NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT) AND STOCK-BASED COMPENSATION

Public Offerings 

On May 23, 2024, the Company completed a best-efforts public offering (the “May Offering”) of (i) 5,416 common units, each consisting of one share of common stock, one Class A warrant (“May Class A Warrant”) to purchase one share of common stock and one Class B warrant (“May Class B Warrant,” together with the May Class A Warrants, the “May Warrants”) to purchase one share of common stock at a purchase price of $25,470 per unit; and (ii) 19 pre-funded units, each consisting of one pre-funded warrant to purchase one share of common stock (“May Pre-Funded Warrant”), one May Class A Warrant and one May Class B Warrant at a purchase price of $25,335 per unit. 

The May Warrants had an exercise price of $25,425 per share, subject to an exercise price reset, were immediately exercisable, and, in the case of May Class A Warrants, will expire on May 23, 2029, and in the case of May Class B Warrants, will expire on November 23, 2025. The May Warrants had an exercise price reset feature whereby if, on June 22, 2024, the exercise price of the May Warrants was greater than the arithmetic average of the volume-weighted average price of the common stock for the prior five days (the “reset price”), the exercise price of the May Warrants would be reduced to the reset price. Pursuant to the reset feature, the exercise price of the May Warrants became $16,763 on June 22, 2024. The exercise price of the May Warrants is also subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in such May Warrants. 

Subject to certain ownership limitations described in the May Pre-Funded Warrants, the May Pre-Funded Warrants were immediately exercisable and may be exercised at a nominal exercise price of $113 per share of common stock any time until all of the May Pre-Funded Warrants are exercised in full. 

In connection with the May Offering, on May 22, 2024, the Company also entered into a placement agency agreement pursuant to which Maxim Group LLC (“Maxim”) served as the exclusive placement agent in connection with the May Offering. The Company paid Maxim a cash fee of 7.0% of the aggregate gross proceeds raised at the closing of the May Offering and reimbursement of certain expenses and legal fees in the amount of $80,000. The Company also issued Maxim warrants to purchase up to an aggregate of 118 shares of common stock (the “May Placement Agent Warrants”). The May Placement Agent Warrants have an exercise price of $25,425 per share and have substantially the same terms as the May Class A Warrants, except the May Placement Agent Warrants were not subject to an exercise price reset and were exercisable beginning November 18, 2024. 

The Company received gross proceeds of $5,998,120 from the May Offering and paid underwriting fees of $499,868, resulting in net proceeds of $5,498,252. 

On September 30, 2024, the Company closed a best-efforts public offering (the “September Offering”) of (i) 377 common units, each consisting of one share of common stock, one Class A warrant (the “September Class A Warrant”) to purchase one share of common stock and one Class B warrant (the “September Class B Warrant,” together with the September Class A Warrants, the “September Warrants”) to purchase one share of common stock at a purchase price of $4,050 per unit; and (ii) 1,019 pre-funded units, each consisting of one pre-funded warrant to purchase one share of common stock (“September Pre-Funded Warrant”), one September Class A Warrant and one September Class B Warrant at a purchase price of $3,938 per unit.  

The September Warrants have an exercise price of $4,050 per share, are immediately exercisable, and, in the case of September Class A Warrants, will expire on September 30, 2029, and in the case of September Class B Warrants, will expire on March 30, 2026. The exercise price of the September Warrants is subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in such September Warrants. Subject to certain ownership limitations described in the September Pre-Funded Warrants, the September Pre-Funded Warrants are immediately exercisable and may be exercised at a nominal exercise price of $113 per share of common stock any time until all of the September Pre-Funded Warrants are exercised in full. 

In connection with the September Offering, on September 27, 2024, the Company also entered into a placement agency agreement pursuant to which Maxim served as the exclusive placement agent in connection with the September Offering. The Company paid Maxim a cash fee of 7.0% of the aggregate gross proceeds raised at the closing of the September Offering and reimbursement of certain expenses and legal fees in the amount of $80,000. The Company also issued to Maxim warrants to purchase up to 70 shares of common stock (the “September Placement Agent Warrants”). The September Placement Agent Warrants have an exercise price of $4,050 per share and substantially the same terms as the September Class A Warrants, except the September Placement Agent Warrants are exercisable beginning March 26, 2025.  

The Company received gross proceeds of $5,552,484 from the September Offering and paid underwriting and other fees of $757,326, resulting in net proceeds of $4,795,158. 

Inducement Letters 

On December 23, 2024, the Company entered into an inducement letter agreement (the “December 2024 Inducement”) with an institutional investor and existing holder (the “Holder”) of September Class B Warrants to purchase 740 shares of the Company’s common stock. Pursuant to the December 2024 Inducement, the Holder agreed to exercise the September Class B Warrants for cash at the exercise price of $4,050 per share in consideration for the Company’s agreement to issue: (i) new unregistered five-year warrants to purchase up to an aggregate of 740 shares of common stock at an exercise price of $90 per share (the “December 2024 Class A Warrants”), and (ii) new unregistered eighteen-month warrants to purchase up to an aggregate of 740 shares of common stock at an exercise price of $4,050 per share (the “December 2024 Class B Warrants”). The December 2024 Class A Warrants were immediately exercisable upon issuance and have a term of five years from the issuance date, and the December 2024 Class B Warrants were immediately exercisable and have a term of eighteen months from the issuance date. The Company received $3,841,000 of proceeds from the Inducement Letter Agreement and recognized $177,308 for underwriting and other fees as of December 31, 2024. As a result of the December 2024 Inducement, the Company recognized a deemed dividend of $3,873,000 during the year ended December 31, 2024. 

On May 21, 2025, the Company entered into an inducement letter agreement (the “May 2025 Inducement”) with the Holder of September Class A Warrants to purchase 740 shares of the Company’s common stock, (ii) December 2024 Class A Warrants to purchase 740 shares of Common Stock and (iii) December 2024 Class B Warrants to purchase 740 shares of Common Stock; and collectively, the (“Existing Warrants”). The Existing Warrants had original exercise prices of $4,050 per share and became exercisable immediately following issuance. Pursuant to the May 2025 Inducement, the Holder agreed to exercise the Existing Warrants for cash at a reduced exercise price of $1,575 per share in consideration for the Company’s agreement to issue new unregistered five-year warrants to purchase up to an aggregate of 4,443 shares of Common Stock at an exercise price of $1,575 per share (the “May 2025 Warrants”). The May 2025 Warrants were immediately exercisable upon issuance and have a term of five years from the initial exercise date. The Company received $3,498,000 of gross proceeds from the May 2025 Inducement and recognized $237,000 for underwriting and other fees as of June 30, 2025. As a result of the May 2025 Inducement, the Company recognized a deemed dividend of $9,833,000.

On October 16, 2025, the Company entered into an inducement letter agreement (the “October 2025 Inducement”) with an institutional investor and existing holder of (i) warrants to purchase 5 shares of the Company’s common stock issued on May 9, 2022 with an initial exercise price of $75,000 (the “May 2022 Warrants”), (ii) warrants to purchase 2 shares of Common Stock issued on September 8, 2023 with an initial exercise price of $270,000 (the “September 2023 Warrants”), (iii) Class A warrants to purchase 24 shares of Common Stock and Class B warrants to purchase 236 shares of Common Stock issued on May 23, 2024 with initial exercise prices of $16,763 (the “May 2024 Warrants”), and (iv) warrants to purchase 4,443 shares of Common Stock issued on May 21, 2025 with an initial exercise price of $1,575 (the “May 2025 Warrants” and collectively with the May 2022 Warrants, September 2023 Warrants, and May 2024 Warrants, the “Existing Warrants”). The Existing Warrants were all immediately exercisable upon issuance. Pursuant to the October 2025 Inducement, the Holder agreed to exercise the Existing Warrants for cash at a reduced exercise price of $927 per share in consideration for the Company’s agreement to issue new unregistered five-year warrants to purchase up to an aggregate of 8,985 shares of Common Stock at an exercise price of $927 per share (the “October 2025 Warrants”). The October 2025 Warrants will be immediately exercisable upon issuance and have a term of five years from the initial exercise date. The Company received $4,164,000 of gross proceeds from the October 2025 Inducement and recognized $280,000 for underwriting and other fees as of December 31, 2025. As a result of the October 2025 Inducement, the Company recognized a deemed dividend of $6,685,000.

Equity Distribution Agreement 

On January 31, 2025, the Company entered into an Equity Distribution Agreement (the “2025 EDA”) with Maxim as sales agent, pursuant to which the Company sold shares of its common stock through Maxim in an at-the-market offering for an aggregate offering price of up to $2,516,000. Under the terms of the 2025 EDA, Maxim sold the shares at market prices by any method that is deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act. The offering of shares of our common stock pursuant to the 2025 EDA terminated on January 31, 2026. 

Subject to the terms and conditions of the 2025 EDA, Maxim used its commercially reasonable efforts to sell shares of common stock from time to time, based upon the Company’s instructions. The Company has provided Maxim with customary indemnification rights, and Maxim will be entitled to a fixed commission of 3.5% of the aggregate gross proceeds from the shares sold. The Company agreed to reimburse Maxim for the fees and disbursements of its counsel, payable upon execution of the 2025 EDA, in an amount not to exceed $30,000 in connection with the establishment of this at-the-market offering program, in addition to certain ongoing fees of its legal counsel.

During the year ended December 31, 2025, we sold 1,769 shares of common stock for total gross proceeds of $2,428,392 and paid commissions to Maxim of $88,000.

 On August 11, 2026, we entered into a new Equity Distribution Agreement with Maxim as sales agent. See Note 14, “Subsequent Events,” for further discussion.

Common Stock

The Company has authorized 100,000,000 shares of common stock with $0.0001 par value.

Stock-Based Compensation

On January 18, 2022 in connection with the IPO, the board of directors (the “Board”) approved the Edible Garden AG Incorporated 2022 Equity Incentive Plan (the “2022 Plan”). The 2022 Plan provides for equity incentive compensation for employees, non-employee directors, and any other individuals who perform services for the Company. The number of shares initially available for grant under the 2022 Plan was 100. A variety of discretionary awards are authorized under the 2022 Plan, including stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. The vesting of such awards may be conditioned upon either a specified period of time or the attainment of specific performance goals as determined by the administrator of the 2022 Plan. The option price and terms are also subject to determination by the administrator with respect to each grant.

On June 8, 2023 the stockholders of the Company approved the First Amendment to the 2022 Plan, which increased the number of shares of common stock reserved for issuance thereunder by 13 shares and extended the term of the 2022 Plan until June 8, 2033.

On August 21, 2024, the stockholders of the Company approved the Second Amendment to the 2022 Plan to: (i) increase the number of shares of common stock reserved for issuance thereunder by 578 shares, (ii) update the recoupment provisions of the 2022 Plan to be consistent with the Company’s Policy for the Recovery of Erroneously Awarded Compensation, and (iii) extend the term of the 2022 Plan until August 21, 2034.

During the six months ended June 30, 2026, the Company issued 116 restricted stock awards to an employee of the Company as compensation and recognized stock-based compensation expense of $5,016 for the awards, which vested immediately. During the six months ended June 30, 2025, the Company did not issue restricted stock awards.

As of June 30, 2026, shares available for future stock compensation grants totaled 1,071.

Warrants

There was no warrant activity during the six months ended June 30, 2026. As of June 30, 2026 and December 31, 2025, outstanding warrants were exercisable for 9,807 shares of common stock at a weighted-average exercise price of $1,923 per share.