Irving-based Sow Good (Nasdaq: SOWG), a leading freeze-dried food and candy manufacturer, has completed a series of moves designed to “strengthen its liquidity position, transition the business to a more asset-light operating model, and provide flexibility as the company continues operating its candy business while evaluating growth opportunities and broader strategic alternatives.”

Chief among these moves is a securities purchase agreement Sow Good made on Dec. 31 for a $6 million private placement with David Lazar, a Panama-based investor whose investment fund, Activist Investing LLC, specializes in “turnaround situations” of distressed Nasdaq & NYSE companies.

The first $3 million closing was completed on Dec 31, the company said, with the second $3 million slated to occur following receipt of required stockholder approvals and prior to March 31, 2026.

Sow Good said net proceeds from the private placement are expected to be used to fund ongoing operations, address outstanding liabilities, and preserve the company’s ability to operate “as a going concern” while it pursues strategic initiatives.

Lazar made two similar agreements in December

Lazar has entered into similar agreements with New York-based Indaptus Therapeutics and with KALA BIO, a clinical-stage biopharmaceutical company based in Arlington, Massachusetts. Both of those agreements were announced in December at the same purchase agreement amount of $6 million.

According to his fund’s website, Lazar has been involved in the capital markets for over a decade, leveraging his “diverse knowledge of financial, legal and operations management; public company management, accounting, private placements, audit preparation, capital raising, due diligence reviews, and SEC regulations.”

Lazar steps into CEO, board chair posts

On May 20, 2024, Sow Good co-founder and then-CEO Claudia Goldfarb (center in pink) and her husband, Co-Founder and then-Executive Chairman Ira Goldfarb (beside her in light blue tie), rang the opening bell at Nasdaq. With the newly announced transactions and leadership moves, David Lazar has now become the company’s CEO and board chair. [Photo: Nasdaq]

In connection with the the transactions, David Lazar was appointed CEO and board chair of Sow Good. Co-Founder Claudia Goldfarb stepped down as CEO and remains with the company as chief operating officer and a member of the board. David Natan was elected to the board, and Joe Mueller and Chris Ludeman resigned from it. Co-Founder Ira Goldfarb resigned as Sow Good’s executive chairman and board chair.

“Completing this financing provides Sow Good with critical runway and stability,” Lazar said in a statement. “Our immediate focus is to continue serving customers and partners, stabilize the business, and evaluate opportunities to grow within the candy and snack category. At the same time, we will be disciplined and thoughtful as we explore additional strategic alternatives that can unlock long-term value for stockholders.”

Asset sale to Trea Grove

In another move, Sow Good said it had completed the sale of “a significant portion of the assets related to the company’s freeze-dried snacks and candy business” to Trea Grove LLC for $1.5 million, payable in installments through March 31. That deal includes the transfer of selected intellectual property, real property improvements, and other related assets, along with the assumption of specified liabilities, Sow Good said.

After the sale, Sow Good appointed Trea Grove as the exclusive distributor of certain Sow Good products, including fruits, snacks, and candy, through July 31, 2026, unless extended. Under the agreement, the distributor will manage customer communications, logistics, fulfillment, billing, and collections, and will remit 10% of gross receipts from product sales to Sow Good.

Sow Good noted that the transactions “do not represent a liquidation or cessation of operations.” The company said it will continue selling and distributing its candy products in the ordinary course of business.

Goldfarb said the transactions allow Sow Good “to remain active in the candy market while significantly reducing fixed operating costs.”

“We believe this structure positions the company to continue serving its customers, through a third-party distribution arrangement, pursue growth opportunities within the candy industry, and thoughtfully assess additional strategic paths that may enhance value,” Goldfarb added in a statement.

Sow Good said it will continue operating its candy business while evaluating growth opportunities within the candy and snack industry. The company added that it will also assess 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.

Company pivoted from oil and gas to freeze-dried candy

The company made a whale of a pivot in January 2021 by announcing it had changed its name from Black Ridge Oil and Gas and become Sow Good Inc. to reflect its entry into the global freeze-dried food market, which was estimated at the time to total nearly $60 billion, according to market research company Technavio.

The company rang the opening bell at Nasdaq in Times Square on May 20, 2024. At the event, Claudia Goldfarb spoke to her company’s sales and future.

“In just our first year of exclusively producing freeze-dried candy and treats, we’ve built a strong foundation to support sustainable and rapid growth, from expanding our production infrastructure to growing our customer base and innovative SKU portfolio,” Goldfarb said at the time. “We expect our recent Nasdaq listing to further enhance our market profile as we continue advancing our growth objectives.”

Decades before that, Ira Goldfarb’s father had rung the opening bell for G-III Apparel Group, an American clothing company that designs, manufactures, markets, and sells women’s and men’s apparel.

Don’t miss what’s next. Subscribe to Dallas Innovates.

Track Dallas-Fort Worth’s business and innovation landscape with our curated news in your inbox Tuesday-Thursday.