Sow Good Inc. Reports 88% Revenue Decline and Gross Loss in Latest Quarter

Sow Good Inc. reported significant financial challenges in its latest 10-Q filing for the quarter ending June 30, 2025. The company generated revenues of $1.86 million, a stark decline of 88% from $15.65 million in the same quarter of the previous year. For the first half of 2025, revenues totaled $4.33 million, down 84% from $27.05 million in the first half of 2024. The drastic drop in revenue is attributed to increased competitive pressures and reduced demand for its freeze-dried candy products, which have been a focus of the company's business strategy.

The company's cost of goods sold (COGS) also decreased significantly, falling to $1.99 million for the three months ended June 30, 2025, compared to $6.64 million in the prior year, reflecting a 70% reduction. However, this decrease was not sufficient to offset the revenue decline, resulting in a gross loss of $129,709 for the quarter, compared to a gross profit of $9 million in the same period last year. The gross margin plummeted from 58% to a negative 7%, indicating that the company is struggling to maintain profitability amid rising overhead costs.

In terms of operational developments, Sow Good has made strategic moves to restructure its debt. On April 28, 2025, the company entered into an exchange agreement with related parties to convert $2.5 million of outstanding promissory notes into new senior convertible promissory notes totaling approximately $2.8 million. This restructuring is part of a broader effort to stabilize the company's financial position, which has been further complicated by an accumulated deficit of $69.2 million as of June 30, 2025.

The company has also expanded its product offerings and market reach, now selling its freeze-dried candy in approximately 5,000 retail outlets across the U.S. and entering the Middle East market through two distributors. Despite these efforts, the company faces challenges in customer retention and market competition, which have hindered its growth potential. As of June 30, 2025, Sow Good had a cash balance of $959,416, down from $3.72 million at the end of 2024, raising concerns about its liquidity and ability to sustain operations in the coming year.

Looking ahead, Sow Good's management has indicated that it will continue to pursue growth strategies, including expanding its product line and enhancing its distribution capabilities. However, the company acknowledges that it may require additional financing to support its operations and growth initiatives, which could be difficult to secure under current market conditions. The outlook remains uncertain as the company navigates these challenges while striving to regain its footing in the competitive freeze-dried snack market.