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Sow Good Inc. - Quarter Report: 2023 June (Form 10-Q)

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

(Mark One)

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended June 30, 2023

or

 

TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ______________

 

Commission File Number 000-53952

SOW GOOD INC.

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation or organization)

27-2345075

(I.R.S. Employer Identification No.)

 

1440 N. Union Bower, Irving, TX 75061

(Address of principal executive offices) (Zip Code)

 

Issuer’s telephone Number: (214) 623-6055

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☒ No  ☐

 

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☒ No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   Accelerated filer
Non-accelerated filer   Smaller reporting company
Emerging growth company      

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐ No  ☒

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock SOWG OTCQB

 

The number of shares of registrant’s common stock outstanding as of August 14, 2023 was 4,868,083.

 

 

 

 

   

 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION 3
ITEM 1.   FINANCIAL STATEMENTS (Unaudited) 3
    Condensed Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022 3
    Unaudited Condensed Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 4
    Unaudited Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022 5
    Unaudited Condensed Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 7
    Notes to the Condensed Financial Statements (Unaudited) 8
ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 28
ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 34
ITEM 4.   CONTROLS AND PROCEDURES 34
       
PART II - OTHER INFORMATION 35
ITEM 1.   Legal Proceedings 35
ITEM 1A.   RISK FACTORS 35
ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 35
ITEM 3.   DEFAULTS UPON SENIOR SECURITIES 35
ITEM 4.   MINE SAFETY DISCLOSURES 35
ITEM 5.   OTHER INFORMATION 35
ITEM 6.   EXHIBITS 36
    SIGNATURES 37

 

 

 

 

 

 

 

 

 2 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

SOW GOOD INC.

CONDENSED BALANCE SHEETS

 

         
   June 30,   December 31, 
   2023   2022 
   (Unaudited)     
ASSETS        
         
Current assets:          
Cash and cash equivalents  $293,024   $276,464 
Accounts receivable, net   726,672    191,022 
Prepaid expenses   119,843    137,692 
Inventory   918,969    1,972,879 
Total current assets   2,058,508    2,578,057 
           
Property and equipment:          
Construction in progress       2,487,673 
Property and equipment   5,905,432    3,055,579 
Less accumulated depreciation   (663,673)   (508,257)
Total property and equipment, net   5,241,759    5,034,995 
           
Security deposit   58,765    24,000 
Right-of-use asset   1,226,708    1,261,525 
           
Total assets  $8,585,740   $8,898,577 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Current liabilities:          
Accounts payable  $376,349   $452,606 
Accrued expenses   657,411    385,028 
Current portion of operating lease liabilities   56,011    52,543 
Current maturities of notes payable, related parties, net of $699,297 of debt discounts at June 30, 2023   200,703     
Current maturities of notes payable, net of $306,498 of debt discounts at June 30, 2023   93,502     
Total current liabilities   1,383,976    890,177 
           
Operating lease liabilities   1,272,626    1,301,355 
Notes payable, related parties, net of $3,027,998 and $2,692,757 of debt discounts at June 30, 2023 and December 31, 2022, respectively   4,667,002    3,502,243 
Notes payable, net of $262,705 and $336,085 of debt discounts at June 30, 2023 and December 31, 2022, respectively   467,295    393,915 
           
Total liabilities   7,790,899    6,087,690 
           
Commitments and contingencies        
           
Stockholders' equity:          
Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares issued and outstanding        
Common stock, $0.001 par value, 500,000,000 shares authorized, 4,868,083 shares issued and outstanding   4,868    4,847 
Additional paid-in capital   61,191,965    58,485,602 
Accumulated deficit   (60,401,992)   (55,679,562)
Total stockholders' equity   794,841    2,810,887 
           
Total liabilities and stockholders' equity  $8,585,740   $8,898,577 

 

See accompanying notes to unaudited condensed financial statements.

 

 3 

 

 

SOW GOOD INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

                 
   For the Three Months   For the Six Months 
   Ended June 30,   Ended June 30, 
   2023   2022   2023   2022 
                 
Revenues  $1,315,347   $244,943   $1,514,277   $293,315 
Cost of goods sold   2,695,820    150,603    2,772,500    198,094 
Gross profit (loss)   (1,380,473)   94,340    (1,258,223)   95,221 
                     
Operating expenses:                    
General and administrative expenses:                    
Salaries and benefits   538,916    1,242,900    1,083,469    2,159,055 
Professional services   63,329    53,295    109,535    115,988 
Other general and administrative expenses   483,260    487,789    841,727    892,865 
Total general and administrative expenses   1,085,505    1,783,984    2,034,731    3,167,908 
Depreciation and amortization   7,413    67,693    83,631    132,919 
Total operating expenses   1,092,918    1,851,677    2,118,362    3,300,827 
                     
Net operating loss   (2,473,391)   (1,757,337)   (3,376,585)   (3,205,606)
                     
Other expense:                    
Interest expense, including $684,144 and $1,054,822 of warrants issued as a debt discount for the three and six months ending June 30, 2023, and $262,074 and $321,798 for the three and six months ending June 30, 2022, respectively   (847,509)   (355,452)   (1,345,845)   (459,245)
Total other expense   (847,509)   (355,452)   (1,345,845)   (459,245)
                     
Net loss  $(3,320,900)  $(2,112,789)  $(4,722,430)  $(3,664,851)
                     
Weighted average common shares outstanding - basic and diluted   4,854,208    4,837,950    4,850,815    4,823,974 
Net loss per common share - basic and diluted  $(0.68)  $(0.44)  $(0.97)  $(0.76)

 

 

See accompanying notes to unaudited condensed financial statements.

 

 

 

 

 4 

 

 

SOW GOOD INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

 

                               
   For the Three Months Ended June 30, 2023 
           Additional   Common       Total 
   Common Stock   Paid-in   Stock   Accumulated   Stockholders' 
   Shares   Amount   Capital   Payable   Deficit   Equity 
Balance, March 31, 2023   4,847,384   $4,847   $59,484,859   $   $(57,081,092)  $2,408,614 
Common stock issued to officers and directors for services   20,699    21    125,208            125,229 
Common stock warrants granted to related parties pursuant to debt financing           1,075,904            1,075,904 
Common stock warrants granted to note holders pursuant to debt financing           374,153            374,153 
Common stock options granted to officers and directors for services           112,974            112,974 
Common stock options granted to employees and advisors for services           18,867            18,867 
Net loss for the three months ended June 30, 2023                   (3,320,900)   (3,320,900)
Balance, June 30, 2023   4,868,083   $4,868   $61,191,965   $   $(60,401,992)  $794,841 

 

 

                         
   For the Three Months Ended June 30, 2022 
           Additional   Common       Total 
   Common Stock   Paid-in   Stock   Accumulated   Stockholders' 
   Shares   Amount   Capital   Payable   Deficit   Equity 
Balance, March 31, 2022   4,820,655   $4,821   $54,502,342   $10,000   $(45,104,556)  $9,412,607 
Common stock warrants granted to related parties pursuant to debt financing           2,249,684            2,249,684 
Common stock warrants granted to note holders pursuant to debt financing           444,330            444,330 
Common stock issued to officers and directors for services   8,064    8    24,990            24,998 
Common stock issued to advisory board for services   12,255    12    29,988    (10,000)       20,000 
Common stock options granted to officers and directors for services           296,002            296,002 
Common stock options granted to employees and advisors for services           90,370            90,370 
Net loss for the three months ended June 30, 2022                   (2,112,789)   (2,112,789)
Balance, June 30, 2022   4,840,974   $4,841   $57,637,706   $   $(47,217,345)  $10,425,202 

 

 

 

 

 

 

(continued)

 

 5 

 

 

SOW GOOD INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

                         
   For the Six Months Ended June 30, 2023 
           Additional   Common       Total 
   Common Stock   Paid-in   Stock   Accumulated   Stockholders' 
   Shares   Amount   Capital   Payable   Deficit   Equity 
Balance, December 31, 2022   4,847,384   $4,847   $58,485,602   $   $(55,679,562)  $2,810,887 
Common stock issued to officers and directors for services   20,699    21    125,208            125,229 
Common stock warrants granted to related parties pursuant to debt financing           1,948,325            1,948,325 
Common stock warrants granted to note holders pursuant to debt financing           374,153            374,153 
Common stock options granted to officers and directors for services           224,707            224,707 
Common stock options granted to employees and advisors for services           33,970            33,970 
Net loss for the six months ended June 30, 2023                   (4,722,430)   (4,722,430)
Balance, June 30, 2023   4,868,083   $4,868   $61,191,965   $   $(60,401,992)  $794,841 

 

 

                         
   For the Six Months Ended June 30, 2022 
           Additional   Common       Total 
   Common Stock   Paid-in   Stock   Accumulated   Stockholders' 
   Shares   Amount   Capital   Payable   Deficit   Equity 
Balance, December 31, 2021   4,809,070   $4,809   $54,342,027   $26,066   $(43,552,494)  $10,820,408 
Common stock warrants granted to related parties pursuant to debt financing           2,249,684            2,249,684 
Common stock warrants granted to note holders pursuant to debt financing           444,330            444,330 
Common stock issued to officers and directors for services   19,649    20    51,044    (26,066)       24,998 
Common stock issued to advisory board for services   12,255    12    29,988            30,000 
Common stock options granted to officers and directors for services           417,742            417,742 
Common stock options granted to employees and advisors for services           102,891            102,891 
Net loss for the six months ended June 30, 2022                   (3,664,851)   (3,664,851)
Balance, June 30, 2022   4,840,974   $4,841   $57,637,706   $   $(47,217,345)  $10,425,202 

 

 

See accompanying notes to unaudited condensed financial statements.

 

 

 

 6 

 

 

SOW GOOD INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

         
   For the Six Months 
   Ended June 30, 
   2023   2022 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(4,722,430)  $(3,664,851)
Adjustments to reconcile net loss to net cash used in operating activities:          
Bad debts expense   185,485     
Depreciation and amortization   155,416    148,655 
Common stock issued to officers and directors for services   125,229    24,998 
Common stock awarded to advisors and consultants for services       30,000 
Amortization of stock options   258,677    520,633 
Amortization of stock warrants issued as a debt discount   1,054,822    321,798 
Decrease (increase) in current assets:          
Accounts receivable   (721,135)   (181,699)
Prepaid expenses   17,849    (28,884)
Inventory   1,053,910    (394,062)
Security deposits   (34,765)   (14,000)
Right-of-use asset   34,817    33,457 
Increase (decrease) in current liabilities:          
Accounts payable   (76,257)   766,089 
Accrued expenses   272,383    185,545 
Lease liabilities   (25,261)   (22,040)
Net cash used in operating activities   (2,421,260)   (2,274,361)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of property and equipment   (362,180)   (124,384)
Cash paid for construction in progress       (1,884,720)
Cash paid for intangible assets       (5,929)
Net cash used in investing activities   (362,180)   (2,015,033)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds received from notes payable, related parties   2,400,000    3,120,000 
Proceeds received from notes payable   400,000    580,000 
Net cash provided by financing activities   2,800,000    3,700,000 
           
NET CHANGE IN CASH AND CASH EQUIVALENTS   16,560    (589,394)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   276,464    3,345,928 
CASH AND CASH EQUIVALENTS AT END OF PERIOD  $293,024   $2,756,534 
           
SUPPLEMENTAL INFORMATION:          
Interest paid  $25,685   $43,606 
Income taxes paid  $   $ 
           
NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Value of debt discounts attributable to warrants  $2,322,478   $2,694,014 

 

See accompanying notes to unaudited condensed financial statements.

 

 

 

 7 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

Note 1 – Organization and Nature of Business

 

Effective January 21, 2021, we changed our name from Black Ridge Oil & Gas, Inc. to Sow Good Inc. (“SOWG,” “Sow Good,” or the “Company”) to pursue the freeze dried fruits and vegetables business as acquired with our October 1, 2020 acquisition of S-FDF, LLC. Our common stock is traded on the OTCQB under the trading symbol “SOWG”. At that time, our common stock started to be quoted on the OTCQB under the trading symbol “SOWG”, from the former trading symbol “ANFC”. Prior to April 2, 2012, the Company name was Ante5, Inc., which became an independent company in April 2010. We became a publicly traded company when our shares began trading on July 1, 2010. From October 2010 through August 2019, we had been engaged in the business of acquiring oil and gas leases and participating in the drilling of wells in the Bakken and Three Forks trends in North Dakota and Montana and/or managing similar assets for third parties.

 

On October 1, 2020, the Company completed its acquisition of S-FDF, LLC pursuant to an Asset Purchase Agreement. In connection with the closing of the Asset Purchase Agreement, the Company acquired approximately $2.2 million in cash and certain assets and agreements related to the Seller’s freeze-dried fruits and vegetables business for human consumption and entered into certain employment and registration rights agreements.

 

On February 5, 2021, the Company raised over $2.5 million of capital from the sale of 631,250 newly issued shares at a share price of $4.00 in a private placement. The proceeds were used to find capital expenditures and working capital investment.

 

On May 5, 2021, the Company announced the launch of our direct-to-consumer freeze-dried consumer packaged goods (CPG) food brand, Sow Good. Sow Good launched with its first line of non-GMO products including 6 ready-to-make smoothies and 9 snacks.

 

On July 7, 2021, the Company raised over $3 million of capital from the sale of 714,701 newly issued shares at a share price of $4.25 in a private placement. Investors in the private placement included Sow Good’s Chief Executive Officer, Executive Chairman, and Chief Financial Officer, in addition to other Sow Good board members and a small group of accredited investors. The proceeds were used to invest in inventory ahead of pursuing larger business-to-business relationships, as well as funding incremental capital expenditures and general operating expenses.

 

On July 23, 2021, we launched six new gluten-free granola products under the Sow Good brand. Sow Good’s granola products are made with health-conscious ingredients such as freeze-dried fruit, almonds, hemp hearts, and coconut oil.

 

On December 31, 2021, we sold an aggregate $2,075,000 of promissory notes and warrants to purchase an aggregate 311,250 shares of common stock to related parties, representing 15,000 warrant shares per $100,000 of promissory notes. The warrants are exercisable at a price of $2.21 per share over a ten-year term. The proceeds were used for working capital investment and to ramp up our freeze-dried consumer packaged goods business.

 

On April 8, 2022, we sold an aggregate $3,700,000 of promissory notes and warrants to purchase an aggregate 925,000 shares of common stock, including $3,120,000 and warrants to purchase an aggregate 780,000 shares of common stock, to related parties. The warrants are exercisable at a price of $2.35 per share over a ten-year term. These proceeds were used for working capital investment and to ramp up our freeze dried consumer packaged goods business.

 

 

 

 

 8 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

On August 23, 2022, we closed on an offering to sell up to $2,500,000 of promissory notes and warrants to purchase an aggregate 625,000 shares of the Company’s common stock, exercisable over a ten-year period at a price of $2.60 per share, representing 25,000 warrant shares per $100,000 of Notes purchased. The notes mature on August 23, 2025. Interest on the notes accrue at a rate of 8% per annum, payable on January 1, 2025. Loans may be advanced to the Company from time to time from August 23, 2022 to the Maturity Date. On various dates from September 29, 2022 through March 7, 2023, the Company received aggregate proceeds of $2,250,000 from two of the Company’s Directors on the sale of these notes and warrants.

 

In the first quarter of 2023, the Company launched a freeze-dried candy product line with a 9-SKU offering that is projected to continue being a major driver of growth. And, in the second quarter of 2023, we completed the construction of our second and third freeze driers to facilitate the increased production demands for our recently launched candy products. Furthermore, the significant and rising demand for our freeze-dried candy products has led us to begin construction of our fourth and fifth freeze drier, which we expect to be completed in the first quarter of 2024.

 

On April 25, 2023 and May 11, 2023, Sow Good raised an aggregate $1.3 million from the sale of Promissory Notes and Warrants, including $900,000 received from related parties, resulting in approximately $293,000 of cash on hand as of June 30, 2023.

 

Note 2 – Basis of Presentation and Significant Accounting Policies

 

The interim condensed financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to not make the information presented misleading.

 

These statements reflect all adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. It is suggested that these interim condensed financial statements be read in conjunction with the audited financial statements for the year ended December 31, 2022, which were included in our Annual Report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.

 

Fair Value of Financial Instruments

The Company discloses the fair value of certain assets and liabilities in accordance with ASC 820 – Fair Value Measurement (“ASC 820”). Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short-term nature of the instruments. The Company had no items that required fair value measurement on a recurring basis.

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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.

 

 

 

 9 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

Cash in Excess of FDIC 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) up to $250,000 under current regulations. The Company had $45,420 of cash in excess of FIDC insured limits at June 30, 2023, and has not experienced any losses in such accounts.

 

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:

 
Software 3 years, or over the life of the agreement
Website 3 years
Office equipment 5 years
Furniture and fixtures 5 years
Machinery and equipment 7-10 years
Leasehold improvements Fully extended lease-term

 

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 was $155,416 and $148,655 for the six months ended June 30, 2023 and 2022, respectively. A total of $71,785 and $15,736 of the depreciation expense was allocated to inventory overhead, resulting in $83,631 and $132,919 of depreciation expense for the six months ended June 30, 2023 and 2022, respectively.

 

Impairment of Long-Lived Assets

Long-lived assets held and used by the Company are reviewed for possible impairment whenever events or circumstances indicate the carrying amount of an asset may not be recoverable or is impaired. Recoverability is assessed using undiscounted cash flows based upon historical results and current projections of earnings before interest and taxes. Impairment is measured using discounted cash flows of future operating results based upon a rate that corresponds to the cost of capital. Impairments are recognized in operating results to the extent that carrying value exceeds discounted cash flows of future operations.

 

Our intellectual property is comprised of indefinite-lived brand names acquired and have been assigned an indefinite life as we currently anticipate that these brand names will contribute cash flows to the Company perpetually. We evaluate the recoverability of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.

 

Inventory

Inventory, consisting of raw materials, material overhead, labor, and manufacturing overhead, are stated at the average cost or net realizable value and consists of the following:

          
   June 30,   December 31, 
   2023   2022 
Finished goods  $252,753   $384,241 
Packaging materials   83,441    416,663 
Work in progress       864,460 
Raw materials   582,775    307,515 
Total inventory  $918,969   $1,972,879 

 

During the six months ending June 30, 2023, the Company wrote down $1,919,686 of non-candy freeze dried inventory to pivot exclusively to its better selling candy products. No reserve for obsolete inventories has been recognized.

 

 

 

 10 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers (“ASC” 606”). Under ASC 606, the Company recognizes revenue from the sale of its freeze-dried food products, 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 which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are 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. The Company has elected, as a practical expedient, to account for the shipping and handling as fulfillment costs, rather than as a separate performance obligation. Revenue is reported net of applicable provisions for discounts, returns and allowances. Methodologies for determining these provisions are dependent on customer pricing and promotional practices. The Company records reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on industry-based historical data, historical sales returns, if any, analysis of credit memo data, and other factors known at the time.

 

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 doubtful accounts of $185,485 at June 30, 2023.

 

Basic and Diluted Earnings (Loss) Per Share

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

Stock-Based Compensation

The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC 2018-07 (ASC 2018-07). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance. Stock-based compensation was $383,906 and $575,631, consisting of $258,677 and $520,633 of stock options expense, using the Black-Scholes options pricing model and an effective term of 6 to 6.5 years based on the weighted average of the vesting periods and the stated term of the option grants and the discount rate on 5 to 7 year U.S. Treasury securities at the grant date, incurred in the six months ended June 30, 2023 and 2022, respectively, and $125,229 and $54,998 of expense related to shares of common stock issued to officers and consultants for services rendered in the six months ended June 30, 2023 and 2022, respectively. In addition, $1,054,822 and $321,798 of expenses related to the amortization of warrants in-the-money issued in consideration for debt financing for the six months ended June 30, 2023 and 2022, respectively.

 

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.

 

 

 

 

 11 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's financial statements upon adoption.

 

In July 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-03 to amend various SEC paragraphs in the Accounting Standards Codification to primarily reflect the issuance of SEC Staff Accounting Bulletin No. 120. ASU No. 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.” ASU 2023-03 amends the ASC for SEC updates pursuant to SEC Staff Accounting Bulletin No. 120; SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force (“EITF”) Meeting; and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. These updates were immediately effective and did not have a significant impact on our financial statements.

 

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which creates an exception to the general recognition and measurement principle for contract assets and contract liabilities from contracts with customers acquired in a business combination. The new guidance will require companies to apply the definition of a performance obligation under accounting standard codification (“ASC”) Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. Under current GAAP, an acquirer in a business combination is generally required to recognize and measure the assets it acquires and the liabilities it assumes at fair value on the acquisition date. The new guidance will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. These amendments are effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption of ASU 2021-08 is not expected to have a material impact on the Company’s financial statements or related disclosures.

 

No other new accounting pronouncements, issued or effective during the period ended June 30, 2023, have had or are expected to have a significant impact on the Company’s financial statements.

 

Note 3 – Going Concern

 

As shown in the accompanying financial statements, as of June 30, 2023, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $60,401,992, and had cash on hand of $293,024. We are too early in our development stage to project revenue with a necessary level of certainty; therefore, we may not have sufficient funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund our operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company has commenced sales and continues to develop its operations.

 

In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these objectives.

 

The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. Our ability to scale production and distribution capabilities and further increase the value of our brands, is largely dependent on our success in raising additional capital.

 

 

 

 12 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

Note 4 – Related Party

 

Debt Financing

On May 11, 2023, the Company received proceeds of $100,000 from Bradley Berman, one of the Company’s directors, on behalf of the Bradley Berman Irrevocable Trust, from the sale of notes and warrants pursuant to an offering to sell up to $1,500,000 of promissory notes and warrants to purchase an aggregate 375,000 shares of the Company’s common stock, exercisable over a ten-year period at a price of $2.50 per share, representing 25,000 warrant shares per $100,000 of Notes purchased. The notes mature on May 11, 2024. Interest on the Notes accrue at a rate of 8% per annum, payable in cash semi-annually on June 30 and December 31.

 

On April 25, 2023, we closed on an offering to sell up to $1,500,000 of promissory notes and warrants to purchase an aggregate 375,000 shares of the Company’s common stock, exercisable over a ten-year period at a price of $2.50 per share, representing 25,000 warrant shares per $100,000 of Notes purchased. The notes mature on April 25, 2024. Interest on the Notes accrue at a rate of 8% per annum, payable in cash semi-annually on June 30 and December 31. On April 25, 2023, the Company received proceeds of $750,000 and $50,000 from the Company’s Chairman, Mr. Goldfarb, and the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, respectively, on the sale of these notes and warrants.

 

On August 23, 2022, we closed on an offering to sell up to $2,500,000 of promissory notes and warrants to purchase an aggregate 625,000 shares of the Company’s common stock, exercisable over a ten-year period at a price of $2.60 per share, representing 25,000 warrant shares per $100,000 of Notes purchased. The notes mature on August 23, 2025. Interest on the Notes accrue at a rate of 8% per annum, payable on January 1, 2025. Loans may be advanced to the Company from time to time from August 23, 2022 to the Maturity Date. On various dates between January 5, 2023 and April 11, 2023, the Company received aggregate proceeds of $1,500,000 from two of the Company’s Directors on the sale of these notes and warrants.

 

Common Stock Issued to Directors for Services

On June 1, 2023, the Company issued an aggregate 20,699 shares of common stock amongst its five non-employee Directors for annual services to be rendered. The aggregate fair value of the common stock was $125,229, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

 

Note 5 – Fair Value of Financial Instruments

 

The Company discloses the fair value of certain assets and liabilities in accordance with ASC 820 – Fair Value Measurement (“ASC 820”). Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

 

The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

 

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

 

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

 

 

 

 13 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

 

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of June 30, 2023 and December 31, 2022:

               
   Fair Value Measurements at June 30, 2023 
   Level 1   Level 2   Level 3 
Assets            
Cash and cash equivalents  $293,024   $   $ 
Total assets   293,024         
Liabilities               
Notes payable, related parties, net of $3,727,295 of debt discounts       4,867,705     
Notes payable, net of $569,203 of debt discounts       560,797     
Total liabilities       5,428,502     
   $293,024   $5,428,502   $ 

 

   Fair Value Measurements at December 31, 2022 
   Level 1   Level 2   Level 3 
Assets               
Cash and cash equivalents  $276,464   $   $ 
Total assets   276,464         
Liabilities               
Notes payable, related parties, net of $2,692,757 of debt discounts       3,502,243     
Notes payable, net of $336,085 of debt discounts       393,915     
Total liabilities       3,896,158     
   $276,464   $3,896,158   $ 

 

There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the three months ended June 30, 2023.

 

 

 

 

 

 

 

 14 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

Note 6 – Prepaid Expenses

 

Prepaid expenses consist of the following:

          
   June 30,   December 31, 
   2023   2022 
Prepaid software licenses  $60,961   $36,424 
Prepaid insurance costs
   14,284    16,746 
Trade show advances   25,728    18,707 
Prepaid rent   13,340    27,043 
Prepaid office and other costs   5,530    38,772 
Total prepaid expenses  $119,843   $137,692 

 

Note 7 – Property and Equipment

 

Property and equipment at June 30, 2023 and December 31, 2022, consists of the following:

          
   June 30,   December 31, 
   2023   2022 
Office equipment  $13,872   $13,872 
Machinery   4,357,267    1,643,010 
Software   70,000    70,000 
Website   71,589    71,589 
Leasehold improvements   1,392,704    1,257,108 
Construction in progress       2,487,673 
    5,905,432    5,543,252 
Less: Accumulated depreciation and amortization   (663,673)   (508,257)
Total property and equipment, net  $5,241,759   $5,034,995 

 

Construction in progress consisted of costs incurred to build our second and third freeze driers, and to build out our offices within our facility in Irving, Texas. A total of $2,705,524 and $135,596 of these costs were capitalized as Machinery and Leasehold Improvements, respectively, when they were placed in service during the six months ended June 30, 2023.

 

The Company recognized depreciation of $155,416 and $148,655, of which $71,785 and $15,736 was allocated to inventory overhead, resulting in $83,631 and $132,919 of depreciation expense for the six months ended June 30, 2023 and 2022, respectively.

 

 

 

 15 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

Note 8 – Leases

 

The Company leases its 20,945 square foot operating and office facility under a non-cancelable real property lease agreement that expires on August 31, 2025, with two five-year options to extend, at a monthly lease term of $10,036, with approximately a 3% annual escalation of lease payments commencing September 15, 2021, subject to the ASU 2016-02. In the locations in which it is economically feasible to continue to operate, management expects to enter into a new lease upon expiration. The operating and office facility lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

 

The components of lease expense were as follows:

          
   For the Six Months Ended 
   June 30, 
   2023   2022 
Operating lease cost:          
Amortization of right-of-use asset  $34,817   $33,457 
Interest on lease liability   38,624    39,984 
Total operating lease cost  $73,441   $73,441 

 

Supplemental balance sheet information related to leases was as follows:

          
   June 30,   December 31, 
   2023   2022 
Operating lease:          
Operating lease assets  $1,226,708   $1,261,525 
           
Current portion of operating lease liability  $56,011    52,543 
Noncurrent operating lease liability   1,272,626    1,301,355 
Total operating lease liability  $1,328,637   $1,353,898 
           
Weighted average remaining lease term:          
Operating leases   12.8 years    13.3 years 
           
Weighted average discount rate:          
Operating lease   5.75%    5.75% 

 

 

Supplemental cash flow and other information related to operating leases was as follows:

        
   June 30, 
   For the Six Months Ended 
   2023   2022 
Cash paid for amounts included in the measurement of lease liabilities:          
Operating cash flows used for operating leases  $25,261   $22,040 

 

 

 

 16 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

The future minimum lease payments due under operating leases as of June 30, 2023 is as follows:

     
Fiscal Year Ending  Minimum Lease 
December 31,  Commitments 
2023 (for the six months remaining)  $64,843 
2024   132,917 
2025   136,905 
2026   141,012 
2027 and thereafter   1,412,988 
 Total  $1,888,665 
Less effects of discounting   560,028 
Lease liability recognized  $1,328,637 

 

Note 9 – Notes Payable, Related Parties

 

Notes payable, related parties consists of the following at June 30, 2023 and December 31, 2022, respectively:

        
   June 30,   December 31, 
   2023   2022 
         
On May 11, 2023, the Company received $100,000 pursuant to a note and warrant purchase agreement from Bradley Berman, one of the Company’s Directors, on behalf of the Bradley Berman Irrevocable Trust, as lender. The unsecured note matures on May 11, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.  $100,000   $ 
           
On April 25, 2023, the Company received $50,000 pursuant to a note and warrant purchase agreement from the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 12,500 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.   50,000     

 

 

 

 

 

 17 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

         
On April 25, 2023, the Company received $750,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 187,500 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.   750,000     
           
On April 11, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.   250,000     
           
On March 7, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.   250,000     
           
On March 2, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.   250,000     
           
On February 1, 2023, the Company received $500,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 125,000 shares of common stock, exercisable at $2.60 per share over a ten-year term.   500,000     
           
On January 5, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.   250,000     
           
On December 21, 2022, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.   250,000    250,000 

 

 

 18 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

 

                 
On September 29, 2022, the Company received $500,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 125,000 shares of common stock, exercisable at $2.60 per share over a ten-year term.     500,000       500,000  
                 
On September 29, 2022, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.     250,000       250,000  
                 
On April 8, 2022, the Company received $2,000,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30th and December 31st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 500,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.     2,000,000       2,000,000  
                 
On April 8, 2022, the Company received $100,000 pursuant to a note and warrant purchase agreement with the Company’s Chairman and CEO, Mr. & Mrs. Goldfarb, as lenders. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30th and December 31st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.     100,000       100,000  
                 
On April 8, 2022, the Company received $100,000 pursuant to a note and warrant purchase agreement with IG Union Bower LLC, an entity owned by Ira Goldfarb, the Company’s Chairman, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30th and December 31st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.     100,000       100,000  
                 
On April 8, 2022, the Company received $920,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30th and December 31st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 230,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.     920,000       920,000  

 

 

 

 19 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

         
On December 31, 2021, the Company received $1,500,000 pursuant to a note and warrant purchase agreement with the Company’s Chairman and CEO, Mr. & Mrs. Goldfarb, as lenders. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30th and December 31st. The note matures on December 31, 2024. The noteholders also received warrants to purchase 225,000 shares of common stock, exercisable at $2.21 per share over a ten-year term.   1,500,000    1,500,000 
           
On December 31, 2021, the Company received $500,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30th and December 31st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 75,000 shares of common stock, exercisable at $2.21 per share over a ten-year term.   500,000    500,000 
           
On December 31, 2021, the Company received $25,000 pursuant to a note and warrant purchase agreement from the Company’s former CFO, Bradley K. Burke, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30th and December 31st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 3,750 shares of common stock, exercisable at $2.21 per share over a ten-year term.   25,000    25,000 
           
On December 31, 2021, the Company received $50,000 pursuant to a note and warrant purchase agreement from the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30th and December 31st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 7,500 shares of common stock, exercisable at $2.21 per share over a ten-year term.   50,000    50,000 
           
Total notes payable, related parties   8,595,000    6,195,000 
Less unamortized debt discounts:   3,727,295    2,692,757 
Notes payable   4,867,705    3,502,243 
Less: current maturities   200,703     
Notes payable, related parties, less current maturities  $4,667,002   $3,502,243 

 

The Company recorded total discounts of $5,458,686 of debt discounts on warrants granted to the related parties on various dates from December 31, 2021 through May 11, 2023. The discounts are being amortized to interest expense over the term of the notes, until repayment, using the straight-line method, which closely approximates the effective interest method. The Company recorded $913,787 and $288,149 of stock-based interest expense pursuant to the amortization of discounts during the six months ended June 30, 2023 and 2022, respectively.

 

The Company recognized $270,721 and $126,530 of interest expense for the six months ended June 30, 2023 and 2022, respectively.

 

 

 

 

 

 20 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

Note 10 – Notes Payable

 

Notes payable consists of the following at June 30, 2023 and December 31, 2022, respectively:

               
    June 30,     December 31,  
    2023     2022  
             
On April 25, 2023, the Company received $400,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 100,000 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.   $ 400,000     $  
             
On April 8, 2022, the Company received $80,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30th and December 31st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholders also received warrants to purchase 20,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.   80,000     80,000  
             
On April 8, 2022, the Company received $500,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30th and December 31st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholders also received warrants to purchase 125,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.     500,000       500,000  
             
On June 16, 2020, the Company entered into a loan authorization and loan agreement with the United States Small Business Administration (the “SBA”), as lender, pursuant to the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business (the “EIDL Loan Agreement”) encompassing a $150,000 Promissory Note issued to the SBA (the “EIDL Note”)(together with the EIDL Loan Agreement, the “EIDL Loan”), bearing interest at 3.75% per annum. In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated June 16, 2020, between the SBA and the Company (the “EIDL Security Agreement”) pursuant to which the EIDL Loan is secured by a security interest on all of the Company’s assets. Under the EIDL Note, the Company is required to pay principal and interest payments of $731 every month beginning June 16, 2022, as extended. All remaining principal and accrued interest is due and payable on June 16, 2050. The EIDL Note may be repaid at any time without penalty.   $ 150,000     $ 150,000  
                 
Total notes payable     1,130,000       730,000  
Less unamortized debt discounts:   569,203    336,085 
Notes payable     560,797       393,915  
Less: current maturities     93,502        
Notes payable, less current maturities   $ 467,295     $ 393,915  

 

The Company recorded total discounts of $818,483, consisting of debt discounts on warrants granted to accredited investors on between April 8, 2022 and April 25, 2023. The discounts are being amortized to interest expense over the term of the notes, until repayment, using the straight-line method, which closely approximates the effective interest method. The Company recorded $141,035 and $33,649 of stock-based interest expense pursuant to the amortization of discounts during the six months ended June 30, 2023 and 2022, respectively.

 

The Company recognized $20,302 and $10,917 of interest expense on notes payable for the six months ended June 30, 2023 and 2022, respectively.

 

 21 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

Note 11 – Changes in Stockholders’ Equity

 

Preferred Stock

The Company has 20,000,000 authorized shares of $0.001 par value preferred stock. No shares have been issued to date.

 

Common Stock

The Company has 500,000,000 authorized shares of $0.001 par value common stock. As of June 30, 2023, a total of 4,868,083 shares of common stock have been issued.

 

Common Stock Issued to Directors for Services

On June 1, 2023, the Company issued an aggregate 20,699 shares of common stock amongst its five non-employee Directors for annual services to be rendered. The aggregate fair value of the common stock was $125,229, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

 

Note 12 – Options

 

The 2020 Equity Plan was approved by written consent of a majority of shareholders of record as of November 12, 2019 and adopted by the Board on December 5, 2019, as provided in the definitive information statement filed with Securities and Exchange Commission on January 10, 2020 (the “DEF 14C”). The description of the 2020 Equity Plan is qualified in its entirety by the text of the 2020 Equity Plan, a copy of which was attached as Annex C to the DEF 14C. On September 29, 2020, January 4, 2021, and March 19, 2021, the Board of Directors adopted and approved amendments that in aggregate increase the number of shares reserved for issuance under the 2020 Equity Plan to an aggregate total of 814,150 shares and such amendments were approved by a majority of shareholders of record on September 3, 2021.

 

Outstanding Options

Options to purchase an aggregate total of 637,396 shares of common stock at a weighted average strike price of $4.64, exercisable over a weighted average life of 7.8 years were outstanding as of June 30, 2023.

 

The Company recognized a total of $258,677 and $520,633 of compensation expense during the six months ended June 30, 2023 and 2022, respectively, related to common stock options issued to Officers, Directors, Employees and Advisors that are being amortized over the implied service term, or vesting period, of the options. The remaining unamortized balance of these options is $1,207,685 as of June 30, 2023.

 

Options Granted

On June 5, 2023, a total of nineteen employees and consultants were granted options to purchase an aggregate 46,405 shares of the Company’s common stock, having an exercise price of $6.05 per share, exercisable over a 10-year term. The options will vest 60% on the third anniversary, and 20% each anniversary thereafter until fully vested. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a call option value of $5.66, was $262,851. The options are being expensed over the vesting period, resulting in $3,598 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $259,253 of unamortized expenses are expected to be expensed over the vesting period.

 

Options Exercised

No options were exercised during the six months ended June 30, 2023 and 2022.

 

 

 

 22 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

Note 13 – Warrants

 

Outstanding Warrants

Warrants to purchase an aggregate total of 2,291,250 shares of common stock at a weighted average strike price of $2.50, exercisable over a weighted average life of 9 years were outstanding as of June 30, 2023.

 

Warrants Granted

On May 11, 2023, warrants to purchase an aggregate 25,000 shares of common stock were issued to the Bradley Berman, one of the Company’s Directors, pursuant to a private placement debt offering in which aggregate proceeds of $100,000 were received in exchange for promissory notes and warrants to purchase an aggregate 25,000 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.50 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $4,469, was $112,371, of which $100,000 was recognized as a debt discount. The debt discount portion of the warrants are being expensed over the life of the loans, resulting in $13,699 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $86,301 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

 

On April 25, 2023, warrants to purchase an aggregate 12,500 shares of common stock were issued to the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, pursuant to a private placement debt offering in which aggregate proceeds of $50,000 were received in exchange for promissory notes and warrants to purchase an aggregate 12,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.50 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $3.74, was $46,769. The warrants are being expensed over the life of the loans, resulting in $8,457 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $38,312 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

 

On April 25, 2023, warrants to purchase an aggregate 187,500 shares of common stock were issued to a trust held by the Company’s Chairman, Mr. Goldfarb, pursuant to a private placement debt offering in which aggregate proceeds of $750,000 were received in exchange for promissory notes and warrants to purchase an aggregate 187,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.50 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $3.74, was $701,537. The warrants are being expensed over the life of the loans, resulting in $126,853 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $574,684 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

 

 

 

 

 23 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

On April 25, 2023, warrants to purchase an aggregate 100,000 shares of common stock were issued to an accredited investor, pursuant to a private placement debt offering in which aggregate proceeds of $400,000 were received in exchange for promissory notes and warrants to purchase an aggregate 100,000 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.50 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $3.74, was $374,153. The warrants are being expensed over the life of the loans, resulting in $67,655 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $306,498 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

 

On April 11, 2023, warrants to purchase an aggregate 62,500 shares of common stock were issued to the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, pursuant to a private placement debt offering in which aggregate proceeds of $250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $3.64, was $227,598. The warrants are being expensed over the life of the loans, resulting in $49,884 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $177,714 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

 

On March 7, 2023, warrants to purchase an aggregate 62,500 shares of common stock were issued to the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, pursuant to a private placement debt offering in which aggregate proceeds of $250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $3.65, was $228,154. The warrants are being expensed over the life of the loans, resulting in $29,153 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $199,001 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

 

On March 2, 2023, warrants to purchase an aggregate 62,500 shares of common stock were issued to a trust held by the Company’s Chairman, Mr. Goldfarb, pursuant to a private placement debt offering in which aggregate proceeds of $250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 139% and a weighted average call option value of $3.66, was $228,464. The warrants are being expensed over the life of the loans, resulting in $30,294 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $198,170 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

 

 

 

 

 24 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

On February 1, 2023, warrants to purchase an aggregate 125,000 shares of common stock were issued to a trust held by the Company’s Chairman, Mr. Goldfarb, pursuant to a private placement debt offering in which aggregate proceeds of $500,000 were received in exchange for promissory notes and warrants to purchase an aggregate 125,000 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants are fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $2.21, was $276,462. The warrants are being expensed over the life of the loans, resulting in $44,104 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $232,358 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

 

On January 5, 2023, warrants to purchase an aggregate 62,500 shares of common stock were issued to the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, pursuant to a private placement debt offering in which aggregate proceeds of $250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants are fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 140% and a weighted average call option value of $2.23, was $139,341. The warrants are being expensed over the life of the loans, resulting in $25,520 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $113,821 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

 

Note 14 – Income Taxes

 

The Company accounts for income taxes under ASC Topic 740, Income Taxes, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.

 

Losses incurred during the period from April 9, 2011 (inception) to June 30, 2023 could be used to offset future tax liabilities. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized. As of June 30, 2023, net deferred tax assets were $9,384,000, with no deferred tax liability, primarily related to net operating loss carryforwards. A valuation allowance of approximately $9,384,000 was applied to the net deferred tax assets. Therefore, the Company has no tax expense for 2023 to date.

 

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no significant uncertain tax positions as of any date on or before June 30, 2023.

 

 

 

 

 

 25 

 

 

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

 

Note 15 – Commitments

 

Legal Proceedings

The Company may be subject from time to time to various inquiries, administrative proceedings and litigation relating to matters arising in the normal course of business. The Company is not currently a defendant in any material litigation and is not aware of any threatened litigation that could have a material effect on the Company. Management is not able to estimate the minimum loss to be incurred, if any, as a result of the final outcome of the matters arising in the normal course of business but believes they are not likely to have a material adverse effect upon the Company’s financial position or results of operations and, accordingly, no provision for loss has been recorded.

 

Cash in Excess of FDIC Limits

The Company periodically maintains cash balances at banks in excess of federally insured amounts. The extent of loss, if any, to be sustained as a result of any future failure of a bank or other financial institution is not subject to estimation at this time.

 

Lease Commitments

Upon closing of the Asset Purchase Agreement, the Company assumed the Seller’s obligations under a real property lease for its 20,945 square foot facility in Irving, Texas, under which an entity owned entirely by Ira Goldfarb is the landlord. The lease term is through September 15, 2025, with two five-year options to extend, at a monthly lease term of $10,036, with approximately a 3% annual escalation of lease payments commencing September 15, 2021.

 

Note 16 – Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date through the date these financial statements were issued. No events occurred of a material nature that would have required adjustments to or disclosures in these financial statements except as follows:

 

Escrowed Cash

As of August 14, 2023, the Company is holding $1,100,000 in escrow related to a financing that will need to be returned if terms and conditions of the financing are not completed on or before August 31, 2023.

 

Options Granted

On July 13, 2023, an employee was granted options to purchase an aggregate 10,000 shares of the Company’s common stock, having an exercise price of $4.87 per share, exercisable over a 10-year term. The options will vest 60% on the third anniversary, and 20% each anniversary thereafter until fully vested. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 134% and a call option value of $4.53, was $45,296.

 

On July 6, 2023, two employees were granted options to purchase an aggregate 6,000 shares of the Company’s common stock, having an exercise price of $4.18 per share, exercisable over a 10-year term. The options will vest 60% on the third anniversary, and 20% each anniversary thereafter until fully vested. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 134% and a call option value of $3.89, was $23,353.

 

 

 

 

 

 26 

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Cautionary Statements

 

We are including the following discussion to inform our existing and potential security holders generally of some of the risks and uncertainties that can affect our company and to take advantage of the “safe harbor” protection for forward-looking statements that applicable federal securities law affords.

 

From time to time, our management or persons acting on our behalf may make forward-looking statements to inform existing and potential security holders about our company. All statements other than statements of historical facts included in this report regarding our financial position, business strategy, plans and objectives of management for future operations and industry conditions are forward-looking statements. When used in this report, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “target,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes. Items making assumptions regarding actual or potential future sales, market size, collaborations, trends or operating results also constitute such forward-looking statements.

 

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements include the following:

 

·volatility or decline of our stock price;
·low trading volume and illiquidity of our common stock;
·potential fluctuation in quarterly results;
·inability to maintain adequate liquidity to meet our financial obligations;
·failure to obtain sufficient sales and distributions for our freeze dried product offerings;
·supply chain disruption and delay;
·transportation, labor, and raw material cost increases;
·litigation, disputes and legal claims involving outside parties; and
·risks related to our ability to be traded on the OTCQB and meeting trading requirements

 

We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made.

 

Readers are urged not to place undue reliance on these forward-looking statements. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the United States Securities and Exchange Commission (the “SEC”) which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.

 

Overview and Outlook

 

Sow Good is an innovative, highly adaptive leader in the freeze dried food industry in both the direct-to-consumer and business-to-business sales channels. Beginning in the plant-based, better-for-you space in 2021, the Company built-out its manufacturing facility and completed construction of its first freeze drier. In the first quarter of 2023, anticipating rising market trends and a significant opportunity with disrupting the candy category, Sow Good launched its freeze dried candy line. The Company has entered into partnerships with major retailers such as FYE, Big Lots, and Hy-Vee, and has a growing pipeline of other large retailers. With this launch, Sow Good constructed an additional two freeze driers during the second quarter of 2023 to meet the rapidly increasing retail demand. With its continuous growth and consistent sell-out within retailers, Sow Good anticipates freeze dried candy to be a major driver of its growth and has begun the process of constructing an additional fourth and fifth freeze drier to meet anticipated demand.

 

 

 

 27 

 

 

Going Concern Uncertainty

 

As of June 30, 2023, the Company had incurred recurring losses from operations resulting in an accumulated deficit of $60,401,992, and had cash on hand of $293,024. We are too early in our development stage to project revenue with a necessary level of certainty; therefore, we may not have sufficient funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund our operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company has commenced sales and continues to develop its operations. In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these objectives.

 

The Company has incurred recurring losses from operations resulting in an accumulated deficit, experienced net negative cash flows from operations, and, as set forth above, the Company’s cash on hand may not be sufficient to sustain operations. We continue to pursue sources of additional capital through various financing transactions or arrangements, including equity financing or other means. We may not be successful in identifying suitable financing transactions in a sufficient time period or at all, and we may not obtain the capital we require by other means. If we do not succeed in raising additional capital, our resources may not be sufficient to fund our business. Our ability to scale production and distribution capabilities and further increase the value of our brands, is largely dependent on our success in raising additional capital.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The unaudited financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Results of Operations for the Three Months Ended June 30, 2023 and 2022

 

The following table summarizes selected items from the statement of operations for the three months ended June 30, 2023 and 2022, respectively.

 

   Three Months Ended    
  June 30,   Increase / 
   2023   2022   (Decrease) 
Revenues  $1,315,347   $244,943   $1,070,404 
Cost of goods sold   2,695,820    150,603    2,545,217 
Gross profit (loss)   (1,380,473)   94,340    (1,474,813)
Operating expenses:               
General and administrative expenses:               
Salaries and benefits   538,916    1,242,900    (703,984)
Professional services   63,329    53,295    10,034 
Other general and administrative expenses   483,260    487,789    (4,529)
Total general and administrative expenses   1,085,505    1,783,984    (698,479)
Depreciation and amortization   7,413    67,693    (60,280)
Total operating expenses   1,092,918    1,851,677    (758,759)
Net operating loss   (2,473,391)   (1,757,337)   716,054 
Other expense:               
Interest expense   (847,509)   (355,452)   492,057 
Total other expense   (847,509)   (355,452)   492,057 
Net loss  $(3,320,900)  $(2,112,789)  $1,208,111 

 

 

 28 

 

 

Revenues

 

Revenues consist primarily of online freeze dried foods product sales. The revenues were $1,315,347 for the three months ended June 30, 2023, compared to $244,943 for the three months ended June 30, 2022, an increase of $1,070,404, or 437%. Revenues increased as we pivoted to sales of our freeze dried candy and expanded our business-to-business sales during the current period, compared to the same period in the prior year.

 

Cost of Goods Sold

 

Cost of goods sold for the three months ended June 30, 2023 were $2,695,820, compared to $150,603 for the three months ended June 30, 2022, an increase of $2,545,217, or 1,690%. Cost of goods sold, primarily consisting of material costs and labor on the sales of freeze dried food products and a one-time inventory write down of $1,919,686 as we disposed of non-candy freeze dried products to pivot exclusively to our better selling candy products. Our gross profit margin was approximately negative 105% during the quarter, compared to 39% during the comparative period, and would have been 41%, compared to 39%, without the inventory impairment. Cost of goods sold and our gross profit decreased primarily due to this inventory impairment.

 

General and administrative expenses

 

Salaries and benefits

 

Salaries and benefits for the three months ended June 30, 2023 were $538,916, compared to $1,242,900 for the three months ended June 30, 2022, a decrease of $703,984, or 57%. Salaries and benefits included stock-based compensation expense for the three months ended June 30, 2023 of $257,070, compared to $431,370 for the three months ended June 30, 2022, a decrease of $174,300, or 40%. Stock-based compensation consists of $131,841 and $386,372 of stock options expense incurred in the three months ended June 30, 2023 and 2022, respectively, and $125,229 and $44,998 of expense related to shares of common stock issued to officers and consultants for services rendered in the three months ended June 30, 2023 and 2022, respectively. The decrease in salaries and benefits was primarily due to decreased personnel, in addition to our CEO absorbing the role of interim CFO.

 

Professional services

 

Professional services were $63,329 for the 2023 period, compared to $53,295 for the 2022 period, an increase of $10,034, or 19%. The increase was primarily due to increased recruiting fees in the current period.

 

Other general and administrative expenses

 

Other general and administrative expenses for the three months ended June 30, 2023 was $483,260, compared to $487,789 for the three months ended June 30, 2022, a decrease of $4,529, or 1%. The decrease is primarily attributable to decreased administrative infrastructure as we continue to scale the production and sales of our freeze dried products.

 

Depreciation

 

Depreciation expense for the three months ended June 30, 2023 was $7,413, compared to $67,693 for the three months ended June 30, 2022, a decrease of $60,280, or 89%. The decrease is attributable to increased overhead allocations to inventory during the current period, compared to the prior period.

 

 

 

 

 29 

 

 

Other expense

 

In the three months ended June 30, 2023, other expense was $847,509, consisting of $163,365 of interest expense, including interest on our EIDL loan with the SBA and loans from our officers and directors, and $684,144 related to the amortization of warrants issued as a debt discount on the loans from our officers and directors. During the comparative three months ended June 30, 2022, other expense was $355,452, consisting of $93,378 of interest expense, including interest on our EIDL loan with the SBA and loans from our officers and directors, and $262,074 related to the amortization of warrants issued as a debt discount on the loans from our officers and directors. Interest expense increased by $492,057, or 138%, primarily due to the increased amortization of warrants issued in-the-money on loans from our officers and directors in the current period.

 

Net loss

 

Net loss for the three months ended June 30, 2023 was $3,320,900, compared to $2,112,789 during the three months ended June 30, 2022, an increased net loss of $1,208,111, or 57%. The increased net loss was due primarily to $1,919,686 of inventory impairment and $492,057 of increased interest expense on debt financing issued with in-the-money warrants during the current period, as partially offset by $703,984 of improved labor costs and $1,070,404 of increased revenues over the comparative period.

 

Results of Operations for the Six Months Ended June 30, 2023 and 2022

 

The following table summarizes selected items from the statement of operations for the six months ended June 30, 2023 and 2022, respectively.

 

   Six Months Ended     
   June 30,   Increase / 
   2023   2022   (Decrease) 
Revenues  $1,514,277   $293,315   $1,220,962 
Cost of goods sold   2,772,500    198,094    2,574,406 
Gross profit (loss)   (1,258,223)   95,221    (1,353,444)
Operating expenses:               
General and administrative expenses:               
Salaries and benefits   1,083,469    2,159,055    (1,075,586)
Professional services   109,535    115,988    (6,453)
Other general and administrative expenses   841,727    892,865    (51,138)
Total general and administrative expenses   2,034,731    3,167,908    (1,133,177)
Depreciation and amortization   83,631    132,919    (49,288)
Total operating expenses   2,118,362    3,300,827    (1,182,465)
Net operating loss   (3,376,585)   (3,205,606)   (170,979)
Other expense:               
Interest expense   (1,345,845)   (459,245)   886,600 
Total other expense   (1,345,845)   (459,245)   886,600 
Net loss  $(4,722,430)  $(3,664,851)  $1,057,579 

 

 

 

 30 

 

 

Revenues

 

Revenues consist primarily of online freeze dried foods product sales. The revenues were $1,514,277 for the six months ended June 30, 2023, compared to $293,315 for the six months ended June 30, 2022, an increase of $1,220,962, or 416%. Revenues increased as we pivoted to sales of our freeze dried candy and expanded our business-to-business sales during the current period, compared to the same period in the prior year.

 

Cost of Goods Sold

 

Cost of goods sold for the six months ended June 30, 2023 were $2,772,500, compared to $198,094 for the six months ended June 30, 2022, an increase of $2,574,406, or 1,300%. Cost of goods sold, primarily consisting of material costs and labor on the sales of freeze dried food products and a one-time inventory write down of $1,919,686 as we disposed of non-candy freeze dried products to pivot exclusively to our better selling candy products. Our gross profit margin was approximately negative 83% during the current period, compared to 32% during the comparative period, and would have been 44%, compared to 32%, without the inventory impairment. Cost of goods sold and our gross profit decreased primarily due to this inventory impairment.

 

General and administrative expenses

 

Salaries and benefits

 

Salaries and benefits for the six months ended June 30, 2023 were $1,083,469, compared to $2,159,055 for the six months ended June 30, 2022, a decrease of $1,075,586, or 50%. Salaries and benefits included stock-based compensation expense for the six months ended June 30, 2023 of $383,906, compared to $575,631 for the six months ended June 30, 2022, a decrease of $191,725, or 33%. Stock-based compensation consists of $258,677 and $520,633 of stock options expense incurred in the six months ended June 30, 2023 and 2022, respectively, and $125,229 and $54,998 of expense related to shares of common stock issued to officers and consultants for services rendered in the six months ended June 30, 2023 and 2022, respectively. The decrease in salaries and benefits was primarily due to decreased personnel, in addition to our CEO absorbing the role of interim CFO.

 

Professional services

 

Professional services were $109,535 for the 2023 period, compared to $115,988 for the 2022 period, a decrease of $6,453, or 6%. The decrease was primarily due to legal fees incurred in connection with creating our brand in the comparative period that were not necessary in the current period.

 

Other general and administrative expenses

 

Other general and administrative expenses for the six months ended June 30, 2023 was $841,727, compared to $892,865 for the six months ended June 30, 2022, a decrease of $51,138, or 6%. The decrease is primarily attributable to decreased administrative infrastructure as we continue to scale the production and sales of our freeze dried products.

 

Depreciation

 

Depreciation expense for the six months ended June 30, 2023 was $83,631, compared to $132,919 for the six months ended June 30, 2022, a decrease of $49,288, or 37%. The decrease is attributable to increased overhead allocations to inventory during the current period, compared to the prior period.

 

 

 

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Other expense

 

In the six months ended June 30, 2023, other expense was $1,345,845, consisting of $291,023 of interest expense, including interest on our EIDL loan with the SBA and loans from our officers and directors, and $1,054,822 related to the amortization of warrants issued as a debt discount on the loans from our officers and directors. During the comparative six months ended June 30, 2022, other expense was $459,245, consisting of $137,447 of interest expense on our EIDL loan with the SBA and loans from our officers and directors, and $321,798 related to the amortization of warrants issued as a debt discount on the loans from our officers and directors. Interest expense increased by $886,600, or 193%, primarily due to the increased amortization of warrants issued in-the-money on loans from our officers and directors in the current period.

 

Net loss

 

Net loss for the six months ended June 30, 2023 was $4,722,430, compared to $3,664,851 during the six months ended June 30, 2022, an increased net loss of $1,057,579, or 29%. The increased net loss was due primarily to $1,919,686 of inventory impairment and $886,600 of increased interest expense on debt financing issued with in-the-money warrants during the current period, as partially offset by $1,075,586 of improved labor costs and $1,220,962 of increased revenues over the comparative period.

 

Liquidity and Capital Resources

 

The following table summarizes our total current assets, liabilities and working capital at June 30, 2023 and December 31, 2022, respectively.

 

   June 30,   December 31, 
   2023   2022 
Current Assets  $2,058,508   $2,578,057 
           
Current Liabilities  $1,383,976   $890,177 
           
Working Capital  $674,532   $1,687,880 

 

As of June 30, 2023, we had working capital of $674,532.

 

The following table summarizes our cash flows during the six months ended June 30, 2023 and 2022, respectively.

 

   Six Months Ended 
   June 30, 
   2023   2022 
Net cash used in operating activities  $(2,421,260)  $(2,274,361)
Net cash used in investing activities   (362,180)   (2,015,033)
Net cash provided by financing activities   2,800,000    3,700,000 
           
Net change in cash and cash equivalents  $16,560   $(589,394)

  

 

 

 32 

 

 

Net cash used in operating activities was $2,421,260 and $2,274,361 for the six months ended June 30, 2023 and 2022, respectively, a period over period increase of $146,899. The increase was primarily due to increased inventory purchases, as partially offset by our increased revenues and diminished labor costs that began to improve our operations.

 

Net cash used in investing activities were $362,180 and $2,015,033 for the six months ended June 30, 2023 and 2022, respectively, a period over period decrease of $1,652,853. Cash used in investing activities were comprised of $3621,80 of fixed asset additions, as we completed our 2nd and 3rd freeze dried freezers and finalized our office leasehold improvements during the six months ended June 30, 2023, compared to $2,009,104 of fixed asset purchases and $5,929 of purchases on trademarks during the six months ended June 30, 2022.

 

Net cash provided by financing activities were $2,800,000 for the six months ended June 30, 2023, which was comprised of $2,400,000 of debt financing received from our officers and directors and $400,000 received from others under the same terms, compared to $3,700,000, comprised of $3,120,000 of debt financing received from our officers and directors and $580,000 received from others under the same terms, for the six months ended June 30, 2022.

 

Satisfaction of our cash obligations for the next 12 months

 

As of June 30, 2023, our balance of cash was $293,024 and we had total working capital of $674,532. Based on projections of cash expenditures in the Company’s current business plan, the cash on hand as of June 30, 2023 would be insufficient to sustain operations over the next year. We expect to incur significant costs related to the development and operation of our freeze dried foods business which will put a strain on our cash resources. Our plan for satisfying our cash requirements for the next twelve months is through cash on hand and additional financing in the form of equity or debt as needed. Our ability to scale production and distribution capabilities and further increase the value of our brands is largely dependent on our success in raising additional capital.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Critical Accounting Policies and Estimates

 

Our management’s discussion and analysis of financial conditions and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financial statements required us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these estimates.

 

Our critical accounting policies are more fully described in Note 2 of the footnotes to our financial statements appearing elsewhere in this Form 10-Q, and Note 2 of the footnotes to the financial statements provided in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

 

 

 

 

 33 

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item

 

ITEM 4. CONTROLS AND PROCEDURES.

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

 

Our management, under the direction of our Chief Executive Officer and Interim Chief Financial Officer, who is one and the same, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2023. As part of such evaluation, management considered the matters discussed below relating to internal control over financial reporting. Based on this evaluation, our Chief Executive Officer and Interim Chief Financial Officer, has concluded that the Company’s disclosure controls and procedures were ineffective as of June 30, 2023 to ensure that the information required to be disclosed in our Exchange Act reports was recorded, processed, summarized and reported on a timely basis. As a small Company with limited resources that is mainly focused on the development and sales of our freeze dried products, the Company does not employ a sufficient number of staff in its finance department to possess an optimal segregation of duties or to provide optimal levels of oversight. This has resulted in certain audit adjustments and management believes that there may be a possibility for a material misstatement to occur in future periods while it employs the current number of personnel in its finance department.

 

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

 

There have been no changes in the Company’s internal control over financial reporting during the three-month period ended June 30, 2023 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

 

 

 

 

 

 

 34 

 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

Other than routine legal proceedings incident to our business, there are no material legal proceedings to which we are a party or to which any of our property is subject.

 

 

ITEM 1A. RISK FACTORS.

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

The following issuances of our securities during the three-month period ended June 30, 2023 were exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.

 

On June 1, 2023, we issued a total of 20,699 shares of common stock, restricted in accordance with Rule 144, among five non-employee board members for services rendered.

 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

 

ITEM 5. OTHER INFORMATION.

 

None.

 

 

 

 35 

 

 

ITEM 6. EXHIBITS.

 

Exhibit   Description
3.1   Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission by Black Ridge Oil & Gas, Inc. on December 12, 2012)
3.2   Bylaws (incorporated by reference to Exhibit 3.2 of the Form 8-K filed with the Securities and Exchange Commission by Black Ridge Oil & Gas, Inc. on December 12, 2012)
3.3   Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission by Black Ridge Oil & Gas, Inc. on February 21, 2020)
3.4   Articles of Merger (incorporated by reference to Exhibit 3.01 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on January 22, 2021)
4.1   Form of Common Stock Warrant (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on August 25, 2022)
4.2   Form of Common Stock Warrant (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on April 14, 2022)
4.3   Form of Common Stock Warrant (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 1, 2023)
4.4   Form of Common Stock Warrant (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 15, 2023)
10.1   Amended Employment Agreement, dated January 4, 2021, between Claudia Goldfarb and Sow Good Inc. (incorporated by reference to Exhibit 10.20 of the Form 10-K filed with the Securities and Exchange Commission by Sow Good Inc. on March 31, 2021)
10.2   Amended Employment Agreement, dated January 4, 2021, between Ira Goldfarb and Sow Good Inc. (incorporated by reference to Exhibit 10.21 of the Form 10-K filed with the Securities and Exchange Commission by Sow Good Inc. on March 31, 2021)
10.3   Amendment to 2020 Stock Incentive Plan adopted in October 2020 (incorporated by reference to Exhibit 10.4 of the Form 10-Q filed with the Securities and Exchange Commission by Sow Good Inc. on May 13, 2021)
10.4   Amendment to 2020 Stock Incentive Plan adopted in January 2021 (incorporated by reference to Exhibit 10.5 of the Form 10-Q filed with the Securities and Exchange Commission by Sow Good Inc. on May 13, 2021)
10.5   Amendment to 2020 Stock Incentive Plan adopted in March 2021 (incorporated by reference to Exhibit 10.6 of the Form 10-Q filed with the Securities and Exchange Commission by Sow Good Inc. on May 13, 2021)
10.6   Note and Warrant Purchase Agreement, dated April 8, 2022, by and among the Company and the Purchasers named therein (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on April 14, 2022)
10.7   Form of 2022 Promissory Note (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on April 14, 2022)
10.8   Note and Warrant Purchase Agreement, dated August 23, 2022 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on August 25, 2022)
10.9   Form of August 2022 Promissory Note (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on August 25, 2022)
10.10   First Amendment to April 2022 Promissory Notes, dated August 23, 2022 (incorporated by reference to Exhibit 10.3 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on August 25, 2022)
10.11   Note and Warrant Purchase Agreement, dated April 25, 2023, by and among the Company and the Purchasers named therein (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 1, 2023)
10.12   Form of April 2023 Promissory Note (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 1, 2023)
10.13   Note and Warrant Purchase Agreement, dated May 11, 2023, by and among the Company and the Purchasers named therein (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 15, 2023)
10.14   Form of May 2023 Promissory Note (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 15, 2023)
31.1*   Section 302 Certification of Chief Executive Officer and Interim Chief Financial Officer
32.1*   Section 906 Certification of Chief Executive Officer and Interim Chief Financial Officer
101.INS*   XBRL Instance Document
101.SCH*   XBRL Schema Document
101.CAL*   XBRL Calculation Linkbase Document
101.DEF*   XBRL Definition Linkbase Document
101.LAB*   XBRL Labels Linkbase Document
101.PRE*   XBRL Presentation Linkbase Document

 

*Filed herewith

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

  SOW GOOD INC.
     
Dated: August 14, 2023 By: /s/ Claudia Goldfarb                          
    Claudia Goldfarb, Chief Executive Officer and Interim Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 37