What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-04-14 compared with 2022-03-29 · 706 added, 793 removed, 890 unchanged (63% of the section changed)

4 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 2738 )

Balance Sheets as of December 31, 2022 and 2021

46 unchanged sentences

the overall presentation of the financial statements.

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

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

Critical Audit Matters

7 unchanged sentences

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.

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

1 unchanged sentence

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

March 29, 2022

April 14, 2023

SOW GOOD INC.

3 unchanged sentences

Accounts receivable

Investment in Allied Esports Entertainment, Inc.

Prepaid expenses

11 unchanged sentences

Accounts payable

Accounts payable, related party

Accrued expenses

2 unchanged sentences

Operating lease liabilities

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

Notes payable

Notes payable, related parties, net of $ 2,692,757 and $ 699,213 of debt discounts at December 31, 2022 and 2021, respectively

Notes payable, net of $ 336,085 of debt discounts at December 31, 2022

Total liabilities

6 unchanged sentences

Additional paid-in capital

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

Common stock payable, consisting of 11,585 shares at December 31, 2021

Accumulated deficit

14 unchanged sentences

Other general and administrative expenses

Intangible asset impairment

Goodwill impairment

6 unchanged sentences

Other income (expense):

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

Gain on early extinguishment of debt

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

Interest expense, including $ 925,839 and $ 607,320 of warrants issued as a debt

discount for the years ended December 31, 2022 and 2021, respectively

( 1,277,965 )

Gain (loss) on disposal of property and equipment

Gain on early extinguishment of debt

Gain on investment in Allied Esports Entertainment, Inc.

Total other income (expense)

2 unchanged sentences

$ ( 6,874,156 )

Weighted average common shares outstanding - basic and fully diluted

Net loss per common share - basic and fully diluted

Weighted average common shares outstanding - basic and diluted

Net loss per common share - basic and diluted

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

4 unchanged sentences

$ ( 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

( 5,320,939 )

Balance, December 31, 2020

$ ( 36,678,338 )

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

11 unchanged sentences

$ ( 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

( 12,127,068 )

Balance, December 31, 2022

$ ( 55,679,562 )

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

7 unchanged sentences

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

Bad debts expense

Depreciation and amortization

Loss on disposal of property and equipment

(Gain) loss on disposal of property and equipment

Loss on impairment of intangible assets

Loss on impairment of goodwill

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

Gain 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

Common stock awarded to advisors and consultants for services

Amortization of stock options

4 unchanged sentences

( 1,310,526 )

Security deposits

Right-of-use asset

7 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Cash received in business combination

Proceeds received from disposal of property and equipment

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

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

( 2,487,673 )

Cash paid for intangible assets

Net cash used in investing activities

( 2,622,829 )

CASH FLOWS FROM FINANCING ACTIVITIES

1 unchanged sentence

Proceeds received from notes payable

Repayments on notes payable

Proceeds received from the sale of common stock

1 unchanged sentence

NET CHANGE IN CASH AND CASH EQUIVALENTS

( 3,069,464 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

5 unchanged sentences

Value of debt discounts attributable to warrants

Value of investment in securities distributed to board members and employees

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

Fair value of common stock paid in business combination

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

9 unchanged sentences

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.

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”.

Prior to April 2, 2012, the Company name was Ante5, Inc., which became an independent company in April 2010.

We became a publicly traded

company when our shares began trading on July 1, 2010.

From October 2010 through August 2019, we had been engaged in the business

of acquiring oil and gas leases and participating in the drilling of wells in the Bakken and Three Forks trends in North Dakota and Montana

and /or managing similar assets for third parties.

On 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,

11 unchanged sentences

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

4 unchanged sentences

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

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021,

4 unchanged sentences

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

stock, including $3,120,000 and warrants to purchase an aggregate 780,000 shares of common stock, to related parties.

The warrants are exercisable at a price of $ 2.35 per share over a ten-year term.

These proceeds were used for working capital investment

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

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 December 21, 2022 and September 29,

2022, the Company received aggregate proceeds of $ 250,000 and $ 750,000 from two of the Company’s Directors on the sale of these

notes and warrants.

Note 2 – Summary

6 unchanged sentences

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

Reclassifications

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

28 unchanged sentences

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.

The Company had no items

that required fair value measurement on a recurring basis.

Cash and Cash Equivalents

11 unchanged sentences

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

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

Company has not experienced any losses in such accounts.

didn’t have any cash in excess of FDIC and SIPC insured limits at December 31, 2022.

The Company had approximately $ 2,813,000 in

excess of FDIC and SIPC insured limits at December 31, 2021.

The Company has not experienced any losses in such accounts.

Accounts Receivable

23 unchanged sentences

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

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

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

Depreciation expense was $ 299,553 , including

$ 25,500 capitalized as inventory overhead and expensed to cost of goods sold, and $ 208,448 for the years ended December 31, 2022

and 2021, respectively.

SOW GOOD INC.

15 unchanged sentences

taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.

Impairment analysis on intangible assets resulted in a loss of $ 310,173 for the year ended December 31, 2022.

Inventory, consisting of raw materials, material

21 unchanged sentences

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 an impairment loss of $ 1,524,030 for the year ended December 31,

The Company’s evaluation of goodwill completed at year-end resulted in an impairment loss of $ 4,887,297 and $ 1,524,030 for the years

ended December 31, 2022 and 2021, respectively.

SOW GOOD INC.

4 unchanged sentences

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

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.

8 unchanged sentences

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

and Diluted Earnings (Loss) Per Share

Basic 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.

3 unchanged sentences

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

Stock-Based Compensation

The Company accounts for equity instruments

9 unchanged sentences

Stock-based compensation was $ 862,079

and $ 726,656 for the years ended

December 31, 2021 and 2020, respectively.

and $ 1,377,379

for the years ended December 31, 2022 and 2021, respectively.

Stock-based compensation consisted of $ 79,998

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.

and $ 834,047

related to the issuance of shares of common stock for services for the years ended December 31, 2022 and 2021,

respectively.

Amortization of the fair values of stock options issued for services and compensation totaled $ 782,081

and $ 543,332

for the years ended December 31, 2022 and 2021, 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, $ 925,839

53 unchanged sentences

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

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.

In October 2021, the FASB issued Accounting Standards

Update (“ASU”) 2021-08 , Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from

Contracts with Customers, which creates an exception to the general recognition and measurement principle for contract assets and

contract liabilities from contracts with customers acquired in a business combination.

The new guidance will require companies to apply

the definition of a performance obligation under accounting standard codification (“ASC”) Topic 606 to recognize and measure

contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business

Under current GAAP, an acquirer in a business combination is generally required to recognize and measure the assets it acquires

and the liabilities it assumes at fair value on the acquisition date.

The new guidance will result in the acquirer recording acquired

contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic

These amendments are effective for fiscal years beginning after December 15, 2022, with early adoption permitted.

The adoption of

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

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.

In May 2021, the FASB issued ASU No.

Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation (Topic

718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting

for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options .

ASU 2021-04 addresses issuer’s

accounting for certain modifications or exchanges of freestanding equity-classified written call options.

ASU 2021-04 is effective for

fiscal years beginning after December 15, 2021 and interim periods within those fiscal years, with early adoption permitted.

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

In March 2020, the FASB issued ASU 2020-04 establishing

Topic 848, Reference Rate Reform .

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact

debt, leases, derivatives and other contracts.

The guidance is optional and is effective between March 12, 2020 and December 31, 2022.

The guidance may be elected over time as reference rate reform activities occur.

We are currently evaluating the impact that the expected

market transition from the London Interbank Offered Rate, commonly referred to as LIBOR, to alternative references rates will have on

our financial statements as well as the applicability of the aforementioned expedients and exceptions provided in ASU 2020-04.

No other new accounting pronouncements, issued

27 unchanged sentences

and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

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.

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

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.

This acquisition was

accounted for as a business combination under the purchase method of accounting.

The purchase resulted in the recognition of $ 6,411,327

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

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:

Fair value of 1,620,973 shares of common stock

Liabilities assumed:

Accounts payable

Accrued expenses

Lease liabilities

Total consideration

Fair value of identifiable assets acquired assumed:

Other receivables

Prepaid expenses

Property and equipment

Construction in progress

Security deposit

Right-of-use asset

Total fair value of assets assumed

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

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 December 21, 2022 and September 29,

2022, the Company received aggregate proceeds of $ 250,000 and $ 750,000 from two of the Company’s Directors on the sale of these

notes and warrants.

SOW GOOD 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.

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,

Net operating loss

$ ( 7,107,925 )

$ ( 3,346,407 )

$ ( 6,874,156 )

$ ( 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

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

Purchase Agreement (the “Purchase Agreement”) to sell an aggregate $3,700,000

of Promissory Notes (the “Notes”) and warrants (the “Warrants”)

to purchase an aggregate 925,000 shares of common stock, representing 25,000 warrant shares per

$100,000 of promissory notes.

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 .

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 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 .

O n 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

of stock sales by related parties

Ira and Claudia Goldfarb JTWRO, Chairman and CEO, respectively

Brad Burke, CFO

Brad Burke, former CFO

Berman Roevocable Trust, Director

2 unchanged sentences

Ludeman JTWROS, Director

Greg Creed Trustee FBO Creed Revocable Living Trust, Director

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

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

Greg Creed Trustee FBO Creed Revocable Living Trust, former Director

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 parties:

of stock sales by related parties

Brad Burke, former CFO

Lyle Berman Trustee FBO Lyle A.

3 unchanged sentences

Ludeman JTWROS, Director

Greg Creed Trustee FBO Creed Revocable Living Trust, Director

Common Stock Awarded Pursuant to Business Combination

On October 1, 2020, the

Company issued 1,120,000 shares of common stock to S-FDF, LLC, a Texas limited liability company co-owned by Claudia and Ira Goldfarb,

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

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 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.

Greg Creed Trustee FBO Creed Revocable Living Trust, former Director

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Common Stock Issued to Officers for Services,

7 unchanged sentences

issued on March 25, 2022, in satisfaction of the outstanding common stock payable.

Common Stock Issued to Officers for Services

Common Stock and Options Awarded to Officers

and Directors

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

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

Pursuant to the Company’s Non-Employee

Director Compensation Plan, Mr.

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

Pursuant to the Company’s 2020 Equity

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

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

On April 1, 2022, the Company granted options

to purchase 27,500 shares of the Company’s common stock, having an exercise price of $ 2.75 per share, exercisable over a 10 -year

term, to the Company’s then Chief Financial Officer.

The options were to 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 406 % and a call

option value of $2.6433, was $ 72,692 .

The options were being expensed over the vesting period, however, pursuant to a Separation

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 year ended December 31, 2022.

Pursuant to the Separation

Agreement and Release, the vesting of an aggregate 47,500 , with a weighted average exercise price of $ 4.87 , of Mr.

Burke’s previously

awarded options were also accelerated to be fully vested .

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

6 unchanged sentences

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.

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, 2020 .

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,

8 unchanged sentences

were expensed upon issuance.

On October 1, 2020,

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.

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.

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 options were to 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

were being expensed over the vesting period, however, pursuant to a Separation Agreement and Release,

dated May 3, 2022 , the vesting terms of the options were accelerated to be fully vested, resulting in $ 128,733 and $ 20,814

of stock-based compensation expense during the years ended December 31, 2022 and 2021, 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.

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 .

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 .

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

December 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

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 .

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 related parties receiving warrant

The officers, directors and related

parties receiving grants and the amounts of such grants were as follows:

Schedule of warrants granted to related parties

Stock Warrant

5 unchanged sentences

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”).

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

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 Owned by the

Company Granted

to the Grantee

Bradley Berman

Benjamin Oehler

Kenneth DeCubellis

Michael Eisele

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Following the AESE merger on August 9, 2019, the

Company owned 2,685,500 shares of AESE common stock and 505,000 warrants to purchase AESE (NASDAQ:

During the year ended December

31, 2020, the Company sold some of these securities, resulting in gross proceeds of $ 3,181,735 , consisting of 1,970,920 shares of common

stock for total proceeds of $ 3,108,067 , and the sale of warrants to purchase 505,000 shares for total proceeds of $ 73,668 .

also distributed 537,101 Sponsor Shares on August 9, 2020 to employees and directors under the 2018 Management Incentive Plan.

and directors were required to remain in their positions for a one-year period from the AESE merger, with certain exceptions, to receive

the granted shares.

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

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.

The lease term is through September 15, 2025 , with two five-year options

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

the Company assumed the Seller’s obligations under a real property lease for its 20,945 square foot facility in Irving, Texas, from

IG Union Bower, LLC (“Union Bower”), an entity owned entirely by Ira Goldfarb, under which Union Bower is the landlord.

lease term is through September 15, 2025 , with two five-year options to extend, at a monthly lease term of $ 10,036 , with approximately

a 3% annual escalation of lease payments commencing September 15, 2021.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Departure of CFO

30, 2022, Mr.

Brad Burke resigned as the Company’s Chief Financial Officer, and the Company’s Chief Executive Officer, Claudia

Goldfarb, was appointed as the interim Chief Financial Officer.

On May 3, 3022, the Company entered into a Separation Agreement and Release,

which entitled Mr.

Burke to receive an amount equal to the base salary that he would have received for a three-month period (“Severance

Pay”), and the accelerated vesting of options to purchase an aggregate 75,000 shares of common stock with a weighted average exercise

price of $ 4.09 per share, along with an extension of the time period to exercise such stock option agreements to the fifth anniversary

of the separation.

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 THE FINANCIAL STATEMENTS

The following schedule summarizes the valuation

3 unchanged sentences

Cash and cash equivalents

Intangible assets

Notes payable, related parties, net of $2,692,757 of debt discounts

Notes payable

Notes payable, net of $336,085 of debt discounts

Total liabilities

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

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

2 unchanged sentences

liabilities between Level 1 and Level 2 inputs for the years ended December 31, 2022 and 2021.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 6 – Prepaid Expenses

4 unchanged sentences

Trade show advances

Prepaid employee benefits

Prepaid office and other costs

Total prepaid expenses

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 7 – Property and Equipment

7 unchanged sentences

Total property and equipment, net

Construction in progress consisted of costs incurred

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 were capitalized

These costs will be capitalized

as Leasehold Improvements and Machinery, 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.

On December 31, 2021, the Company disposed of

2 unchanged sentences

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

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

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

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

Depreciation of property and equipment was $ 299,553 , including $ 25,500

capitalized as inventory overhead and expensed to cost of goods sold, and $ 208,448 for the years ended December 31, 2022 and 2021, respectively.

Note 8 – Leases

The Company leases

its 20,945 square foot operating and office facility under a non -cancelable

real property lease agreement that expires on August 31, 2025 , with two five-year options to extend, at a monthly lease term of

$ 10,036 , with approximately a 3% annual escalation of lease payments commencing September 15, 2021, subject

to the ASU 2016-02.

In the locations in which it is economically feasible to continue to operate, management expects to enter into a new

lease upon expiration.

The operating and office facility lease contains provisions requiring payment of property taxes, utilities, insurance,

maintenance and other occupancy costs applicable to the leased premise.

As the Company’s leases do not provide implicit discount

rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present

value of lease payments.

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 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 )

Net gains and losses recognized on equity securities sold during the period

Unrealized losses recognized on equity securities still held at the end of the period

$ ( 160,829 )

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

For the Year Ended

Operating lease cost:

Fixed rent expense

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Supplemental balance sheet information related to leases was as follows:

Amortization of right-of-use asset

Interest on lease liability

Total operating lease cost

Supplemental balance sheet information related

to leases was as follows:

Schedule of supplemental balance sheet information

Operating leases:

Operating lease:

Operating lease assets

Current portion of operating lease liabilities

Noncurrent operating lease liabilities

Total operating lease liabilities

Current portion of operating lease liability

Noncurrent operating lease liability

Total operating lease liability

Weighted average remaining lease term:

1 unchanged sentence

Weighted average discount rate:

Operating leases

Supplemental cash flow and other information related to leases was

Operating lease

Supplemental cash flow and other information

related to operating leases was as follows:

Schedule of supplemental cash flow and other information

For the Year Ended

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

19 unchanged sentences

Total intangible assets

We evaluate the recoverability

of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or

that indicate the asset may be impaired.

Impairment analysis on intangible assets resulted in a loss of $ 310,173 for the year ended December 31,

SOW GOOD INC.

4 unchanged sentences

Schedule of Notes payable, related parties

On December 21, 2022, the Company received $ 250,000 pursuant to a note and warrant purchase agreement from the Lyle A.

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

The unsecured note matures on August 23, 2025 .

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

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

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

Goldfarb, as lender.

The unsecured note matures on August 23, 2025 .

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

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

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 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.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

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.

8 unchanged sentences

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.

On December 31, 2021, the Company received $ 25,000 pursuant to a note and warrant purchase agreement from the Company’s former CFO, Bradley K.

Burke, as lender.

12 unchanged sentences

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

The Company recorded total discounts of $ 2,811,138

and $ 699,213 , consisting of debt discounts on warrants granted to the related parties during the years ended December 31, 2022 and 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 recorded $ 817,594 of stock-based interest expense pursuant

to the amortization of discounts during the year ended December 31, 2022.

The Company recognized $ 320,580 of interest expense

for the year ended December 31, 2022.

No interest expense was recognized during the year ended December 31, 2021.

Note 11 – Notes Payable

2 unchanged sentences

Schedule of notes payable

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

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

3 unchanged sentences

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”).

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 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

unamortized debt discounts

Notes payable

current maturities

Notes payable, less current maturities

The Company recorded total discounts of $ 377,440 ,

consisting of debt discounts on warrants granted to four officers and directors for warrants issued in consideration of personal guarantees

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

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

The Company recorded total discounts of $ 444,330 ,

consisting of debt discounts on warrants granted to accredited investors on April 8, 2022.

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

The Company recorded $ 108,245 of stock-based interest expense pursuant to the amortization of discounts during the year ended

December 31, 2022.

The Company recognized $ 31,546 and $ 5,911 of interest

expense for the years ended December 31, 2022 and 2021, respectively.

The Company recognized interest expense for the

years ended December 31, 2022 and 2021, as follows:

Schedule of recognized interest expense on notes payable

Interest on notes payable, related parties

Amortization of debt discounts on notes payable, related parties

Interest on notes payable

Amortization of debt discounts on notes payable

Total interest expense

Note 12 – Stockholders’ Equity

Reverse Stock Split

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 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;

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.

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.

The Company was authorized to issue 500,000,000

shares of common stock prior to the Reverse Stock Split, which remains unaffected.

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

share information in this Interim Report has been retroactively adjusted to reflect the Reverse Stock Split.

Preferred Stock

2 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 December 31, 2021, a total of 4,809,070 shares of common stock have been issued.

Common Stock Awarded Pursuant to Business Combination

On October 1, 2020, the

Company issued 1,120,000 shares of common stock to S-FDF, LLC, a Texas limited liability company, 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

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

Payable as of December 31, 2020.

SOW GOOD 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.

O n 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.

4 unchanged sentences

were purchased by officers and directors.

Common Stock Issued to Officers for Services,

Common Stock Payable

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 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

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

Pursuant to the Company’s Non-Employee

Director Compensation Plan, Mr.

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

The fair value of the shares was $ 24,998 ,

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

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

On December 8, 2021,

3 unchanged sentences

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 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,

3 unchanged sentences

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

On October 1, 2020,

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

Benjamin Oehler, for former 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.

Common Stock Awarded to Advisory Board Members

20, 2022, the Company awarded an aggregate total of 8,000 shares of common stock to

two advisory board members for services.

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

common stock on the date of grant.

25, 2022, the Company awarded 4,255 shares of common stock to a newly appointed advisory

board member for services.

The fair value of the shares was $ 10,000 , based on the closing price of the Company’s common stock on

the date of grant.

Issuance of Shares for Services

15 unchanged sentences

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 Officers for Services,

Common Stock Payable

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 25, 2022, in satisfaction of the outstanding common stock payable.

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, 2020 .

SOW GOOD INC.

1 unchanged sentence

Note 13 – 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.

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.

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 8, 2021, a total of eight employees

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 $ 7,753 of stock-based compensation expense during the year ended December 31, 2022.

As of December 31, 2022, a

total of $ 79,593 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 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 $ 10,763 of stock-based compensation expense during the year ended December 31, 2022.

As of December 31, 2022, a total of $ 60,660 of unamortized expenses are expected to be expensed over the vesting period.

On April 1, 2022, a total of nineteen employees

and consultants were granted options to purchase an aggregate 35,977 shares of the Company’s common stock, having an exercise price

6 unchanged sentences

during the year ended December 31, 2022.

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

As of December 31, 2022, a total of $ 70,420 of unamortized expenses are expected to

be expensed over the vesting period.

On April 1, 2022, the Company granted options

to purchase 27,500 shares of the Company’s common stock, having an exercise price of $ 2.75 per share, exercisable over a 10-year

term, to the Company’s then Chief Financial Officer.

The options were to 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 406 % and a call

option value of $2.6433, was $ 72,692 .

The options were being expensed over the vesting period, however, pursuant to a Separation

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 year ended December 31, 2022.

Pursuant to the Separation

Agreement and Release, the vesting of an aggregate 47,500 , with a weighted average exercise price of $ 4.87 , of Mr.

Burke’s previously

awarded options were also accelerated to be fully vested .

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

On March 30, 2022, a total of sixteen employees

and consultants were granted options to purchase an aggregate 19,436 shares of the Company’s common stock, having an exercise price

6 unchanged sentences

during the year ended December 31, 2022.

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

over the vesting period.

As of December 31, 2022, a total of $ 26,756 of unamortized expenses are expected to

be expensed over the vesting period.

On March 25, 2022, a newly appointed advisory

board member was granted options to purchase an aggregate 6,382 shares of the Company’s common stock, having an exercise price of

$ 2.35 per share, exercisable over a 10-year term.

The options will vest 20% on each anniversary over a five-year period, 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 $2.2584, was

The options are being expensed over the vesting period, resulting in $ 2,220 of stock-based compensation expense during the year

ended December 31, 2022.

As of December 31, 2022, a total of $ 12,193 of unamortized expenses are expected to be expensed over

the vesting period.

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 $ 4,636 and $ 693 of stock-based compensation

expense during the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, a total of $ 6,260 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 $ 8,252 and $ 4,883 of stock-based compensation

expense during the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, a total of $ 21,679 of unamortized

expenses are expected to be expensed over the vesting period.

On May 25, 2021, two advisory board members were

3 unchanged sentences

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

The options are being expensed over the vesting period, resulting in $ 5,912 and $ 3,564 of stock-based compensation expense during

the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, a total of $ 20,086 of unamortized expenses

are expected to be expensed over the vesting period.

On April 22, 2021, Brad Burke was granted options

3 unchanged sentences

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.

were being expensed over the vesting period, however, pursuant to a Separation Agreement and Release,

dated May 3, 2022 , the vesting terms of the options were accelerated to be fully vested, resulting in $ 128,733 and $ 20,814

of stock-based compensation expense during the years ended December 31, 2022 and 2021, respectively.

SOW GOOD INC.

7 unchanged sentences

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.

The options were expensed over the vesting period, resulting in $ 14,658 and $ 13,361 of stock-based compensation

expense during the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, a total of $ 47,638 of unamortized

expenses are expected to be expensed over the vesting period.

On January 27, 2021, Chris Ludeman was granted

5 unchanged sentences

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.

The options are being expensed over the vesting period, resulting in $ 29,848 and

$ 22,815 of stock-based compensation expense during the years ended December 31, 2022 and 2021, respectively.

As of December 31,

2022, a total of $ 96,576 of unamortized expenses are expected to be expensed over the vesting period.

On January 4, 2021, Claudia and Ira Goldfarb were

6 unchanged sentences

The options are being expensed over the vesting period, resulting in $ 197,060

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.

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 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

Shares Granted

Ira Goldfarb, Chairman of the Board and Director

Claudia Goldfarb, Chief Executive Officer

On October 1, 2020, 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

and $ 194,900 of stock-based compensation expense during the years ended December 31, 2022 and 2021, respectively.

1 unchanged sentence

2022, a total of $ 199,218 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

Shares Granted

Ken DeCubellis, Chief Executive Officer and Interim Chief Financial Officer

Michael Eisele, Chief Operating Officer

Bradley Berman, Chairman of the Board and Director

Joseph Lahti, 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

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.

The Company recognized a total of $ 782,081 , and

8 unchanged sentences

Options Expired

An aggregate 666 options with a weighted average

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

No options expired during the years ended December 31, 2022

Options Exercised

1 unchanged sentence

December 31, 2022 and 2021.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

The following is a summary of information about

1 unchanged sentence

Schedule of options outstanding and exercisable

Shares Underlying

Shares Underlying Options Outstanding

Shares Underlying

Options Exercisable

1 unchanged sentence

$ 2.35 - $ 195.00

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

The following is a summary of activity of outstanding

3 unchanged sentences

Options granted

Options expired

Options cancelled

8 unchanged sentences

shares of common stock at a $ 2.47 strike price, exercisable over a weighted average life of 9.16 years were outstanding as of December

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

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

On December 21, 2022 ,

warrants to purchase an aggregate 62,500 shares of common stock were issued to a director pursuant to a private placement debt offering

in which aggregate proceeds of $ 250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares

of common stock, representing 25,000 warrant shares per $ 100,000 of promissory notes.

The warrants are fully vested and exercisable

over a period of 10 years at a price of $ 2.60 per share.

The Company may redeem outstanding warrants prior to their expiration, at a price

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

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

The estimated

value using the Black-Scholes Pricing Model, based on a volatility rate of 316 % and a weighted average call option value of $3.15, was

The warrants are being expensed over the life of the loans, resulting in $ 2,018 of stock-based compensation expense during the

year ended December 31, 2022.

As of December 31, 2022, a total of $ 194,924 of unamortized expenses are expected to be expensed

over the remaining life of the outstanding debts.

On September 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

The warrants are being expensed over the life of the loans, resulting in $ 32,355 of stock-based compensation expense during

the year ended December 31, 2022.

As of December 31, 2022, a total of $ 332,157 of unamortized expenses are expected to be expensed

over the remaining life of the outstanding debts.

On April 8, 2022, warrants to purchase an aggregate

925,000 shares of common stock were issued pursuant to a private placement debt offering in which aggregate proceeds of $ 3,700,000 were

received in exchange for promissory notes and warrants to purchase an aggregate 925,000 shares of common stock, representing 25,000 warrant

shares per $ 100,000 of promissory notes.

The warrants are fully vested and exercisable over a period of 10 years at a price of $ 2.35 per

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.

A total of 780,000 of the warrants were issued to officers

or directors.

The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 154 % and a weighted average call

option value of $2.9443, was $ 2,694,014 .

The warrants are being expensed over the life of the loans, resulting in $ 656,301 of stock-based

compensation expense during the year ended December 31, 2022.

As of December 31, 2022, a total of $ 2,037,713 of unamortized

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

December 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

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 ten-year term.

The estimated value using the Black-Scholes

Pricing Model, based on a volatility rate of 198 %

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:

The warrants are being expensed over the life of the loans, resulting in $ 235,165

of stock-based compensation expense during the year ended December 31, 2022.

As of December 31, 2022, a total of $ 464,048

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

The officers,

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

Schedule of debt discount life loans

8 unchanged sentences

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 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

Name and Title at the Time of Grant

Shares Granted

Ken DeCubellis, Chief Executive Officer and Interim Chief Financial Officer

Bradley Berman, Chairman of the Board and Director

Lyle Berman, Director

Benjamin Oehler, former Director

A total of 1,300 warrants with a weighted average

exercise price of $ 3.00 per share expired during the year ended December 31, 2022.

No warrants were exercised, cancelled or expired

during the years ended December 31, 2021 and 2020.

during the years ended December 31, 2022 and 2021, otherwise.

The following is a summary of activity of outstanding

4 unchanged sentences

Warrants granted

Warrants expired

Balance, December 31, 2022

Exercisable, December 31, 2022

Note 15 – Commitments

Legal Proceedings

The Company may be subject from time to time to

various inquiries, administrative proceedings and litigation relating to matters arising in the normal course of business.

is not currently a defendant in any material litigation and is not aware of any threatened litigation that could have a material effect

on the Company.

Management is not able to estimate the minimum loss to be incurred, if any, as a result of the final outcome of the matters

arising in the normal course of business but believes they are not likely to have a material adverse effect upon the Company’s financial

position or results of operations and, accordingly, no provision for loss has been recorded.

Cash in Excess of FDIC Limits

The Company periodically maintains cash balances

at banks in excess of federally insured amounts.

The extent of loss, if any, to be sustained as a result of any future failure of a bank

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

Lease Commitments

Upon closing of the Asset Purchase Agreement,

the Company assumed the Seller’s obligations under a real property lease for its 20,945 square foot facility in Irving, Texas, under

which an entity owned entirely by Ira Goldfarb is the landlord.

The lease term is through September 15, 2025 , with two five-year options

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

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 16 – Gain on Early Extinguishment

During the year ended December 31, 2021, the Company

recognized a gain on early extinguishment of debt of $ 113,772 , consisting of the forgiveness of $ 112,925 of principal and $ 847 of interest,

on our PPP loan pursuant to Payroll Protection Program established as part of the Coronavirus Aid, Relief, and Economic Security Act (the

“CARES Act”).

Note 17 – Gain on 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 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.

Net gains and losses recognized on equity securities sold during the period

Unrealized losses recognized on equity securities still held at the end of the period

Note 18 – Income Taxes

11 unchanged sentences

Net income tax provision (benefit)

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

The effective income tax rate for the years ended

8 unchanged sentences

Net effective income tax rate

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

The components of the deferred tax assets and

4 unchanged sentences

Stock compensation

Property and equipment

Stock-based debt discounts

Goodwill and intangibles

5 unchanged sentences

( 2,850,375 )

( 2,865,274 )

Total deferred liabilities

( 3,130,112 )

( 2,894,788 )

Net deferred tax assets (liabilities)

3 unchanged sentences

Deferred tax assets (liabilities)

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.

SOW GOOD INC.

NOTES TO THE FINANCIAL STATEMENTS

As of December 31, 2022, the Company

has a net operating loss carryover of approximately $ 41,300,000 .

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, 2022, approximately $ 4,240,000 of the Company’s NOL is subject to the TCJA net operating loss

ASC Topic 740 provides that a valuation allowance

1 unchanged sentence

will not be realized.

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 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.

In 2021, The Company increased its valuation allowance from 6,905,572 to $ 15,517,441 to adjust for the increase

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

The Company believes it is more likely than

not that the benefit of these remaining assets will not be realized.

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

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

The Company adopted the provisions

2 unchanged sentences

or before December 31, 2022.

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

at banks in excess of federally insured amounts.

The extent of loss, if any, to be sustained as a result of any future failure of a bank

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

Lease Commitments

Upon closing of the Asset Purchase Agreement,

the Company assumed the Seller’s obligations under a real property lease for its 20,945 square foot facility in Irving, Texas, under

which an entity owned entirely by Ira Goldfarb is the landlord.

The lease term is through September 15, 2025 , with two five-year options

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

The future minimum lease payments due under operating leases as of

December 31, 2021 is as follows:

Fiscal Year Ending

Minimum Lease

2026 and thereafter

Less effects of discounting

Lease liability recognized

Note 19 – Subsequent

3 unchanged sentences

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

Common Stock Issued to Officers on Common Stock

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

for December 31, 2021 in satisfaction of the outstanding common stock payable.

Debt Financing

On various dates from

January 5, 2023 to March 7, 2023, the Company received aggregate proceeds of $1,250,000 from two of the Company’s Directors on the

sale of an offering entered into on September 29, 2022, to sell up to $2,500,000 of promissory notes and warrants to purchase an

aggregate 625,000 shares of the Company’s common stock, exercisable over a ten-year period at a price of $2.60 per share, representing

25,000 warrant shares per $100,000 of Notes purchased.

The notes mature on August 23, 2025.

Interest on the Notes accrue at a rate of

8% per annum, payable on January 1, 2025.

The Company issued aggregate warrants to purchase 312,500 shares of common stock pursuant

to the advances received on this offering.

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