cut Herb portfolio, which increased approximately 45.9% year-over-year. That growth was supported by expansion within existing customer accounts, along with new account contributions from Kroger and Weis Markets. We also saw broad-based growth across Hydro Basil, wheatgrass, vitamins and supplements, and condiments. International sales increased approximately 50% year-over-year, and condiment sales grew 51%, reflecting expanding demand for our branded product portfolio across the retail footprint that now exceeds 6,000 locations.

Operating expenses were $10 million for the three months ended March 31st, 2026, compared to $5.6 million for the three months ended March 31st, 2025. The increase of $4.4 million was primarily driven by two factors. First, cost of goods sold increased as we scaled Cut Herb distribution through third-party sourcing. It dynamically view as transitional as we work to renegotiate supplier terms. Second, depreciation and amortization increased approximately $2.5 million, primarily reflecting accelerated depreciation of certain fixed assets in connection with the company's pivot to RTD clean nutrition manufacturing at our Prairie Hills facility.

The company recorded an income tax benefit of approximately $3.4 million for the three months ended March 31, primarily related to a valuation allowance release in connection with the sale of certain tax benefits under the New Jersey Economic Development Authority's Technology Business Tax Certificate Transfer Program. This benefit is a discrete non-recurring item. Net loss for the quarter was approximately $3.7 million, compared to approximately $3.3 million in the prior year period. Turning to the balance sheet and cash flow, cash increased up to approximately $2 million at March 31 from $1.1 million at year-end. First sequential increase in five quarters. That improvement was driven by positive operating cash flow of approximately $251,000, which reflected favorable working capital, including collections on receivables and inventory reductions, as well as net financing inflows.

We continue to manage a working capital deficit and are focused on improving the company's capital position as we execute on our growth strategy. Looking ahead, our priorities for 2026 are clear. Continue scaling revenue through our expanding retail network. Improve our cost structure by transitioning Cut Herb sourcing and scaling higher margin branded categories. Advance the RTD manufacturing platform with Tetra Pak and maintain disciplined capital management. We're encouraged by the top-line momentum and the cash flow improvement this quarter, and we are focused on translating that momentum into margin improvement over the balance of the year. With that, operator, please open the line for questions.

Thank you very much. We are now opening the floor for questions. If you would like to ask a question, please press star one on your phone keypad now. We ask that while you are posing your question, you please pick up your handset if you are listening on a speakerphone to provide optimum sound quality. You may press star two if you would like to remove your question from the queue. Please wait a moment whilst we poll for questions. Thank you. Our first question is coming from Nick Sherwood of the Maxim Group. Nick, your line is live.

Hi, Jim. Good morning. Thank you for taking my questions. My first question is, you know, across the 6,000 retail locations your products are found in, how many of those stores are carrying the cut herb products? How many of them are carrying vitamin supplements? You know, how should we conceptualize, you know, what's being held in across those stores?

Good morning, Nick. It's, you know, it's a combination and a mix, obviously. We're seeing growth come out of cut herbs. That's the preferred form that consumers like based on convenience. That continues to accelerate. You know, we have Target is gonna be coming online in the next week or so. That'll be significant for us as a business at the blend with the largest percentage being cut herbs, with, you know, with some potted herbs as well.

As we start to evolve as a business and get into higher, more shelf-stable, you know, opportunities and products, you'll see that mix start to even out, where I think you're gonna see, especially with the ready-to-drinks down the road, that becoming a larger part of our business and, you know, and that's at a much higher velocity as well as margin, the RTD business.

Near term, let's say the next 6-12 months as we bring on the RTDs, it's gonna be, I think, driven primarily by the vitamin supplements, which currently right now I would say is, you know, 20% of our business, with, you know, cut herbs being probably 40-50, and then the rest is kinda everything else, potted, wheatgrass, hydroponic basil, which is also a big player for us at a nice margin. I think a lot of top-line growth coming out of cut herbs, even more coming out of vitamins and supplements, knowing that, you know, the ring for a lot of these products is much higher than the clamshell of cut herbs.

You know, the rest of it, is gonna be some of the other products that are, in the mix that have, I think, you know, better margins that will offset some of the top-line, growth that's coming out of the cut herb with, once again, the vitamins and supplements, I think, becoming a bigger and bigger part of our business.

Understood. I appreciate the detail in that answer. Kinda looking at this new ready-to-drink platform, have you been able to provide some of your retail partners with prototypes? Can you kinda talk about the reception from your retail partners? How should we think about that, yeah?

The reception's been overwhelming. It's, you know, what's great about being in the food business is people have to eat, right? Ready-to-drinks is in the segment which is just incredibly compelling with the growth in, you know, in protein consumption. You know, you can't turn the television on and not see it, you know, come up, whether in, you know, advertisements or people speaking about just the growing need, whether you're looking to, you know, you know, be an active individual and put on muscle mass or to recover or just live a healthier lifestyle, or if you're older and you're looking to keep, you know, weight on or if you may unfortunately be, you know, sick. The protein needs just continue to grow across the full spectrum of consumers.

For us, you know, the retailers, many of which that we are in, you know, we've already gotten significant commitments with the factory that's going up. I would think, you know, we're gonna be at a point where it's gonna become more and more of a negotiation to figure out who we're gonna start to bring in post-launch. We are working with a co-manufacturer to start driving the business and servicing the overwhelming demand. I think we're probably gonna be close to capacity with them probably in the next few weeks. It's really been incredibly exciting. You know, we are focused on the core business. The greenhouse has got us here.

The RTD business, it's just a monster with, you know, with the product lines that we have in there, both, you know, both a performance, high protein drink, and then we'll have an adult nutrition drink that's in there that's, you know, launching in, once again, in a tail end of 2027, early 2028 in our own factory. We'll be launching prior, or servicing business prior, you know, out of a co-manufacturer. Once again, just overwhelming demand, and, you know, we're gonna be seeing this paradigm shift for us as a business, you know, directed more and more towards that.

Once again, I think we're so uniquely qualified because, you know, there's really no one out there that is coming out of the greenhouse business that's doing the innovative things that we're doing and isn't as qualified as we are to, you know, to really stand for something, whether it's clean label, which is what's driving the thrust of this, or just having a, you know, an eye on sustainability and working with someone like Tetra Pak, who's been a phenomenal resource for us as we, you know, we build out this platform. I mean, like I said, we've got probably more orders than we can handle.

We'll be running our prototype to get more specific in mid-July with product beginning to manufacture at a co-man in September, while we build out the factory in Iowa. We're already in the final stages of finalizing the product. We teamed up with McCormick in order to develop the products, like I said, one is a sports nutrition dairy-based premix that then gets turned into a RTD in a Tetra Pak, and then the other one is an adult product not unlike Boost Ensure and those types. It's just fantastic.

A joke I said to people, I've always wanted to be in the hotcakes business, you know, 'cause we're in the hotcakes business 'cause everything's selling like hotcakes. It's been pretty cool, in all honesty. Exciting, I think, for the team, the company, investors. I mean, just fantastic.

Yeah. Sounds like there's a lot of momentum there and something to look forward to. Yeah. My last question is, you know, how do you keep or how do you make customers sort of loyal to your brand across product categories so that, you know, someone is recognizing that they may buy or maybe the condiments that they buy and ensuring that, you know, they're buying, you know, across your product categories as opposed to just kind of buying one of them?

Sure. You know, look, it comes down to an exercise in marketing and distribution, right? And customer service, you know, both for our retailers and our, you know, end user. It's comes down to quality and consistency. I mean, you know, what, you know, the art of this is, you know, is communicating and hopefully, training consumers, for lack of a better word, to know that when they want the best, and that they only deserve the best, they buy Edible Garden. Putting forth the marketing, you know, initiatives that, you know, communicate that is something that, you know, I think we do a fairly good job of, whether it's through, you know, advertising and marketing and in store promotions and reinforcement or social media.

Once again, I think, you know, if you've got the quality and the consistency and the availability, and you're shipping at 98% like we have, I mean, it drives not only, I think, loyalty because people know when they go in, your product's gonna be in there and look for Edible Garden, 'cause you know what you're gonna get. You're gonna get safe, high quality, best quality, produce that's super fresh. I think you just continue to give a consumer that experience, and it tastes great, and it makes your everything that you cook taste that much better. We believe if we deliver on that and we do our job, I think people will continue to be loyal and want our product.

We see that, through, you know, the fact that we have a very stable revenue line, albeit, you know, small in comparison to many of the other companies out there. With the RTDs and our reputation with the, not only the consumers, but the retailers. Once again, talk about, you know, this notion of Farm-to-Formula and what that means. It's harnessing the greenhouses and all the great R&D stuff that we do, and we don't talk enough about it at the company. You know, the universities we're involved in, the partnerships with the EPA, the USDA, to, you know, things that just help, you know, drive quality, consistency, and elevate us beyond anybody else in the category.

There's not too many people left because I don't think people made the investment, and I think the shareholders was backing us to allow us to get to where we are to do the great things that we're doing. I think all of that goes into building brand loyalty because people know that, hey, this is, you know, if I want the best in herbs, I want the best in condiments, I want great tasting, better for you products, and somebody who's got an eye on the environment as well, you know, you should buy Edible Garden. I think we've seen that. Once again, I think what really reflects it is our consistent relationships and the opportunities that it drives for something like the RTDs, where, you know, major retailers came to us and said, "Can you do this?

We've got a problem. We've got, you know, I mean, the shortfall in the marketplace on this item is tremendous. To be able to do it better, cleaner, you know, and, you know, and do it where, like I said, you know, where people are calling us and saying, "Hey, you know, we've heard about what you guys are doing. Can you do it for us?" It's just, I mean, you work a lifetime to get to this position, and the company's put in 10 years and fought hard to be where we are, and now it's starting to pay off. It's a, it's an exciting time, and I couldn't be any more bullish on the business, you know, and we're just in a great spot.

I gotta thank, frankly, the retailers, you know, for their support and, you know, because they're excited. They've got a problem. Well, you know, we're here. We've got a solution, and they've worked with us to craft, you know, a solution that works for all parties, and, you know, like I said, it's a huge opportunity that's only accelerating and growing.

Yeah. Thank you for answering all my questions and, you know, looks like there's a lot of momentum there. I'll return to the queue.

All right. Thanks, Nick. Take care.

Thank you very much. Just a reminder there, if you would like to ask a question, you can still join the queue by pressing star one on your phone keypad now. Our next question is coming from [Ellen Litvak] of Forest Capital. Ellen, your line is live.

Hey, good morning, guys. Thank you so much for taking my questions. You discussed the growing RTD opportunity and increasing retailer interest in domestic clean label functional nutrition products. As you look ahead, how are you balancing investment between the company's core produce business and the, really, like, the larger RTD opportunity? What do you think positions Edible Garden to compete effectively in that market?

Well, welcome. Nice to meet you, and thanks for joining the call. We're looking to, you know, look, the future is gonna be, you know, the shelf-stable, better for you products. We are going to be, kinda allocating our resources, you know, along where we see the growth is. The core business, I think, look, I know that we've made a significant investment in the operations, you know, adding greenhouses, you know, tying them to contracts. That's the thing. That's the other thing that's, you know, very unique about, you know, the relationships we have. You know, the distribution platform of 6,000 stores holds steady and is growing, you know, every day that, you know, we're out there selling and working with our retail partners.

I think you're gonna see a shift towards the investment in the RTD and nutrition platform because that's the future, and it's the larger opportunity, with the shelf stability, the overwhelming demand. You know, I think, you know, only if you're lucky once in your career, I've been fortunate to have it a few times. You know, harking back to my days in nutritional supplements with Nature's Bounty, where, you know, you catch a craze. Right now, we've got a protein craze. People want convenience. They want liquids. They don't necessarily wanna mix powders. They wanna have their nutrition, and they wanna have it on the go. They wanna have it when they need it.

What's great is everybody from kids all the way to seniors, you know, have these nutritional needs and these protein needs. We're just starting there. I mean, there's so many other segments, you know, hydration, whatnot, that we could play in. We're gonna be investing, you know, a good chunk of our resources, our money, in that platform, really backed by the greenhouses and the wherewithal and the reputation that we have for, you know, for being, you know, a supplier that supplies very difficult, highly perishable products at a 98% ship rate, which is just unheard of. I mean, all of that has driven the retailers.

This RTD opportunity came from a world's largest retailer said, "Hey, you know, can you help us out?" It wasn't necessarily something that was on our radar. When we started working with them and with their resources, we were able to partner with a Tetra Pak, partner with a McCormick's. When you think about Edible Garden our size and the partners that we're working with, it's a real credit to everybody at Edible Garden who sat there and made sure the truck left on time in full because that means everything to the retailers. They want availability. If you don't have a product on the shelf, you're missing a sale.

I think that's, you know, just boiling it down, in simple terms, that's kind of what I think has made us, you know, effective. Like I said, we're gonna be putting our more and more resources towards that. I think I answered your second question, which is, you know, what positioned us for this opportunity, and that was, you know, really just, you know, our commitment. You know, I tell people at Edible Garden, we're a customer service company first that happens to make things or grow things. I think just getting in there and understanding the importance of the retailers and addressing their needs is something that I think we've just done really well as a team. It's paying off. You know. It's paying off.

I mean, and it's frustrating 'cause it's been years of investment and, you know, and managing costs and managing suppliers and, you know, and those challenges aren't gonna stop. Now we have such a huge opportunity. You know, when everybody's got something in it, you know, to gain, you know, people come to the table with resources 'cause we're all gonna win. I hope I answered your question. Was that enough?

Yeah, no. Yeah, no, you definitely did. Obviously it looks like you run a very tight ship. I mean, I have another question.

Sure, go ahead.

As you continue to evolve toward, you know, higher margin and shelf-stable categories, like what specific initiatives are, you know, are you underway with the core produce business to improve the operational efficiencies and strengthen the margins over time?

Well, right now, a lot of it is, you know, not only a redeployment of existing resources that we have of people that, let's say, like whether it's in our regulatory department or our food safety, things like that can be deployed across the whole platform, including the RTDs. It's not like you're hiring another person. You know, we'll be looking to probably shift the business around, blend the business with our suppliers, you know, negotiate harder with our suppliers based on the growing demand, which I think puts us in a more advantageous position than we've been in the past to get some price considerations on what we're bringing in the house.

I also think you're gonna see a lot of, I think. I don't even think I know we're gonna be looking to focus on the accounts where we make money. I think we'll start to remove some of the businesses that are maybe too far from the greenhouse with the rising, you know, diesel costs and if we're delivering it that way. We've already begun and it's and have impacted in this quarter, quite a bit of labor re-reduction just based on the investments that we made in Q1 or the investments we even made in Q4 to bring in more automation and more lines.

You know, especially in preparation on what we anticipate to be, you know, a growing business, you know, when you think about it. You know, the overall business is up, you know, 22% with growth coming out of that core produce business. I don't see that stopping and, you know, and I think we've got a bunch of opportunities lined up. It's just gonna be a, you know, it's gonna be a margin play for us, a reduction of some costs in operations, negotiating better with our suppliers and, you know, and focusing on where we know that we can drive margin and profit and, you know, 'cause we've got a lot of the market share now, so that, you know, that's kind of happened and that investment's paid off.

I think it's really a refinement and, you know, focus. Whether it's traditionally a low margin business, especially cut herbs, and so that drags us down a little bit. Once we start to shift to these higher margin, you know, products and we pick up velocity, you know, that will start to shift.

I think we're already starting to see that while we reduce costs because, you know, we've been, you know I appreciate you saying I run a tight ship, but there's more to do, we gotta continue to refine, you know, our costs so that we can, you know, we can focus our energies, you know, where we need to, where we can drive margin as well as drive, you know, top line.

Yeah. No, no, that definitely, that makes sense and looks like you guys are on your way. You also mentioned that international sales increased approximately 50% year-over-year. Can you discuss what's driving that growth and how important international markets could become within the broader business over time?

Yes. A lot of it's driven, you know, or the majority honestly is driven by PriceSmart. You know, they are the, they are the major player in big box, so think Costco, except in the Caribbean and in South America. They are, they are continuing to grow. I know that they're opening, stores in Chile. They're already, you know, in Colombia and some of the other countries in South America, you know, as well as, you know, throughout the, you know, the Caribbean. They're NASDAQ listed as well. They're performing extremely well. You know, we've been able to continue. We've been in business with them for almost a decade, and so we've been able to benefit with, you know, to, from their growth. It's been a phenomenal relationship.

They continue to not only drive an existing product that's been there for a while, but also expand into our Kick. Sports Nutrition line. I think you'll see even more growth out of that over the next year. Like I said, your earlier question about, you know, what does that product mix look like? You're gonna see vitamin supplements, our sports nutrition lines, the clean labeled products even before we start, you know, benefiting from this tremendous upside that we see on the RTDs. You'll see our, you know, existing protein powders, plant protein powders, all clean labeled.

Those will start to come online, I would say, towards the tail end of this year as well, and you know, in significant numbers, you know, at a much, you know, and a really nice margin. Once again, as that mixes shifts, you know, the lower margin, you know, cut herb business doesn't become such a. I don't like using the word drag. It's just, it is a little bit of a drag on margin just 'cause it's a lower margin product line that right now, you know, we're getting, you know, requests to, you know, whether it's Target or, you know, or others to say, "Hey, can you take this business line? You do such a great job for our competitors.

Can you do it for us?" You're gonna start to see a lot of this higher margin vitamins and supplement type of products, sports nutrition come online this year, as well as, you know, the high velocity, better margined, you know, RTDs as well towards the tail end of the year.

Well, that's fantastic. I just got one more question. You highlighted expansion with several major retail partners during the quarter, right? As an investor, how should I think about the opportunity to continue increasing distribution within your existing retail relationships going forward?

Well, it's gonna be, I mean, we're in an advantageous position, right? When you think about the fact that we're in 6,000 stores. Once again, super stable relationships really based on performance. I mean, you know, we're servicing Walmart, we're servicing Target, we're servicing Meijer, we're servicing Wakefern ShopRite, we're servicing, you know, the Hannaford and the Ahold Delhaize family of banners, Safeway. You know, it's, I mean, these are the who's who of people who sell food to, you know, the majority of the country.

We're gonna continue to put, you know, look to go deep, you know, versus while we kind of go wide. Really it's about selling, you know, more, more products across our total portfolio to the existing customers that we have. We will add on, you know, new accounts as new accounts make sense. Once again, this whole idea of kind of, as you know, rationalizing out the relationship, the portfolio, the retailers, and making sure that, you know, we're going deep and driving the business at, you know, a higher margin and, you know, while addressing, you know, the operational inefficiencies that the business has, that we've, you know, continued to improve upon, so that, you know, we're, you know, we're more, you know, more efficient.

You know, our whole, you know, seed to store or, you know, cradle to grave or whatever you wanna say it, you know, process here is efficient and that we are benefiting from, you know, the margin that we need by servicing, you know, the retailers in a way that allows them to have, you know, the products that sell at an efficient rate for them as well as us, and that we're, you know, gaining the, you know, margin and getting the margin expansion that we need because we have the optimal mix.

I think it's a lot of it's gonna be, you know, continuing to work with the relation, you know, with the retailers that we've been working with for the last decade that we've worked so hard to prove ourselves, and that's paying off. It's selling, you know, more of what we currently have through the existing platform of retailers and distribution that we have, you know, versus, you know, going after necessarily new accounts. We've got a lot of business that we can do better at, I guess, is the best way to do it.

We're gonna focus on that by getting, you know, getting them to take in ideally, you know, the pickles, which has been, you know, gaining momentum and, or the, you know, or the fermented hot sauces. Then, like I said, the vitamin supplements, you know, is really, you know, probably gonna be you know, on its own, not on its own, segmented out and focused on separately.

But they all kind of dovetail into this better for you, and, you know, overall push that we have as a company and that aligns obviously with the, not only with what the consumers are looking for, but what the retailers are looking to do as there's been such a dramatic, an overwhelming initiative by the retailers to remove artificial colors, artificial sweeteners from products. You know, for us, timing was great. We were already doing it. Not only were we doing it with what we grew and, being USDA Organic, the first out there with a USDA certified, you know, organic product, with our Hydro Basil, which was incredibly, you know, innovative from the team.

We're, you know, we're just in a position where, you know, we've got the right product at the right time, and the retailers are pushing this as they, you know, understand the importance of getting it to better for you products 'cause they're getting that pressure from a consumer base that's demanding it and an administration that's pushing it as well in Washington. We're, we're in a good spot.

Well, thank you so much for taking my questions. I really appreciate it, and congratulations on the quarter. I'll hop back on the queue if I have any other questions. Thanks again.

All right. Thank you.

Thank you very much. Well, we appear to have reached the end of our question-and-answer session. I will now hand back over to the management team for any closing comments.

Thank you, operator. Thanks again to everyone for joining us today and for your continued interest in Edible Garden. We believe the first quarter reflected meaningful progress across the business and continued validation of the broader strategy we have been executing against over the past several years. We're seeing encouraging momentum across our retail footprint, branded product portfolio, and operational initiatives while continuing to build a foundation for future growth and opportunities in higher margin, shelf-stable nutrition categories. As we move through 2026 and beyond, our focus remains on disciplined execution. That includes continuing to expand distribution, improve operational efficiencies, strengthen margins over time, advance our RTD initiative, and further leverage the infrastructure and retail relationships we have already established across the business.

While we are still in the early stages of this evolution, we believe Edible Garden is becoming increasingly well-positioned as a diversified, clean label nutrition company with expanding capabilities across fresh, functional, and shelf-stable categories and a stronger foundation for long-term growth. We appreciate everyone's continued support and look forward to updating you on our progress in the quarters ahead. Thanks again, and have a great day.

Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.

Please note, this conference is being recorded. I will now turn the conference over to your host, Ted Ayvas, Investor Relations. The floor is yours.

Thanks, John. Good afternoon, and thank you for joining Edible Garden's 2025 fourth quarter and full year earnings conference call and business update. On the call with us today are Jim Kras, Chief Executive Officer of Edible Garden, and Kostas Dafoulas, Interim Chief Financial Officer of Edible Garden. Earlier today, the company announced its operating results for the three months and year ended December 31st, 2025. The press release is posted on the company's website, www.ediblegardenag.com. In addition, the company has filed its annual report on Form 10-K with the U.S. Securities and Exchange Commission, which can also be accessed on the company's website as well as the SEC's website at www.sec.gov. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020.

Before Mr. Kras reviews the company's operating results for the quarter and year ended December 31st, 2025 and provides a business update. We would like to remind everyone that this conference call may contain forward-looking statements. All statements other than statements of historical facts contained in the conference call, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations are forward-looking statements. The words aim, anticipate, believe, could, expect, may, plan, project, strategy, will, and the negative of such terms and other words and terms of similar expression are intended to identify forward-looking statements. These forward-looking statements are based largely on the company's current expectations and projections about future events and trends that it believes may affect its financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs.

These forward-looking statements are subject to several risks, uncertainties, and assumptions as described in the company's filings with the SEC, including the company's annual report on Form 10-K for the year ended December 31st, 2025. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in the conference call may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance, or achievements. In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements except as required by law.

All forward-looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements as well as others made on the conference call. You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties. Having said that, I would now like to turn the call over to Jim Kras, Chief Executive Officer of Edible Garden. Jim?

Thanks, Ted. Good afternoon, and thanks to everyone for joining us today. 2025 was a defining year for Edible Garden as we continued to build on our foundation and expand our long-term growth potential. Over the past several quarters, we have executed a deliberate strategy to grow beyond our core controlled environment agricultural platform into a broader innovation-driven consumer packaged goods business, focusing on higher growth, higher margin opportunities aligned with what consumers and retailers are actively seeking. During the fourth quarter, we continued to build momentum across our core business, securing new and expanded placements with key retail partners, including Kroger, Weis Markets, Safeway, The Fresh Market, and Busch's, increasing our distribution to nearly 6,000 store locations. This reflects growing demand for our products, our ability to gain market share, and the strength of our retail relationships.

We saw a strong performance across both our core produce and CPG categories, including double-digit growth in cut herbs driven by expansion in existing accounts and the onboarding of Kroger, as well as continued strength in our vitamin and supplement portfolio, where demand remains robust both domestically and internationally. We also saw significant growth in our condiment platform, supported by new customer wins such as Wakefern and Safeway. Importantly, these efforts, along with targeted investments in customer onboarding, resulted in incremental distribution of more than 700 additional retail locations, further expanding our reach across key markets. At the same time, we're expanding our portfolio of Better-for-You brands, including KICK Sports Nutrition, Jealousy GLP-1, Vitamin Way, Pickle Party, and Pulp, and broadening distribution across domestic, e-commerce, and international markets, including placements with Amazon, PriceSmart, Target.com, and Walmart.com.

This expanded retail footprint and brand portfolio positions us to support our next phase of growth into higher margin, shelf-stable, and ready to drink categories. This is not a shift away from what we've built. It's a deliberate evolution of our business, supported by our national retail distribution and infrastructure, much of which is already in place and positioned to drive scale across higher value categories. Key next step in our strategy is expanding into the ready-to-drink or RTD category, a fast-growing market where demand for clean label, shelf-stable nutrition continues to outpace supply. We are leveraging our Farm to Formula approach, our sustainable manufacturing infrastructure, and our established relationships with leading retailers to enter this category from a position of strength. Importantly, we are not starting from scratch.

Our products are already carried across approximately 6,000 store locations, giving us the ability to deepen existing relationships while expanding into a category that aligns closely with our brand portfolio. To support this expansion, we recently announced the development of a state-of-the-art RTD manufacturing initiative at our Midwest facility as part of our Zero-Waste Inspired platform. We have selected Tetra Pak, a global leader in food processing and packaging solutions to plan, install, and integrate proprietary processing capabilities, which we expect will enable us to meet growing retailer demand at scale. When you look at the broader market, the opportunity is significant. The global RTD category is estimated at approximately $842.5 billion in 2025 and is projected to reach roughly $1.26 trillion by 2033.

We believe this represents a durable opportunity and builds naturally on our platform, combining controlled environment agriculture, scalable aseptic capabilities, and our portfolio of differentiated brands across sports nutrition, performance nutrition, adult nutrition, kids nutrition, GLP-1 supportive and functional categories. Looking ahead, we are focused on scaling our presence in higher margin RTD shelf-stable categories while continuing to build a more diversified consumer packaged goods business beyond fresh produce. As we execute on the strategy, Edible Garden is evolving into a more vertically integrated, innovation-driven company with the ability to deliver more predictable and scalable results. We believe this positions us as a differentiated player in the evolving food and nutrition landscape with a clear path to sustainable long-term growth. With that, I'll turn the call over to Kostas to review the financials.

Thanks, Jim, and good afternoon, everyone. Starting with the fourth quarter results, revenue for the three months ended December 31st, 2025 was approximately $4.1 million compared to $3.9 million in the prior year period, reflecting a strong quarter across the business. We launched our USDA organic herb programs with Kroger in October and recorded our first international CPG shipment of KICK Sports Nutrition to PriceSmart, marking our entry into the markets beyond domestic retail. These wins reflect the growing demand we are seeing for our products and the continued strength of our retail relationships heading into 2026. Cost of goods sold in Q4 was approximately $5.3 million compared to $3.8 million in the year prior. The increase reflects the cost profile of the company that was actively onboarding new retail customers during a seasonally compressed period.

We made a deliberate investment in these new accounts that secures 2026 shelf space and builds the fulfillment track record that major retailers require. We expect the cost structure to normalize as those programs mature and volume increases. Gross profit was approximately a $1.2 million loss compared to flat in 2024. Q4 was a quarter where we made a deliberate decision to absorb elevated costs to secure a 2026 shelf space and deepen relationships with retailers like Kroger, Wakefern, and Safeway. Bringing customers of that caliber requires front-loaded investment, and we see this as necessary to support future growth and operational scalability. Selling, general, and administrative expenses were approximately $4.6 million compared to $2.6 million in the prior year.

Primary drivers were depreciation and rent tied to the NaturalShrimp asset acquisition, higher legal and professional fees from that acquisition and our capital markets activities, along with higher compensation expenses in 2025. While the absolute number is elevated, a meaningful portion reflects non-recurring or deal related costs rather than ongoing run rate expense. Turning to the full year, revenue was approximately $12.8 million versus $13.9 million in 2024. The headline decline is largely a function of our strategic exit from floral and lettuce, which together contributed approximately $1 million of 2024 revenue, but at low margins. Excluding those exits, core revenue was essentially flat year-over-year, and Q4 was a genuine growth quarter, up approximately 5%. That trajectory is what we consider most indicative of where the business is headed.

Full year cost of goods sold was approximately $13 million versus $11.6 million in 2024. The increase was concentrated in the second half and driven by the same Q4 onboarding dynamics I described earlier. Gross profit for the full year was approximately a loss of $0.2 million compared to a gain of $2.3 million in 2024. The first half ran at margins more consistent with our historical range. However, the full year result reflects Q4 specifically, and we do not view it as a representative of our own ongoing cost structure. Gross margin recovery is a top priority for 2026 as new program scale, third-party procurement costs decline, and fixed costs are absorbed over a larger revenue base.

Full year SG&A was approximately $15.3 million versus $11.6 million in 2024, with the increase driven primarily by the NaturalShrimp acquisition, along with other capital markets activity. The balance reflects continued investment in the team and infrastructure supporting our long-term strategy. On the balance sheet, we ended the year in a stronger position. Stockholders' equity improved through the preferred stock issuance associated with the NaturalShrimp acquisition, and total debt declined approximately $0.6 million year-over-year as we continue to reduce our outstanding notes. We remain focused on managing costs while investing in the infrastructure and capabilities needed to support our transition to a higher margin, more scalable business model. With that, I will turn the call over to the operator for any questions.

Thank you. At this time, we will be conducting a question-and-answer session. If you like to ask a question please press star one, on your telephone keypad. Our conformation tone will indicate your line is in the question queue. You may press star two if you like to remove your question from the queue. For participants using speaker equipment maybe necessary to pick up your headset before pressing star keys. One moment please while we pause for questions. Our first question comes from Jeremy Pearlman with Maxim Group. Please proceed.

Thank you for taking my question. Good afternoon. Firstly, you know, as you transition your business, you expand it from the fresh to include, you know, more shelf-stable CPG and now the RTD. How should we view the margins from the fresh to the CPG products? What do you think, you know, the revenue expectation breakdown for CPG versus fresh through 2026?

Kostas, I can do this with you. How do you wanna?

Do you wanna talk high level and I can get into some detail?

Yeah, that'd be great. First of all, thanks for the question. You know, our expectation obviously is there's gonna be much more of a you know robust margin as it relates to the RTD business and the consumer packaged, you know, items. The fact that they are shelf stable, we don't have to worry about the, some of the shrink issues that we have with fresh. The fresh business has been great to us. It's really opened doors. It's built our relationships with major retailers, you know, such as Walmart, Meijer, whatnot, where, you know, we have great performance as it relates to our in-stocks and our delivery, you know, you know, our delivery capabilities.

When, you know, when you have a 98% in-stock rate and acceptance rate with major retailers, they tend to wanna do more business. This business is really all about availability. On the margin end, what'll be nice here is that there's much more stable business because you control much more in manufacturing with the shelf stable products than you may with fresh goods. Fresh goods, like I said, have been our staple, and I think it's really showed how we can execute and our operational excellence to be able to deliver on time in full in a really difficult category. That's really paying off for us, that investment. You'll see.

In this business, you're gonna see the margins, you know, they're gonna be much more stable. They'll be, like I said, more robust as a function of that. Then, you know, the revenue side of it, you know, just based on the size of the market, which I outlined in the call earlier in our script, is more than meaningful. This is a big category with a lot of pent-up demand, with a lot of capacity issues out there. We're stepping in really at the request of retailers who trust us and want these products, and they want it from somebody who they know who can deliver in time, on full, on spec. For us, it's a great evolution, leveraging our Farm to Formula approach, and our, you know, and our wherewithal as a strong supplier to major accounts. Kostas, do you wanna add to that at all?

Yeah, sure. Thanks, Jim. Yeah, Jeremy, so just to kinda add to what Jim said, you know, we can think about the portfolio kind of in three pieces, right? The core CEA business, which I think we'll see kind of return to steady growth in the high-single digits sorta range, maybe even higher, depending on customer wins and customer growth. In the CEA space, you know, margins, we can kinda look to return to, like, normalized margins that we saw earlier this year and last year. In addition to that, the nutraceutical business actually showed really strong growth, you know, in kind of double-digit, 20%-ish range year-over-year. That, you know, I think is gonna be a larger component of our revenue growth story going into 2026.

The trade-off there is, you know, a good portion of that product is co-manufactured. So while it gives us a lot of stability and visibility into our cost structure, the margins are not as rich as, you know, if we were to do it ourselves. So I think, you know, blended margin, kind of low double digits to mid-teens is, you know, a reasonable expectation going forward. The biggest upside we have in the whole portfolio is around this RTD business where we're looking at, you know, pretty significant revenue opportunity with margins kind of in the 20%-30% range. We're working through that right now as we start scoping this project out and understand the input costs a little bit better, but that's sort of first blush expectations there.

Okay, great. Yeah, thanks for the information. Maybe while we're talking about RTD, you know, it is a broad category. Where specifically do you expect to, you know, to put out your products within there? You know, I don't know, energy drinks, more like the healthy, you know, green drinks. Is that gonna be produced at the Midwest facility that you talked about? I have another question to follow up about that facility afterwards.

Okay. It's gonna be primarily in the protein segment. You know, obviously we'll have a few different formulations, but we've been requested by a major retailer to help develop this for their private label as a start. It just opened up the floodgates. You know, we're at a point now where, you know, our goal is. I don't think it's lofty but is to sell out the plant in the next 90 days or so. You know, which when you think about, we're looking at capacity into the hundreds of millions of units within a couple years. This is transformative for Edible Garden. It's a huge opportunity.

The fact that we've got the type of, you know, association that we have with Tetra Pak, that's driven by the major retailers saying, "Hey, you know, we trust these guys. These guys do a great job, not only in fresh but also in the nutraceuticals." I've been doing nutraceuticals. You know, I grew up in the business. I've been doing it for almost 30 years. You know, kind of all points have led to this. For us, we're gonna be playing in the sports nutrition, performance nutrition, arena. I don't wanna use anybody out there as an example. I just know we're gonna do it cleaner, we're gonna do it better, and we're gonna do it at massive scale.

We'll be not only driving our own KICK Sports Nutrition, high protein lower calorie, lower carb type of product, that's gonna be something that we'll be providing. We'll be doing clean labeled, of course. We have a GLP-1 formula, supportive formula under our Jealousy brand, so we'll have our own higher margin brands. We'll also be taking on co-man opportunities with brands that are out there that don't have their own manufacturing. Then obviously, you know, I would say, you know, half of the facility will be private label ranging from, you know, all the major players, you know, from, you know, you name them, all the, all the chains and the existing. What's great about Edible Garden is the existing relationships we have. I mean, we, you know, we service Meijer.

We service Walmart, Wakefern, you know, Ahold Delhaize, Kroger, Safeway. That investment that you saw in Q4 serves a couple purposes, one of which obviously is it's great to get their businesses. Our competitors had issues, and they turned to us and picked up the phone, and we made the investment to service their business and capture that opportunity. We have a nice business with Weis Markets right now. We have a nice business with Kroger. Those conversations, when they're happy with you, they turn to RTDs for them as well. It's not whether it's you know, looking at what you're currently making for yourself or, you know, for your brand or doing it for them.

When you look at our roster of accounts, you know, Walmart and Target.com and Meijer and Wakefern and like I said, Ahold Delhaize, and you know, the list goes on and on, CVS and you know, Walgreens. I mean, these are. They're coming to us for innovation because they know that we'll get the job done. For us, we're gonna start. The answer, sorry it was so long-winded, but I'm excited about it. It's really in the sports nutrition. Then we'll move to the adult, you know, type of products. You know, many of these you're familiar with out in the marketplace, whether it's, you know, Ensure or Boost or Premier Protein product.

You know, we'll be doing similar type of products in Tetra Pak, which, you know, is the world leader in this packaging. Sustainable as well, which really goes to our core as a company and what we stand for with, you know, sustainable, using sustainable materials, you know, using less resources. It's why we're Giga-Guru with Walmart. You know, that's the plan. It's exciting. It's, you know, I got an excited team here. I hope that answers your question.

Yeah, no, that's great. It really sounds like a really great opportunity for the company. Maybe just a final question just around the Midwest facility. You know, what can we expect some of the CapEx requirements for that and the build-out timeline and when you expect to be. You know, what's the total scale of that, what you're hoping for and when you can reach that? Thanks.

Well, yeah, I mean, it's. I don't want to give any specific numbers, but, you know, and there's, you know, and I. Some of it's also we just don't, you know. This is such a huge opportunity, and we're not the only ones, you know, would want it, right? Look, this is gonna be significant. We're talking about a big facility with considerable velocity coming out of it. We're working closely with the local and state authorities to be able to support this with incentives. We've already gotten the nod on a few things, which is great.

Obviously, you know, we're gonna need to buy machines and retrofit a building. You're talking, you know, some real CapEx. We've been there before, and we've built a significant greenhouse in New Jersey, and we did a beautiful retrofit in Grand Rapids for Meijer. We're prepared as a company to take on the challenge, and our plan is to really hopefully be out in the marketplace, you know, probably towards the tail end of 2027.

Okay, great. Thank you so much for all that information and thank you. Take care.

Great question. Jeremy. Nice to meet you.

Have a nice night.

Once again, if you have a question or a comment, please press star one on your touchtone phone. The next question comes from Nick Pincus with Forest Capital. Please proceed.

Hey, thanks for taking the call, and congrats on the progress. A lot of my questions have already been asked, but you highlighted the strong fourth quarter momentum, including new retail placements and expansion to nearly 6,000 locations. My question is how sustainable is this level of growth, and should we expect similar distribution gains and category performance going forward?

Well, yes and yes. You know, the expansion indoors, I mean, that has been a lot of us getting kinda organized on the greenhouse business, getting focused, getting rid of some of the product lines that just didn't make sense, like floral and lettuce at the time because of, you know, the lack of margin. We really shored things up this past year. It's been challenging, you know, and tough because, you know, we are in a growth sector. People are eating better. People are buying more fresh goods.

People are cooking, you know, continue to cook more and more at home, whether it's, you know, pressures with costs of eating out or just people are being more creative because that's been a trend line. You know, we've benefited from that. The herbs are. They, you know, they make any average dish that much better, right, using fresh herbs. For us, you know, it's really just about, you know, making sure that, you know, we continue to take care of our current customers. They're the ones who got us here. They continue to give us opportunity, not only within this category, which means more penetration, and ideally more velocity, you know, sales velocity at current doors.

You know, there's a great story around our organic growth, by the way, Nick. That's where, you know, we've seen, you know, good same store sales over the last year. For us, you know, that's great, kind of exit velocity out of the year. We're, you know, gonna continue to, you know, focus on our core 'cause that's what's gotten us here. Now when you look at something like RTD, which is just a huge, massive business with just so much untapped opportunity, you know, and there's just a shortfall of capacity.

It's very rare in your career that they intersect and you've got people asking you, right to take on their business because they trust you. It's, you know, it makes me sleep a little better at night knowing that the money that we spent over the last couple years has really gone to unlock, you know, these opportunities. You know, look, you're gonna see more store counts I think across the whole business, I know you're gonna see it across the whole business, whether it's the herbs, whether it's the pickles, which by the way is a sleeper. Then the RTDs, I think you're gonna see doors, you're gonna see new accounts, you're gonna see all kinds of, you know, it's just incredibly.

You know, those are sold everywhere in all kinds of classes of trade, including classes of trade that we're not even in, like convenience store currently, right? The beverage business, it's a great business. People love the convenience. These are great items. Protein's hot. Has been hot for a while. No one sees that slowing down. You know, we're gonna have a state-of-the-art facility, you know, cranking this stuff out, you know, for the betterment of our, you know, of our great, you know, supermarket, you know, partners. Yes.

Very well.

It's gonna continue, Nick.

Yes. Keep up the good work. Thank you.

I appreciate it. Thanks, Nick.

Okay. We have no further questions in the queue. I'd like to turn the floor back over to management for any closing remarks.

Sure. Thanks again to everyone for joining us today. We believe 2025 was a year of meaningful progress for Edible Garden as we continued to build beyond our CEA foundation and expanded into broader, higher margin consumer packaged goods platform. We're seeing that progress reflected in our momentum across our business, growing demand for our products, and our ability to continue to gain market share with our leading retail partners. At the same time, we believe our expansion into the ready-to-drink category represents a significant opportunity for Edible Garden, one that builds on our existing infrastructure, retail relationships, and our product development capabilities, and positions us to scale into a large and growing market where demand continues to outpace supply.

As we look ahead, we remain focused on executing against that opportunity while continuing to expand higher margin categories and leverage our retail network to support long-term growth. We believe this continued evolution of our business is positioning us to deliver greater scale, improved margins, and long-term value for our shareholders, and we're confident in the path that we're on as we continue to execute and deliver on the opportunity ahead. We're encouraged by the progress we're making and look forward to updating you on our continued execution and success in the months ahead. Thank you, everybody. Appreciate it.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.