What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-13 · 190 added, 112 removed, 142 unchanged (68% of the section changed)

46 unchanged sentences

Overview and Outlook

We continue to sell our products

online via our direct-to-consumer channels, in addition to our growing pipeline of business-to-business customers.

In March of 2021, we

completed the construction of our first freeze drier and, in antiparticipation of the increased production demands for our products and

freeze-drying expertise, we are in the development process of our second and third freeze driers.

During the first quarter of

2022, we expanded our ‘Sustain Us’ brand, which offers a line of granolas, snacks, and soups that are marketed toward outdoor

adventure activities, everyday snacking and meal prep needs, and long-term food storage.

During 2021, we completed build-out of our production

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

launched eleven ready-to-blend smoothies, nine fruit snacks, and six vegetable snacks.

The smoothie lineup offers a mix of both new and

familiar flavors:

We continue to sell our

products online via our direct-to-consumer channels, in addition to our growing pipeline of business-to-business customers.

of 2021, we completed the construction of our first freeze drier and, in anticipation of the increased production demands for our

products and freeze drying expertise, we are in the development process of our second and third freeze driers.

During the second quarter

of 2022, we saw a significant increase in demand for our products from large business-to-business customers.

We expect our growing pipeline

of business-to-business customers to drive sales growth in the coming quarters.

We also continued the expansion of our ‘Sustain

Us’ brand, which offers a line of granolas, snacks, and soups that are marketed toward outdoor adventure activities, everyday snacking

and meal prep needs, and long-term food storage.

During 2021, we completed

the build-out of our production facility and launched our direct-to-consumer freeze dried consumer packaged goods (CPG) food brand, under

our Sow Good brand.

Sow Good launched eleven ready-to-blend smoothies, nine fruit snacks, and six vegetable snacks.

The smoothie lineup

offers a mix of both new and familiar flavors:

Açaí of Relief (açaí, blueberry);

Mint to Be (banana, coconut, mint);

and Berry Apeeling

(banana, strawberry).

Sow Good’s packaged snack lineup includes fruits and vegetables such as Mon Cherry (cherries) and What’s

the Dill (sweet potato chips with dill).

We also launched four new gluten-free granola products under the Sow Good brand.

granola products are made with health-conscious ingredients such as freeze dried fruits, almonds, and hemp hearts.

Our unique food products

are targeting the large, and growing, freeze dried food market.

Mint to Be (banana, coconut,

and Berry Apeeling (banana, strawberry).

Sow Good’s packaged snack lineup includes fruits and vegetables such as Mon Cherry

(cherries) and What’s the Dill (sweet potato chips with dill).

We also launched four 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 fruits, almonds, and

Our unique food products are targeting the large, and growing, freeze dried food market.

With the extensive freeze

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Going Concern Uncertainty

As of March 31, 2022, the

Company had incurred recurring losses from operations resulting in an accumulated deficit of $45,104,556, and had cash on hand of $1,814,988.

As of June 30, 2022,

the Company had incurred recurring losses from operations resulting in an accumulated deficit of $47,217,345, and had cash on hand of

We are too early in our development stage to project revenue with a necessary level of certainty;

therefore, we may not have sufficient

funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund our operations.

These factors

raise substantial doubt about the Company’s ability to continue as a going concern.

The Company has commenced sales and continues

to develop its operations.

In the event sales do not materialize at the expected rates, management would seek additional financing or

would attempt to conserve cash by further reducing expenses.

There can be no assurance that we will be successful in achieving these

therefore, we may not have

sufficient funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund our operations.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company has commenced sales

and continues to develop its operations.

In the event sales do not materialize at the expected rates, management would seek additional

financing or would attempt to conserve cash by further reducing expenses.

There can be no assurance that we will be successful in achieving

these objectives.

The Company has incurred recurring

15 unchanged sentences

Results of Operations for the Three Months

Ended March 31, 2022 and 2021

Ended June 30, 2022 and 2021

The following table summarizes

selected items from the statement of operations for the three months ended March 31, 2022 and 2021, respectively.

selected items from the statement of operations for the three months ended June 30, 2022 and 2021, respectively.

Three Months Ended

11 unchanged sentences

Interest expense

Gain on early extinguishment of debt

Gain on investment in Allied Esports Entertainment, Inc.

Loss on investment in Allied Esports Entertainment, Inc.

Total other income (expense)

Revenues consist primarily

of online freeze-dried foods product sales.

The revenues were $48,372 for the three months ended March 31, 2022, as we continued

to launch our product lines.

The Company did not earn any revenues during the comparative three months ended March 31, 2021.

We anticipate

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

$ (2,112,789 )

$ (1,557,794 )

Revenues consist

primarily of online freeze dried foods product sales.

The revenues were $244,943 for the three months ended June 30, 2022,

compared to $7,076 for the three months ended June 30, 2021, an increase of $237,867, or 3,362%.

Revenues increased as we

continued to launch our product lines and significantly increased our business-to-business sales during the second quarter of 2022.

We had minimal revenues during the comparative period, as we had just commenced sales.

Cost of Goods Sold

Cost of goods sold for the

three months ended March 31, 2022 were $47,491, primarily consisting of material costs and labor on the sales of freeze-dried food products,

resulting in a gross profit of approximately 2% during the quarter.

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

three months ended March 31, 2021.

Cost of goods sold for

the three months ended June 30, 2022 were $150,603, compared to $4,899 for the three months ended June 30, 2021, an

increase of $145,704, or 2,974%.

Cost of goods sold, primarily consisting of material costs and labor on the sales of freeze dried

food products, resulted in a gross profit margin of approximately 39% during the quarter, compared to 31% during the comparative

General and administrative expenses

1 unchanged sentence

Salaries and benefits for

the three months ended March 31, 2022 were $916,155, compared to $757,144 for the three months ended March 31, 2021, an increase

of $159,011, or 21%, Salaries and benefits included stock-based compensation expense for the three months ended March 31, 2022 of $144,261,

compared to $375,891 for the three months ended March 31, 2021, a decrease of $231,630, or 62%.

Stock-based compensation consists

of $134,261 and $121,221 of stock options expense incurred in the three months ended March 31, 2022 and 2021, respectively, and $10,000

and $254,670 of expense related to shares of common stock issued to officers and consultants for services rendered in the three months

ended March 31, 2022 and 2021, respectively.

The increase in salaries and benefits was primarily due to increased operations as we developed

our freeze-dried food operations, as partially offset by a reduction in stock-based compensation, as management accepted stock-based compensation

in lieu of cash in the comparative period.

the three months ended June 30, 2022 were $1,242,900, compared to $916,957 for the three months ended June 30, 2021, an increase

of $325,943, or 36%.

Salaries and benefits included stock-based compensation expense for the three months ended June 30, 2022 of

$431,370, compared to $333,324 for the three months ended June 30, 2021, an increase of $98,046, or 29%.

Stock-based compensation

consists of $386,372 and $140,244 of stock options expense incurred in the three months ended June 30, 2022 and 2021, respectively,

and $44,998 and $193,080 of expense related to shares of common stock issued to officers and consultants for services rendered in the

three months ended June 30, 2022 and 2021, respectively.

The increase in salaries and benefits was primarily due to increased operations

as we developed our freeze dried food operations.

Professional services

5 unchanged sentences

Other general and administrative

expenses for the three months ended March 31, 2022 was $405,076, compared to $286,821 for the three months ended March 31, 2021,

expenses for the three months ended June 30, 2022 was $487,789, compared to $424,263 for the three months ended June 30, 2021,

an increase of $63,526, or 15%.

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

The increase is primarily attributable to increased administrative infrastructure as we continue to scale

the production and sales of our freeze dried products.

Depreciation expense for

the three months ended March 31, 2022 was $65,226, compared to $4,996 for the three months ended March 31, 2021, an increase

of $60,230, or 1,206%.

Depreciation expense for the

three months ended June 30, 2022 was $67,693, compared to $60,056 for the three months ended June 30, 2021, an increase of $7,637,

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

1 unchanged sentence

In the three months ended

March 31, 2022, other expense was $103,793, consisting of $44,069 of interest expense on our EIDL loan with the SBA and loans from our

officers and directors, and $59,724 related to the amortization of warrants issued as a debt discount on the loans from our officers and

During the comparative three months ended March 31, 2021, other income, on a net basis, was $342,983, consisting of a

$113,772 gain on early extinguishment of debt and a net gain on investments in Allied Esports Entertainment, Inc.

securities of $230,723,

as offset by $1,512 of interest expense derived from the operating loans the Company received from the PPP and EIDL programs.

June 30, 2022, other expense was $355,452 consisting entirely of interest expense on our EIDL loan with the SBA and loans from our

officers and directors, including $262,074 related to the amortization of warrants issued as a debt discount on loans.

During the comparative

three months ended June 30, 2021, other expense was $98,001, consisting of $1,222 of interest expense derived from the operating

loans the Company received from the PPP and EIDL programs and a $96,779 net loss on investments in Allied Esports Entertainment, Inc.

Net loss for the three months

ended March 31, 2022 was $1,552,062, compared to $807,877 during the three months ended March 31, 2021, an increased net loss of

$744,185, or 92%.

ended June 30, 2022 was $2,112,789, compared to $1,557,794 during the three months ended June 30, 2021, an increased net loss

of $554,995, or 36%.

The increased net loss was due primarily to $297,544 of increased operating losses over the prior year, as we ramped

up our operations, and prior years gains of $113,772 and $230,723 on the forgiveness of our PPP loan and gains on the sale of our investments

in Allied Esports Entertainment, Inc.

up our operations, increased interest expense of $354,230, including $262,074 of amortization on warrants issued as a debt discount, as

partially offset by a $96,779 loss on the sale of our investments in Allied Esports Entertainment, Inc.

securities in the comparative

period that were not incurred in the current period.

Results of Operations for the Six Months Ended

June 30, 2022 and 2021

The following table summarizes

selected items from the statement of operations for the six months ended June 30, 2022 and 2021, respectively.

Six Months Ended

Cost of goods sold

Operating expenses:

General and administrative expenses:

Salaries and benefits

Professional services

Other general and administrative expenses

Total general and administrative expenses

Depreciation and amortization

Total operating expenses

Net operating loss

Other income (expense)

Interest expense

Gain on early extinguishment of debt

Gain on investment in Allied Esports Entertainment, Inc.

Total other income (expense)

$ (3,664,851 )

$ (2,365,671 )

Revenues consist

primarily of online freeze dried foods product sales.

The revenues were $293,315 for the six months ended June 30, 2022,

compared to $7,076 for the six months ended June 30, 2021, an increase of $286,239, or 4,045%.

Revenues increased as we

continued to launch our product lines and significantly increased our business-to-business sales during the second quarter of 2022.

We had minimal revenues during the comparative period, as we had just commenced sales.

Cost of Goods Sold

Cost of goods sold for

the six months ended June 30, 2022 were $198,094, compared to $4,899 for the six months ended June 30, 2021, an increase

of $193,195, or 3,944%.

Cost of goods sold, primarily consisting of material costs and labor on the sales of freeze dried food

products, resulting in a gross profit margin of approximately 32% during the current period, compared to 31% during the comparative

General and administrative expenses

Salaries and benefits

Salaries and benefits for

the six months ended June 30, 2022 were $2,159,055, compared to $1,674,101 for the six months ended June 30, 2021, an increase

of $484,954, or 29%, Salaries and benefits included stock-based compensation expense for the six months ended June 30, 2022 of $575,631,

compared to $709,215 for the six months ended June 30, 2021, a decrease of $133,584, or 19%.

Stock-based compensation consists of

$520,633 and $261,465 of stock options expense incurred in the six months ended June 30, 2022 and 2021, respectively, and $54,998

and $447,750 of expense related to shares of common stock issued to officers and consultants for services rendered in the six months ended

June 30, 2022 and 2021, respectively.

The increase in salaries and benefits was primarily due to increased operations as we developed

our freeze dried food operations.

Professional services

Professional services were

$115,988 for the 2022 period, compared to $162,593 for the 2021 period, a decrease of $46,605, or 29%.

The decrease was primarily due

to legal fees incurred in connection with creating our brand in the comparative period that were not necessary in the current period.

Other general and administrative expenses

Other general and administrative

expenses for the six months ended June 30, 2022 was $892,865, compared to $711,084 for the six months ended June 30, 2021, an

increase of $181,781, or 26%.

The increase is primarily attributable to increased administrative infrastructure as we continued to scale

the production and sales of our freeze dried products.

Depreciation expense for the

six months ended June 30, 2022 was $132,919, compared to $65,052 for the six months ended June 30, 2021, an increase of $67,867,

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

Other income (expense)

In the six months ended June 30,

2022, other expense was $459,245, consisting entirely of interest expense on our EIDL loan with the SBA and loans from our officers and

directors, including $321,798 related to the amortization of warrants issued as a debt discount on loans.

During the comparative six months

ended June 30, 2021, other income, on a net basis, was $244,982, consisting of a $113,772 gain on early extinguishment of debt and

a net gain on investments in Allied Esports Entertainment, Inc.

securities of $133,944, as offset by $2,734 of interest expense derived

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

Net loss for the six months

ended June 30, 2022 was $3,664,851, compared to $2,365,671 during the six months ended June 30, 2021, an increased net loss

of $1,299,180, or 55%.

The increased net loss was due primarily to $594,953 of increased operating losses over the prior year, as we ramped

up our operations, increased interest expense of $456,511, including $321,798 of amortization on warrants issued as a debt discount, and

prior years gains of $113,772 and $133,944 on the forgiveness of our PPP loan and gains on the sale of our investments in Allied Esports

Entertainment, Inc.

securities in the comparative period.

1 unchanged sentence

The following table summarizes

our total current assets, liabilities and working capital at March 31, 2022 and December 31, 2021, respectively.

our total current assets, liabilities and working capital at June 30, 2022 and December 31, 2021, respectively.

Current Assets

1 unchanged sentence

Working Capital

As of March 31, 2022, we

had working capital of $3,168,852.

As of June 30, 2022,

we had working capital of $3,548,603.

The following table summarizes

our cash flows during the three months ended March 31, 2022 and 2021, respectively.

Three Months Ended

our cash flows during the six months ended June 30, 2022 and 2021, respectively.

Six Months Ended

Net cash used in operating activities

4 unchanged sentences

Net change in cash and cash equivalents

$ (1,530,940 )

Net cash used in operating

activities was $1,482,598 and $1,194,871 for the three months ended March 31, 2022 and 2021, respectively, a period over period increase

The increase was primarily due to our increased net loss.

Net cash used in investing

activities were $48,342 and $696,745 for the three months ended March 31, 2022 and 2021, respectively, a period over period decrease

Cash used in investing activities were comprised of $44,726 of fixed asset purchases, as we built out our freeze-dried foods

warehouse and equipment, and $3,616 of purchases on trademarks during the three months ended March 31, 2022, compared to $38,208 of fixed

asset purchases, along with $658,537 of construction in progress costs incurred during the three months ended March 31, 2021.

There were no financing activities

during the three months ended March 31, 2022.

Net cash provided by financing activities was $2,525,000 for the three months ended

March 31, 2021.

All of the 2021 activity was the result of the $2,525,000 we raised from the sale

of an aggregate 631,250 shares of the Company’s common stock at $4.00 per share, and another $3,037,511 raised from the sale of

an aggregate 714,701 shares sold at $4.25 per share .

activities was $2,274,361 and $2,764,841 for the six months ended June 30, 2022 and 2021, respectively, a period over period

decrease of $490,480.

The decrease was primarily due to our increased revenues that began to diminish our operating expenditures.

Net cash used in

investing activities were $2,015,033 and $390,643 for the six months ended June 30, 2022 and 2021, respectively, a period

over period increase of $1,624,390.

Cash used in investing activities were comprised of $124,384 of fixed asset purchases and

$1,884,720 of construction in progress, as we built out our 2 nd and 3 rd freeze dried freezers and leasehold

improvements on our office space, and $5,929 of purchases on trademarks during the six months ended June 30, 2022, compared to

$805,004 of fixed asset purchases, as partially offset with $414,361 of proceeds received from the sale of securities during the six

months ended June 30, 2021.

Net cash provided by financing

activities were $3,700,000 and $4,997,136 for the six months ended June 30, 2022 and 2021, respectively, a period over period

decrease of $1,297,136.

The $3,700,000 of financing received in 2022 was comprised of debt financing, and the 2021 financing proceeds

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

Company’s common stock at $4.00 per share, and another 581,675 shares sold at $4.25 per share .

Satisfaction of our cash obligations for

the next 12 months

As of March 31, 2022, our

balance of cash was $1,814,988 and we had total working capital of $3,168,852.

B ased on projections

of cash expenditures in the Company’s current business plan, the cash on hand as of March 31, 2022 would be insufficient to

sustain operations over the next year.

We expect to incur significant costs related to the development and operation of our freeze-dried

foods business which will put a strain on our cash resources.

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

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

Adding a third freeze drier would require

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

O ur plan for satisfying our cash requirements for the next twelve months is through cash on hand

and additional financing in the form of equity or debt as needed.

On April 8, 2022, we raised $3.7 million from the sale of Promissory

Notes and Warrants, including $3,120,000 received from related parties, resulting in approximately $4.4 million of cash on hand as

of May 1, 2022.

Our ability to scale production and distribution capabilities and further increase the value of our brands is largely

dependent on our success in raising additional capital .

As of June 30,

2022, our balance of cash was $2,756,534 and we had total working capital of $3,548,603.

on projections of cash expenditures in the Company’s current business plan, the cash on hand as of June 30, 2022 would be

insufficient to sustain operations over the next year.

We expect to incur significant costs related to the development and operation

of our freeze dried foods business which will put a strain on our cash resources.

We are currently in the process of expanding our

production capabilities through the construction of a third freeze drier, which will require approximately $1 million of

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

plan for satisfying our cash requirements for the next twelve months is through cash on hand and additional financing in the form of

equity or debt as needed.

Our ability to scale production and distribution capabilities and further increase the value of our brands

is largely dependent on our success in raising additional capital .

Off-Balance Sheet Arrangements

22 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis