What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-14 compared with 2023-05-22 · 443 added, 222 removed, 654 unchanged (50% of the section changed)

19 unchanged sentences

Current portion of operating lease liabilities

Current maturities of notes payable, related parties,

net of $ 699,297 of debt discounts at June 30, 2023

Current maturities of notes payable,

net of $ 306,498 of debt discounts at June 30, 2023

Total current liabilities

Operating lease liabilities

Notes payable, related parties, net of $ 3,230,987 and $ 2,692,757 of debt discounts at March 31, 2023 and December 31, 2022, respectively

Notes payable, net of $ 299,598 and $ 336,085 of debt discounts at March 31, 2023 and December 31, 2022, respectively

Notes payable, related parties,

net of $ 3,027,998 and $ 2,692,757 of debt discounts at June 30, 2023 and December 31, 2022, respectively

Notes payable, net of $ 262,705

and $ 336,085 of debt discounts at June 30, 2023 and December 31, 2022, respectively

Total liabilities

1 unchanged sentence

Stockholders' equity:

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

Common stock, $ 0.001 par value, 500,000,000 shares authorized, 4,847,384 shares issued and outstanding

Preferred stock, $ 0.001 par value, 20,000,000 shares

authorized, no shares issued and outstanding

Common stock, $ 0.001 par value,

500,000,000 shares authorized, 4,868,083 shares issued and outstanding

Additional paid-in capital

8 unchanged sentences

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

Cost of goods sold

Gross profit (loss)

( 1,380,473 )

( 1,258,223 )

Operating expenses:

8 unchanged sentences

( 2,473,391 )

( 1,757,337 )

( 3,376,585 )

( 3,205,606 )

Other expense:

Interest expense, including $ 370,678 and $ 59,724 of warrants issued as a debt discount for the three months ending March 31, 2023 and 2022, respectively

Interest expense, including $ 684,144 and $ 1,054,822 of warrants issued as a debt discount for the three and six months ending June 30, 2023, and $ 262,074 and $ 321,798 for the three and six months ending June 30, 2022, respectively

( 1,345,845 )

Total other expense

1 unchanged sentence

$ ( 3,320,900 )

$ ( 2,112,789 )

$ ( 4,722,430 )

$ ( 3,664,851 )

Weighted average common shares outstanding - basic and diluted

3 unchanged sentences

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the Three Months Ended

June 30, 2023

Stockholders'

Balance, December 31, 2021

Balance, March 31, 2023

$ ( 57,081,092 )

Common stock issued to officers and directors for services

Common stock awarded to advisory board member for services

Common stock warrants granted to

related parties pursuant to debt financing

Common stock warrants granted to

note holders pursuant to debt financing

Common stock options granted to officers

and directors for services

Common stock options granted to employees

and advisors for services

Net loss for the three months ended

June 30, 2023

( 3,320,900 )

Balance, June 30, 2023

$ ( 60,401,992 )

For the Three Months Ended

June 30, 2022

Stockholders'

Balance, March 31, 2022

$ ( 45,104,556 )

Common stock warrants granted to related parties pursuant to debt financing

Common stock warrants granted to note holders pursuant to debt financing

Common stock issued to officers and directors for services

Common stock issued to advisory board for services

Common stock options granted to officers and directors for services

Common stock options granted to employees and advisors for services

Net loss for the three months ended March 31, 2022

Net loss for the three months ended June 30, 2022

( 2,112,789 )

Balance, March 31, 2022

Balance, June 30, 2022

$ ( 47,217,345 )

SOW GOOD INC.

STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

For the Six Months Ended

June 30, 2023

Stockholders'

1 unchanged sentence

$ ( 55,679,562 )

Common stock issued to officers and

directors for services

Common stock warrants granted to

related parties pursuant to debt financing

Common stock warrants granted to

note holders pursuant to debt financing

Common stock options granted to officers

and directors for services

Common stock options granted to employees

and advisors for services

Net loss for the six months ended

June 30, 2023

( 4,722,430 )

Balance, June 30, 2023

$ ( 60,401,992 )

For the Six Months Ended

June 30, 2022

Stockholders'

Balance, December 31, 2021

$ ( 43,552,494 )

Common stock warrants granted to related parties pursuant to debt financing

Common stock warrants granted to note holders pursuant to debt financing

Common stock issued to officers and directors for services

Common stock issued to advisory board for services

Common stock options granted to officers and directors for services

Common stock options granted to employees and advisors for services

Net loss for the three months ended March 31, 2023

Net loss for the six months ended June 30, 2022

( 3,664,851 )

Balance, March 31, 2023

Balance, June 30, 2022

$ ( 47,217,345 )

2 unchanged sentences

CONDENSED STATEMENTS OF CASH FLOWS

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Depreciation and amortization

Common stock awarded to advisors for services

Common stock issued to officers and directors for services

Common stock awarded to advisors and consultants for services

Amortization of stock options

3 unchanged sentences

Prepaid expenses

Security deposits

Right-of-use asset

5 unchanged sentences

( 2,421,260 )

( 2,274,361 )

CASH FLOWS FROM INVESTING ACTIVITIES

1 unchanged sentence

Cash paid for construction in progress

( 1,884,720 )

Cash paid for intangible assets

Net cash used in investing activities

( 2,015,033 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds received from notes payable, related parties

Proceeds received from notes payable

Net cash provided by financing activities

NET CHANGE IN CASH AND CASH EQUIVALENTS

( 1,530,940 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

37 unchanged sentences

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

On July 7, 2021, the

Company raised over $ 3 million of capital from the sale of 714,701 newly issued shares at a share price of $ 4.25 in a private placement.

Investors in the private placement included Sow Good’s Chief Executive Officer, Executive Chairman, and Chief Financial Officer,

in addition to other Sow Good board members and a small group of accredited investors.

The proceeds are being used to invest in inventory

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

On July 7, 2021,

the Company raised over $ 3

million of capital from the sale of 714,701

newly issued shares at a share price of $ 4.25

in a private placement.

Investors in the private placement included Sow Good’s Chief Executive Officer, Executive Chairman,

and Chief Financial Officer, in addition to other Sow Good board members and a small group of accredited investors.

were used to invest in inventory ahead of pursuing larger business-to-business relationships, as well as funding incremental capital

expenditures and general operating expenses.

On July 23, 2021, we

2 unchanged sentences

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

Granola products are initially being sold direct-to-consumer

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

On December 31, 2021,

3 unchanged sentences

ten-year term.

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

The proceeds were 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

15 unchanged sentences

sale of these notes and warrants.

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 expertise.

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

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 the first quarter

of 2023, the Company launched a freeze-dried candy product line with a 9-SKU offering that is projected to continue being a major driver

And, in the second quarter of 2023, we completed the construction of our second and third freeze driers to facilitate the increased

production demands for our recently launched candy products.

Furthermore, the significant and rising demand for our freeze-dried candy

products has led us to begin construction of our fourth and fifth freeze drier, which we expect to be completed in the first quarter of

April 25, 2023 and May 11, 2023, Sow Good raised an aggregate $ 1.3 million from the sale of Promissory Notes and Warrants,

including $900,000 received from related parties, resulting in approximately $293,000 of cash on hand as of June 30, 2023.

Note 2 – Basis of Presentation and Significant

7 unchanged sentences

make the information presented misleading.

These statements reflect all adjustments, which

in the opinion of management, are necessary for fair presentation of the information contained therein.

Except as otherwise disclosed,

all such adjustments are of a normal recurring nature.

It is suggested that these interim condensed financial statements be read in conjunction

with the audited financial statements for the year ended December 31, 2022, which were included in our Annual Report on Form 10-K.

These statements reflect all adjustments,

which in the opinion of management, are necessary for fair presentation of the information contained therein.

Except as otherwise

disclosed, all such adjustments are of a normal recurring nature.

It is suggested that these interim condensed financial statements

be read in conjunction with the audited financial statements for the year ended December 31, 2022, which were included in

our Annual Report on Form 10-K.

The Company follows the same accounting policies in the preparation of interim reports.

16 unchanged sentences

Actual results could differ from those estimates.

SOW GOOD INC.

Notes to Condensed

Financial Statements

Cash in Excess of FDIC Limits

2 unchanged sentences

Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC)

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

had $ 175,245 of cash in excess of FIDC and SIPC insured limits at March 31, 2023, and has not experienced any losses in such accounts.

SOW GOOD INC.

Notes to Condensed

Financial Statements

up to $250,000 under current regulations.

The Company had $ 45,420 of cash in excess of FIDC insured limits at June 30, 2023, and has not

experienced any losses in such accounts.

Property and Equipment

16 unchanged sentences

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

Depreciation was $ 76,218 and $ 72,954 for the

three months ended March 31, 2023 and 2022, respectively.

For the three months ended March 31, 2022, $ 7,728 of the depreciation

expense was allocated to inventory overhead, resulting in $ 65,226 of depreciation expense.

Depreciation was $ 155,416 and $ 148,655 for

the six months ended June 30, 2023 and 2022, respectively.

A total of $ 71,785 and $ 15,736 of the depreciation expense was allocated to

inventory overhead, resulting in $ 83,631 and $ 132,919 of depreciation expense for the six months ended June 30, 2023 and 2022, respectively.

of Long-Lived Assets

21 unchanged sentences

Total inventory

No reserve for obsolete inventories has been recognized.

During the six months ending June 30, 2023, the

Company wrote down $ 1,919,686 of non-candy freeze dried inventory to pivot exclusively to its better selling candy products.

for obsolete inventories has been recognized.

SOW GOOD INC.

27 unchanged sentences

and their current financial condition.

The Company had an allowance for doubtful accounts of $ 8,997 at March 31, 2023.

The Company had an allowance for doubtful accounts of $ 185,485 at June 30, 2023.

Basic and Diluted Earnings (Loss) Per Share

14 unchanged sentences

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

compensation was $ 126,836 and $ 144,261 , consisting entirely of expenses related to common stock and options issued for services for the

three months ended March 31, 2023 and 2022, respectively, using the Black-Scholes options pricing model and an effective term of

6 to 6.5 years based on the weighted average of the vesting periods and the stated term of the option grants and the discount rate on

5 to 7 year U.S.

Treasury securities at the grant date.

In addition, $ 370,678 and $ 59,724 of expenses related to the amortization of warrants

issued in consideration for debt financing for the three months ended March 31, 2023 and 2022, respectively.

compensation was $ 383,906 and $ 575,631 , consisting of $ 258,677 and $ 520,633 of stock options expense, 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, incurred in the six months ended June 30,

2023 and 2022, respectively, and $ 125,229 and $ 54,998 of expense related to shares of common stock issued to officers and consultants

for services rendered in the six months ended June 30, 2023 and 2022, respectively.

In addition, $ 1,054,822 and $ 321,798 of expenses

related to the amortization of warrants in-the-money issued in consideration for debt financing for the six months ended June 30, 2023

and 2022, respectively.

The Company recognizes deferred tax assets and

12 unchanged sentences

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

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.

In July 2023, the FASB issued Accounting Standards

Update (“ASU”) 2023-03 to amend various SEC paragraphs in the Accounting Standards Codification to primarily reflect the issuance

of SEC Staff Accounting Bulletin No.

2023-03, “ Presentation of Financial Statements (Topic 205), Income Statement—Reporting

Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock

Compensation (Topic 718):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

120, SEC Staff Announcement at the

March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation

Income or Loss Applicable to Common Stock.

” ASU 2023-03 amends the ASC for SEC updates pursuant to SEC Staff Accounting

SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force (“EITF”) Meeting;

and Staff Accounting

Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X:

Income or Loss Applicable to Common Stock.

updates were immediately effective and did not have a significant impact on our financial statements.

In October 2021, the FASB issued 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 combination.

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 606.

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.

No other new accounting pronouncements, issued

or effective during the period ended March 31, 2023, have had or are expected to have a significant impact on the Company’s

financial statements.

or effective during the period ended June 30, 2023, have had or are expected to have a significant impact on the Company’s financial

Note 3 – Going Concern

As shown in the accompanying financial statements,

as of March 31, 2023, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $ 57,081,092 ,

and had cash on hand of $ 348,441 .

as of June 30, 2023, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $ 60,401,992 , and

had cash on hand of $ 293,024 .

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

13 unchanged sentences

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

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.

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.

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.

SOW GOOD INC.

Notes to Condensed

Financial Statements

Note 4 – Related Party

Debt Financing

On May 11, 2023, the

Company received proceeds of $ 100,000 from Bradley Berman, one of the Company’s directors, on behalf of the Bradley Berman Irrevocable

Trust, from the sale of notes and warrants pursuant to an offering to sell up to $ 1,500,000 of promissory notes and warrants to purchase

an aggregate 375,000 shares of the Company’s common stock, exercisable over a ten-year period at a price of $ 2.50 per share, representing

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

The notes mature on May 11, 2024 .

Interest on the Notes accrue at a rate of 8 %

per annum, payable in cash semi-annually on June 30 and December 31.

On April 25, 2023, we

closed on an offering to sell up to $ 1,500,000 of promissory notes and warrants to purchase an aggregate 375,000 shares of the Company’s

common stock, exercisable over a ten-year period at a price of $ 2.50 per share, representing 25,000 warrant shares per $ 100,000 of Notes

The notes mature on April 25, 2024 .

Interest on the Notes accrue at a rate of 8 % per annum, payable in cash semi-annually on

June 30 and December 31.

On April 25, 2023, the Company received proceeds of $ 750,000 and $ 50,000 from the Company’s Chairman,

Goldfarb, and the Cesar J.

Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, respectively,

on the sale of these notes and warrants.

On August 23, 2022, we

5 unchanged sentences

On various dates between January 5,

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

2023 and April 11, 2023, the Company received aggregate proceeds of $ 1,500,000 from two of the Company’s Directors on the sale

of these notes and warrants.

SOW GOOD INC.

Notes to Condensed

Financial Statements

Common Stock Issued to Directors for Services

On June 1, 2023,

the Company issued an aggregate 20,699 shares of common stock amongst its five non-employee Directors for annual services to be rendered.

The aggregate fair value of the common stock was $ 125,229 , based on the closing price of the Company’s common stock on the date

The shares were expensed upon issuance.

Note 5 – Fair Value of Financial Instruments

19 unchanged sentences

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

SOW GOOD INC.

Notes to Condensed

Financial Statements

The following schedule summarizes the valuation

of financial instruments at fair value on a recurring basis in the balance sheets as of March 31, 2023 and December 31, 2022:

of financial instruments at fair value on a recurring basis in the balance sheets as of June 30, 2023 and December 31, 2022:

Valuation of financial instruments at fair value

Fair Value Measurements at March 31, 2023

Fair Value Measurements at June 30, 2023

Cash and cash equivalents

8 unchanged sentences

There were no transfers of financial assets or

liabilities between Level 1 and Level 2 inputs for the three months ended March 31, 2023.

liabilities between Level 1 and Level 2 inputs for the three months ended June 30, 2023.

SOW GOOD INC.

10 unchanged sentences

Note 7 – Property and Equipment

Property and equipment at March 31, 2023 and December 31, 2022,

Property and equipment at June 30, 2023 and December 31, 2022,

consists of the following:

5 unchanged sentences

Total property and equipment, net

Construction in progress consists of costs incurred

Construction in progress consisted of costs incurred

to build our second and third freeze driers, and to build out our offices within our facility in Irving, Texas.

These costs will be capitalized

as Machinery and Leasehold Improvements, respectively, upon completion.

A total of $ 2,705,524

and $ 135,596 of these costs were capitalized as Machinery and Leasehold Improvements, respectively, when they were placed in service during

the six months ended June 30, 2023.

The Company recognized depreciation of $ 155,416

and $ 72,954 for the three months ended March 31, 2023 and 2022, respectively.

For the three months ended March 31, 2022,

$ 7,728 of the depreciation expense was allocated to inventory overhead, resulting in $ 65,226 of depreciation expense.

and $ 148,655 , of which $ 71,785 and $ 15,736 was allocated to inventory overhead, resulting in $ 83,631 and $ 132,919 of depreciation expense

for the six months ended June 30, 2023 and 2022, respectively.

SOW GOOD INC.

15 unchanged sentences

Schedule of components of lease expense

For the Three Months Ended

For the Six Months Ended

Operating lease cost:

14 unchanged sentences

Operating lease

SOW GOOD INC.

Notes to Condensed

Financial Statements

Supplemental cash flow and other information

1 unchanged sentence

Schedule of supplemental cash flow and other information

For the Three Months Ended

For the Six Months Ended

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

Operating cash flows used for operating leases

SOW GOOD INC.

Notes to Condensed

Financial Statements

The future minimum lease payments due under operating leases as of

March 31, 2023 is as follows:

June 30, 2023 is as follows:

Schedule of future minimum lease payments

1 unchanged sentence

Minimum Lease

2023 (for the nine months remaining)

2023 (for the six months remaining)

2027 and thereafter

1 unchanged sentence

Lease liability recognized

SOW GOOD INC.

Notes to Condensed

Financial Statements

Note 9 – Notes Payable, Related Parties

Notes payable, related parties consists of the

following at March 31, 2023 and December 31, 2022, respectively:

following at June 30, 2023 and December 31, 2022, respectively:

Schedule of Notes payable, related parties

On May 11, 2023, the Company received $ 100,000 pursuant to a note and warrant purchase agreement from Bradley Berman, one of the Company’s Directors, on behalf of the Bradley Berman Irrevocable Trust, as lender.

The unsecured note matures on May 11, 2024 .

The note bears interest at 8 % per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period.

The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.50 per share over a ten-year term.

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.

On April 25, 2023, the Company received $ 50,000 pursuant to a note and warrant purchase agreement from the Cesar J.

Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, as lender.

The unsecured note matures on April 25, 2024 .

The note bears interest at 8 % per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period.

The noteholder also received warrants to purchase 12,500 shares of common stock, exercisable at $2.50 per share over a ten-year term.

SOW GOOD INC.

Notes to Condensed

Financial Statements

On April 25, 2023, the Company received $ 750,000 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 April 25, 2024 .

The note bears interest at 8 % per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period.

The noteholder also received warrants to purchase 187,500 shares of common stock, exercisable at $2.50 per share over a ten-year term.

On April 11, 2023, 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 March 7, 2023, the Company received $ 250,000 pursuant to a note and warrant purchase agreement from the Lyle A.

88 unchanged sentences

The Company recorded total discounts of $ 5,458,686

of debt discounts on warrants granted to the related parties on various dates from December 31, 2021 through March 7, 2023.

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 $ 334,191 and $ 59,724 of stock-based interest expense pursuant

to the amortization of discounts during the three months ended March 31, 2023 and 2022, respectively.

of debt discounts on warrants granted to the related parties on various dates from December 31, 2021 through May 11, 2023.

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 $ 913,787 and $ 288,149 of stock-based interest expense pursuant to the

amortization of discounts during the six months ended June 30, 2023 and 2022, respectively.

The Company recognized $ 270,721 and $ 126,530 of

interest expense for the three months ended March 31, 2023 and 2022, respectively.

interest expense for the six months ended June 30, 2023 and 2022, respectively.

SOW GOOD INC.

2 unchanged sentences

Note 10 – Notes Payable

Notes payable consists of the following at March 31,

Notes payable consists of the following at June 30,

2023 and December 31, 2022, respectively:

1 unchanged sentence

On April 25, 2023, the Company received $ 400,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender.

The unsecured note matures on April 25, 2024 .

The note bears interest at 8 % per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period.

The noteholder also received warrants to purchase 100,000 shares of common stock, exercisable at $2.50 per share over a ten-year term.

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 .

18 unchanged sentences

The Company recorded total discounts of $ 818,483 ,

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 $ 36,487 of stock-based interest expense pursuant to the amortization of discounts during the three months

ended March 31, 2023.

The Company recognized $ 8,581 and $ 1,494 of interest

expense on notes payable for the three months ended March 31, 2023 and 2022, respectively.

consisting of debt discounts on warrants granted to accredited investors on between April 8, 2022 and April 25, 2023.

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 $ 141,035 and $ 33,649 of stock-based interest expense pursuant to the amortization

of discounts during the six months ended June 30, 2023 and 2022, respectively.

The Company recognized $ 20,302 and $ 10,917 of

interest expense on notes payable for the six months ended June 30, 2023 and 2022, respectively.

SOW GOOD INC.

8 unchanged sentences

of $ 0.001 par value common stock.

As of March 31, 2023, a total of 4,847,384 shares of common stock have been issued.

As of June 30, 2023, a total of 4,868,083 shares of common stock have been issued.

Common Stock Issued to Directors for Services

On June 1, 2023,

the Company issued an aggregate 20,699 shares of common stock amongst its five non-employee Directors for annual services to be rendered.

The aggregate fair value of the common stock was $ 125,229 , based on the closing price of the Company’s common stock on the date

The shares were expensed upon issuance.

Note 12 – Options

10 unchanged sentences

shares of common stock at a weighted average strike price of $ 4.64 , exercisable over a weighted average life of 7.8 years were outstanding

as of March 31, 2023.

as of June 30, 2023.

The Company recognized a total of $ 258,677 and

$ 134,261 of compensation expense during the three months ended March 31, 2023 and 2022, respectively, related to common stock options

$ 520,633 of compensation expense during the six months ended June 30, 2023 and 2022, respectively, related to common stock options

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

The remaining unamortized balance of these options is $ 1,076,675 as of March 31, 2023.

The remaining unamortized balance of these options is $ 1,207,685 as of June 30, 2023.

Options Granted

On June 5, 2023, a total of nineteen employees

and consultants were granted options to purchase an aggregate 46,405 shares of the Company’s common stock, having an exercise price

of $ 6.05 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 138 % and a call option value

of $ 5.66 , was $ 262,851 .

The options are being expensed over the vesting period, resulting in $ 3,598 of stock-based compensation expense

during the six months ended June 30, 2023.

As of June 30, 2023, a total of $ 259,253 of unamortized expenses are expected to

be expensed over the vesting period.

Options Exercised

No options were exercised during the three months

ended March 31, 2023 and 2022.

No options were exercised during the six months

ended June 30, 2023 and 2022.

SOW GOOD INC.

Notes to Condensed

Financial Statements

Note 13 – Warrants

2 unchanged sentences

shares of common stock at a weighted average strike price of $ 2.50 , exercisable over a weighted average life of 9 years were outstanding

as of March 31, 2023.

SOW GOOD INC.

Notes to Condensed

Financial Statements

as of June 30, 2023.

Warrants Granted

On March 7, 2023 ,

warrants to purchase an aggregate 62,500 shares of common stock were issued to the Lyle A.

Berman Revocable Trust, as beneficially

controlled by one of the Company’s Directors, pursuant to a private placement debt offering

On May 11, 2023 ,

warrants to purchase an aggregate 25,000 shares of common stock were issued to the Bradley Berman, one of the Company’s Directors,

pursuant to a private placement debt offering in which aggregate proceeds of $ 100,000 were received

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

per $ 100,000 of promissory notes.

The warrants were issued in-the-money and are fully vested and exercisable over a period of 10

years at a price of $ 2.50 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 138 % and a weighted average call option value of $ 4,469 , was $ 112,371 , of which $ 100,000

was recognized as a debt discount.

The debt discount portion of the warrants are being expensed over the life of the loans, resulting

in $ 13,699 of stock-based compensation expense during the six months ended June 30, 2023.

As of June 30, 2023, a total of $ 86,301

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

On April 25, 2023 ,

warrants to purchase an aggregate 12,500 shares of common stock were issued to the Cesar J.

Gutierrez Living Trust, as beneficially

controlled by the brother of the Company’s CEO, pursuant to a private placement debt offering

in which aggregate proceeds of $ 50,000 were received in exchange for promissory notes and warrants to purchase an aggregate 12,500 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 warrants were issued in-the-money and

are fully vested and exercisable over a period of 10 years at a price of $ 2.50 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 138 % and a weighted average

call option value of $ 3.74 , was $ 46,769 .

The warrants are being expensed over the life of the loans, resulting in $ 8,457 of stock-based

compensation expense during the six months ended June 30, 2023.

As of June 30, 2023, a total of $ 38,312 of unamortized expenses

are expected to be expensed over the remaining life of the outstanding debts.

On April 25, 2023 ,

warrants to purchase an aggregate 187,500 shares of common stock were issued to a trust held by the Company’s Chairman, Mr.

Goldfarb, 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 were issued in-the-money and are fully vested and exercisable over

a period of 10 years at a price of $ 2.50 per share.

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

3 unchanged sentences

value using the Black-Scholes Pricing Model, based on a volatility rate of 138 % and a weighted average call option value of $ 3.74 , was

The warrants are being expensed over the life of the loans, resulting in $ 6,084 of stock-based compensation expense during the

three months ended March 31, 2023.

As of March 31, 2023, a total of $ 222,070 of unamortized expenses are expected to be expensed

The warrants are being expensed over the life of the loans, resulting in $ 126,853 of stock-based compensation expense during

the six months ended June 30, 2023.

As of June 30, 2023, a total of $ 574,684 of unamortized expenses are expected to be expensed

over the remaining life of the outstanding debts.

SOW GOOD INC.

Notes to Condensed

Financial Statements

On April 25, 2023 ,

warrants to purchase an aggregate 100,000 shares of common stock were issued to an accredited investor , pursuant

to a private placement debt offering in which aggregate proceeds of $ 400,000 were received in exchange for promissory notes and warrants

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

warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $ 2.50 per share.

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 138 % and a weighted average call option value of $ 3.74 , was $ 374,153 .

The warrants are being expensed over the life of the loans,

resulting in $ 67,655 of stock-based compensation expense during the six months ended June 30, 2023.

As of June 30, 2023, a total

of $ 306,498 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

On April 11, 2023 ,

warrants to purchase an aggregate 62,500 shares of common stock were issued to the Lyle A.

Berman Revocable Trust, as beneficially

controlled by one of the Company’s Directors, 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 were issued in-the-money and

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 138 % and a weighted average

call option value of $ 3.64 , was $ 227,598 .

The warrants are being expensed over the life of the loans, resulting in $ 49,884 of stock-based

compensation expense during the six months ended June 30, 2023.

As of June 30, 2023, a total of $ 177,714 of unamortized expenses

are expected to be expensed over the remaining life of the outstanding debts.

On March 7, 2023 ,

warrants to purchase an aggregate 62,500

shares of common stock were issued to the Lyle A.

Berman Revocable Trust,

as beneficially controlled by one of the Company’s Directors, 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 were issued in-the-money

and 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 138 % and a weighted average

call option value of $ 3.65 , was $ 228,154 .

The warrants are being expensed over the life of the loans, resulting in $ 29,153 of stock-based

compensation expense during the six months ended June 30, 2023.

As of June 30, 2023, a total of $ 199,001 of unamortized expenses

are expected to be expensed over the remaining life of the outstanding debts.

On March 2, 2023 ,

warrants to purchase an aggregate 62,500 shares of common stock were issued to a trust held by the Company’s Chairman, Mr.

2 unchanged sentences

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 139 % and a weighted average call option value of $3.66, was $ 228,464 .

The warrants are being expensed

over the life of the loans, resulting in $ 7,321 of stock-based compensation expense during the three months ended March 31, 2023.

As of March 31, 2023, a total of $ 221,143 of unamortized expenses are expected to be expensed over the remaining life of the outstanding

The warrants were issued in-the-money and 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 139 % and a weighted average call option value of $ 3.66 , was

The warrants are being expensed over the life of the loans, resulting in $ 30,294 of stock-based compensation expense during

the six months ended June 30, 2023.

As of June 30, 2023, a total of $ 198,170 of unamortized expenses are expected to be expensed

over the remaining life of the outstanding debts.

SOW GOOD INC.

Notes to Condensed

Financial Statements

On February 1, 2023 ,

11 unchanged sentences

The warrants are being expensed

over the life of the loans, resulting in $ 17,168 of stock-based compensation expense during the three months ended March 31, 2023.

As of March 31, 2023, a total of $ 259,294 of unamortized expenses are expected to be expensed over the remaining life of the outstanding

over the life of the loans, resulting in $ 44,104 of stock-based compensation expense during the six months ended June 30, 2023.

of June 30, 2023, a total of $ 232,358 of unamortized expenses are expected to be expensed over the remaining life of the outstanding

On January 5, 2023 ,

12 unchanged sentences

The warrants are being expensed over the life of the loans, resulting in $ 25,520 of stock-based compensation expense during

the three months ended March 31, 2023.

As of March 31, 2023, a total of $ 127,016 of unamortized expenses are expected to be

expensed over the remaining life of the outstanding debts.

SOW GOOD INC.

Notes to Condensed

Financial Statements

the six months ended June 30, 2023.

As of June 30, 2023, a total of $ 113,821 of unamortized expenses are expected to be expensed

over the remaining life of the outstanding debts.

Note 14 – Income Taxes

6 unchanged sentences

Losses incurred during the period from April 9,

2011 (inception) to March 31, 2023 could be used to offset future tax liabilities.

2011 (inception) to June 30, 2023 could be used to offset future tax liabilities.

Accounting standards require the consideration

1 unchanged sentence

of deferred tax assets will not be realized.

As of March 31, 2023, net deferred tax assets were $ 8,877,000 , with no deferred tax

liability, primarily related to net operating loss carryforwards.

A valuation allowance of approximately $ 8,877,000 was applied to the

net deferred tax assets.

As of June 30, 2023, net deferred tax assets were $ 9,384,000 , with no deferred tax liability,

primarily related to net operating loss carryforwards.

A valuation allowance of approximately $ 9,384,000 was applied to the net deferred

Therefore, the Company has no tax expense for 2023 to date.

In accordance with FASB ASC 740, the Company has

evaluated its tax positions and determined there are no significant uncertain tax positions as of any date on, or before March 31,

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

SOW GOOD INC.

Notes to Condensed

Financial Statements

Note 15 – Commitments

23 unchanged sentences

have required adjustments to or disclosures in these financial statements except as follows:

Debt Financing Received on September 2022 Note

On April 11, 2023, 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,

The unsecured note matures on August 23, 2025.

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

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

SOW GOOD INC.

Notes to Condensed

Financial Statements

May 2023 Debt Financing

In connection with a

private placement, dated April 25, 2023 (the "Offering"), on May 11, 2023, the Company entered into a Note and Warrant Purchase

Agreement (the "Purchase Agreement") with one of our directors (the "Purchaser") to sell and issue to the Purchaser

up to $100,000 in the May 2023 Promissory Note (the "Note") and (ii) a ten-year warrant (the "Warrant") to purchase

up to 25,000 shares (the "Warrant Shares" and together with the Note and Warrant, the "Securities") of the Company's

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

The Note Purchase Agreement, Note, and Warrant are based

on substantially similar terms as the April 2023 Note Purchase Agreement, promissory notes, and warrants issued on April 25, 2023

as part of the Offering.

The Note is a (1) year

Interest on the Note accrues at a rate of 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate

pro rata adjustments made for any partial interest accrual period, and the outstanding principal amount of the Note matures and becomes

due and payable on the Maturity Date (as defined in the Note to be May 11, 2024, unless accelerated by an Event of Default).

defined in the Note) may be advanced to the Company from time to time from May 11, 2023 to the Maturity Date, upon prior written

notice from Company.

The Warrant is issued

to the Purchaser as they advance Loans to the Company, in accordance with the terms of the Note.

Upon issuance, the Warrant is exercisable

immediately and for a period of 10 years at a price of $2.50 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.

Assuming full advance of the Loans and full exercise of the Warrant, further proceeds to the Company from the exercise of the Warrant

Shares is calculated as $50,000.

April 2023 Debt Financing

On April 25, 2023, the

Company closed a private placement (the “Offering”) and concurrently entered into a Note and Warrant Purchase Agreement (the

“Purchase Agreement”) with multiple accredited investors (the “Purchasers”) to sell and issue to the Purchasers,

(i) an aggregate of up to $1,500,000 in the April 2023 Promissory Notes (the “Notes”) and (ii) ten-year warrants (the “Warrants”)

to purchase up to an aggregate of 375,000 shares (the “Warrant Shares”, and together with the Notes and Warrants, the “Securities”)

of the Company’s common stock, par value $0.001 per share, representing 25,000 warrant shares per $100,000 of Notes purchased.

total of $1.3 million was received on various dates from May 1, 2023 through May 11, 2023, including $900,0000 received

from related parties.

The Notes are one (1)

Interest on the Notes accrues at a rate of 8% per annum, payable in cash semi-annually on June 30 and December 31,

with appropriate pro rata adjustments made for any partial interest accrual period, and the outstanding principal amount of the Notes

matures and becomes due and payable on the Maturity Date (as defined in the notes to be April 25, 2024, unless accelerated by an

Event of Default).

Loans (as defined in the Notes) may be advanced to the Company from time to time from April 25, 2023 to the Maturity

Date, upon prior written notice from Company.

The Warrants are issued

to the Purchasers as they advance Loans to the Company, in accordance with the terms of the Note.

Upon issuance, the Warrants are exercisable

immediately and for a period of 10 years at a price of $2.50 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.

Assuming full advance of the Loans and full exercise of the Warrants, further proceeds to the Company from the exercise of the Warrant

Shares is calculated as $750,000.

The Offering closed simultaneously with execution of the Purchase Agreement.

Escrowed Cash

As of August 14, 2023, the Company is holding

$1,100,000 in escrow related to a financing that will need to be returned if terms and conditions of the financing are not completed on

or before August 31, 2023.

Options Granted

On July 13, 2023, an employee was granted options

to purchase an aggregate 10,000 shares of the Company’s common stock, having an exercise price of $4.87 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 134% and a call option value of $4.53, was $45,296.

On July 6, 2023, two employees were granted options

to purchase an aggregate 6,000 shares of the Company’s common stock, having an exercise price of $4.18 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 134% and a call option value of $3.89, was $23,353.

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

What changed 10-Q

Item 1. Financial Statements