What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-29 compared with 2021-03-31 · 1044 added, 840 removed, 639 unchanged (75% of the section changed)

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SOW GOOD INC.

(FORMERLY BLACK RIDGE OIL & GAS, INC.)

FINANCIAL STATEMENTS

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Statements of Operations for the years ended December 31, 2021 and 2020

Statement of Stockholders’

Equity for the years ended December 31, 2020 and 2019

Statement of Stockholders’ Equity for the years ended December 31, 2021 and 2020

Statements of Cash Flows for the years ended December 31, 2021 and 2020

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of SOW GOOD INC.

(the Company) as of December 31, 2020 and 2019, and the related statements of operations, stockholders’

and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred to as

the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of

the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year

period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

(the Company) as of December 31, 2021 and 2020, and the related statements of operations, stockholders’ equity,

and cash flows for the two-year period then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles

generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As discussed in Note 3 to the financial statements, the Company has

suffered net losses from operations, which raises substantial doubt about its ability to continue as a going concern.

plans regarding those matters are discussed in Note 3.

The financial statements do not include any adjustments that might result from

the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are

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standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

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As part of our audits, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

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Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

Our audits also included evaluating the accounting principles used and the significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Going Concern

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As discussed in Note 3 to the financial statements, the Company suffered

a net loss from operations and the cash on hand would be insufficient to fund the Company over the next year, which raises substantial

doubt about its ability to continue as a going concern.

Management’s plans regarding those matters are also described in Note 3.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to

the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our

especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion

on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions

on the critical audit matters or on the accounts or disclosures to which they relate.

Business Combination, S-FDF

in Note 4, the Company acquired S-FDF, LLC in an acquisition accounted for as a business combination, which required asset and liabilities

assumed to be measured at their acquisition date fair values.

Significant judgment is exercised by the Company in determining the fair

value of assets acquired.

Management engaged specialists, and the work of management’s specialists was used in performing the procedures

to evaluate the reasonableness purchase price allocation.

Given these factors and due to significant judgements made by management, the

related audit effort in evaluating management's judgments in determining accounting for the business combination required a high degree

of auditor judgment.

for using this work, the specialists’

qualifications were understood and the Company’s relationship with the specialists was

The procedures performed also included evaluation of the methods and assumptions used by the specialists, tests of the data

used by the specialists and an evaluation of the specialists’

We evaluated and tested the Company’s significant

judgments that determine the recognition of goodwill.

The critical audit matter communicated below is

a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the

audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the

financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on

the critical audit matter or on the accounts or disclosures to which they relate.

As discussed in Note 1 to the financial statements,

the Company issues stock-based compensation in accordance with ASC 718, Compensation.

Auditing management’s calculation of the

fair value of stock-based compensation can be a significant judgment given the fact that the Company uses management estimates on various

inputs to the calculation.

To evaluate the appropriateness of the fair value

determined by management, we examined and evaluated the inputs management used in calculating the fair value of the stock-based compensation.

/s/ M&K CPAS, PLLC

M&K CPAS, PLLC

We have served as the Company’s auditor since 2010.

March 29, 2022

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

BALANCE SHEETS

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Cash and cash equivalents

Accounts receivable

Investment in Allied Esports Entertainment, Inc.

Receivable from Allied Esports Entertainment, Inc.

Prepaid expenses

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Property and equipment:

Construction in progress

Property and equipment

Less accumulated depreciation

Construction in progress

Total property and equipment, net

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Right-of-use asset

Intangible assets

LIABILITIES AND STOCKHOLDERS' EQUITY

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Accrued expenses

Deferred compensation

Current portion of operating lease liabilities

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Operating lease liabilities

Notes payable, related parties, net of $ 699,213 of debt discounts at December 31, 2021

Notes payable

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Stockholders' equity:

Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares issued and

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, 4,809,070 and

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Additional paid-in capital

Common stock payable, consisting of 535,729 shares at December 31, 2020

Common stock payable, consisting of 11,585 and 535,729 shares at December 31, 2021 and 2020,

Accumulated deficit

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Total liabilities and stockholders' equity

The accompanying notes are an integral part of

these financial statements.

The accompanying notes are an integral part of these financial statements.

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

STATEMENTS OF OPERATIONS

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Ended December 31,

Management fee income

Cost of goods sold

Operating expenses:

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Salaries and benefits

Stock-based compensation

Deferred compensation

Professional services

Other general and administrative expenses

Goodwill impairment

Total general and administrative expenses

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Net operating loss

( 7,107,925 )

( 3,009,422 )

Other income (expense):

Gain on deconsolidation of subsidiary

Interest expense, including $377,440 of warrants issued as a debt discount for the year ended December 31, 2020

Interest expense, including $ 377,440 of warrants issued as a debt discount for the

year ended December 31, 2020

Loss on disposal of property and equipment

Loss on investment in Allied Esports Entertainment, Inc.

Gain on early extinguishment of debt

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

( 1,925,029 )

Total other income (expense)

Net income (loss) before provision for income taxes

Provision for income taxes

Net income (loss) from continuing operations, net of tax

Net loss from discontinued operations

Net income (loss) before non-controlling interest

Less net income attributable to redeemable non-controlling interest

Net income (loss) attributable to Sow Good Inc.

( 2,311,517 )

Weighted average common shares outstanding - basic

Weighted average common shares outstanding - fully diluted

Net income (loss) per common share - basic

Net income (loss) per common share - fully diluted

$ ( 6,874,156 )

$ ( 5,320,939 )

Weighted average common shares outstanding - basic and fully diluted

Net loss per common share - basic and fully diluted

The accompanying notes are an integral part of these financial statements.

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

STATEMENT OF STOCKHOLDERS' EQUITY

Stockholders'

Non-controlling

Balance, December 31, 2019

$ ( 31,357,399 )

Common stock issued for services to employees and directors

Common stock issued for the purchase of S-FDF, LLC assets

Common stock options granted for services to employees and directors

Common stock warrants granted to employees and directors for personal guaranty on debt

( 5,320,939 )

Common stock options granted for services to employees

and directors

Non-controlling interest disposed in deconsolidation

( 5,320,939 )

Net income attributable to Sow Good, Inc.

Balance, December 31, 2020

$ ( 36,678,338 )

Common stock issued for services to employees and directors

Common stock issued for the purchase of S-FDF, LLC assets

Common stock options granted for services to employees

and directors

Common stock warrants granted to employees and directors

for personal guaranty on debt

Net income attributable to Sow Good, Inc.

December 31, 2020

Common stock issued on subscriptions payable for the purchase of S-FDF, LLC assets

( 1,853,600 )

Common stock sales for cash to officers and directors

Common stock sales for cash

Common stock issued to officers and directors for services

Common stock issued to employees and consultants for services

Common stock options granted to officers and directors for services

Common stock options granted to employees for services

Common stock warrants granted to related parties as a debt discount

( 6,874,156 )

Balance, December 31, 2021

$ ( 43,552,494 )

The accompanying notes are an integral part of these financial statements.

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

STATEMENTS OF CASH FLOWS

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CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss) attributable to Sow Good Inc.

$ ( 6,874,156 )

Net loss from discontinued operations

Net income attributable to redeemable non-controlling interest

Adjustments to reconcile net loss attributable to Sow Good, Inc.

to net cash used in operating activities:

Gain on deconsolidation of subsidiary

$ ( 5,320,939 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Loss on disposal of property and equipment

Loss on investment in Allied Esports Entertainment, Inc.

Loss on impairment of goodwill

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

Gain on early extinguishment of debt

Common stock issued to officers and directors for services

Common stock issued to consultants for services

Amortization of stock options

Amortization of stock warrants issued as a debt discount

Deferred compensation

Decrease (increase) in current assets:

Accounts receivable

Accounts receivable, related party

Prepaid expenses

( 1,310,526 )

Right-of-use asset

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Lease liabilities

Net cash used in operating activities of continuing operations

Net cash used in operating activities of discontinued operations

Net cash used in operating activities

( 5,551,261 )

( 1,743,409 )

CASH FLOWS FROM INVESTING ACTIVITIES

Cash disposed in deconsolidation

Cash received in business combination

Purchase of property and equipment

Purchase of intangible assets

Cash paid for construction in progress

Proceeds received from sale of investment in Allied Esports Entertainment, Inc.

Net cash provided by (used in) investing activities of continuing operations

Net cash provided by investing activities of discontinued operations

Net cash provided by investing activities

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds received from notes payable, related parties

Proceeds received from notes payable

Repayments on notes payable

Net cash provided by financing activities from continuing operations

Net cash provided by financing activities from discontinued operations

Proceeds received from the sale of common stock

Net cash provided by financing activities

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Value of investment in securities distributed to board members and employees

Fair value of net assets acquired in business combination

Fair value of non-cash net assets acquired in business combination

Fair value of common stock paid in business combination

Recognition of subsidiary equity upon deconsolidation

Non-cash investing and financing activities in discontinued operations

$ 229,914,415

The accompanying notes are an integral part of these financial statements.

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Note 1 –

Organization and Nature of

Note 1 – Organization and Nature of

Effective January 21, 2021, we changed our name

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to Sow Good Inc.

(“SOWG,”

“Sow Good,”

or the “Company”).

common stock is traded on the OTCQB under the trading symbol “SOWG”.

that time, o ur 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.

(“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, o ur common stock

started to be quoted on the OTCQB under the trading symbol “SOWG”, from the former trading symbol “ANFC”.

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 September 26, 2017, the Company finalized an

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proceeds were used to sponsor a special purpose acquisition company, discussed below, with the remainder for general corporate purposes.

10, 2017, the Company’s sponsored special purpose acquisition company, Black Ridge Acquisition Corp.

(“BRAC”), completed

an IPO raising $138,000,000 of gross proceeds (including proceeds from the exercise of an over-allotment option by the underwriters on

October 18, 2017).

In addition, the Company purchased 445,000 BRAC units at $10.00 per unit in a private placement transaction for a total

contribution of $4,450,000 in order to fulfill its obligations in sponsoring BRAC, a blank check company formed for the purpose

of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business

combination with one or more businesses or entities.

BRAC’s efforts to identify a prospective target business were not limited to

a particular industry or geographic region.

Following the IPO and over-allotment, BROG owned 22% of the outstanding common stock of BRAC

and managed BRAC’s operations via a management services agreement.

On December 19, 2018, BRAC entered into a business combination

agreement, which subsequently closed on August 9, 2019.

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.

As of December 31, 2020, the Company owned 177,479

shares of Allied Esports Entertainment, Inc.

AESE), the surviving entity after BRAC’s business combination (“Sponsor

Shares”), after selling 1,970,920 shares for total net proceeds of $3,108,067, selling warrants to purchase 505,000 shares of AESE

AESEW) (“Sponsor Warrants”) for total proceeds of $73,668, and distributing 537,101 Sponsor Shares on August 9,

2020 to employees and directors under the 2018 Management Incentive Plan, dated March 6, 2018.

Note 2 –

On October 10, 2017, the Company’s sponsored

special purpose acquisition company, Black Ridge Acquisition Corp.

(“BRAC”), completed an IPO raising $ 138,000,000 of gross

proceeds (including proceeds from the exercise of an over-allotment option by the underwriters on October 18, 2017).

In addition, the

Company purchased 445,000 BRAC units at $ 10.00 per unit in a private placement transaction for a total contribution of $ 4,450,000 in order

to fulfill its obligations in sponsoring BRAC, a blank check company formed for the purpose of entering into a merger, share exchange,

asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses

BRAC’s efforts to identify a prospective target business were not limited to a particular industry or geographic region.

Following the IPO and over-allotment, BROG owned 22% of the outstanding common stock of BRAC and managed BRAC’s operations via a

management services agreement.

On December 19, 2018, BRAC entered into a business combination agreement, which subsequently closed on

August 9, 2019.

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 are being used to invest in inventory

ahead of pursuing larger business-to-business relationships, as well as funding incremental capital expenditures and general operating

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

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.

Granola products are initially being sold direct-to-consumer

and will later be targeted to the business-to-business segment.

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 will be used for working capital investment and to ramp up our freeze-dried consumer packaged goods business.

Note 2 – Summary

of Significant Accounting Policies

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Exchange Commission (SEC).

All references to Generally Accepted Accounting Principles (“GAAP”) are in accordance with The

FASB Accounting Standards Codification (“ASC”) and the Hierarchy of Generally Accepted Accounting Principles.

All references to Generally Accepted Accounting Principles (“GAAP”) are in accordance with The

FASB Accounting Standards Codification (“ASC”) and the Hierarchy of Generally Accepted Accounting Principles.

Reclassifications

In the prior year, the income, expense and cash

flows from Black Ridge Acquisition Corp., a wholly-owned subsidiary formed on October 10, 2017, which was consolidated as a variable interest

entity through August 9, 2019, the date that BRAC completed a business combination with Allied Esports Entertainment, Inc.

(“AESE”),

were consolidated and have been retrospectively classified as discontinued operations.

In addition, prior period investment in Allied

Esports Entertainment, Inc.

securities of $6,982,300 were reclassified from long term assets to current assets to conform to management’s

intent and ability to liquidate the asset.

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

In the prior year, intangible assets were presented

within property and equipment.

This asset has been separately stated in the prior year to conform to the current year presentation.

addition, stock-based compensation was separately stated in our operating expenses in the prior year.

These costs have been combined with

salaries and benefits to conform to the current year presentation.

These reclassifications had no effect on previously reported results

of operations or retained earnings.

Segment Reporting

FASB ASC 280-10-50 requires annual and interim

reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major

An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn

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time, management knows of no substantial losses from environmental accidents or events which would have a material effect on the Company.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Fair Value of Financial Instruments

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

receivable, prepaid expenses, inventory, 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.

Cash and Cash Equivalents

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had approximately $ 2,813,000 and $ 1,311,000 in excess of FDIC and SIPC insured limits at December 31, 2021 and 2020, respectively.

has not experienced any losses in such accounts.

Fair Value of Financial Instruments

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

Company has not experienced any losses in such accounts.

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 no allowance for doubtful accounts for either of the periods presented, as all

accounts receivable had been subsequently collected.

Property and Equipment

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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:

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:

Schedule of estimated useful lives of assets

3 years, or over the life of the agreement

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Machinery and equipment

Intangible assets

Leasehold improvements

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and amortization are eliminated and any resulting gain or loss is reflected in operations.

Depreciation expense was $3,642 and $872 for

the years ended December 31, 2020 and 2019, respectively.

Depreciation expense was $ 208,448 and $ 3,642

for the years ended December 31, 2021 and 2020, respectively.

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

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Inventory, consisting of raw materials, material

overhead, labor, and manufacturing overhead, are stated at the lower of cost (first-in, first-out) or net realizable value and consist

of the following:

overhead, labor, and manufacturing overhead, are stated at the average cost or net realizable value and consist of the following:

Schedule of inventory

Finished goods

Packaging materials

Work in progress

Raw materials

Total inventory

No reserve for obsolete inventories has been recognized.

and we have not yet commenced production.

We have not yet commenced significant production.

The Company evaluates goodwill on an annual basis

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fair values of its reporting units using a combination of the income, or discounted cash flows, approach and the market approach, which

utilizes comparable companies’

If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, an

utilizes comparable companies’ data.

If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, an

impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

The Company’s evaluation of goodwill completed during the year resulted in no impairment losses.

The Company’s evaluation of goodwill completed during the year resulted in an impairment loss of $ 1,524,030 for the year ended December 31,

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Revenue Recognition

The Company will recognize revenue in accordance

with ASC 606 —

Revenue from Contracts with Customers.

Under ASC 606, the Company will recognize revenue from the sale of its freeze-dried

food products once operations commence, in accordance with a five-step model in which

the Company will evaluate the transfer of promised goods or services and recognize 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

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

To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, the Company

will perform 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

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.

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expedient, to account for the shipping and handling as fulfillment costs, rather than as a separate performance obligation.

be reported net of applicable provisions for discounts, returns and allowances.

Methodologies for determining these provisions will be

dependent on customer pricing and promotional practices.

The Company will record reductions to revenue for estimated product returns and

pricing adjustments in the same period that the related revenue is recorded.

These estimates will be based on industry-based historical

data, historical sales returns, if any, analysis of credit memo data, and other factors known at the time.

The Company recognized

management fee income as services were provided in 2019.

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Revenue Concentration

All of the Company’s revenue earned came

from management fees earned through its management services agreement with BRAC, which ceased as of December 31, 2019.

Basic and Diluted Earnings (Loss) Per Share

Basic earnings (loss) per share (“EPS”)

are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period (the denominator).

Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding

(if dilutive) during each period.

Potential common shares include stock options, warrants and restricted stock.

The number of potential

common shares outstanding relating to stock options, warrants and restricted stock is computed using the treasury stock method.

The reconciliation of the denominators used to

calculate basic EPS and diluted EPS for the years ended December 31, 2020 and 2019 are as follows:

Years Ended December 31,

Weighted average common shares outstanding –

Potentially dilutive common shares:

Stock options and warrants

Weighted average common shares outstanding –

For 2020 and 2019, potential dilutive securities

had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

Stock options and warrants

excluded from the calculation of diluted EPS because their effect was anti-dilutive were 565,824 and 34,204 of December 31, 2020

and 2019, respectively.

Stock-Based Compensation

Under FASB ASC 718-10-30-2, all share-based

payments to employees, including grants of employee stock options, are to be recognized in the income statement based on their fair

Pro forma disclosure is no longer an alternative.

The Company recognized $268,608 of stock-based compensation for the

issuance of shares of common stock for services in 2020.

Amortization of the fair values of stock options issued for services and

compensation totaled $458,048 and $100,526 for the years ended December 31, 2020 and 2019, respectively.

The fair values

of stock options were determined 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.

securities at the grant date and are being amortized over the related implied service term, or vesting period.

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.

and Diluted Earnings (Loss) Per Share

net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding.

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.

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 $ 1,377,379

and $ 726,656 for the years ended

December 31, 2021 and 2020, respectively.

Stock-based compensation consisted of $ 834,047

and $ 268,608 related to

the issuance of shares of common stock for services for the years ended December 31, 2021 and 2020, respectively.

Amortization of

the fair values of stock options issued for services and compensation totaled $ 543,332

and $ 458,048 for

the years ended December 31, 2021 and 2020, respectively.

The fair values of stock options were determined 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 and are being

amortized over the related implied service term, or vesting period.

In addition, $ 377,440

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and the stated term of the warrant grants and the discount rate on 5 year U.S.

Treasury securities at the grant date were recognized

as interest expense for the year ended December 31, 2020.

Treasury securities at the grant date were

recognized as interest expense for the year ended December 31, 2020.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

The Company recognizes deferred tax assets and

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Tax Cuts and Jobs

Act of 2017 (“Tax Reform”) was signed into law.

As a result of Tax Reform, the U.S.

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Staff Accounting Bulletin No.

118 (“SAB 108”) to address the application of GAAP in situations when a registrant does not

have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting

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the Company may take as a result of Tax Reform.

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Uncertain Tax Positions

In accordance with ASC 740, “Income Taxes”

(“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that

In accordance with ASC 740, “Income Taxes”

(“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that

the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position.

4 unchanged sentences

Various taxing authorities can periodically audit

the Company’s income tax returns.

These audits include questions regarding the Company’s tax filing positions, including the

the Company’s income tax returns.

These audits include questions regarding the Company’s tax filing positions, including the

timing and amount of deductions and the allocation of income to various tax jurisdictions.

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not yet undergone an examination by any taxing authorities.

The assessment of the Company’s tax position

relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

The assessment of the Company’s tax position

relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

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.

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effective, will not have a material impact on the Company's financial statements upon adoption.

In July 2018, the FASB issued ASU No.

2018-10, Codification

Improvements to Topic 842, Leases .

The amendments in ASU 2018-10 provide additional clarification and implementation guidance on certain

aspects of the previously issued ASU No.

2016-02, Leases (Topic 842) (“ASU 2016-02”) and have the same effective and transition

requirements as ASU 2016-02.

Upon the effective date, ASU 2018-10 will supersede the current lease guidance in ASC Topic 840, Leases.

Under the new guidance, lessees will be required to recognize for all leases, with the exception of short-term leases, a lease liability,

which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis.

Concurrently, lessees

will be required to recognize a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the

use of, a specified asset for the lease term.

ASU 2018-10 is effective for private companies and emerging growth public companies for

interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted.

The guidance is required to be

applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest

comparative periods presented in the financial statements.

The Company adopted this guidance effective January 1, 2019, and the standard

did not have a material impact on the Company’s financial statements and related disclosures until the closing of the asset purchase

with S-FDF, LLC on October 1, 2020.

Note 3 –

Going Concern

2020, the FASB issued ASU No.

2020-06, Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging–Contracts in Entity’s Own Equity (Subtopic 815-40) :

Accounting for Convertible Instruments and Contracts

in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for convertible instruments by reducing the number

of accounting models available for convertible debt instruments.

This guidance also eliminates the treasury stock method to calculate

diluted earnings per share for convertible instruments and requires the use of the if converted method.

The new guidance is effective

for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2021, with early

adoption permitted.

The adoption of ASU 2020-06 is not expected to have a material impact on the Company’s financial statements

or related disclosures.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

In May 2020, the

SEC adopted final rules that amend the financial statement requirements for significant business acquisitions and dispositions.

other changes, the final rules modify the significance tests and improve the disclosure requirements for acquired or to be acquired businesses

and related pro forma financial information, the periods those financial statements must cover, and the form and content of the pro forma

financial information.

The final rules do not modify requirements for the acquisition and disposition of significant

amounts of assets that do not constitute a business.

The final rules were effective January 1, 2021 .

The Company has considered these final rules and updated its disclosures, as applicable.

2019, the FASB issued ASU 2019 - 12 – Income Taxes (“Topic 740” ):

the Accounting for Income Taxes .

The amendments in ASU 2019-12 are part of an initiative to reduce complexity in

accounting standards and simplify the accounting for income taxes by removing certain exceptions from Topic 740 and making

minor improvements to the codification.

ASU 2019-12 and its related amendments are effective for public entities

for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

The provisions of

this update did not have a material impact on the Company’s financial position or results of operations.

No other new accounting pronouncements, issued

or effective during the year ended December 31, 2021, 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 December 31, 2021, the Company had a cash balance of $ 3,345,928 and working capital of $ 4,488,207 .

The Company has no revenue source

Based on projections of cash expenditures in the Company’s current business plan, the cash on hand would be insufficient

to sustain operations over the next year.

On February 5, 2021, we raised $2.525 million from the sale of an aggregate 631,250 shares of

the Company’s common stock at $4.00 per share, resulting in approximately $2.7 million of cash on hand and $650,000 of liquid securities

for a combined liquidity of $3.35 million as of March 19, 2021.

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.

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 continues to pursue sources of additional

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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.

These financial

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SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Note 4 –

Business Combination, S-FDF

1, 2020, the Company completed its acquisition of S-FDF, LLC (the "Seller"), a Texas limited liability company, pursuant to

an Asset Purchase Agreement, between the Company and the Seller, dated June 9, 2020, as subsequently amended effective October 1,

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.

The Company did not assume any liabilities of Seller or any liabilities, liens,

or encumbrances pertaining to or encumbering the Purchased Assets, except for those related to agreements or arrangements specified in

the Asset Purchase Agreement.

The Seller transferred the Purchased Assets to the Company in exchange for the issuance of 1,120,000 shares

of the Company’s common stock to the Seller.

The number of Seller Shares to be issued was subject to adjustment, as specified in

the Asset Purchase Agreement, as amended, based on the extent to which the amount of cash proceeds held by the Company, as derived from

the sale of the Company’s holdings of Allied Esports Entertainment Inc.

("AESE") Shares, were less than $5 million

or greater than $6 million on the date specified in the Asset Purchase Agreement, which resulted in the issuance of an additional

Note 4 – Business Combination, S-FDF

October 1, 2020, the Company completed its acquisition of S-FDF, LLC (the "Seller"), a Texas limited liability company,

pursuant to an Asset Purchase Agreement, between the Company and the Seller, dated June 9, 2020, as subsequently amended effective

October 1, 2020.

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.

The Company did not assume any

liabilities of Seller or any liabilities, liens, or encumbrances pertaining to or encumbering the Purchased Assets, except for those

related to agreements or arrangements specified in the Asset Purchase Agreement.

The Seller transferred the Purchased Assets to the

Company in exchange for the issuance of 1,120,000

shares of the Company’s common stock to the Seller.

The number of Seller Shares to be issued was subject to adjustment, as

specified in the Asset Purchase Agreement, as amended, based on the extent to which the amount of cash proceeds held by the Company,

as derived from the sale of the Company’s holdings of Allied Esports Entertainment Inc.

(“AESE”) Shares, were less

than $5 million or greater than $6 million on the date specified in the Asset Purchase Agreement, which resulted in the

issuance of an additional 500,973

Seller Shares that were issued on January 4, 2021.

The combined issuances represented approximately 46% of the Company’s

issued and outstanding common stock, on a fully diluted basis.

The combined issuances represented approximately 46 %

of the Company’s issued and outstanding common stock, on a fully diluted basis.

Black Ridge Oil & Gas, Inc.

was determined to be the acquiror of the

business combination.

to its obligations under the Asset Purchase Agreement, on the Closing Date the Company, (a) created three new seats on the Company’s

Board of Directors and appointed the Seller’s principals, Ira Goldfarb and Claudia Goldfarb, and a third person designated by the

was determined

to be the acquiror of the business combination.

to its obligations under the Asset Purchase Agreement, on the Closing Date the Company, (a) created three new seats on the Company’s

Board of Directors and appointed the Seller’s principals, Ira Goldfarb and Claudia Goldfarb, and a third person designated by the

Goldfarbs, Greg Creed, as directors, (b) entered into employment agreements with Ira Goldfarb and Claudia Goldfarb, (c) delivered a registration

rights agreement with respect to the Seller Shares and any shares of common stock delivered as part of the employment compensation for

Ira Goldfarb or Claudia Goldfarb, and (d) amended the Company’s 2020 Stock Incentive Plan to increase the number of shares of common

stock reserved thereunder.

At closing, the Company also assumed the Seller’s obligations under a real property lease for its facility

in Irving, Texas under which an entity owned entirely by Ira Goldfarb is the landlord.

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of goodwill, which is evaluated annually for impairment, unless circumstances change that require an earlier determination.

to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows:

Company recognized an impairment loss of $ 1,524,030

during the year ended December 31, 2021, in accordance with this annual evaluation.

According to the purchase method of accounting,

the Company recognized the identifiable assets acquired and liabilities assumed as follows:

Schedule of recognized identified assets and liabilities assumed

Consideration:

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Consideration paid in excess of fair value (Goodwill) (1)

(1) The consideration paid in excess of the net

fair value of assets acquired and liabilities assumed was recognized as goodwill.

The book value of the net assets acquired was

determined to represent the fair market value, and no additional intangible assets were evidenced.

The consideration paid in excess

of the net fair value of assets acquired and liabilities assumed was recognized as goodwill.

The book value of the net assets

acquired was determined to represent the fair market value, and no additional intangible assets were evidenced.

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Pro Forma Results

The following table sets forth the unaudited pro

forma results of the Company as if the acquisition of S-FDF, LLC was effective on the first day of each of the periods presented.

combined results are not necessarily indicative of the results that may have been achieved had the companies always been combined.

The following table sets forth the unaudited

pro forma results of the Company as if the acquisition of S-FDF, LLC was effective on the first day of each of the periods presented.

These combined results are not necessarily indicative of the results that may have been achieved had the companies always been combined.

Schedule of unaudited pro forma

For the Years Ended December 31,

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$ ( 3,346,407 )

Net income (loss)

$ ( 6,874,156 )

Weighted average common shares outstanding - basic

Weighted average common shares outstanding - fully diluted

Net income (loss) per common share - basic

Net income (loss) per common share - fully diluted

(2) S-FDF, LLC was formed on May 4, 2020, therefore pro forma operation for 2019 are identical to the Company’s actual results, other than the basic and fully diluted net income per share amounts .

Note 5 –

BRAC’s IPO, Consolidation

of BRAC and Non-controlling Interest

BRAC’s IPO

The registration statement for the BRAC’s

IPO was declared effective on October 4, 2017.

The registration statement was initially declared effective for 10,000,000 units (“Units”

and, with respect to the common stock included in the Units being offered, the “Public Shares”), but the offering was increased

to 12,000,000 Units pursuant to Rule 462(b) under the Securities Act of 1933, as amended.

On October 10, 2017, the Company consummated

the Initial Public Offering of 12,000,000 units, generating gross proceeds of $120,000,000.

Simultaneous with the closing of the IPO, BRAC

sold 400,000 units (the “Placement Units”) at a price of $10.00 per Unit in a private placement to BROG, generating gross

proceeds of $4,000,000.

BROG’s investment in BRAC’s common stock was eliminated in consolidation prior to the BRAC’s

merger on August 9, 2019.

Transaction costs relating to the IPO amounted

to $2,882,226, consisting of $2,400,000 of underwriting fees and $482,226 of other costs.

Following the closing of the IPO on October 10,

2017, an amount of $120,600,000 ($10.05 per Unit) from the net proceeds of the sale of the Units in the IPO and the Placement Units was

placed in a trust account (“Trust Account”) and invested in U.S.

government securities, within the meaning set forth in Section

2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or

less or in any open-ended investment company that holds itself out as a money market fund selected by BRAC meeting the conditions of paragraphs

(d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by BRAC, until the earlier of:

(i) the consummation

of a Business Combination or (ii) the distribution of the Trust Account, as described below.

On October 18, 2017, in connection with the underwriters’

exercise of their over-allotment option in full, BRAC sold an additional 1,800,000 Units and sold an additional 45,000 Placement Units

to BROG at $10.00 per Unit, generating total proceeds of $18,450,000.

Transaction costs for underwriting fees on the sale of the over-allotment

units were $360,000.

Following the closing, an additional $18,090,000 of the net proceeds ($10.05 per Unit) was placed in the Trust Account,

bringing the total aggregate proceeds held in the Trust Account to $138,690,000 ($10.05 per Unit).

BROG’s investment in BRAC’s

common stock was eliminated in consolidation prior to the BRAC’s merger on August 9, 2019.

Upon the closing of the IPO, $10.05 per Unit sold

in the IPO, including some of the proceeds of the Private Placements was deposited in a trust account (“Trust Account”) to

be held until the earlier of (i) the consummation of its initial Business Combination or (ii) BRAC’s failure to consummate a Business

Combination within 21 months from the consummation of the IPO (the “Combination Period”).

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

The Extension Meeting

On July 9, 2019, BRAC held a special

meeting of its stockholders (the “Meeting”).

At the Meeting, BRAC’s stockholders considered a proposal to adopt and

approve an amendment to BRAC’s amended and restated certificate of incorporation (the “Charter”) to extend the date

that BRAC had to consummate a business combination (the “Extension”) to August 10, 2019.

The amendment was approved by the

stockholders and filed with the Secretary of State of the State of Delaware on July 9, 2019.

In connection with this vote, the holders

of 9,246,727 shares of BRAC’s common stock properly exercised their right to convert their shares into cash at a conversion price

of approximately $10.29 per share resulting in $95,125,574 in Trust Account assets being distributed back to shareholders.

In connection

with the Extension, BROG loaned $30,000 to BRAC to be placed in the Trust Account for the benefit of the public shares that were not converted.

The loan was non-interest bearing and evidenced by a promissory note issued by BRAC on the same date.

The loan was repaid on August 12,

Business Combination Agreement

On December 19, 2018, BRAC entered into the Business

Combination Agreement with Merger Sub, Allied Esports, Ourgame, Noble and Primo.

The Business Combination Agreement was amended on August

5, 2019 and the Business Combination Agreement as amended is referred to as the Amended Business Combination Agreement.

The merger closed

on August 9, 2019 (the “Closing Date”).

Subject to the Amended Business Combination Agreement,

(i) Noble merged with and into Allied Esports (the “Redomestication Merger”) with Allied Esports being the surviving entity

in such merger and (ii) immediately after the Redomestication Merger, Merger Sub merged with into Allied Esports with Allied Esports being

the surviving entity of such merger (the “Transaction Merger”

and together with the Redomestication Merger, the “Mergers”).

The Mergers resulted in BRAC acquiring two of

Ourgame’s global esports and entertainment assets, Allied Esports and WPT.

Allied Esports is a premier esports entertainment company

with a global network of dedicated esports properties and content production facilities.

WPT is the creator of the World Poker Tour®

(WPT®) –

the premier name in internationally televised gaming and entertainment with brand presence in land-based tournaments,

television, online and mobile.

The transactions strategically combined the globally recognized Allied Esports brand with the three-pronged

business model of the iconic World Poker Tour, featuring in-person experiences, multiplatform content and interactive services, to leverage

the high-growth opportunities in the global esports industry.

The Business Combination Agreement, which original

called for a debt repayment to Ourgame of $35,000,000 was amended to call for BRAC to (i) assume $10,000,000 of the debt obligations of

Ourgame and Noble (including an additional $1,200,000 of accrued interest) and (ii) repay Ourgame the remaining balance of $23,800,000

by paying $3,500,000 in cash to Ourgame and its designees, issuing to Ourgame and its designees 2,928,679 shares of BRAC’s common

stock and Ourgame retaining $1,000,000 of the proceeds of such loans to pay its transaction expenses incurred in the Merger.

In connection

with entering into the Amendment, BROG, as BRAC’s founder, agreed to transfer an aggregate of 600,000 shares of BRAC’s common

stock held by it to Ourgame.

Additionally, In July and August 2019, BRAC and

BROG entered into several share purchase agreements (the “Purchase Agreements”) with several parties (collectively referred

to as the “Purchasers”).

Pursuant to the Purchase Agreements, the Purchasers agreed to purchase an aggregate of $18,000,000

of shares of BRAC’s common stock in open market or privately negotiated transactions.

If the Purchasers were unable to purchase

the full $18,000,000 of shares of common stock in open market or privately negotiated transactions, BRAC will issue to the Purchasers

newly issued shares at the Closing at a per-share price equal to the per-share amount held in BRAC’s trust account ($10.30 per share),

and having an aggregate value equal to the difference between $18,000,000 and the dollar amount of shares purchased by them in the open

market or in privately negotiated transactions.

At the Closing, BRAC agreed to issue to the Purchasers 1.5 shares of common stock for

every 10 shares purchased by them under the Purchase Agreements.

Additionally, BROG agreed to transfer an aggregate of 720,000 shares

held by it of BRAC common stock to the Purchasers.

Pursuant to the Purchase Agreements, BRAC is required to file a registration statement

with the SEC as promptly as practicable following the closing of the merger to register the resale of any securities purchased by the

Purchasers that are not already registered and cause such registration statement to become effective as soon as possible.

The Purchasers

included a $3 million investment from Lyle Berman, a member of the board of directors of both BRAC and BROG and the largest shareholder

Additionally, $5 million will be held in an escrow account and its usage will be limited to specific capital projects.

Consummation of the transactions contemplated

by the Amended Business Combination Agreement was subject to certain closing conditions including, among others, (i) approval by the stockholders

of BRAC, and (ii) that BRAC have available cash in an amount not less than $22,000,000 after payment to stockholders who elect to redeem

their shares of common stock in accordance with the provisions of BRAC’s charter documents.

This second condition was waived by

Ourgame prior to the close.

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Consolidation of BRAC and Non-controlling Interest

The Company determined that BRAC, following its

IPO, was a VIE and that the Company is the primary beneficiary of the VIE.

The Company determined that, due to the redemption feature

associated with the IPO shares, that the IPO shareholders are indirectly protected from the operating expenses of BRAC and BROG had the

power to direct the activities of BRAC through the date at which BRAC affords the stockholders the opportunity to vote to approve a proposed

business combination.

Therefore, the consolidated financial statements contain the operations of the BRAC from its inception on May 9,

2017 through the date of the merger, when BRAC was determined to no longer be a VIE.

BRAC’s IPO shareholders are reflected in our

Consolidated Financial Statements as a redeemable non-controlling interest prior to the merger.

The non-controlling interest was recorded

at fair value on October 10, 2017, with an addition on October 18, 2017 as a result of the underwriters’

exercise of their over-allotment

During the period in which BRAC was consolidated, the net earnings attributable to the IPO shareholders are subtracted from the

net gain (loss) for any period to arrive at the net loss attributable to the Company and the non-controlling interest on the balance sheet

is adjusted to include the net earnings attributable to the IPO shareholders.

Deconsolidation of BRAC

Additionally, US GAAP (ASC 810-10-40) provides

guidance on “Derecognition”

of a previously consolidated entity or entities.

Under this guidance, the Company shall account

for the deconsolidation of a subsidiary or derecognition of a group of assets specified in ASC 810-10-40-3A by recognizing a gain or loss

in net income attributable to the parent, measured as the difference between the combination of:

a) The fair value of:

any consideration received.

In this case, the Company received no consideration.

any retained non-controlling investment in the former subsidiary or group of assets at the date the subsidiary is deconsolidated,

or the group of assets is derecognized.

In this case the fair value of the BRAC common stock at the close of the business combination

was $11,950,475, and;

b) The carrying amount of the former subsidiaries

assets and liabilities or the carrying amount of the group of assets.

With the above guidance the Company determined

that the effect of the deconsolidation of BRAC produced a non-cash adjustment, resulting in a gain of $20,448,687.

Intercompany Transactions and Eliminations

BROG was paid a management fee by AESE of $10,000

per month as part of an administrative services agreement, which commenced October 5, 2017 and ended on the date of the merger, for general

and administrative services including the cost of office space and personnel dedicated to AESE.

BROG was also reimbursed for any out-of-pocket

expenses, particularly travel, incurred in connection with activities on AESE’s behalf, including but not limited to identifying

potential target businesses and performing due diligence on suitable business combinations.

AESE paid a total of $72,903 to BROG for such

services in 2019, prior to the merger and while AESE remained a VIE and was consolidated and included in our loss on discontinued operations.

The management services income of BROG and the management services expense of AESE as well as any balances due between the companies for

such services or reimbursements were eliminated in consolidation.

Management fees earned by BROG of $466,595 subject to the management

services agreement between AESE and BROG in effect subsequent to the merger were not eliminated.

$ ( 5,657,924 )

Weighted average common shares outstanding – basic and fully diluted

Net loss per common share – basic and fully diluted

Note 5 – Related Party

Common Stock Sold for Cash

On July 2, 2021, the Company entered into a Stock

Purchase Agreement with multiple accredited investors to sell and issue to the purchasers, thereunder, an aggregate of 714,701

shares of the Company’s common stock at a price of $4.25

per Share, resulting in total proceeds received of $ 3,037,511 .

The stock sales included purchases by the following related parties:

Schedule of purchases by parties

Ira and Claudia Goldfarb JTWRO, Chairman and CEO, respectively

Brad Burke, CFO

Berman Roevocable Trust, Director

Bradley Berman, Director

Christopher R.

Ludeman JTWROS, Director

Greg Creed Trustee FBO Creed Revocable Living Trust, Director

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Note 6 –

Related Party

On February 5, 2021, the Company entered into

a Stock Purchase Agreement with multiple accredited investors to sell and issue to the purchasers an aggregate 631,250 shares of the Company’s

common stock at a price of $4.00 per share for total proceeds of $ 2,525,000 .

The stock sales included purchases by the following related

of stock sales from Stock Purchase Agreement

Brad Burke, CFO

Lyle Berman Trustee FBO Lyle A.

Berman Revocable Trust, Director

Bradley Berman, Director

Christopher R.

Ludeman JTWROS, Director

Greg Creed Trustee FBO Creed Revocable Living Trust, Director

Common Stock Awarded Pursuant to Business Combination

2 unchanged sentences

pursuant to an Asset Purchase Agreement, between the Company and the Seller.

The issuance represented 41.18% of the Company’s issued

and outstanding common stock at the time.

The fair value of the common stock was $6,720,000 based on the closing price of the Company’s

The fair value of the common stock was $ 6,720,000 based on the closing price of the Company’s

common stock on the date of grant.

number of Seller Shares to be issued was subject to adjustment, as specified in the amended Asset Purchase Agreement, based on the extent

to which the amount of cash proceeds held by the Company, as derived from the sale of the Company’s holdings of Allied Esports Entertainment

("AESE") Shares, were less than $5 million or greater than $6 million on the date specified in the Asset Purchase

This resulted in an additional 500,973 Seller Shares that were issued on January 4, 2021.

The combined issuances represented

approximately 46% of the Company’s issued and outstanding common stock, on a fully diluted basis.

number of Seller Shares to be issued was subject to adjustment, as specified in the amended Asset Purchase Agreement, based on the

extent to which the amount of cash proceeds held by the Company, as derived from the sale of the Company’s holdings of Allied

Esports Entertainment Inc.

(“AESE”) Shares, were less than $5 million or greater than $6 million on the date

specified in the Asset Purchase Agreement.

This resulted in an additional 500,973

Seller Shares that were issued on January 4, 2021.

The combined issuances represented approximately 46%

of the Company’s issued and outstanding common stock, on a fully diluted basis.

The fair value of the 500,673

shares was $1,853,600, based on the closing price of the Company’s common stock on the date of grant, was presented as Common Stock

Payable as of December 31, 2020.

shares was $ 1,853,600 ,

based on the closing price of the Company’s common stock on the date of grant, was presented as Common Stock Payable as of

December 31, 2020.

Common Stock Issued to Officers for Services,

Common Stock Payable

January 4, 2021, the Board amended Claudia and Ira Goldfarb’s employment agreements to

issue shares of common stock in equal monthly increments of 5,541 and 6,044 shares, respectively, following each month of employment from

October 2020 through December 31, 2021.

The Company awarded an aggregate 16,623 and 18,133 shares

of common stock to Claudia and Ira, respectively, for their services from October through December 31, 2020 as a common stock payable.

The aggregate fair value of the shares was $61,505 and $67,092 for Claudia and Ira, respectively, based on the closing price of the Company’s

common stock on the date of grant , was presented as Common Stock Payable as of December 31, 2020 .

The shares were subsequently issued on January 4, 2021.

On December 31, 2021,

the Company awarded 5,541 and 6,044 shares of common stock to Claudia and Ira Goldfarb , respectively, for services earned during

December 31, 2021.

The aggregate fair value of the shares was $ 12,467 and $ 13,599 for Claudia and

Ira, respectively, based on the closing price of the Company’s common stock on the date of grant .

The shares were subsequently

issued on March 24, 2022, in satisfaction of the outstanding common stock payable.

Common Stock Issued to Officers for Services

dates between January 31, 2021 and December 31, 2021, the Company issued an aggregate 60,951 and 66,484 shares in

monthly increments of 5,541 and 6,044 shares to Claudia and Ira Goldfarb , respectively ,

for their services.

The aggregate fair value of the shares was $ 290,792 and $ 317,188 for Claudia and Ira, respectively, based on the closing

price of the Company’s common stock on the dates of grant.

On May 25, 2021,

the Company issued 2,000 shares to each of two advisory board members for their services.

The total aggregate fair value of the shares was $ 20,000 , based on the closing price of the Company’s common stock on the date of

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

January 27, 2021, upon Benjamin Oehler’s resignation, the Company a ppointed Chris Ludeman as a member of the

Board of Directors of the Company, and appointed him to the Company’s Audit Committee as Chairperson.

Pursuant to his

appointment, Mr.

Ludeman was issued 6,400 shares

of common stock for his services to be rendered.

The aggregate fair value of the common stock was $ 40,000 ,

based on the closing price of the Company’s common stock on the date of grant.

On January 7, 2021,

the Company issued an aggregate 16,623 and 18,133 shares of common stock to Claudia and Ira Goldfarb , respectively, for services

from October 2020 through December 31, 2020 in satisfaction of the outstanding common stock payable

at December 31, 2020.

The aggregate fair value of the shares was $ 61,505 and $ 67,092 for Claudia and Ira, respectively, based on

the closing price of the Company’s common stock on the date of grant , was presented as Common Stock Payable as of December 31,

Common Stock Issued to Directors for Services

On December 8, 2021,

the Company issued an aggregate 41,665 shares of common stock amongst its five Directors for annual services to be rendered.

The aggregate

fair value of the common stock was $ 125,000 , based on the closing price of the Company’s common stock on the date of grant.

shares were expensed upon issuance.

On December 8, 2021,

the Company issued an additional 5,000 shares to Mr.

Chris Ludeman, for Audit Committee Chair services.

fair value of the common stock was $ 15,000 , based on the closing price of the Company’s common stock on the date of grant.

were expensed upon issuance.

On October 1, 2020,

1 unchanged sentence

The aggregate

fair value of the common stock was $125,010, based on the closing price of the Company’s common stock on the date of grant.

fair value of the common stock was $ 125,010 , based on the closing price of the Company’s common stock on the date of grant.

shares were expensed upon issuance.

2 unchanged sentences

Benjamin Oehler, for Audit Committee Chair services.

fair value of the common stock was $15,000, based on the closing price of the Company’s common stock on the date of grant.

fair value of the common stock was $ 15,000 , based on the closing price of the Company’s common stock on the date of grant.

were expensed upon issuance.

Options Granted for Services to Officers and

On April 22, 2021, Brad Burke was granted options

to purchase 27,500 shares of the Company’s common stock, having an exercise price of $ 5.50 per share, exercisable over a 10 -year

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 193 % and a call option value of $ 5.4381 , was $ 149,547 .

are being expensed over the vesting period, resulting in $ 20,814 of stock-based compensation expense during the year ended December 31,

As of December 31, 2021, a total of $ 128,733 of unamortized expenses are expected to be expensed over the vesting period.

On January 27, 2021, one of our Directors, Mr.

Chris Ludeman, was granted options to purchase 24,151 shares of the Company’s common stock, having an exercise price of $ 6.25 per

share, exercisable over a 10 -year term.

The options will vest in three equal annual installments beginning of January 27, 2022 and continuing

on each of the two anniversaries thereafter until fully vested.

The estimated value using the Black-Scholes Pricing Model, based on a

volatility rate of 198 % and a call option value of $ 6.1794 , was $ 149,239 .

The options are being expensed over the vesting period, resulting

in $ 22,815 of stock-based compensation expense during the year ended December 31, 2021.

As of December 31, 2021, a total of $ 126,424

of unamortized expenses are expected to be expensed over the vesting period.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

On January 4, 2021, our CEO and Chairman, Claudia

and Ira Goldfarb, were each granted options to purchase 75,000 shares of the Company’s common stock, having an exercise price of

$ 3.70 per share, exercisable over a 10 -year term.

The options will vest in three equal installments beginning of January 4, 2022 and continuing

on each of the two anniversaries thereafter until fully vested.

The aggregate estimated value using the Black-Scholes Pricing Model, based

on a volatility rate of 198 % and a call option value of $ 3.9412 , was $ 591,178 .

The options are being expensed over the vesting period,

resulting in $ 194,900 of stock-based compensation expense during the year ended December 31, 2021.

As of December 31, 2021, a total of

$ 396,278 of unamortized expenses are expected to be expensed over the vesting period.

On December 28, 2020, (a) Mr.

Burke was granted

options to purchase 20,000 shares of the Company’s common stock, (b) Ira Goldfarb was granted options to purchase 16,500 shares

of the Company’s common stock, and (c) Claudia Goldfarb was granted options to purchase 16,500 shares of the Company’s common

stock, each grant having an exercise price of $4.00 per share, which represents the closing price of the Company’s shares on the

OTCQB marketplace on December 28, 2020 (collectively, the “Executive Option Grants”).

The Executive Option Grants will vest

60% as of January 1, 2024 and 20% each anniversary thereafter until fully vested.

The aggregate estimated value using the Black-Scholes

Pricing Model, based on a volatility rate of 201.05 % and a call option value of $ 3.9657 , was $ 210,185 .

The options are being expensed

over the vesting period, resulting in $ 41,923 and $ 344 of stock-based compensation expense during the years ended December 31, 2021 and

2020, respectively.

As of December 31, 2021, a total of $ 167,918 of unamortized expenses are expected to be expensed over the vesting

On October 2, 2020, the Company’s Board

of Directors granted an aggregate amount of 115,250

stock options pursuant to the 2020 Equity Plan to purchase shares of the Company’s common stock to several officers, directors,

and employees at an exercise price of $5.25

per share, which represents the closing price of the Company’s shares on the OTCQB marketplace on October 2, 2020.

The options are exercisable over a ten-year term, and vest 60% on the 3 rd anniversary of the grant date and 20% each anniversary

thereafter, until fully vested.

The aggregate estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 532.91 %

and a call option value of $ 5.2102 ,

was $ 600,473 .

The options are being expensed over the vesting period, resulting in $ 104,485

of stock-based compensation expense during the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021,

a total of $ 421,760

of unamortized expenses are expected to be expensed over the vesting period.

The officers and directors receiving grants and the

amounts of such grants were as follows:

Schedule of grants

Name and Title at Time of Grant

Shares Granted

Ira Goldfarb, Chairman of the Board and Director

Claudia Goldfarb, Chief Executive Officer

On October 1, 2020, one of our Directors, Mr.

Greg Creed, was granted options to purchase 24,151 shares of the Company’s common stock at an exercise price of $ 6.00 per share,

which represented the closing price of the Company’s shares on the OTCQB marketplace on October 1, 2020.

These options will

vest 60% as of January 1, 2024 and 20% each anniversary thereafter until fully vested.

The estimated value using the Black-Scholes Pricing

Model, based on a volatility rate of 552.14 % and a call option value of $ 5.9660 , was $ 144,084 .

The options are being expensed over the

vesting period, resulting in $ 26,605 and $ 6,633 of stock-based compensation expense during the years ended December 31, 2021 and 2020,

respectively.

As of December 31, 2021, a total of $ 110,846 of unamortized expenses are expected to be expensed over the vesting period.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

On February 26, 2020, the Company’s Board

of Directors granted an aggregate amount of 240,000 stock options pursuant to the 2020 Equity Plan to purchase shares of the Company’s

common stock to several officers, directors, and employees at an exercise price of $ 5.41 per share, which represents the closing price

of the Company’s shares on the OTCQB marketplace on February 20, 2020.

The aggregate estimated value using the Black-Scholes Pricing

Model, based on a volatility rate of 147.98 % and a call option value of $ 3.7354 , was $ 896,506 .

The options are being expensed over the

vesting period, resulting in $ 105,792 and $ 408,964 of stock-based compensation expense during the years ended December 31, 2021 and 2020,

respectively.

As of December 31, 2021, a total of $ 227,936 of unamortized expenses are expected to be expensed over the vesting period.

The officers and directors receiving grants and the amounts of such grants were as follows:

of officers and directors receiving grants

Name and Title at Time of Grant

Shares Granted

Ken DeCubellis, former Chief Executive Officer and former Interim Chief Financial Officer

Michael Eisele, former Chief Operating Officer

Bradley Berman, Director

Joseph Lahti, Director

Benjamin Oehler, former Director

Lyle Berman, Director

All of the stock options granted under the 2020

Equity Plan presented in the table above will vest in five equal installments, commencing one year from the date of grant on February

26, 2021, and continuing for the next four anniversaries thereof until fully vested.

Warrants Granted

31, 2021, the Company closed a private placement and concurrently entered into a Note and Warrant Purchase Agreement with related parties

to sell an aggregate $ 2,075,000

of promissory notes, bearing 8 %

interest, and warrants to purchase an aggregate 311,250

shares of common stock, 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 10

ten-year term.

The estimated value using the Black-Scholes Pricing Model,

based on a volatility rate of 198%

and a call option value of $2.25,

was $ 699,213 .

The warrants will be expensed as a debt discount over the life of the loans.

The officers, directors and related parties receiving grants

and the amounts of such grants were as follows:

Schedule of related parties receiving warrant

Stock Warrant

Name and Title at Time of Grant

Shares Granted

Ira and Claudia Goldfarb, Chairman and Chief Executive Officer

Brad Burke, Chief Financial Officer

Lyle Berman, Director

Gutierrez, brother of the Company’s Chief Executive Officer

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

In consideration for four officers and director’s

willingness to serve as guarantors of the Cadence Loan, the Company issued warrants to each of the Guarantors (the “Guarantor Warrants”)

for the purchase of the Company’s common stock on March 12, 2020.

The Guarantor Warrants entitle each Guarantor to purchase 26,250

shares of the Company's common stock (the “Warrant Shares”) at an exercise price of $4.00

The Guarantor Warrants expire on March

The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 146%

and a call option value of $3.59,

was $ 377,440 .

The warrants were expensed as a debt discount during the year ended December, 31, 2020.

The officers and directors receiving grants and

the amounts of such grants were as follows:

Schedule of warrants grants

Stock Warrant

Name and Title at the Time of Grant

Shares Granted

Ken DeCubellis, former Chief Executive Officer and former Interim Chief Financial Officer

Bradley Berman, Director

Lyle Berman, Director

Benjamin Oehler, former Director

Management Incentive Plan

On March 1, 2018, the Board of Directors (the

“Board”) of the Company approved and adopted the Black Ridge Gas, Inc.

2018 Management Incentive Plan (the “Plan”)

and the form of 2018 Management Incentive Plan Award Agreement (the “Award Agreement”).

“Board”) of the Company approved and adopted the Black Ridge Gas, Inc.

2018 Management Incentive Plan (the “Plan”)

and the form of 2018 Management Incentive Plan Award Agreement (the “Award Agreement”).

In connection with the approval of the Plan and

Award Agreement, the Board approved the issuance of awards (the “Awards”) to certain individuals including officers and directors

(the “Grantees”), representing a percentage of the shares of BRAC held by the Company as of the date of closing of a business

Award Agreement, the Board approved the issuance of awards (the “Awards”) to certain individuals including officers and directors

(the “Grantees”), representing a percentage of the shares of BRAC held by the Company as of the date of closing of a business

combination for the acquisition of a target business as described in the BRAC prospectus dated October 4, 2017, as follows:

Percentage of BRAC Shares Owned by the

Company Granted to the Grantee

Percentage of BRAC Shares Owned by the Company Granted to the Grantee

Percentage of BRAC Owned by the

Company Granted

to the Grantee

Bradley Berman

2 unchanged sentences

Michael Eisele

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Following the AESE merger on August 9, 2019, the

7 unchanged sentences

The AESE Plan Shares had a fair market value of $ 1,133,281 on August 10, 2020, when the shares were distributed.

Company recognized $1,396,460 of compensation expense related to the Plan during the year ended December 31, 2019.

Lease Agreement

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.

1 unchanged sentence

to extend, at a monthly lease term of $ 10,036 , with approximately a 3% annual escalation of lease payments commencing September 15, 2021.

Shares Transferred to Purchasers of BRAC Common

As presented in Note 5, in July and August 2019,

BRAC and BROG entered into several share purchase agreements (the “Purchase Agreements”) with several parties (collectively

referred to as the “Purchasers”).

Pursuant to the Purchase Agreements, the Purchasers agreed to purchase an aggregate of $18,000,000

of shares of BRAC’s common stock in open market or privately negotiated transactions.

If the Purchasers were unable to purchase

the full $18,000,000 of shares of common stock in open market or privately negotiated transactions, BRAC will issue to the Purchasers

newly issued shares at the Closing at a per-share price equal to the per-share amount held in BRAC’s trust account ($10.30 per share),

and having an aggregate value equal to the difference between $18,000,000 and the dollar amount of shares purchased by them in the open

market or in privately negotiated transactions.

At the Closing, BRAC agreed to issue to the Purchasers 1.5 shares of common stock for

every 10 shares purchased by them under the Purchase Agreements.

Additionally, the Company agreed to transfer an aggregate of 720,000

shares held by it of BRAC common stock to the Purchasers.

The Purchasers included a $3 million investment from Lyle Berman, a member

of the board of directors of both BRAC and BROG and the largest shareholder of BROG.

Berman received 43,800 bonus shares of BRAC common

stock issued by BRAC and 120,000 shares of BRAC common stock transferred from the Company.

Note 7 –

Fair Value of Financial Instruments

Note 6 – Fair Value of Financial Instruments

Under FASB ASC 820-10-5, fair value is defined

7 unchanged sentences

a revolving credit facility that must be measured under the fair value standard.

The Company’s financial assets and liabilities

are measured using inputs from the three levels of the fair value hierarchy.

9 unchanged sentences

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

1 unchanged sentence

of financial instruments at fair value on a recurring basis in the balances sheet as of December 31, 2021 and 2020:

Valuation of financial instruments at fair value

Fair Value Measurements at December 31, 2021

Cash and cash equivalents

Investment in Allied Esports Entertainment, Inc.

Intangible assets

Notes payable, related parties, net of $699,213 of debt discounts

Notes payable

3 unchanged sentences

Investment in Allied Esports Entertainment, Inc.

Intangible assets

Notes payable

Total liabilities

1 unchanged sentence

liabilities between Level 1 and Level 2 inputs for the years ended December 31, 2021 and 2020.

Note 8 –

Prepaid Expenses

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 7 – Prepaid Expenses

Prepaid expenses consist of the following:

Schedule of prepaid expenses

Prepaid software licenses

Prepaid insurance costs

Trade show advances

Prepaid employee benefits

1 unchanged sentence

Total prepaid expenses

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Note 9 –

Property and Equipment

Note 8 – Property and Equipment

Property and equipment at December 31, 2021 and 2020, consisted of

the following:

Property and equipment

Office equipment

Leasehold improvements

Construction in progress

1 unchanged sentence

Total property and equipment, net

Construction in progress consists of costs incurred to build out our

manufacturing facility in Irving Texas, along with the construction of our freeze driers.

These costs will be capitalized as Leasehold

Improvements and Machinery, respectively, upon completion.

Construction in progress consisted of costs incurred

to build out our manufacturing facility in Irving Texas, along with the construction of our freeze driers.

These costs were capitalized

as Leasehold Improvements and Machinery, respectively, upon completion.

On December 31, 2021, the Company disposed of

packaging equipment no longer in service.

No proceeds were received on the disposal of the equipment, resulting in a loss on disposal

of fixed assets of $ 8,036 , which represented the net book value at the time of disposal.

On September 30, 2020, the Company disposed of

2 unchanged sentences

fixed assets of $ 5,369 , which represented the net book value at the time of disposal.

Depreciation of property and equipment was $3,642 and $872 for the

years ended December 31, 2020 and 2019, respectively.

Note 10 –

Investment in Allied Esports

Depreciation of property and equipment was $ 208,448 and $ 3,642 for

the years ended December 31, 2021 and 2020, respectively.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 9 – Investment in Allied Esports

Entertainment, Inc.

Following the close of BRAC’s merger, the

Company retained 2,685,500 shares of AESE common stock with a value, based on the closing stock of $4.45 on the merger, of $ 11,950,475 ,

and tradeable warrants to purchase 505,000 shares of AESE (NASDAQ:

AESEW) (“Sponsor Warrants”), of which the Company still

owned 177,479 shares as of December 31, 2020, after selling 1,970,920 shares for total net proceeds of $3,108,067, selling warrants to

purchase 505,000 Sponsor Warrants for total proceeds of $73,668, and distributing 537,101 Sponsor Shares on August 10, 2020 to employees

and directors under the 2018 Management Incentive Plan.

As noted above, in Note 6 - Related Party Transactions, 20% or 537,101, of the

shares were released to employees on August 10, 2020.

Therefore, the Company recorded compensation expense and recorded a deferred compensation

liability of $1,396,460 to recognize the commitment to employees in 2019.

As of December 31, 2020, the market value of the

Company’s investment in AESE’s common stock was $280,417, based on the closing stock price of $1.58 per share, resulting in

losses on our investment in securities, as follows:

Net loss on investment in Allied Esports Entertainment, Inc.

$ (1,925,029 )

AESEW) (“Sponsor Warrants”), of which the Company had sold

its last remaining 177,479 shares for total net proceeds of $ 414,361 as of December 31, 2021, and still owned 177,479 shares as of

December 31, 2020, after selling 1,970,920 shares for total net proceeds of $ 3,108,067 , selling warrants to purchase 505,000 Sponsor Warrants

for total proceeds of $ 73,668 , and distributing 537,101 Sponsor Shares on August 10, 2020 to employees and directors under the 2018 Management

Incentive Plan.

As of December 31, 2021, the Company had sold

all of its shares in AESE common stock, and as of December 31, 2020, the market value of the Company’s investment in AESE’s

common stock was $ 280,417 ,

based on the closing stock price of $ 1.58

per share, resulting in losses on our investment in securities, as follows:

Schedule of unrealized loss on investment

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

$ ( 1,925,029 )

2 unchanged sentences

$ ( 160,829 )

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Note 11 –

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.

Note 10 – 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:

Schedule of components of lease expense

Operating lease cost:

Fixed rent expense

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Supplemental balance sheet information related to leases was as follows:

Schedule of supplemental balance sheet information

Operating leases:

8 unchanged sentences

Supplemental cash flow and other information related to leases was

Schedule of supplemental cash flow and other information

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Total operating lease liabilities

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

The future minimum lease payments due under operating leases as of

December 31, 2021 is as follows:

Schedule of future minimum lease payments

Fiscal Year Ending

Minimum Lease

2026 and thereafter

Less effects of discounting

Lease liability recognized

Note 11 – Intangible Assets

Intangible assets consist of the following:

Schedule of Intangible assets

Branding, Sow Good

Branding, Sustain Us

Trademarks and patents

Total intangible assets

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Note 12 –

Note 12 – Notes Payable, Related Parties

Notes payable, related parties consists of the

following at December 31, 2021 and 2020, respectively:

Schedule of Notes payable, related parties

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.

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 30 th and December 31 st .

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.

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 30 th and December 31 st .

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.

On December 31, 2021, the Company received $ 25,000 pursuant to a note and warrant purchase agreement from the Company’s 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 30 th and December 31 st .

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.

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 30 th and December 31 st .

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.

Total notes payable, related parties

Less unamortized debt discounts:

Notes payable

current maturities

Notes payable, related parties, less current maturities

The Company recorded total discounts of $ 699,213 ,

consisting of debt discounts on warrants granted to the related parties during the year ended December 31, 2021.

The discounts will

be amortized to interest expense over the term of the notes, until repayment, using the straight-line method, which closely approximates

the effective interest method.

No interest expense was recognized during the

years ended December 31, 2021 and 2020.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 13 – Notes Payable

Notes payable consists of the following at December

31, 2021 and 2020, respectively:

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.

Schedule of notes payable

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.

Under the EIDL Note, the Company is required to pay principal and interest payments of $731 every month beginning June 16, 2021.

1 unchanged sentence

The EIDL Note may be repaid at any time without penalty.

On April 24, 2020, the Company entered into a loan agreement with Kensington Bank (“Kensington”), as lender (the “Loan Agreement”) encompassing a $112,925 Promissory Note issued to Kensington (the “PPP Note”) pursuant to Payroll Protection Program established as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides loans to qualifying businesses and is administered by the U.S.

Small Business Administration (the “SBA”).

On April 24, 2020, the Company entered into a loan agreement with Kensington Bank (“Kensington”), as lender (the “Loan Agreement”) encompassing a $ 112,925 Promissory Note issued to Kensington (the “PPP Note”) pursuant to Payroll Protection Program established as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides loans to qualifying businesses and is administered by the U.S.

Small Business Administration (the “SBA”).

The PPP Note bears interest at 1.0 % per annum, with interest payable monthly beginning November 24, 2020, and principal due in full on April 24, 2022 ..

The PPP Note may be repaid at any time without penalty.

Under the Payroll Protection Program, the Company will be eligible for loan forgiveness up to the full amount of the PPP Note and any accrued interest.

The forgiveness amount will be equal to the amount that the Company spends during the 24-week period beginning April 24, 2020 on payroll costs, payment of rent on any leases in force prior to February 15, 2020 and payment on any utility for which service began before February 15, 2020.

The maximum amount of loan forgiveness for non-payroll expenses is 40% of the amount of the PPP Note.

On January 19, 2021, the Company received forgiveness, as authorized by Section 1106 of the Cares Act in the amount of $113,772, consisting of $112,925 of principal and $847 of interest.

On November 25, 2019, the Company entered into a credit account agreement (“Margin Account”) with RBC Capital Markets, LLC (“RBC”).

The Margin Account enables the Company to borrow against the Company’s AESE shares that are held in an account with RBC.

The advances received on margin bear interest at rates of between 1.00% and 2.75% over the Base Lending Rate, depending on the average outstanding debit balance.

The Base Lending Rate is internally determined by RBC using Broker Call, Prime Rate as determined by commercial banks utilized by RBC CM, Fed Funds, RBC CM’s cost of funds, and other commercially recognized rates of interest.

The margin loans are collateralized by the underlying AESE shares.

A total of $122,100 was borrowed on the Margin Account over various dates between January 29, 2020 and March 6, 2020.

The outstanding balance was repaid in full on, or about, March 12, 2020 out of the proceeds of the loan from Cadence Bank, described below.

On March 12, 2020, the Company entered into a business loan agreement with Cadence Bank, N.A.

(“Cadence”), as lender encompassing a $700,000 Promissory Note issued to Cadence (the “Note”), a Security Agreement by the Company in favor of Cadence and limited commercial guarantees by the Company’s Chief Executive Officer and Interim Chief Financial Officer, who is one in the same, and members of the Company’s Board of Directors (the “Guarantors”) (collectively, the “Cadence Loan”).

The Note carried interest at a rate of 0.50 percentage points over the prime rate, as published in the Wall Street Journal, payable monthly, and was due on March 9, 2021.

The Note could be repaid at any time without penalty.

The Note was secured by all of the Company’s rights, title and interests in and to 500,000 shares of the common stock of Allied Esports Entertainment Inc.

AESE) currently owned by the Company and held in the Company’s brokerage account with RBC Capital Markets, LLC.

On March 26, 2020, the Company subsequently entered into a separate letter agreement with the Guarantors (the “Letter Agreement”), which provides that if the Company defaults or fails to make any payment due under the Cadence Loan and the Guarantors are required to make payment to Cadence pursuant to the Guarantees, then the Company agrees to issue additional equity interests or rights to Guarantors reflecting ninety-five percent (95%) of the outstanding equity of the Company at the time of such default to participating Guarantors who have made the payments to Cadence.

All equity issuances will be subject to any third party or shareholder approvals required at the time of issuance.

A total of $417,000 was advanced on the loan and subsequently repaid in full on June 30, 2020.

The PPP Note could have been repaid at any time without penalty.

Under the Payroll Protection Program, the Company received loan forgiveness of $ 113,772 , consisting of $112,925 of principal and $847 of accrued interest, on January 19, 2021.

The forgiveness amount was equal to the amount that the Company spends during the 24-week period beginning April 24, 2020 on payroll costs, payment of rent on any leases in force prior to February 15, 2020 and payment on any utility for which service began before February 15, 2020.

The maximum amount of loan forgiveness for non-payroll expenses was 40% of the amount of the PPP Note.

Total notes payable

Less unamortized derivative discounts:

Notes payable

current maturities

Notes payable, less current maturities

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

The Company recorded total discounts of $ 377,440 ,

1 unchanged sentence

provided for debt financing incurred during the year ended December 31, 2020.

The discounts were amortized to stock-based compensation

expense over the term of the note, until repayment, using the straight-line method, which closely approximated the effective interest

The Company recorded $377,440 of stock-based compensation expense pursuant to the amortization of note discounts during the year

ended December 31, 2020.

The Company recognized $384,456 of interest expense,

consisting of $8,724 of interest and $377,440 of stock-based warrant expense pursuant to the amortization of the debt discount on the

business loans during the year ended December 31, 2020.

Note 13 –

Stockholders’

The discounts were amortized to interest expense over

the term of the note, until repayment, using the straight-line method, which closely approximated the effective interest method.

recorded $ 377,440 of stock-based interest expense pursuant to the amortization of note discounts during the year ended December 31,

The Company recognized $ 5,911 and $ 384,456 of

interest expense for the years ended December 31, 2021 and 2020, respectively.

Interest expense included $ 377,440 of stock-based warrant

expense pursuant to the amortization of the debt discount on the business loans during the year ended December 31, 2020.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 14 – Stockholders’ Equity

Reverse Stock Split

On February 21, 2020,

the Company effected a 1-for-300 reverse stock split (the “Reverse Stock Split”) .

fractional shares were issued.

Instead, the Company issued the following to any stockholder who otherwise would have received a fractional

share as a result of the Reverse Stock Split:

Stockholders owning 300 or more shares of Common Stock received (1) one share of Common Stock for every 300 shares owned and (2) cash in lieu of fractional shares upon the surrender of such stockholder’s shares;

On February 21, 2020, the Company effected a 1-for-300

reverse stock split (the “Reverse Stock Split”).

No fractional shares were issued.

Instead, the Company issued the following

to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split:

Stockholders owning between 25 and 300 shares of Common Stock had their ownership of shares of Common Stock rounded up to one share;

Stockholders owning fewer than 25 shares of Common Stock received cash in lieu of fractional shares upon the surrender of such stockholders’

shares and no longer own shares of Common Stock.

Stockholders owning fewer than 25 shares of Common Stock received cash in lieu of fractional shares upon the surrender of such stockholders’ shares and no longer own shares of Common Stock.

Any cash payment in lieu of fractional shares

were based on the volume weighted average of the closing sales prices of the Company’s Common Stock on the OTCQB operated by

OTC Markets Group Inc.

(the “OTCQB”) during regular trading hours for the five consecutive trading days immediately preceding

the Effective Date, which was $0.018 per share prior to the effects of the reverse stock split.

2 unchanged sentences

The Reverse Stock Split did not have any effect on

the stated par value of the common stock, or the Company’s authorized preferred stock.

Unless otherwise stated, all share and per

11 unchanged sentences

between the Company and the Seller.

The issuance represented 41.18% of the Company’s issued and outstanding common stock at the

The fair value of the common stock was $6,720,000 based on the closing price of the Company’s common stock on the date of

number of Seller Shares to be issued was subject to adjustment, as specified in the amended Asset Purchase Agreement, based on the extent

to which the amount of cash proceeds held by the Company, as derived from the sale of the Company’s holdings of Allied Esports Entertainment

("AESE") Shares, were less than $5 million or greater than $6 million on the date specified in the Asset Purchase

The issuance represented 41.18% of the Company’s issued and outstanding common stock at the

The fair value of the common stock was $ 6,720,000 based on the closing price of the Company’s common stock on the date of

of Seller Shares to be issued was subject to adjustment, as specified in the amended Asset Purchase Agreement, based on the extent to

which the amount of cash proceeds held by the Company, as derived from the sale of the Company’s holdings of Allied Esports Entertainment

(“AESE”) Shares, were less than $5 million or greater than $6 million on the date specified in the Asset Purchase

This resulted in an additional 500,973 Seller Shares that were issued on January 4, 2021.

The combined issuances represented

approximately 46% of the Company’s issued and outstanding common stock, on a fully diluted basis.

The fair value of the 500,673

shares was $1,853,600, based on the closing price of the Company’s common stock on the date of grant, was presented as Common Stock

shares was $ 1,853,600 , based on the closing price of the Company’s common stock on the date of grant, was presented as Common Stock

Payable as of December 31, 2020.

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Common Stock Sold for Cash

On July 2, 2021, the Company entered into a Stock

Purchase Agreement with multiple accredited investors to sell and issue to the purchasers, thereunder, an aggregate of 714,701 shares

of the Company’s common stock at a price of $4.25 per Share.

Proceeds to the Company from the sale of the Shares were $3,037,511.

A total of 271,911 of these shares, or proceeds of $1,155,625 were purchased by officers and directors.

On February 5, 2021, the Company entered into

a Stock Purchase Agreement with multiple accredited investors to sell and issue to the Purchasers an aggregate 631,250 shares of the Company’s

common stock at a price of $4.00 per share for total proceeds of $2,525,000.

A total of 225,000 of these shares, or proceeds of $900,000

were purchased by officers and directors.

Common Stock Issued to Officers for Services,

Common Stock Payable

January 4, 2021, the Board amended Claudia and Ira Goldfarb’s employment agreements to

issue shares of common stock in equal monthly increments of 5,541 and 6,044 shares, respectively, following each month of employment from

October 2020 through December 31, 2021.

The Company awarded an aggregate 16,623 and 18,133 shares

of common stock to Claudia and Ira, respectively, for their services from October through December 31, 2020 as a common stock payable.

The aggregate fair value of the shares was $61,505 and $67,092 for Claudia and Ira, respectively, based on the closing price of the Company’s

common stock on the date of grant , was presented as Common Stock Payable as of December 31, 2020 .

The shares were subsequently issued on January 4, 2021.

On December 31, 2021,

the Company awarded 5,541 and 6,044 shares of common stock to Claudia and Ira Goldfarb , respectively, for services earned during

December 31, 2021.

The aggregate fair value of the shares was $12,467 and $13,599 for Claudia and

Ira, respectively, based on the closing price of the Company’s common stock on the date of grant .

The shares were subsequently

issued on March 24, 2022, in satisfaction of the outstanding common stock payable.

Common Stock Issued to Directors for Services

On October 1, 2020,

On December 8, 2021,

the Company issued an aggregate 41,665 shares of common stock amongst its five Directors for annual services to be rendered.

The aggregate

fair value of the common stock was $125,010, based on the closing price of the Company’s common stock on the date of grant.

fair value of the common stock was $125,000, based on the closing price of the Company’s common stock on the date of grant.

shares were expensed upon issuance.

December 8, 2021, the Company issued an additional 5,000 shares to Mr.

Chris Ludeman, for Audit Committee Chair

The fair value of the common stock was $15,000, based on the closing price of the

Company’s common stock on the date of grant.

The shares were expensed upon issuance.

On October 1, 2020,

the Company issued an additional 2 ,500 shares to Mr.

Benjamin Oehler, for Audit Committee Chair services.

fair value of the common stock was $15,000, based on the closing price of the Company’s common stock on the date of grant.

were expensed upon issuance.

No shares were issued during 2019.

Note 14 –

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

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.

the Company issued an aggregate 20,835 shares of common stock amongst its five Directors for annual services to be rendered.

The aggregate

fair value of the common stock was $125,010, based on the closing price of the Company’s common stock on the date of grant.

shares were expensed upon issuance.

October 1, 2020, the Company issued an additional 2,500 shares to Mr.

Benjamin Oehler, for former Audit Committee

Chair services.

The fair value of the common stock was $15,000 ,

based on the closing price of the Company’s common stock on the date of grant.

The shares were expensed upon

Issuance of Shares for Services

dates between January 31, 2021 and December 31, 2021, the Company issued an aggregate 60,951 and 66,484 shares in

monthly increments of 5,541 and 6,044 shares to Claudia and Ira Goldfarb , respectively ,

for their services.

The aggregate fair value of the shares was $290,792 and $317,188 for Claudia and Ira, respectively, based on the closing

price of the Company’s common stock on the dates of grant.

On May 25, 2021,

the Company issued 2,000 shares to each of two advisory board members for their services.

The total aggregate fair value of the shares was $ 20,000 , based on the closing price of the Company’s common stock on the date of

On January 27, 2021,

upon Benjamin Oehler’s resignation, the Company a ppointed Chris Ludeman as a member of the Board of Directors of the Company,

and appointed him to the Company’s Audit Committee as Chairperson.

Pursuant to his appointment, Mr.

Ludeman was issued

6,400 shares of common stock for his services to be rendered.

The aggregate fair value of the common stock was $40,000, based on the closing

price of the Company’s common stock on the date of grant.

On January 7, 2021,

the Company issued an aggregate 16,623 and 18,133 shares of common stock to Claudia and Ira Goldfarb , respectively, for services

from October 2020 through December 31, 2020 in satisfaction of the outstanding common stock payable

at December 31, 2020.

The aggregate fair value of the shares was $61,505 and $67,092 for Claudia and Ira, respectively, based on

the closing price of the Company’s common stock on the date of grant , was presented as Common Stock Payable as of December 31,

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 15 – 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

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

3 unchanged sentences

Options Granted

On December 28, 2020,

Burke was granted options to purchase 20,000 shares of the Company’s common stock, (b) Ira Goldfarb was granted options

to purchase 16,500 shares of the Company’s common stock, and (c) Claudia Goldfarb was granted options to purchase 16,500 shares

of the Company’s common stock, each grant having an exercise price of $4.00 per share, which represents the closing price of the

Company’s shares on the OTCQB marketplace on December 28, 2020 (collectively, the “Executive Option Grants”).

The Executive

Option Grants will vest 60% as of January 1, 2024 and 20% each anniversary thereafter until fully vested.

The aggregate estimated

value using the Black-Scholes Pricing Model, based on a volatility rate of 201.05% and a call option value of $3.9657, was $210,185.

options are being expensed over the vesting period, resulting in $ 344 of stock-based compensation expense during the year ended December

On December 8, 2021, a total of eight employees

and consultants were granted options to purchase an aggregate 18,531 shares of the Company’s common stock, having an exercise price

of $ 3.00 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 199 % and a call option value

of $2.9731, was $ 55,094 .

The options are being expensed over the vesting period, resulting in $ 693 of stock-based compensation expense

during the year ended December 31, 2021.

As of December 31, 2021, a total of $ 54,401 of unamortized expenses are expected to be expensed

over the vesting period.

On August 27, 2021, a total of twelve employees

and consultants were granted options to purchase an aggregate 11,918 shares of the Company’s common stock, having an exercise price

of $ 6.00 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 193 % and a call option value

of $5.9316, was $ 70,693 .

The options are being expensed over the vesting period, resulting in $ 4,883 of stock-based compensation expense

during the year ended December 31, 2021.

As of December 31, 2021, a total of $ 65,810 of unamortized expenses are expected to be expensed

over the vesting period.

On May 25, 2021, two advisory board members were

granted options to purchase an aggregate 6,000 shares of the Company’s common stock, having an exercise price of $ 5.00 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 191 % and a call option value of $4.9272, was

The options are being expensed over the vesting period, resulting in $ 3,564 of stock-based compensation expense during the year

ended December 31, 2021.

As of December 31, 2021, a total of $ 25,998 of unamortized expenses are expected to be expensed over the vesting

On April 22, 2021, Brad Burke was granted options

to purchase 27,500 shares of the Company’s common stock, having an exercise price of $ 5.50 per share, exercisable over a 10-year

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 193 % and a call option value of $5.4381, was $ 149,547 .

are being expensed over the vesting period, resulting in $ 20,814 of stock-based compensation expense during the year ended December 31,

As of December 31, 2021, a total of $ 128,733 of unamortized expenses are expected to be expensed over the vesting period.

On December 28, 2020,

two employees were granted options to purchase an aggregate 6,750 shares of the Company’s common stock, each grant having an exercise

price of $4.00 per share, which represents the closing price of the Company’s shares on the OTCQB marketplace on December 28, 2020.

The option grants will vest 60% as of January 1, 2024 and 20% each anniversary thereafter until fully vested.

The aggregate estimated

value using the Black-Scholes Pricing Model, based on a volatility rate of 201.05% and a call option value of $3.9657, was $26,769.

options are being expensed over the vesting period, resulting in $44 of stock-based compensation expense during the year ended December

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

On April 22, 2021, a total of fifteen employees

and consultants were granted options to purchase an aggregate 19,875 shares of the Company’s common stock, having an exercise price

of $ 5.50 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 193 % and a call option value

of $5.4381, was $ 108,082 .

The options were expensed over the vesting period, resulting in $ 13,361 of stock-based compensation expense

during the year ended December 31, 2021.

As of December 31, 2021, a total of $ 70,990 of unamortized expenses are expected to be expensed

over the vesting period.

On January 27, 2021, Chris Ludeman was granted

options to purchase 24,151 shares of the Company’s common stock, having an exercise price of $ 6.25 per share, exercisable over a

10-year term.

The options will vest in three equal annual installments beginning of January 27, 2022 and continuing on each of the two

anniversaries thereafter until fully vested.

The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of

198 % and a call option value of $6.1794, was $ 149,239 .

The options are being expensed over the vesting period, resulting in $ 22,815 of

stock-based compensation expense during the year ended December 31, 2021.

As of December 31, 2021, a total of $ 126,424 of unamortized

expenses are expected to be expensed over the vesting period.

On January 4, 2021, Claudia and Ira Goldfarb were

each granted options to purchase 75,000 shares of the Company’s common stock, having an exercise price of $ 3.70 per share, exercisable

over a 10-year term.

The options will vest in three equal installments beginning of January 4, 2022 and continuing on each of the two

anniversaries thereafter until fully vested.

The aggregate estimated value using the Black-Scholes Pricing Model, based on a volatility

rate of 198 % and a call option value of $3.9412, was $ 591,178 .

The options are being expensed over the vesting period, resulting in $ 194,900

of stock-based compensation expense during the year ended December 31, 2021.

As of December 31, 2021, a total of $ 396,278 of unamortized

expenses are expected to be expensed over the vesting period.

On December 28, 2020, (a) Mr.

Burke was granted

options to purchase 20,000 shares of the Company’s common stock, (b) Ira Goldfarb was granted options to purchase 16,500 shares

of the Company’s common stock, and (c) Claudia Goldfarb was granted options to purchase 16,500 shares of the Company’s common

stock, each grant having an exercise price of $ 4.00 per share, which represents the closing price of the Company’s shares on the

OTCQB marketplace on December 28, 2020 (collectively, the “Executive Option Grants”).

The Executive Option Grants will vest

60% as of January 1, 2024 and 20% each anniversary thereafter until fully vested.

The aggregate estimated value using the Black-Scholes

Pricing Model, based on a volatility rate of 201.05 % and a call option value of $3.9657, was $ 210,185 .

The options are being expensed

over the vesting period, resulting in $ 41,923 and $ 344 of stock-based compensation expense during the years ended December 31, 2021 and

2020, respectively.

As of December 31, 2021, a total of $ 167,918 of unamortized expenses are expected to be expensed over the vesting

On December 28, 2020, two employees were granted

options to purchase an aggregate 6,750 shares of the Company’s common stock, each grant having an exercise price of $ 4.00 per share,

which represents the closing price of the Company’s shares on the OTCQB marketplace on December 28, 2020.

The option grants will

vest 60% as of January 1, 2024 and 20% each anniversary thereafter until fully vested.

The aggregate estimated value using the Black-Scholes

Pricing Model, based on a volatility rate of 201.05 % and a call option value of $3.9657, was $ 26,769 .

The options are being expensed over

the vesting period, resulting in $ 3,497 and $ 44 of stock-based compensation expense during the years ended December 31, 2021 and 2020,

respectively.

As of December 31, 2021, a total of $ 10,297 of unamortized expenses are expected to be expensed over the vesting period.

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

On October 2, 2020,

the Company’s Board of Directors granted an aggregate amount of 115,250 stock options pursuant to the 2020 Equity Plan to purchase

shares of the Company’s common stock to several officers, directors, and employees at an exercise price of $5.25 per share, which

represents the closing price of the Company’s shares on the OTCQB marketplace on October 2, 2020.

The options are exercisable

over a ten-year term, and vest 60% on the 3 rd anniversary of the grant date and 20% each anniversary thereafter, until fully

The aggregate estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 532.91% and a call option

value of $5.2102, was $600,473.

The options are being expensed over the vesting period, resulting in $27,667 of stock-based compensation

expense during the year ended December 31, 2020.

As of December 31, 2020, a total of $572,806 of unamortized expenses are expected to

be expensed over the vesting period.

The officers and directors receiving grants and the amounts of such grants

were as follows:

On October 2, 2020, the Company’s Board

of Directors granted an aggregate amount of 115,250

stock options pursuant to the 2020 Equity Plan to purchase shares of the Company’s common stock to several officers, directors,

and employees at an exercise price of $ 5.25

per share, which represents the closing price of the Company’s shares on the OTCQB marketplace on October 2, 2020.

The options are exercisable over a ten-year term, and vest 60% on the 3 rd anniversary of the grant date and 20% each anniversary

thereafter, until fully vested.

The aggregate estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 532.91 %

and a call option value of $5.2102, was $ 600,473 .

The options are being expensed over the vesting period, resulting in $ 104,485

of stock-based compensation expense during the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021,

a total of $ 421,760

of unamortized expenses are expected to be expensed over the vesting period.

The officers and directors receiving grants and the

amounts of such grants were as follows:

Schedule of options granted

Name and Title at Time of Grant

4 unchanged sentences

Greg Creed was granted

options to purchase 24,151 shares of the Company’s common stock at an exercise price of $6.00 per share, which represented the closing

price of the Company’s shares on the OTCQB marketplace on October 1, 2020.

options to purchase 24,151 shares of the Company’s common stock at an exercise price of $ 6.00 per share, which represented the closing

price of the Company’s shares on the OTCQB marketplace on October 1, 2020.

These options will vest 60% as of January 1, 2024

3 unchanged sentences

The options are being expensed over the vesting period, resulting in

$6,633 of stock-based compensation expense during the year ended December 31, 2020.

As of December 31, 2020, a total of $137,451 of unamortized

expenses are expected to be expensed over the vesting period.

On February 26, 2020,

the Company’s Board of Directors granted an aggregate amount of 240,000 stock options pursuant to the 2020 Equity Plan to purchase

shares of the Company’s common stock to several officers, directors, and employees at an exercise price of $5.41 per share, which

represents the closing price of the Company’s shares on the OTCQB marketplace on February 20, 2020.

The aggregate estimated

value using the Black-Scholes Pricing Model, based on a volatility rate of 147.98% and a call option value of $3.7354, was $896,506.

options are being expensed over the vesting period, resulting in $408,964 of stock-based compensation expense during the year ended December

As of December 31, 2020, a total of $487,541 of unamortized expenses are expected to be expensed over the vesting period.

officers and directors receiving grants and the amounts of such grants were as follows:

$ 26,605 and $ 6,633 of stock-based compensation expense during the years ended December 31, 2021 and 2020, respectively.

As of December

31, 2021, a total of $ 110,846 of unamortized expenses are expected to be expensed over the vesting period.

On February 26, 2020, the Company’s Board

of Directors granted an aggregate amount of 240,000

stock options pursuant to the 2020 Equity Plan to purchase shares of the Company’s common stock to several officers, directors,

and employees at an exercise price of $ 5.41

per share, which represents the closing price of the Company’s shares on the OTCQB marketplace on February 20, 2020.

aggregate estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 147.98 %

and a call option value of $3.7354, was $ 896,506 .

The options are being expensed over the vesting period, resulting in $ 105,792

and $ 408,964

of stock-based compensation expense during the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021,

a total of $ 227,936

of unamortized expenses are expected to be expensed over the vesting period.

The officers and directors receiving grants and the

amounts of such grants were as follows:

Name and Title at Time of Grant

4 unchanged sentences

Joseph Lahti, Director

Benjamin Oehler, Director

Benjamin Oehler, former Director

Lyle Berman, Director

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

All of the stock options granted under the 2020

6 unchanged sentences

unamortized balance of these options is $ 1,807,391 as of December 31, 2021.

No options were granted during

the year ended December 31, 2019.

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Options Cancelled or Forfeited

An aggregate 13,164 and 1,284 options with a weighted

average strike price of $107.94 and $27.18 per share were forfeited by former employees during the years ended December 31, 2020 and 2019,

respectively.

An aggregate 176,312 and 13,164 options with a

weighted average strike price of $ 12.66 and $ 107.94 per share were forfeited by former employees during the years ended December 31, 2021

and 2020, respectively.

Options Expired

An aggregate 666 and 457 options with a weighted

average strike price of $195.00 and $90.51 per share expired during the years ended December 31, 2020 and 2019, respectively.

An aggregate 666 options with a weighted average

strike price of $ 195.00 per share expired during the year ended December 31, 2020.

Options Exercised

3 unchanged sentences

the Stock Options outstanding at December 31, 2021.

Schedule of options outstanding and exercisable

Shares Underlying

3 unchanged sentences

$ 3.00 - $ 195.00

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

The following is a summary of activity of outstanding

stock options:

Schedule of option activity

Balance, December 31, 2019

Options granted

Options expired

1 unchanged sentence

Balance, December 31, 2020

Options expired

Options cancelled

Options granted

Options cancelled

Balance, December 31, 2021

Exercisable, December 31, 2021

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Note 15 –

Note 16 – Warrants

Outstanding Warrants

2 unchanged sentences

Warrants Granted

In consideration for four officers and director’s

willingness to serve as guarantors of the Cadence Loan, the Company issued warrants to each of the Guarantors (the “Guarantor Warrants”)

for the purchase of the Company’s common stock on March 12, 2020.

31, 2021, the Company closed a private placement and concurrently entered into a Note and Warrant Purchase Agreement with related parties

to sell an aggregate $ 2,075,000

of promissory notes and warrants to purchase an aggregate 311,250

shares of common stock, representing 15,000 warrant shares per $100,000 of promissory

The warrants are exercisable at a price of $ 2.21

per share over a ten-year term.

The estimated value using the Black-Scholes

Pricing Model, based on a volatility rate of 198 %

and a call option value of $2.25, was $ 699,213 .

The warrants will be expensed as a debt discount over the life of the loans.

The officers, directors and related parties receiving grants

and the amounts of such grants were as follows:

Schedule of debt discount life loans

Stock Warrant

Name and Title at Time of Grant

Shares Granted

Ira and Claudia Goldfarb, Chairman and Chief Executive Officer

Brad Burke, Chief Financial Officer

Lyle Berman, Director

Gutierrez, brother of the Company’s Chief Executive Officer

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

In consideration for four officers and director’s

willingness to serve as guarantors of the Cadence Loan, the Company issued warrants to each of the Guarantors (the “Guarantor Warrants”)

for the purchase of the Company’s common stock on March 12, 2020.

The Guarantor Warrants entitle each Guarantor to purchase 26,250

shares of the Company's common stock (the “Warrant Shares”) at an exercise price of $4.00 per share.

The Guarantor Warrants

expire on March 12, 2030.

The officers and directors receiving grants and the amounts of such grants were as follows:

shares of the Company's common stock (the “Warrant Shares”) at an exercise price of $ 4.00

The Guarantor Warrants expire on March 12, 2030.

The estimated value using the Black-Scholes Pricing Model, based on

a volatility rate of 146 %

and a call option value of $3.59, was $ 377,440 .

The warrants were expensed as a debt discount during the year ended December, 31, 2020.

The officers and directors receiving grants and

the amounts of such grants were as follows:

Schedule of stock warrants, shares granted

Stock Warrant

4 unchanged sentences

Lyle Berman, Director

Benjamin Oehler, Director

No warrants were granted during the year ended

December 31, 2019.

Benjamin Oehler, former Director

No warrants were exercised, cancelled or expired

1 unchanged sentence

The following is a summary of activity of outstanding

Schedule of warrant activity

Balance, December 31, 2019

Warrants granted

Balance, December 31, 2020

3 unchanged sentences

SOW GOOD INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Note 16 –

Note 17 – Income Taxes

We account for income taxes under the provisions

4 unchanged sentences

for income tax purposes.

Our provision for income taxes for the years ended

December 31, 2020 and 2019 consisted of the following:

Our provision for income taxes for the years

ended December 31, 2021 and 2020 consisted of the following:

Schedule of components of income tax expense

Current taxes

3 unchanged sentences

December 31, 2021 and 2020 consisted of the following:

Schedule of effective income tax rate

Federal statutory income tax rate

2 unchanged sentences

Change in effective state income tax rate

True up prior year tax return

Change in valuation allowance

Net effective income tax rate

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

The components of the deferred tax assets and

liabilities as of December 31, 2021 and 2020 are as follows:

Schedule of deferred tax assets and liabilities

Deferred tax assets:

2 unchanged sentences

Property and equipment

Deferred compensation

Goodwill and intangibles

Reorganization costs

3 unchanged sentences

Unrealized gain on investment in Allied Esports Entertainment, Inc.

( 2,850,375 )

( 2,865,274 )

Total deferred liabilities

( 3,130,112 )

( 2,894,788 )

Net deferred tax assets (liabilities)

valuation allowance

( 6,905,572 )

( 5,489,828 )

Deferred tax assets (liabilities)

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

As of December 31, 2020, the Company

has a net operating loss carryover of approximately $30,592,014.

Under existing Federal law, a portion of the net operating loss may be

utilized to offset taxable income through the year ended December 31, 2037.

A portion of the net operating loss carryover begins

to expire in 2030.

For tax years beginning after December 31, 2017, pursuant to the enactment of the Tax Cuts and Jobs Act (“TCJA”)

net operating losses now carry forward indefinitely but are limited to offsetting 80% of taxable income in a tax year.

Of the total net

operating loss as of December 31, 2020, approximately $4,837,882 of the Company’s NOL is subject to the TCJA net operating loss

As of December 31, 2021, the

Company has a net operating loss carryover of approximately $ 36,000,000 .

Under existing Federal law, a portion of the net operating loss may be utilized to offset taxable income through the year ended December

A portion of the net operating loss carryover begins to expire in 2030.

For tax years beginning after December 31,

2017, pursuant to the enactment of the Tax Cuts and Jobs Act (“TCJA”) net operating losses now carry forward

indefinitely but are limited to offsetting 80% of taxable income in a tax year.

Of the total net operating loss as of December 31,

2021, approximately $ 5,600,000

of the Company’s NOL is subject to the TCJA net operating loss provisions.

ASC Topic 740 provides that a valuation allowance

1 unchanged sentence

will not be realized.

In 2020, BROG decreased its valuation allowance from $6,010,207 to $5,489,828 to adjust for the decrease in net

deferred tax assets primarily due to an unrealized gain recorded for book purposes related to the investment in Allied Esports Entertainment,

In 2021, the Company increased its valuation allowance from $5,489,828 to $6,905,572 to adjust for the increase in net

deferred tax assets primarily due to an increase in the net operating loss

The Company believes it is more likely than not that the benefit of these remaining assets will not be realized.

The Company did

not place a valuation allowance on deferred tax asset for BRAC related to the capitalized merger and acquisition costs.

The Company filed annual US

Federal income tax returns and annual income tax returns for the state of Minnesota through 2020.

Going forward, it will file annual state

income tax returns for the state of Texas.

We are not subject to income tax examinations by tax authorities for years before 2015 for

Income taxing authorities have conducted no formal examinations of our past federal or state income tax returns and supporting

The Company filed annual US Federal income tax returns and annual income

tax returns for the state of Minnesota through 2020.

Going forward, it will file annual state income tax returns for the state of Texas.

We are not subject to income tax examinations by tax authorities for years before 2016 for all returns.

Income taxing authorities have

conducted no formal examinations of our past federal or state income tax returns and supporting records.

The Company adopted the provisions

2 unchanged sentences

or before December 31, 2021.

Note 17 –

The Company is involved in 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.

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.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 18 – 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.

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

2 unchanged sentences

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.

5 unchanged sentences

Minimum Lease

2026 and thereafter

Less effects of discounting

Lease liability recognized

SOW GOOD, INC.

(Formerly Black Ridge Oil & Gas, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

Note 18 –

Note 19 – Subsequent

The Company evaluates events that have occurred

2 unchanged sentences

that would have required adjustments to or disclosure in these financial statements except as follows:

Issuance of Shares in Completion of Acquisition

In connection with

the closing of the Amended Asset Purchase Agreement between the Company and S-FDF, LLC, the Company was obligated to make certain adjustments

to the common stock issued to Seller.

The adjustment was based primarily on the fair value of AESE shares sold subsequent to the Asset

Purchase Agreement.

On December 31, 2020, the final number of shares to be issued to S-FDF, LLC was determined to be 500,973 shares and

a common stock payable was recognized in the amount of $1,853,600 , the fair value of the common stock based on the closing price

of the Company’s common stock on the date of grant.

On January 4, 2021, the 500,973 shares were

issued in settlement of the common stock payable.

Common Stock Issued to Officers on Common Stock

On January 7, 2021,

On March 24, 2022,

the Company issued an aggregate 5,541 and 6,044 shares of common stock to Claudia and Ira Goldfarb , respectively, for services

from October 2020 through December 31, 2020 in satisfaction of the outstanding common stock payable.

Issuance of Shares for Services

On January 27, 2021,

upon Benjamin Oehler’s resignation, the Company a ppointed Chris Ludeman as a member of the Board of Directors of the Company,

and appointed him to the Company’s Audit Committee as Chairperson.

Pursuant to his appointment, Mr.

Ludeman was issued

6,400 shares of common stock for his services to be rendered.

The aggregate fair value of the common stock was $40,000, based on the closing

price of the Company’s common stock on the date of grant.

On January 31, 2021,

the Company issued 5,541 and 6,044 shares to Claudia and Ira Goldfarb , respectively ,

for their services for January 2021.

The aggregate fair value of the shares was $29,035 and $31,671 for Claudia and Ira, respectively,

based on the closing price of the Company’s common stock on the date of grant.

On February 28, 2021,

the Company issued 5,541 and 6,044 shares to Claudia and Ira Goldfarb , respectively ,

for their services for February 2021.

The aggregate fair value of the shares was $38,787 and $42,308 for Claudia and Ira, respectively,

based on the closing price of the Company’s common stock on the date of grant.

Common Stock Sold for Cash

On February 5, 2021, the Company entered into

a Stock Purchase Agreement with multiple accredited investors to sell and issue to the Purchasers an aggregate 631,250 shares of the Company’s

common stock at a price of $4.00 per share for total proceeds of $2,525,000.

A total of 300,000 of these shares, or proceeds of $1,200,000

were purchased by related parties.

Options Granted

On January 4, 2021, Claudia and Ira Goldfarb were

each granted options to purchase 75,000 shares of the Company’s common stock, having an exercise price of $3.70 per share, exercisable

over a ten-year term.

The options will vest in three equal installments beginning of January 4, 2022 and continuing on each of the two

anniversaries thereafter until fully vested.

On January 27, 2021, Chris Ludeman was granted

options to purchase 24,151 shares of the Company’s common stock, having an exercise price of $6.25 per share, exercisable over a

ten-year term.

The options will vest in five equal annual installments.

for December 31, 2021 in satisfaction of the outstanding common stock payable.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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-K

Item 8. Financial Statements and Supplementary Data