Sow Good Inc.

Previous wording

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, 2024, we have twenty-one stock keeping units (“SKUs”) in our Sow Good Candy line of treats and three SKUs in our Sow Good Crunch Cream line. 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, 2024. As of September 30, 2024, our treats are offered for sale in over 6,000 brick-and-mortar retail outlets in the United States. The rapid demand growth for our delectable treats since their retail debut in March 2023 highlights our consumers’ excitement for our novel and explosively flavorful treats that “satisfy your sweet tooth in fewer bites.”

Current wording

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 March 31, 2025, we have twenty-one stock keeping units (“SKUs”) in our Sow Good Candy line of treats and three SKUs in our Sow Good Crunch Cream line, which consists of freeze dried ice cream bars and sandwiches. 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 March 31, 2025. As of March 31, 2025, our treats are offered for sale in approximately 3,000 brick-and-mortar retail outlets in the United States.

Previous wording

We have custom-built a 20,945 square foot freeze drying facility in Irving, Texas, and have entered into additional co-manufacturing arrangements in China and Colombia. 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 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.

Current wording

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.

Previous wording

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 placed deposits on six additional freeze driers, which we aim to have operational within the next nine months in our new 324,000 square foot facility in Dallas, Texas. In addition, due to strong customer demand, we have entered into co-manufacturing arrangements with third-party manufacturers whose freeze drying facilities meet our exacting production, sanitation and allergen control requirements, as well as our food quality and safety standards. Currently, all of our products manufactured by third parties are shipped to our facilities in Texas for packaging.

Current wording

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 by the end of 2025, as needed.

Previous wording

Sow Good, co-founded by Claudia and Ira Goldfarb, brings over a decade of manufacturing expertise to the 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 their proprietary technology, Sow Good aims to disrupt traditional categories, delivering innovative, high-quality products that emphasize 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.

Current wording

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.

Previous wording

Our products have launched in retailers nationwide from convenience and grocery stores to big-box retailers, such as Five Below, Target, Misfits Market/Imperfect Foods, TJX Canada, Big Lots, Hy-Vee, Cracker Barrel, Circle K, 7/11, HEB Kroger and Albertsons. In addition, we sell a substantial portion of our products through distributors such as Redstone Foods, CB Distributors and Nassau Distributors. We believe there is a significant growth opportunity in increasing our shelf presence, SKU portfolio, and number of stores with our existing customers. For many of these customers, we launched with a limited number of SKUs, with those SKUs routinely outpacing initial sales projections. As we scale production, we will 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 are also introducing our product displays with distinctive designs and product highlights to enhance our visibility in current stores and educate new consumers on the advantages 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 our retailers.

Current wording

Our products are sold in retailers nationwide from convenience and grocery stores to big-box retailers, such as Five Below, Misfits Market/Imperfect Foods, TJX Canada, Hy-Vee, Cracker Barrel, 7/11, H-E-B, Kroger and Albertsons. In addition, we sell a substantial portion of our products through distributors such as Redstone Foods, CB Distributors and Lipari Foods. 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 our retailers.

Previous wording

Our highly differentiated 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, leading 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.comand our social medial pages.

Current wording

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.comand our social media pages.

Previous wording

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 market clout and marketing spend to limit our current and future customers from purchasing our products or reducing our shelf space. Our ability to keep our current customers, or grow our SKU portfolio on their shelves, and continue to expand our sales with new customers will depend on our competitors’ ability to leverage their market clout and financial resources to limit our access to consumers and our ability to compete with these larger competitors.

Current wording

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 continue to 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.

Previous wording

We are currently growing 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, Target, Misfits Market/Imperfect Foods, TJX Canada, Big Lots, Hy-Vee, Cracker Barrel, Circle K, 7/11, HEB, Kroger and Albertsons. In addition, we sell a substantial portion of our products through distributors such as Redstone, CB Distributors and Nassau Distributors. We continue to increase our shelf presence, SKU portfolio and number of stores with existing customers. In addition, 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.

Current wording

We are currently growing 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, Misfits Market/Imperfect Foods, TJX Canada, Hy-Vee, Cracker Barrel, 7/11, H-E-B, Kroger and Albertsons. In addition, we sell a substantial portion of our products through distributors such as Redstone, CB Distributors and Lipari Foods. 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.

Previous wording

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. 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.

Current wording

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.

Previous wording

Because we are early in our lifecycle of growth, it is difficult to discern the exact magnitude of seasonality affecting our business from a demand standpoint. While evidence of any demand seasonality is currently difficult to assess because of our growth, we anticipate certain holiday cycles such as Halloween, Christmas, Easter and Valentine’s Day contributing to revenue fluctuations within a given year. In addition, we have become aware of external data showing a general trend in candy consumer behavior regarding reduced candy purchasing in summer months due to a variety of factors including greater levels of health consciousness during warm weather. Operationally, recent heat waves from July through October have presented challenges in transporting our freeze-dried treats. 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, impacting its shelf performance. We are actively working to remove affected products from shelves and replace them promptly to support recovery in product velocity. In the short term, these measures will impact our market reputation, sell-through rates, and operational results as we address these unforeseen challenges. We do anticipate a return to a normal cadence with the seasonal reduction in temperatures to a level where our treats can be shipped without damage. As a result, we anticipate an annual temporary decrease in shipments of our treats during summer months, which we believe is consistent with the greater candy industry trend.

Current wording

Because we are early in our lifecycle of growth, it is difficult to discern the exact magnitude of seasonality affecting our business from a demand standpoint. While evidence of any demand seasonality is currently difficult to assess because of our growth, 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, 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, which we believe is consistent with the greater candy industry trend.

Previous wording

Our cost of goods sold consists primarily of facilities costs, material costs, and labor on the production of freeze dried treats.

Current wording

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.

Previous wording

Our operating expenses consist of general and administrative expenses, which includes salaries and benefits expenses, professional services expenses and other general and administrative expenses, intangible asset impairment losses and goodwill impairment losses.

Current wording

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

Previous wording

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 three month periods ended September 30, 2024 and 2023, we have determined that we have one operating segment and one reportable segment.

Current wording

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 three months ended March 31, 2025 and 2024, we have determined that we have one operating segment and one reportable segment.

Previous wording

Cost of goods sold for the three months ended September 30, 2024 were $3.0 million, compared to $3.7 million for the three months ended September 30, 2023, a decrease of $700.8 thousand, or (19%). The decrease in cost of goods sold is primarily related to the decline in revenue partially offset by higher costs related to the company’s new facility and a lower production yield.

Current wording

Cost of goods sold for the three months ended March 31, 2025 were $1.37 million, compared to $6.8 million for the three months ended March 31, 2024, a decrease of $5.4 million, or 80%. The decrease in cost of goods sold is primarily related to the decline in revenue.

Previous wording

Gross profit for the three months ended September 30, 2024 was $556.0 thousand, compared to gross profit of $1.3 million for the three months ended September 30, 2023, a decrease of $779.3 thousand, or 58%. Gross profit decreased over the comparative period due to decreased revenues of $1.5 million partially offset by lower cost of goods sold of $700.8 thousand.

Current wording

Gross profit for the three months ended March 31, 2025 was $1.1 million compared to gross profit of $4.6 million for the three months ended March 31, 2024, a decrease of $3.5 million, or 76%. Gross profit decreased over the comparative period due to decreased revenues of $8.9 million partially offset by lower cost of goods sold of $5.4 million.

Previous wording

Our gross profit margin was 16% during the three months ended September 30, 2024, compared to 27% for the three months ended September 30, 2023. Our gross profit margin decreased primarily due to higher cost of goods sold as a percentage of sales.

Current wording

Our gross profit margin was 45% during the three months ended March 31, 2025, compared to 41% for the three months ended March 31, 2024. Our gross profit margin increased primarily due to lower cost of goods sold as a percentage of sales.

Previous wording

Salaries and benefits for the three months ended September 30, 2024 were $1.9 million, compared to $618.9 thousand for the three months ended September 30, 2023, an increase of $1.3 million, or 203%. Salaries and benefits included stock-based compensation expense of $1.2 million for the three months ended September 30, 2024, compared to $111.5 thousand for the three months ended September 30, 2023, an increase of $1.0 million. Stock-based compensation consists of stock options expense for employees and officers of the Company. The increase in salaries and benefits was mainly due to the amortization of performance shares granted December 15, 2023.

Current wording

Salaries and benefits for the three months ended March 31, 2025 were $1.9 million, compared to $2.4 million for the three months ended March 31, 2024, a decrease of $408.0 thousand, or 17%. The decrease in salaries and benefits was mainly due to a decrease in bonus compensation of approximately $450,000 compared to the prior year period. Salaries and benefits included stock-based compensation expense of $1.1 million for both of the three-month periods ended March 31, 2025, and 2024. Stock-based compensation consists of stock options expense for employees and officers of the Company.

Previous wording

Other general and administrative expenses for the three months ended September 30, 2024 were $1.6 million, compared to $74.7 thousand for the three months ended September 30, 2023, an increase of $1.5 million, or 2052%. Other General and Administrative expense compared to the prior year period was primarily due to a $741.6 thousand increase in facilities costs to the extent they are not allocated to inventory related to the company’s new facility, a $325.4 thousand increase in bad debt expense due to a customer bankruptcy versus a recovery of bad debt in the prior year period, and a $265.2 thousand increase in marketing and advertising costs.

Current wording

Other general and administrative expenses for the three months ended March 31, 2025 were $1.4 million, compared to $872.3 thousand for the three months ended March 31, 2024, an increase of $502.2 thousand, or 58%, primarily due to increased facilities costs related to the company’s new facility, to the extent they are not allocated to inventory.

Previous wording

Depreciation of property and equipment for the three months ended September 30, 2024 and 2023, respectively, was $216.2 thousand and $150.7 thousand, of which $207.6 thousand and $141.4 thousand was allocated to cost of goods sold, which resulted in net depreciation expense of $8.6 thousand and $9.3 thousand, respectively.

Current wording

Depreciation of property and equipment for the three months ended March 31, 2025 and 2024, respectively, was $252.5 thousand and $167.0 thousand, of which $243.9 thousand and $162.4 thousand was allocated to cost of goods sold, which resulted in net depreciation expense of $8.6 thousand and $9.5 thousand, respectively.

Previous wording

In the three months ended September 30, 2024, other expense consisted mainly of interest expense derived from notes payable and the amortization of warrants issued as a debt discount of $225.1 thousand. During the period ended September 30, 2023, interest expense on notes payable was a net credit of $3.6 thousand, due to adjustments to amortized interest during the three month period ended September 30, 2023.

Current wording

In the three months ended March 31, 2025, other expense of $182.6 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 March 31, 2024, other income consisted of interest expense of $418.7 thousand. Interest expense decreased due to decreased amortization on notes payable discounts as notes get closer to maturity.

Previous wording

Pretax net loss for the three months ended September 30, 2024 was $3.4 million, compared to pretax net income of $334.0 thousand during the three months ended September 30, 2023, decrease in earnings of $3.8 million, or 1,131%. The transition to pretax net loss from pretax net income was primarily due the decrease in gross profit of $779.3 thousand, or 58% and increased operating expenses of $2.8 million or 282%.

Current wording

Pretax net loss for the three months ended March 31, 2025 was $2.6 million, compared to pretax net income of $510.0 thousand during the three months ended March 31, 2024, decrease in earnings of $3.1 million, or 604%. The transition to pretax net loss from pretax net income was primarily due the decrease in gross profit of $3.5 million, or 76% partially offset by decreased operating expenses of $182.3 thousand or 5%.

Previous wording

The Company maintains a full valuation allowance related to our net deferred tax assets, primarily due to our historical net loss position. For each of the nine month periods ended September 30, 2024 and 2023, the Company recognized federal income tax of $195,603, and $0, respectively.

Current wording

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 March 31, 2025 and 2024, the Company recognized federal income tax provisions of $. thousand and $0, respectively.

Previous wording

As of September 30, 2024, we had working capital of $19.7 million, compared to working capital of $4.5 million as of December 31, 2023. The increased working capital is mainly attributable to increases in cash of $4.5 million, accounts receivable of $1.3 million, and inventory of $15.3 million, partially offset by the increase in the current portion of our lease liability of $1.6 million, and accrued expenses of $1.2 million. As of September 30, 2024, our balance of cash and cash equivalents was $6.9 million, compared to $2.4 million at December 31, 2023. We expect to continue to incur significant capital expenditures related to the development and operation of our freeze dried candy business. Our ability to scale production and distribution capabilities and further increase the value of our brands is largely 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 and additional financing in the form of equity or debt as needed.

Current wording

As of March 31, 2025, we had working capital of $17.9 million, compared to working capital of $17.7 million as of December 31, 2024. The increased working capital is mainly attributable increases in accounts receivable of $0.9 million, in inventory of $0.8 million, and a decrease in the current portion of our lease liability of $0.4 million, and accrued expenses of $0.2 million, offset by decreases in cash of $2.1 million. As of March 31, 2025, our balance of cash and cash equivalents was $1.6 million, 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 and additional financing in the form of equity or debt as needed.

Previous wording

The following table summarizes our cash flows during the nine months ended September 30, 2024 and 2023, respectively.

Current wording

The following table summarizes our cash flows during the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Net cash used in operating activities was $6.1 million for the nine months ended September 30, 2024, compared to $3.3 million of cash used in operating activities nine months ended September 30, 2023. The increase in cash used in operating activities was primarily due to increased inventory.

Current wording

Net cash used in operating activities was $2.0 million for the three months ended March 31, 2025, compared to $1.3 million of cash used in operating activities three months ended March 31, 2024. The increase in cash used in operating activities was primarily due to increases in inventory and accounts receivable.

Previous wording

Net cash used in investing activities was $4.5 million for nine months ended September 30, 2024, compared to $1.3 million for the nine months ended September 30, 2023, an increase of $3.2 million. During the nine months ended September 30, 2024, cash used in investing activities was primarily used for additional freezers. Cash used in investing activities for the nine months ended September 30, 2023 was used to build out freezers and improve our office space.

Current wording

Net cash used in investing activities was $108.0 thousand for the three months ended March 31, 2025, compared to $630.3 thousand for the three months ended March 31, 2024, a decrease of $522.5 thousand. Cash used in investing activities was primarily used to build out additional freezers and to improve our office space.

Previous wording

Net cash provided by financing activities was $15.1 million and $6.5 million for the nine months ended September 30, 2024 and 2023, 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. Net cash provided by financing activities for the nine months ended September 30, 2023 was comprised of debt financing received from our officers, directors and other non-related parties of $2.8 million, and cash proceeds from the issuance of 735,000 shares of common stock of $3.7 million.

Current wording

Net cash provided by financing activities was $0 and $3.7 million for the three months ended March 31, 2025 and 2024, respectively. Net cash provided by financing activities for the three months ended March 31, 2024 consisted of 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.

Previous wording

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 is the landlord. 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.

Current wording

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.

Previous wording

On January 19, 2024, the Company entered into a sublease agreement (the “Sublease Agreement”) with Papsa Merx S. de R.S. de C.V., a corporation registered in Mexico City, Mexico (the “Sublessor”). Pursuant to the terms of the Sublease Agreement, the Company will sublease approximately 141 rentable square meters at Av. Roble 660, Valle del Campestre, 66265 San Pedro Garza García Municipality, Nuevo León, 66269 (the “Premises”) for a term of approximately seventeen months (the “Term”), which the Company intends to use as office space. The Term of the Lease Agreement will commence on February 1, 2024 (the “Sublease Commencement Date”). The Sublease Agreement provides for rent payments at fixed price of $5.25 thousand per month plus the corresponding Value Added Tax (“VAT”) for the duration of the Term. The Company is also responsible for operating expenses of the Premises, which includes a maintenance fee, electricity and internet services. The Company is required to provide a deposit of guarantee in the amount of $5.25 thousand in connection with the Sublease Agreement. The Sublease Agreement does not have a renewal period.

Current wording

On January 19, 2024, the Company entered into a sublease agreement (the “Sublease Agreement”) with Papsa Merx S. de R.S. de C.V., a corporation registered in Mexico City, Mexico (the “Sublessor”). Pursuant to the terms of the Sublease Agreement, the Company will sublease approximately 141 rentable square meters at Av. Roble 660, Valle del Campestre, 66265 San Pedro Garza García Municipality, Nuevo León, 66269 (the “Premises”) for a term of approximately seventeen months (the “Term”), which the Company intends to use as office space. The Term of the Lease Agreement will commence on February 1, 2024. The Sublease Agreement provides for rent payments at fixed price of $5.25 thousand per month plus the corresponding Value Added Tax for the duration of the Term. The Company is also responsible for operating expenses of the Premises, which includes a maintenance fee, electricity and internet services. The Company is required to provide a deposit of guarantee in the amount of $5.25 thousand in connection with the Sublease Agreement. The Sublease Agreement does not have a renewal period.

Previous wording

On October 26, 2023, the Company entered into a lease agreement (the “2023 Lease Agreement”) with Prologis, Inc., a Maryland corporation (the “Landlord”). 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.

Current wording

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.