[10-Q] Sow Good Inc. Quarterly Earnings Report

Rhea-AI Filing Summary

Sow Good Inc. (SOWG)$1,553,138 versus $3,554,157 a year ago. Cost of goods sold of $10,500,626 drove a gross loss of $8,947,488, and net loss reached $10,935,484 versus a net loss of $3,379,909 last year.

For the nine months ended September 30, 2025, revenue totaled $5,886,372 compared with $30,608,526 in 2024, with a net loss of $17,693,050 versus net income of $465,821 last year. Results include a $5,377,125 inventory obsolescence reserve and a $1,775,528 gain on lease terminations. Cash and cash equivalents were $387,294 and operating cash outflow was $3,335,070 for the nine‑month period.

The company exited major facility leases effective in late 2025 and early 2026, reducing the right‑of‑use asset from $16,459,215 to $1,169,271 and operating lease liabilities from $17,792,231 to $2,675,013. Management disclosed that these factors raise substantial doubt about the ability to continue as a going concern. As supplemental financing, related‑party notes of $2,803,818 were exchanged into senior convertible notes maturing April 30, 2030 at conversion prices of $0.62–$0.63 per share.

Positive

• Lease exits reduced operating lease liabilities to $2,675,013, with a $1,775,528 gain on terminations, lowering future fixed commitments.

Negative

• Going concern warning disclosed due to losses, low cash of $387,294, and significant nine‑month operating cash outflow of $3,335,070.

Insights

Equity analyst – small-cap consumer

Q3 shows severe contraction, heavy write‑downs, and a going‑concern warning.

Sow Good posted Q3 revenue of $1.55M against a gross loss of $8.95M, reflecting unfavorable cost absorption and a $5.38M inventory obsolescence reserve across discontinued SKUs. Nine‑month revenue of $5.89M fell sharply from $30.61M last year, swinging to a nine‑month net loss of $17.69M.

Liquidity is tight with cash at $387,294 and operating cash outflow of $3.34M for the nine months. Management’s disclosure of “substantial doubt” about continuing as a going concern is pivotal. Lease exits produced a non‑cash gain of $1.78M and reduced operating lease liabilities to $2.68M, but the benefit is offset by weak sales and high costs.

Related‑party debt was exchanged into $2.80M of senior convertible notes maturing in 2030 with conversion prices of $0.62–$0.63. Execution from here depends on stabilizing demand and monetizing working capital; subsequent filings may detail progress on cost actions and capital plans.

11/14/2025 - 08:17 AM

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________________ to ______________________

Commission File Number: 001-42037

SOW GOOD INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	27-2345075
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1440 N Union Bower Rd, Irving, TX	75061
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (214) 623-6055

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 $0.001 per share		SOWG		The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☒
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of registrant’s common stock outstanding as of November 13, 2025 was 12,223,599

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements (Unaudited)	5
	Condensed Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024	5
	Unaudited Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024	6
	Unaudited Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2025 and 2024	7
	Unaudited Condensed Statements of Cash Flows for the nine months Ended September 30, 2025 and 2024	8
	Notes to the Condensed Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
	Signatures	39

2

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

We are including the following discussion to inform our existing and potential security holders generally of some of the risks and uncertainties that can affect our company and to take advantage of the “safe harbor” protection for forward-looking statements that applicable federal securities law affords.

From time to time, our management or persons acting on our behalf may make forward-looking statements to inform existing and potential security holders about our company. All statements other than statements of historical facts included in this report regarding our financial position, business strategy, plans and objectives of management for future operations and industry conditions are forward-looking statements. When used in this report, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “target,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes. Items making assumptions regarding actual or potential future sales, market size, collaborations, trends or operating results also constitute such forward-looking statements.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements include the following:

•our ability to maintain adequate liquidity to meet our financial obligations and operational needs;

•our ability to meet the listing requirements of Nasdaq;

•our ability to compete successfully against competitors with significantly greater financial and relationship resources than us in the highly competitive industry in which we operate;

•our ability to maintain and enhance our brand;

•our ability to successfully implement our growth strategies related to launching new products;

•our ability to successfully enter new markets internationally;

•the effectiveness and efficiency of our marketing programs;

•our ability to manage current operations effectively;

•our future operating performance;

•our ability to attract new customers or retain existing customers;

•our ability to protect and maintain our intellectual property;

•the government regulations to which we are subject;

•failure to obtain sufficient sales and distributions for our freeze dried product offerings;

•the potential for supply chain and shipping disruption and delay;

•the potential for transportation, labor, and raw material cost increases;

•international risks associated with our global operations, including geopolitical conflicts, tariffs or changes in trade policies; and

•other risks and uncertainties included in our “Risk Factors.”

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. We have based these forward-looking statements and statements of belief on our current expectations and assumptions about future events as of the date of this report. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. You should consider carefully the statements in “Item 1A. Risk Factors” and other sections of this report, which describe factors that could cause our actual results to differ from those set forth in the forward-looking statements.

Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the United States Securities and Exchange Commission (the “SEC”) which

3

attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.

4

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

SOW GOOD INC.

CONDENSED BALANCE SHEETS

		September 30,				December 31,
		2025				2024
ASSETS		(Unaudited)
Current assets:
Cash and cash equivalents		$	387,294			$	3,723,440
Accounts receivable, net			174,757				460,147
Inventory, net			11,524,269				20,313,315
Prepaid inventory			19,923				55,796
Prepaid expenses			226,694				523,442
Assets held for sale			713,256				-
Total current assets			13,046,193				25,076,140
Property and equipment, net			10,311,440				11,802,420
Security deposit			1,043,972				1,357,956
Right-of-use asset			1,169,271				16,459,215
Total assets		$	25,570,876			$	54,695,731
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	818,797			$	1,368,006
Accrued interest			110,973				-
Accrued expenses			734,548				976,153
Current portion of operating lease liabilities			1,551,711				2,599,102
Current maturities of notes payable, related parties, net of $0 and $304,500 of debt discounts at September 30, 2025 and December 31, 2024, respectively			-				2,195,500
Current maturities of notes payable, net of $0 and $13,470 of debt discounts as of September 30, 2025 and December 31, 2024, respectively			-				225,780
Total current liabilities			3,216,029				7,364,541
Operating lease liabilities			1,123,302				15,193,129
Convertible notes payable, related parties, net of $811,388 and $0 of debt discounts as of September 30, 2025 and December 31, 2024, respectively			1,992,430				-
Notes payable			150,000				150,000
Total liabilities			6,481,761				22,707,670
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares issued and outstanding			-				-
Common stock, $0.001 par value, 500,000,000 shares authorized, 12,223,599 and 11,300,624 shares issued and outstanding as of September 30, 2025 and December 31, 2024			12,224				11,300
Additional paid-in capital			99,212,152				94,418,972
Accumulated deficit			(80,135,261	)			(62,442,211	)
Total stockholders' equity			19,089,115				31,988,061
Total liabilities and stockholders' equity		$	25,570,876			$	54,695,731

The accompanying notes are an integral part of these condensed financial statements.

5

SOW GOOD INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2025				2024				2025				2024
Revenues		$	1,553,138			$	3,554,157			$	5,886,372			$	30,608,526
Cost of goods sold			10,500,626				2,998,171				13,860,846				16,415,970
Gross profit			(8,947,488	)			555,986				(7,974,474	)			14,192,556
Operating expenses:
General and administrative expenses:
Salaries and benefits			1,826,918				1,875,908				5,701,187				6,350,038
Professional services			97,553				320,289				548,106				1,382,393
Other general and administrative expenses			1,712,505				1,607,844				4,832,623				3,879,350
Total general and administrative expenses			3,636,976				3,804,041				11,081,916				11,611,781
Depreciation and amortization			8,584				8,583				25,751				23,060
Loss on impairment of long-lived assets			24,690				-				24,690				-
Total operating expenses			3,670,250				3,812,624				11,132,357				11,634,841
Net operating income (loss)			(12,617,738	)			(3,256,638	)			(19,106,831	)			2,557,715
Other income (expense):
Interest income			-				39,509				27,266				43,639
Interest expense			(93,274	)			(225,095	)			(389,013	)			(1,243,428	)
Loss on early extinguishment of debt			-				-				-				(696,502	)
Gain on termination of leases			1,775,528				-				1,775,528				-
Total other expense			1,682,254				(185,586	)			1,413,781				(1,896,291	)
Income (loss) before income tax			(10,935,484	)			(3,442,224	)			(17,693,050	)			661,424
Income tax provision			-				62,315				-				(195,603	)
Net income (loss)		$	(10,935,484	)		$	(3,379,909	)		$	(17,693,050	)		$	465,821
Weighted average common shares outstanding - basic			12,203,609				10,245,388				11,708,645				8,651,223
Net income (loss) per common share - basic		$	(0.90	)		$	(0.33	)		$	(1.51	)		$	0.05
Weighted average common shares outstanding - diluted			12,203,609				10,245,388				11,708,645				9,613,553
Net income (loss) per common share - diluted		$	(0.90	)		$	(0.33	)		$	(1.51	)		$	0.05

The accompanying notes are an integral part of these condensed financial statements.

6

SOW GOOD INC.

STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

		For the Three Months Ended September 30, 2025
										Additional								Total
		Common Stock								Paid-in				Accumulated				Stockholders'
		Shares				Amount				Capital				Deficit				Equity
Balance, June 30, 2025			12,166,128			$	12,166			$	97,758,199			$	(69,199,777	)		$	28,570,588
Common stock issued to directors for services			57,471			$	58			$	49,941			–					49,999
Common stock issued to officers for services		–				–					104,554			–					104,554
Common stock options granted to directors and advisors for services		–				–				$	3,598			–					3,598
Common stock options granted to officers and employees for services		–				–					1,295,860			–					1,295,860
Net loss for the three months ended September 30, 2025		–				–				–					(10,935,484	)			(10,935,484	)
Balance, September 30, 2025			12,223,599			$	12,224			$	99,212,152			$	(80,135,261	)		$	19,089,115

		For the Three Months Ended September 30, 2024
						–				Additional								Total
		Common Stock								Paid-in				Accumulated				Stockholders'
		Shares				Amount				Capital				Deficit				Equity
Balance, June 30, 2024			10,245,388			$	10,245			$	89,899,666			$	(54,894,265	)		$	35,015,646
Common stock options granted to directors and advisors for services		–				–					29,284			–					29,284
Common stock options granted to officers and employees for services		–				–					1,157,587			–					1,157,587
Net loss for the three months ended September 30, 2024		–				–				–					(3,379,909	)			(3,379,909	)
Balance, September 30, 2024			10,245,388			$	10,245			$	91,086,537			$	(58,274,174	)		$	32,822,608

		For the Nine Months Ended September 30, 2025
										Additional								Total
		Common Stock								Paid-in				Accumulated				Stockholders'
		Shares				Amount				Capital				Deficit				Equity
Balance, December 31, 2024			11,300,624			$	11,300			$	94,418,972			$	(62,442,211	)		$	31,988,061
Common stock issued to directors for services			139,907				142				279,858			–					280,000
Common stock issued to officers for services			783,068				782				263,572			–					264,354
Common stock options granted to directors and advisors for services		–					-				13,487			–					13,487
Common stock options granted to officers and employees for services		–				–					3,541,322			–					3,541,322
Additional paid in capital from exchange of related party debt, net		–				–					694,941			–					694,941
Net loss for the nine months ended September 30, 2025		–				–				–					(17,693,050	)			(17,693,050	)
Balance, September 30, 2025			12,223,599			$	12,224			$	99,212,152				(80,135,261	)		$	19,089,115

		For the Nine Months Ended September 30, 2024
										Additional								Total
		Common Stock								Paid-in				Accumulated				Stockholders'
		Shares				Amount				Capital				Deficit				Equity
Balance, December 31, 2023			6,029,371			$	6,029			$	66,014,415			$	(58,739,995	)		$	7,280,449
Common stock issued in public offering, net of offering costs			1,380,000				1,380				11,973,596			–					11,974,976
Common stock issued in private placement offering			515,597				516				3,737,484			–					3,738,000
Proceeds from the exercise of stock options and warrants			2,289,209				2,288				5,670,680			–					5,672,968
Common stock issued to directors for services			31,211				32				295,616			–					295,648
Common stock options granted to directors and advisors for services		–				–					86,892			–					86,892
Common stock options granted to officers and employees for services		–				–					3,307,854			–					3,307,854
Net income for the three months ended September 30, 2024		–				–				–					465,821				465,821
Balance, September 30, 2024			10,245,388			$	10,245			$	91,086,537			$	(58,274,174	)		$	32,822,608

The accompanying notes are an integral part of these condensed financial statements.

7

SOW GOOD INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

		For the Nine Months Ended
		September 30,
		2025				2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	(17,693,050	)		$	465,821
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debts expense			86,339				176,032
Depreciation and amortization			778,800				582,648
Non-cash amortization of right-of-use asset and liability			1,786,411				791,360
Non-cash gain on lease exit			(1,775,526	)			-
Inventory valuation and obsolescence adjustments			5,377,125				-
Common stock issued to officers and directors for services			544,356				295,648
Amortization of stock options			3,554,809				3,394,746
Amortization of debt discounts			202,200				932,883
Loss on early extinguishment of debt			-				696,502
Decrease (increase) in current assets:
Accounts receivable			199,051				1,169,269
Prepaid expenses			296,748				360,734
Inventory			3,447,794				(15,319,762	)
Security deposits			313,984				(1,011,340	)
Increase (decrease) in current liabilities:
Accounts payable			(549,209	)			447,563
Income tax payable			-				65,603
Accrued interest			174,863				(363,326	)
Accrued expenses			(79,765	)			1,190,375
Net cash used in operating activities		$	(3,335,070	)			(6,125,244	)
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed asset additions and disposals, net			32,883				(3,143,561	)
Cash paid for construction in progress			(33,959	)			(1,325,726	)
Net cash used in investing activities			(1,076	)			(4,469,287	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock offerings, net			-				15,712,976
Proceeds from the exercise of warrants and options			-				373,855
Repayments of borrowings			-				(956,249	)
Net cash provided by financing activities			-				15,130,582
NET CHANGE IN CASH AND CASH EQUIVALENTS			(3,336,146	)			4,536,051
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			3,723,440				2,410,037
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	387,294			$	6,946,088
SUPPLEMENTAL INFORMATION:
Interest paid		$	399			$	667,293
Interest received		$	27,266			$	43,639
Income taxes paid		$	-			$	130,000
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash exercise of warrants		$	-			$	5,299,113
Retirement of Notes Payable, related party in non-cash debt exchange		$	(2,500,000	)		$	-
Issuance of Convertible Notes Payable, related party, including accrued interest of $64,568 in debt exchange		$	2,803,818			$	-
Repayment of interest		$	(64,568	)		$	(98,750	)
Repayments of borrowings		$	(239,250	)		$	(5,200,363	)
Reclassification of construction in progress to assets held for sale		$	713,256			$	-
Reclassification of construction in progress to property and equipment		$	682,469			$	2,864,649

The accompanying notes are an integral part of these condensed financial statements.

8

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 1 – Organization and Nature of Business

Sow Good Inc. (“SOWG,” “Sow Good,” “us,” “our,” “we,” or the “Company”) is a U.S.-based freeze dried candy and snack manufacturer. Formerly Black Ridge Oil & Gas, Inc. (a business that participated in the acquisition and development of oil and gas leases and acquired by the Company in October 1, 2020) , the Company was initially focused on the production of freeze dried fruits and vegetables, a business later expanded to include freeze dried candy. At that time of the acquisition of Black Ridge Oil & Gas, Inc., the Company’s common stock began to be quoted on the OTCQB under the trading symbol “SOWG,” from the former trading symbol “ANFC.” Effective February 15, 2024, Sow Good Inc. reincorporated to the State of Delaware from the State of Nevada under the name Sow Good Inc. pursuant to a plan of conversion. On May 2, 2024, trading of the Company’s common stock commenced on the Nasdaq Capital Market stock exchange.

In May of 2021, the Company announced the launch of its first direct-to-consumer freeze dried consumer packaged goods (“CPG”) line of non-GMO products including ready-to-make smoothies, gluten-free granola and snacks. After launching a freeze dried candy product line in the first quarter of 2023, the Company now has fifteen SKU offerings as of September 30, 2025, that together make up the entirety of the Company’s product portfolio. After launching its freeze dried candy product line the Company discontinued its smoothie, snack and granola products. The Company has six freeze driers in a facility in Irving, Texas and has access to six additional freeze driers, which we may place in operations if and as needed.

Note 2 – Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and stated in U.S. dollars, consistent in all material respects with those applied in our financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Because these financial statements address interim periods, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Such interim financial information is unaudited but reflects all adjustments that in the opinion of management are necessary for the fair presentation of the interim periods presented. The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or for any future periods. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Segment Reporting

FASB ASC 280-10-50 requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding how to allocate resources. The Company operates as a single segment. Segment disclosures are included in Note 15 – Segment Reporting.

During the quarter ended three and nine months ended September 30, 2025, the Company began sales activity in the Middle East. While these sales did not quantitatively represent a reportable segment under ASC 280 and are not managed or evaluated separately by the Chief Operating Decision Maker ("CODM"). The Company will continue to monitor this business for potential future reporting as a separate segment if it becomes quantitatively or operationally material.

Environmental Liabilities

The Company was formerly a direct owner of assets in the oil and gas industry. The oil and gas industry is subject, by its nature, to environmental hazards and clean-up costs. At this time, management knows of no substantial losses from environmental accidents or events which would have a material effect on the Company.

9

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Cash and Cash Equivalents

Cash equivalents include money market accounts which have maturities of three months or less. Cash equivalents are stated at cost plus accrued interest, which approximates market value.

Cash in Excess of FDIC Insured Limits

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) and the Securities Investor Protection Corporation (“SIPC”) up to $250,000 and $500,000, respectively, under current regulations. The Company had cash in excess of FDIC and SIPC insured limits of $41,978 at September 30, 2025. The Company had cash in excess of FDIC and SIPC insured limits of $2,199,681 at December 31, 2024. The Company has not experienced any losses in such accounts.

Accounts Receivable

Accounts receivable are carried at their estimated collectible amounts. Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance for doubtful accounts of $130,446 at September 30, 2025 and $33,549 at December 31, 2024.

The Company estimates its reserve based on historical loss information. The Company believes that historical loss information is a reasonable base on which to determine expected credit losses for trade receivables held at the reporting date because the composition of the trade receivables at the reporting date is consistent with that used in developing the historical credit-loss percentages. However, the Company will continue to monitor and adjust the historical loss rates to reflect the effects of current conditions and forecasted changes.

Inventory

Inventory is valued at the lower of average cost or net realizable value. The cost of substantially all of the Company’s inventory has been determined by the first-in, first-out (“FIFO”) method.

Property and Equipment

Property and equipment are stated at the lower of cost or estimated net recoverable amount. The cost of property, plant and equipment is depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based on the following life expectancy:

Software		3 years, or over the life of the agreement
Website (years)		3
Office equipment (years)		5
Furniture and fixtures (years)		5
Machinery and equipment (years)		7 - 10
Leasehold improvements		Lease-term or useful life

Construction in progress is stated at cost, which predominately relates to the cost of freeze driers and equipment not yet placed into service. No depreciation expense is recorded on construction-in-progress until such time as the relevant assets are completed and put into use.

Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation and amortization are eliminated and any resulting gain or loss is reflected in operations.

Depreciation of property and equipment was $268,281 and $216,164 for the three months ended September 30, 2025 and 2024, respectively, of which $259,697 and $207,580 was allocated to cost of goods sold, respectively. Depreciation of property and equipment was $786,993 and $582,948 for the nine months ended September 30, 2025 and 2024, respectively, of which $761,242 and $559,888 was allocated to cost of goods sold, respectively. During the three and nine month periods ended September 30, 2025, the Company disposed of leasehold improvements with a costs basis of $32,882, and related accumulated depreciation of $8,193.

10

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue from the sale of its freeze dried food products, in accordance with a five-step model in which the Company evaluates the transfer of promised goods or services and recognizes revenue when customers obtain control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company has elected, as a practical expedient, to account for the shipping and handling as fulfillment costs, rather than as a separate performance obligation. For the nine months ended September 30, 2025 and 2024, shipping and handling costs of $394,567 and $502,196, respectively, are included in cost of goods sold. Revenue is reported net of applicable provisions for discounts, returns and allowances. Methodologies for determining these provisions are dependent on customer pricing and promotional practices. The Company records reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on industry-based historical data, historical sales returns, if any, analysis of credit memo data, and other factors known at the time.

Customer Concentration

For the nine months ended September 30, 2025, our top three customers were responsible for 53%, 14%, and 7% of our revenues, respectively. For the nine months ended September 30, 2024, our top three customers were responsible for 33%, 21% and 16% of our revenues, respectively.

For the three months ended September 30, 2025, our top three customers were responsible for 65%, 9%, and 5% of our revenues, respectively. For the three months ended September 30, 2024, our top four customers were responsible for 20%, 15%, 10%, and 10% of our revenues.

Supplier Concentration

For the nine months ended September 30, 2025, three suppliers accounted for 64% of our purchases from vendors. For the nine months ended September 30, 2024, three suppliers accounted for 76% of our purchases from vendors.

For the three months ended September 30, 2025, our top three suppliers accounted for 94% of our purchases from vendors. For the three months ended September 30, 2024, our top three suppliers accounted for 87% of our purchases from vendors. The Company considers these vendors to be critical suppliers of candy and packaging for our freeze dried candy production.

Basic and Diluted Earnings (Loss) Per Share

The basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding. Diluted net income (loss) per common share is computed by dividing the net income (loss) adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods where potential dilutive securities would have an anti-dilutive effect and they were not included in the calculation of diluted net loss per common share.

Stock-Based Compensation

The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 – Stock Compensation (“ASC 718”) and Equity-Based Payments to Non-employees pursuant to ASC 2018-07 – Compensation – Stock Compensation (“ASC 2018-07”). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance.

Stock-based compensation related to the issuance of shares of common stock for Board of Directors' services consisted of $280,000 and $295,648 for the nine months ended September 30, 2025 and 2024, respectively.

On March 31, 2025 and June 5, 2025, the Board of Directors unanimously approved revisions to the annual compensation of Claudia Goldfarb, the Company's Chief Executive Officer, and Ira Goldfarb, the Company's Executive Chairman, whereby Ms.

11

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Goldfarb and Mr. Goldfarb would receive a certain percentage of their annual cash salaries in shares of the Company's common stock in lieu of cash payments. The aggregate number of shares issued was 783,068, at an aggregate value of $668,507, which is being amortized over the service period. The Company recognized $264,356 and $424,153 in share compensation expense related to the shares for the three and nine months ended September 30, 2025, respectively.

Stock-based compensation related to amortization of stock option grants to officers and employees consisted of $3,541,322 and $3,307,854 for the nine months ended September 30, 2025 and 2024, respectively. The amortization of stock options granted to Directors is included in other general and administrative expense. The fair values of service-based stock options are determined using the Black-Scholes options pricing model and an effective term of 6.8 to 7.3 years based on either the weighted average of the vesting periods and the stated term of the option grants or as calculated under the options valuation model, the discount rate on 5 to 7 year U.S. Treasury securities at the grant date. The Company uses a Monte Carlo simulation to value its performance-based and market-based stock options. Options are amortized over the implied service term, or the vesting period.

Income Taxes

The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.

Uncertain Tax Positions

In accordance with ASC 740 – Income Taxes (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Various taxing authorities can periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. The Company has not yet undergone an examination by any taxing authorities.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, "Improvements to Income Tax Disclosures." The amendments in this update affect annual income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this update are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the effects of this pronouncement on its financial statements and does not expect the adoption to impact our results or presentation.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires disclosures about specific types of expenses, including purchases of inventory, employee compensation, depreciation and amortization. The amendments in this ASU are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements and related disclosures.

No other new accounting pronouncements, issued or effective during the three and nine months ended September 30, 2025, have had or are expected to have a significant impact on the Company’s financial statements.

Note 3 – Going Concern

As of September 30, 2025, the Company had an accumulated retained deficit of $80,135,261 and a net loss for the nine month period of $17,693,050. The Company had $387,294 and $3,723,440 of cash on hand and working capital of $9,116,908 and $17,711,599 at September 30, 2025 and December 31, 2024, respectively. The Company may not have sufficient funds to sustain operations for the next twelve months. These factors raise substantial doubt about the Company's ability to continue as a going concern.

12

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

During the nine months ended September 30, 2025, management has implemented its comprehensive plans to improve the Company's financial position. These initiatives included restructuring of debt, which was effected through an exchange transaction in the second quarter, ongoing strategic cost cutting and firmwide headcount reductions, on-boarding new customers in existing markets, entering new markets overseas, and entering new product categories to fully utilize any excess production capacity. During the three months ended September 30, 2025, management has finalized exit strategies for leases associated with unused facilities. This will significantly reduce ongoing facilities expense, and related right-of-use liabilities on the balance sheet. In addition, management is investigating potential partnership opportunities, asset sales, and capital raises through debt and or equity offerings, including the sales of shares available under our at-the-market program.

The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 – Related Party

Related Party Debt Exchange

On April 28, 2025, the Company entered into an exchange agreement (the “Exchange Agreement”) with Lyle Berman, Claudia Goldfarb and Ira Goldfarb, as holders of the Company’s outstanding promissory notes (the “Outstanding Notes”) with an aggregate principal amount of $2,500,000, maturing August 23, 2025 at an interest rates of 8%. Pursuant to the Exchange Agreement, holders exchanged their Outstanding Notes for new senior convertible promissory notes (the “Convertible Notes”) in an amount equal to $2,563,890, the aggregate principal amount of the Outstanding Notes, plus accrued and unpaid interest thereunder. In addition, the Company issued Convertible Notes of $239,928 at an interest rate of 6%, for the repayment of the Notes which matured on April 8, 2025. The combined $2,803,818 of Convertible Notes have a maturity date of April 30, 2030 and will pay interest semiannually in arrears on May 1 and November 1 beginning on November 1, 2025. At the Company’s election, interest payable on an interest payment date may be added to the principal amount of the Convertible Notes on the applicable interest payment date and will no longer be owed to holders of the Convertible Notes. The Convertible Notes are convertible at the election of the holders, in whole or in part, into shares of common stock based on a price per share equal to the average closing price of such common stock for the five trading days immediately prior to the execution of and entry into the Convertible Notes, with such conversion prices ranging from $0.62 to $0.63. The Convertible Notes are senior in right of payment to all existing and future debt obligations of the Company and will be secured by all existing and future assets of the Company. The Convertible Notes are redeemable by the Company at any time upon ten days’ notice and at the option the holders for the principal amount thereof plus interest, beginning on January 1, 2025. The entry into the Exchange Agreement, and the transactions contemplated therein, including entering into the Convertible Notes, was approved unanimously by the disinterested members of the Company’s board of directors, as well as the disinterested members of the Company’s audit committee, pursuant to the Company’s related party transaction policy.

Common Stock Issued to Officers and Directors for Services

On August 1, 2025, the Company issued an aggregate 64,614 shares of common stock to Jeffery Rubin for annual Director services to be rendered. The aggregate fair value of the common stock was $57,471, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On June 5, 2025, the Board of Directors unanimously approved a revision to the annual compensation of Claudia Goldfarb, the Company's Chief Executive Officer, and Ira Goldfarb, the Company's Executive Chairman, whereby Ms. Goldfarb and Mr. Goldfarb would receive approximately 28% and 32%, respectively, of their annual cash salary in shares of the Company's common stock under the Sow Good 2024 Stock Incentive Plan in lieu of cash payments. The number of shares issued in each case is calculated with a stock price equal to the most recent closing price of the Company's common stock, on June 4, 2025. Ms. Goldfarb received 167,362 shares valued at $128,868.65. Mr. Goldfarb received 259,070 shares valued at $199,637.89.

On March 31, 2025, the Board of Directors unanimously approved a revision to the annual compensation of Claudia Goldfarb, the Company's Chief Executive Officer, and Ira Goldfarb, the Company's Executive Chairman, whereby Ms. Goldfarb and Mr. Goldfarb would receive approximately 28% and 32%, respectively, of their annual cash salary in shares of the Company's common stock under the Sow Good 2024 Stock Incentive Plan in lieu of cash payments. The number of shares issued in each case is calculated with a stock price equal to the most recent closing price of the Company's common stock, on March 31, 2025. Ms. Goldfarb received 158,416 shares valued at $160,000. Mr. Goldfarb received 198,202 shares valued at $200,000.20.

13

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

On February 6, 2025, the Company issued an aggregate 82,436 shares of common stock amongst its four non-employee Directors and two advisory Directors for annual services to be rendered. The aggregate fair value of the common stock was $230,000, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On February 9, 2024, the Company issued an aggregate 23,534 shares of common stock amongst its five non-employee Directors and three advisory Directors for annual services to be rendered. The aggregate fair value of the common stock was $519,280, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On January 11, 2024, the Company issued an aggregate 7,060 shares of common stock amongst its five non-employee Directors for annual services to be rendered. The aggregate fair value of the common stock was $56,480, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

Common Stock Options Awarded to Officers and Directors

On June 3, 2025, the Company granted Donna Guy, Chief Financial Officers, options to purchase 7,500 shares of the Company's stock at an exercise price of $0.77 per share. Options vest 60% on the third anniversary of the grant, and 20% on each anniversary thereafter.

On January 29, 2025, the Company granted Brendon Fischer, Interim Chief Financial Officer, options to purchase 11,250 shares of the Company’s common stock at an exercise price of $2.78 per share. On June 6, 2025, Mr. Fischer resigned from the Company and his options were forfeited. The reduction in share compensation related to Mr. Fischer's total forfeited options expensed through June 30, 2025 was $37,517.

Common Stock Sold for Cash

On March 28, 2024, the Company raised $3,738,000 of capital from the sale of 515,597 newly issued shares of common stock at a share price of $7.25 in a private placement exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. The stock sales included purchases by the following related parties:

			Shares			Amount
Ira and Claudia Goldfarb, Executive Chairman and CEO, respectively			17,242		$	125,000
Lyle A. Berman Revocable Trust, Director			68,966			500,000
Bradley Berman, Director			30,000			217,500
Edward Shensky			13,794			100,000
Brendon Fischer			8,000			58,000
Cesar J. Gutierrez			10,345			75,000
Alexandria Gutierrez			3,449			25,000
Ava Gutierrez			3,449			25,000
Brett Goldfarb			3,449			25,000
			158,694		$	1,150,500

Leases

The Company leases a 20,945 square foot facility in Irving, Texas, for which an entity owned entirely by Ira Goldfarb. The lease term is through September 15, 2025, with two five-year options to extend, with a current monthly lease rate of $12,425, with approximately 3% annual escalation of lease payments.

At September 30, 2025 and December 31, 2024, included in the operating lease liabilities was $1,191,721 and $1,241,860 in connection with this lease. For the nine months ended September 30, 2025 and 2024 the Company expensed $110,172 in each of the periods and paid cash of $102,227 and $99,030, respectively.

Note 5 – Fair Value of Financial Instruments

The Company's financial statements are prepared in accordance with ASC 820, “Fair Value Measurement,” which requires the measurement of certain financial instruments at fair value. The Company's financial instruments primarily consist of cash and cash equivalents, and accounts receivable, which approximate fair value due to their short-term nature, and Term Loans issued in connection with detachable warrants, which are carried on the balance sheet net of the unamortized portion of the related discounts. For financial instruments or investments that are required to be reported at fair value on a recurring or nonrecurring basis under

14

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

GAAP, the applicable guidance for fair value measurement requires the Company to include the determination of the appropriate fair value hierarchy level for each instrument. The fair value hierarchy levels consist of the following:

Level 1: Quoted Prices in Active Markets for Identical Assets or Liabilities - This level represents the highest degree of observability, where fair values are based on quoted market prices for identical assets or liabilities in active markets.

Level 2: Inputs Other Than Quoted Prices Included within Level 1 - Fair values in this level are based on inputs other than quoted market prices but are still observable, such as quoted market prices for similar assets or liabilities, or inputs derived from market data.

Level 3: Unobservable Inputs - This level includes fair values for which there are no observable inputs and relies on the reporting entity's own assumptions and estimates. These fair values are considered the least reliable and most subjective.

Detachable common stock warrants issued in connection with debt may be recorded as either liabilities or equity depending on the applicable accounting guidance. The Company determined that warrants issued in connection with notes payable met the definition of a freestanding financial instrument and qualified for treatment as permanent equity. We utilized the Black-Scholes valuation model to estimate the fair value of warrants granted at issuance date. The initial measurement of the fair value of the notes considers the present value of future cash flows, discounted at the current market rate of interest at the issuance date, and time to liquidity. The Company allocated the value of warrants between the relative fair value of the notes payable without the warrants, and the warrants themselves at the time of issuance. The allocated portion of the warrants was treated as a debt discount, and amortized over the term of the note. The amortization of the debt discount is recognized as interest expense. When a notes payable are issued at a discount, wherein a significant portion of the issuance is between related parties, the valuation of the notes and the discount involve significant judgment and the use of unobservable inputs, classifying it into Level 3 of the fair value hierarchy, requiring a nonrecurring fair value measurement. Changes other than additions, settlements, or discount amortization, in the fair value of the notes payable, net of discounts do not impact net income or cash flows. The debt related to the issuance of the detachable warrants was fully retired during the three month period ended June 30, 2025.

On April 28, 2025, the Company entered into an exchange agreement (the “Exchange Agreement”) with Lyle Berman, Claudia Goldfarb and Ira Goldfarb, as holders of the Company’s outstanding promissory notes (the “Outstanding Notes”) with an aggregate principal amount of $2,500,000, maturing August 23, 2025 at an interest rates of 8%. Pursuant to the Exchange Agreement, holders exchanged their Outstanding Notes for new senior convertible promissory notes (the “Convertible Notes”) in an amount equal to $2,563,890, the aggregate principal amount of the Outstanding Notes, plus accrued and unpaid interest thereunder. In addition, the Company issued Convertible Notes of $239,928 at an interest rate of 6%, for the repayment of the Notes which matured on April 8, 2025. The Convertible Notes are convertible at the election of the holders, in whole or in part, into shares of common stock based on a price per share equal to the average closing price of such common stock for the five trading days immediately prior to the execution of and entry into the Convertible Notes, with such conversion prices ranging from $0.62 to $0.63. The Convertible Notes are redeemable by the Company at any time upon ten days’ notice and at the option the holders for the principal amount thereof plus interest, beginning on January 1, 2025.

The Outstanding Notes payable and related discounts on the detachable warrants were exchanged for the Convertible Notes. The Company determined that the conversion feature of the Convertible Notes is not bifurcated as a derivative and is therefore not within the scope of ASC 815 and ASC 820.

The following schedule summarizes the valuation of financial instruments at fair value on a nonrecurring basis in the balances sheet as of September 30, 2025 and December 31, 2024:

		September 30, 2025								December 31, 2024
		Carrying Value				Estimated Fair Value				Carrying Value				Estimated Fair Value
Liabilities
Notes payable, related parties, net of debt discounts		$	-			$	-			$	2,195,500			$	2,469,531
Convertible notes payable, related parties, net of discounts			1,992,430				1,992,430				-				-
Notes payable			150,000				150,000				375,780				237,841
Total liabilities		$	2,142,430			$	2,142,430			$	2,571,280			$	2,707,372

15

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 6 – Inventory

Inventory

As of September 30, 2025 and December 31, 2024 the Company's inventory consisted of raw materials, material overhead, labor, and manufacturing overhead, categorized as follows:

		September 30, 2025				December 31, 2024
Finished goods		$	7,774,138			$	8,816,867
Overhead allocated to inventory			3,148,171				4,993,947
Packaging materials			1,650,515				1,639,608
Work in progress			3,312,468				4,556,718
Raw materials			1,016,102				1,401,408
Inventory Reserve - Allowance for Obsolescence			(5,377,125	)			(1,095,233	)
Total inventory		$	11,524,269			$	20,313,315

During the three and nine month periods ended three and nine months ended September 30, 2025, the Company recorded reserves of $5,377,125 for obsolescence for SKUs which the Company has discontinued and the related work in progress, raw materials, and packaging.

Prepaid Inventory

The company had reported a total of $19,923 and $55,796 in prepaid inventory as of September 30, 2025 and December 31, 2024, respectively. Prepaid inventory primarily consists of deposits and advance payments to suppliers for the purchase of raw materials and finished goods expected to be received and utilized in production within the next financial period, which have not been shipped as of the balance sheet date.

The Company accounts for prepaid inventory at cost, which includes all charges necessary to bring the inventory items to their present location and condition. Upon shipment of the inventory, these amounts are reclassified from prepaid inventory to the appropriate inventory accounts on the balance sheet.

Note 7 – Prepaid Expenses

Prepaid expenses consist of the following at September 30, 2025 and December 31, 2024:

		September 30, 2025				December 31, 2024
Prepaid software licenses		$	35,502			$	44,736
Prepaid insurance costs			59,578				260,995
Prepaid other			131,614				217,711
Total prepaid expenses		$	226,694			$	523,442

16

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 8 – Property and Equipment

Property and equipment at consist of the following at September 30, 2025 and December 31, 2024:

		September 30, 2025				December 31, 2024
Machinery		$	8,508,693			$	7,826,224
Leasehold improvements			1,459,067				1,467,267
Software			70,000				70,000
Website			71,589				71,589
Office equipment			96,991				121,674
Construction in progress			2,678,441				4,040,207
			12,884,781				13,596,961
Less: Accumulated depreciation and amortization			(2,573,341	)			(1,794,541	)
Total property and equipment, net		$	10,311,440			$	11,802,420

Construction in progress consists of costs incurred to build out our manufacturing facilities in Texas, along with the construction of our freeze driers. These costs will be capitalized as Leasehold Improvements and Machinery, respectively, upon completion.

As of September 30, 2025, the Company reclassified a candy-making machine and accessories with a carrying amount of $713,256 from construction in progress to assets held for sale on our balance sheets. The reclassification was made in accordance with ASC 360-10-45, Property, Plant, and Equipment — Other Presentation Matters, as management committed to a plan to sell the asset, initiated an active program to locate a buyer, and determined that the sale was probable within one year. The asset is presented separately on the consolidated balance sheet at the lower of its carrying amount or estimated fair value less costs to sell.

Depreciation of property and equipment was $268,281 and $216,164 for the three months ended September 30, 2025 and 2024, respectively, of which $259,697 and $207,580 was allocated to cost of goods sold, respectively.

Depreciation of property and equipment was $786,993 and $582,948 for the nine months ended September 30, 2025 and 2024, respectively, of which $761,242 and $559,888 was allocated to cost of goods sold, respectively. During the three and nine month periods ended September 30, 2025, the Company disposed of leasehold improvements with a costs basis of $32,882, and related accumulated deprecation of $8,193.

Note 9 – Leases

The Company determines if an arrangement is a finance lease or operating lease at inception and recognizes right-of-use (“ROU”) assets and lease liabilities at commencement date based on the present value of the lease payments over the lease term. For operating leases, our right-of-use assets are amortized on a straight-line basis over the lease term with rent expense recorded to operating expenses. The Company has elected the practical expedient of not separating lease components from nonlease components. The depreciable life of related leasehold improvements is based on the shorter of the useful life or the lease term.

The Company leases its 20,945 square foot facility under a non-cancelable real property lease agreement with an expiration date of August 31, 2025, with two five-year options to extend, at a monthly lease rate of $11,296, with approximately a 3% annual escalation of lease payments commencing September 15, 2021, under which an entity owned entirely by Ira Goldfarb, the Company's Executive Chairman, is the landlord. The lease liability and right-of-use asset were recorded under the assumption that the Company would elect to extend. The Company is currently The facility lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in

17

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

determining the present value of lease payments. The incremental borrowing rate for the lease at the time of commencement was 5.75%.

On May 22, 2024, the Company entered into an industrial lease with USCIF Pinnacle Building B LLC. The Company leased approximately 324,000 rentable square feet from the Lessor at 4024 Rock Quarry Road, Dallas, Texas for a term of approximately 62 months, which the Company intends to use as industrial and manufacturing space. The term of the lease commenced on May 22, 2024. The lease provides for graduated rent payments starting at $122,175 per month, increasing up to $297,289 per month by the end of the lease, plus taxes, insurance and common area maintenance costs. The Company has provided a security deposit in the amount of $1,000,000 in connection with the lease. The lease may be renewed upon the extension in writing between the Company and the lessor for a period of up to 60 months. The incremental borrowing rate for the lease at the time of commencement was 10.84%. Effective September 30, 2025, the Company agreed with Pinnacle to exit the facility on January 31, 2026. As a result of reducing the lease term by 42 months, the company reduced the related right-of-use asset by $10,397,922 and the lease liability by $11,829,536, resulting in a noncash gain $1,431,614.

On October 26, 2023, the Company entered into a lease agreement with Prologis, Inc., a Maryland corporation, which the Company intends to use as production space. The Company leased approximately 51,264 square feet in Dallas, Texas for an initial term of approximately five years and two months. The lease commenced on November 1, 2023. The base rent payments started at approximately $42,500 per month in the first year, and increase each year, up to approximately $51,700 per month during the last year of the initial term. The Company is also responsible for operating expenses of the premises, which start at $7,835 per month, with an annual escalation of 4.3%. As a deposit on the lease, the Company is required to provide a letter of credit to Prologis, Inc. in the amount of $300,000. Effective September 30, 2025, the Company agreed with Prologis to exit the lease as of September 30, 2025. As a result of reducing the lease term by 39 months, the company derecognized the related right-of-use asset $2,325,675 and the lease liability of $2,673,619, resulting in a noncash gain of $347,943.

On July 1, 2023, the Company entered into a lease for additional warehouse space in Irving, Texas, of approximately 9,000 feet under a 37-month lease at a rate of $8,456 per month, with approximately a 4% annual escalation of lease payments. The facility lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate for the lease at the time of commencement was 8%.

The components of lease expense were as follows:

		For the Nine Months Ended
		September 30,
		2025				2024
Right-of-Use lease cost:
Amortization of right-of-use asset		$	2,849,375			$	1,423,179

Supplemental balance sheet information related to leases was as follows:

		September 30, 2025				December 31, 2024
Operating lease:
Operating lease assets		$	1,169,271			$	16,459,215
Current portion of operating lease liability		$	1,551,711			$	2,599,102
Noncurrent operating lease liability			1,123,302				15,193,129
Total operating lease liability		$	2,675,013			$	17,792,231
Weighted average remaining lease term:
Operating leases (in years)			0.7				4.8
Weighted average discount rate:
Operating lease			8.45	%			10.25	%

18

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Supplemental cash flow and other information related to operating leases was as follows:

		For the Nine Months Ended
		September 30,
		2025				2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases		$	1,657,897			$	1,553,753

The future minimum lease payments due under operating leases as of September 30, 2025 is as follows:

Fiscal Year Ending		Minimum Lease
December 31,		Commitments
2025		$	1,120,115
2026			573,171
2027			145,242
2028			149,600
2029 and thereafter			1,118,148
Total		$	3,106,276
Less effects of discounting			(431,263	)
Lease liability recognized		$	2,675,013

19

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 10 – Notes Payable, Related Parties

On April 28, 2025, the Company entered into an exchange agreement (the “Exchange Agreement”) with Lyle Berman, Claudia Goldfarb and Ira Goldfarb, as holders of the Company’s outstanding promissory notes (the “Outstanding Notes”) with an aggregate principal amount of $2,500,000, maturing August 23, 2025 at an interest rates of 8%. Pursuant to the Exchange Agreement, holders exchanged their Outstanding Notes for new senior convertible promissory notes (the “Convertible Notes”) in an amount equal to $2,563,890, the aggregate principal amount of the Outstanding Notes, plus accrued and unpaid interest thereunder. In addition, the Company issued Convertible Notes of $239,928 at an interest rate of 6%, for the repayment of the Notes which matured on April 8, 2025. The combined $2,803,818 of Convertible Notes have a maturity date of April 30, 2030 and will pay interest semiannually in arrears on May 1 and November 1 beginning on November 1, 2025. At the Company’s election, interest payable on an interest payment date may be added to the principal amount of the Convertible Note on the applicable interest payment date and will no longer be owed to holders of the Convertible Notes. The Convertible Notes are convertible at the election of the holders, in whole or in part, into shares of common stock based on a price per share equal to the average closing price of such common stock for the five trading days immediately prior to the execution of and entry into the Convertible Notes, with such conversion prices ranging from $0.62 to $0.63. The Convertible Notes are senior in right of payment to all existing and future debt obligations of the Company and will be secured by all existing and future assets of the Company. The Convertible Notes are redeemable by the Company at any time upon ten days’ notice and at the option the holders for the principal amount thereof plus interest, beginning on January 1, 2025. The entry into the Exchange Agreement, and the transactions contemplated therein, including entering into the Convertible Notes, was approved unanimously by the disinterested members of the Company’s board of directors, as well as the disinterested members of the Company’s audit committee, pursuant to the Company’s related party transaction policy.

Notes payable, related parties consists of the following at September 30, 2025 and December 31, 2024, respectively:

		September 30, 2025				December 31, 2024
Convertible Notes payable, bearing interest at 8% per annum, maturing on April 30, 2030		$	2,563,890			$	2,500,000
Convertible Notes payable, bearing interest at 6% per annum, maturing on April 30, 2030			239,928			-
Total notes payable, related parties			2,803,818				2,500,000
Less unamortized debt discounts:			811,388				304,500
Notes payable			1,992,430				2,195,500
Less current maturities			-				2,195,500
Notes payable, related parties, less current maturities		$	1,992,430			$	-

Note 11 – Notes Payable

On June 16, 2020, the Company entered into a loan authorization and loan agreement with the United States Small Business Administration (the “SBA”), as lender, pursuant to the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business (the “EIDL Loan Agreement”) encompassing a $150,000 Promissory Note issued to the SBA (the “EIDL Note”)(together with the EIDL Loan Agreement, the “EIDL Loan”), bearing interest at 3.75% per annum. In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated June 16, 2020, between the SBA and the Company (the “EIDL Security Agreement”) pursuant to which the EIDL Loan is secured by a security interest on all of the Company’s assets. Under the EIDL Note, the Company is required to pay principal and interest payments of $731 every month beginning June 16, 2022, as extended. All remaining principal and accrued interest is due and payable on June 16, 2050. The EIDL Note may be repaid at any time without penalty.

On April 8, 2022, the Company issued unsecured notes bearing interest of 6% per annum, compounded semi-annually, payable in cash semi-annually on June 30th and December 31st. On August 23, 2022, the notes were amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The notes matured on April

20

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

8, 2025. The noteholders also received warrants to purchase 125,000 shares of common stock, exercisable at $2.35 per share, which were exercised April 15, 2024. The Company issued $239,928 of related party Convertible Notes on April 28, 2025.

Notes payable consists of the following at September 30, 2025 and December 31, 2024, respectively:

		September 30, 2025				December 31, 2024
Notes payable, bearing interest of 6% per annum, matured April 8, 2025		$	-			$	239,250
EIDL Note			150,000				150,000
Total notes payable			150,000				389,250
Less unamortized debt discounts:			-				13,470
Notes payable			150,000				375,780
Less: current maturities			-				225,780
Notes payable, less current maturities		$	150,000			$	150,000

The Company recognized interest expense related to related party notes payable and other notes payable for nine months ended September 30, 2025 and 2024, as follows:

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2025				2024				2025				2024
Interest on notes payable, related parties		$	54,072			$	64,105			$	177,966			$	285,459
Interest on notes payable			2,193				5,812				8,041				25,086
Amortization of debt discounts on notes payable			37,009				155,178				203,006				932,883
Total interest expense		$	93,274			$	225,095			$	389,013			$	1,243,428

Note 12 – Stockholders’ Equity

Preferred Stock

The Company has 20,000,000 authorized shares of $0.001 par value preferred stock. No shares have been issued to date.

Common Stock Sold for Cash

On March 28, 2024, the Company raised $3,738,000 of capital from the sale of 515,597 newly issued shares of common stock at a share price of $7.25 in a private placement exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. A total of 158,694 of these shares, or proceeds of $1,150,500 were purchased by officers, directors, and related parties.

On May 2, 2024, the Company priced its registered underwritten public offering of 1,200,000 shares of the Company’s common stock, par value $0.001 at a price of $10.00 per share. In addition, the Company granted the underwriters a 30-day overallotment option to purchase up to 180,000 additional shares of common stock and issued to the underwriters warrants to purchase 120,000 shares of Common Stock. On May 9, 2024, the underwriters purchased all of the additional shares pursuant to the full exercise of their overallotment option. Including proceeds from the additional shares, the proceeds from the public offering were approximately $11,974,976 net of offering expenses and underwriting discounts and commissions.

On November 14, 2024 the Company filed a shelf registration to offer and sell from time to time in one or more offerings, up to $50.0 million in aggregate of common stock, preferred stock, debt securities, warrants, and units, including an at-the-market program for up to $20 million of our common stock. As of December 31, 2024, 1,042,862 shares of our common stock have been issued under the at-the-market program netting aggregate proceeds of $2.2 million.

Common Stock Issued to Officers for Services

On June 5, 2025, the Board of Directors unanimously approved a revision to the annual compensation of Claudia Goldfarb, the Company's Chief Executive Officer, and Ira Goldfarb, the Company's Executive Chairman, whereby Ms. Goldfarb and Mr. Goldfarb would receive approximately 28% and 32%, respectively, of their annual cash salary in shares of the Company's common stock under the Sow Good 2024 Stock Incentive Plan in lieu of cash payments. The number of shares issued in each case is calculated

21

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

with a stock price equal to the most recent closing price of the Company's common stock, on June 4, 2025. Ms. Goldfarb received 167,362 shares valued at $128,869. Mr. Goldfarb received 198,202 shares valued at $199,638.

On March 31, 2025, the Board of Directors unanimously approved a revision to the annual compensation of Claudia Goldfarb, the Company's Chief Executive Officer, and Ira Goldfarb, the Company's Executive Chairman, whereby Ms. Goldfarb and Mr. Goldfarb would receive approximately 28% and 32%, respectively, of their annual cash salary in shares of the Company's common stock under the Sow Good 2024 Stock Incentive Plan in lieu of cash payments. The number of shares issued in each case is calculated with a stock price equal to the most recent closing price of the Company's common stock, on March 31, 2025. Ms. Goldfarb received 158,416 shares valued at $160,000. Mr. Goldfarb received 198,202 shares valued at $200,000.

Common Stock Issued to Directors for Services

On August 1, 2025, the Company issued an aggregate 64,614 shares of common stock to Jeffery Rubin for annual Director services to be rendered. The aggregate fair value of the common stock was $57,471, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On February 6, 2025, the Company issued an aggregate 82,436 shares of common stock amongst its four non-employee Directors and two advisory Directors for annual services to be rendered. The aggregate fair value of the common stock was $230,000, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On February 9, 2024, the Company issued an aggregate 23,534 shares of common stock amongst its five non-employee Directors and three advisory Directors for annual services to be rendered. The aggregate fair value of the common stock was $519,280, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On January 11, 2024, the Company issued an aggregate 7,060 shares of common stock amongst its five non-employee Directors for annual services to be rendered. The aggregate fair value of the common stock was $56,480, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On January 5, 2024, the Company appointed Edward Shensky as a member of the Board of Directors of the Company effective immediately. Pursuant to the Company’s Non-Employee Director Compensation Plan, Mr. Shensky received annualized compensation of $25,000, paid in cash or common stock.

Note 13 – Options

2024 Stock Incentive Plan

Effective February 15, 2024, the Board of Directors adopted the 2024 Plan (the “2024 Plan”) under which a total of 3,000,000 share of our common stock have been reserved for issuance of Incentive Stock Options, or ISOs, Non-Qualified Stock Options, or NSOs, restricted share awards, stock unit awards, SARs, other stock-based awards, performance-based stock awards, (collectively, “stock awards”) and cash-based awards (stock awards and cash-based awards are collectively referred to as “awards”). ISOs may be granted only to our employees, including officers, and the employees of our parent or subsidiaries. All other awards may be granted to our employees, officers, our non-employee directors, and consultants and the employees and consultants of our subsidiaries, and affiliates.

Outstanding Options

Options to purchase an aggregate total of 2,620,740 shares of common stock were outstanding as of September 30, 2025, at a weighted average strike price of $19.73. The weighted average life of exercisable outstanding options was 7.7 years as of September 30, 2025.

The Company recognized compensation expense related to common stock options that are being amortized over the implied service term, or vesting period, of the options during the three and nine months ended September 30, 2025 and 2024, as follows:

22

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2025				2024				2025				2024
Directors		$	3,598			$	29,284			$	13,487			$	86,892
Officers and employees			1,295,860				1,157,587				3,541,322				3,307,854
Total amortized options expense		$	1,299,458			$	1,186,871			$	3,554,809			$	3,394,746

The remaining unamortized balance of these options is $7,668,297 as of September 30, 2025 and the weighted-average period over which these awards are expected to be recognized is approximately 1.46 years.

Options Granted

During the nine months ended September 30, 2025, 25 employees were granted options to purchase an aggregate of 113,469 shares of the Company's common stock, having a weighted average exercise price of $2.65, exercisable over a 10-year term. The options will vest 60% on the third anniversary, and 20% each anniversary thereafter until fully vested. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 102% and an average call option fair value of $2.23, was $253,491. The options are being expensed over the vesting period.

Options Cancelled or Forfeited

Approximately 74,370 options with a weighted average strike price of $5.73 per share were forfeited by former employees during the nine months ended September 30, 2025.

Options Expired

No options expired during the nine months ended September 30, 2025. During the nine months ended September 30, 2024, options expirations consisted of 333 options with a $195.00 strike price, and 14,491 options with a $5.41 strike price.

Options Exercised

No options were exercised during the nine months ended September 30, 2025. A total of 50,459 options were exercised during the nine months ended September 30, 2024.

Options Exercisable

There were 585,287 options exercisable as of September 30, 2025, with a weighted average exercise price of $6.27.

Note 14 – Warrants

Outstanding Warrants

Warrants to purchase an aggregate total of 190,500 shares of common stock at a weighted average strike price of $9.80, exercisable over a weighted average life of approximately 5 years, were outstanding as of September 30, 2025.

No warrants were granted, exercised, cancelled, or expired during the nine months ended September 30, 2025.

Note 15 – Segment Reporting

The Company operates as a single reportable segment, which is engaged in the production and sale of freeze-dried candy products. The Chief Operating Decision Maker (“CODM”), who is the Company’s Chief Executive Officer, evaluates the performance of the business and allocates resources based on a review of the Statement of Operations presented on a consolidated basis. The CODM does not review assets in evaluating the results of the freeze-dried candy segment, and therefore, such information is not presented. The accounting policies of the freeze-dried candy segment are the same as those described in Note 2 – Summary of Significant Accounting Policies.

The following table provides the operating financial results of our freeze-dried candy segment for the three and nine months

23

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

ended September 30, 2025 and 2024:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2025				2024				2025				2024
Revenues		$	1,553,138			$	3,554,157			$	5,886,372			$	30,608,526
Less: Significant other segment expenses
Cost of goods sold			10,500,626				2,998,171				13,860,846				16,415,970
Salaries and benefits			1,826,918				1,875,908				5,701,187				6,350,038
Professional services			97,553				320,289				548,106				1,382,393
Other general and administrative expenses			1,712,505				1,607,844				4,832,623				3,879,350
Depreciation and amortization			8,584				8,583				25,751				23,060
Loss on impairment of long-lived assets			24,690				-				24,690				-
Interest expense, net			93,274				185,586				361,747				1,199,789
Loss on early extinguishment of debt			-				-				-				696,502
Gain on termination of leases			(1,775,528	)			-				(1,775,528	)			-
Income tax expense (benefit)			-				(62,315	)			-				195,603
Segment net income (loss)		$	(10,935,484	)		$	(3,379,909	)		$	(17,693,050	)		$	465,821

Note 16 – Earnings Per Share

Basic and diluted earnings per share for the three months ended September 30, 2025 and September 30, 2024:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2025				2024				2025				2024
Net income (loss) attributable to common shareholders		$	(10,935,484	)		$	(3,379,909	)		$	(17,693,050	)		$	465,821
Basic weighted average shares			12,203,609				10,245,388				11,708,645				8,651,223
Basic income (loss) per share		$	(0.90	)		$	(0.33	)		$	(1.51	)		$	0.05
Diluted weighted average shares			12,203,609				10,245,388				11,708,645				9,613,553
Diluted income (loss) per share		$	(0.90	)		$	(0.33	)		$	(1.51	)		$	0.05

The table below includes information related to stock options and warrants that were outstanding at the end of each respective the three and nine months ended September 30, 2025 and September 30, 2024. For periods in which the Company incurred a net loss, these options and warrants are not included in weighted average dilutive shares because their impact would be anti-dilutive. For the nine months ended September 30, 2025 and 2024, there were approximately 2,613,240 and 1,024,469 options with a strike price

24

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

greater than the average share price for the respective periods, which have been excluded from the weighted average shares because including them would have been antidilutive under the treasury method.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2025				2024				2025				2024
Weighted average stock options			2,634,641				1,607,913				2,647,966				1,607,580
Weighted average price of exercisable stock options		$	6.20			$	8.00			$	6.20			$	8.00
Weighted average warrants			190,500				190,500				190,500				974,839
Weighted average price of warrants		$	9.80			$	9.80			$	9.80			$	3.01
Average price of common stock		$	0.72			$	15.74			$	1.60			$	13.84

Note 17 – Income Taxes

The Company recognized a benefit of $0 and expense of $195,603, respectively in the nine month periods ended September 30, 2025 and 2024. The Company’s effective tax rates for the nine months ended September 30, 2025 and 2024 differed from the federal statutory tax rate of 21% primarily due to a valuation allowance for the Company’s deferred tax assets and permanent differences.

The Company continually monitors and performs an assessment of the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets using a “more likely than not” standard. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Based on the Company’s review of this evidence, management determined that a full valuation allowance against all of the Company’s net deferred tax assets at September 30, 2025 was appropriate.

Note 18 – Subsequent Events

Management has evaluated events and transactions subsequent to the balance sheet date through the date of this report (the day the financial statements were available to be issued) for potential recognition or disclosure in the financial statements.

Capital Contribution

On October 27, 2025, the Company issued a press release announcing, among other developments, that co-founders Claudia and Ira Goldfarb committed to personally contribute up to $1,000,000 for working capital needs. The commitments are expected to close in early November.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated historical financial statements and the notes to those statements that appear elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and the notes to those statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Certain statements in the discussion contain forward-looking statements based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q titled “Risk Factors.” The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Factors that might cause or contribute to actual results or performance being materially different from those expressed or implied by such forward-looking statements include, but are not limited to, those set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Item 1A. Risk Factors in the 2024 Annual Report on 10-K.

Overview and Outlook

Sow Good is a trailblazing U.S.-based freeze dried candy and snack manufacturer dedicated to providing consumers with innovative and explosively flavorful freeze dried treats. Sow Good has harnessed the power of our proprietary freeze drying technology and product-specialized manufacturing facility to transform traditional candy into a novel and exciting everyday confectioneries subcategory that we call freeze dried candy. We began commercializing our freeze dried candy products in the first quarter of 2023, and as of September 30, 2025, we have fifteen stock keeping units (“SKUs”) in our Sow Good Candy line of treats. We sell our treats using an omnichannel strategy primarily focused on the wholesale and retail channels with less than 2% of sales coming from e-commerce as of September 30, 2025. As of September 30, 2025, our treats are offered for sale in approximately 5,000 brick-and-mortar retail outlets in the United States.

We have custom-built a 20,945 square foot freeze drying facility in Irving, Texas. Freeze drying removes up to 99% of moisture from a product in its frozen state by applying a small amount of heat in an extremely low air pressure, near outer space-like environment, through the use of massive vacuum chambers, resulting in moisture being removed from the product at the speed of sound. This process of removing moisture from the product, which can take up to twenty-four hours, concentrates its flavor, creating a “hyper dried, hyper crunchy, and hyper flavorful” snackable treat. Our freeze drying process and expertise allow us to easily expand our manufacturing into other freeze dried snacks, such as yogurt snacks. Our commitment to providing the most flavorful and crunchy treats extends into the product packaging process, where our employees are dedicated to hand-packaging our treats through our precision packaging process in vigilantly managed low humidity conditions to protect our treats from reintroduction to moisture.

We have built six bespoke freeze driers using proprietary technology tailored specifically to our products which allows us to freeze dry up to 24 million units of freeze dried candy per year, creating a truly state-of-the-art facility in Irving, Texas. We have six additional freeze driers, which we can have operational, as needed.

Sow Good, co-founded by Claudia and Ira Goldfarb, brings over a decade of manufacturing expertise to the consumer packaged goods (“CPG”) sector, specializing in advanced freeze-drying technology. With experience across pet, baby, and candy products, they have a proven track record of transforming niche trends into everyday consumer staples. Leveraging our proprietary technology, Sow Good delivers innovative, high-quality products with a long shelf life and natural preservation. Beyond product innovation, they are committed to job creation and positive community impact, making Sow Good a forward-thinking force in the industry.

Our products are sold in retailers nationwide from convenience and grocery stores to big-box retailers, such as Five Below, H-E-B, Kroger, Albertsons, and Ace Hardware. In addition, we sell a substantial portion of our products through distributors such as C&S Wholesale and Dutch Valley Food Distributors. In addition, we have expanded our market to two Middle East distributors, Sugary Trading and Festival Sweets. We believe there is a significant growth opportunity in increasing our shelf presence, SKU portfolio, and number of stores with our existing customers. We aim to have the ability to increase the availability of our products to these customers in current locations and distribution to more of their stores, while also broadening our SKU portfolio offerings. Bolstering our distribution and sales force will be a key growth driver for Sow Good so more of our products are available wherever our consumers choose to shop, whether it be a retail store, convenience store, or directly online. To further support our retail launches with existing customers and strengthen our brand name, we provide our product displays with distinctive designs and product highlights to enhance our visibility in current stores and educate new consumers on the value of freeze dried treats. We believe this strategy will capture the attention of new consumers, further educate and attract current consumers, and ultimately, increase sales for

26

our retailers.

Our omnichannel distribution strategy has three key components: retailers, e-commerce, and distributors. In aggregate, this omnichannel strategy provides us with a diverse set of consumers and customer partners, which may lead to a larger total addressable market opportunity than is normally available to products sold only in grocery stores, along with an opportunity to develop a direct relationship with our customers at our website, www.thisissowgood.com and our social media pages.

Key Factors Affecting our Performance

Our future success is dependent upon many factors. While the factors and trends described below present opportunities for us, they also pose significant challenges that we must successfully address to enable us to sustain and grow of our business and improve our results of operations. These factors and trends in our business have driven fluctuations in revenues over the periods presented and are expected to be key drivers of our results of operations and liquidity position for the foreseeable future.

Ability to Compete Against Competitors with Greater Resources and Market Clout

We operate in a highly competitive industry against competitors with significantly greater financial and other resources. We have become aware of certain of our competitors using their status in the market and marketing spend to limit our current and future customers from purchasing our products or reducing our shelf space. This caused the loss of significant customers with resulted in a significant reduction in revenue and an increase in our inventory. Our ability to keep our current customers, or grow our SKU portfolio on their shelves, and expand our sales with new customers will depend on our competitors’ ability to leverage their market status and financial resources to limit our access to consumers and our ability to compete with these larger competitors.

Ability to Retain and Grow Our Customer Base in Retail and Traditional Wholesale Distribution Channels

We are currently seeking to grow our customer base in a variety of physical retail and traditional wholesale distribution channels. Our products have launched in retailers nationwide from convenience and grocery stores to big-box retailers, such as Five Below, H-E-B, Kroger, Albertsons, and Ace Hardware. In addition, we sell a substantial portion of our products through distributors such as C&S Wholesale and Dutch Valley Food Distributors. In addition, we have expanded our market to two Middle East distributors. Given the nascent state of the freeze dried candy segment and the number of potential retailer and wholesaler customers, we also believe there is a significant growth opportunity with customer acquisition in both the retail and wholesale channels, domestically and internationally. Customer acquisition in these channels depends on, among other things, our go-to-market function and our ability to meet the demand of customers who require large volumes of products.

Ability to Expand Our Product Line

Our goal is to substantially expand our product line over time to increase our growth opportunity and reduce product-specific risks through SKU diversification into multiple products, including freeze dried products beyond our freeze dried treats, such as yogurt snacks and jerky. Our pace of growth will be partially affected by the cadence and magnitude of new product launches over time. We believe the commercialization of any new products will require us to hire additional employees within our product design and commercialization team, thereby increasing our marketing expense, as well as research and development costs within our administrative expense.

Impact of Inflation, Tariff and Trade Policies and Other Factors on Our Supply Chain and Operations

We expect supplies and prices of the ingredients that we are going to use to be affected by a variety of factors, such as weather, seasonal fluctuations, demand, politics and macroeconomic trends, including tariff and trade policies. These factors subject us to shortages or interruptions in product supplies, which could adversely affect our revenue and profits. In addition, we may face limits on the ability to source some of the candy for our freeze dried candy products.

Seasonality

Because we are early in our lifecycle as a public company, it is difficult to discern the exact magnitude of seasonality affecting our business from a demand standpoint. While evidence of any demand seasonality remains difficult to assess, we anticipate certain holiday cycles such as Halloween, Christmas, Easter and Valentine’s Day contributing to revenue fluctuations within a given year. In addition, candy purchasing in summer months may be reduced due to a variety of factors including greater levels of health consciousness during warm weather. Operationally, heat waves from July through October of 2024 presented challenges in transporting our freeze-dried treats in the summer months. These conditions led to reduced shipments, higher inventory levels, and a decline in revenue. Additionally, some candy transported via external distribution channels during the extreme summer heat melted,

27

impacting its shelf performance. We worked to remove affected products from shelves and replace them promptly to support recovery in product velocity. In the short term, these measures have impacted our market reputation, sell-through rates, and operational results. As a result, we anticipate an annual temporary decrease in shipments of our treats during summer months.

Components of Results of Operations

Revenues

We derive revenues from the sales of our freeze dried treats. The Company recognizes revenues when orders are shipped to customers.

Cost of Goods Sold

Our cost of goods sold, which may include inventory write-downs, consists primarily of facilities costs, material costs, and labor on the production of freeze dried treats.

Operating Expenses

Our operating expenses consist of general and administrative expenses, which includes salaries and benefits expenses, professional services expenses and other general and administrative expenses.

We expect our general and administrative expenses will increase as our business grows.

Interest Expense

Interest expense consists primarily of the cash interest expense on outstanding debt and the amortization of the debt discount created upon the issuance of warrants in connection with debt.

Interest Income

Interest income consists primarily of the interest on short-term U.S Treasury Bonds.

Provision for Income Taxes

The Company recognized a federal income tax expense of $0 and $195,603, for the nine months ended September 30, 2025 and 2024, respectively. The Company’s effective tax rates for the three months ended September 30, 2025 and 2024 differed from the federal statutory tax rate of 21% primarily due to a valuation allowance for the Company’s deferred tax assets and permanent differences.

Segment Overview

Our chief operating decision makers, who are our Chief Executive Officer and our Executive Chairman, review financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance, as well as for strategic operational decisions and managing the organization. For each of the nine months ended September 30, 2025 and 2024, we have determined that we have one operating segment and one reportable segment.

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Results of Operations for the Three Months Ended September 30, 2025 and September 30, 2024.

The following table summarizes selected items from the statement of operations for the three-month periods ended September 30, 2025 and September 30, 2024:

		Three Months Ended
		September 30,								Increase /
		2025				2024				(Decrease)				% Change
Revenues		$	1,553,138			$	3,554,157			$	(2,001,019	)			(56	%)
Cost of goods sold			10,500,626				2,998,171				7,502,455				250	%
Gross profit			(8,947,488	)			555,986				(9,503,474	)			(1709	%)
Operating expenses:
General and administrative expenses:
Salaries and benefits			1,826,918				1,875,908				(48,990	)			(3	%)
Professional services			97,553				320,289				(222,736	)			(70	%)
Other general and administrative expenses			1,712,505				1,607,844				104,661				7	%
Total general and administrative expenses			3,636,976				3,804,041				(167,065	)			(4	%)
Depreciation and amortization			8,584				8,583				1				0	%
Loss on impairment of long-lived assets			24,690				-				24,690				100	%
Total operating expenses			3,670,250				3,812,624				(142,374	)			(4	%)
Net operating loss			(12,617,738	)			(3,256,638	)			(9,361,100	)			287	%
Other income (expense):
Interest income			-				39,509				(39,509	)			(100	%)
Interest expense			(93,274	)			(225,095	)			131,821				59	%
Loss on early extinguishment of debt			-				-				-				0	%
Gain on termination of leases			1,775,528				-				1,775,528				100	%
Total other expense			1,682,254				(185,586	)			1,867,840				(1006	%)
Net loss before tax provision		$	(10,935,484	)		$	(3,442,224	)		$	(7,493,260	)			218	%

Comparison of the three months ended September 30, 2025 and September 30, 2024

Revenues

Sales of freeze dried candy for the three months ended September 30, 2025 were $1.6 million, compared to $3.6 million for the three months ended September 30, 2024, a decrease of $2.0 million, or (56%), driven by significantly reduced demand due in large part to increased competitive and market pressure by large competitors.

Cost of Goods Sold

Cost of goods sold for the three months ended September 30, 2025 were $10.5 million, compared to $3.0 million for the three months ended September 30, 2024, an increase of $7.5 million, or 250%. The increase was primarily due to charges to inventory to reserve for finished goods and materials associated with SKUs that the Company no longer intends to produce or sell, as well as the related write-down of overhead allocated to this inventory.

Gross Profit

Gross profit for the three months ended September 30, 2025 was $(8.9) million compared to gross profit of $0.6 million for the three months ended September 30, 2024, a decrease of $(9.5) million, or (1709%). Gross profit decreased over the comparative period due to a decrease in revenues of $2.0 million, coupled with an increase in the cost of goods sold of $7.5 million, largely due to inventory reserve charges.

Our gross margin loss was (576%) during the three months ended September 30, 2025, compared to a gross margin profit of 16% for the three months ended September 30, 2024. Our gross margin decreased due to lower sales and increased cost of goods sold as a percentage of revenues due to inventory reserve charges.

Operating Expenses

Salaries and Benefits

Salaries and benefits for the three months ended September 30, 2025 were $1.8 million, compared to $1.9 million for the three months ended September 30, 2024, a decrease of $49.0 thousand, or (3%). The decrease in salaries and benefits was mainly due

29

to headcount reductions in the third quarter. Salaries and benefits included stock option amortization expense of $1.3 million for both of the three-month periods ended September 30, 2025, and 2024. Stock-based compensation also includes amortization of shares granted to officers in lieu of cash of $104,554 for the three months ended September 30, 2025.

Professional Services

Professional services were $97.6 thousand for the three months ended September 30, 2025, compared to $320.3 thousand for the three months ended September 30, 2024, a decrease of $222.7 thousand, or (70%). The decrease was primarily due to decreased legal service expenses compared to the prior year period.

Other General and Administrative Expenses

Other general and administrative expenses for the three months ended September 30, 2025 were $1.7 million, compared to $1.6 million for the three months ended September 30, 2024, an increase of $104.7 thousand, or 7% primarily due to increased facilities costs, such as property tax, utilities, and rent expense.

Depreciation

Depreciation of property and equipment for the three months ended September 30, 2025 and 2024, respectively, was $268.3 thousand and $216.2 thousand, of which $259.7 thousand and $207.6 thousand was allocated to cost of goods sold, which resulted in net depreciation expense of $8.6 thousand and $8.6 thousand, respectively.

Impairment of long-lived assets

During the three months ended September 30, 2025, the Company recognized impairment charges of $24.7 thousand related to the derecognition of the Rock Quarry lease and the write-off of certain associated leasehold improvements. No impairment charges were recorded during the three months ended September 30, 2024.

Other Income (Expense)

In the three months ended September 30, 2025, other expense of $93.3 thousand consisted of interest expense derived from notes payable and the amortization of warrants issued as a debt discount, net of interest income on cash deposits. During the period ended September 30, 2024, other income consisted of interest expense of $185.6 thousand. Interest expense decreased due to decreased amortization on notes payable discounts as notes get closer to maturity.

Gain on termination of leases

During the three months ended September 30, 2025, the Company recognized a noncash gain of $1.8 million on the derecognition of the Rock Quarry and Mockingbird leases. No gain or loss on lease exits were recorded during the three months ended September 30, 2024.

Net Income (Loss)

Pretax net loss for the three months ended September 30, 2025 was $10.9 million, compared to pretax net income of $3.44 million during the three months ended September 30, 2024, decrease in earnings of $7.5 million, or (1006%). The increase was primarily due the decrease in gross profit of $(9.5) million, or (1709%) partially offset by a gain on the exit of leases $1.8 million, and decreased operating expenses of $142.4 thousand or 100%.

Provision for Income Taxes

The Company maintains a full valuation allowance related to our net deferred tax assets, primarily due to our historical net loss position. For the periods ended September 30, 2025 and 2024, the Company recognized federal income tax provisions of $0 and $195.6 thousand, respectively.

30

Comparison of the nine months ended September 30, 2025 and September 30, 2024

The following table summarizes selected items from the statement of operations for the three-month periods ended September 30, 2025 and September 30, 2024:

		Nine Months Ended
		September 30,								Increase /
		2025				2024				(Decrease)				% Change
Revenues		$	5,886,372			$	30,608,526			$	(24,722,154	)			(81	%)
Cost of goods sold			13,860,846				16,415,970				(2,555,124	)			(16	%)
Gross profit			(7,974,474	)			14,192,556				(22,167,030	)			(156	%)
Operating expenses:
General and administrative expenses:
Salaries and benefits			5,701,187				6,350,038				(648,851	)			(10	%)
Professional services			548,106				1,382,393				(834,287	)			(60	%)
Other general and administrative expenses			4,832,623				3,879,350				953,273				25	%
Total general and administrative expenses			11,081,916				11,611,781				(529,865	)			(5	%)
Depreciation and amortization			25,751				23,060				2,691				12	%
Loss on impairment of long-lived assets			24,690				-				24,690				100	%
Total operating expenses			11,132,357				11,634,841				(502,484	)			(4	%)
Net operating loss			(19,106,831	)			2,557,715				(21,664,546	)			(847	%)
Other income (expense):
Interest income			27,266				43,639				(16,373	)			(38	%)
Interest expense			(389,013	)			(1,243,428	)			854,415				(69	%)
Loss on early extinguishment of debt			-				(696,502	)			696,502				(100	%)
Gain on termination of leases			1,775,528				-				1,775,528				100	%
Total other expense			1,413,781				(1,896,291	)			3,310,072				(175	%)
Net loss before tax provision		$	(17,693,050	)		$	661,424			$	(18,354,474	)			(2775	%)

Revenues

Sales of freeze dried candy for the nine months ended September 30, 2025 were $5.9 million, compared to $30.6 million for the nine months ended September 30, 2024, a decrease of $24.7 million or (81%), driven by significantly reduced demand due in large part to increased competitive and market pressure by large competitors.

Cost of Goods Sold

Cost of goods sold for the nine months ended September 30, 2025 were $13.9 million, or 235% of sales compared to $16.4 million, or 54% of sales for the nine months ended September 30, 2024, a decrease of $2.6 million. The increase of cost of goods sold as a percent of sales was primarily due to charges to inventory to reserve for finished goods and materials associated with SKUs that the Company no longer intends to produce or sell, as well as the related write-down of overhead allocated to this inventory.

Gross Profit

Gross loss for the nine months ended September 30, 2025 was $(8.9) million compared to gross profit of $14.2 million for the nine months ended September 30, 2024, a decrease of -$22.2 million, or (156%). Gross profit decreased over the comparative period due to decreased revenues of $24.7 million partially offset by lower cost of goods sold of $2.6 million.

Our gross profit margin was (135.5)% during the nine months ended September 30, 2025, compared to 46.37% for the nine months ended September 30, 2024. Our gross profit margin decreased as sales decreased while allocated overhead costs and inventory reserves increased over the prior year period.

Operating Expenses

Salaries and Benefits

Salaries and benefits for the nine months ended September 30, 2025 were $5.7 million, compared to $6.4 million for the nine months ended September 30, 2024, a decrease of $648.9 thousand, or (10%). The decrease in salaries and benefits was mainly due to a decrease in bonus compensation of approximately $850,000 and headcount reductions. Salaries and benefits included stock-based compensation expense of $3.8 million for both of the six-month periods ending September 30, 2025, and 2024. Stock-based

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compensation consists of stock options expense for employees and officers of the Company and share grants awarded to certain executives of the Company in lieu of salary, which are being amortized over the service period.

Professional Services

Professional services were $548.1 thousand for the nine months ended September 30, 2025, compared to $1.4 million for the nine months ended September 30, 2024, a decrease of $834.3 thousand, or (60%). The decrease was primarily due to heightened legal service expenses related to the public offering of common stock and Nasdaq listing in the prior year period.

Other General and Administrative Expenses

Other general and administrative expenses for the nine months ended September 30, 2025 were $4.8 million, compared to $3.9 million for the nine months ended September 30, 2024, an increase of $953.3 thousand or 25%, primarily due to increased facilities costs related to the company’s new facility, to the extent they are not allocated to inventory.

Depreciation

Depreciation of property and equipment for the nine months ended September 30, 2025 and 2024, respectively, was $787.0 thousand and $587.9 thousand, of which $501.5 thousand and $564.8 thousand was allocated to cost of goods sold, which resulted in net depreciation expense of $25.8 thousand and $23.1 thousand, respectively.

Impairment of long-lived assets

During the nine months ended September 30, 2025, the Company recognized impairment charges of $24.7 thousand related to the derecognition of the Rock Quarry lease and the write-off of certain associated leasehold improvements. No impairment charges were recorded during the nine months ended September 30, 2024.

Other Income (Expense)

Interest

In the nine months ended September 30, 2025, other expense consisted of net interest expense of $361.7 thousand derived from notes payable and the amortization of warrants issued as a debt discount, net of interest income on cash deposits. During the nine months ended September 30, 2024, other income consisted of net interest expense of $1.2 million and $696.5 thousand loss on the early extinguishment of debt. Interest expense decreased due to decreased amortization on notes payable discounts as a $5.2 million of debt was paid down during the second quarter of 2024.

Gain on termination of leases

During the three months ended September 30, 2025, the Company recognized a noncash gain of $1.8 million on the derecognition of the Rock Quarry and Mockingbird leases. No gain or loss on lease exits were recorded during the three months ended September 30, 2024.

Net Income (Loss)

Pretax net loss for the nine months ended September 30, 2025 was $17.7 million, compared to pretax net income of $0.7 million during the nine months ended September 30, 2024, a decrease in earnings of $18.4 million or (2775%). The transition to pretax net loss from pretax net income was primarily due the decrease in gross profit of -$22.2 million, or (156%), while operating expenses decreased $502.5 thousand, or 100%.

Provision for Income Taxes

The Company maintains a full valuation allowance related to our net deferred tax assets, primarily due to our historical net loss position. For the periods ended September 30, 2025 and 2024, the Company recognized federal income tax provisions of $0 and $195.6 thousand, respectively.

Liquidity, Going Concern and Capital Resources

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The following table summarizes our total current assets, liabilities and working capital at September 30, 2025 and December 31, 2024.

		September 30,				December 31,
		2025				2024
Current Assets		$	12,332,937			$	25,076,140
Current Liabilities		$	3,216,029			$	7,364,541
Working Capital		$	9,116,908			$	17,711,599

As of September 30, 2025, we had working capital of $9.1 million, compared to working capital of $17.7 million as of December 31, 2024. The decreased working capital is mainly attributable a decrease in cash of $3.3 million and decreased inventory of $8.8 million. As of September 30, 2025, our balance of cash and cash equivalents was $387.3 thousand, compared to $3.7 million at December 31, 2024. We expect to continue to incur significant capital expenditures related to the development and operation of our freeze dried candy business. Our ability to resume our production levels and distribution capabilities and further increase the value of our brands is in part dependent on our success in deploying additional capital. Our plan for satisfying our cash requirements for the next twelve months is through cash on hand, however we will require additional financing in the form of equity or debt which may not be available on favorable terms, or at all. We may not have sufficient funds to sustain our operations for the next twelve months. These factors raise substantial doubt about our ability to continue as a going concern. See Note 3 – “Going Concern” of the notes to consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.

Indebtedness

On April 28, 2025, the Company restructured its outstanding current debt through the issuance of Convertible Notes in a dollar-for-dollar exchange. On April 28, 2025, the Company entered into an exchange agreement (the “Exchange Agreement”) with related party holders of the Company’s outstanding promissory notes (the “Outstanding Notes”) with an aggregate principal amount of $2.7 million, maturity dates ranging from April 8, 2025 to August 23, 2025 and interest rates ranging from 6% to 8%. Pursuant to the Exchange Agreement, holders exchanged their Outstanding Notes for new senior convertible promissory notes (the “Convertible Notes”) in an amount equal to $2.8 million, the aggregate principal amount of the Outstanding Notes, plus accrued and unpaid interest thereunder. The Convertible Notes have a maturity date of April 30, 2030 and will pay interest semiannually in arrears on May 1 and November 1 beginning on November 1, 2025. At the Company’s election, interest payable on an interest payment date may be added to the principal amount of the Convertible Note on the applicable interest payment date and will no longer be owed to holders of the Convertible Notes. The Convertible Notes are convertible at the election of the holders, in whole or in part, into shares of common stock based on a price per share equal to the average closing price of such common stock for the five trading days immediately prior to the execution of and entry into the Convertible Notes, with such conversion prices ranging from $0.62 to $0.63. The Convertible Notes are senior in right of payment to all existing and future debt obligations of the Company and will be secured by all existing and future assets of the Company. The Convertible Notes are redeemable by the Company at any time upon ten days’ notice and at the option the holders for the principal amount thereof plus interest, beginning on January 1, 2026.

Cash Flows

The following table summarizes our cash flows during the nine months ended September 30, 2025 and 2024, respectively.

		Nine Months Ended
		September 30,
		2025				2024
Net cash used in operating activities		$	(3,335,070	)		$	(6,125,244	)
Net cash used in investing activities			(1,076	)			(4,469,287	)
Net cash provided by financing activities			-				15,130,582
Net change in cash and cash equivalents		$	(3,336,146	)		$	4,536,051

Net cash used in operating activities was $3.3 million for the nine months ended September 30, 2025, compared to $6.1 million of cash used in operating activities nine months ended September 30, 2024. The decrease in cash used in operating activities was primarily due to decreases in the level of cash spent on inventory and reduced accounts receivable due to lower sales.

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Net cash used in investing activities was $1.1 thousand for the nine months ended September 30, 2025, compared to $4.5 million for the nine months ended September 30, 2024, a decrease of $4.5 million. Cash used in investing activities during 2024 was primarily used to build out additional freezers and to improve office space.

Net cash provided by financing activities was $0 and $15.1 million for the nine months ended September 30, 2025 and 2024, respectively. Net cash provided by financing activities for the nine months ended September 30, 2024 consisted of $12.0 million of net proceeds from a public offering of 1,380,000 shares at a price of $10.00 per share completed on May 9, 2024, and net proceeds of $3.7 million from private placement offerings to accredited investors and related parties from the issuance of 515,597 shares at $7.25 per share on March 28, 2024. Proceeds from warrant and options exercises totaled $5.7 million during the nine months ended September 30, 2024, which was used to pay down notes payable totaling approximately $6.2 million nine months ended September 30, 2024.

Contractual Obligations and Commitments

The Company is a party to a real property lease for its 20,945 square foot facility at 1440 N. Union Bower Rd., Irving, TX 75061, under which an entity owned entirely by Ira Goldfarb. The lease term is through September 15, 2025, with two five-year options to extend, at a monthly lease term of $10.0 thousand, with approximately a 3% annual escalation of lease payments commencing September 15, 2021. The Company has elected to extend this lease.

On July 1, 2023, the Company entered into a lease for additional warehouse space in Irving, Texas, of approximately 9,000 feet under a 37-month lease at a rate of $8,456 per month, with approximately a 4% annual escalation of lease payments. The facility lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate for the lease at the time of commencement was 8%.

On May 22, 2024, the Company entered into an industrial lease (the “Lease”) with USCIF Pinnacle Building B LLC, a Delaware limited liability company. Pursuant to the terms of the Lease, the Company will lease approximately 324,000 rentable square feet from the Lessor at 4024 Rock Quarry Road, Dallas, Texas for a term of approximately 62 months, which the Company intends to use as industrial and manufacturing space. The term of the Lease commenced on May 22, 2024. The Lease provides for graduated rent payments starting at $122,175 per month, and increasing up to $297,289.14 per month by the end of the Lease, plus taxes, insurance and common area maintenance costs. The Company was required to provide a security deposit in the amount of $1,000,000 in connection with the Lease. Effective September 30, 2025, the Company agreed with Pinnacle to exit the facility on January 31, 2026. As a result of reducing the lease term by 42 months, the company reduced the related right-of-use asset by $10,397,922 and the lease liability by $11,829,536, resulting in a noncash gain $1,431,614.

On October 26, 2023, the Company entered into a lease agreement (the “2023 Lease Agreement”) with Prologis, Inc., a Maryland corporation. Pursuant to the terms of the 2023 Lease Agreement, beginning on November 1, 2023 the Company leases approximately 51,264 rentable square feet at Stemmons 10, 308 Mockingbird Lane, Dallas, TX 75247 for a term of approximately five years and two months (the “Initial Term”), which the Company intends to use as warehousing and distribution space. The 2023 Lease Agreement provides for base rent payments starting at approximately $42.5 thousand per month (taking into consideration an initial phase-in of the base rent obligation) in the first year of the Initial Term, and increase each year, up to approximately $51.7 thousand per month during the last year of the Initial Term. The 2023 Lease Agreement may be extended for a period of five years, at the option of the Company, at a rate to be based on a fair market rent rate determined at the time of the extension. Effective September 30, 2025, the Company agreed with Prologis to exit the lease as of September 30, 2025. As a result of reducing the lease term by 39 months, the company derecognized the related right-of-use asset $2,325,675 and the lease liability of $2,673,619, resulting in a noncash gain of $347,943.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial conditions and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financial statements required us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for

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making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these estimates.

Our critical accounting policies are more fully described in Note 2 of the footnotes to our financial statements appearing elsewhere in this Form 10-Q, and Note 2 of the footnotes to the financial statements provided in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Commodity Price Risk

We do not expect any significant effects from commodity price risk outside of inherent inflationary risks.

Interest Rate Risk

We are not a party to agreements that subject us to floating rates of interest and do not anticipate entering into any transactions that would expose us to any direct interest rate risk.

Foreign Currency Risk

We did not hold a material amount of cash in foreign jurisdictions as of September 30, 2025. However, we anticipate that as our foreign operations grow, we may hold more cash in foreign jurisdictions, particularly Mexico, Colombia and China, and possibly expose ourselves to greater currency fluctuation risk than we currently experience.

Item 4. Controls and Procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2025, as such term is defined in Rules 13a-15(e) and 15d-15(e) under Securities Exchange Act of 1934, as amended (the “Exchange Act”). We maintain disclosure controls and procedures that are designed to ensure the information we are required to disclose in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation as of September 30, 2025, our Chief Executive Officer, Claudia Goldfarb, and our Chief Financial Officer, Donna Guy concluded that our disclosure controls and procedures are effective.

There have been no changes in the Company’s internal control over financial reporting during the nine months ended September 30, 2025 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time in the ordinary course of business, we are a party to various types of legal proceedings. We do not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors.

Significant tariffs could increase Costs, decrease margin, and materially adversely affect the business.

Significant tariffs on certain products could materially increase the costs of our business. These additional costs may not be able to be fully passed along to our customers. These additional costs could materially adversely affect our margins. To the extent that tariffs cause any adverse impacts on global supply chains, it could further materially affect the ability of our ability to timely source our raw materials. If, as a result of tariffs, the United States’ economy experiences a recession or other economic slowdown, the demand for our products may decline materially.

There is substantial doubt about our ability to continue as a going concern.

Our financial statements as of September 30, 2025 have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of September 30, 2025, we had cash and cash equivalents of $387.3 thousand and an accumulated deficit of $80.1 million. We do not believe that our cash and cash equivalents are sufficient to fund operations and capital expenditures to reach larger scale revenue generation from our product offerings. As a result of our financial condition and other factors described herein, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern will depend on our ability to obtain additional funding, as to which no assurances can be given. We continue to analyze various alternatives, including potentially obtaining debt or equity financings or other arrangements. Our future success depends on our ability to raise capital. We cannot be certain that raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to us or, if available, will be on terms acceptable to us, and, to the extent it is obtained, it would likely have rights, preferences, and privileges senior to those of holders of our common stock and would further dilute our current stockholders. Our ability to raise capital is also constrained by the price of and demand for our common stock. The inclusion of disclosures expressing substantial doubt about our ability to continue as a going concern could also materially adversely affect our stock price and our ability to raise new capital. If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our current development programs, cut operating costs, forgo future development and other opportunities, or even terminate our operations in which case our investors could lose some or all of their investment.

Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our securities.

On May 14, 2025, we received a letter from Nasdaq indicating that the listing of the Company’s common stock was not in compliance with Nasdaq Listing Rule 5550(a)(2), as the closing bid price of our common stock was less than $1.00 per share over a consecutive 30- trading-day period. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we have a period of 180 calendar days, or until November 10, 2025, to regain compliance with the minimum bid price requirement, with the possibility of extension for an additional 180 calendar days if we meet Nasdaq’s continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market with the exception of the minimum bid price requirement. In addition, we would be required to provide written notice of our intention to cure the deficiency during such additional compliance period, by effecting a reverse stock split, if necessary

We can regain compliance if our common stock is at least $1.00 for a minimum of 10 consecutive business days (unless Nasdaq exercises its discretion to extend the 10-day period) at any time during the 180 day compliance period (or additional compliance period, if applicable) (the “Nasdaq Listing Requirement”).

If it appears to Nasdaq that we will not be able to cure the deficiency in connection with the minimum bid price requirement, or if we are otherwise not eligible for the additional compliance period, and we do not regain compliance by September 30, 2025 for the minimum bid price requirement, Nasdaq will provide written notification to us that our shares of common stock are subject to delisting. At that time, we may appeal the delisting determination to a hearings panel pursuant to the procedures set forth in the applicable Nasdaq Listing Rules.

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The notice is a notice of deficiency, not delisting, and does not currently affect the listing or trading of our common stock on Nasdaq, which continues to trade under the symbol “SOWG.” However, as of June 30, 2025, we did not meet the Nasdaq Listing Requirement, and we may not meet that requirement before the end of the compliance period (or additional compliance period, if applicable).

On November 11, 2025, Nasdaq granted a second 180-day period compliance period in order to effect our plans to increase the share price, or effect a stock split, if needed by May 11, 2026. We continue to actively monitor the closing bid price of our common stock and are evaluating available options, including by effecting the 1-for-3 reverse stock split that was approved by the Company’s stockholders at the Company’s 2025 Annual Meeting of Stockholders held on June 13, 2025, and intend to take appropriate steps to maintain our listing on Nasdaq. However, there can be no assurance that we will be able to regain compliance with the minimum bid price requirement.

Such a delisting would likely have a negative effect on the price of the securities and would impair your ability to sell or purchase the securities when you wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements. Additionally, if our securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

These are not the only risks we face. You should carefully consider these risk factors, together with the risk factors set forth in Item 1A of our Annual Report on Form 10-K. There have been no other material changes from the risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None of the Company’s directors or officers adopted or terminated any purported Rule 10b5-1 plans and/or “non-Rule 10b5-1 trading arrangements,” as defined under applicable law.

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Item 6. Exhibits.

Exhibit No	Description
2.1	Agreement and Plan of Merger by and between Sow Good Inc. and Black Ridge Oil & Gas, Inc., dated January 20, 2021 (incorporated by reference to Exhibit 2.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on January 22, 2021)
2.2	Articles of Merger by and between Sow Good Inc. and Black Ridge Oil & Gas, Inc., dated January 20, 2021 (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on January 22, 2021)
2.3	Plan of Conversion of Sow Good Inc. (incorporated by reference to Exhibit 2.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on February 22, 2024)
3.1	Certificate of Incorporation (incorporated by reference to Exhibit 3.3 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on February 22, 2024)
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on February 22, 2024)
3.3	Articles of Conversion (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on February 22, 2024)
3.4	Certificate of Conversion (incorporated by reference to Exhibit 3.2 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on February 22, 2024)
4.1	Form of Common Stock Certificate of Sow Good Inc. (incorporated by reference to Exhibit 4.1 of the Form 10-K filed with the Securities and Exchange Commission by Sow Good Inc. on March 22, 2024)
4.2	Description of Securities (incorporated by reference to Exhibit 4.2 of the Form 10-K filed with the Securities and Exchange Commission by Sow Good Inc. on March 22, 2024)
10.1	Form of Senior Convertible Promissory Note (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on April 30, 2025)
31.1*	Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)
31.2*	Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)
32.1**	Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104*	Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)

* Filed herewith.

** The certifications attached as Exhibit 32.1 and 32.2 accompanying this Quarterly Report on Form 10-Q are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

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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 thereunto duly authorized.

		SOW GOOD INC.
Date: November 14, 2025		By:	/s/ Claudia Goldfarb
			Claudia Goldfarb, Chief Executive Officer (Principal Executive Officer)
Date: November 14, 2025		By:	/s/ Donna Guy
			Donna Guy, Chief Financial Officer (Principal Financial Officer)

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FAQ

What were SOWG’s Q3 2025 revenues and net loss?

For the three months ended September 30, 2025, revenue was $1,553,138 and net loss was $10,935,484.

How did nine‑month 2025 results compare to 2024 for SOWG?

Nine‑month 2025 revenue was $5,886,372 vs. $30,608,526 in 2024, with a net loss of $17,693,050 vs. net income of $465,821.

Did Sow Good record any significant write‑downs in Q3 2025?

Yes. An inventory obsolescence reserve of $5,377,125 was recorded for discontinued SKUs and related items.

What liquidity did SOWG report as of September 30, 2025?

Cash and cash equivalents were $387,294; operating cash outflow for the nine months was $3,335,070.

What lease changes affected SOWG’s balance sheet?

Lease exits reduced the right‑of‑use asset to $1,169,271 and operating lease liabilities to $2,675,013, including a $1,775,528 gain.

What financing steps did SOWG take with related parties?

Outstanding notes were exchanged into $2,803,818 senior convertible notes maturing April 30, 2030 at $0.62–$0.63 conversion prices.

Did SOWG disclose a going concern issue?

Yes. Management stated conditions that raise substantial doubt about continuing as a going concern.