Edible Garden takes $1.75M secured note financing

Edible Garden AG Incorporated entered into a new financing arrangement with Avondale Capital, LLC on August 29, 2025.

Rhea-AI Filing Summary

Edible Garden AG Incorporated entered into a new financing arrangement with Avondale Capital, LLC on August 29, 2025. The company issued a secured promissory note with an original principal amount of $1,750,000, receiving net proceeds of $1,395,000 after a $350,000 original issue discount and transaction expenses. Part of these funds will be used to pay the remaining amount owed under a merchant cash advance agreement with Arin Funding LLC.

The company must make weekly payments of $43,750 until the note is repaid and can prepay at any time without penalty. If it repays the note in full by January 16, 2026, the outstanding balance will be reduced by $50,000. No interest is charged unless a default occurs, after which interest increases to the lesser of 22% per year or the legal maximum.

The note is secured by the company’s cash, cash equivalents, accounts receivable and other receivables. The agreement includes trigger events tied to SEC reporting, Nasdaq listing status, additional debt or liens, and payment failures. Trigger events can increase the outstanding balance by up to 20% and may lead to default, after which Avondale can restrict the company from issuing new equity unless the note is repaid. A most-favored-nation clause allows Avondale to claim any more favorable terms granted in future debt deals.

Positive

• None.

Negative

• High effective cost and punitive default terms: A $1,750,000 secured note carries a $350,000 original issue discount, potential balance step-ups of up to 20% after trigger events, and default interest up to 22% per annum, which could significantly raise financing costs if the company encounters stress.
• Restrictive covenants and collateral claims: The note is secured by cash, cash equivalents and receivables, and after an event of default Avondale can seek to block new equity issuance unless the note is paid in full, potentially constraining future funding options and liquidity management.

Insights

Credit and capital structure analyst

High-cost, tightly covenanted secured debt adds pressure to Edible Garden.

Edible Garden AG Incorporated has taken on a secured promissory note with an original principal of $1,750,000, yielding net cash of $1,395,000 after a sizeable $350,000 original issue discount and expenses. Weekly payments of $43,750 create a meaningful fixed cash outflow, while a $50,000 discount for repayment by January 16, 2026 incentivizes early payoff.

The instrument is effectively zero-coupon unless there is distress, but default terms are harsh. Trigger events linked to late SEC reports, loss of Nasdaq listing, new unsecured or more senior financing, or missed payments can immediately increase the outstanding balance by up to 20% and convert into an event of default. Upon default, the interest rate jumps to the lesser of 22% per annum or the legal maximum, materially raising the cost of capital.

The note is secured by cash, cash equivalents, accounts receivable and other receivables, giving Avondale strong claims on working capital assets. Covenants also allow Avondale, after default, to block new equity issuance unless the note is paid in full, and a most-favored-nation provision lets Avondale adopt any better terms offered in future debt deals. Overall, the structure points to near-term liquidity support at the price of tighter financial flexibility and elevated downside risk if operating or listing conditions weaken.

8-K Event Classification

3 items: 1.01, 2.03, 9.01

3 items

Item 1.01 Entry into a Material Definitive Agreement Business

The company signed a significant contract such as a merger agreement, credit facility, or major partnership.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement Financial

The company incurred a new significant debt or off-balance-sheet obligation.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, or exhibit attachments filed with this report.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What new financing did Edible Garden AG Incorporated (EDBLW) enter into?

Edible Garden AG Incorporated entered into a note purchase agreement with Avondale Capital, LLC under which it issued a secured promissory note with an original principal amount of $1,750,000.

How much cash does Edible Garden receive from the new note?

After a $350,000 original issue discount and transaction expenses, Edible Garden received net proceeds of $1,395,000 from the sale of the secured promissory note.

What are the repayment terms of Edible Gardens secured note with Avondale?

The company must make weekly payments of $43,750 until the note is fully repaid and may prepay at any time without penalty. If it pays the note in full by January 16, 2026, it receives a $50,000 discount on the outstanding balance.

When does interest accrue on Edible Gardens new note and at what rate?

No interest accrues on the note unless an event of default occurs. After default, interest accrues at the lesser of 22% per annum or the maximum rate permitted by law.

What assets secure Edible Garden AG Incorporateds note to Avondale?

The note is secured by a security interest in the companys cash and cash equivalents, accounts receivable, and all other forms of receivables, as described in the security agreement.

What events can trigger penalties or default under Edible Gardens note?

Trigger events include failure to timely file required SEC reports, loss of Nasdaq listing, issuing new debt or granting security interests without Avondales consent, failing to make payments, and similar customary events. These can increase the outstanding balance by 20% after a major trigger event or 5% after a minor one and may lead to default if uncured.

What is the most-favored-nation provision in Edible Gardens agreement with Avondale?

As long as the note is outstanding, if Edible Garden issues any debt security with more favorable terms, it must notify Avondale, and at Avondales election those favorable terms will be incorporated into the transaction documents.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Accepted by SEC EDGAR 09/05/2025 - 04:30 PM Learn about SEC filing dates

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 ________________________

FORM 8-K

 ________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 29, 2025

EDIBLE GARDEN AG INCORPORATED

(Exact name of registrant as specified in its charter)

 ________________________

Delaware		001-41371		85-0558704
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

283 County Road 519, Belvidere, New Jersey				07823
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code: (908) 750-3953

 ________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☒

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

Item 1.01.    Entry into a Material Definitive Agreement.

On August 29, 2025, Edible Garden AG Incorporated (the “Company”) entered into a note purchase agreement (the “Note Purchase Agreement”) with Avondale Capital, LLC (“Avondale”), an affiliate of Streeterville Capital, LLC, the sole holder of the Company’s outstanding shares of Series B Preferred Stock, pursuant to which the Company agreed to issue and sell to Avondale a secured promissory note (the “Note”) with an original principal amount of $1,750,000. After deducting the original issue discount of $350,000 and certain transaction expenses, the Company received net proceeds of $1,395,000 from the sale of the Note to Avondale. A portion of the net proceeds of the Note Purchase Agreement will be used to satisfy the remaining amount to which Arin Funding LLC is entitled under the standard merchant cash advance agreement dated as of April 1, 2025.

The Company will make weekly payments of $43,750 until the Note is paid in full. The Company may prepay the outstanding amount due under the Note at any time without penalty. If the Company prepays the Note in full by January 16, 2026, it will receive a $50,000 discount on the outstanding balance of the Note. No interest will accrue on the Note unless an event of default occurs. The Note is secured by a security interest in the Company’s cash and cash equivalents, accounts receivable, and all other forms of receivables, as set forth in a security agreement in favor of Avondale (the “Security Agreement,” together with the Note Purchase Agreement and the Note, the “Transaction Documents”). The Transaction Documents contain customary representations and warranties, covenants and agreements of the Company and Avondale.

Under the Note, a “trigger event” will occur if the Company fails to timely file required reports with the Securities and Exchange Commission; the Company’s common stock is no longer listed for trading on Nasdaq; the Company, without the consent of Avondale, issues any debt, pledges or grants any security interest in its assets, or enters into a fundamental transaction; the Company fails to may a payment under the Note; or similar customary events of default, as detailed in the Note and Note Purchase Agreement. Subject to certain limitations in the Note, upon a trigger event, Avondale may increase the outstanding balance of the Note by adding to the outstanding balance the result of multiplying the outstanding balance by 20% after a major trigger event or 5% after a minor trigger event. Subject to exceptions in the Note, if the Company fails to cure the trigger event within a cure period, the trigger event will become an event of default under the Note, following which interest will accrue at the lesser of 22% per annum or the maximum rate permitted under applicable law. Certain trigger events will automatically become an event of default. After an event of default, Avondale will have the right to seek to prohibit the Company from issuing any shares of its capital stock to any party unless the Note will be paid in full simultaneously with such issuance.

As long as the Note is outstanding, if the Company issues any debt security with a term or condition more favorable to the holder of such security or with a term in favor of any holder that was not provided to Avondale, the Company will notify Avondale of the favorable term, and, at Avondale’s election, such term will become a part of the Transaction Documents.

The foregoing is only a summary of the Note Purchase Agreement, the Note and the Security Agreement and does not purport to be a complete description thereof. Such descriptions are qualified in their entirety by reference to the Note Purchase Agreement, the Note and the Security Agreement, copies of which are incorporated by reference as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

To the extent required by Item 2.03 of Form 8-K, the information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d)  Exhibits.

Exhibit No.		Description
10.1#		Note Purchase Agreement, by and between Edible Garden AG Incorporated and Avondale Capital, LLC, dated as of August 29, 2025
10.2		Secured Promissory Note, by and between Edible Garden AG Incorporated and Avondale Capital, LLC, effective as of August 29, 2025
10.3		Security Agreement, by and between Edible Garden AG Incorporated and Avondale Capital, LLC, dated as of August 29, 2025
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).
#		Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.

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SIGNATURES

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

	EDIBLE GARDEN AG INCORPORATED
Date: September 5, 2025	/s/ James E. Kras
	Name:	James E. Kras
	Title:	President and Chief Executive Officer

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