Sow Good Inc.
For the period ended Mar 31, 2026. Filed May 20, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 20, 2026
SOWG$2.26+0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001193125-25-281675
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-20.
0001213900-26-059638
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 82 current paragraphs.
39 unchanged; 6 reworded; 37 added; 56 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (37)
Current report
Sow Good Inc. is a U.S.-based consumer packaged goods company that pioneered the freeze dried candy category. Since commencing commercial sales in the first quarter of 2023, Sow Good developed and scaled a proprietary freeze drying manufacturing operation dedicated to transforming traditional candy and snacks into novel, intensely flavorful treats it markets under the “hyper dried, hyper crunchy, hyper flavorful” brand positioning.
Current report
Recent Strategic Transactions
Current report
On December 30, 2025, the Company completed a series of strategic transactions that fundamentally changed the nature of its operations. The Company sold substantially all of its manufacturing assets - including six proprietary freeze drying machines and other property and equipment with an aggregate net book value of approximately $10 million - to Trea Grove, LLC, a related party, for total consideration of $1.5 million. Concurrently, the Company entered into a Distribution Agreement with Trea Grove, LLC, pursuant to which Trea Grove serves as the primary worldwide distributor of Sow Good’s remaining finished goods inventory, with the Company receiving 10% of gross receipts from customer sales. The Distribution Agreement has a term through July 31, 2026. Additionally, the Company completed a $3.0 million convertible preferred stock offering, the proceeds of which were used to pay down debt and for operational purposes.
Current report
As a result of these transactions, the Company no longer operates manufacturing facilities and has transitioned to a capital-light model for the duration of the Distribution Agreement. The Company’s board and management are evaluating strategic alternatives for the business going forward.
Current report
On December 31, 2025, the Company entered into a Securities Purchase Agreement with David Lazar for the private placement of two tranches of convertible preferred stock. The Company completed the sale of the first tranche by issuing 1,500,000 shares of Series AA Preferred Stock with proceeds to the Company of $3,000,000, which were used to pay down debt, reduce headcount, and for operational purposes. Pursuant to the Securities Purchase Agreement, the Company expects to consummated the sale of the second tranche with the issuance of 1,500,000 shares of Series AAA Preferred Stock for additional proceeds of $3,000,000 on March 31, 2026. The terms of the Series AAA Preferred Stock are substantially similar to the terms of the Series AA Preferred Stock, except that (i) the Series AAA Preferred Stock are redeemable at a price of $200 per share, (ii) each share of Series AA Preferred Stock is initially convertible into 14 shares of Common Stock where each share of Series AAA Preferred Stock is initially convertible into 250 shares of Common Stock (subject to adjustment as provided in the Series AAA certificate of designations), and (iii) there is no ownership limitation upon conversion.
Current report
In connection with the Private Placement the Company experienced a 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 (the “Board”), (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.
Current report
On May 31, 2026, upon the issuance of the Series AAA Preferred Stock, holders of 1,122,609 shares of the Series AAA Preferred Stock converted their shares into 280,652,250 shares of common stock (or 18,710,150 shares of common stock after giving effect to the 15-to-1 reverse stock split). On the same date, Mr. David Lazar converted 410,000 shares of Series AA Preferred Stock into 5,740,000 shares of common stock (or 382,666 shares of common stock after giving effect to the 15-to-1 reverse stock split).
Current report
While we observed the freeze dried candy category experience a significant rise in popularity during 2024 and the first half of 2025, we have observed market data showing a significant decline in sales in the freeze dried candy category toward the end of 2025. This decline could be the result of a number of factors, including the disjointed nature of freeze dried candy providers and the variance in quality, the arrival of large multinational market entrants and their desire to reduce competition in the space, or the exhaustion of consumer appetite of freeze dried candy. As a result of the slowdown in the market for freeze dried candy, the Company has transitioned to a capital-light model for the duration of the Distribution Agreement.
Current report
Our Ability to Consummate Our Acquisition and Subsequent Development of the Nachu Project
Current report
On April 20, 2026, SOWG Tanzania Inc., a Delaware corporation and wholly owned subsidiary of the Company Delaware corporation, and the Company entered into a share purchase agreement (the “Share Purchase Agreement”) with Ryzon Materials Limited, an Australian unlisted public company (“Ryzon”), Uranex Tanzania Limited (“Uranex”), Magnis Technologies (Tanzania) Limited (“Magnis Tech”), and Uranex ESIP Pty, pursuant to which the Company agreed to acquire 100% of the issued and outstanding shares (the “Acquisition”) of Uranex and Magnis Tech, each a wholly owned Tanzanian subsidiary of Ryzon (collectively, the “Targets”). The Targets are the sole holders of the Nachu Graphite Project, an advanced-stage graphite development asset located in the Ruangwa District, Lindi Region of Southern Tanzania (the “Nachu Project”). Upon closing, the Company intends to focus on advancing the acquired project toward construction and production, with its current consumer products operations managed as a separate business segment, and management believes the Transaction positions us as a burgeoning battery metals company with a platform for additional critical mineral acquisitions in the future. Our ability to consummate the Acquisition and bring the Nachu Project to operational will depend on a number of factors and risks, including the time and attention of management, completion of due diligence and other closing conditions for the Acquistion, the ability to obtain additional financing, among many others. The consummation of the Acquisition and the development of the Nachu Project will have a significant impact on our financial position and results of operations.
Current report
Revenues
Current report
We derive revenues primarily from commissions earned pursuant to the Distribution Agreement related to sales of Sow Good-branded products. The Company recognizes revenue when the underlying customer sale is completed and the amount due to the Company becomes determinable in accordance with the terms of the Distribution Agreement.
Current report
Cost of Goods Sold
Current report
Our cost of goods sold consists primarily of limited product-related costs associated with remaining inventory sales and costs incurred under the Distribution Agreement. Following the Company’s strategic restructuring and transition to a commission-based distribution model, substantially all historical manufacturing, labor, facilities, and inventory-related costs have been discontinued and reclassified to discontinued operations.
Current report
Operating Expenses
Current report
Provision for Income Taxes
Current report
Revenues
Current report
For the three months ended March 31, 2026, the Company recognized approximately $18 thousand of commission revenue under the Distribution Agreement. For the three months ended March 31, 2025, the Company recognized no revenue. The absence of revenue in the 2025 period within continuing operations is due to the Company’s former manufacturing and direct-sales business being presented within discontinued operations following the Company’s strategic restructuring completed on December 31, 2025. As a result, all revenue associated with the legacy operating model is excluded from continuing operations for comparative purposes.
Current report
Cost of Goods Sold
Current report
No cost of goods sold was recognized for the periods ended March 31, 2026 and 2025.
Current report
For the three months ended March 31, 2026, the Company recognized approximately $18 thousand of commission revenue under the Distribution Agreement and no associated cost of revenue, resulting in gross profit of approximately $18 thousand. For the three months ended March 31, 2025, the Company recognized no revenue or gross profit. The absence of gross profit in the 2025 period is due to the Company’s former manufacturing and direct-sales operations being presented within discontinued operations following the Company’s strategic restructuring completed on December 31, 2025.
Current report
Operating Expenses
Current report
Salaries and benefits expense for the three months ended March 31, 2026 was $295 thousand, compared to $807 thousand for the three months ended March 31, 2025, representing a decrease of $511 thousand, or 63%. The decrease was primarily attributable to reduced headcount and lower employee-related costs following the Company’s transition away from manufacturing operations and related workforce reductions.
Current report
Professional services expense for the three months ended March 31, 2026 was $1.1 million, compared to $192 thousand for the three months ended March 31, 2025, representing an increase of $932 thousand, or 485%. The increase was primarily attributable to higher legal, accounting, consulting, and transaction-related expenses associated with the Company’s strategic transition, financing activities, and ongoing public company compliance requirements.
Current report
Other general and administrative expenses for the three months ended March 31, 2026 were $263 thousand, compared to $579 thousand for the three months ended March 31, 2025, representing a decrease of $315 thousand, or 55%. The decrease was primarily attributable to lower facilities, administrative, and overhead costs following the Company’s exit from its manufacturing operations and facility reductions.
Current report
Depreciation and amortization expense for the three months ended March 31, 2026 was $3 thousand, compared to $9 thousand for the three months ended March 31, 2025, representing a decrease of $6 thousand, or 71%. The decrease was primarily attributable to the sale of substantially all manufacturing assets in December 2025.
Current report
Interest expense for the three months ended March 31, 2026 was $243 thousand, compared to $365 thousand for the three months ended March 31, 2025, representing an increase of $121 thousand, or 33%. The increase was primarily attributable to financing activities completed in connection with the Company’s transition to an asset-light operating model.
Current report
Net loss from continuing operations for the three months ended March 31, 2026 was $1.9 million, compared to $1.9 million for the three months ended March 31, 2025, representing an improvement of $21 thousand, or 1%. The improvement was primarily attributable to lower operating expenses following the Company’s exit from manufacturing operations.
Current report
Loss from discontinued operations for the three months ended March 31, 2026 was $559 thousand, compared to $802 thousand for the three months ended March 31, 2025, representing an improvement of $245 thousand, or 30%. Discontinued operations reflect the historical results of the Company’s former manufacturing and direct-sales business, which was sold in December 2025.
Current report
Net loss for the three months ended March 31, 2026 was $2.5 million, compared to $2.7 million for the three months ended March 31, 2025, representing an improvement of $263 thousand, or 10%.
Current report
Provision for Income Taxes
Current report
As of March 31, 2026, the Company had a working capital deficit of $1,390,620, compared to a working capital deficit of $2,794,664 as of December 31, 2025. The improvement in working capital was primarily attributable to reductions in accrued severance liabilities of $1,292,500 and convertible notes payable of $559,861, partially offset by decreases in accounts receivable - related party of $1,145,706.
Current report
As of March 31, 2026, cash and cash equivalents were $2,318,848, compared to $1,474,445 as of December 31, 2025. The increase in cash was primarily attributable to financing activities and working capital deficit during the period.
Current report
Following the sale of substantially all of the Company’s operating assets in December 2025, the Company transitioned to an asset-light operating structure. Management believes existing cash on hand will be sufficient to fund operations in the near term; however, the Company may require additional financing in the form of equity or debt to support future operations and strategic initiatives. There can be no assurance that such financing will be available on acceptable terms, or at all.
Current report
These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued. See Note 3- “Going Concern” to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Current report
Net cash provided by investing activities was $0 for the three months ended March 31, 2026, compared to net cash used in investing activities of $107,790 for the three months ended March 31, 2025. The change was primarily due to a reduction in capital expenditures and a decrease in security deposits during the 2026 period.
Current report
Net cash provided by financing activities was $2,534,002 for the three months ended March 31, 2026, compared to $0 for the three months ended March 31, 2025. Cash provided by financing activities during 2026 was primarily attributable to proceeds from the issuance of preferred stock and net proceeds from convertible notes.
Removed paragraphs (56)
Previous report
Sow Good is a trailblazing U.S.-based freeze dried candy and snack manufacturer dedicated to providing consumers with innovative and explosively flavorful freeze dried treats. Sow Good has harnessed the power of our proprietary freeze drying technology and product-specialized manufacturing facility to transform traditional candy into a novel and exciting everyday confectioneries subcategory that we call freeze dried candy. We began commercializing our freeze dried candy products in the first quarter of 2023, and as of September 30, 2025, we have fifteen stock keeping units (“SKUs”) in our Sow Good Candy line of treats. We sell our treats using an omnichannel strategy primarily focused on the wholesale and retail channels with less than 2% of sales coming from e-commerce as of September 30, 2025. As of September 30, 2025, our treats are offered for sale in approximately 5,000 brick-and-mortar retail outlets in the United States.
Previous report
We have custom-built a 20,945 square foot freeze drying facility in Irving, Texas. Freeze drying removes up to 99% of moisture from a product in its frozen state by applying a small amount of heat in an extremely low air pressure, near outer space-like environment, through the use of massive vacuum chambers, resulting in moisture being removed from the product at the speed of sound. This process of removing moisture from the product, which can take up to twenty-four hours, concentrates its flavor, creating a “hyper dried, hyper crunchy, and hyper flavorful” snackable treat. Our freeze drying process and expertise allow us to easily expand our manufacturing into other freeze dried snacks, such as yogurt snacks. Our commitment to providing the most flavorful and crunchy treats extends into the product packaging process, where our employees are dedicated to hand-packaging our treats through our precision packaging process in vigilantly managed low humidity conditions to protect our treats from reintroduction to moisture.
Previous report
We have built six bespoke freeze driers using proprietary technology tailored specifically to our products which allows us to freeze dry up to 24 million units of freeze dried candy per year, creating a truly state-of-the-art facility in Irving, Texas. We have six additional freeze driers, which we can have operational, as needed.
Previous report
Sow Good, co-founded by Claudia and Ira Goldfarb, brings over a decade of manufacturing expertise to the consumer packaged goods (“CPG”) sector, specializing in advanced freeze-drying technology. With experience across pet, baby, and candy products, they have a proven track record of transforming niche trends into everyday consumer staples. Leveraging our proprietary technology, Sow Good delivers innovative, high-quality products with a long shelf life and natural preservation. Beyond product innovation, they are committed to job creation and positive community impact, making Sow Good a forward-thinking force in the industry.
Previous report
Our products are sold in retailers nationwide from convenience and grocery stores to big-box retailers, such as Five Below, H-E-B, Kroger, Albertsons, and Ace Hardware. In addition, we sell a substantial portion of our products through distributors such as C&S Wholesale and Dutch Valley Food Distributors. In addition, we have expanded our market to two Middle East distributors, Sugary Trading and Festival Sweets. We believe there is a significant growth opportunity in increasing our shelf presence, SKU portfolio, and number of stores with our existing customers. We aim to have the ability to increase the availability of our products to these customers in current locations and distribution to more of their stores, while also broadening our SKU portfolio offerings. Bolstering our distribution and sales force will be a key growth driver for Sow Good so more of our products are available wherever our consumers choose to shop, whether it be a retail store, convenience store, or directly online. To further support our retail launches with existing customers and strengthen our brand name, we provide our product displays with distinctive designs and product highlights to enhance our visibility in current stores and educate new consumers on the value of freeze dried treats. We believe this strategy will capture the attention of new consumers, further educate and attract current consumers, and ultimately, increase sales for our retailers.
Previous report
Our omnichannel distribution strategy has three key components: retailers, e-commerce, and distributors. In aggregate, this omnichannel strategy provides us with a diverse set of consumers and customer partners, which may lead to a larger total addressable market opportunity than is normally available to products sold only in grocery stores, along with an opportunity to develop a direct relationship with our customers at our website, www.thisissowgood.comand our social media pages.
Previous report
Ability to Retain and Grow Our Customer Base in Retail and Traditional Wholesale Distribution Channels
Previous report
Ability to Expand Our Product Line
Previous report
Our goal is to substantially expand our product line over time to increase our growth opportunity and reduce product-specific risks through SKU diversification into multiple products, including freeze dried products beyond our freeze dried treats, such as yogurt snacks and jerky. Our pace of growth will be partially affected by the cadence and magnitude of new product launches over time. We believe the commercialization of any new products will require us to hire additional employees within our product design and commercialization team, thereby increasing our marketing expense, as well as research and development costs within our administrative expense.
Previous report
Impact of Inflation, Tariff and Trade Policies and Other Factors on Our Supply Chain and Operations
Previous report
We expect supplies and prices of the ingredients that we are going to use to be affected by a variety of factors, such as weather, seasonal fluctuations, demand, politics and macroeconomic trends, including tariff and trade policies. These factors subject us to shortages or interruptions in product supplies, which could adversely affect our revenue and profits. In addition, we may face limits on the ability to source some of the candy for our freeze dried candy products.
Previous report
Seasonality
Previous report
Because we are early in our lifecycle as a public company, it is difficult to discern the exact magnitude of seasonality affecting our business from a demand standpoint. While evidence of any demand seasonality remains difficult to assess, we anticipate certain holiday cycles such as Halloween, Christmas, Easter and Valentine’s Day contributing to revenue fluctuations within a given year. In addition, candy purchasing in summer months may be reduced due to a variety of factors including greater levels of health consciousness during warm weather. Operationally, heat waves from July through October of 2024 presented challenges in transporting our freeze-dried treats in the summer months. These conditions led to reduced shipments, higher inventory levels, and a decline in revenue. Additionally, some candy transported via external distribution channels during the extreme summer heat melted, impacting its shelf performance. We worked to remove affected products from shelves and replace them promptly to support recovery in product velocity. In the short term, these measures have impacted our market reputation, sell-through rates, and operational results. As a result, we anticipate an annual temporary decrease in shipments of our treats during summer months.
Previous report
We derive revenues from the sales of our freeze dried treats. The Company recognizes revenues when orders are shipped to customers.
Previous report
Our cost of goods sold, which may include inventory write-downs, consists primarily of facilities costs, material costs, and labor on the production of freeze dried treats.
Previous report
Sales of freeze dried candy for the three months ended September 30, 2025 were $1.6 million, compared to $3.6 million for the three months ended September 30, 2024, a decrease of $2.0 million, or (56%), driven by significantly reduced demand due in large part to increased competitive and market pressure by large competitors.
Previous report
Cost of goods sold for the three months ended September 30, 2025 were $10.5 million, compared to $3.0 million for the three months ended September 30, 2024, an increase of $7.5 million, or 250%. The increase was primarily due to charges to inventory to reserve for finished goods and materials associated with SKUs that the Company no longer intends to produce or sell, as well as the related write-down of overhead allocated to this inventory.
Previous report
Gross profit for the three months ended September 30, 2025 was $(8.9) million compared to gross profit of $0.6 million for the three months ended September 30, 2024, a decrease of $(9.5) million, or (1709%). Gross profit decreased over the comparative period due to a decrease in revenues of $2.0 million, coupled with an increase in the cost of goods sold of $7.5 million, largely due to inventory reserve charges.
Previous report
Our gross margin loss was (576%) during the three months ended September 30, 2025, compared to a gross margin profit of 16% for the three months ended September 30, 2024. Our gross margin decreased due to lower sales and increased cost of goods sold as a percentage of revenues due to inventory reserve charges.
Previous report
Salaries and benefits for the three months ended September 30, 2025 were $1.8 million, compared to $1.9 million for the three months ended September 30, 2024, a decrease of $49.0 thousand, or (3%). The decrease in salaries and benefits was mainly due to headcount reductions in the third quarter. Salaries and benefits included stock option amortization expense of $1.3 million for both of the three-month periods ended September 30, 2025, and 2024. Stock-based compensation also includes amortization of shares granted to officers in lieu of cash of $104,554 for the three months ended September 30, 2025.
Previous report
Professional services were $97.6 thousand for the three months ended September 30, 2025, compared to $320.3 thousand for the three months ended September 30, 2024, a decrease of $222.7 thousand, or (70%). The decrease was primarily due to decreased legal service expenses compared to the prior year period.
Previous report
Other general and administrative expenses for the three months ended September 30, 2025 were $1.7 million, compared to $1.6 million for the three months ended September 30, 2024, an increase of $104.7 thousand, or 7% primarily due to increased facilities costs, such as property tax, utilities, and rent expense.
Previous report
Depreciation of property and equipment for the three months ended September 30, 2025 and 2024, respectively, was $268.3 thousand and $216.2 thousand, of which $259.7 thousand and $207.6 thousand was allocated to cost of goods sold, which resulted in net depreciation expense of $8.6 thousand and $8.6 thousand, respectively.
Previous report
Impairment of long-lived assets
Previous report
During the three months ended September 30, 2025, the Company recognized impairment charges of $24.7 thousand related to the derecognition of the Rock Quarry lease and the write-off of certain associated leasehold improvements. No impairment charges were recorded during the three months ended September 30, 2024.
Previous report
In the three months ended September 30, 2025, other expense of $93.3 thousand consisted of interest expense derived from notes payable and the amortization of warrants issued as a debt discount, net of interest income on cash deposits. During the period ended September 30, 2024, other income consisted of interest expense of $185.6 thousand. Interest expense decreased due to decreased amortization on notes payable discounts as notes get closer to maturity.
Previous report
Gain on termination of leases
Previous report
During the three months ended September 30, 2025, the Company recognized a noncash gain of $1.8 million on the derecognition of the Rock Quarry and Mockingbird leases. No gain or loss on lease exits were recorded during the three months ended September 30, 2024.
Previous report
Pretax net loss for the three months ended September 30, 2025 was $10.9 million, compared to pretax net income of $3.44 million during the three months ended September 30, 2024, decrease in earnings of $7.5 million, or (1006%). The increase was primarily due the decrease in gross profit of $(9.5) million, or (1709%) partially offset by a gain on the exit of leases $1.8 million, and decreased operating expenses of $142.4 thousand or 100%.
Previous report
Comparison of the nine months ended September 30, 2025 and September 30, 2024
Previous report
Sales of freeze dried candy for the nine months ended September 30, 2025 were $5.9 million, compared to $30.6 million for the nine months ended September 30, 2024, a decrease of $24.7 million or (81%), driven by significantly reduced demand due in large part to increased competitive and market pressure by large competitors.
Previous report
Cost of goods sold for the nine months ended September 30, 2025 were $13.9 million, or 235% of sales compared to $16.4 million, or 54% of sales for the nine months ended September 30, 2024, a decrease of $2.6 million. The increase of cost of goods sold as a percent of sales was primarily due to charges to inventory to reserve for finished goods and materials associated with SKUs that the Company no longer intends to produce or sell, as well as the related write-down of overhead allocated to this inventory.
Previous report
Gross Profit
Previous report
Gross loss for the nine months ended September 30, 2025 was $(8.9) million compared to gross profit of $14.2 million for the nine months ended September 30, 2024, a decrease of -$22.2 million, or (156%). Gross profit decreased over the comparative period due to decreased revenues of $24.7 million partially offset by lower cost of goods sold of $2.6 million.
Previous report
Our gross profit margin was (135.5)% during the nine months ended September 30, 2025, compared to 46.37% for the nine months ended September 30, 2024. Our gross profit margin decreased as sales decreased while allocated overhead costs and inventory reserves increased over the prior year period.
Previous report
Salaries and Benefits
Previous report
Salaries and benefits for the nine months ended September 30, 2025 were $5.7 million, compared to $6.4 million for the nine months ended September 30, 2024, a decrease of $648.9 thousand, or (10%). The decrease in salaries and benefits was mainly due to a decrease in bonus compensation of approximately $850,000 and headcount reductions. Salaries and benefits included stock-based compensation expense of $3.8 million for both of the six-month periods ending September 30, 2025, and 2024. Stock-based compensation consists of stock options expense for employees and officers of the Company and share grants awarded to certain executives of the Company in lieu of salary, which are being amortized over the service period.
Previous report
Professional Services
Previous report
Professional services were $548.1 thousand for the nine months ended September 30, 2025, compared to $1.4 million for the nine months ended September 30, 2024, a decrease of $834.3 thousand, or (60%). The decrease was primarily due to heightened legal service expenses related to the public offering of common stock and Nasdaq listing in the prior year period.
Previous report
Other General and Administrative Expenses
Showing the first 40 of 56 passages. Open the source sections for the rest.
Reworded paragraphs (6)
Previous wording
We are currently seeking to grow our customer base in a variety of physical retail and traditional wholesale distribution channels. Our products have launched in retailers nationwide from convenience and grocery stores to big-box retailers, such as Five Below, H-E-B, Kroger, Albertsons, and Ace Hardware. In addition, we sell a substantial portion of our products through distributors such as C&S Wholesale and Dutch Valley Food Distributors. In addition, we have expanded our market to two Middle East distributors. Given the nascent state of the freeze dried candy segment and the number of potential retailer and wholesaler customers, we also believe there is a significant growth opportunity with customer acquisition in both the retail and wholesale channels, domestically and internationally. Customer acquisition in these channels depends on, among other things, our go-to-market function and our ability to meet the demand of customers who require large volumes of products.
Current wording
The State of the Freeze Dried Candy Category
Previous wording
The Company recognized a federal income tax expense of $0 and $195,603, for the nine months ended September 30, 2025 and 2024, respectively. The Company’s effective tax rates for the three months ended September 30, 2025 and 2024 differed from the federal statutory tax rate of 21% primarily due to a valuation allowance for the Company’s deferred tax assets and permanent differences.
Current wording
The Company recognized a federal income tax expense of $0 and $195,603, for the three months ended March 31, 2026 and 2025, respectively. The Company’s effective tax rates for the three months ended March 31, 2026 and 2025 differed from the federal statutory tax rate of 21% primarily due to a valuation allowance for the Company’s deferred tax assets and permanent differences.
Previous wording
Our chief operating decision makers, who are our Chief Executive Officer and our Executive Chairman, review financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance, as well as for strategic operational decisions and managing the organization. For each of the nine months ended September 30, 2025 and 2024, we have determined that we have one operating segment and one reportable segment.
Current wording
Our chief operating decision maker is our Chief Executive Officer who reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance, as well as for strategic operational decisions and managing the organization. For each of the three months ended March 31, 2026 and 2025, we have determined that we have one operating segment and one reportable segment.
Previous wording
On April 28, 2025, the Company restructured its outstanding current debt through the issuance of Convertible Notes in a dollar-for-dollar exchange. On April 28, 2025, the Company entered into an exchange agreement (the “Exchange Agreement”) with related party holders of the Company’s outstanding promissory notes (the “Outstanding Notes”) with an aggregate principal amount of $2.7 million, maturity dates ranging from April 8, 2025 to August 23, 2025 and interest rates ranging from 6% to 8%. Pursuant to the Exchange Agreement, holders exchanged their Outstanding Notes for new senior convertible promissory notes (the “Convertible Notes”) in an amount equal to $2.8 million, the aggregate principal amount of the Outstanding Notes, plus accrued and unpaid interest thereunder. The Convertible Notes have a maturity date of April 30, 2030 and will pay interest semiannually in arrears on May 1 and November 1 beginning on November 1, 2025. At the Company’s election, interest payable on an interest payment date may be added to the principal amount of the Convertible Note on the applicable interest payment date and will no longer be owed to holders of the Convertible Notes. The Convertible Notes are convertible at the election of the holders, in whole or in part, into shares of common stock based on a price per share equal to the average closing price of such common stock for the five trading days immediately prior to the execution of and entry into the Convertible Notes, with such conversion prices ranging from $0.62 to $0.63. The Convertible Notes are senior in right of payment to all existing and future debt obligations of the Company and will be secured by all existing and future assets of the Company. The Convertible Notes are redeemable by the Company at any time upon ten days’ notice and at the option the holders for the principal amount thereof plus interest, beginning on January 1, 2026.
Current wording
On April 28, 2025, the Company restructured its outstanding current debt through the issuance of Convertible Notes in a dollar-for-dollar exchange. On April 28, 2025, the Company entered into an exchange agreement (the “Exchange Agreement”) with related party holders of the Company’s outstanding promissory notes (the “Outstanding Notes”) with an aggregate principal amount of $2.7 million, maturity dates ranging from April 8, 2025 to August 23, 2025 and interest rates ranging from 6% to 8%. Pursuant to the Exchange Agreement, holders exchanged their Outstanding Notes for new senior convertible promissory notes (the “Convertible Notes”) in an amount equal to $2.8 million, the aggregate principal amount of the Outstanding Notes, plus accrued and unpaid interest thereunder. The Convertible Notes have a maturity date of April 30, 2030 and will pay interest semiannually in arrears on May 1 and November 1 beginning on November 1, 2025. At the Company’s election, interest payable on an interest payment date may be added to the principal amount of the Convertible Note on the applicable interest payment date and will no longer be owed to holders of the Convertible Notes. The Convertible Notes are convertible at the election of the holders, in whole or in part, into shares of common stock based on a price per share equal to the average closing price of such common stock for the five trading days immediately prior to the execution of and entry into the Convertible Notes, with such conversion prices ranging from $0.62 to $0.63. The Convertible Notes are senior in right of payment to all existing and future debt obligations of the Company and will be secured by all existing and future assets of the Company. The Convertible Notes are redeemable by the Company at any time upon ten days’ notice and at the option the holders for the principal amount thereof plus interest, beginning on January 1, 2026. 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. The remaining outstanding balance of approximately $344,838, including accrued quarterly interest, was repaid in full on March 31, 2026.
Previous wording
The following table summarizes our cash flows during the nine months ended September 30, 2025 and 2024, respectively.
Current wording
The following table summarizes our cash flows during the three months ended March 31, 2026 and 2025, respectively.
Previous wording
Net cash used in operating activities was $3.3 million for the nine months ended September 30, 2025, compared to $6.1 million of cash used in operating activities nine months ended September 30, 2024. The decrease in cash used in operating activities was primarily due to decreases in the level of cash spent on inventory and reduced accounts receivable due to lower sales.
Current wording
Net cash used in operating activities, continuing operations was $843,354 for the three months ended March 31, 2026, compared to $396,671 for the three months ended March 31, 2025. The decrease in cash used in operating activities was primarily attributable to changes in working capital, including decreases in inventory and accounts receivable - related party, partially offset by increases in accrued expenses and other liabilities.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The following table summarizes selected items from the statement of operations for the three-month periods ended September 30, 2025 and September 30, 2024:
Previous report — wording carried elsewhere
The Company maintains a full valuation allowance related to our net deferred tax assets, primarily due to our historical net loss position. For the periods ended September 30, 2025 and 2024, the Company recognized federal income tax provisions of $0 and $195.6 thousand, respectively.