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 June 30, 2026

☐ 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 August 19, 2026 was 20,099,893.

Table of Contents

		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1
	Condensed Balance Sheets as of June 30, 2026 (Unaudited) and December 31, 2025	1
	Unaudited Condensed Statements of Operations for the Three and Six Months Ended June 30, 2026 and 2025	2
	Unaudited Condensed Statements of Changes in Stockholders’ Deficit for the Three and Six Months Ended June 30, 2026 and 2025	3
	Unaudited Condensed Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025	4
	Notes to the Condensed Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37

PART II.	OTHER INFORMATION	38

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	40
	Signatures	42

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 consummate the acquisition of Uranex Tanzania Limited and Magnis Technologies (Tanzania) Limited, the sole holders of the Nachu Graphite Project, and to receive the anticipated benefits from such acquisition;

●

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 attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations 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.

iii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

SOW GOOD INC.

CONDENSED BALANCE SHEETS

	June 30,			December 31,
	2026			2025
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	8,492		$	1,474,445
Accounts receivable, net		2,686			-
Accounts receivable - related party		-			1,651,471
Other receivables		93,491			93,198
Inventory, net		4,911			22,871
Prepaid expenses		149,346			90,460
Other receivables, related party		124,543			-
Current assets of discontinued operations		-			60,333
Total current assets		383,469			3,392,778

Property and equipment, net		-			21,667
Security deposit		26,309			283,972
Right-of-use asset		10,989			76,971
Total assets	$	420,767		$	3,775,388

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable		1,049,143			1,297,851
Accrued interest		81,895			96,453
Accrued severance		1,150,000			2,442,500
Accrued expenses		1,820,838			584,186
Advances – related party		452,390			-
Accrued compensation, related parties		198,750			-
Current portion of operating lease liabilities		5,758			78,171
Convertible notes payable, net of $262,048 and $518,530 of debt discounts as of June 30, 2026 and December 31, 2025, respectively		841,814			1,341,420
Current liabilities of discontinued operations		-			346,861
Total current liabilities	$	5,600,588		$	6,187,442

Notes payable		150,000			150,000

Total liabilities	$	5,750,588		$	6,337,442

Commitments and contingencies		-			-

Stockholders’ deficit:
Series AA Preferred Stock, $0.001 par value, 20,000,000 shares authorized, 1,090,000 and 1,500,000 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively		1,090			1,500
Series AAA Preferred Stock, $0.001 par value, 1,000,000,000 shares authorized, 377,391 and 0 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively		377			-
Common Stock, $0.001 par value, 500,000,000 shares authorized, 20,099,893 and 814,933 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively		20,100			815
Additional paid-in capital		104,101,109			100,519,348
Accumulated deficit		(109,452,497	)		(103,083,717	)
Total stockholders’ deficit		(5,329,821	)		(2,562,054	)

Total liabilities and stockholders’ deficit	$	420,767		$	3,775,388

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

SOW GOOD INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2026			2025			2026			2025

Revenues	$	-		$	-		$			$	-
Cost of goods sold		-			-			-			-
Gross profit		-			-			-			-

Operating expenses:
General and administrative expenses:
Salaries and benefits		1,840,114			662,224			2,135,706			1,469,007
Professional services		1,666,285			258,230			2,791,425			450,553
Other general and administrative expenses		268,798			228,456			532,008			807,162
Total general and administrative expenses		3,775,197			1,148,910			5,459,139			2,726,722
Depreciation and amortization		-			8,583			2,500			17,167
Total operating expenses		3,775,197			1,157,493			5,461,639			2,743,889

Net operating loss		(3,775,197	)		(1,157,493	)		(5,461,639	)		(2,743,889	)

Other expense:
Interest income		43,871			-			43,871			-
Interest expense		(105,219	)		(113,163	)		(348,813	)		(295,739	)
Loss on disposition of assets		(19,167	)		-			(19,167	)		-
Total other expense		(80,515	)		(113,163	)		(324,109	)		(295,739	)

Loss from continuing operations before tax		(3,855,712	)		(1,270,656	)		(5,785,748	)		(3,039,628	)
Income tax (benefit) provision		-			-			-			-
Net loss from continued operations		(3,855,712	)		(1,270,656	)		(5,785,748	)		(3,039,628	)
Income (loss) from discontinued operations		(23,315	)		(2,915,856	)		(583,032	)		(3,717,938	)
Net loss	$	(3,879,027	)	$	(4,186,512	)	$	(6,368,780	)	$	(6,757,566	)

Weighted average common shares outstanding – basic and diluted		20,053,450			770,918			10,615,621			763,804
Continuing loss per common share - basic and diluted	$	(0.19	)	$	(1.64	)	$	(0.55	)	$	(3.98	)
Discontinued loss, net of tax per common share - basic and diluted	$	(0.00	)	$	(3.79	)	$	(0.05	)	$	(4.87	)
Net loss per common share - basic and diluted	$	(0.19	)	$	(5.43	)	$	(0.60	)	$	(8.85	)

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

SOW GOOD INC.

STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED JUNE 30, 2026 AND 2025

(Unaudited)

	For the Three Months Ended June 30, 2026
									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance, April 1, 2026		1,467,391	$	1,467		20,099,893	$	20,100	$	104,101,109	$	(105,573,470	)	$	(1,450,794	)
Net income for the three months ended June 30, 2026		-		-		-		-		-		(3,879,027	)		(3,879,027	)
Balance, June 30, 2026		1,467,391	$	1,467		20,099,893	$	20,100	$	104,101,109	$	(109,452,497	)	$	(5,329,821	)

	For the Three Months Ended June 30, 2025
									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance, April 1, 2025		-		-		11,383,060	$	11,384	$	95,790,991	$	(65,013,265	)	$	30,789,110
Common stock issued to directors for services		-		-		783,068		782		159,018		-			159,800
Common stock options granted to directors and advisors for services		-		-		-		-		3,559		-			3,559
Common stock options granted to officers and employees for services		-		-		-		-		1,109,689		-			1,109,689
Additional paid in capital from exchange of related party debt, net		-		-		-		-		694,941		-			694,941
Net income for the three months ended June 30, 2025		-		-		-		-		-		(4,186,512	)		(4,186,512	)
Balance, June 30, 2025		-	$	-		12,166,128	$	12,166	$	97,758,198	$	(69,199,777	)	$	28,570,587

	For the Six Months Ended June 30, 2026
											Additional						Total
	Preferred Stock						Common Stock				Paid-in			Accumulated			Stockholders’
	Shares			Amount			Shares		Amount		Capital			Deficit			Deficit
Balance, January 1, 2026		1,500,000		$	1,500			814,933	$	815	$	100,519,348		$	(103,083,717	)	$	(2,562,054	)
Issuance of Series AAA Preferred Stock		1,500,000			1,500			-		-		2,998,490			-			2,999,990
Conversion of Preferred AA Preferred Stock		(410,000	)		(410	)		382,667		383		27			-			-
Conversion of Preferred AAA Preferred Stock		(1,122,609	)		(1,123	)		18,756,593		18,756		(17,633	)		-			-
Effect of Stock Split		-			-			-		-		-			-			-
Capitalized legal costs		-			-			-		-		(156,200	)		-			(156,200	)
Forfeiture of stock options		-			-			-		-		(134,860	)		-			(134,860	)
Common stock issued to directors for services		-			-			23,894		24		137,476			-			137,500
Common stock issued to advisors for services		-			-			66,667		67		465,033			-			465,100
Conversion of convertible notes to common stock		-			-			55,140		55		289,428			-			289,483
Net loss for the three months ended June 30, 2026		-			-			-		-		-			(6,368,780	)		(6,368,780	)
Balance, June 30, 2026		1,467,391		$	1,467			20,099,893	$	20,100	$	104,101,109		$	(109,452,497	)	$	(5,329,821	)

	For the Six Months Ended June 30, 2025
									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance, January 1, 2025		-		-		11,300,624	$	11,300	$	94,418,972	$	(62,442,211	)	$	31,988,061
Common stock issued to directors for services		-		-		82,436		84		229,916		-			230,000
Common stock issued to officers for services		-		-		783,068		782		159,018		-			159,800
Common stock options granted to directors and advisors for services		-		-		-		-		9,889		-			9,889
Common stock options granted to officers and employees for services		-		-		-		-		2,245,462		-			2,245,462
Additional paid in capital from exchange of related party debt, net		-		-		-		-		694,941		-			694,941
Net loss for the six months ended June 30, 2025		-		-		-		-		-		(6,757,566	)		(6,757,566	)
Balance, June 30, 2025		-		-		12,166,128	$	12,166	$	97,758,198	$	(69,199,777	)	$	28,570,587

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

SOW GOOD INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended June 30,
	2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations	$	(5,785,748	)	$	(3,039,628	)
Net loss from discontinued operations		(583,032	)		(3,717,938	)

Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation and amortization		2,500			518,712
Amortization of right-of-use asset		65,982			200,710
Loss on disposal of asset		19,167			-
Forfeited stock-based compensation		(134,860	)		-
Amortization of debt discount		255,865			165,997
Common stock issued to directors for services		602,600			389,800
Payable to related party		183,382			-
Accrued compensation, related parties		198,750			-
Changes in operating assets and liabilities:
Accounts receivable		(2,686	)		(250,212	)
Accounts receivable - related party		1,343,545			-
Other receivables		(293	)		-
Inventory		17,960			-
Prepaid expenses		(58,886	)		214,248
Security deposits		257,663			13,984
Accounts payable		(248,708	)		(191,663	)
Accrued interest		(14,558	)		119,986
Accrued severance		(1,292,500	)		-
Accrued expenses		1,236,653			201,647
Operating lease liability		(72,413	)		-
Net cash used in continuing operations		(3,426,585	)		(1,656,419	)
Net cash used in discontinued operations		(869,560	)		(858,465	)
Net cash used in operating activities	$	(4,296,145	)	$	(2,514,884	)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for construction in progress		-			(249,140	)
Net cash used in continuing operations		-			(249,140	)
Net cash used in discontinued operations		-			-
Net cash used in investing activities	$	-		$	(249,140	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on convertible notes		(465,988	)		-
Proceeds from Advances – related party		452,390			-
Proceeds from issuance of preferred stock, net of issuance costs		2,843,790			-
Net cash provided by continuing operations		2,830,192			-
Net cash provided by financing activities	$	2,830,192		$	-

NET DECREASE IN CASH AND CASH EQUIVALENTS	$	(1,465,953	)	$	(2,764,024	)
Cash and cash equivalents, beginning of period	$	1,474,445		$	3,723,440
Cash and cash equivalents, end of period	$	8,492		$	959,416
SUPPLEMENTAL INFORMATION:
Interest paid	$	-		$	-
Interest received	$	-		$	26,710

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Reclassification of construction in progress to property and equipment	$	-		$	505,355
Non-cash issuances of common stock (including note conversion)	$	289,483		$	-

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

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 company that, through a third-party distribution arrangement, participates in the commercialization of freeze-dried candy products. The Company historically operated as a manufacturer of freeze-dried consumer packaged goods, including candy, fruits, vegetables, and snack products.

Formerly Black Ridge Oil & Gas, Inc. (a business that participated in the acquisition and development of oil and gas leases and was acquired by the Company on October 1, 2020), the Company transitioned its focus to freeze-dried food products following the acquisition. At the 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.” Prior to April 2, 2012, Black Ridge Oil & Gas, Inc. was known as Ante5, Inc., a publicly traded company since July 1, 2010. Effective February 15, 2024, Sow Good Inc. reincorporated in the State of Delaware from the State of Nevada pursuant to a plan of conversion. On May 2, 2024, trading of the Company’s common stock commenced on the Nasdaq Capital Market.

During December 2025, the Company completed a strategic shift away from direct manufacturing and product sales and entered into a distribution agreement pursuant to which a third-party distributor serves as the exclusive distributor of the Company’s freeze-dried candy products. Under this arrangement, the distributor is responsible for commercialization, sales, marketing, fulfillment, and customer relationships, and the Company earns a contractual percentage of distributor gross receipts. As a result of this strategic shift, the Company no longer operates a manufacturing business and does not directly sell products to customers.

In April 2026, Company entered into a share purchase agreement with Ryzon Materials Limited, an Australian unlisted public company (“Ryzon”), Uranex Tanzania Limited (“Uranex”), Magnis Technologies (Tanzania) Limited (“Magnis Tech”), and Uranex ESIP Pty Limited (“Uranex ESIP” and, together with Ryzon, Uranex and Magnis Tech, the “Sellers”), pursuant to which the Company agreed to acquire 100% of the issued and outstanding shares (the “Transaction”) of Uranex and Magnis Tech, each a wholly owned Tanzanian subsidiary of Ryzon (collectively, the “Tanzanian Subsidiaries”). The Tanzanian Subsidiaries are the sole holders of the Nachu Graphite Project, an advanced-stage graphite development asset located in the Ruangwa District, Lindi Region of Southern Tanzania, intended to support the Company’s strategic expansion into the critical minerals and battery anode materials sector. The Transaction remains subject to the execution of definitive agreements, completion of due diligence, receipt of regulatory approvals, financing arrangements and other customary closing conditions. As of the filing date of these financial statements, the proposed acquisition had not been consummated and no amounts related to the proposed transaction had been recorded in the accompanying financial statements.

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, 2025. 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, 2026 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, 2025.

Reverse Stock Split

On April 17, 2026 the company effected a 1 for 15 reverse stock split. The impact of this split has been retroactively applied to all periods presented unless stated otherwise.

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 16 – Segment Reporting.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

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.

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 no cash in excess of FDIC and SIPC insured limits at June 30, 2026. The Company had cash in excess of FDIC and SIPC insured limits of $1,189,975 at December 31, 2025. 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 credit losses of $12,284 at June 30, 2026 and $0 at December 31, 2025.

The Company estimates its reserve based on historical loss information. The Company believes that historical loss information is a reasonable basis 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.

Other Receivables

Other accounts receivable was $93,491 as of June 30, 2026 and December 31, 2025. Other accounts receivable consisted primarily of a tax refund receivable from the State of Delaware for franchise taxes.

Inventory

On December 30 and December 31, 2025, the Company entered into an Asset Purchase Agreement and a Distribution Agreement, respectively. As a result of these transactions, the Company transitioned from operating as a manufacturer and omnichannel seller of freeze-dried candy to operating as a commission-based distribution agent, earning a fixed percentage of distributor gross receipts from sales of Sow Good-branded products. In addition, the Company retained certain SKUs to market independently of the Distribution Agreement.

Inventory is stated at the lower of average cost or net realizable value, with cost determined using the first-in, first-out (“FIFO”) method. The Company evaluates inventory for potential obsolescence and excess quantities on a periodic basis.

In connection with the exit of its manufacturing and omnichannel distribution business, the Company recorded an impairment and write-off of inventory of $13,737,675 during the year ended December 31, 2025. Because the impaired inventory related entirely to the former manufacturing and direct-sales business, the impairment expense has been included in loss from discontinued operations for all periods presented.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

As of June 30, 2026 and December 31, 2025, the Company retained approximately $4,911 and $22,871 of inventory related to certain SKUs that were not transferred in the Asset Purchase Agreement. This inventory has been recorded at the lower of cost or net realizable value. Based on our Distribution Agreement with the Distributor, the net realizable value for units the Company expects to sell through its Distributor is 10% of the expected selling price of the Distributor.

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

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 expense included in continuing operations was $2,500 and $8,583 for the three months ended June 30, 2026 and 2025, respectively. Depreciation was $5,000 and $17,167 for the six months ended June 30, 2026 and 2025, respectively. The remaining net book value of property and equipment of $16,667 was written off during the three months ended June 30, 2026 and is presented as a loss on disposal of assets within other expense, resulting in a nil carrying value at June 30, 2026. Depreciation related to the assets used in the manufacture and sale of freeze-dried candy was reclassified to cost of goods sold and has been included in the loss on discontinued operations, $0 and $8,583, for the three months ended June 30, 2026 and 2025, respectively. Depreciation was $0 and $17,167 for the six months ended June 30, 2026 and 2025, respectively. Depreciation related to the assets used in the manufacture and sale of freeze-dried candy was reclassified to cost of goods sold, and has been included in the loss on discontinued operations.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 - Revenue from Contracts with Customers (“ASC 606”). Following the Company’s strategic restructuring completed on December 31, 2025, including the sale of substantially all manufacturing and operating assets and the execution of the Distribution Agreement with Trea Grove LLC, the Company transitioned from a manufacturing and direct-sales business model to a commission-based distribution model. Under ASC 606, the Company recognizes revenue 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 to which the Company expects to be entitled in exchange for those goods or services.

To determine revenue recognition for arrangements 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.

Under the Distribution Agreement, Trea Grove LLC serves as a distributor of Sow Good-branded products and is responsible for invoicing customers, fulfillment activities, and collection of customer payments. The Company is entitled to receive a fixed percentage of gross receipts collected by the distributor from customer sales. The Company evaluated the arrangement under ASC 606 and concluded that it acts as an agent because it does not control the products prior to transfer to end customers, does not have primary responsibility for fulfillment, and does not bear primary inventory or customer credit risk. Accordingly, revenue is recognized on a net basis in an amount equal to the commission to which the Company expects to be entitled.

The Company’s performance obligation under the Distribution Agreement consists primarily of providing access to the Sow Good brand and related distribution rights. Revenue is recognized when the distributor completes the underlying customer sale and collects payment, as this represents the point at which the Company’s right to consideration becomes fixed and determinable in accordance with the contractual terms of the arrangement.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

The Company has elected, as a practical expedient, to account for shipping and handling activities as fulfillment costs rather than as separate performance obligations. Because shipping, fulfillment, product handling, returns processing, and customer pricing adjustments are managed by the distributor, the Company does not separately recognize gross product sales revenue, shipping revenue, or related customer allowances associated with distributor sales activity.

Revenue is reported net of applicable provisions for discounts, returns, and allowances. Under the current commission-based operating structure, customer returns, promotional programs, discounts, and pricing adjustments are administered by the distributor and do not materially impact the Company’s recognized commission revenue. The Company evaluates the need for reserves related to variable consideration based on known facts and contractual terms at each reporting date.

For the six months ended June 30, 2026, the Company recognized approximately $18 thousand of commission revenue associated with sales activity under the Distribution Agreement, which is included in discontinued operations. The Company did not recognize revenue from continuing operations under its legacy manufacturing and direct-sales business model, as substantially all such operations were discontinued as of December 31, 2025, and historical results have been reclassified to discontinued operations for all periods presented.

Customer Concentration

Following the sale of substantially all manufacturing and operating assets and the transition to a capital-light distribution model, the Company earns revenue primarily from a single related party distribution partner pursuant to the Distribution Agreement entered into on December 31, 2025. Trea Grove LLC, a related party, serves as the primary distributor of Sow Good-branded products and is expected to represent substantially all of the Company’s revenue under the current operating structure. The Company may also sell remaining inventory independently from time to time.

For the six months ended June 30, 2026, the Company recognized approximately $18 thousand of commission revenue associated with sales activity under the Distribution Agreement. Substantially all historical product sales and related operating activity have been classified within discontinued operations as a result of the Company’s restructuring and disposal of substantially all manufacturing operations.

Supplier Concentration

Following the sale of substantially all manufacturing and operating assets and the transition to a capital light sales through a distributor model, the Company earns revenue mainly from a single related party distribution partner pursuant to a long-term Distribution Agreement. Trea Grove LLC, a related party, is expected to be the Company’s primary distributor of Sow Good-branded products going forward. The Company may also sell inventory independently from time to time.

Purchases from vendors relate primarily to corporate overhead, professional services, and other administrative costs. Amounts related to the Company’s former manufacturing and direct-sales business model have been reclassified to loss from discontinued operations for all periods presented.

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. There were no dilutive common shares for the periods ended June 30, 2026 and 2025 since the company was in a loss position for both periods.

For the six months ended June 30, 2026 and 2025, the Company incurred net losses which cannot be diluted; therefore, basic and diluted loss per share of Common Stock is the same. Each share of Series AA Preferred Stock and Series AAA Preferred Stock is convertible into 0.93 and 16.67 shares of Common Stock, respectively, and are included in the table as if converted. As of June 30, 2026 and 2025, shares issuable which could potentially dilute future earnings were as follows:

	June 30,
	2026		2025
Series AA Preferred Stock		1,017,333		-
Series AAA Preferred Stock		6,289,850		-
Shares excluded from the calculation of diluted loss per share		7,307,183		-

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Stock-based compensation for equity instruments issued to employees and non-employees is measured at fair value on the grant date and recognized as compensation expense over the requisite service period.

All transactions in which the consideration for goods or services is settled in equity instruments are accounted for based on the fair value of the equity instruments issued. The measurement date is the date at which the key terms and conditions of the award is reached.

The Company accounts for forfeitures as they occur. When an award is forfeited prior to completion of the requisite service period, any previously recognized compensation cost related to the unvested portion of the award is reversed in the period of forfeiture.

The fair value of service-based stock options is estimated using the Black-Scholes option-pricing model, with expected terms ranging from 2.3 to 7.3 years, determined based on either the weighted-average vesting period and contractual term or as calculated under the valuation model. The risk-free interest rate is based on U.S. Treasury securities with maturities commensurate with the expected term of the awards at the grant date.

The Company uses a Monte Carlo simulation model to estimate the fair value of performance-based and market-based stock options. Stock option expense is recognized on a straight-line basis over the requisite service period or the implied service period, as applicable. Amortization of options granted to members of the Board of Directors is included in other general and administrative expense. Amortization of options granted to officers and employees is included in salaries and benefits.

Stock-based compensation costs reversed in respect of forfeitures amounted to $134,860 for the six months ended June 30, 2026. Stock-based compensation expense related to the issuance of shares of common stock to members of the Board of Directors for their services was approximately $137,500 and $230,000 for the six months ended June 30, 2026 and 2025, respectively, and is included in other general and administrative expense. Stock-based compensation expense related to the issuance of shares of common stock to advisors for their services was $465,100 and $0 for the six months ended June 30, 2026 and 2025, respectively, and is included in other general and administrative expense. Stock-based compensation expense related to the issuance of shares of common stock to officer for their services was approximately $0 and $159,800 for the six months ended June 30, 2026 and 2025, respectively, and is included in other general and administrative expense.

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 (“Topic 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.

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. In evaluating the exposures connected with these tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

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.

Recent Accounting Pronouncements

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 six months ended June 30, 2026, have had or are expected to have a significant impact on the Company’s financial statements.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform with the current period presentation.

Note 3 – Going Concern

As of June 30, 2026, the Company had an accumulated deficit of $109,452,497 and incurred net losses from continuing operations of $5,785,748 and net losses from discontinued operations of $583,032 for the six months ended June 30, 2026. The Company had $8,492 of cash on hand and a working capital deficit of $5,217,119 as of June 30, 2026. These conditions, combined with the Company’s history of operating losses, indicate that the Company may not have sufficient funds to sustain operations for the twelve months following the issuance of these financial statements. Accordingly, these factors raise substantial doubt about the Company’s ability to continue as a going concern.

During December 2025, the Company completed the sale of substantially all manufacturing assets and transitioned to a commission-based, asset-light distribution model under a long-term Distribution Agreement. The transaction generated cash proceeds and significantly reduced the Company’s capital requirements and working capital needs by eliminating manufacturing operations and inventory ownership. While this transition is expected to lower ongoing operating and capital expenditures, the resulting reduction in cash requirements is not expected, by itself, to be sufficient to overcome the Company’s existing liquidity shortfall without additional capital contributions or debt financing.

Management has implemented and continues to evaluate plans intended to improve the Company’s financial position and liquidity. These actions include the sale of manufacturing assets to a related party, ongoing strategic cost reductions and headcount rationalization, finalizing exits for leases associated with unused facilities, which were completed as of January 31, 2026, and pursuing additional capital-raising transactions.

In addition, management is evaluating potential partnership arrangements and capital-raising transactions, including debt and/or equity financings and sales of shares under the Company’s at-the-market equity program. There can be no assurance that these plans will be successfully implemented or will generate sufficient liquidity to allow the Company to continue operations.

The accompanying financial statements have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty. The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 – Discontinued Operations

On December 30, 2025, the Company sold substantially all of its manufacturing and operating assets to its former Executive Chairman and former Chief Executive Officer and exited its legacy manufacturing and direct-sales business. In connection with this transaction, the Company entered into a long-term Distribution Agreement pursuant to which the Company now operates as a commission-based distribution agent and no longer manufactures products, owns significant inventory, or incurs costs related to product sourcing, production, warehousing, or distribution.

The sale of substantially all manufacturing and operating assets and the related exit of the legacy business represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, the results of the former manufacturing and direct-sales business have been classified as discontinued operations for all periods presented.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

The assets and liabilities of the discontinued operations were disposed of or otherwise derecognized as of June 30, 2026, and no assets or liabilities of discontinued operations remain on the Company’s consolidated balance sheet as of that date.

Results of Discontinued Operations

The following table presents components of discontinued operations, net of tax for the six months ended June 30, 2026 and 2025:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2026			2025			2026			2025
Revenues	$	-		$	1,856,315		$	17,842		$	4,333,235
Prior period discounts and refunds		(5,000	)		-			(20,225	)		-
Net revenues		(5,000	)		1,856,315			(2,383	)		4,333,235
Cost of goods sold		-			1,986,024			17,960			3,360,222
Gross profit (loss)		(5,000	)		(129,709	)		(20,343	)		973,013

Operating expenses:
General and administrative expenses:
Other general and administrative expenses		18,315			2,786,702			642,204			4,718,217
Total general and administrative expenses		18,315			2,786,702			642,208			4,718,217
Total operating expenses		18,315			2,786,702			642,204			4,718,217

Net operating loss		(23,315	)		(2,916,411	)		(662,547	)		(3,745,204	)

Other income (expense):
Interest income		-			555			-			27,266
Gain on termination of leases		-			-			80,697			-
Loss on disposition of assets		-			-			(1,182	)		-
Total other expense		-			555			79,515			27,266

Loss from discontinued operations before income tax		(23,315	)		(2,915,856	)