[Management View]
Sow Good Inc. faced significant revenue and profitability declines in Q2 2025 due to increased competition and higher facility overhead. Management emphasized operational stabilization following earlier supply chain bottlenecks and fulfillment delays. Distribution momentum was observed in both domestic and international retail channels, with new product initiatives and repeat business signaling regained partner confidence. Cost reduction programs targeting occupancy and storage expenses accompanied the strategic affirmation of an innovation-led product roadmap.

[Outlook]
Management projected the company could achieve cash flow breakeven before the end of the year. CEO Goldfarb described current inventory as "quite a bit of finished goods from last year," clarifying that "business has stabilized" and regular retail sales continue for most SKUs. Completion of holiday inventory allowed management to commit to supply chain stabilization and ramp production for upcoming demand cycles.

[Financial Performance]
Revenue for the first half of 2025 was $1.9 million, a significant decline attributed to heightened competition from new large market entrants. Gross loss was $100,000 for 2025, with management attributing this reversal to both lower sales and elevated occupancy costs tied to increased facility space for finished goods. Negative gross margin was -7% in 2025, visibly impacted by a combination of sales contraction and increased occupancy expense. Operating expenses were $3.9 million in 2025, with the decrease tied to lower accrued bonus compensation compared to $4.1 million in 2024. Net loss was $4.2 million or -$0.36 per diluted share in 2025, reversing net income of $3.3 million or $0.29 per diluted share in 2024. Adjusted EBITDA was -$2.7 million in 2025, compared to $6.2 million in 2024. Cash and cash equivalents were $1 million at the end of Q2 2025, down from $3.7 million as of Dec. 31, 2024, and $1.6 million as of Mar. 31, 2025.

[Q&A Highlights]
Question 1: Can you just talk to your inventory levels as well as your need for future financing?
Answer: From an inventory perspective, we still have quite a bit of finished goods from last year. The good thing about our inventory is that it has a very long shelf life, and we continue to sell through that inventory. There are two SKUs that we are working through at a discount, which are the sweeter geeks and sweet worms. So those two were moving through discount channels, but the rest is remaining at regular retail and continues to perform well. In regards to what we are going to need from a financing perspective, right now with our current run rate, we are fine. Once we expand, if we want to do further R&D or move into some adjacent categories, then that is something we will evaluate at that time. But for right now, business has stabilized. Sales are in a good spot for where we are. We still need to right-size our occupancy cost, but we are actively working through that.

Question 2: How long until your cash flow breakeven at this point do you think?
Answer: That is a good question. I would say before the end of the year. We are making really good progress right now. From a cash perspective, we are holding steady where we are right now.

[Sentiment Analysis]
The tone of the management was cautiously optimistic, emphasizing stabilization and strategic adjustments to navigate competitive pressures. Analysts appeared concerned about inventory levels and cash flow breakeven timelines but acknowledged the progress in operational recovery and cost optimization.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 |
|-------------------------|---------------|---------------|
| Revenue | $1.9 million | $15.6 million |
| Gross Loss | $100,000 | $9 million |
| Gross Margin | -7% | 58% |
| Operating Expenses | $3.9 million | $4.1 million |
| Net Loss | $4.2 million | $3.3 million |
| Adjusted EBITDA | -$2.7 million | $6.2 million |
| Cash and Cash Equivalents| $1 million | $3.7 million |

[Risks and Concerns]
Revenue for the first half of 2025 declined due to softer demand driven primarily by increased competitive pressure with the arrival of large market entrants. Gross margin decreased as a result of lower sales and higher occupancy costs. Net loss was reported, primarily due to the sales decline under intensified competition. Cash position ended the quarter at $1 million, down from $3.7 million as of Dec. 31, 2024, and $1.6 million as of Mar. 31, 2025.

[Final Takeaway]
Sow Good Inc. faced substantial challenges in Q2 2025, with significant declines in revenue and profitability due to increased competition and higher facility overhead. However, management highlighted operational stabilization and strategic adjustments, including cost reduction programs and an innovation-led product roadmap. The company is optimistic about achieving cash flow breakeven before the end of the year and is focused on driving top-line growth, improving operational leverage, and rebuilding from a more resilient foundation. Despite ongoing challenges, Sow Good Inc. remains committed to scaling with discipline, deepening retailer relationships, and leading with bold, differentiated innovation.