What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-14 compared with 2022-08-15 · 373 added, 357 removed, 694 unchanged (51% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

September 30,

Current assets:

18 unchanged sentences

Operating lease liabilities

Notes payable, related parties, net of $ 2,660,748 and $ 699,213 of debt discounts at June 30, 2022 and December 31, 2021, respectively

Notes payable, net of $ 410,681 of debt discounts at June 30, 2022

Notes payable, related parties, net of $ 2,777,036 and $ 699,213 of debt discounts at September 30, 2022 and December 31, 2021, respectively

Notes payable, net of $ 373,383 of debt discounts at September 30, 2022

Total liabilities

1 unchanged sentence

Stockholders' equity:

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

Common stock, $ 0.001 par value, 500,000,000 shares authorized, 4,840,974 and 4,809,070 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

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, 4,847,384 and

4,809,070 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

5 unchanged sentences

Total liabilities and stockholders' equity

accompanying notes to unaudited condensed financial statements.

See accompanying notes to unaudited condensed financial statements.

SOW GOOD INC.

CONDENSED STATEMENTS

OF OPERATIONS

CONDENSED STATEMENTS OF OPERATIONS

For the Three Months

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Cost of goods sold

13 unchanged sentences

Other income (expense):

Interest expense, including $ 262,074 and $ 321,798 of warrants issued as a debt discount for the three and six months ending June 30, 2022, respectively

Interest expense, including $ 285,522 and $ 607,320 of warrants issued as a debt discount for the three

and nine months ending September 30, 2022, respectively

Gain on disposal of property and equipment

Gain on early extinguishment of debt

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

Gain on investment in Allied Esports Entertainment, Inc.

Total other income (expense)

3 unchanged sentences

$ ( 3,947,828 )

Weighted average common shares outstanding - basic

Net loss per common share - basic

Weighted average common shares outstanding - fully diluted

Net loss per common share - fully diluted

Weighted average common shares outstanding - basic and diluted

Net loss per common share - basic and diluted

See accompanying notes to unaudited condensed financial statements.

SOW GOOD INC.

STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

the Three Months Ended June 30, 2021

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the Three Months Ended

September 30, 2021

Stockholders'

Balance, March 31, 2021

Balance, June 30, 2021

$ ( 39,044,009 )

Common stock sales for cash

to officers and directors

Common stock sales for cash to officers and directors

( 1,474,996 )

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

Net loss for the three months

ended June 30, 2021

Common stock issued to officers and directors for services

Common stock options granted to officers and directors for services

Common stock options granted to employees for services

Net loss for the three months ended September 30, 2021

( 1,582,157 )

June 30, 2021

Balance, September 30, 2021

$ ( 40,626,166 )

For the Three Months Ended

June 30, 2022

For the Three Months Ended September 30, 2022

Stockholders'

Balance, March 31, 2022

Balance, June 30, 2022

$ ( 47,217,345 )

Common stock warrants granted to related parties pursuant to debt financing

Common stock warrants granted to note holders pursuant to debt financing

Common stock issued to officers and directors for services

Common stock issued to advisory board for services

Common stock options granted to officers and directors for services

Common stock options granted to employees and advisors for services

Net loss for the three months ended June 30, 2022

Net loss for the three months ended September 30, 2022

( 1,647,272 )

Balance, June 30, 2022

Balance, September 30, 2022

$ ( 48,864,617 )

SOW GOOD INC.

STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

Stockholders'

1 unchanged sentence

$ ( 36,678,338 )

Common stock issued on subscriptions

payable for the purchase of S-FDF, LLC assets

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

( 1,853,600 )

Common stock sales for cash

to officers and directors

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

Net loss for the six months

ended June 30, 2021

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

Net loss for the nine months ended September 30, 2021

( 3,947,828 )

June 30, 2021

Balance, September 30, 2021

$ ( 40,626,166 )

the Six Months Ended June 30, 2022

For the Nine Months Ended September 30, 2022

Stockholders'

1 unchanged sentence

$ ( 43,552,494 )

Common stock warrants granted

to related parties pursuant to debt financing

Common stock warrants granted

to note holders pursuant to debt financing

Common stock issued to officers

and directors for services

Common stock issued to advisory

board for services

Common stock options granted

to officers and directors for services

Common stock options granted

to employees and advisors for services

Net loss for the six months

ended June 30, 2022

Common stock warrants granted to related parties pursuant to debt financing

Common stock warrants granted to note holders pursuant to debt financing

Common stock issued to officers and directors for services

Common stock issued to advisory board for services

Common stock options granted to officers and directors for services

Common stock options granted to employees and advisors for services

Net loss for the nine months ended September 30, 2022

( 5,312,123 )

June 30, 2022

Balance, September 30, 2022

$ ( 48,864,617 )

See accompanying

notes to unaudited condensed financial statements.

accompanying notes to unaudited condensed financial statements.

SOW GOOD INC.

CONDENSED STATEMENTS

OF CASH FLOWS

For the Six Months

Ended June 30,

CONDENSED STATEMENTS OF CASH FLOWS

For the Nine Months

Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

3 unchanged sentences

Depreciation and amortization

Gain on disposal of property and equipment

Gain on investment in Allied Esports Entertainment, Inc.

7 unchanged sentences

Prepaid expenses

( 1,021,099 )

Security deposits

8 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds received from disposal of property and equipment

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

Purchase of property and equipment

( 1,004,611 )

Cash paid for construction in progress

9 unchanged sentences

NET CHANGE IN CASH AND CASH EQUIVALENTS

( 1,971,112 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

5 unchanged sentences

Value of debt discounts attributable to warrants

See accompanying notes to unaudited condensed financial statements.

See accompanying notes to

unaudited condensed financial statements.

SOW GOOD INC.

2 unchanged sentences

Note 1 – Organization and Nature of Business

Effective January 21, 2021, we changed our

name from Black Ridge Oil & Gas, Inc.

Effective January 21, 2021, we changed our name

from Black Ridge Oil & Gas, Inc.

to Sow Good Inc.

(“SOWG,” “Sow Good,” or the

“Company”) to pursue the freeze dried fruits and vegetables business as acquired with our October 1, 2020 acquisition of

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

that time, our common stock started to be quoted on the OTCQB under the trading symbol “SOWG”, from the former

trading symbol “ANFC”.

Prior to April 2, 2012, the Company name was Ante5, Inc., which became an independent company in

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

14 unchanged sentences

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 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,

1 unchanged sentence

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.

launched with its first line of non-GMO products including 6 ready-to-make smoothies and 9 snacks.

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

4 unchanged sentences

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

SOW GOOD INC.

Notes to Condensed

Financial Statements

On July 23, 2021, we

2 unchanged sentences

ingredients such as freeze dried fruit, almonds, hemp hearts, and coconut oil.

SOW GOOD INC.

Notes to Condensed

Financial Statements

On December 31, 2021,

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.

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.

April 8, 2022, we sold an aggregate $ 3,700,000 of promissory notes and warrants to purchase an aggregate 925,000 shares of common

3 unchanged sentences

investment and to ramp up our freeze dried consumer packaged goods business.

On August 23, 2022, we

closed on an offering to sell up to $ 2,500,000 of promissory notes and warrants to purchase an aggregate 625,000 shares of the Company’s

common stock, exercisable over a ten-year period at a price of $ 2.60 per share, representing 25,000 warrant shares per $ 100,000 of Notes

The notes mature on August 23, 2025 .

Interest on the notes accrue at a rate of 8 % per annum, payable on January 1, 2025.

Loans may be advanced to the Company from time to time from August 23, 2023 to the Maturity Date.

On September 29, 2022, the Company

received aggregate proceeds of $ 750,000 from two of the Company’s Directors on the sale of these notes and warrants.

Note 2 – Basis of Presentation and Significant

39 unchanged sentences

and the Securities Investor Protection Corporation (SIPC) up to $250,000 and $500,000, respectively, under current regulations.

had $ 2,259,715 of cash in excess of FIDC and SIPC insured limits at June 30, 2022, and has not experienced any losses in such accounts.

had $ 832,600 of cash in excess of FIDC and SIPC insured limits at September 30, 2022, and has not experienced any losses in such

Property and Equipment

16 unchanged sentences

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

Depreciation was $ 148,655 and $ 65,052 for the

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

For the six months ended June 30, 2022, $ 15,736 of the depreciation expense

was allocated to inventory overhead, resulting in $ 132,919 of depreciation expense.

Depreciation was $ 223,887 and $ 129,915 for

the nine months ended September 30, 2022 and 2021, respectively.

For the nine months ended September 30, 2022, $ 21,841 of the

depreciation expense was allocated to inventory overhead, resulting in $ 202,046 of depreciation expense.

of Long-Lived Assets

19 unchanged sentences

Schedule of inventory

September 30,

Finished goods

19 unchanged sentences

Revenue Recognition

The Company recognizes revenue in accordance

with ASC 606 — Revenue from Contracts with Customers (“ASC” 606”).

Under ASC 606, the Company

recognizes revenue from the sale of its freeze dried food products, in accordance with a

five-step model in which the Company evaluates the transfer of promised goods or services and recognizes revenue when customers

obtain control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled

to receive in exchange for those goods or services.

To determine revenue recognition for the arrangements that the Company

determines are within the scope of ASC 606, the Company performs the following five steps:

(1) identify the contract(s) with a

customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the

transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a

performance obligation.

The Company has elected, as a practical expedient, to account for the shipping and handling as fulfillment

costs, rather than as a separate performance obligation.

Revenue is reported net of applicable provisions for discounts, returns and

Methodologies for determining these provisions are dependent on customer pricing and promotional practices.

records reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is

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.

SOW GOOD INC.

Notes to Condensed

Financial Statements

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

performs the following five steps:

(1) identify the contract(s) with a customer, (2) identify the performance obligations in

the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the

contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company has elected, as a practical

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

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.

Basic and Diluted Earnings (Loss) Per Share

4 unchanged sentences

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

SOW GOOD INC.

Notes to Condensed

Financial Statements

Stock-Based Compensation

8 unchanged sentences

by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance.

compensation was $ 575,631 and $ 709,215 , consisting entirely of expenses related to common stock and options issued for services for the

six months ended June 30, 2022 and 2021, respectively, 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

compensation was $ 731,499 and $ 1,015,233 , consisting entirely of expenses related to common stock and options issued for services for

the nine months ended September 30, 2022 and 2021, respectively, 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.

In addition, $ 321,798 of expenses related to the amortization of warrants issued in

consideration of debt financing for the six months ended June 30, 2022.

In addition, $ 607,320 of expenses related to the amortization of warrants issued

in consideration of debt financing for the nine months ended September 30, 2022.

The Company recognizes deferred tax assets and

24 unchanged sentences

adoption of ASU 2021-08 is not expected to have a material impact on the Company’s financial statements or related disclosures.

SOW GOOD INC.

Notes to Condensed

Financial Statements

In May 2021, the FASB issued ASU No.

7 unchanged sentences

of ASU 2021-04 has not had a material impact on the Company’s financial statements or related disclosures.

SOW GOOD INC.

Notes to Condensed

Financial Statements

March 2020, the FASB issued ASU 2020-04 establishing Topic 848, Reference Rate Reform .

8 unchanged sentences

August 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) :

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 has not had

a material impact on the Company’s financial statements or related disclosures.

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 has not had a material impact on the Company’s financial statements or

related disclosures.

No other new accounting pronouncements, issued

or effective during the period ended June 30, 2022, have had or are expected to have a significant impact on the Company’s

or effective during the period ended September 30, 2022, have had or are expected to have a significant impact on the Company’s

financial statements.

1 unchanged sentence

As shown in the accompanying financial statements,

as of June 30, 2022, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $ 47,217,345 ,

as of September 30, 2022, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $ 48,864,617 ,

and had cash on hand of $ 1,374,816 .

16 unchanged sentences

additional capital.

Note 4 – Related Party

Debt Financing

On August 23, 2022, we

closed on an offering to sell up to $ 2,500,000 of promissory notes and warrants to purchase an aggregate 625,000 shares of the Company’s

common stock, exercisable over a ten-year period at a price of $ 2.60 per share, representing 25,000 warrant shares per $ 100,000 of Notes

The notes mature on August 23, 2025 .

Interest on the Notes accrue at a rate of 8 % per annum, payable on January 1, 2025.

Loans may be advanced to the Company from time to time from August 23, 2023 to the Maturity Date.

On September 29, 2022, the Company

received aggregate proceeds of $ 750,000 from two of the Company’s Directors on the sale of these notes and warrants.

SOW GOOD INC.

1 unchanged sentence

Financial Statements

Note 4 – Related Party

Debt Financing

8, 2022 , the Company closed a private placement and concurrently entered into a Note and Warrant

3 unchanged sentences

$ 100,000 of promissory notes.

Accrued interest on the Notes is payable semi-annually beginning June 30, 2022 at the rate of 6 %

per annum, and the principal amount of the Notes matures and becomes due and payable on April 8, 2025 .

The Warrants are exercisable immediately

and for a period of 10 years at a price of $ 2.35 per share.

Accrued interest on the Notes was payable semi-annually beginning September 30, 2022 at the rate

of 6 % per annum, but on August 23, 2022, the notes were amended to update the terms of the interest payment to be payable at the

earlier of the maturity date or January 1, 2025, rather than being paid semi-annually.

The principal amount of the Notes mature and become

due and payable on April 8, 2025 .

The Warrants are exercisable immediately and for a period of 10 years at a price of $ 2.35 per share.

Proceeds to the Company from the sale of the Securities were $ 3,700,000 .

Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average

sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business

day prior to the mailing of notice of such redemption.

Assuming full exercise thereof, further proceeds to the Company from the exercise

of the Warrant Shares is calculated as $ 2,173,750 .

The Offering closed simultaneously with execution of the Purchase Agreement.

aggregate $3,700,000 of Notes, a total of $ 3,120,000 of Notes were sold to officers or directors, along with 780,000 of the Warrants.

The Company may redeem outstanding warrants prior to their expiration,

at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00

per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.

Assuming full exercise thereof, further proceeds to the Company from the exercise of the Warrant Shares is calculated as $ 2,173,750 .

Offering closed simultaneously with execution of the Purchase Agreement.

Of the aggregate $3,700,000 of Notes, a total of $ 3,120,000 of

Notes were sold to officers or directors, along with 780,000 of the Warrants.

Common Stock Payable Awarded to Officers

5 unchanged sentences

Appointed Director

On July 22, 2022, the

Company accepted Mr.

Joseph Lahti’s resignation from the Board of Directors and appointed Tim Creed as a member of the Board.

to the Company’s Non-Employee Director Compensation Plan, Mr.

Creed received 6,410 shares of common stock as compensation.

to the Company’s 2020 Stock Incentive Plan (the “2020 Equity Plan”), Mr.

Creed was also granted options to purchase

24,151 shares of the Company’s common stock at an exercise price of $ 3.90 per share.

These options will vest 20 % as of July 22,

2023 and 20% each anniversary thereafter until fully vested.

On April 11, 2022, the

3 unchanged sentences

Mueller received 8,064 shares of common stock as compensation.

Pursuant to the Company’s 2020 Stock

Incentive Plan (the “2020 Equity Plan”), Mr.

Mueller was also granted options to purchase 24,151 shares of the Company’s

common stock at an exercise price of $ 3.10 per share.

These options will vest 20 % as of April 11, 2023 and 20% each anniversary thereafter

until fully vested.

Pursuant to the Company’s 2020 2020

Equity Plan, Mr.

Mueller was also granted options to purchase 24,151 shares of the Company’s common stock at an exercise price of

$ 3.10 per share.

These options will vest 20 % as of April 11, 2023 and 20% each anniversary thereafter until fully vested.

Lease Agreement

12 unchanged sentences

2022 , the vesting terms of the options were accelerated to be fully vested.

SOW GOOD INC.

Notes to Condensed

Financial Statements

Departure of CFO

8 unchanged sentences

of the separation.

SOW GOOD INC.

Notes to Condensed

Financial Statements

Note 5 – Fair Value of Financial Instruments

19 unchanged sentences

reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

SOW GOOD INC.

Notes to Condensed

Financial Statements

The following schedule summarizes the valuation

of financial instruments at fair value on a recurring basis in the balance sheets as of June 30, 2022 and December 31, 2021:

of financial instruments at fair value on a recurring basis in the balance sheets as of September 30, 2022 and December 31, 2021:

Valuation of financial instruments at fair value

Fair Value Measurements at June 30, 2022

Fair Value Measurements at September 30, 2022

Cash and cash equivalents

11 unchanged sentences

There were no transfers of financial assets or

liabilities between Level 1 and Level 2 inputs for the six months ended June 30, 2022.

liabilities between Level 1 and Level 2 inputs for the nine months ended September 30, 2022.

SOW GOOD INC.

4 unchanged sentences

Schedule of prepaid expenses

September 30,

Prepaid software licenses

4 unchanged sentences

Note 7 – Property and Equipment

Property and equipment at June 30, 2022 and December 31, 2021,

Property and equipment at September 30, 2022 and December 31,

2021, consists of the following:

Property and equipment

September 30,

Office equipment

7 unchanged sentences

as Machinery and Leasehold Improvements, respectively, upon completion.

On July 1, 2022, the Company disposed of certain

leasehold improvements that were damaged.

The Company received proceeds on the disposal of $ 62,308 pursuant to a settlement with the manufacturer,

resulting in a gain on the disposal of property and equipment of $ 36,392 , which represented the proceeds received, less the net book value

at the time of disposal.

The Company recognized depreciation of $ 223,887

and $ 65,052 for the six months ended June 30, 2022 and 2021, respectively.

For the six months ended June 30, 2022, $ 15,736

and $ 129,915 for the nine months ended September 30, 2022 and 2021, respectively.

For the nine months ended September 30,

2022, $ 21,841 of the depreciation expense was allocated to inventory overhead, resulting in $ 202,416 of depreciation expense.

5 unchanged sentences

Schedule of Intangible assets

September 30,

Branding, Sow Good

16 unchanged sentences

Schedule of components of lease expense

September 30,

Operating lease cost:

5 unchanged sentences

Schedule of supplemental balance sheet information

September 30,

Operating leases:

9 unchanged sentences

Schedule of supplemental cash flow and other information

September 30,

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

1 unchanged sentence

The future minimum lease payments due under operating leases as of

June 30, 2022 was as follows:

September 30, 2022 was as follows:

Schedule of future minimum lease payments

1 unchanged sentence

Minimum Lease

2022 (for the six months remaining)

2022 (for the three months remaining)

2026 and thereafter

6 unchanged sentences

Notes payable, related parties consists of the

following at June 30, 2022 and December 31, 2021, respectively:

following at September 30, 2022 and December 31, 2021, respectively:

Schedule of Notes payable, related parties

2022, the Company received $ 2,000,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s

Chairman, Mr.

September 30,

On September 29, 2022, the Company received $ 500,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr.

Goldfarb, as lender.

The unsecured note bears interest at 6% 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 500,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.

On April 8, 2022, the Company

received $ 100,000 pursuant to a note and warrant purchase agreement with the Company’s Chairman and CEO, Mr.

The unsecured note bears interest at 6% 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 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.

On April 8, 2022, the Company

received $ 100,000 pursuant to a note and warrant purchase agreement with IG Union Bower LLC, an entity owned by Ira Goldfarb, the

Company’s Chairman, as lender.

The unsecured note bears interest at 6% per annum, compounded semi-annually, and 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 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.

On April 8, 2022, the Company

received $ 920,000 pursuant to a note and warrant purchase agreement from the Lyle A.

Berman Revocable Trust, as beneficially controlled

by one of the Company’s Directors, as lender.

The unsecured note bears interest at 6% per annum, compounded semi-annually,

and shall be payable in cash semi-annually on June 30 th and December 31 st .

The note matures on December 31,

The noteholders also received warrants to purchase 230,000 shares of common stock, exercisable at $2.35 per share over a ten-year

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.

The unsecured note matures on August 23, 2025 .

The note bears interest at 8% per annum, payable on January 1, 2025.

The noteholder also received warrants to purchase 125,000 shares of common stock, exercisable at $2.60 per share over a ten-year term.

On September 29, 2022, the Company received $ 250,000 pursuant to a note and warrant purchase agreement from the Lyle A.

Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender.

The unsecured note matures on August 23, 2025 .

The note bears interest at 8% per annum, payable on January 1, 2025.

The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.

On April 8, 2022, the Company received $ 2,000,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr.

Goldfarb, as lender.

The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30 th and December 31 st .

On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually.

The note matures on April 8, 2025 .

The noteholder also received warrants to purchase 500,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.

On April 8, 2022, the Company received $ 100,000 pursuant to a note and warrant purchase agreement with the Company’s Chairman and CEO, Mr.

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 unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30 th and December 31 st .

On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually.

The note matures on April 8, 2025 .

The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.

On April 8, 2022, the Company received $ 100,000 pursuant to a note and warrant purchase agreement with IG Union Bower LLC, an entity owned by Ira Goldfarb, the Company’s Chairman, as lender.

The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30 th and December 31 st .

On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually.

The note matures on April 8, 2025 .

The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.

On April 8, 2022, the Company received $ 920,000 pursuant to a note and warrant purchase agreement from the Lyle A.

Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender.

The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30 th and December 31 st .

On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually.

The note matures on April 8, 2025 .

The noteholder also received warrants to purchase 230,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.

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 noteholder 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

On December 31, 2021, the

Company received $ 25,000 pursuant to a note and warrant purchase agreement from the Company’s then CFO, Bradley K.

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 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 then 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.

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 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

unamortized debt discounts:

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, related parties

current maturities

payable, related parties, less current maturities

Notes payable, related parties, less current maturities

The Company recorded total discounts of $ 3,313,409 ,

consisting of $ 2,249,684 and $ 699,213 of debt discounts on warrants granted to the related parties on April 8, 2022 and on various dates

in December 2021, respectively.

The discounts are being amortized to interest expense over the term of the notes, until repayment,

using the straight-line method, which closely approximates the effective interest method.

consisting of $ 364,512 , $ 2,249,684 and $ 699,213 of debt discounts on warrants granted to the related parties on September 29, 2022, April

8, 2022 and on various dates in December, 2021, respectively.

The discounts are being amortized to interest expense over the term of the

notes, until repayment, using the straight-line method, which closely approximates the effective interest method.

The Company recognized $ 752,257 of interest expense

for the six months ended June 30, 2022.

for the nine months ended September 30, 2022.

Interest expense consisted of $ 215,884 of stated interest expense and $ 536,373 of amortized

debt discounts related to stock-based warrants.

There was no interest expense during the six months ended June 30, 2021.

SOW GOOD INC.

Notes to Condensed

Financial Statements

There was no interest expense during the nine months ended September 30, 2021.

Note 11 – Notes Payable

Notes payable consists of the following at June 30,

Notes payable consists of the following at September 30,

2022 and December 31, 2021, respectively:

Schedule of notes payable

September 30,

On April 8, 2022, the Company received $ 80,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender.

The unsecured note bears interest at 6% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30 th and December 31 st .

The note matures on December 31, 2024 .

The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30 th and December 31 st .

On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually.

The note matures on April 8, 2025 .

The noteholders also received warrants to purchase 20,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.

On April 8, 2022, the Company received $ 500,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender.

The unsecured note bears interest at 6% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30 th and December 31 st .

The note matures on December 31, 2024 .

The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30 th and December 31 st .

On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually.

The note matures on April 8, 2025 .

The noteholders also received warrants to purchase 125,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.

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%

In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated June 16, 2020,

between the SBA and the Company (the “EIDL Security Agreement”) pursuant to which the EIDL Loan is secured by a security

interest on all of the Company’s assets.

Under the EIDL Note, the Company is required to pay principal and interest payments

of $731 every month beginning June 16, 2022, as extended.

On June 16, 2020, the Company entered into a loan authorization and loan agreement with the United States Small Business Administration (the “SBA”), as lender, pursuant to the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business (the “EIDL Loan Agreement”) encompassing a $ 150,000 Promissory Note issued to the SBA (the “EIDL Note”)(together with the EIDL Loan Agreement, the “EIDL Loan”), bearing interest at 3.75% per annum.

In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated June 16, 2020, between the SBA and the Company (the “EIDL Security Agreement”) pursuant to which the EIDL Loan is secured by a security interest on all of the Company’s assets.

Under the EIDL Note, the Company is required to pay principal and interest payments of $731 every month beginning June 16, 2022, as extended.

All remaining principal and accrued interest is due and payable on June 16, 2050 .

10 unchanged sentences

The Company recognized $ 90,983 and $ 4,431 of interest

expense for the six months ended June 30, 2022 and 2021, respectively.

expense for the nine months ended September 30, 2022 and 2021, respectively.

Interest expense consisted of $ 20,036 of stated interest,

and $ 33,649 of amortized debt discounts related to stock-based warrants for the six months ended June 30, 2022.

and $ 70,947 of amortized debt discounts related to stock-based warrants for the nine months ended September 30, 2022.

Interest expense

of $ 2,734 consisted entirely of the stated interest on the EIDL Loan during the six months ended June 30, 2021.

SOW GOOD INC.

Notes to Condensed

Financial Statements

of $ 4,431 consisted entirely of the stated interest on the EIDL Loan during the nine months ended September 30, 2021.

Note 12 – Changes in Stockholders’

3 unchanged sentences

No shares have been issued to date.

The Company has 500,000,000 authorized shares

of $ 0.001 par value common stock.

As of June 30, 2022, a total of 4,840,974 shares of common stock have been issued.

The Company has 500,000,000

authorized shares of $ 0.001

par value common stock.

As of September 30, 2022, a total of 4,847,384

shares of common stock have been issued.

Common Stock Awarded to Board Member

On July 22, 2022, the

Company accepted Mr.

Joseph Lahti’s resignation from the Board of Directors and appointed Tim Creed as a member of the Board.

to the Company’s Non-Employee Director Compensation Plan, Mr.

Creed received 6,410 shares of common stock as compensation.

fair value of the shares was $ 25,000 , based on the closing price of the Company’s common stock on the date of grant .

On April 11, 2022, the

20 unchanged sentences

the dates of grant.

SOW GOOD INC.

Notes to Condensed

Financial Statements

Note 13 – Options

10 unchanged sentences

shares of common stock at a weighted average strike price of $ 4.81 , exercisable over a weighted average life of 8.37 years were outstanding

as of June 30, 2022.

as of September 30, 2022.

Options Granted

On July 22, 2022, the

Company appointed Tim Creed as a member of the Board.

Pursuant to the Company’s 2020 Equity Plan, Mr.

Creed was granted options

to purchase 24,151 shares of the Company’s common stock at an exercise price of $ 3.90 per share.

These options will vest 20 % as

of July 22, 2023 and 20% each anniversary thereafter until fully vested.

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

on a volatility rate of 137 % and a call option value of $3.6166, was $ 87,346 .

The options are being expensed over the vesting period,

resulting in $ 3,350 of stock-based compensation expense during the nine months ended September 30, 2022.

As of September 30,

2022, a total of $ 83,996 of unamortized expenses are expected to be expensed over the vesting period.

On April 11, 2022, the

Company appointed Joe Mueller as a member of the Board of Directors and Audit Committee.

Pursuant to the Company’s 2020 Stock Incentive

Plan (the “2020 Equity Plan”), Mr.

Mueller was granted options to purchase 24,151 shares of the Company’s common stock

at an exercise price of $ 3.10 per share.

These options will vest 20 % as of April 11, 2023 and 20% each anniversary thereafter until

fully vested.

The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 406 % and a call option value of

$2.6433, was $ 71,423 .

The options are being expensed over the vesting period, resulting in $ 3,561 of stock-based compensation expense

during the six months ended June 30, 2022.

As of June 30, 2022, a total of $ 67,862 of unamortized expenses are expected to be

expensed over the vesting period.

Pursuant to the Company’s 2020 Equity Plan,

Mueller was granted options to purchase 24,151 shares of the Company’s common stock at an exercise price of $ 3.10 per share.

These options will vest 20 % as of April 11, 2023 and 20% each anniversary thereafter until fully vested.

The estimated value using

the Black-Scholes Pricing Model, based on a volatility rate of 406 % and a call option value of $2.6433, was $ 71,423 .

The options are being

expensed over the vesting period, resulting in $ 7,162 of stock-based compensation expense during the nine months ended September 30,

As of September 30, 2022, a total of $ 64,261 of unamortized expenses are expected to be expensed over the vesting period.

On April 1, 2022, a total of nineteen employees

6 unchanged sentences

The options are being expensed over the vesting period, resulting in $ 9,468 of stock-based compensation expense

during the six months ended June 30, 2022.

As of June 30, 2022, a total of $ 90,408 of unamortized expenses are expected to be

expensed over the vesting period.

during the nine months ended September 30, 2022.

As of September 30, 2022, a total of $ 85,241 of unamortized expenses are expected

to be expensed over the vesting period.

On April 1, 2022, the Company granted options

7 unchanged sentences

Agreement and Release, dated May 3, 2022 , the vesting terms of the options were accelerated to be fully vested, resulting

in $ 72,692 of stock-based compensation expense during the six months ended June 30, 2022.

in $ 72,692 of stock-based compensation expense during the nine months ended September 30, 2022.

Pursuant to the Separation

2 unchanged sentences

awarded options were also accelerated to be fully vested .

SOW GOOD INC.

Notes to Condensed

Financial Statements

On March 30, 2022, a total of sixteen employees

6 unchanged sentences

The options are being expensed over the vesting period, resulting in $ 5,038 of stock-based compensation expense

during the six months ended June 30, 2022.

As of June 30, 2022, a total of $ 48,796 of unamortized expenses are expected to be

expensed over the vesting period.

during the nine months ended September 30, 2022.

As of September 30, 2022, a total of $ 42,709 of unamortized expenses are expected

to be expensed over the vesting period.

On March 25, 2022, a newly appointed advisory

3 unchanged sentences

The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 406 % and a call option value of $2.2584, was

The options are being expensed over the vesting period, resulting in $ 766 of stock-based compensation expense during the six

months ended June 30, 2022.

As of June 30, 2022, a total of $ 13,647 of unamortized expenses are expected to be expensed over

the vesting period.

The options are being expensed over the vesting period, resulting in $ 1,493 of stock-based compensation expense during the nine

months ended September 30, 2022.

As of September 30, 2022, a total of $ 12,920 of unamortized expenses are expected to be expensed

over the vesting period.

The Company recognized a total of $ 651,501 and

$ 261,465 of compensation expense during the six months ended June 30, 2022 and 2021, respectively, related to common stock options

issued to Officers, Directors, Employees and Advisors that are being amortized over the implied service term, or vesting period, of the

The remaining unamortized balance of these options is $ 1,419,792 as of June 30, 2022.

$ 407,031 of compensation expense during the nine months ended September 30, 2022 and 2021, respectively, related to common stock

options issued to Officers, Directors, Employees and Advisors that are being amortized over the implied service term, or vesting period,

of the options.

The remaining unamortized balance of these options is $ 1,370,205 as of September 30, 2022.

Options Exercised

No options were exercised during the six months

ended June 30, 2022 and 2021.

No options were exercised during the nine months

ended September 30, 2022 and 2021.

Options Forfeited

A total of 46,986 options with a weighted average

exercise price of $ 5.12 were forfeited during the six months ended June 30, 2022.

exercise price of $ 5.64 were forfeited during the nine months ended September 30, 2022.

Note 14 – Warrants

2 unchanged sentences

shares of common stock at a weighted average strike price of $ 2.47 , exercisable over a weighted average life of 9.42 years were outstanding

as of June 30, 2022.

as of September 30, 2022.

Warrants Granted

29, 2022 , warrants to purchase an aggregate 187,500 shares of common stock were issued to directors

pursuant to a private placement debt offering in which aggregate proceeds of $ 750,000 were received in exchange for promissory notes and

warrants to purchase an aggregate 187,500 shares of common stock, representing 25,000 warrant shares per $ 100,000 of promissory notes.

The warrants are fully vested and exercisable over a period of 10 years at a price of $ 2.60 per share.

The Company may redeem outstanding

warrants prior to their expiration, at a price of $ 0.01 per share, provided that the volume weighted average sale price per share of Common

Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing

of notice of such redemption.

The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 140 % and a weighted

average call option value of $1.9441, was $ 364,512 .

The warrants are being expensed over the life of the loans, resulting in $ 688 of stock-based

compensation expense during the nine months ended September 30, 2022.

As of September 30, 2022, a total of $ 363,824 of unamortized

expenses are expected to be expensed over the lives of outstanding debts.

8, 2022, warrants to purchase an aggregate 925,000 shares of common stock were issued pursuant to

10 unchanged sentences

The warrants are

being expensed over the life of the loans, resulting in $ 204,019 of stock-based compensation expense during the six months ended June 30,

As of June 30, 2022, a total of $ 3,071,429 of unamortized expenses are expected to be expensed over the lives of outstanding

being expensed over the life of the loans, resulting in $ 430,160 of stock-based compensation expense during the nine months ended September 30,

As of September 30, 2022, a total of $ 2,786,595 of unamortized expenses are expected to be expensed over the lives of outstanding

debts, including $ 522,741 of unamortized debt discounts on warrants issued during December of 2021.

No warrants were granted during the six months

ended June 30, 2021.

Warrants Exercised or Expired

No warrants were exercised or expired during the

six months ended June 30, 2022 and 2021.

SOW GOOD INC.

Notes to Condensed

Financial Statements

No warrants were granted during the nine months

ended September 30, 2021.

Warrants Expired

A total of 1,300 warrants with a weighted average

exercise price of $ 3.00 were forfeited during the nine months ended September 30, 2022.

No warrants were exercised during the nine months

ended September 30, 2021.

Warrants Exercised

No warrants were exercised during the nine months

ended September 30, 2022 and 2021.

Note 15 – Income Taxes

6 unchanged sentences

Losses incurred during the period from April 9,

2011 (inception) to June 30, 2022 could be used to offset future tax liabilities.

2011 (inception) to September 30, 2022 could be used to offset future tax liabilities.

Accounting standards require the consideration

1 unchanged sentence

of deferred tax assets will not be realized.

As of June 30, 2022, net deferred tax assets were $ 8,170,728 , with no deferred tax liability,

primarily related to net operating loss carryforwards.

A valuation allowance of approximately $ 8,170,728 was applied to the net deferred

As of September 30, 2022, net deferred tax assets were $ 8,432,000 , with no deferred

tax liability, primarily related to net operating loss carryforwards.

A valuation allowance of approximately $ 8,432,000 was applied to

the net deferred tax assets.

Therefore, the Company has no tax expense for 2022 to date.

In accordance with FASB ASC 740, the Company has

evaluated its tax positions and determined there are no significant uncertain tax positions as of any date on, or before June 30,

evaluated its tax positions and determined there are no significant uncertain tax positions as of any date on, or before September 30,

Note 16 – Commitments

12 unchanged sentences

or other financial institution is not subject to estimation at this time.

SOW GOOD INC.

Notes to Condensed

Financial Statements

Lease Commitments

5 unchanged sentences

The future minimum lease payments due under operating leases as of

June 30, 2022 was as follows:

September 30, 2022 was as follows:

Fiscal Year Ending

Minimum Lease

2022 (for the six months remaining)

2022 (for the three months remaining)

2026 and thereafter

4 unchanged sentences

after the balance sheet date through the date these financial statements were issued.

Common Stock and Options Awarded to Recently

Appointed Director

On July 22, 2022, the

Company accepted Mr.

Joseph Lahti’s resignation from the Board of Directors and appointed Tim Creed as a member of the Board.

to the Company’s Non-Employee Director Compensation Plan, Mr.

Creed received 6,410 shares of common stock as compensation.

to the Company’s 2020 Stock Incentive Plan (the “2020 Equity Plan”), Mr.

Mueller was also granted options to purchase

24,151 shares of the Company’s common stock at an exercise price of $3.90 per share.

These options will vest 20% as of July 22,

2023 and 20% each anniversary thereafter until fully vested.

No events occurred of a material nature that would

have required adjustments to or disclosures in these financial statements.

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 1. Financial Statements