What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-08-16 · 142 added, 141 removed, 203 unchanged (58% of the section changed)

55 unchanged sentences

and packaging, while delivering samples to potential B2B customers.

As of May, 2021, we have launched

our direct-to-consumer freeze-dried consumer packaged goods (CPG) food brand, under our Sow Good brand.

Sow Good launches with its first

line of non-GMO products including six ready-to-make smoothies and nine snacks.

The smoothie lineup offers a mix of both new and familiar

During the second quarter

of 2021, we launched our direct-to-consumer freeze-dried consumer packaged goods (CPG) food brand, under our Sow Good brand.

launched its first line of non-GMO products including six ready-to-make smoothies and nine snacks.

The smoothie lineup offers a mix of

both new and familiar flavors:

Açaí of Relief (açaí, blueberry);

Mint to Be (banana, coconut, mint);

and Berry Apeeling (banana,

Apeeling (banana, strawberry).

Sow Good packaged snack lineup includes single-ingredient fruits and vegetables such as Mon Cherry (cherries);

Cool Beans (edamame);

and What’s Apple’n (apples).

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Going Concern Uncertainty

As of June 30, 2021, the Company

has incurred recurring losses from operations resulting in an accumulated deficit of $39,044,009, and had cash on hand of $3,754,381.

As of September 30, 2021,

the Company had incurred recurring losses from operations resulting in an accumulated deficit of $40,626,166, and had cash on hand of

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, and the Company raised an additional $564,661 from sale of common stock in July, as noted in our subsequent

events footnote.

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.

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

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Results of Operations for the Three Months

Ended June 30, 2021 and 2020.

Ended September 30, 2021 and 2020.

The following table summarizes

selected items from the statement of operations for the three months ended June 30, 2021 and 2020, respectively.

selected items from the statement of operations for the three months ended September 30, 2021 and 2020, respectively.

Three Months Ended

September 30,

Cost of goods sold

2 unchanged sentences

Salaries and benefits

Salaries and benefits, stock-based

Professional services

5 unchanged sentences

Other income (expense)

Interest expense, including $363,645 of warrants issued as a debt discount for the three months ending June 30, 2020

Gain (loss) on investment in Allied Esports Entertainment, Inc.

Interest expense

Loss on disposal of property and equipment

Loss on investment in Allied Esports Entertainment, Inc.

Total other income (expense)

Net income (loss)

$ (1,582,157 )

1 unchanged sentence

Revenues commenced during

the three months ended June 30, 2021, which were generated by online sales of our freeze-dried foods products.

These revenues were minimal,

as we test launched our products.

The Company did not earn any revenues during the comparative three months ended June 30, 2020.

We anticipate

increased revenues over the remainder of the year, although there can be no assurance.

the current year, which were generated by online sales of our freeze-dried foods products.

The revenues were $21,137 for the three months

ended September 30, 2021, as we test launched our products.

The Company did not earn any revenues during the comparative three months

ended September 30, 2020.

We anticipate increased revenues over the remainder of the year, although there can be no assurance.

Cost of Goods Sold

Cost of goods sold for the

three months ended June 30, 2021 were $4,899, primarily consisting of material costs and labor on the sales of freeze-dried food products,

resulting in a gross profit of approximately 31% during the quarter.

The Company did not have any cost of goods sold during the comparative

three months ended June 30, 2020.

three months ended September 30, 2021 were $19,396, primarily consisting of material costs and labor on the sales of freeze-dried

food products, resulting in a gross profit of approximately 8% during the quarter.

The Company did not have any cost of goods sold during

the comparative three months ended September 30, 2020.

General and administrative expenses

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Salaries and benefits for

the three months ended June 30, 2021 were $583,633, compared to $233,530 for the three months ended June 30, 2020, an increase of $350,103,

The increase in salaries and benefits was primarily due to increased operations as we developed our freeze-dried food operations.

Salaries and benefits, stock-based

compensation expense for the three months ended June 30, 2021 was $333,324, compared to $49,454 for the three months ended June 30, 2020,

an increase of $283,870, or 574%.

Stock-based compensation consists of $140,244 and $21,489 of stock options expense incurred in the three

months ended June 30, 2021 and 2020, respectively, and $193,080 of expense related to shares of common stock issued to officers and consultants

in the current period for services rendered.

Stock-based compensation increased as management accepted stock-based compensation in lieu

of cash while the Company developed its freeze-dried food operations.

the three months ended September 30, 2021 were $936,783, compared to $805,938 for the three months ended September 30, 2020,

an increase of $130,845, or 16%, Salaries and benefits included stock-based compensation expense for the three months ended September 30,

2021 of $306,018, compared to $322,888 for the three months ended September 30, 2020, a decrease of $16,870, or 5%.

Stock-based compensation

consists of $145,566 and $322,888 of stock options expense incurred in the three months ended September 30, 2021 and 2020, respectively,

and $160,452 of expense related to shares of common stock issued to officers and consultants in the current period for services rendered.

The increase in salaries and benefits was primarily due to increased operations as we developed our freeze-dried food operations and stock-based

compensation, as management accepted stock-based compensation in lieu of cash.

Professional services

1 unchanged sentence

$108,186 for the 2021 period, compared to $130,234 for the 2020 period, a decrease of $22,048, or 17%.

The decrease was primarily due to

legal fees incurred in connection with our asset purchase agreement with S-FDF, LLC in the comparative period that were not necessary

The decrease was primarily due

to legal fees incurred in connection with our asset purchase agreement with S-FDF, LLC in the comparative period that were not necessary

in the current period.

1 unchanged sentence

Other general and administrative

expenses for the three months ended June 30, 2021 was $424,263, compared to $50,229 for the three months ended June 30, 2020, an increase

of $374,034, or 745%.

The increase is primarily attributable to increased administrative infrastructure as we seek to scale the production

and sales of our freeze-dried products.

expenses for the three months ended September 30, 2021 was $472,369, compared to $45,001 for the three months ended September 30,

2020, an increase of $427,368, or 950%.

The increase is primarily attributable to increased administrative infrastructure as we seek to

scale the production and sales of our freeze-dried products.

Depreciation expense for the

three months ended June 30, 2021 was $60,056, compared to $379 for the three months ended June 30, 2020, an increase of $59,677, or 15,746%.

The increase is attributable to the addition of new equipment placed in service in 2020 and 2021.

three months ended September 30, 2021 was $64,863, compared to $380 for the three months ended September 30, 2020, an increase

of $64,483, or 16,969%.

The increase is attributable to the addition of new equipment placed in service in late 2020 and early 2021.

Other income (expense)

In the three months ended

June 30, 2021, other expense was $98,001, consisting of $1,222 of interest expense on operating loans from the EIDL program, and a $96,779

loss on investments in Allied Esports Entertainment, Inc.

During the comparative three months ended June 30, 2020, other income

was $1,162,246, consisting of $4,007 of interest expense derived from the business loans the Company received from Cadence Bank,

N.A and RBC Capital Markets, LLC and additional operating loans from the PPP and EIDL programs, and $363,645 of expense related to the

amortization of warrants issued in consideration of personal guarantees provided for debt financing, along with a net gain on investments

in Allied Esports Entertainment, Inc.

securities of $1,529,896.

Net income (loss)

September 30, 2021, other expense was $1,697, consisting entirely of interest expense on our EIDL loan with the SBA.

During the comparative

three months ended September 30, 2020, other expense, on a net basis, was $1,510,651, consisting of $1,695 of interest expense derived

from the business loans the Company received from Cadence Bank, N.A and RBC Capital Markets, LLC and additional operating loans from

the PPP and EIDL programs, a loss on the disposal of equipment of $5,369, and a net loss on investments in Allied Esports Entertainment,

securities of $1,503,601, as offset by $14 of interest income.

Net loss for the three months

ended June 30, 2021 was $1,557,794, compared to net income of $716,782 during the three months ended June 30, 2020, an increased net loss

of $2,274,576, or 317%.

The increased net loss was due primarily to current costs associated with the development of our freeze-dried

food operations, and our loss on investments in Allied Esports Entertainment, Inc.

securities, compared to our prior period gain on investments.

Results of Operations for the Six Months Ended

June 30, 2021 and 2020.

ended September 30, 2021 was $1,582,157, compared to $2,492,204 during the three months ended September 30, 2020, a decreased

net loss of $910,047, or 37%.

The decreased net loss was due primarily to our loss on investments in Allied Esports Entertainment, Inc.

securities in the comparative period.

Results of Operations for the Nine Months Ended

September 30, 2021 and 2020.

The following table summarizes

selected items from the statement of operations for the six months ended June 30, 2021 and 2020, respectively.

Six Months Ended

selected items from the statement of operations for the nine months ended September 30, 2021 and 2020, respectively.

Nine Months Ended

September 30,

Cost of goods sold

2 unchanged sentences

Salaries and benefits

Salaries and benefits, stock-based

Professional services

5 unchanged sentences

Other income (expense)

Interest expense, including $363,645 of warrants issued as a debt discount for the three months ending June 30, 2020

Interest expense, including $377,440 of warrants issued as a debt discount for the nine months ending September 30, 2020

Loss on disposal of property and equipment

Gain on early extinguishment of debt

4 unchanged sentences

Revenues commenced during

the six months ended June 30, 2021, which were generated by online sales of our freeze-dried foods products.

These revenues were minimal,

as we test launched our products.

The Company did not earn any revenues during the comparative six months ended June 30, 2020.

We anticipate

increased revenues over the remainder of the year, although there can be no assurance.

the current year, which were generated by online sales of our freeze-dried foods products.

The revenues were $28,213 for the nine months

ended September 30, 2021, as we test launched our products.

The Company did not earn any revenues during the comparative nine months ended

September 30, 2020.

We anticipate increased revenues over the remainder of the year, although there can be no assurance.

Cost of Goods Sold

Cost of goods sold for the

six months ended June 30, 2021 were $4,899, primarily consisting of material costs and labor on the sales of freeze-dried food products,

resulting in a gross profit of approximately 31% during the quarter.

The Company did not have any cost of goods sold during the comparative

six months ended June 30, 2020.

nine months ended September 30, 2021 were $24,295, primarily consisting of material costs and labor on the sales of freeze-dried

food products, resulting in a gross profit of approximately 14% during the period.

The Company did not have any cost of goods sold during

the comparative nine months ended September 30, 2020.

General and administrative expenses

1 unchanged sentence

Salaries and benefits for

the six months ended June 30, 2021 were $964,886, compared to $453,254 for the six months ended June 30, 2020, an increase of $511,632,

The increase in salaries and benefits was primarily due to increased operations as we developed our freeze-dried food operations.

Salaries and benefits, stock-based

compensation expense for the six months ended June 30, 2021 was $709,215, compared to $70,943 for the six months ended June 30, 2020,

an increase of $638,272, or 900%.

Stock-based compensation consists of $261,465 and $70,943 of stock options expense incurred in the six

months ended June 30, 2021 and 2020, respectively, and $447,750 of expense related to shares of common stock issued to officers and consultants

in the current period for services rendered.

Stock-based compensation increased as management accepted stock-based compensation in lieu

of cash while the Company developed its freeze-dried food operations.

the nine months ended September 30, 2021 were $2,610,884, compared to $1,330,135 for the nine months ended September 30, 2020,

an increase of $1,280,749, or 96%, Salaries and benefits included stock-based compensation expense of $1,015,233, compared to $393,831

for the nine months ended September 30, 2020, an increase of $621,402, or 158%.

Stock-based compensation consists of $407,031 and

$393,831 of stock options expense incurred in the nine months ended September 30, 2021 and 2020, respectively, and $608,202 of expense

related to shares of common stock issued to officers and consultants in the current period for services rendered.

The increase in salaries

and benefits was primarily due to increased operations as we developed our freeze-dried food operations and stock-based compensation,

as management accepted stock-based compensation in lieu of cash.

Professional services

6 unchanged sentences

Other general and administrative

expenses for the six months ended June 30, 2021 was $711,084, compared to $141,379 for the six months ended June 30, 2020, an increase

of $569,705, or 403%.

The increase is primarily attributable to increased administrative infrastructure as we seek to scale the production

and sales of our freeze-dried products.

expenses for the nine months ended September 30, 2021 was $1,183,453, compared to $186,380 for the nine months ended September 30,

2020, an increase of $997,073, or 535%.

The increase is primarily attributable to increased administrative infrastructure as we seek to

scale the production and sales of our freeze-dried products.

Depreciation expense for the

six months ended June 30, 2021 was $65,052, compared to $650 for the six months ended June 30, 2020, an increase of $64,402, or 9,908%.

The increase is attributable to the addition of new equipment placed in service in 2020 and 2021.

nine months ended September 30, 2021 was $129,915, compared to $1,030 for the nine months ended September 30, 2020, an increase

of $128,885, or 12,513%.

The increase is attributable to the addition of new equipment placed in service in late 2020 and early 2021.

Other income (expense)

In the six months ended June

In the nine months ended September 30,

2021, other income was $243,285, consisting of a gain on investments in Allied Esports Entertainment, Inc.

securities of $133,944

and a gain on early extinguishment of debt of $113,772 related to the forgiveness of the PPP loan, as offset by $2,734 of interest expense

securities of $133,944 and

a gain on early extinguishment of debt of $113,772 related to the forgiveness of the PPP loan, as offset by $4,431 of interest expense

derived from the operating loans the Company received from the PPP and EIDL programs.

During the comparative six months ended June 30,

During the comparative nine months ended September 30,

2020, other expense was $2,576,366, consisting of $384,456 of interest expense derived from the business loans the Company received from

3 unchanged sentences

of $2,186,557, as offset by $16 of interest income.

Net loss for the six months

ended June 30, 2021 was $2,365,671, compared to $1,928,797 during the six months ended June 30, 2020, an increase of $436,874, or 23%.

The increased net loss was due primarily by increased stock-based compensation and costs associated with the development of our freeze-dried

food operations, as partially offset by our gain on early extinguishment of debt and gain on investments in Allied Esports Entertainment,

securities, compared to our prior period loss on investments.

Net loss for the nine months

ended September 30, 2021 was $3,947,828, compared to $4,421,001 during the nine months ended September 30, 2020, a decrease

of $473,173, or 11%.

The decreased net loss was primarily due to our gain on early extinguishment of debt and gain on investments in Allied

Esports Entertainment, Inc.

securities, compared to our prior period loss on investments, as partially offset by increased stock-based

compensation and costs associated with the development of our freeze-dried food operations.

Liquidity and Capital Resources

The following table summarizes

our total current assets, liabilities and working capital at June 30, 2021 and December 31, 2020, respectively.

our total current assets, liabilities and working capital at September 30, 2021 and December 31, 2020, respectively.

September 30,

Current Assets

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Working Capital

As of June 30, 2021, we had

working capital of $4,266,191.

As of September 30, 2021,

we had working capital of $3,425,459.

The following table summarizes

our cash flows during the six months ended June 30, 2021 and 2020, respectively.

Six Months Ended

our cash flows during the nine months ended September 30, 2021 and 2020, respectively.

Nine Months Ended

September 30,

Net cash used in operating activities

$ (4,304,501 )

$ (1,111,648 )

Net cash provided by (used in) investing activities

2 unchanged sentences

Net cash used in operating

activities was $2,764,841 and $682,885 for the six months ended June 30, 2021 and 2020, respectively, a period over period increase of

The increase was primarily due to an increase of $717,403 in inventory purchases, as well as, increased costs as we moved

our operations from Minnesota to Texas to develop our new freeze-dried food business.

activities was $4,304,501 and $1,111,648 for the nine months ended September 30, 2021 and 2020, respectively, a period over period

increase of $3,192,853.

The increase was primarily due to an increase of $1,021,099 in inventory purchases, as well as, increased costs

as we moved our operations from Minnesota to Texas to develop our new freeze-dried food business.

Net cash used in investing

activities were $390,643 for the six months ended June 30, 2021.

Cash used in investing activities were comprised of $805,004 of fixed

asset purchases, as partially offset by $414,361 of proceeds received from the sale of investments in Allied Esports Entertainment, Inc.

securities during the six months ended June 30, 2021, as we built out our freeze-dried foods warehouse and equipment.

activities were $590,250 for the nine months ended September 30, 2021.

Cash used in investing activities were comprised of $1,004,611

of fixed asset purchases, as we built out our freeze-dried foods warehouse and equipment, as partially offset by $414,361 of proceeds

received from the sale of investments in Allied Esports Entertainment, Inc.

securities during the nine months ended September 30,

Net cash provided by financing

activities was $4,997,136 and $262,925 for the six months ended June 30, 2021 and 2020, respectively.

All of the 2021 activity was the

result of the $4,997,136 we raised from the sale of an aggregate 631,250 shares of the Company’s

common stock at $4.00 per share, and another 581,675 shares we sold at $4.25 per share , compared to $262,925 of net proceeds received

and repayments on notes payable in the comparative six months ended June 30, 2020.

activities was $5,562,511 and $262,925 for the nine months ended September 30, 2021 and 2020, respectively.

All of the 2021 activity

was the result of the $2,525,000 we raised from the sale of an aggregate 631,250 shares of the Company’s

common stock at $4.00 per share, and another $3,037,511 raised from the sale of an aggregate 714,701 shares sold at $4.25 per share ,

compared to $262,925 of net proceeds received and repayments on notes payable in the comparative nine months ended September 30,

Satisfaction of our cash obligations for

the next 12 months

As of June 30, 2021, our balance

of cash was $3,754,381 and we had total working capital of $4,266,191.

B ased on projections of cash

expenditures in the Company’s current business plan, the cash on hand as of June 30, 2021 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.

Should the Company be successful in launching its products, we may pursue the expansion of our

production capabilities through the construction of a second freeze drier.

Adding a second freeze drier would require approximately $1 million

of incremental capital and would likely require the Company to identify additional sources of funding .

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 .

As of September 30, 2021,

our balance of cash was $2,580,489 and we had total working capital of $3,425,459.

B ased on projections

of cash expenditures in the Company’s current business plan, the cash on hand as of September 30, 2021 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.

Should the Company be successful in launching its products, we may pursue

the expansion of our production capabilities through the construction of a second freeze drier.

Adding a second freeze drier would require

approximately $1 million of incremental capital and would likely require the Company to identify additional sources of funding .

O ur 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

22 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis