Accounting Policies, by Policy (Policies) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Reverse Stock Split | Reverse Stock Split On April 17, 2026 the company effected a 1 for 15 stock split. The impact of this split has been retroactively applied to all periods presented unless stated otherwise. |
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| Use of Estimates | 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. |
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| Segment Reporting | 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. Segment disclosures are included in Note 15 – Segment Reporting. |
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| Environmental Liabilities | 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. |
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| Cash and Cash Equivalents | 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 $2,068,848 at March 31, 2026. The Company had cash in excess of FDIC and SIPC insured limits of $1,189,975 at December 31, 2025. The Company has not experienced any losses in such accounts. |
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| Accounts Receivable | 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 credit losses of $12,284 at March 31, 2026 and $0 at December 31, 2025. 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. |
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| Other Receivables | Other Receivables Other accounts receivable was $93,491 as of March 31, 2026 and December 31, 2025. Other accounts receivable consisted primarily of a tax refund receivable from the State of Delaware for franchise taxes. |
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| 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. 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 March 31, 2026 and December 31, 2025, the Company retained approximately $4,911 and $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. |
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| Property and Equipment | 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 is stated at cost, which predominately relates to the cost of freeze driers and equipment not yet placed into service. No depreciation expense is recorded on construction-in-progress until such time as the relevant assets are 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 $2,500 and $8,584, for the three months ended March 31, 2026 and 2025, 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. |
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| Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606 - Revenue from Contracts with Customers (“ASC 606”). Following the Company’s strategic restructuring completed on December 31, 2025, including the sale of substantially all manufacturing and operating assets and the execution of the Distribution Agreement with Trea Grove LLC, the Company transitioned from a manufacturing and direct-sales business model to a commission-based distribution model. Under ASC 606, the Company recognizes revenue in accordance with a five-step model in which the Company evaluates the transfer of promised goods or services and recognizes revenue when customers obtain control of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Under the Distribution Agreement, Trea Grove LLC serves as a distributor of Sow Good-branded products and is responsible for invoicing customers, fulfillment activities, and collection of customer payments. The Company is entitled to receive a fixed percentage of gross receipts collected by the distributor from customer sales. The Company evaluated the arrangement under ASC 606 and concluded that it acts as an agent because it does not control the products prior to transfer to end customers, does not have primary responsibility for fulfillment, and does not bear primary inventory or customer credit risk. Accordingly, revenue is recognized on a net basis in an amount equal to the commission to which the Company expects to be entitled. The Company’s performance obligation under the Distribution Agreement consists primarily of providing access to the Sow Good brand and related distribution rights. Revenue is recognized when the distributor completes the underlying customer sale and collects payment, as this represents the point at which the Company’s right to consideration becomes fixed and determinable in accordance with the contractual terms of the arrangement. The Company has elected, as a practical expedient, to account for shipping and handling activities as fulfillment costs rather than as separate performance obligations. Because shipping, fulfillment, product handling, returns processing, and customer pricing adjustments are managed by the distributor, the Company does not separately recognize gross product sales revenue, shipping revenue, or related customer allowances associated with distributor sales activity. Revenue is reported net of applicable provisions for discounts, returns, and allowances. Under the current commission-based operating structure, customer returns, promotional programs, discounts, and pricing adjustments are administered by the distributor and do not materially impact the Company’s recognized commission revenue. The Company evaluates the need for reserves related to variable consideration based on known facts and contractual terms at each reporting date. For the three months ended March 31, 2026, the Company recognized approximately $18 thousand of commission revenue associated with sales activity under the Distribution Agreement, which is included in discontinued operations. The Company did not recognize revenue from continuing operations under its legacy manufacturing and direct-sales business model, as substantially all such operations were discontinued as of December 31, 2025, and historical results have been reclassified to discontinued operations for all periods presented. |
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| Customer Concentration | Customer Concentration Following the sale of substantially all manufacturing and operating assets and the transition to a capital-light distribution model, the Company earns revenue primarily from a single related party distribution partner pursuant to the Distribution Agreement entered into on December 31, 2025. Trea Grove LLC, a related party, serves as the primary distributor of Sow Good-branded products and is expected to represent substantially all of the Company’s revenue under the current operating structure. The Company may also sell remaining inventory independently from time to time. For the three months ended March 31, 2026, the Company recognized approximately $18 thousand of commission revenue associated with sales activity under the Distribution Agreement. Substantially all historical product sales and related operating activity have been classified within discontinued operations as a result of the Company’s restructuring and disposal of substantially all manufacturing operations. |
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| Supplier Concentration | 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 related party distribution partner pursuant to a long-term Distribution Agreement. Trea Grove LLC, a related party, is expected to be the Company’s primary 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. |
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| Basic and Diluted Earnings (Loss) Per Share | 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. There were no dilutive common shares for the periods ended March 31, 2026 and 2025 since the company was in a loss position for both periods. For the three months ended March 31, 2026 and 2025, the Company incurred net losses which cannot be diluted; therefore, basic and diluted loss per share of Common Stock is the same. Each share of Series AA Preferred Stock and Series AAA Preferred Stock is convertible into 0.93 and 16.67 shares of Common Stock, respectively, and are included in the table as if converted. As of March 31, 2026 and 2025, shares issuable which could potentially dilute future earnings were as follows:
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| Stock-Based Compensation | 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 costs reversed in respect of forfeitures amounted to $134,860 for the three months ended March 31, 2026. Stock-based compensation expense related to the issuance of shares of common stock to members of the Board of Directors for their services was $137,500 and $230,000 for the three months ended March 31, 2026 and 2025, respectively, and is included in other general and administrative expense. Stock-based compensation expense related to the issuance of shares of common stock to advisors for their services was $465,100 and $0 for the three months ended March 31, 2026 and 2025, respectively, and is included in other general and administrative expense. |
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| Income Taxes | 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. |
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| Uncertain Tax Positions | 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 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. |
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements 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 three months ended March 31, 2026, have had or are expected to have a significant impact on the Company’s financial statements. |
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