What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-22 compared with 2022-11-14 · 86 added, 180 removed, 160 unchanged (62% of the section changed)

53 unchanged sentences

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

We expect our growing pipeline

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

We also continued the expansion of our ‘Sustain

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

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

During 2021, we completed

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

our Sow Good brand.

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

The smoothie lineup

offers a mix of both new and familiar flavors:

Açaí of Relief (açaí, blueberry);

Mint to Be (banana, coconut,

and Berry Apeeling (banana, strawberry).

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

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

We also launched four new gluten-free granola products under the

Sow Good brand.

Sow Good’s granola products are made with health-conscious ingredients such as freeze dried fruits, almonds, and

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

With the extensive freeze

dried manufacturing and business development experience of our senior management team, we are confident that we are well positioned to

lead the Company's growth and development in the freeze dried food industry.

We are marketing our line of

products via our direct-to-consumer focused website, as well as via the business-to-business sales channel.

In the first quarter of 2023,

we launched a freeze-dried candy product offering that we expect will be a major driver of our growth going forward.

As of May 19, 2023,

we have 14 candy product lines for sale.

In 2022, we commenced

the construction of our second and third freeze driers in anticipation of the increased production demands for our products and freeze-drying

We expect to place these additional freeze driers in service during the second quarter of 2023.

April 25, 2023 and May 11, 2023, we raised an aggregate $1.55 million from the sale of Promissory Notes and Warrants, including

$1.15 million received from related parties, resulting in approximately $1.9 million of cash on hand as of May 19, 2023.

Our business operates

under two distinct brands, Sow Good and Sustain Us.

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

With the extensive freeze-dried

manufacturing and food product-focused business development experience of our senior management team, including recent additions, we believe

we are well positioned to lead the Company's growth and development in the freeze-dried food industry.

Going Concern Uncertainty

As of September 30, 2022,

As of March 31, 2023,

the Company had incurred recurring losses from operations resulting in an accumulated deficit of $57,081,092, and had cash on hand of

17 unchanged sentences

succeed in raising additional capital, our resources may not be sufficient to fund our business.

Our ability to scale production and distribution

capabilities and further increase the value of our brands, is largely dependent on our success in raising additional capital.

April 25, 2023 and May 11, 2023, we raised an aggregate $1.55 million from the sale of Promissory Notes and Warrants, including

$1.15 million received from related parties, resulting in approximately $1.9 million of cash on hand as of May 19, 2023.

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

on our success in raising additional capital.

The accompanying financial

5 unchanged sentences

Results of Operations for the Three Months

Ended September 30, 2022 and 2021

Ended March 31, 2023 and 2022

The following table summarizes

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

selected items from the statement of operations for the three months ended March 31, 2023 and 2022, respectively.

Three Months Ended

September 30,

Cost of goods sold

8 unchanged sentences

Net operating loss

Other income (expense)

Other expense:

Interest expense

Gain on disposal of property and equipment

Total other income (expense)

Total other expense

$ (1,401,530 )

2 unchanged sentences

of online freeze dried foods product sales.

The revenues were $87,741 for the three months ended September 30, 2022, compared to

$21,137 for the three months ended September 30, 2021, an increase of $66,604, or 315%.

Revenues increased as we continued to launch

our product lines and significantly increased our business-to-business sales during the third quarter of 2022, compared to the same period

in the prior year.

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

The revenues were $198,930 for the three months ended March 31, 2023, compared to $48,372

for the three months ended March 31, 2022, an increase of $150,558, or 311%.

Revenues increased as we ramped up sales on our product

lines and expanded our business-to-business sales during the first quarter of 2023, compared to the same period in the prior year.

Cost of Goods Sold

Cost of goods sold for the

three months ended September 30, 2022 were $65,195, compared to $19,396 for the three months ended September 30, 2021, an increase

of $45,799, or 236%.

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

resulted in a gross profit margin of approximately 26% during the quarter, compared to 8% during the comparative period.

three months ended March 31, 2023 were $76,680, compared to $47,491 for the three months ended March 31, 2022, an increase of

$29,189, or 61%.

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

in a gross profit margin of approximately 61% during the quarter, compared to 2% during the comparative period.

Cost of goods sold and

our gross profit increased as we began to realize economies of scale pursuant to our increased sales.

General and administrative expenses

1 unchanged sentence

Salaries and benefits for

the three months ended September 30, 2022 were $788,450, compared to $936,783 for the three months ended September 30, 2021,

a decrease of $148,333, or 16%.

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

2022 of $155,868, compared to $306,018 for the three months ended September 30, 2021, a decrease of $150,150, or 49%.

compensation consists of $130,868 and $145,566 of stock options expense incurred in the three months ended September 30, 2022 and

2021, respectively, and $25,000 and $160,452 of expense related to shares of common stock issued to officers and consultants for services

rendered in the three months ended September 30, 2022 and 2021, respectively.

The decrease in salaries and benefits was primarily

due to decreased stock-based compensation awards.

the three months ended March 31, 2023 were $544,553, compared to $916,155 for the three months ended March 31, 2022, a decrease

of $371,602, or 41%.

Salaries and benefits included stock-based compensation expense for the three months ended March 31, 2023 of

$126,836, compared to $144,261 for the three months ended March 31, 2022, a decrease of $17,425, or 12%.

Stock-based compensation

consists of $126,836 and $134,261 of stock options expense incurred in the three months ended March 31, 2023 and 2022, respectively, and

$10,000 of expense related to shares of common stock issued to officers and consultants for services rendered in the three months ended

March 31, 2022.

The decrease in salaries and benefits was primarily due to decreased personnel, in addition to our CEO absorbing the role

of interim CFO.

Professional services

5 unchanged sentences

Other general and administrative

expenses for the three months ended September 30, 2022 was $403,429, compared to $472,369 for the three months ended September 30,

expenses for the three months ended March 31, 2023 was $358,467, compared to $405,076 for the three months ended March 31, 2022,

a decrease of $46,609, or 12%.

The decrease is primarily attributable to decreased administrative infrastructure as we continue

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

The decrease is primarily attributable to decreased administrative infrastructure as we continue to scale

the production and sales of our freeze dried products.

Depreciation expense for the

three months ended September 30, 2022 was $69,127, compared to $64,863 for the three months ended September 30, 2021, an increase

of $4,264, or 7%.

three months ended March 31, 2023 was $76,218, compared to $65,226 for the three months ended March 31, 2022, an increase of

$10,992, or 17%.

The increase is attributable to the addition of new equipment placed in service during prior periods.

Other income (expense)

Other expense

In the three months ended

September 30, 2022, other expense was $347,603 consisting of $383,995 of interest expense on our EIDL loan with the SBA and loans

from our officers and directors, including $285,522 related to the amortization of warrants issued as a debt discount on loans, as partially

offset by a gain on disposal of property and equipment of $36,392.

During the comparative three months ended September 30, 2021,

other expense was $1,697, consisting entirely of interest expense derived from the operating loans the Company received from the PPP and

EIDL programs.

March 31, 2023, other expense was $498,336, consisting of $127,658 of interest expense on our EIDL loan with the SBA and loans from

our officers and directors, and $370,678 related to the amortization of warrants issued as a debt discount on the loans from our officers

and directors.

During the comparative three months ended March 31, 2022, other expense was $103,793, consisting of $44,069 of interest

expense on our EIDL loan with the SBA and loans from our officers and directors, and $59,724 related to the amortization of warrants issued

as a debt discount on the loans from our officers and directors.

Net loss for the three months

ended September 30, 2022 was $1,647,272, compared to $1,582,157 during the three months ended September 30, 2021, an increased

net loss of $65,115, or 4%.

The increased net loss was due primarily to increased interest expense of $382,298, including $285,522 of

amortization on warrants issued as a debt discount, as partially offset by $280,791 of decreased operating losses over the prior year.

Results of Operations for the Nine Months Ended

September 30, 2022 and 2021

The following table summarizes

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

Nine Months Ended

September 30,

Cost of goods sold

Operating expenses:

General and administrative expenses:

Salaries and benefits

Professional services

Other general and administrative expenses

Total general and administrative expenses

Depreciation and amortization

Total operating expenses

Net operating loss

Other income (expense)

Interest expense

Gain on disposal of property and equipment

Gain on early extinguishment of debt

Gain on investment in Allied Esports Entertainment, Inc.

Total other income (expense)

$ (5,312,123 )

$ (3,947,828 )

Revenues consist primarily

of online freeze dried foods product sales.

The revenues were $381,056 for the nine months ended September 30, 2022, compared to

$28,213 for the nine months ended September 30, 2021, an increase of $352,843, or 1,251%.

Revenues increased as we continued to launch

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

We had minimal revenues

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

Cost of Goods Sold

Cost of goods sold for the

nine months ended September 30, 2022 were $263,289, compared to $24,295 for the nine months ended September 30, 2021, an increase

of $238,994, or 984%.

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

resulting in a gross profit margin of approximately 31% during the current period, compared to 14% during the comparative period.

General and administrative expenses

Salaries and benefits

Salaries and benefits for

the nine months ended September 30, 2022 were $2,947,505, compared to $2,610,884 for the nine months ended September 30, 2021,

an increase of $336,621, or 13%, Salaries and benefits included stock-based compensation expense for the nine months ended September 30,

2022 of $731,499, compared to $1,015,233 for the nine months ended September 30, 2021, a decrease of $283,734, or 28%.

compensation consists of $651,501 and $407,031 of stock options expense incurred in the nine months ended September 30, 2022 and

2021, respectively, and $79,998 and $608,202 of expense related to shares of common stock issued to officers and consultants for services

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

The increase in salaries and benefits was primarily

due to increased operations as we developed our freeze dried food operations, as partially offset by a reduction in stock-based compensation

Professional services

Professional services were

$177,197 for the 2022 period, compared to $270,779 for the 2021 period, a decrease of $93,582, or 35%.

The decrease was primarily due

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

Other general and administrative expenses

Other general and administrative

expenses for the nine months ended September 30, 2022 was $1,296,294, compared to $1,183,453 for the nine months ended September 30,

2021, an increase of $112,841, or 10%.

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

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

Depreciation expense for the

nine months ended September 30, 2022 was $202,046, compared to $129,915 for the nine months ended September 30, 2021, an increase

ended March 31, 2023 was $1,401,530, compared to $1,552,062 during the three months ended March 31, 2022, a decreased net loss

of $150,532, or 10%.

The increase is attributable to the addition of new equipment placed in service during prior periods.

Other income (expense)

In the nine months ended September 30,

2022, other expense was $843,240, consisting of $843,240 of interest expense on our EIDL loan with the SBA and loans from our officers

and directors, including $607,320 related to the amortization of warrants issued as a debt discount on loans, as partially offset by a

gain on disposal of property and equipment of $36,392.

During the comparative nine months ended September 30, 2021, other income,

on a net basis, was $243,285, consisting of a $113,772 gain on early extinguishment of debt and a net gain on investments in Allied Esports

Entertainment, Inc.

securities of $133,944, as offset by $4,431 of interest expense derived from the operating loans the Company received

from the PPP and EIDL programs.

Net loss for the nine months

ended September 30, 2022 was $5,312,123, compared to $3,947,828 during the nine months ended September 30, 2021, an increased

net loss of $1,364,295, or 35%.

The increased net loss was due primarily to $314,162 of increased operating losses over the prior year,

as we ramped up our operations, increased interest expense of $838,809, including $607,320 of amortization on warrants issued as a debt

discount, and prior years gains of $113,772 and $133,944 on the forgiveness of our PPP loan in the comparative period that were not present

in the current period.

The decreased net loss was due primarily to $150,558 of increased revenues and $371,602 of improved labor costs,

as partially offset by $394,543 of increased interest expense over the comparative period.

Liquidity and Capital Resources

The following table summarizes

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

September 30,

our total current assets, liabilities and working capital at March 31, 2023 and December 31, 2022, respectively.

Current Assets

1 unchanged sentence

Working Capital

As of September 30, 2022,

As of March 31, 2023,

we had working capital of $1,901,232.

The following table summarizes

our cash flows during the nine months ended September 30, 2022 and 2021, respectively.

Nine Months Ended

September 30,

our cash flows during the three months ended March 31, 2023 and 2022, respectively.

Three Months Ended

Net cash used in operating activities

$ (1,482,598 )

$ (4,304,501 )

Net cash used in investing activities

3 unchanged sentences

Net cash used in operating

activities was $4,149,046 and $4,304,501 for the nine months ended September 30, 2022 and 2021, respectively, a period over

period decrease of $155,455.

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

activities was $966,117 and $1,482,598 for the three months ended March 31, 2023 and 2022, respectively, a period over period

decrease of $516,481.

The decrease was primarily due to our increased revenues and diminished labor costs that began to improve our operations.

Net cash used in investing

activities were $2,272,066 and $590,250 for the nine months ended September 30, 2022 and 2021, respectively, a period over period

activities were $211,906 and $48,342 for the three months ended March 31, 2023 and 2022, respectively, a period over period

increase of $163,564.

Cash used in investing activities were comprised of $154,853 of fixed asset purchases, $2,175,241 of construction

in progress, as we built out our 2 nd and 3 rd freeze dried freezers and commenced leasehold improvements on our office

space, and $5,929 of purchases on trademarks, as partially offset by $63,957 of proceeds received from the disposal of property and equipment

during the nine months ended September 30, 2022, compared to $1,004,611 of fixed asset purchases, as partially offset with $414,361

of proceeds received from the sale of securities during the nine months ended September 30, 2021.

Cash used in investing activities were comprised of $211,906 of construction in progress payments as we continued

to build out our 2 nd and 3 rd freeze dried freezers and improve our office space during the three months ended March 31,

2023, compared to $44,726 of fixed asset purchases and $3,616 of purchases on trademarks during the three months ended March 31,

Net cash provided by financing

activities were $4,450,000 and $5,562,511 for the nine months ended September 30, 2022 and 2021, respectively, a period over

period decrease of $1,112,511.

The $4,450,000 of financing received in 2022 was comprised of debt financing, and the 2021 financing proceeds

were the r esult of $2,525,000 we raised from the sale of an aggregate 631,250 shares of the Company’s

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

activities were $1,250,000 for the three months ended March 31, 2023, which was comprised entirely of debt financing received from

our officers and directors.

There was no cash provided by financing activities during the comparative three months ended March 31,

Satisfaction of our cash obligations for

the next 12 months

As of September 30, 2022,

As of March 31, 2023,

our balance of cash was $348,441 and we had total working capital of $1,901,232.

B ased on projections

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

to sustain operations over the next year.

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

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

We are currently in the process of expanding our production capabilities

through the construction of two additional freeze driers, which will require approximately $500,000 to complete, of which we expect to

pay for with the financing obtained on August 23, 2022 .

O ur plan for satisfying our cash

requirements for the next twelve months is through cash on hand and additional financing in the form of equity or debt as needed.

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

in raising additional capital .

of cash expenditures in the Company’s current business plan, the cash on hand as of March 31, 2023 would be insufficient to

sustain operations over the next year.

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

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

O ur plan for satisfying our

cash requirements for the next twelve months is through cash on hand and additional financing in the form of equity or debt as needed.

On April 25, 2023 and May 11, 2023, we raised an aggregate $1.6 million from the sale of Promissory Notes and Warrants, including

$1,200,000 received from related parties, resulting in approximately $1.9 million of cash on hand as of May 22, 2023.

to scale production and distribution capabilities and further increase the value of our brands is largely dependent on our success in

raising additional capital .

Off-Balance Sheet Arrangements

22 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis