Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $2.5 million, a significant decrease from $11.4 million in Q1 2024, primarily due to softening demand and increased competitive pressure [7] - Gross profit in Q1 2025 was $1.1 million compared to $4.6 million in the same period last year, with a gross margin improvement to 45% from 41% year-over-year [8] - Net loss for Q1 2025 was $2.6 million, or a loss of $0.23 per diluted share, compared to net income of $511,000, or $0.06 per diluted share, in Q1 2024 [9] - Adjusted EBITDA for Q1 2025 was negative $800,000, down from $2.5 million in Q1 2024 [9] - Cash and cash equivalents at the end of Q1 2025 were $1.6 million, down from $3.7 million at the end of 2024 [10] Business Line Data and Key Metrics Changes - The company reported a 79% increase in revenue from Q4 2024 to Q1 2025, indicating a recovery trend [4] - The freeze-dried candy line has seen renewed consumer enthusiasm, although competitive pressure from larger CPG companies remains a challenge [5] Market Data and Key Metrics Changes - The company is experiencing a slow increase in sell-through data, with units per door rising from 12-13 to 16 over recent weeks [26] - Retail partners like Five Below and Ace Hardware are showing positive initial demand and reorders, indicating a return to normal reorder cadences [28][30] Company Strategy and Development Direction - The company is focusing on cost savings, cash conservation, and expanding candy distribution while exploring new category opportunities [11] - Strategic actions include reducing overhead costs, implementing automation in packaging, and postponing certain production activations to align with demand [12][13] - The company is also pursuing international expansion, having launched products in the Middle East with positive initial orders [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about a gradual recovery in sales, expecting Q2 to show modest improvement over Q1 [21] - The company is focused on maintaining quality and innovation while navigating a competitive landscape with both large and small competitors [22] Other Important Information - The company has entered into exchange agreements with noteholders to extend maturities by five years, reflecting confidence in the recovery plan [10][13] - The management team is actively evaluating strategies to improve cash position, including converting inventory to cash [50] Q&A Session Summary Question: Can you share insights on consumer enthusiasm and retail inventory? - Management noted a slow increase in sell-through data, with a return to normal reorder cadences as consumers return to the brand after trying competitors [26][30] Question: What is the current number of retail doors? - The company is currently in approximately 1,900 to 2,000 retail doors [34] Question: How is the quality of the inventory and plans for working it down? - Management indicated that most heat-affected inventory has been identified and removed, with a focus on working through remaining inventory strategically [35][36] Question: What are the competitive dynamics with larger CPG companies? - Management observed that smaller competitors have exited the space, while larger CPGs are not performing as expected, indicating room for improvement in product quality [38][40] Question: What are the plans for spare capacity in production? - The company is exploring opportunities for private labeling and home manufacturing to utilize spare capacity effectively [46] Question: What strategies are in place to improve cash position? - Management is focused on converting inventory to cash and evaluating all strategies to enhance cash flow [50]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $2.5 million, a significant decrease from $11.4 million in Q1 2024, primarily due to softening demand and increased competitive pressure [7] - Gross profit in Q1 2025 was $1.1 million compared to $4.6 million in the same period last year, with a gross margin improvement to 45% from 41% due to lower cost of goods sold [8][10] - Net loss for Q1 2025 was $2.6 million, or a loss of $0.23 per diluted share, compared to net income of $511,000, or $0.06 per diluted share, in Q1 2024 [10] - Adjusted EBITDA for Q1 2025 was negative $800,000, down from $2.5 million in Q1 2024 [10] - Cash and cash equivalents decreased to $1.6 million from $3.7 million as of December 31, 2024 [10] Business Line Data and Key Metrics Changes - The company reported a 79% increase in revenue from Q4 2024, indicating a recovery trend despite the overall decline year-over-year [5] - The freeze-dried candy line has seen renewed consumer enthusiasm, although competitive pressure from larger CPG companies remains a challenge [6] Market Data and Key Metrics Changes - The company is experiencing a slow increase in sell-through data, with units per door rising from 12-13 to 16 over recent weeks [27] - Retail partners like Five Below and Ace Hardware are showing positive initial demand and reorders, indicating a return to normal reorder cadences [29][31] Company Strategy and Development Direction - The company is focusing on cost savings, cash conservation, and expanding candy distribution while exploring new category opportunities [12] - Strategic actions include reducing overhead costs, enhancing operational efficiency through automation, and postponing certain production activations to align with demand [13][14] - The company plans to enter new categories such as beef jerky and freeze-dried yogurt snacks, emphasizing clean label ingredients [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery trajectory, expecting modest improvement in Q2 over Q1 as new partnerships take hold [23] - The company acknowledges ongoing challenges but believes it is positioning itself to emerge stronger through innovation and category expansion [24] Other Important Information - The company has entered into exchange agreements with noteholders to extend maturities by five years, reflecting confidence in its recovery plan [11][14] - Initial orders from the Middle East market exceeded expectations, presenting a significant growth opportunity [20] Q&A Session Summary Question: What is the trend in weekly or monthly velocities and retail inventory position? - Management noted a slow increase in sell-through data, with units per door rising to 16, and excess inventory at Five Below is being worked through successfully [27][29] Question: How does the company view its inventory quality and expectations for the next quarters? - Management indicated that most heat-affected inventory has been identified and removed, and they have a two-year shelf life on most products, allowing time to work through remaining inventory [37][38] Question: What are the competitive dynamics with larger CPG companies? - Management observed that smaller competitors have exited the space, and while larger CPGs have entered, they are not performing as expected, with significant declines in their sell-through rates [41][43]

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q1 2025 financial statements show a shift from $0.51 million net income to a $2.57 million net loss, driven by a 78% revenue decline and indicating a going concern risk [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) As of March 31, 2025, total assets slightly decreased to $52.7 million, primarily due to a $2.1 million reduction in cash, while inventory increased and equity declined due to net loss Condensed Balance Sheet Data (in USD) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,615,108 | $3,723,440 | | Inventory, net | $21,142,831 | $20,313,315 | | Total current assets | $24,625,698 | $25,076,140 | | Total assets | $52,723,185 | $54,695,731 | | Total current liabilities | $6,750,942 | $7,364,541 | | Total liabilities | $21,934,075 | $22,707,670 | | Total stockholders' equity | $30,789,110 | $31,988,061 | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) Q1 2025 saw a net loss of $2.57 million, a significant reversal from Q1 2024's $0.51 million net income, primarily due to a 78% revenue decrease Statement of Operations Summary (in USD) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $2,476,922 | $11,406,320 | | Gross Profit | $1,102,723 | $4,629,438 | | Total Operating Expenses | $3,517,911 | $3,700,181 | | Net Operating Income (Loss) | ($2,415,188) | $929,257 | | Net Income (Loss) | ($2,571,054) | $510,588 | | Basic Net Loss per Share | ($0.23) | $0.08 | [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for Q1 2025 was $2.0 million, a reversal from Q1 2024's $1.3 million provided, leading to a $2.1 million decrease in cash and equivalents Cash Flow Summary (in USD) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($2,000,542) | $1,297,651 | | Net cash used in investing activities | ($107,790) | ($630,332) | | Net cash provided by financing activities | $0 | $3,737,999 | | Net change in cash and cash equivalents | ($2,108,332) | $4,405,318 | [Notes to the Condensed Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20the%20Condensed%20Financial%20Statements%20(Unaudited)) Notes detail the company's freeze-dried candy business, accounting policies, a 'Going Concern' warning due to a $65 million deficit, high customer/supplier concentration, and a $2.8 million debt restructuring - The company's business is now entirely focused on its freeze-dried candy and ice cream product lines, having discontinued its previous smoothie, snack, and granola products, with production capacity expanded to six freeze driers operational[29](index=29&type=chunk) - There is substantial doubt about the Company's ability to continue as a going concern, given its accumulated deficit of **$65 million** and a net loss of **$2.57 million** for the quarter, with management outlining plans for recovery including debt restructuring, cost reductions, and exploring new markets[60](index=60&type=chunk)[61](index=61&type=chunk) - The company exhibits significant customer and supplier concentration, with the top three customers accounting for **83.2% of revenues** and the top three suppliers for **76% of purchases** in Q1 2025[47](index=47&type=chunk)[48](index=48&type=chunk) - Subsequent to the quarter end, on April 28, 2025, the company restructured **$2.8 million** of outstanding and accrued debt into new senior convertible promissory notes maturing in 2030[126](index=126&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 78% Q1 2025 revenue decline and $2.6 million net loss to intense competition and reduced demand, highlighting liquidity concerns and a $2.8 million debt restructuring - The company operates as a freeze-dried candy and snack manufacturer with **21 candy SKUs** and **3 ice cream SKUs**, sold through an omnichannel strategy in approximately **3,000 retail outlets**[128](index=128&type=chunk) - A key challenge is competition from larger players with greater resources, which has led to the loss of significant customers and a substantial reduction in revenue[135](index=135&type=chunk) Results of Operations Comparison (in USD) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $2,476,922 | $11,406,320 | (78%) | | Gross profit | $1,102,723 | $4,629,438 | (76%) | | Net income (loss) | ($2,571,054) | $510,588 | (604%) | - The **78% decrease in revenue** was driven by significantly reduced demand due to increased competitive and market pressure by large competitors[150](index=150&type=chunk) - As of March 31, 2025, the company had working capital of **$17.9 million** but only **$1.6 million** in cash and cash equivalents, down from **$3.7 million** at year-end 2024[162](index=162&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company anticipates no significant commodity or interest rate risk, but expects foreign currency risk to increase with international expansion into Mexico, Colombia, and China - The company does not anticipate significant exposure to commodity price or interest rate risk[176](index=176&type=chunk)[177](index=177&type=chunk) - Foreign currency risk is expected to increase with the growth of international operations, particularly in Mexico, Colombia, and China[178](index=178&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[179](index=179&type=chunk) - No material changes were made to the company's internal control over financial reporting during the first quarter of 2025[180](index=180&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company does not anticipate any current legal proceedings to materially adversely affect its financial position, results, or cash flows - The company does not expect any current legal proceedings to have a material adverse effect on its financials[183](index=183&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) Key risks include potential tariffs impacting costs and margins, and substantial doubt about the company's ability to continue as a going concern due to its $65 million accumulated deficit and insufficient cash - Significant tariffs could materially increase costs, decrease margins, and adversely affect the business[184](index=184&type=chunk) - There is substantial doubt about the company's ability to continue as a going concern, with cash of **$1.6 million** and an accumulated deficit of **$65 million** noted as insufficient to fund operations without additional financing as of March 31, 2025[185](index=185&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - None[187](index=187&type=chunk) [Other Information](index=31&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading plans or other non-Rule 10b5-1 arrangements during the period - None of the Company's directors or officers adopted or terminated any Rule 10b5-1 plans[190](index=190&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and various corporate and financial agreements

IRVING, Texas, May 14, 2025 (GLOBE NEWSWIRE) -- Sow Good Inc. (Nasdaq: SOWG) ("Sow Good" or "the Company"), a trailblazer in the freeze dried candy and treat industry, is reporting financial and operating results for first quarter ended March 31, 2025. "We're encouraged by the progress we made in the first quarter of 2025, particularly the successful everyday launches at Winn-Dixie, Ace Hardware, and Orville Hardware, as well as Holiday launches at Albertsons" said Claudia Goldfarb, CEO of Sow Good. "While ...

Core Insights - Sow Good Inc. is launching two new products: Freeze Dried Caramel and Raw Caramel at the 2025 Sweets & Snacks Expo [3] - The new products will be available for purchase starting June 2025 through the company's website and retail partners [4] - Sow Good Inc. focuses on innovative freeze drying techniques to transform traditional confections, aiming to deliver unique textures and flavors [5] Product Details - Freeze Dried Caramel: A product designed to offer a unique texture and flavor experience [3] - Raw Caramel: Another innovative offering that complements the freeze dried variant [3] - Seasonal SKUs will also be launched at the end of the second quarter [3] Company Background - Sow Good Inc. is based in Dallas, TX, and is dedicated to reimagining classic treats through innovative techniques [5] - The company emphasizes the production of its confections in the USA [4]

Core Viewpoint - Sow Good Inc. is set to hold a conference call on May 14, 2025, to discuss its Q1 2025 financial results, showcasing its commitment to transparency and investor engagement [1][2]. Company Overview - Sow Good Inc. is a U.S.-based manufacturer specializing in freeze dried candy and snacks, utilizing proprietary freeze-drying technology to create innovative and flavorful treats [4]. - The company focuses on five core pillars: innovation, scalability, manufacturing excellence, meaningful employment opportunities, and food quality standards [4]. Conference Call Details - The conference call will take place at 10:00 a.m. Eastern time, with registration required for phone access [2]. - The call will be broadcast live and available for replay on the company's website [3]. Investor and Media Inquiries - For investor inquiries, Cody Slach from Gateway Group, Inc. can be contacted at 1-949-574-3860 or via email [5]. - Media inquiries can be directed to Sow Good, Inc. at 1-214-623-6055 or through their press email [5].

Company Performance - Sow Good Inc. reported a quarterly loss of $0.40 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.21, and compared to earnings of $0.23 per share a year ago, indicating a significant decline [1] - The company posted revenues of $1.38 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 71.17%, and down from $9.52 million in the same quarter last year [2] - Over the last four quarters, Sow Good has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Movement and Outlook - Sow Good shares have increased by approximately 34.8% since the beginning of the year, contrasting with a decline of 3.7% in the S&P 500 [3] - The company's earnings outlook is mixed, with the current consensus EPS estimate for the coming quarter at -$0.11 on revenues of $6.5 million, and -$0.32 on revenues of $33.5 million for the current fiscal year [7] - The current Zacks Rank for Sow Good is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Industry Context - The Consumer Products - Discretionary industry, to which Sow Good belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Sow Good's stock performance [5]

Core Viewpoint - Sow Good Inc. is set to announce its financial results for Q4 and the full year of 2024 on March 21, 2025, during a conference call [1] Group 1: Conference Call Details - The conference call will take place on March 21, 2025, at 12:00 p.m. Eastern time [2] - Registration is required to access the call, and participants will receive dial-in instructions upon registration [2] - The call will be broadcast live and available for replay on the Company's website [3] Group 2: Company Overview - Sow Good Inc. is a U.S.-based manufacturer specializing in freeze dried candy and snacks, focusing on innovative and flavorful products [4] - The Company utilizes proprietary freeze-drying technology and a specialized manufacturing facility to create a new category of confectionaries known as freeze dried candy [4] - Sow Good is committed to innovation, scalability, manufacturing excellence, meaningful employment opportunities, and high food quality standards [4]

Core Viewpoint - Sow Good Inc. is set to hold a conference call on March 21, 2025, to discuss its financial results for Q4 and the full year ended December 31, 2024 [1]. Company Overview - Sow Good Inc. is a U.S.-based manufacturer specializing in freeze dried candy and snacks, focusing on innovative and flavorful products [4]. - The company utilizes proprietary freeze-drying technology and a specialized manufacturing facility to create a new category of confectionaries known as freeze dried candy [4]. - Sow Good aims to foster growth for customers, investors, and employees through its core pillars: innovation, scalability, manufacturing excellence, meaningful employment opportunities, and food quality standards [4]. Conference Call Details - The conference call will take place at 12:00 p.m. Eastern time on March 21, 2025, with registration required for phone access [2]. - The call will be broadcast live and available for replay on the company's website [3].

Revenue Growth - Revenues increased from $1.3 million for the three months ended June 30, 2023, to approximately $15.6 million for the three months ended June 30, 2024, reflecting significant growth [163]. - Revenues for the three months ended June 30, 2024, were $15.6 million, a significant increase of $14.3 million or 1,090% compared to $1.3 million in the same period of 2023 [188]. - For the six months ended June 30, 2024, revenues reached $27.1 million, an increase of $25.5 million or 1,687% compared to $1.5 million in the same period of 2023 [200]. Production Capacity and Facilities - A new 324,000 square foot production facility in Dallas, Texas, is expected to significantly increase production capacity and meet rising demand for freeze dried treats [174]. - The company has built five bespoke freeze driers and is fabricating a sixth, with plans for six additional driers in the new Dallas facility [162]. - The company entered into a lease for approximately 324,000 rentable square feet in Dallas, Texas, for a term of approximately 62 months, starting at $122,175 per month and increasing to $297,289.14 per month by the end of the lease [226]. Financial Performance - Gross profit for the three months ended June 30, 2024, was $9.0 million, an increase of $10.6 million or 670% compared to a gross loss of $1.6 million in 2023, resulting in a gross profit margin of 58% [190]. - Net income for the three months ended June 30, 2024, was $3.6 million, compared to a net loss of $3.3 million in 2023, reflecting an increase in earnings of $6.9 million or 208% [196]. - Net income for the six months ended June 30, 2024 was $4.1 million, a positive change of $8.8 million compared to a net loss of $4.7 million for the same period in 2023 [207]. Cost and Expenses - Cost of goods sold for the same period was $6.6 million, up $3.7 million or 129% from $2.9 million in 2023, primarily due to increased sales volumes [189]. - Salaries and benefits for the six months ended June 30, 2024, were $4.5 million, an increase of $3.6 million or 438% compared to $831.2 thousand in 2023 [202]. - Professional services expenses for the six months ended June 30, 2024, were $1.1 million, an increase of $952.6 thousand or 870% compared to $109.5 thousand in 2023 [203]. - Other general and administrative expenses for the six months ended June 30, 2024, were $2.3 million, an increase of $1.4 million or 157% compared to $884.5 thousand in 2023 [204]. - Interest expense for the six months ended June 30, 2024, was $1.0 million, a decrease of $327.5 thousand or 24% compared to $1.3 million in 2023 [206]. Working Capital and Cash Flow - Working capital increased to $26.0 million as of June 30, 2024, up from $4.5 million as of December 31, 2023, primarily due to increases in cash, accounts receivable, and inventory [209]. - Cash and cash equivalents reached $14.4 million as of June 30, 2024, compared to $2.4 million at December 31, 2023 [209]. - Net cash provided by financing activities was $15.1 million for the six months ended June 30, 2024, an increase of $12.4 million from $2.8 million in the same period of 2023 [222]. - Net cash used in operating activities was $939,534 for the six months ended June 30, 2024, a decrease from $2.4 million used in the same period of 2023 [220]. - Net cash used in investing activities was $2.2 million for the six months ended June 30, 2024, compared to $362.2 thousand for the same period in 2023 [221]. Market and Product Development - The non-chocolate confections market grew 13.8% in sales in 2022, exceeding $10 billion, and is forecasted to grow at a CAGR of 5.8% from 2023 to 2030 [164]. - The company aims to expand its product line to increase growth opportunities and reduce product-specific risks through SKU diversification [178]. - The company has 17 SKUs in the Sow Good Candy line and 5 SKUs in the Sow Good Crunch Cream line, with products available in over 5,850 retail outlets as of June 30, 2024 [161]. Tax and Regulatory Matters - Federal income tax recognized for the three-month periods ended June 30, 2024, and 2023 was $257,918 and $0, respectively [185]. - The company maintains a full valuation allowance related to its net deferred tax assets due to its historical net loss position [207]. Risk Management - The Company does not expect significant effects from commodity price risk outside of inherent inflationary risks [230]. - The Company is not exposed to floating rates of interest and does not anticipate entering into transactions that would expose it to direct interest rate risk [231]. - As of June 30, 2024, the Company did not hold a material amount of cash in foreign jurisdictions but anticipates increased exposure to currency fluctuation risk as foreign operations grow [232].