Edible Garden AG Incorporated

Greetings. Welcome to the Edible Garden first quarter 2023 business update conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Ted Avis, Investor Relations. You may begin.

Thank you. Good morning and thank you for joining Edible Garden's quarter-ended March 31st, 2023 conference call and business update. On the call with us today is Mr. Jim Kress, Chief Executive Officer of Edible Garden, and Mike James, Chief Financial Officer of Edible Garden. Earlier this morning, the company announced its operating results for the three-month-ended March 31st, 2023. The press release is posted on the company's website, www.ediblegardenag.com. In addition, the company filed its quarterly report on Form 10-Q with the United States Securities and Exchange Commission this morning, 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. Kress reviews the company's operating results for the quarter ended March 31st, 2023, 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, Expect, project, plan, believe, may, will, would, should, could, mission, strategy, potential, seek, strive, and the negative of such terms, in other words, and 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, result of operation, 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 most recent quarterly report on Form 10-Q filed with the United States Securities and Exchange Commission. Because of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this conference call may not occur and actual results could differ materially and adversely from those anticipated or applied 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, 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 in 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 will now turn the call over to Mr. Jim Kras. Jim?

Thanks, Ted. Good morning, and thank you to everyone for joining us today. I would like to start by expressing our deep gratitude to our investors for your support and confidence in our mission. We remain steadfast in our pursuit of our objectives and in creating long-term value for our shareholders. In the most recent quarter, the company experienced a slight decline in revenue compared to Q1 2022 as a result of several substantial orders initially anticipated in the first quarter slipping into the second quarter. Furthermore, the company diligently evaluated all its business partnerships and opted to focus on and reallocate resources to more profitable customer and partner relationships. This strategic move aims to phase out lower margin relationships that have been adversely affecting our overall margins and substitute them with higher margin relationships and products in an effort to strengthen the company's overall profitability. Our first quarter results provide evidence that the strategy is working and our gross profit margin increased from the 2022 first quarter. Furthermore, the launch of Edible Garden Heartland in April 2023 presents a substantial opportunity for our profit margins to experience a positive influence due to the expanded growing capacity provided by the facility. We anticipate that this extra capacity will alleviate or remove previous capacity constraints that affected the company, enabling Edible Garden to become more self-reliant and less dependent on third-party contract growers. Consequently, this is likely to result in a significant increase in Edible Garden's profitability. Moreover, Edible Garden is expanding our product offerings to showcase that we believe in what we believe are higher margin growth products within new categories, such as our newly acquired pulp line of all-natural, non-GMO, preservative-free, sustainable gourmet sauces and chili-based products. These items will become available at Whole Foods Market, Mid-Atlantic, and Southeastern retail locations starting in the summer of 2023. Founded in the supermarket's refrigerated section, typically near the produce department, these fermented sauces let us take advantage of Edible Garden's increasing brand recognition in this innovative product category. At the same time, we have enhanced our distribution network from the start of 2023 by adding several new retail partners and strengthening existing partnerships. The addition of Whole Foods Market as a retail distribution partner represents a further expansion of an already robust distribution network across the country. Additionally, as we touched upon on our last conference call, Morton Williams Supermarkets joined our distribution network in the Northeast, and they now carry Edible Garden's produce and products across all their stores in the New York metropolitan area. We also deepened our market reach with Gristiti's and D'Agostino supermarkets, substantially expanding our product offerings across their numerous locations in Manhattan, Brooklyn, and Westchester. In addition, through continued partnerships and investments in research and technology, Edible Garden is at the forefront of establishing a more secure and sustainable food supply chain. One of the company's groundbreaking innovations is the Green Thumb patented software, which monitors plants across the supply chain, GreenThomb enables us to carefully observe plant growth and movement within the greenhouse, guaranteeing quality control and enhanced traceability at every stage of production and distribution. Additionally, with ongoing collaborations and investments in research and technology, Edible Garden is leading the way towards a safer and more sustainable food supply chain. In April, on the heels of our previously announced research and collaboration with the New York Institute of Technology, the USDA and the EPA to investigate nanobubble technology in a controlled environment agriculture setting, we embarked on a funded research project with Auburn University's Department of Horticulture, focused on addressing food safety matters and the potential contamination of fresh produce, including pathogens, like Listeria. Taking part in groundbreaking research efforts like this, we can draw insights from seasoned experts and contribute our own expertise, ultimately enhancing the safety and quality of our produce for consumers. We're confident that our zero waste inspired mission, along with our steadfast commitment to sustainable hydroponic farming and food safety practices, resonate with eco-conscious consumers and retail distribution partners, thus driving a growing demand for our products. In a time when businesses are experiencing the stress of mounting inflation and assorted challenges, Edible Garden continues to outperform its competition, as demonstrated by the company's order fulfillment rates across all retailers and distribution partners. which are consistently higher than industry averages. Achieving such performance levels, despite the unparalleled supply chain challenges the industry is encountering, illustrates Edible Garden's commitment to providing exceptional service and execution to its customers. By consistently surpassing partner expectations, we believe retailers perceive Edible Garden as a dependable, credible provider of sustainably cultivated produce and are looking for opportunities to initiate or strengthen distribution relationships with the company. We are confident that the various initiatives undertaken by the company since early 2023 are beginning to manifest in our financial performance. In April, we achieved record revenue, which we believe validates our strategy is working and expect to turn cash flow positive on a quarterly basis prior to the end of the year. Before handing the call to Mike James for an overview of the company's quarterly financial results, I would like to extend a warm welcome to Pamela Donnarumma, who joined the Edible Garden Board in April. As the founder and CEO of Futures Inc, Pamela brings extensive experience in human resource management, accreditation, financial operations, and governmental compliance. Her commitment to promoting access to healthy, sustainable, and locally sourced products resonates with our mission, as does her dedication to supporting and investing in local communities. As a master gardener, we believe Pamela is uniquely aligned to help the company continue to focus on quality and sustainability. I would now like to turn the call over to Mike James, Chief Financial Officer of Edible Garden, who will review the financial results for the three-month period ending March 31st, 2023. Mike?