Sow Good Inc.

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.

In May 2021, the Company announced the launch of its first direct-to-consumer freeze-dried consumer packaged goods (“CPG”) line of non-GMO products, including ready-to-make smoothies, gluten-free granola, and snacks. In the first quarter of 2023, the Company launched a freeze-dried candy product line and subsequently discontinued its smoothie, snack, and granola products. The Company expanded manufacturing capacity during 2023 and 2024 through the construction and installation of multiple freeze-dryers to support anticipated growth in candy production.

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.

As of December 31, 2025, the Company’s business consists primarily of earning commission-based revenue from its distribution arrangement related to freeze-dried candy products.

Note 2 –Summary of Significant Accounting Policies

These financial statements are presented in accordance with United States generally accepted accounting principles ("GAAP”) and stated in US dollars, have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC”). These statements reflect all adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Except as otherwise disclosed, all such adjustments are of a normal recurring nature.

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. For further details on segment reporting, refer to Note 15 – Segment Reporting.

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.

Reclassifications

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

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 cash in excess of FDIC and SIPC insured limits of$1,189,975 at December 31, 2025. The Company had cash in excess of FDIC and SIPC insured limits of $1,837,840 at December 31, 2024. The Company has not experienced any losses in such accounts.

Accounts Receivable

Accounts receivable are carried at their estimated collectible amounts. Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance for doubtful accounts of$0, and $33,549 at December 31, 2025 and 2024.

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

Accounts Receivable - Related Party

Related party receivables are $1,651,471 for the year ended December 31, 2025 and $0 for the year ended December 31, 2024. These receivables consisted of the $1,500,000 purchase price of the assets of Sow Good under the Asset Purchase Agreement, which was with Trea Grove, a company owned by Ira Goldfarb, and approximately $151,472 in withholding taxes due from Claudia and Ira Goldfarb related to fully vested shares granted as employee compensation.

Other Receivables

Other accounts receivable of $93,198 and $0 for the years ended December 31, 2025 and 2024 respectively, consisted primarily of a tax refund receivable from the State of Delaware for franchise taxes and interest receivable from investments, respectively.

Divestiture

On December 30, 2025, the Company entered into an Asset Purchase Agreement with Trea Grove LLC, an entity controlled by the Goldfarbs, a related party under common ownership (see Note 5 — Related Party Transactions). The Company evaluated the transferred set of assets, processes, and employees under ASC 805-10-55 and determined that the disposition of the manufacturing and omnichannel distribution business constituted a sale of a business. The transaction included the transfer of an assembled workforce, operational processes, manufacturing equipment, and leasehold improvements. In connection with the transaction, Trea Grove LLC also assumed the lease of the Union Bower facility, a facility owned by the Goldfarbs. Accordingly, the transaction was accounted for as a sale of a business and the loss on divestiture was recognized upon closing in accordance with ASC 810-40. The results of operations of the disposed business have been reclassified as discontinued operations for all periods presented in the accompanying consolidated financial statements in accordance with ASC 205-20.

The table below summarizes the components of the transaction and the resulting gain on divestiture recognized in the Consolidated Statements of Operations:

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.

As of December 31, 2025, the Company retained approximately $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:

Construction in progress was included as assets sold under the Asset Purchase Agreement with Trea Grove on December 30, 2025. Construction in progress for the year ended December 31, 2024 was stated at cost and no depreciation expense was recorded on construction-in-progress until such time as the relevant assets were 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 $33,101 and $31,644, for thetwelve months ended December 31, 2025 and 2024, 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 sale of substantially all manufacturing and operating assets and the entry into a long-term Distribution Agreement effective December 31, 2025, the Company no longer manufactures products or sells goods to customers. Instead, the Company operates as a commission-based distribution agent and earns a fixed percentage of distributor gross receipts from sales of Sow Good-branded products.

For the year ended December 31, 2025, the Company recognizedno revenue from continuing operations, as the Distribution Agreement became effective at year end and no commission revenue was earned during the period. Revenue recognized in prior periods under the Company’s former manufacturing and direct-sales business model has been reclassified to loss from discontinued operations for all periods presented and is not comparable to revenue that may be recognized under the Company’s current commission-based distribution model.

Under ASC 606, the Company has concluded that it acts as an agent in these arrangements because it does not control the underlying products prior to transfer to end customers, does not have primary responsibility for fulfillment, and does not bear inventory or credit risk. Accordingly, for the units of inventory sold under the Distribution Agreement, the Company recognizes revenue on a net basis in an amount equal to the commission to which it is entitled.

The Company’s performance obligation under the Distribution Agreement is to provide ongoing brand support and access to the Sow Good brand to its distribution partner. This performance obligation is satisfied over time. Commission revenue is recognized in the period in which the related underlying product sales occur and the distributor’s gross receipts are generated, as this corresponds to when the Company’s right to consideration becomes fixed and determinable.

The Company does not record revenue related to gross product sales, shipping, or handling activities, that are performed by the Distributor and third-party manufacturers. The Company also does not record provisions for product returns, discounts, or allowances, for items which are sold by our Distributor.

Advertising 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.

The Company did not recognize any advertising costs under our commission-based distribution model.

Customer 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 distribution partner pursuant to a long-term Distribution Agreement. Trea Grove LLC, a related party, is expected to be the Company’s sole distributor of Sow Good-branded products going forward. The Company may also sell inventory independently from time to time.

For the year ended December 31, 2025, the Company recognizedno revenue from continuing 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 distribution partner pursuant to a long-term Distribution Agreement. Trea Grove LLC, a related party, is expected to be the Company’s sole 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.

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 related to the issuance of shares of common stock to members of the Board of Directors for their services was $280,000 and $295,648 for the years ended December 31, 2025 and 2024, respectively, and is included in other general and administrative expense.

Stock-based compensation related to the issuance of shares of common stock to Officers of the Company for their services was $689,288 and $0 for the years ended December 31, 2025 and 2024, respectively, and is included in salaries and benefits.

Stock-based compensation related to the amortization of stock option grants was $1,427,945 and $4,511,657 for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, the Company had $2,762,546 of total unrecognized stock-based compensation cost related to unvested awards, which is expected to be recognized over a weighted-average period of 1.4 years.

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 various 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.

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 December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. The ASU’s amendments are effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company adopted this standard during the current year.

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 year ended December 31, 2025, have had or are expected to have a significant impact on the Company’s financial statements.

Note 3– Going Concern

As of December 31, 2025, the Company had an accumulated retained deficit of$103,083,717 and net losses from continuing operations of $6,823,265 and net losses from discontinued operations of $33,818,241, respectively, for thetwelve months ended December 31, 2025. The Company had$1,474,445 cash on hand and working capital deficit of $2,794,664 at the twelve month period ended twelve months ended December 31, 2025. 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.

The assets and liabilities of the discontinued operations were disposed of or otherwise derecognized as of December 31, 2025, 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 theyears ended December 31, 2025 and 2024:

Balance Sheet

The asset and related liabilities related to the discontinued operations were disposed or derecognized prior to December 31, 2025, therefore the assets and liabilities for the year ended December 31, 2025 represent those of the ongoing operation. Balance sheet amounts from the year ended December 31, 2024 have been reclassified as assets and liabilities related to discontinued operations. The following table represents the assets and liabilities reclassified from their December 31, 2024 presentation.

During the year ended December 31, 2025, the Company recorded an impairment and write-off of approximately $13,737,675 of inventory that was determined to have no recoverable value. The write-off was initially recorded within cost of goods sold under the Company’s former manufacturing and direct-sales business model, and is included in the net income (loss) of discontinued operations on the Company's Statement of Operations.

During 2025, the Company exited multiple manufacturing and industrial facility leases associated with the discontinued business. As a result of lease termination and modification agreements, the Company recorded noncash gains of $1,896,276 related to the facility lease exits.

Revenue Reclassification

Revenue recognized in prior periods under the Company’s former manufacturing and direct-sales business model has been reclassified to loss from discontinued operations for all periods presented. For the year ended December 31, 2025, the Company recognized no revenue from continuing operations, as the Distribution Agreement became effective at year end and no commission revenue was earned during the period.

Continuing Involvement

Following the disposition, the Company’s continuing involvement with the former business is limited to our role as an agent who receives commissions from Trea Grove in their role as a Distributor under the Distribution Agreement.

Note 5– Related Party

During the year ended December 31, 2025, the Company entered into a series of transactions with related parties in connection with a strategic restructuring of its operations and capitalization.

Severance Payment to Related Party

On December 31, 2025, the Company entered into a settlement agreement and general and mutual release (the "Officer Settlement Agreement”) with Ira Goldfarb, the Company’s former executive chairman. Pursuant to the terms of the Officer Settlement Agreement, Mr. Goldfarb was entitled to receive from the Company a cash settlement payment, upon the Stockholder Meeting, of $1,250,000, less all applicable taxes and withholdings (the "Officer Settlement Payment”), in exchange for waiving his rights to contractual severance pursuant to his employment agreement. Payment of $1,250,000 was made to Mr. Goldfarb on January 5, 2026. Mr. Goldfarb continues to serve as a member of the Board of Directors.

On December 31, 2025, the Company entered into a settlement agreement and general and mutual release (the "Officer Settlement Agreement”) with Claudia Goldfarb, the Company’s former chief executive officer. Pursuant to the terms of the Officer Settlement Agreement, Mrs. Goldfarb is entitled to receive from the Company a cash settlement payment, upon the Stockholder Meeting, of $1,150,000, less all applicable taxes and withholdings (the "Officer Settlement Payment”), in exchange for waiving her rights to contractual severance pursuant to her employment agreement. Mrs. Goldfarb continued to be employed by the Company as its Chief Operations Officer and continues to serve on the Board of Directors.

Asset Sale to Related Party

On December 30, 2025, the Company entered into an Asset Purchase Agreement with Trea Grove, LLC (“Trea Grove”), a related party, pursuant to which the Company sold a significant portion of the assets related to its freeze-dried snacks and candy business, including real property improvements, proprietary and intellectual property rights, transferable governmental licenses and permits, and other specified assets. Trea Grove also assumed certain specified liabilities. Total cash consideration for the transaction was $1,500,000, payable in installments through March 31, 2026, the entire amount was recorded as a related party receivable at December 31, 2025. Subsequently, on January 5, 2026, $900,000 was netted from Mr. Goldfarb's severance payment of $1,250,000.

Distribution Agreement with Related Party

On December 31, 2025, the Company entered into a Distribution Agreement with Trea Grove, LLC (“Trea Grove”), an entity owned by Ira Goldfarb and Claudia Goldfarb, pursuant to which Trea Grove was appointed the exclusive distributor of certain Company products, including fruits, snacks, and candy, through July 31, 2026, unless extended. Under the Distribution Agreement, Trea Grove is responsible for customer communications, order management, billing, collections, shipping, logistics, and fulfillment. Trea Grove will remit to the Company ten percent (10%) of gross receipts from product sales. The agreement provides Trea Grove with a limited license to use the Company’s trademarks for distribution and marketing purposes.

Based on the terms of this exclusive Distribution Agreement, the Company has determined that it acts as an agent for purposes of revenue recognition under ASC 606, as the Company does not control the underlying products prior to transfer to end customers, does not have primary responsibility for fulfillment, and does not bear inventory or credit risk. Accordingly, the Company recognizes revenues related to the Distribution Agreement with Trea Gove on a net basis equal to the commission to which it is entitled. Subsequently, on March 18, 2026, the Company amended the Distribution Agreement to allow Sow Good to sell inventory independently as long as Trea Grove remained as the sole distributor.

On December 31, 2025, the Company entered into a Securities Purchase Agreement with David Lazar pursuant to which the Company agreed to issue and sell, in a private placement, shares of Series AA Convertible Non-Redeemable Preferred Stock and Series AAA Convertible Non-Redeemable Preferred Stock in two closings for aggregate gross proceeds of $6,000,000. The first closing occurred on December 31, 2025 for gross proceeds of $3,000,000. Mr. Lazar was appointed Chief Executive Officer and Chairman of the Board in connection with the transaction.

Convertible Notes Held by Related Parties Amended

During 2025, Claudia Goldfarb and Ira Goldfarb (the “Goldfarbs”) held Convertible Notes issued by the Company. In connection with the Securities Purchase Agreement executed on December 31, 2025, the Company and the Ira and Claudia Goldfarb agreed to amend the conversion terms of the notes to provide for a conversion price of $0.35 per share, replacing prior conversion price ranges of approximately $0.62 to $0.63 per share.

An aggregate principal amount of $1,404,914 of notes held by the Ira and Claudia Goldfarb will remain outstanding as a backstop for the Company’s operations (the “Backstop Loan”). The Backstop Loan remains a bona fide debt obligation of the Company and is not reduced or otherwise affected by operating losses, restructuring costs, or transaction expenses. On April 15, 2026, the Company and the Ira and Claudia Goldfarb are required to determine, in good faith, what portion of the outstanding balance, if any, will be repaid in cash and what portion, if any, will convert into shares of common stock at the agreed conversion price of $0.35 per share.

On February 12, 2026, the Ira and Claudia exercised the option to convert $289,483 of the outstanding Convertible Notes to 827,095 shares.

Use of Proceeds to Pay Related Party Debt and Settlement with an Officer

A portion of the net proceeds from the preferred stock issuance was used to repay $943,868 of principal and $70,365 in interest outstanding under notes payable to Lyle Berman, a related party.

On December 31, 2025, the Company entered into a settlement agreement and mutual release with Ira Goldfarb, the Company’s former Executive Chairman, pursuant to which Mr. Goldfarb is entitled to receive a cash settlement payment of $1,250,000, less applicable taxes and withholdings, upon the Company’s stockholder meeting, in exchange for waiving his contractual severance rights. Of this amount, $900,000 was retained by the Company and applied as Mr. Goldfarb’s down payment toward the purchase price of the manufacturing assets acquired by Trea Grove, LLC, an entity owned by Mr. Goldfarb. Mr. Goldfarb received the remaining $350,000.

Settlement Agreements with Directors

On December 31, 2025, the Company entered into settlement agreements and mutual releases with Joe Mueller and Chris Ludeman, former members of the Board of Directors.

Voting Agreements

On December 31, 2025, the Company entered into voting agreements with Ira Goldfarb, Claudia Goldfarb, and Lyle Berman, pursuant to which such parties agreed, for a two-year period, to vote their shares in favor of proposals recommended by the Company’s Board of Directors.

All related-party transactions were approved and authorized by a special committee consisting of disinterested members of the Company’s Board of Directors.

Related Party Debt Exchange

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

On December 31, 2025, as part of the Securities Purchase Agreement, Ira and Claudia Goldfarb's Convertible Notes were amended to change the conversion price to $0.35 per share, and Mr. Berman was repaid $943,868 of principal and $70,365 in interest outstanding related to his Convertible Notes. Ira and Claudia Goldfarb converted 827,095 shares at a price of $0.35 per share on February 12, 2026.

Common Stock Issued

Common Stock Issued to Officers and Directors for Services

On January 15, 2026, the Company issued 138,888 shares of common stock to each of Lyle Berman and Ira Goldfarb for annual Director services to be rendered. The aggregate fair value of the common stock was $222,221, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On August 1, 2025, the Company issued an aggregate 57,471 shares of common stock to Jeffery Rubin for annual Director services to be rendered. The aggregate fair value of the common stock was $50,000, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

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

On June 5, 2025, the Board of Directors unanimously approved a revision to the annual compensation of Claudia Goldfarb, as Company's Chief Executive Officer, and Ira Goldfarb, the Company's former Executive Chairman, whereby Ms. Goldfarb and Mr. Goldfarb would receive approximately 28% and 32%, respectively, of their annual cash salary in shares of the Company's common stock under the Sow Good 2024 Stock Incentive Plan in lieu of cash payments. The number of shares issued in each case is calculated with a stock price equal to the most recent closing price of the Company's common stock, on June 4, 2025. Ms. Goldfarb received 167,362 shares valued at $128,869. Mr. Goldfarb received 259,070 shares valued at $199,638. Mrs. Goldfarb continues to be employed by the Company as its Chief Operations Officer.

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

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

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

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

On December 31, 2024, Ira and Claudia Goldfarb purchased 12,374 shares of common stock jointly, at a share price of $2.05 pursuant to a Stock Purchase Agreement.

Common Stock Options Awarded to Officers and Directors

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

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

Debt Financing and Related Warrants Granted

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

Leases

Prior to the December 30, 2025 sale of the Company's manufacturing business, the Company leased a 20,945 square foot facility in Irving, Texas, for which an entity owned entirely by Ira Goldfarb, our former Executive Chairman is the landlord. The lease term was through September 15, 2025, with twofive-year options to extend, with a current monthly lease rate of$12,425, with approximately 3% annual escalation of lease payments, however the Company exited the lease concurrently with the asset sale.

At December 31, 2025 and December 31, 2024,$0 and$1,241,860 are included in liabilities of discontinued operations on our balance sheets in connection with this lease. For the twelve months ended December 31, 2025 and 2024 the Company expensed $146,896 in each of the periods and paid cash of$143,356 and$132,917, respectively.

Note 6– Fair Value of Financial Instruments

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

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

On April 15, 2024, the Company issued 2,186,250 shares of its common stock in connection with the exercise of warrants that were issued between December 2021 and May 2023 (the “Warrants”), with exercise prices varying from $2.21 to $2.60 (the “Warrant Exercise”). None of the Warrants were amended prior to or in connection with the Warrant Exercise. As a result of the Warrant Exercise Transaction, excluding the impact of deferred debt costs, the Company’s debt was reduced by $5,200,363, accrued interest payable was reduced by $98,750, common equity was increased by $5,299,112 and the Company issued an aggregate of 2,186,250 shares of common stock.

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

Note 7–Inventory

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. Pursuant to the Asset Purchase Agreement, 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 finished goods and work in process materials 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.

As of December 31, 2025, the Company retained approximately $22,871 of inventory related to certain SKUs that were not transferred in the Asset Purchase Agreement. Inventory of $20,313,315 was included in the current assets of discontinued operations on the balance sheet for the year ended December 31, 2024.

Inventory at respective period ends is was follows:

Note 8– Property and Equipment

Following the sale of substantially all manufacturing and operating assets and the transition to a commission-based distribution model, the Company no longer owns manufacturing facilities, production equipment, or construction-in-progress assets. Property and equipment as of December 31, 2025 consists primarily of office equipment and software.

For the years ended December 31, 2025 and 2024, substantially all depreciation expense related to assets of the former manufacturing and direct-sales business has been reclassified to loss from discontinued operations. Depreciation expense related to continuing operations, consisting primarily of office equipment, was $33,101 and $31,644 for the years ended December 31, 2025 and 2024, respectively, and is included in operating expenses. Depreciation related to the disposed assets is included in net gain or loss on discontinued operations. The Company determined that there were impairment indicators present, and tested the remaining assets for impairment as of December 31, 2025 and recorded an impairment of $57,602. This was determined based on the Company's assessment that the expected future cash flows of the assets did not exceed the net book value on an undiscounted basis.

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

Note 9– Leases

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

The Company previously leased a 20,945 square foot facility under a non-cancelable real property lease agreement with an entity owned entirely by Ira Goldfarb, the Company’s former Executive Chairman. The lease required monthly base rent of $11,296, subject to annual escalations of approximately 3%, and included payment of property taxes, utilities, insurance, maintenance, and other occupancy costs. The lease expired on August 31, 2025, and wasnot renewed. The incremental borrowing rate at commencement was 5.75%. The lease was derecognized as of December 31, 2025, the Company recognized a $120,773 gain upon exit of the lease, this amount is included in net gain or loss on discontinued operations.

On May 22, 2024, the Company entered into an industrial lease with USCIF Pinnacle Building B LLC. The Company leased approximately 324,000 rentable square feet from the Lessor at 4024 Rock Quarry Road, Dallas, Texas for a term of approximately 62 months. The term of the lease commenced on May 22, 2024. The incremental borrowing rate for the lease at the time of commencement was 10.84%. Effective September 30, 2025, the Company agreed with Pinnacle to exit the facility on January 31, 2026. As a result of reducing the lease term by 42 months, the company reduced the related right-of-use asset by $10,397,922 and the lease liability by $11,829,536, resulting in a noncash gain $1,427,649, this amount is included in net gain or loss on discontinued operations.

On October 26, 2023, the Company entered into a lease agreement with Prologis, Inc., a Maryland corporation. The Company leased approximately 51,264 square feet in Dallas, Texas for an initial term of approximately five years and two months. The lease commenced on November 1, 2023. The base rent payments started at approximately $42,500 per month in the first year, and increase each year, up to approximately $51,700 per month during the last year of the initial term. Effective September 30, 2025, the Company agreed with Prologis to exit the lease as of September 30, 2025. As a result of reducing the lease term by 39 months, the company derecognized the related right-of-use asset $2,325,675 and the lease liability of $2,673,619, resulting in a noncash gain of $347,853, this amount is included in net gain or loss on discontinued operations.

In July 1, 2023, the Company entered into a lease for a warehouse space in Irving, Texas, of approximately 9,000 feet under a 37-month lease at a rate of $8,456 per month, with approximately a 4% annual escalation of lease payments. The facility lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. The incremental borrowing rate for the lease at the time of commencement was 8%. The lease expires July 31, 2026. this is the Company's only remaining lease obligation.

The components of lease expense were as follows:

Supplemental balance sheet information related to leases was as follows:

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

The future minimum lease payments due under operating leases as of December 31, 2025 is as follows:

Note 10– Notes Payable, Related Parties

On April 28, 2025, the Company entered into an exchange agreement (the “Exchange Agreement”) with Lyle Berman, Claudia Goldfarb and Ira Goldfarb, as holders of the Company’s outstanding promissory notes (the “Outstanding Notes”) with an aggregate principal amount of $2,500,000, maturing August 23, 2025 and bearing interest at 8% per annum. Pursuant to the Exchange Agreement, the holders exchanged their Outstanding Notes for new senior convertible promissory notes (the “Convertible Notes”) in an aggregate principal amount of $2,563,890, representing the principal amount of the Outstanding Notes plus accrued and unpaid interest thereon. In addition, the Company issued Convertible Notes with an aggregate principal amount of $239,928 bearing interest at 6% per annum in connection with notes that matured on April 8, 2025. Convertible Notes were convertible, at the election of the holders, in whole or in part, into shares of the Company’s common stock at the fixed conversion prices specified in the applicable notes (ranging from $0.62 to $0.63 per share), subject to customary anti-dilution adjustments.

The combined $2,803,818 of Convertible Notes mature on April 30, 2030 andaccrue simple interest at rates ranging from 6% to 8% per annum, payable semi-annually in arrears on May 1 and November 1, beginning November 1, 2025. At the Company’s election, accrued and unpaid interest on an interest payment date may be added to the principal amount of the applicable Convertible Note in lieu of cash payment.

The Convertible Notes are senior in right of payment to all existing and future indebtedness of the Company and are secured by a security interest in all existing and future assets of the Company. The Convertible Notes may be prepaid by the Company at any time upon ten days’ prior written notice.

The entry into the Exchange Agreement and the transactions contemplated thereby, including the issuance of the Convertible Notes, were approved unanimously by the disinterested members of the Company’s board of directors and the disinterested members of the Company’s audit committee in accordance with the Company’s related-party transaction policy.

Pursuant to Appendix C of the Securities Purchase Agreement entered into on December 31, 2025, $1,404,914 aggregate principal amount of notes held by Claudia and Ira Goldfarb will remain outstanding as a backstop for the Company’s operations (the “Backstop Loan”). The Backstop Loan will remain outstanding as a bona fide debt obligation of the Company and will not be reduced, impaired or otherwise affected by operating losses, restructuring costs or transaction expenses. On April 15, 2026, the Company and the Ira and Claudia Golfarb will determine, in good faith, what portion of the outstanding Backstop Loan balance, if any, will be repaid in cash and what portion, if any, will convert into shares of the Company’s common stock at an agreed conversion price of $0.35 per share.

On December 31, 2025, a portion of the net proceeds from the preferred stock issuance was used to repay $943,868 of principal and $70,365 in interest outstanding under notes payable to Lyle Berman, a related party.

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

During the twelve months ended December 31, 2024, the Company recorded $696,502 of loss on the early extinguishments of debt related to the accelerated amortization of debt discounts related to the Warrant Exercise Transaction, this amount is included in net gain or loss on discontinued operations.

Note 11– Notes Payable

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

The Company used proceeds from the sale of manufacturing assets to pay down certain notes payable. Interest related to notes payable which were paid down as part of the sale of assets and discontinued operations were reclassified to loss from discontinued operations. Interest expenses related to notes payable, related parties, which were retained as part of the continued operations of the company for thetwelve months ended December 31, 2025 and 2024, are as follows:

Note 12– Stockholders’ Equity

Preferred Stock

The Company has 20,000,000 authorized shares of $0.001 par value preferred stock. The Company is authorized to issue shares of preferred stock, par value $0.001 per share, in one or more series, with such rights, preferences, privileges and restrictions as may be determined by the Company’s Board of Directors.

On December 31, 2025, in connection with a Securities Purchase Agreement with an investor, the Company filed a Certificate of Designations, Preferences and Rights creating 1,500,000 shares of Series AA Convertible Non-Redeemable Preferred Stock (the “Series AA Preferred Stock”) and issued 1,500,000 shares of Series AA Preferred Stock at a stated value of $2.00 per share for aggregate gross proceeds of $3,000,000. A second closing for the issuance of 1,500,000 shares of Series AAA Convertible Non-Redeemable Preferred Stock at a stated value of $2.00 per share for aggregate gross proceeds of $3,000,000 is expected to occur following receipt of required stockholder approvals and satisfaction of other customary closing conditions. The terms of the Series AAA Preferred Stock are substantially similar to those of the Series AA Preferred Stock, except that each share of Series AAA Preferred Stock is initially convertible into a greater number of shares of common stock.

The Series AA Preferred Stock ranks senior to the Company’s common stock and any junior securities with respect to dividends and distributions upon liquidation, dissolution or winding up of the Company, and on parity with any series of preferred stock expressly designated as ranking on parity with the Series AA Preferred Stock.

The Series AA Preferred Stock does not bear a stated dividend rate. However, if the Company declares a dividend on its common stock, holders of Series AA Preferred Stock are entitled to receive dividends on an as-converted basis in the same form and manner as holders of common stock.

Subject to receipt of stockholder approvals and the filing of an amendment to the Company’s certificate of incorporation, each share of Series AA Preferred Stock is initially convertible, at the option of the holder, into 14 sharesof common stock

(equivalentto a conversion price of $0.14286 per share), subject to customary anti-dilution adjustments for stock splits, stock dividends, combinations, and similar events.

In the event of a liquidation, dissolution or winding up of the Company, holders of Series AA Preferred Stock are entitled to receive, prior and in preference to any distributions to holders of common stock, an amount per share equal to the greater of (i) the stated value of $2.00 per share plus any declared but unpaid dividends or (ii) the amount per share that would have been payable had such shares been converted into common stock immediately prior to such event.

The Series AA Preferred Stock generally has no voting rights, except as required by Delaware law and for certain protective provisions requiring the consent of holders of a majority of the outstanding Series AA Preferred Stock.

On December 31, 2024, Ira and Claudia Goldfarb purchased 12,374 shares of common stock jointly, at a share price of $2.05 pursuant to a Stock Purchase Agreement.

On November 14, 2024 the Company filed a shelf registration to offer and sell from time to time in one or more offerings, up to $50.0 million in aggregate of common stock, preferred stock, debt securities, warrants, and units. As of December 31, 2025,1,042,862 shares of our common stock have been issued under the registration netting aggregate proceeds of .

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

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

Common Stock Issued to Officers for Services

On June 5, 2025, the Board of Directors unanimously approved a revision to the annual compensation of Claudia Goldfarb, the Company's former Chief Executive Officer, and Ira Goldfarb, the Company's Executive Chairman, whereby Ms. Goldfarb and Mr. Goldfarb would receive approximately 28% and 32%, respectively, of their annual cash salary in shares of the Company's common stock under the Sow Good 2024 Stock Incentive Plan in lieu of cash payments. The number of shares issued in each case is calculated with a stock price equal to the most recent closing price of the Company's common stock, on June 4, 2025. Ms. Goldfarb received 167,362 shares valued at $128,869. Mr. Goldfarb received 198,202 shares valued at $199,638. Mrs. Goldfarb continues to be employed by the Company as its Chief Operations Officer.

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

Common Stock Issued to Directors for Services

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

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

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

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

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

Warrant Exercise Transaction

On April 15, 2024, the Company issued 2,186,250 shares of its common stock in connection with the exercise of warrants that were issued between December 2021 and May 2023 (the “Warrants”), with exercise prices varying from $2.21 to $2.60 (the “Warrant Exercise”). None of the Warrants were amended prior to or in connection with the Warrant Exercise. Each of the exercising holders of warrants (collectively, the “Holders”), received its warrants in connection with the incurrence by the Company of indebtedness pursuant to various tranches of promissory notes issued between December 2021 and May 2023 (collectively, the “Notes”). The Warrants were classified as permanent equity at inception. Due to a redemption feature in the Warrants allowing the Company to redeem the Warrants for $0.001 per Warrant if the daily volume weighted average price per share over thirty consecutive trading days is above $9.00, the Company received indications of intent to exercise Warrants from various Holders given the recent increase in trading price of the Company's common stock. With authorization from the Company's Board of Directors, each of the Holders was provided an opportunity to, and agreed to, amend certain of such Holder’s Notes (the “Notes Amendment”) to allow for the partial prepayment of principal in an aggregate amount equal to the exercise price of such Holder’s Warrants. As a result of the Warrant Exercise Transaction, excluding the impact of deferred debt costs, the Company’s debt was reduced by $5,200,363, accrued interest payable was reduced by $98,750, common equity was increased by $5,299,112 and the Company issued an aggregate of 2,186,250 shares of common stock.

Note 13– Options

The 2020 Equity Plan was approved by written consent of a majority of shareholders of record as of November 12, 2019 and adopted by the Board of Directors on December 5, 2019, as provided in the definitive information statement filed with Securities and Exchange Commission on January 10, 2020 (the “DEF 14C”). The description of the 2020 Equity Plan is qualified in its entirety by the text of the 2020 Equity Plan, a copy of which was attached as Annex C to the DEF 14C.

Amendment to the 2020 Stock Incentive Plan

On January 8, 2024, our stockholders took action by written consent to ratify the amendment to the 2020 Stock Incentive Plan (the “2020 Plan”) approved by the Board of Directors on December 15, 2023. On December 15, 2023, our Board approved an amendment to the 2020 Plan to effect an increase in the number of shares that remain available for issuance under the 2020 Plan by an additional 2,150,000 shares up to an aggregate of 2,964,150 shares available for issuance under the 2020 Plan (the “2020 Plan Amendment”). Before the 2020 Plan Amendment, the number of shares available for issuance under the 2020 Plan would be too limited to effectively operate as an incentive and retention tool for employees, officers, directors, non-employee directors and consultants of the Company and its affiliates (as defined in the 2020 Plan). The 2020 Plan and the approved increase enabled us to continue our policy of equity ownership by employees, officers, directors, non-employee directors and consultants of the Company and its affiliates as an incentive to contribute to the creation of long-term value for our stockholders.

2024 Stock Incentive Plan

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

On February 12, 2026, the Majority Stockholders approved the Stockholder Consent approving, among other things, an amendment to our 2024 Plan to increase the number of shares of Common Stock of the Corporation reserved for issuance of new grants under the 2024 Plan to 10,000,000 shares, resulting in an aggregate maximum number of 9,959,789 shares available for issuance as of such date.

As of February 23, 2026,2,959,789 shares of Common Stock remained available for grant under the 2024 Plan. The Board believed that additional Shares were necessary to meet the Corporation’s anticipated equity compensation needs.

Following the amendment, the total number of Shares that are available for future awards under the 2024 Plan is equal to 9,959,789, including the 2,959,789 shares that remained available for grants as of February 23, 2026, less shares subject to awards made after February 23, 2026, and subject to adjustment as provided in the 2024 Plan and as described below.

General

The 2024 Plan enables our Board to provide equity-based incentives through grants of awards to the Corporation’s present and future employees, directors, consultants and other third-party service providers.

The 2024 Plan authorizes the grant of Incentive Stock Options, ("ISOs”), Non-Qualified Stock Options, restricted share awards, stock unit awards, stock appreciation rights ("SARs”), other stock-based awards, performance-based stock awards, (collectively, "stock awards”) and cash-based awards (stock awards and cash-based awards are collectively referred to as "awards”). ISOs may be granted only to our employees, including officers, and the employees of our parent or subsidiaries. All other awards may be granted to our employees, officers, our non-employee directors, and consultants and the employees and consultants of our subsidiaries, and affiliates.

The following table sets forth shares authorized and available under our incentive plansat December 31, 2025:

Outstanding Options

The following is a summary of information about the Stock Options outstanding at December 31, 2025:

The following is a summary of activity of outstanding stock options at December 31, 2025:

Options Granted

During the twelve months ended December 31, 2025,25 employees were granted options to purchase an aggregate of 118,111 shares of the Company's common stock, having a weighted average exercise price of$2.64, exercisable over a 10-year term. The options will vest 60% on the third anniversary, and 20% each anniversary thereafter until fully vested. The Company uses the Black-Scholes Pricing Model to determine the fair value of options at the grant date. Inputs to this model include, expected term, risk-free interest rate, volatility, and the dividend rate. Due to a limited exercise history, the Company uses the simplified method of calculating expected term, which results in expected term of 6.8 years options granted in 2025. The Company uses an interest rate from the U.S. Department of the Treasury’s published yield curve which corresponds to the expected term. The options will vest 60% on the third anniversary, and 20% each anniversary thereafter until fully vested. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 102% and an average call option fair value of $2.23, was $253,491. The options are being expensed over the vesting period.

Options Cancelled or Forfeited

Approximately 921,236 options with a weighted average strike price of $25.74 per share were forfeited by former employees during thetwelve months ended December 31, 2025. Reductions to share compensation expense are recognized at the time of forfeiture.

Options Expired

During the twelve months ended December 31, 2025, no options expired.

Options Exercised

No options were exercised during thetwelve months ended December 31, 2025 and 50,459 options were exercised during the twelve months ended December 31, 2024. Proceeds from options exercises during the twelve months ended December 31, 2024 amounted to $163,854.

Options Exercisable

There were 782,537 options exercisable as of December 31, 2025.

Options Expense

The Company recognized compensation expense net of forfeitures related to common stock options that are being amortized over the implied service term, or vesting period, of the options during thetwelve months ended December 31, 2025 and 2023, as follows:

As of December 31, 2025, the remaining unamortized balance to be expensed over the next five years is$2,762,545 and the weighted-average period over which these awards are expected to be recognized is approximately 1.4 years.

Note 14– Warrants

Warrants Exercised

No warrants were exercised during the twelve months ended December 31, 2025. During the twelve months ended December 31, 2024, a total of 2,186,250 warrants related to the issuance of debt were fully exercised at an average price of $2.50, and the proceeds were used to repay certain Notes Payable. The debt discounts relating to the warrants were either written off as a loss on early extinguishment of debt, to the extent that the related Notes Payable were fully retired, or amortized to interest expense for those Notes which were partially extinguished. The Company realized a loss on early extinguishment of debt of $696,502, this amount is included in net income from discontinued operations for twelve months ended December 31, 2024. Another 52,500 warrants were exercised at an exercise price of $4.00 during the period.

Warrants Granted

In connection with the Company’s underwritten public offering in May 2024, the Company issued to the underwriters warrants to purchase 138,000 shares of Common Stock. The grant was equal to 10% of the number of shares sold in this offering by Roth, (a total of 1,380,000 shares). The Representative’s Warrants will be exercisable upon issuance, will have an exercise price equal to 120%, (or $12.00)of the initial public offering price and will terminate fifth anniversary of the effective date of the registration statement. The Representative’s Warrants and the underlying shares of common stock are deemed compensation by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and will therefore be subject to FINRA Rule 5110(g)(1). In accordance with FINRA Rule 5110(g)(1), neither the Representative’s Warrants nor any shares issued upon exercise of the Representative's Warrants may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities by any person, for a period of 180 days immediately following the date of effectiveness or commencement of sales of the offering pursuant to which the Representative’s Warrants are being issued, subject to certain exceptions. The fair value of the warrants, was determined using the Black-Scholes option pricing model, and was recorded through additional paid in capital as an offset of the offering proceeds.

Outstanding Warrants

Warrants to purchase an aggregate total of 190,500 shares of common stock at a weighted average strike price of $9.80, exercisable over a weighted average life of 5 years, were outstanding as of December 31, 2025.

No warrants were cancelled or expired during thetwelve months ended December 31, 2025.

Note 15-Segment Reporting

The Company operates asone reportable segment, reflecting its capital-light business model under which it earns proceeds from the sale of freeze-dried candy products. The Chief Operating Decision Maker (“CODM”), the Company’s Chief Executive Officer, evaluates performance and allocates resources based on the consolidated Statement of Operations. The CODM does not review asset-level information in assessing segment performance; accordingly, such information is not presented. The accounting policies for this segment are consistent with those described in Note 2 – Summary of Significant Accounting Policies.

On December 30, 2025, the Company sold substantially all of its manufacturing assets to Trea Grove, a related party. In connection with this transaction, the Company entered into an exclusive Distribution Agreement under which Trea Grove serves as the exclusive distributor of the Company’s finished goods inventory, and the Company receives 10% of gross receipts from customer sales. Following these transactions, the Company continues to operate as asingle reportable segment.

As a result, the Company no longer operates manufacturing facilities and has transitioned to a capital-light model for the term of the Distribution Agreement. The results of the former manufacturing and omnichannel sales operations have been reclassified to net income (loss) from discontinued operations in the consolidated Statement of Operations for all periods presented. The segment information presented below reflects only continuing operations.

The following table provides the operating financial results of our freeze-dried candy segment for thetwelve months ended December 31, 2025 and 2024:

Note 16-Earnings Per Share

Basic and diluted earnings per share for the three and nine months ended December 31, 2025 and December 31, 2024:

The table below includes information related to stock options and warrants that were outstanding at the end thetwelve months ended December 31, 2025 and December 31, 2024. There were 5,555,947 shares underlying senior convertible notes payable exercisable at the option of the holder in whole or in part at any time prior to maturity on April 30, 2030 at the end of the twelve month period ended December 31, 2025. For periods in which the Company incurred a net loss, these amounts are not included in weighted average dilutive shares because their impact would be anti-dilutive.

Note 17– Income Taxes

We account for income taxes under the provisions of ASC Topic 740, Income taxes, which provides for an asset and liability approach for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributable to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.

The Company recognized income tax expense of$0 and $0 for the periods ended December 31, 2025 and 2024, respectively.

A reconciliation of the differences between the United States statutory federal income tax rate and the effective tax rate, as provided in the consolidated statements of operations, is as follows for the year ended December 31, 2025:

Deferred income taxes are provided using the asset and liability method to reflect temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities using presently enacted tax rates and laws. The components of deferred income taxes included in the consolidated balance sheets were as follows:

Aportion of the Company’s net operating loss carryforwards is subject to provisions of the tax law that limit the use of losses incurred by a corporation prior to the date certain ownership changes occur. These limitations also apply to certain depreciation deductions associated with assets on hand at the time of the ownership change and otherwise allowable during the five-year period following the ownership change. As the five-year limitation period lapsed in 2019, these disallowed deductions are reflected in property and equipment in the schedule above but continue to be subject to the annual limitation that applies to the pre-change net operating losses. Due to the limitation on the use of net operating losses and depreciation deductions, a significant portion of these carryforwards will expire regardless of whether the Company generates future taxable income. After reducing these net operating loss carryforwardsfor the amount which will expire due to this limitation, the Company had remaining federal net operating loss carryforwards of approximately $75,119,367 and state net operating loss carryforwards of approximately $0 at December 31, 2025. These net operating loss carryforwards expire as follows:

*Includes indefinite life federal net operating losses of $49,648,096 generated after 2017.

Approximately $46,162,842 is available to utilize against federal taxable income for 2026.

In assessing whether the deferred tax assets are realizable, a more likely than not standard is applied. If it is determined that it is more likely than not that deferred tax assets will not be realized, a valuation allowance must be established against the deferred tax assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the associated temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

A valuation allowance was established in the amount of $21,843,804 and $13,698,081 as of December 31, 2025 and 2024, respectively, based on the Company’s assessment of the future realizability of certain deferred tax assets. The valuation allowance on deferred tax assets is related to future deductible temporary differences and net operating loss carryforwards for which the Company has concluded it is more likely than not that these items will not be realized in the ordinary course of operations.

For the year ended December 31, 2025, the Company recorded an increase in valuation allowance of $8,145,723. This was primarily related to net operating losses generated by the Company in the current tax year. For the year ended December 31, 2024, the Company recorded an increase in valuation allowance of $713,972. This was primarily related to additional net operating losses accumulated for the year.

Unrecognized Tax Benefits

A reconciliation of the beginning balance and the ending balance of gross unrecognized tax benefits, before interest and penalties, for the period presented is as follows (in thousands):

The Company recorded unrecognized tax benefits for uncertain tax positions of approximately $0 and $0 as of December 31, 2025 and 2024, of which $0 impacted the effective tax rate as it was reversed.

The Company is subject to income tax in the United States federal jurisdiction and various state jurisdictions and has identified its federal tax return and tax returns in state jurisdictions below as “major” tax filings. These jurisdictions, along with the years still open to audit under the applicable statutes of limitation, are as follows:

Note 18– Subsequent Events

Management has evaluated events and transactions subsequent to the balance sheet date through the date of this report (the day the financial statements were available to be issued) for potential recognition or disclosure in the financial statements. Management has not identified any items requiring recognition or disclosure.

On January 6, 2026, the Company issued a press release announcing a private placement and strategic asset sale to support continued candy operations and future growth, while assessing other strategic alternatives, including potential partnerships, acquisitions, or additional corporate transactions, with the goal of strengthening its financial position and creating long-term stockholder value. Further the press release announced the previously disclosed leadership transition with (i) Claudia Goldfarb stepping down as Chief Executive Officer while remaining with the Company as Chief Operating Officer and a member of the Company’s board of directors (ii) members of the Board Chris Ludeman and Joe Mueller resigning from the Board in connection with the private placement and strategic asset sale, (iii) David Lazar being appointed Chief Executive Officer and elected to the Board, serving as the Board’s Chairman and (iv) David Natan being elected to the Board and serving as Audit Committee Chairman following Mr. Ludeman’s resignation.

On January 15, 2026 the Company issued an aggregate 277,776 shares of common stock amongst two non-employee Directors for annual services to be rendered. The aggregate fair value of the common stock was $100,000, based on the closing price of the Company’s common stock on the December 29, 2025. The shares were expensed upon issuance.

On February 12, 2026 the Company issued an aggregate 827,095 shares of common stock to Claudia and Ira Goldfarb upon the conversion of $289,483 of their Convertible Notes, at a conversion prices of $0.35 per share.

On February 18, 2026, the Company amended the previously disclosed Securities Purchase Agreement (the "Amendment”) by and between the Corporation and David Lazar (the "Purchaser”) (the "Securities Purchase Agreement”), dated as of December 31, 2025, pursuant to which the Corporation agreed to, among other things and subject to approval of the stockholders of the Corporation, sell and issue to the Purchaser or a permitted designee(s) or transferee(s)1,500,000 Series AAA preferred shares of the Corporation (the "Series AAA Preferred Stock”), convertible into 375,000,000 shares of Common Stock, pursuant to a Certificate of Designation (the "Old CoD”) in the form of Exhibit B to the Securities Purchase Agreement. The Amendment replaces the Old CoD with a new Certificate of Designation (the "New CoD”), pursuant to which the Series AAA Preferred Stock would be redeemable by the Company at price of $200.00 per share of Series AAA Preferred Stock, plus any declared but unpaid dividends, and is subject to certain conversion limitations.

The Amendment to the Securities Purchase Agreement is filed herewith as Exhibit 10.1 and the description above is qualified in its entirety by the text of the Amendment.

On February 13, 2026, the Board appointed Yisroel Goldberg as Chief Commercial Officer, effective immediately.

On February 13, 2026, the Board approved an amendment to the Company’s by-laws (the "By-Laws Amendment”) to permit the removal of any director or the entire Board with or without cause by a majority of the voting power of the Company’s capital stock, in line with Section 141(k) of the Delaware General Corporation Law. The amendment is reflected in the Amended and Restated Bylaws of the Company, which became effective on February 18, 2026 ("Amended and Restated Bylaws”).

On February 23, 2026, the Company filed Form 14-C to provide notice and information to the holders of shares of common stock, par value $0.001 per share of the Company, in connection with actions taken by the holders of a majority of the issued and outstanding Common Stock (the "Majority Stockholders”), which actions were approved by written consent on February 12, 2026 (the "Stockholder Consent”) to:

On March, 30, 2026, the Company filed a Certificate of Amendment of the Certificate of Incorporation of Sow Good Inc. with the Secretary of State of the State of Delaware, amending the Certificate of Incorporation to increase the authorized number of shares of Common Stock to 1,000,000,000.