S-1 1 sowg20240207_s1.htm FORM S-1 sowg20240207_s1.htm
0001490161 Sow Good Inc. false Q3 2023 2,692,757 699,213 336,085 0.001 0.001 20,000,000 20,000,000 0 0 0 0 0.001 0.001 500,000,000 500,000,000 4,847,384 4,847,384 4,809,070 4,809,070 11,585 925,839 607,320 August 23, 2025 0 3 3 5 5 7 10 10 5 5 250,000 August 23, 2025 8 62,500 2.60 10 500,000 August 23, 2025 8 125,000 2.60 10 250,000 August 23, 2025 8 62,500 2.60 10 2,000,000 2,000,000 6 6 April 8, 2025 April 8, 2025 500,000 500,000 2.35 2.35 10 10 100,000 100,000 6 6 April 8, 2025 April 8, 2025 25,000 25,000 2.35 2.35 10 10 100,000 100,000 6 6 April 8, 2025 April 8, 2025 25,000 25,000 2.35 2.35 10 10 920,000 920,000 6 6 April 8, 2025 April 8, 2025 230,000 230,000 2.35 2.35 10 10 1,500,000 1,500,000 8 8 December 31, 2024 December 31, 2024 225,000 225,000 2.21 2.21 10 10 500,000 500,000 8 8 December 31, 2024 December 31, 2024 75,000 75,000 2.21 2.21 10 10 25,000 25,000 8 8 December 31, 2024 December 31, 2024 3,750 3,750 2.21 2.21 10 10 50,000 50,000 8 8 December 31, 2024 December 31, 2024 7,500 7,500 2.21 2.21 10 10 80,000 80,000 6 6 April 8, 2025 April 8, 2025 20,000 20,000 2.35 2.35 10 10 500,000 500,000 6 6 April 8, 2025 April 8, 2025 125,000 125,000 2.35 2.35 10 10 150,000 150,000 3.75 3.75 731 731 3 0 0 10 2016 2017 2018 2019 2020 2021 2022 10 261,996 114,959 1,851,118 2,692,757 148,421 336,085 0.001 0.001 20,000,000 20,000,000 0 0 0 0 0.001 0.001 500,000,000 500,000,000 5,603,083 5,603,083 4,847,384 4,847,384 3 223,887 1 1 2 30 82 10 May 11, 2024 10 April 25, 2024 10 August 23, 2025 5 5 100,000 May 11, 2024 8 25,000 2.50 10 0.01 9.00 50,000 April 25, 2024 8 12,500 2.50 10 0.01 9.00 750,000 April 25, 2024 8 187,500 2.50 10 0.01 9.00 250,000 August 23, 2025 8 62,500 2.60 10 250,000 August 23, 2025 8 62,500 2.60 10 250,000 August 23, 2025 8 62,500 2.60 10 500,000 August 23, 2025 8 125,000 2.60 10 250,000 August 23, 2025 8 62,500 2.60 10 250,000 250,000 August 23, 2025 August 23, 2025 8 8 62,500 62,500 2.60 2.60 10 10 500,000 500,000 August 23, 2025 August 23, 2025 8 8 125,000 125,000 2.60 2.60 10 10 250,000 250,000 August 23, 2025 August 23, 2025 8 8 62,500 62,500 2.60 2.60 10 10 2,000,000 2,000,000 6 6 April 8, 2025 April 8, 2025 500,000 500,000 2.35 2.35 10 10 100,000 100,000 6 6 April 8, 2025 April 8, 2025 25,000 25,000 2.35 2.35 10 10 100,000 100,000 6 6 April 8, 2025 April 8, 2025 25,000 25,000 2.35 2.35 10 10 920,000 920,000 6 6 April 8, 2025 April 8, 2025 230,000 230,000 2.35 2.35 10 10 1,500,000 1,500,000 8 8 December 31, 2024 December 31, 2024 225,000 225,000 2.21 2.21 10 10 500,000 500,000 8 8 December 31, 2024 December 31, 2024 75,000 75,000 2.21 2.21 10 10 25,000 25,000 8 8 December 31, 2024 December 31, 2024 3,750 3,750 2.21 2.21 10 10 50,000 50,000 8 8 December 31, 2024 December 31, 2024 7,500 7,500 2.21 2.21 10 10 1,182,124 400,000 April 25, 2024 8 100,000 2.50 10 0.01 9.00 80,000 80,000 6 6 April 8, 2025 April 8, 2025 20,000 20,000 2.35 2.35 10 10 500,000 500,000 6 6 April 8, 2025 April 8, 2025 125,000 125,000 2.35 2.35 10 10 150,000 150,000 3.75 3.75 731 731 3 3.66 2.95 0 10 0 0 0 0 0 0 5.17 5 2,692,757 336,085 699,213 2,113,114 263,380 00014901612023-01-012023-09-30 thunderdome:item iso4217:USD 00014901612022-12-31 00014901612021-12-31 0001490161us-gaap:RelatedPartyMember2022-12-31 0001490161us-gaap:RelatedPartyMember2021-12-31 0001490161us-gaap:NonrelatedPartyMember2022-12-31 0001490161us-gaap:NonrelatedPartyMember2021-12-31 iso4217:USDxbrli:shares xbrli:shares 00014901612022-01-012022-12-31 00014901612021-01-012021-12-31 0001490161us-gaap:CommonStockMember2020-12-31 0001490161us-gaap:AdditionalPaidInCapitalMember2020-12-31 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2020-12-31 0001490161us-gaap:RetainedEarningsMember2020-12-31 00014901612020-12-31 0001490161us-gaap:CommonStockMember2021-01-012021-12-31 0001490161us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-31 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2021-01-012021-12-31 0001490161us-gaap:RetainedEarningsMember2021-01-012021-12-31 0001490161us-gaap:CommonStockMembersowg:OfficersAndDirectorsMember2021-01-012021-12-31 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:OfficersAndDirectorsMember2021-01-012021-12-31 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:OfficersAndDirectorsMember2021-01-012021-12-31 0001490161us-gaap:RetainedEarningsMembersowg:OfficersAndDirectorsMember2021-01-012021-12-31 0001490161sowg:OfficersAndDirectorsMember2021-01-012021-12-31 0001490161us-gaap:CommonStockMemberus-gaap:PrivatePlacementMembersowg:OfficersAndDirectorsMember2021-01-012021-12-31 0001490161us-gaap:CommonStockMemberus-gaap:PrivatePlacementMember2021-01-012021-12-31 0001490161us-gaap:AdditionalPaidInCapitalMemberus-gaap:PrivatePlacementMember2021-01-012021-12-31 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMemberus-gaap:PrivatePlacementMember2021-01-012021-12-31 0001490161us-gaap:RetainedEarningsMemberus-gaap:PrivatePlacementMember2021-01-012021-12-31 0001490161us-gaap:PrivatePlacementMember2021-01-012021-12-31 0001490161us-gaap:CommonStockMembersowg:EmployeesAndAdvisorsMember2021-01-012021-12-31 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:EmployeesAndAdvisorsMember2021-01-012021-12-31 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:EmployeesAndAdvisorsMember2021-01-012021-12-31 0001490161us-gaap:RetainedEarningsMembersowg:EmployeesAndAdvisorsMember2021-01-012021-12-31 0001490161sowg:EmployeesAndAdvisorsMember2021-01-012021-12-31 0001490161us-gaap:RelatedPartyMemberus-gaap:CommonStockMember2021-01-012021-12-31 0001490161us-gaap:RelatedPartyMemberus-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-31 0001490161us-gaap:RelatedPartyMemberus-gaap:DeferredCompensationShareBasedPaymentsMember2021-01-012021-12-31 0001490161us-gaap:RelatedPartyMemberus-gaap:RetainedEarningsMember2021-01-012021-12-31 0001490161us-gaap:RelatedPartyMember2021-01-012021-12-31 0001490161us-gaap:CommonStockMember2021-12-31 0001490161us-gaap:AdditionalPaidInCapitalMember2021-12-31 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2021-12-31 0001490161us-gaap:RetainedEarningsMember2021-12-31 0001490161us-gaap:RelatedPartyMemberus-gaap:CommonStockMember2022-01-012022-12-31 0001490161us-gaap:RelatedPartyMemberus-gaap:AdditionalPaidInCapitalMember2022-01-012022-12-31 0001490161us-gaap:RelatedPartyMemberus-gaap:DeferredCompensationShareBasedPaymentsMember2022-01-012022-12-31 0001490161us-gaap:RelatedPartyMemberus-gaap:RetainedEarningsMember2022-01-012022-12-31 0001490161us-gaap:RelatedPartyMember2022-01-012022-12-31 0001490161us-gaap:NonrelatedPartyMemberus-gaap:CommonStockMember2022-01-012022-12-31 0001490161us-gaap:NonrelatedPartyMemberus-gaap:AdditionalPaidInCapitalMember2022-01-012022-12-31 0001490161us-gaap:NonrelatedPartyMemberus-gaap:DeferredCompensationShareBasedPaymentsMember2022-01-012022-12-31 0001490161us-gaap:NonrelatedPartyMemberus-gaap:RetainedEarningsMember2022-01-012022-12-31 0001490161us-gaap:NonrelatedPartyMember2022-01-012022-12-31 0001490161us-gaap:CommonStockMembersowg:OfficersAndDirectorsMember2022-01-012022-12-31 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:OfficersAndDirectorsMember2022-01-012022-12-31 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:OfficersAndDirectorsMember2022-01-012022-12-31 0001490161us-gaap:RetainedEarningsMembersowg:OfficersAndDirectorsMember2022-01-012022-12-31 0001490161sowg:OfficersAndDirectorsMember2022-01-012022-12-31 0001490161us-gaap:CommonStockMembersowg:AdvisoryBoardMember2022-01-012022-12-31 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:AdvisoryBoardMember2022-01-012022-12-31 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:AdvisoryBoardMember2022-01-012022-12-31 0001490161us-gaap:RetainedEarningsMembersowg:AdvisoryBoardMember2022-01-012022-12-31 0001490161sowg:AdvisoryBoardMember2022-01-012022-12-31 0001490161us-gaap:CommonStockMembersowg:EmployeesAndAdvisorsMember2022-01-012022-12-31 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:EmployeesAndAdvisorsMember2022-01-012022-12-31 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:EmployeesAndAdvisorsMember2022-01-012022-12-31 0001490161us-gaap:RetainedEarningsMembersowg:EmployeesAndAdvisorsMember2022-01-012022-12-31 0001490161sowg:EmployeesAndAdvisorsMember2022-01-012022-12-31 0001490161us-gaap:CommonStockMember2022-01-012022-12-31 0001490161us-gaap:AdditionalPaidInCapitalMember2022-01-012022-12-31 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2022-01-012022-12-31 0001490161us-gaap:RetainedEarningsMember2022-01-012022-12-31 0001490161us-gaap:CommonStockMember2022-12-31 0001490161us-gaap:AdditionalPaidInCapitalMember2022-12-31 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2022-12-31 0001490161us-gaap:RetainedEarningsMember2022-12-31 0001490161sowg:AdvisorsAndConsultantsMember2022-01-012022-12-31 0001490161sowg:AdvisorsAndConsultantsMember2021-01-012021-12-31 0001490161us-gaap:PrivatePlacementMember2021-02-042021-02-05 0001490161us-gaap:PrivatePlacementMember2021-02-05 0001490161us-gaap:PrivatePlacementMember2021-07-062021-07-07 0001490161us-gaap:PrivatePlacementMember2021-07-07 0001490161sowg:PromissoryNotesAndWarrantsMember2021-01-012021-12-31 0001490161sowg:PromissoryNotesAndWarrantsMember2021-12-31 0001490161sowg:PromissoryNotesAndWarrantsMember2022-04-072022-04-08 0001490161sowg:PromissoryNotesAndWarrantsMember2022-04-08 0001490161sowg:PromissoryNotesAndWarrantsMember2022-08-222022-08-23 0001490161sowg:PromissoryNotesAndWarrantsMember2022-08-23 xbrli:pure 0001490161sowg:OneDirectorMembersowg:PromissoryNotesAndWarrantsMember2022-12-202022-12-21 0001490161sowg:OneDirectorMembersowg:PromissoryNotesAndWarrantsMember2022-09-282022-09-29 utr:Y 0001490161us-gaap:SoftwareAndSoftwareDevelopmentCostsMembersrt:MinimumMember2022-12-31 0001490161sowg:WebsiteMember2022-12-31 0001490161us-gaap:OfficeEquipmentMember2022-12-31 0001490161us-gaap:FurnitureAndFixturesMember2022-12-31 0001490161us-gaap:MachineryAndEquipmentMembersrt:MinimumMember2022-12-31 0001490161us-gaap:MachineryAndEquipmentMembersrt:MaximumMember2022-12-31 0001490161us-gaap:InventoriesMember2022-01-012022-12-31 0001490161sowg:StockIssuedForServicesMember2022-01-012022-12-31 0001490161sowg:StockIssuedForServicesMember2021-01-012021-12-31 0001490161sowg:AmortizationOfFairValuesOfOptionsMember2022-01-012022-12-31 0001490161sowg:AmortizationOfFairValuesOfOptionsMember2021-01-012021-12-31 0001490161us-gaap:EmployeeStockOptionMembersrt:MinimumMember2022-01-012022-12-31 0001490161us-gaap:EmployeeStockOptionMembersrt:MaximumMember2022-01-012022-12-31 0001490161sowg:PromissoryNotesAndWarrantsMember2022-08-232022-08-23 0001490161sowg:WarrantsIssuedWithPromissoryNotesMember2022-08-23 0001490161sowg:NoteAndWarrantPurchaseAgreementMember2022-04-08 0001490161sowg:NoteAndWarrantPurchaseAgreementMember2022-04-072022-04-08 0001490161sowg:NoteAndWarrantPurchaseAgreementMember2022-04-012022-04-08 0001490161sowg:SoldToOfficersOrDirectorsMembersowg:NoteAndWarrantPurchaseAgreementMember2022-04-072022-04-08 0001490161sowg:SoldToOfficersOrDirectorsMembersowg:NoteAndWarrantPurchaseAgreementMember2022-04-08 0001490161sowg:StockPurchaseAgreementJuly2021Member2021-07-012021-07-02 0001490161sowg:IraAndClaudiaGoldfarbMember2021-07-012021-07-02 0001490161sowg:BradBurkeMember2021-07-012021-07-02 0001490161sowg:LyleBermanRevocableTrustMember2021-07-012021-07-02 0001490161sowg:BradleyBermanMember2021-07-012021-07-02 0001490161sowg:ChristopherAndLindaLudemanMember2021-07-012021-07-02 0001490161sowg:CreedRevocableLivingTrustMember2021-07-012021-07-02 0001490161sowg:RelatedPartiesMember2021-07-012021-07-02 0001490161sowg:StockPurchaseAgreementFeb2021Member2021-02-042021-02-05 0001490161sowg:BradBurkeMember2021-02-042021-02-05 0001490161sowg:LyleBermanRevocableTrustMember2021-02-042021-02-05 0001490161sowg:BradleyBermanMember2021-02-042021-02-05 0001490161sowg:ChristopherAndLindaLudemanMember2021-02-042021-02-05 0001490161sowg:CreedRevocableLivingTrustMember2021-02-042021-02-05 0001490161sowg:RelatedPartiesMember2021-02-042021-02-05 0001490161sowg:CommonStockAwardsMembersowg:ClaudiaMember2021-01-012021-12-31 0001490161sowg:CommonStockAwardsMembersowg:IraGoldfarbMember2021-01-012021-12-31 0001490161sowg:MrCreedMember2022-07-222022-07-22 0001490161sowg:MrMuellerMember2022-04-012022-04-11 0001490161srt:ChiefFinancialOfficerMember2022-03-292022-04-02 0001490161sowg:StockOption4Member2022-03-292022-04-02 0001490161sowg:StockOption4Member2022-01-012022-12-31 0001490161sowg:StockOption4Membersowg:MrBurkeMember2022-01-012022-12-31 0001490161sowg:StockOption4Membersowg:MrBurkeMember2022-12-31 0001490161sowg:ClaudiaMember2021-01-012021-01-31 0001490161sowg:IraGoldfarbMember2021-01-012021-12-31 0001490161sowg:BoardMember2021-05-242021-05-25 0001490161sowg:MrLudemanMember2021-01-262021-01-27 0001490161sowg:October2020ThroughDecember2020Membersowg:ClaudiaMember2021-01-062021-01-07 0001490161sowg:October2020ThroughDecember2020Membersowg:IraGoldfarbMember2021-01-062021-01-07 0001490161sowg:FiveDirectorsMember2021-12-072021-12-08 0001490161sowg:MrLudemanMember2021-12-072021-12-08 0001490161us-gaap:EmployeeStockOptionMembersowg:BradBurkeMember2021-04-212021-04-22 0001490161us-gaap:EmployeeStockOptionMembersowg:BradBurkeMember2022-01-012022-12-31 0001490161us-gaap:EmployeeStockOptionMembersowg:BradBurkeMember2021-01-012021-12-31 0001490161sowg:StockOption6Membersrt:BoardOfDirectorsChairmanMember2021-01-262021-01-27 0001490161sowg:StockOption7Membersrt:BoardOfDirectorsChairmanMember2021-01-032021-01-04 0001490161sowg:NoteAndWarrantPurchaseAgreementMember2021-12-302021-12-31 0001490161sowg:NoteAndWarrantPurchaseAgreementMember2021-12-31 0001490161sowg:IraAndClaudiaGoldfarbMembersowg:NoteAndWarrantPurchaseAgreementMember2021-12-302021-12-31 0001490161sowg:IraAndClaudiaGoldfarbMembersowg:NoteAndWarrantPurchaseAgreementMember2021-12-31 0001490161sowg:BradBurkeMembersowg:NoteAndWarrantPurchaseAgreementMember2021-12-302021-12-31 0001490161sowg:BradBurkeMembersowg:NoteAndWarrantPurchaseAgreementMember2021-12-31 0001490161sowg:LyleBermanMembersowg:NoteAndWarrantPurchaseAgreementMember2021-12-302021-12-31 0001490161sowg:LyleBermanMembersowg:NoteAndWarrantPurchaseAgreementMember2021-12-31 0001490161sowg:CesarGutierrezMembersowg:NoteAndWarrantPurchaseAgreementMember2021-12-302021-12-31 0001490161sowg:CesarGutierrezMembersowg:NoteAndWarrantPurchaseAgreementMember2021-12-31 utr:sqft 0001490161sowg:FacilityInIrvingTexasMember2022-12-31 0001490161sowg:FacilityInIrvingTexasMember2022-01-012022-12-31 0001490161sowg:MrBradBurkeMember2022-05-012022-05-03 0001490161us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMember2022-12-31 0001490161us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMember2022-12-31 0001490161us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001490161us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001490161us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:RelatedPartyMember2022-12-31 0001490161us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:RelatedPartyMember2022-12-31 0001490161us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:NonrelatedPartyMember2022-12-31 0001490161us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:NonrelatedPartyMember2022-12-31 0001490161us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMember2021-12-31 0001490161us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMember2021-12-31 0001490161us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMembersowg:IntangibleAssetsMember2021-12-31 0001490161us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMembersowg:IntangibleAssetsMember2021-12-31 0001490161us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:GoodwillMember2021-12-31 0001490161us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:GoodwillMember2021-12-31 0001490161us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-31 0001490161us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-31 0001490161us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:RelatedPartyMember2021-12-31 0001490161us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:RelatedPartyMember2021-12-31 0001490161us-gaap:OfficeEquipmentMember2021-12-31 0001490161us-gaap:MachineryAndEquipmentMember2022-12-31 0001490161us-gaap:MachineryAndEquipmentMember2021-12-31 0001490161us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2022-12-31 0001490161us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2021-12-31 0001490161sowg:WebsiteMember2021-12-31 0001490161us-gaap:LeaseholdImprovementsMember2022-12-31 0001490161us-gaap:LeaseholdImprovementsMember2021-12-31 0001490161us-gaap:ConstructionInProgressMember2022-12-31 0001490161us-gaap:ConstructionInProgressMember2021-12-31 0001490161sowg:OperatingAndOfficeFacilityMember2022-09-15 0001490161sowg:LicensesMember2021-12-31 0001490161sowg:BrandingSowGoodMember2021-12-31 0001490161sowg:BrandingSustainUsMember2021-12-31 0001490161sowg:TrademarksAndPatentsMember2021-12-31 0001490161sowg:NotesPayable9Membersowg:LyleABermanRevocableTrustMember2022-12-31 0001490161sowg:NotesPayable9Membersowg:LyleABermanRevocableTrustMember2022-01-012022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable9Membersowg:LyleABermanRevocableTrustMember2022-12-31 0001490161sowg:NotesPayable9Membersowg:LyleABermanRevocableTrustMember2021-12-31 0001490161sowg:NotesPayable10Membersrt:BoardOfDirectorsChairmanMember2022-12-31 0001490161sowg:NotesPayable10Membersrt:BoardOfDirectorsChairmanMember2022-01-012022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable10Membersrt:BoardOfDirectorsChairmanMember2022-12-31 0001490161sowg:NotesPayable10Membersrt:BoardOfDirectorsChairmanMember2021-12-31 0001490161sowg:NotesPayable11Membersowg:LyleABermanRevocableTrustMember2022-12-31 0001490161sowg:NotesPayable11Membersowg:LyleABermanRevocableTrustMember2022-01-012022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable11Membersowg:LyleABermanRevocableTrustMember2022-12-31 0001490161sowg:NotesPayable11Membersowg:LyleABermanRevocableTrustMember2021-12-31 0001490161sowg:NotesPayable12Membersrt:BoardOfDirectorsChairmanMember2022-12-31 0001490161sowg:NotesPayable12Membersrt:BoardOfDirectorsChairmanMember2021-12-31 0001490161sowg:NotesPayable12Membersrt:BoardOfDirectorsChairmanMember2022-01-012022-12-31 0001490161sowg:NotesPayable12Membersrt:BoardOfDirectorsChairmanMember2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable12Membersrt:BoardOfDirectorsChairmanMember2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable12Membersrt:BoardOfDirectorsChairmanMember2021-12-31 0001490161sowg:NotesPayable13Membersrt:BoardOfDirectorsChairmanMember2022-12-31 0001490161sowg:NotesPayable13Membersrt:BoardOfDirectorsChairmanMember2021-12-31 0001490161sowg:NotesPayable13Membersrt:BoardOfDirectorsChairmanMember2022-01-012022-12-31 0001490161sowg:NotesPayable13Membersrt:BoardOfDirectorsChairmanMember2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable13Membersrt:BoardOfDirectorsChairmanMember2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable13Membersrt:BoardOfDirectorsChairmanMember2021-12-31 0001490161sowg:NotesPayable14Membersowg:IGUnionBowerLLCMember2022-12-31 0001490161sowg:NotesPayable14Membersowg:IGUnionBowerLLCMember2021-12-31 0001490161sowg:NotesPayable14Membersowg:IGUnionBowerLLCMember2022-01-012022-12-31 0001490161sowg:NotesPayable14Membersowg:IGUnionBowerLLCMember2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable14Membersowg:IGUnionBowerLLCMember2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable14Membersowg:IGUnionBowerLLCMember2021-12-31 0001490161sowg:NotesPayable16Membersowg:LyleABermanRevocableTrustMember2022-12-31 0001490161sowg:NotesPayable16Membersowg:LyleABermanRevocableTrustMember2021-12-31 0001490161sowg:NotesPayable16Membersowg:LyleABermanRevocableTrustMember2022-01-012022-12-31 0001490161sowg:NotesPayable16Membersowg:LyleABermanRevocableTrustMember2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable16Membersowg:LyleABermanRevocableTrustMember2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable16Membersowg:LyleABermanRevocableTrustMember2021-12-31 0001490161sowg:NotesPayable17Membersrt:BoardOfDirectorsChairmanMember2022-12-31 0001490161sowg:NotesPayable17Membersrt:BoardOfDirectorsChairmanMember2021-12-31 0001490161sowg:NotesPayable17Membersrt:BoardOfDirectorsChairmanMember2022-01-012022-12-31 0001490161sowg:NotesPayable17Membersrt:BoardOfDirectorsChairmanMember2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable17Membersrt:BoardOfDirectorsChairmanMember2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable17Membersrt:BoardOfDirectorsChairmanMember2021-12-31 0001490161sowg:NotesPayable18Membersowg:LyleABermanRevocableTrustMember2022-12-31 0001490161sowg:NotesPayable18Membersowg:LyleABermanRevocableTrustMember2021-12-31 0001490161sowg:NotesPayable18Membersowg:LyleABermanRevocableTrustMember2022-01-012022-12-31 0001490161sowg:NotesPayable18Membersowg:LyleABermanRevocableTrustMember2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable18Membersowg:LyleABermanRevocableTrustMember2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable18Membersowg:LyleABermanRevocableTrustMember2021-12-31 0001490161sowg:NotesPayable19Membersowg:FormerCFOMember2022-12-31 0001490161sowg:NotesPayable19Membersowg:FormerCFOMember2021-12-31 0001490161sowg:NotesPayable19Membersowg:FormerCFOMember2022-01-012022-12-31 0001490161sowg:NotesPayable19Membersowg:FormerCFOMember2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable19Membersowg:FormerCFOMember2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable19Membersowg:FormerCFOMember2021-12-31 0001490161sowg:NotesPayable20Membersowg:CesarJGutierrezLivingTrustMember2022-12-31 0001490161sowg:NotesPayable20Membersowg:CesarJGutierrezLivingTrustMember2021-12-31 0001490161sowg:NotesPayable20Membersowg:CesarJGutierrezLivingTrustMember2022-01-012022-12-31 0001490161sowg:NotesPayable20Membersowg:CesarJGutierrezLivingTrustMember2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable20Membersowg:CesarJGutierrezLivingTrustMember2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable20Membersowg:CesarJGutierrezLivingTrustMember2021-12-31 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:RelatedPartyMember2022-12-31 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:RelatedPartyMember2021-12-31 0001490161sowg:NotesPayableRelatedPartiesMember2022-01-012022-12-31 0001490161sowg:NotesPayableRelatedPartiesMember2021-01-012021-12-31 0001490161sowg:StockBasedWarrantExpenseMembersowg:NotesPayableRelatedPartiesMember2022-01-012022-12-31 0001490161sowg:NotesPayable2Memberus-gaap:NonrelatedPartyMember2022-12-31 0001490161sowg:NotesPayable2Memberus-gaap:NonrelatedPartyMember2021-12-31 0001490161sowg:NotesPayable2Memberus-gaap:NonrelatedPartyMember2022-01-012022-12-31 0001490161sowg:NotesPayable2Memberus-gaap:NonrelatedPartyMember2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable2Memberus-gaap:NonrelatedPartyMember2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable2Memberus-gaap:NonrelatedPartyMember2021-12-31 0001490161sowg:NotesPayable3Memberus-gaap:NonrelatedPartyMember2022-12-31 0001490161sowg:NotesPayable3Memberus-gaap:NonrelatedPartyMember2021-12-31 0001490161sowg:NotesPayable3Memberus-gaap:NonrelatedPartyMember2022-01-012022-12-31 0001490161sowg:NotesPayable3Memberus-gaap:NonrelatedPartyMember2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable3Memberus-gaap:NonrelatedPartyMember2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable3Memberus-gaap:NonrelatedPartyMember2021-12-31 0001490161sowg:NotesPayable4Memberus-gaap:NonrelatedPartyMember2022-12-31 0001490161sowg:NotesPayable4Memberus-gaap:NonrelatedPartyMember2021-12-31 0001490161sowg:NotesPayable4Memberus-gaap:NonrelatedPartyMember2022-01-012022-12-31 0001490161sowg:NotesPayable4Memberus-gaap:NonrelatedPartyMember2021-01-012021-12-31 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:NonrelatedPartyMember2022-12-31 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:NonrelatedPartyMember2021-12-31 0001490161sowg:NotesPayableMember2022-04-012022-04-08 0001490161sowg:StockBasedWarrantExpenseMembersowg:NotesPayableMember2022-01-012022-12-31 0001490161sowg:NotesPayableMember2022-01-012022-12-31 0001490161sowg:NotesPayableMember2021-01-012021-12-31 0001490161sowg:OfficersAndDirectorsMembersowg:StockPurchaseAgreementJuly2021Member2021-07-012021-07-02 0001490161sowg:OfficersAndDirectorsMembersowg:StockPurchaseAgreementFeb2021Member2021-02-042021-02-05 0001490161sowg:MrCreedMember2022-07-212022-07-22 0001490161sowg:MrMuellerMember2022-04-012022-04-11 0001490161sowg:FiveDirectorsMember2021-12-072021-12-08 0001490161sowg:MrLudemanMember2021-12-072021-12-08 0001490161sowg:FiveDirectorsMember2020-10-012020-10-02 0001490161sowg:MrBenjaminOehlerMember2020-10-012020-10-02 0001490161sowg:TwoAdvisoryBoardMember2022-04-192022-04-20 0001490161sowg:AdvisoryBoardMember2022-03-242022-03-25 0001490161sowg:The2020EquityPlanMember2021-09-03 0001490161us-gaap:EmployeeStockOptionMember2022-12-31 0001490161us-gaap:EmployeeStockOptionMember2022-01-012022-12-31 0001490161sowg:StockOption1Membersowg:MrCreedMember2022-07-212022-07-22 0001490161sowg:StockOption1Member2022-07-212022-07-22 0001490161sowg:StockOption1Member2022-01-012022-12-31 0001490161sowg:StockOption1Member2022-12-31 0001490161sowg:StockOption2Membersowg:MrMuellerMember2022-04-012022-04-11 0001490161us-gaap:EmployeeStockOptionMembersowg:NineteenEmployeesAndConsultantsMember2022-04-012022-04-11 0001490161sowg:StockOption2Member2022-04-012022-04-11 0001490161sowg:StockOption2Member2022-01-012022-12-31 0001490161sowg:StockOption2Member2022-12-31 0001490161us-gaap:EmployeeStockOptionMembersowg:NineteenEmployeesAndConsultantsMember2022-04-012022-04-01 0001490161us-gaap:EmployeeStockOptionMembersowg:NineteenEmployeesAndConsultantsMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2022-04-012022-04-01 0001490161us-gaap:EmployeeStockOptionMembersowg:NineteenEmployeesAndConsultantsMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2022-04-012022-04-01 0001490161us-gaap:EmployeeStockOptionMembersowg:NineteenEmployeesAndConsultantsMember2022-01-012022-12-31 0001490161us-gaap:EmployeeStockOptionMembersowg:NineteenEmployeesAndConsultantsMember2022-12-31 0001490161sowg:StockOption4Membersowg:MrBurkeMember2022-12-012022-12-31 0001490161sowg:StockOption4Membersowg:MrBurkeMember2022-12-31 0001490161us-gaap:EmployeeStockOptionMembersowg:ThreeEmployeesMember2022-03-302022-03-30 0001490161us-gaap:EmployeeStockOptionMembersowg:ThreeEmployeesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2022-03-302022-03-30 0001490161us-gaap:EmployeeStockOptionMembersowg:ThreeEmployeesMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2022-03-302022-03-30 0001490161us-gaap:EmployeeStockOptionMembersowg:ThreeEmployeesMember2022-03-012022-03-31 0001490161us-gaap:EmployeeStockOptionMembersowg:ThreeEmployeesMember2022-12-31 0001490161sowg:StockOption6Member2022-03-252022-03-25 0001490161sowg:StockOption6Member2022-12-31 0001490161sowg:StockOption7Membersrt:BoardOfDirectorsChairmanMember2021-12-082021-12-08 0001490161sowg:StockOption7Member2021-12-082021-12-08 0001490161sowg:StockOption7Member2022-01-012022-12-31 0001490161sowg:StockOption7Member2021-01-012021-12-31 0001490161sowg:StockOption7Member2022-12-31 0001490161sowg:StockOption8Membersrt:BoardOfDirectorsChairmanMember2021-08-272022-08-27 0001490161sowg:StockOption8Member2021-08-272022-08-27 0001490161sowg:StockOption8Member2022-01-012022-12-31 0001490161sowg:StockOption8Member2021-01-012021-12-31 0001490161sowg:StockOption8Member2022-12-31 0001490161sowg:StockOption9Membersrt:BoardOfDirectorsChairmanMember2021-05-252021-05-25 0001490161sowg:StockOption9Member2021-05-252021-05-25 0001490161sowg:StockOption9Member2022-01-012022-12-31 0001490161sowg:StockOption9Member2021-01-012021-12-31 0001490161sowg:StockOption9Member2022-12-31 0001490161sowg:StockOption10Member2021-04-222021-04-22 0001490161sowg:StockOption10Member2022-01-012022-12-31 0001490161sowg:StockOption10Member2021-01-012021-12-31 0001490161sowg:StockOption11Membersrt:BoardOfDirectorsChairmanMember2021-04-222021-04-22 0001490161sowg:StockOption11Member2021-04-222021-04-22 0001490161sowg:StockOption11Member2022-01-012022-12-31 0001490161sowg:StockOption11Member2021-01-012021-12-31 0001490161sowg:StockOption11Member2022-12-31 0001490161sowg:StockOption12Membersrt:BoardOfDirectorsChairmanMember2021-01-272021-01-27 0001490161sowg:StockOption12Member2021-01-272021-01-27 0001490161sowg:StockOption12Member2022-01-012022-12-31 0001490161sowg:StockOption12Member2021-01-012021-12-31 0001490161sowg:StockOption12Member2022-12-31 0001490161sowg:StockOption13Membersrt:BoardOfDirectorsChairmanMember2021-01-042021-01-04 0001490161sowg:StockOption13Member2021-01-042021-01-04 0001490161sowg:StockOption13Member2022-01-012022-12-31 0001490161sowg:StockOption13Member2021-01-012021-12-31 0001490161sowg:StockOption13Member2022-12-31 0001490161us-gaap:EmployeeStockOptionMember2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMember2022-12-21 0001490161sowg:WarrantsIssuedWithPromissoryNotesMember2022-12-212022-12-21 0001490161sowg:WarrantsIssuedWithPromissoryNotesMemberus-gaap:MeasurementInputPriceVolatilityMember2022-12-21 0001490161sowg:WarrantsIssuedWithPromissoryNotesMember2022-01-012022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotesMember2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotes2Member2022-09-29 0001490161sowg:WarrantsIssuedWithPromissoryNotes2Member2022-09-292022-09-29 0001490161sowg:WarrantsIssuedWithPromissoryNotes2Memberus-gaap:MeasurementInputPriceVolatilityMember2022-09-29 0001490161sowg:WarrantsIssuedWithPromissoryNotes2Member2022-01-012022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotes2Member2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotes3Member2022-04-08 0001490161sowg:WarrantsIssuedWithPromissoryNotes3Member2022-04-082022-04-08 0001490161sowg:WarrantsIssuedWithPromissoryNotes3Memberus-gaap:MeasurementInputPriceVolatilityMember2022-04-08 0001490161sowg:WarrantsIssuedWithPromissoryNotes3Member2022-01-012022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotes3Member2022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotes4Member2021-01-012021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotes4Member2021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotes4Memberus-gaap:MeasurementInputPriceVolatilityMember2021-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotes4Member2022-01-012022-12-31 0001490161sowg:WarrantsIssuedWithPromissoryNotes4Member2022-12-31 0001490161sowg:ChairmanAndCeoMember2022-01-012022-12-31 0001490161srt:ChiefFinancialOfficerMember2022-01-012022-12-31 0001490161srt:DirectorMember2022-01-012022-12-31 0001490161sowg:BrotherOfCeoMember2022-01-012022-12-31 0001490161sowg:AlliedEsportsEntertainmentIncMember2020-08-10 0001490161sowg:SponsorWarrantsMembersowg:AlliedEsportsEntertainmentIncMember2020-12-31 0001490161sowg:AlliedEsportsEntertainmentIncMember2021-01-012021-12-31 0001490161sowg:AlliedEsportsEntertainmentIncMember2020-12-31 0001490161sowg:AlliedEsportsEntertainmentIncMember2020-01-012020-12-31 0001490161sowg:AlliedEsportsEntertainmentIncMember2020-08-102020-08-10 0001490161sowg:AlliedEsportsEntertainmentIncMember2022-01-012022-12-31 0001490161sowg:TaxCutsAndJobsActMember2022-12-31 0001490161sowg:PromissoryNotesAndWarrantsMembersowg:OneDirectorMember2023-01-062023-03-07 0001490161sowg:PromissoryNotesAndWarrantsMember2022-09-292022-09-29 0001490161sowg:WarrantsIssuedWithPromissoryNotesMember2022-09-29 0001490161sowg:PromissoryNotesAndWarrantsMember2022-09-29 0001490161sowg:WarrantsIssuedWithPromissoryNotesMember2023-03-07 00014901612023-09-30 0001490161us-gaap:RelatedPartyMember2023-09-30 0001490161us-gaap:NonrelatedPartyMember2023-09-30 00014901612023-07-012023-09-30 00014901612022-07-012022-09-30 00014901612022-01-012022-09-30 0001490161us-gaap:CommonStockMember2023-06-30 0001490161us-gaap:AdditionalPaidInCapitalMember2023-06-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2023-06-30 0001490161us-gaap:RetainedEarningsMember2023-06-30 00014901612023-06-30 0001490161us-gaap:CommonStockMember2023-07-012023-09-30 0001490161us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2023-07-012023-09-30 0001490161us-gaap:RetainedEarningsMember2023-07-012023-09-30 0001490161us-gaap:CommonStockMembersowg:OfficersAndDirectorsMember2023-07-012023-09-30 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:OfficersAndDirectorsMember2023-07-012023-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:OfficersAndDirectorsMember2023-07-012023-09-30 0001490161us-gaap:RetainedEarningsMembersowg:OfficersAndDirectorsMember2023-07-012023-09-30 0001490161sowg:OfficersAndDirectorsMember2023-07-012023-09-30 0001490161us-gaap:CommonStockMembersowg:EmployeesAndAdvisorsMember2023-07-012023-09-30 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:EmployeesAndAdvisorsMember2023-07-012023-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:EmployeesAndAdvisorsMember2023-07-012023-09-30 0001490161us-gaap:RetainedEarningsMembersowg:EmployeesAndAdvisorsMember2023-07-012023-09-30 0001490161sowg:EmployeesAndAdvisorsMember2023-07-012023-09-30 0001490161us-gaap:CommonStockMember2023-09-30 0001490161us-gaap:AdditionalPaidInCapitalMember2023-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2023-09-30 0001490161us-gaap:RetainedEarningsMember2023-09-30 0001490161us-gaap:CommonStockMember2022-06-30 0001490161us-gaap:AdditionalPaidInCapitalMember2022-06-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2022-06-30 0001490161us-gaap:RetainedEarningsMember2022-06-30 00014901612022-06-30 0001490161us-gaap:RelatedPartyMemberus-gaap:CommonStockMember2022-07-012022-09-30 0001490161us-gaap:RelatedPartyMemberus-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-30 0001490161us-gaap:RelatedPartyMemberus-gaap:DeferredCompensationShareBasedPaymentsMember2022-07-012022-09-30 0001490161us-gaap:RelatedPartyMemberus-gaap:RetainedEarningsMember2022-07-012022-09-30 0001490161us-gaap:RelatedPartyMember2022-07-012022-09-30 0001490161us-gaap:CommonStockMembersowg:OfficersAndDirectorsMember2022-07-012022-09-30 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:OfficersAndDirectorsMember2022-07-012022-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:OfficersAndDirectorsMember2022-07-012022-09-30 0001490161us-gaap:RetainedEarningsMembersowg:OfficersAndDirectorsMember2022-07-012022-09-30 0001490161sowg:OfficersAndDirectorsMember2022-07-012022-09-30 0001490161us-gaap:CommonStockMembersowg:EmployeesAndAdvisorsMember2022-07-012022-09-30 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:EmployeesAndAdvisorsMember2022-07-012022-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:EmployeesAndAdvisorsMember2022-07-012022-09-30 0001490161us-gaap:RetainedEarningsMembersowg:EmployeesAndAdvisorsMember2022-07-012022-09-30 0001490161sowg:EmployeesAndAdvisorsMember2022-07-012022-09-30 0001490161us-gaap:CommonStockMember2022-07-012022-09-30 0001490161us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2022-07-012022-09-30 0001490161us-gaap:RetainedEarningsMember2022-07-012022-09-30 0001490161us-gaap:CommonStockMember2022-09-30 0001490161us-gaap:AdditionalPaidInCapitalMember2022-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2022-09-30 0001490161us-gaap:RetainedEarningsMember2022-09-30 00014901612022-09-30 0001490161us-gaap:CommonStockMember2023-01-012023-09-30 0001490161us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2023-01-012023-09-30 0001490161us-gaap:RetainedEarningsMember2023-01-012023-09-30 0001490161us-gaap:CommonStockMembersowg:OfficersAndDirectorsMember2023-01-012023-09-30 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:OfficersAndDirectorsMember2023-01-012023-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:OfficersAndDirectorsMember2023-01-012023-09-30 0001490161us-gaap:RetainedEarningsMembersowg:OfficersAndDirectorsMember2023-01-012023-09-30 0001490161sowg:OfficersAndDirectorsMember2023-01-012023-09-30 0001490161us-gaap:RelatedPartyMemberus-gaap:CommonStockMember2023-01-012023-09-30 0001490161us-gaap:RelatedPartyMemberus-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-30 0001490161us-gaap:RelatedPartyMemberus-gaap:DeferredCompensationShareBasedPaymentsMember2023-01-012023-09-30 0001490161us-gaap:RelatedPartyMemberus-gaap:RetainedEarningsMember2023-01-012023-09-30 0001490161us-gaap:RelatedPartyMember2023-01-012023-09-30 0001490161us-gaap:NonrelatedPartyMemberus-gaap:CommonStockMember2023-01-012023-09-30 0001490161us-gaap:NonrelatedPartyMemberus-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-30 0001490161us-gaap:NonrelatedPartyMemberus-gaap:DeferredCompensationShareBasedPaymentsMember2023-01-012023-09-30 0001490161us-gaap:NonrelatedPartyMemberus-gaap:RetainedEarningsMember2023-01-012023-09-30 0001490161us-gaap:NonrelatedPartyMember2023-01-012023-09-30 0001490161us-gaap:CommonStockMembersowg:EmployeesAndAdvisorsMember2023-01-012023-09-30 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:EmployeesAndAdvisorsMember2023-01-012023-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:EmployeesAndAdvisorsMember2023-01-012023-09-30 0001490161us-gaap:RetainedEarningsMembersowg:EmployeesAndAdvisorsMember2023-01-012023-09-30 0001490161sowg:EmployeesAndAdvisorsMember2023-01-012023-09-30 0001490161us-gaap:RelatedPartyMemberus-gaap:CommonStockMember2022-01-012022-09-30 0001490161us-gaap:RelatedPartyMemberus-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-30 0001490161us-gaap:RelatedPartyMemberus-gaap:DeferredCompensationShareBasedPaymentsMember2022-01-012022-09-30 0001490161us-gaap:RelatedPartyMemberus-gaap:RetainedEarningsMember2022-01-012022-09-30 0001490161us-gaap:RelatedPartyMember2022-01-012022-09-30 0001490161us-gaap:NonrelatedPartyMemberus-gaap:CommonStockMember2022-01-012022-09-30 0001490161us-gaap:NonrelatedPartyMemberus-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-30 0001490161us-gaap:NonrelatedPartyMemberus-gaap:DeferredCompensationShareBasedPaymentsMember2022-01-012022-09-30 0001490161us-gaap:NonrelatedPartyMemberus-gaap:RetainedEarningsMember2022-01-012022-09-30 0001490161us-gaap:NonrelatedPartyMember2022-01-012022-09-30 0001490161us-gaap:CommonStockMembersowg:OfficersAndDirectorsMember2022-01-012022-09-30 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:OfficersAndDirectorsMember2022-01-012022-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:OfficersAndDirectorsMember2022-01-012022-09-30 0001490161us-gaap:RetainedEarningsMembersowg:OfficersAndDirectorsMember2022-01-012022-09-30 0001490161sowg:OfficersAndDirectorsMember2022-01-012022-09-30 0001490161us-gaap:CommonStockMembersowg:AdvisoryBoardMember2022-01-012022-09-30 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:AdvisoryBoardMember2022-01-012022-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:AdvisoryBoardMember2022-01-012022-09-30 0001490161us-gaap:RetainedEarningsMembersowg:AdvisoryBoardMember2022-01-012022-09-30 0001490161sowg:AdvisoryBoardMember2022-01-012022-09-30 0001490161us-gaap:CommonStockMembersowg:EmployeesAndAdvisorsMember2022-01-012022-09-30 0001490161us-gaap:AdditionalPaidInCapitalMembersowg:EmployeesAndAdvisorsMember2022-01-012022-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMembersowg:EmployeesAndAdvisorsMember2022-01-012022-09-30 0001490161us-gaap:RetainedEarningsMembersowg:EmployeesAndAdvisorsMember2022-01-012022-09-30 0001490161sowg:EmployeesAndAdvisorsMember2022-01-012022-09-30 0001490161us-gaap:CommonStockMember2022-01-012022-09-30 0001490161us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-30 0001490161us-gaap:DeferredCompensationShareBasedPaymentsMember2022-01-012022-09-30 0001490161us-gaap:RetainedEarningsMember2022-01-012022-09-30 0001490161sowg:AdvisorsAndConsultantsMember2023-01-012023-09-30 0001490161sowg:AdvisorsAndConsultantsMember2022-01-012022-09-30 00014901612021-05-05 00014901612021-07-23 0001490161us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2023-09-30 0001490161sowg:WebsiteMember2023-09-30 0001490161us-gaap:OfficeEquipmentMember2023-09-30 0001490161us-gaap:FurnitureAndFixturesMember2023-09-30 0001490161us-gaap:MachineryAndEquipmentMembersrt:MinimumMember2023-09-30 0001490161us-gaap:MachineryAndEquipmentMembersrt:MaximumMember2023-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:OneRetailCustomerMember2023-07-012023-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:OneFoodDistributorMember2023-07-012023-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:TwoRetailCustomersMember2022-07-012022-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:RetailCustomerOneMember2022-07-012022-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:RetailCustomerTwoMember2022-07-012022-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:OneFoodDistributorMember2022-07-012022-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:TopFiveCustomersMember2023-01-012023-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:TopFiveCustomersMember2022-01-012022-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:OneRetailCustomerMember2023-01-012023-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:OneFoodDistributorMember2023-01-012023-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:TwoDistributorsMember2022-01-012022-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:DistributorOneMember2022-01-012022-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:DistributorTwoMember2022-01-012022-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:FiveCustomersMember2023-01-012023-09-30 0001490161us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersowg:FiveCustomersMember2022-01-012022-09-30 0001490161us-gaap:CostOfGoodsProductLineMemberus-gaap:SupplierConcentrationRiskMembersowg:TwoSuppliersMember2023-07-012023-09-30 0001490161us-gaap:CostOfGoodsProductLineMemberus-gaap:SupplierConcentrationRiskMembersowg:SupplierOneMember2023-07-012023-09-30 0001490161us-gaap:CostOfGoodsProductLineMemberus-gaap:SupplierConcentrationRiskMembersowg:SupplierTwoMember2023-07-012023-09-30 0001490161us-gaap:CostOfGoodsProductLineMemberus-gaap:SupplierConcentrationRiskMembersowg:OneSupplierMember2023-01-012023-09-30 0001490161us-gaap:EmployeeStockOptionMember2023-01-012023-09-30 0001490161us-gaap:EmployeeStockOptionMember2022-01-012022-09-30 0001490161us-gaap:EmployeeStockOptionMembersrt:MinimumMember2023-01-012023-09-30 0001490161us-gaap:EmployeeStockOptionMembersrt:MaximumMember2023-01-012023-09-30 0001490161us-gaap:ScenarioAdjustmentMember2023-09-30 0001490161sowg:PromissoryNotesAndWarrantsMembersrt:DirectorMember2023-05-112023-05-11 0001490161sowg:PromissoryNotesAndWarrantsMember2023-05-112023-05-11 0001490161sowg:WarrantsIssuedWithPromissoryNotesMember2023-05-11 0001490161sowg:PromissoryNotesAndWarrantsMember2023-05-11 0001490161sowg:PromissoryNotesAndWarrantsMember2023-04-252023-04-25 0001490161sowg:WarrantsIssuedWithPromissoryNotesMember2023-04-25 0001490161sowg:PromissoryNotesAndWarrantsMember2023-04-25 0001490161sowg:PromissoryNotesAndWarrantsMembersrt:BoardOfDirectorsChairmanMember2023-04-252023-04-25 0001490161sowg:PromissoryNotesAndWarrantsMembersowg:CesarJGutierrezLivingTrustMember2023-04-252023-04-25 0001490161sowg:PromissoryNotesAndWarrantsMembersowg:TwoDirectorsMember2023-01-052023-04-11 0001490161sowg:FiveNonemployeeDirectorsMember2023-06-012023-06-01 0001490161us-gaap:PrivatePlacementMember2023-08-302023-08-30 0001490161us-gaap:PrivatePlacementMember2023-08-30 0001490161sowg:FacilityInIrvingTexasMember2023-09-30 0001490161sowg:FacilityInIrvingTexasMember2023-01-012023-09-30 0001490161us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:RelatedPartyMember2023-09-30 0001490161us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:RelatedPartyMember2023-09-30 0001490161us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:RelatedPartyMember2022-12-31 0001490161us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:RelatedPartyMember2022-12-31 0001490161us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:NonrelatedPartyMember2023-09-30 0001490161us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:NonrelatedPartyMember2023-09-30 0001490161us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:NonrelatedPartyMember2022-12-31 0001490161us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:NonrelatedPartyMember2022-12-31 0001490161us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-30 0001490161us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-30 0001490161us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001490161us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001490161us-gaap:MachineryAndEquipmentMember2023-09-30 0001490161us-gaap:LeaseholdImprovementsMember2023-09-30 0001490161us-gaap:ConstructionInProgressMember2023-09-30 0001490161sowg:OfficesWithinFacilityInIrvingTexasMember2023-09-30 0001490161sowg:WarehouseSpaceInIrvingTexasMember2023-07-01 utr:M 0001490161sowg:WarehouseSpaceInIrvingTexasMember2023-07-012023-07-01 0001490161sowg:NotesPayable1Membersrt:DirectorMember2023-09-30 0001490161sowg:NotesPayable1Membersrt:DirectorMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable1Membersrt:DirectorMember2023-09-30 0001490161sowg:NotesPayable1Membersrt:DirectorMember2022-12-31 0001490161sowg:NotesPayable2Membersowg:CesarJGutierrezLivingTrustMember2023-09-30 0001490161sowg:NotesPayable2Membersowg:CesarJGutierrezLivingTrustMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable2Membersowg:CesarJGutierrezLivingTrustMember2023-09-30 0001490161sowg:NotesPayable2Membersowg:CesarJGutierrezLivingTrustMember2022-12-31 0001490161sowg:NotesPayable3Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable3Membersrt:BoardOfDirectorsChairmanMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable3Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable3Membersrt:BoardOfDirectorsChairmanMember2022-12-31 0001490161sowg:NotesPayable4Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable4Membersowg:LyleABermanRevocableTrustMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable4Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable4Membersowg:LyleABermanRevocableTrustMember2022-12-31 0001490161sowg:NotesPayable5Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable5Membersowg:LyleABermanRevocableTrustMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable5Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable5Membersowg:LyleABermanRevocableTrustMember2022-12-31 0001490161sowg:NotesPayable6Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable6Membersrt:BoardOfDirectorsChairmanMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable6Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable6Membersrt:BoardOfDirectorsChairmanMember2022-12-31 0001490161sowg:NotesPayable7Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable7Membersrt:BoardOfDirectorsChairmanMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable7Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable7Membersrt:BoardOfDirectorsChairmanMember2022-12-31 0001490161sowg:NotesPayable8Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable8Membersowg:LyleABermanRevocableTrustMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable8Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable8Membersowg:LyleABermanRevocableTrustMember2022-12-31 0001490161sowg:NotesPayable9Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable9Membersowg:LyleABermanRevocableTrustMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable9Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable10Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable10Membersrt:BoardOfDirectorsChairmanMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable10Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable11Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable11Membersowg:LyleABermanRevocableTrustMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable11Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable12Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable12Membersrt:BoardOfDirectorsChairmanMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable12Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable13Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable13Membersrt:BoardOfDirectorsChairmanMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable13Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable14Membersowg:IGUnionBowerLLCMember2023-09-30 0001490161sowg:NotesPayable14Membersowg:IGUnionBowerLLCMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable14Membersowg:IGUnionBowerLLCMember2023-09-30 0001490161sowg:NotesPayable16Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable16Membersowg:LyleABermanRevocableTrustMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable16Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable17Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable17Membersrt:BoardOfDirectorsChairmanMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable17Membersrt:BoardOfDirectorsChairmanMember2023-09-30 0001490161sowg:NotesPayable18Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable18Membersowg:LyleABermanRevocableTrustMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable18Membersowg:LyleABermanRevocableTrustMember2023-09-30 0001490161sowg:NotesPayable19Membersowg:FormerCFOMember2023-09-30 0001490161sowg:NotesPayable19Membersowg:FormerCFOMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable19Membersowg:FormerCFOMember2023-09-30 0001490161sowg:NotesPayable20Membersowg:CesarJGutierrezLivingTrustMember2023-09-30 0001490161sowg:NotesPayable20Membersowg:CesarJGutierrezLivingTrustMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable20Membersowg:CesarJGutierrezLivingTrustMember2023-09-30 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:RelatedPartyMember2023-09-30 0001490161us-gaap:RelatedPartyMember2023-05-11 0001490161us-gaap:RelatedPartyMember2023-07-012023-09-30 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:RelatedPartyMember2023-01-012023-09-30 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:RelatedPartyMember2022-01-012022-09-30 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:RelatedPartyMember2023-07-012023-09-30 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:RelatedPartyMember2022-07-012022-09-30 0001490161sowg:NotesPayable1Memberus-gaap:NonrelatedPartyMember2023-09-30 0001490161sowg:NotesPayable1Memberus-gaap:NonrelatedPartyMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable1Memberus-gaap:NonrelatedPartyMember2023-09-30 0001490161sowg:NotesPayable1Memberus-gaap:NonrelatedPartyMember2022-12-31 0001490161sowg:NotesPayable2Memberus-gaap:NonrelatedPartyMember2023-09-30 0001490161sowg:NotesPayable2Memberus-gaap:NonrelatedPartyMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable2Memberus-gaap:NonrelatedPartyMember2023-09-30 0001490161sowg:NotesPayable3Memberus-gaap:NonrelatedPartyMember2023-09-30 0001490161sowg:NotesPayable3Memberus-gaap:NonrelatedPartyMember2023-01-012023-09-30 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:NotesPayable3Memberus-gaap:NonrelatedPartyMember2023-09-30 0001490161sowg:NotesPayable4Memberus-gaap:NonrelatedPartyMember2023-09-30 0001490161sowg:NotesPayable4Memberus-gaap:NonrelatedPartyMember2023-01-012023-09-30 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:NonrelatedPartyMember2023-09-30 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:NonrelatedPartyMember2023-04-25 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:NonrelatedPartyMember2023-01-012023-09-30 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:NonrelatedPartyMember2022-01-012022-09-30 0001490161us-gaap:NotesPayableOtherPayablesMember2023-07-012023-09-30 0001490161us-gaap:NotesPayableOtherPayablesMember2022-07-012022-09-30 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:NonrelatedPartyMember2023-07-012023-09-30 0001490161us-gaap:NotesPayableOtherPayablesMemberus-gaap:NonrelatedPartyMember2022-07-012022-09-30 0001490161sowg:NineteenEmployeesAndConsultantsMember2023-06-052023-06-05 0001490161us-gaap:EmployeeStockOptionMembersowg:NineteenEmployeesAndConsultantsMember2023-06-052023-06-05 0001490161us-gaap:EmployeeStockOptionMembersowg:NineteenEmployeesAndConsultantsMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2023-06-052023-06-05 0001490161us-gaap:EmployeeStockOptionMembersowg:NineteenEmployeesAndConsultantsMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2023-06-052023-06-05 0001490161us-gaap:EmployeeStockOptionMembersowg:NineteenEmployeesAndConsultantsMember2023-06-05 0001490161us-gaap:EmployeeStockOptionMembersowg:NineteenEmployeesAndConsultantsMember2023-01-012023-09-30 0001490161sowg:ThreeEmployeesMember2023-07-012023-07-31 0001490161us-gaap:EmployeeStockOptionMembersowg:ThreeEmployeesMember2023-07-012023-07-31 0001490161us-gaap:EmployeeStockOptionMembersowg:ThreeEmployeesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2023-07-012023-07-31 0001490161us-gaap:EmployeeStockOptionMembersowg:ThreeEmployeesMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2023-07-012023-07-31 0001490161us-gaap:EmployeeStockOptionMembersowg:ThreeEmployeesMember2023-07-31 0001490161us-gaap:EmployeeStockOptionMembersowg:ThreeEmployeesMember2023-01-012023-09-30 0001490161us-gaap:EmployeeStockOptionMembersowg:ThreeEmployeesMember2023-09-30 0001490161sowg:WarrantsRelatedDebtMember2023-09-30 0001490161sowg:WarrantsRelatedDebtMember2023-01-012023-09-30 0001490161sowg:WarrantsRelatedDebtMember2022-01-012022-09-30 0001490161sowg:PromissoryNotesAndWarrantsMembersrt:MaximumMember2022-08-23 0001490161sowg:WarrantsIssuedWithPromissoryNotesMember2022-08-232022-08-23 00014901612022-08-232022-08-23 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersrt:DirectorMember2023-05-11 0001490161sowg:WarrantsIssuedWithPromissoryNotesMemberus-gaap:MeasurementInputPriceVolatilityMembersrt:DirectorMember2023-05-11 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:MeasurementInputWeightedAverageCallOptionValueMembersrt:DirectorMember2023-05-11 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:CesarJGutierrezLivingTrustMember2023-04-25 0001490161sowg:WarrantsIssuedWithPromissoryNotesMemberus-gaap:MeasurementInputPriceVolatilityMembersowg:CesarJGutierrezLivingTrustMember2023-04-25 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:MeasurementInputWeightedAverageCallOptionValueMembersowg:CesarJGutierrezLivingTrustMember2023-04-25 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersrt:BoardOfDirectorsChairmanMember2023-04-25 0001490161sowg:WarrantsIssuedWithPromissoryNotesMemberus-gaap:MeasurementInputPriceVolatilityMembersrt:BoardOfDirectorsChairmanMember2023-04-25 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:MeasurementInputWeightedAverageCallOptionValueMembersrt:BoardOfDirectorsChairmanMember2023-04-25 0001490161sowg:WarrantsIssuedWithPromissoryNotesMemberus-gaap:NonrelatedPartyMember2023-04-25 0001490161sowg:PromissoryNotesAndWarrantsMemberus-gaap:NonrelatedPartyMember2023-04-252023-04-25 0001490161sowg:WarrantsIssuedWithPromissoryNotesMemberus-gaap:MeasurementInputPriceVolatilityMemberus-gaap:NonrelatedPartyMember2023-04-25 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:MeasurementInputWeightedAverageCallOptionValueMemberus-gaap:NonrelatedPartyMember2023-04-25 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:LyleABermanRevocableTrustMember2023-04-11 0001490161sowg:PromissoryNotesAndWarrantsMembersowg:LyleABermanRevocableTrustMember2023-04-112023-04-11 0001490161sowg:WarrantsIssuedWithPromissoryNotesMemberus-gaap:MeasurementInputPriceVolatilityMembersowg:LyleABermanRevocableTrustMember2023-04-11 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:MeasurementInputWeightedAverageCallOptionValueMembersowg:LyleABermanRevocableTrustMember2023-04-11 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:LyleABermanRevocableTrustMember2023-03-07 0001490161sowg:PromissoryNotesAndWarrantsMembersowg:LyleABermanRevocableTrustMember2023-03-072023-03-07 0001490161sowg:WarrantsIssuedWithPromissoryNotesMemberus-gaap:MeasurementInputPriceVolatilityMembersowg:LyleABermanRevocableTrustMember2023-03-07 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:MeasurementInputWeightedAverageCallOptionValueMembersowg:LyleABermanRevocableTrustMember2023-03-07 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersrt:BoardOfDirectorsChairmanMember2023-03-02 0001490161sowg:PromissoryNotesAndWarrantsMembersrt:BoardOfDirectorsChairmanMember2023-03-022023-03-02 0001490161sowg:WarrantsIssuedWithPromissoryNotesMemberus-gaap:MeasurementInputPriceVolatilityMembersrt:BoardOfDirectorsChairmanMember2023-03-02 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:MeasurementInputWeightedAverageCallOptionValueMembersrt:BoardOfDirectorsChairmanMember2023-03-02 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersrt:BoardOfDirectorsChairmanMember2023-02-01 0001490161sowg:PromissoryNotesAndWarrantsMembersrt:BoardOfDirectorsChairmanMember2023-02-012023-02-01 0001490161sowg:WarrantsIssuedWithPromissoryNotesMemberus-gaap:MeasurementInputPriceVolatilityMembersrt:BoardOfDirectorsChairmanMember2023-02-01 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:MeasurementInputWeightedAverageCallOptionValueMembersrt:BoardOfDirectorsChairmanMember2023-02-01 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:LyleABermanRevocableTrustMember2023-01-05 0001490161sowg:PromissoryNotesAndWarrantsMembersowg:LyleABermanRevocableTrustMember2023-01-052023-01-05 0001490161sowg:WarrantsIssuedWithPromissoryNotesMemberus-gaap:MeasurementInputPriceVolatilityMembersowg:LyleABermanRevocableTrustMember2023-01-05 0001490161sowg:WarrantsIssuedWithPromissoryNotesMembersowg:MeasurementInputWeightedAverageCallOptionValueMembersowg:LyleABermanRevocableTrustMember2023-01-05 0001490161sowg:ApproximationMember2023-07-012023-09-30 0001490161sowg:ApproximationMember2022-07-012022-09-30 0001490161sowg:ApproximationMember2023-01-012023-09-30 0001490161sowg:ApproximationMember2022-01-012022-09-30 0001490161srt:WeightedAverageMember2023-07-012023-09-30 0001490161srt:WeightedAverageMember2022-07-012022-09-30 0001490161srt:WeightedAverageMember2023-01-012023-09-30 0001490161srt:WeightedAverageMember2022-01-012022-09-30 0001490161sowg:LeaseAgreementInDallasTexasMemberus-gaap:SubsequentEventMember2023-10-26 0001490161sowg:LeaseAgreementInDallasTexasMemberus-gaap:SubsequentEventMember2023-10-262023-10-26 0001490161us-gaap:FairValueMeasurementsRecurringMemberus-gaap:RelatedPartyMember2022-12-31 0001490161us-gaap:FairValueMeasurementsRecurringMemberus-gaap:NonrelatedPartyMember2022-12-31 0001490161us-gaap:FairValueMeasurementsRecurringMemberus-gaap:RelatedPartyMember2021-12-31
 

Table of Contents

Registration No. 333-      



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933


SOW GOOD INC.

 

(Exact name of registrant as specified in its charter)

 

Nevada
(State or other jurisdiction of
incorporation or organization)

 

2034
(Primary Standard Industrial
Classification Code Number)

 

27-2345075
(I.R.S. Employer
Identification No.)

 

1440 N. Union Bower Rd
Irving, Texas 75061
(214) 623-6055
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)


Claudia Goldfarb

Chief Executive Officer

1440 N. Union Bower Road

Irving, Texas 75061

(214) 623-6055
(Name, address, including zip code, and telephone number, including area code, of agent for service)


Copies to:

Drew M. Valentine, Esq.
DLA Piper LLP (US)
303 Colorado St, Suite 3000
Austin, TX 78701
(512) 457-7000

John J. Slater

Latham & Watkins LLP

1271 Avenue of the Americas

New York, NY 10020

(212) 906-1675

 


APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT IS DECLARED EFFECTIVE.


 

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

 

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ 

 

Accelerated filer ☐ 

 

Non-accelerated filer ☒

 

Smaller reporting company 
Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐


 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 



 

The information in this preliminary prospectus supplement is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

 

SUBJECT TO COMPLETION, DATED FEBRUARY 13, 2024

 

sglogo01.jpg

 

 

SOW GOOD INC.

 

       Shares

 

Common Stock

 


 

This is a public offering of shares of common stock, par value $0.0001 per share (“common stock”) of Sow Good Inc. We are offering       shares of our common stock.

 

Currently, our common stock is quoted on the OTCQB Marketplace maintained by OTC Markets, Inc. (“OTCQB”) under the symbol “SOWG.” On           , the last reported sale price of our common stock was $      per share. It is currently estimated that the public offering price per share of common stock will be between $       and $      , and the number of shares offered hereby is based upon an assumed offering price of $        , the midpoint of such estimated price range.

 

Currently, there is a very limited market for our common stock. We have applied to list our common stock on the Nasdaq Capital Market under the symbol “SOWG.” There is no assurance that, if our listing is successful, an active trading market for our common stock will develop or be sustained.

 

We are a “smaller reporting company,” as defined in Rule 12b-2 of the Securities Exchange Act of 1934 and have elected to take advantage of certain scaled disclosure available to smaller reporting companies. This prospectus is intended to comply with the requirements that apply to an issuer that is a smaller reporting company. See “Prospectus SummaryImplications of Being a Smaller Reporting Company.”

 


Investing in our common stock involves risks. Please read Risk Factors beginning on page 13 for factors you should consider before investing in our common stock.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 


  

Per Share

  

Total

 

Public offering price

 $   $  

Underwriting discounts and commissions(1)

 $   $  

Proceeds, before expenses, to us

 $   $  

 


(1)

We refer you to “Underwriting” beginning on page 104 of this prospectus for additional information regarding underwriting compensation.

 

We have granted the underwriters the right to purchase up to an additional             shares of common stock from us to cover over-allotments.

 


 

The underwriters expect to deliver the shares of common stock against payment on or about         , 2024.

 

Roth Capital Partners

 

The date of this prospectus is            , 2024.

 

 

 

 

 

TABLE OF CONTENTS

 

 

EXPLANATORY NOTE

iii

ABOUT THIS PROSPECTUS

iii

TRADEMARKS, SERVICE MARKS AND TRADE NAMES

iii

MARKET AND INDUSTRY DATA

iii

NON-GAAP FINANCIAL MEASURES

iii

PROSPECTUS SUMMARY

1

THE OFFERING

8

SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

10

RISK FACTORS

13

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

40

USE OF PROCEEDS

41

CAPITALIZATION

42

DIVIDEND POLICY

44

CORPORATE CONVERSION

45

DILUTION

46

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

48

BUSINESS

67

MANAGEMENT

79

EXECUTIVE COMPENSATION

83

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

91

PRINCIPAL STOCKHOLDERS

94

DESCRIPTION OF CAPITAL STOCK

96

SHARES ELIGIBLE FOR FUTURE SALE

99

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK

101

UNDERWRITING

104

LEGAL MATTERS

110

EXPERTS

110

WHERE YOU CAN FIND MORE INFORMATION

110

 


 

 

Neither we nor any of the underwriters have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or in any related free writing prospectuses prepared by or on behalf of us or to which we have referred you. Neither we nor any of the underwriters take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares of common stock offered by this prospectus, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date regardless of the time of delivery of this prospectus or any sale of shares of common stock. Our business, financial condition, results of operations and prospectus may have changed since that date.

 

For investors outside the United States: We have not, and the underwriters have not, done anything that would permit this offering or the possession or distribution of this prospectus or any free writing prospectus we may provide to you in connection with this offering in any jurisdiction where action for purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States. See “Underwriting.” 

 

 

EXPLANATORY NOTE

 

Sow Good Inc., the registrant whose name appears on the cover of this registration statement, is a Nevada corporation. Prior to the effectiveness of this registration statement, Sow Good Inc. will convert into a Delaware corporation pursuant to a statutory conversion as described in the section captioned “Corporate Conversion” of the accompanying prospectus. Except as disclosed in the prospectus, the historical consolidated financial statements and selected historical consolidated financial data and other financial information included in this registration statement do not give effect to the Corporate Conversion. Shares of the common stock of Sow Good Inc. are being offered by the prospectus included in this registration statement.

 

ABOUT THIS PROSPECTUS

 

As used in this prospectus, unless the context otherwise requires, references to “we,” “us,” “our,” the “Company,” “Sow Good,” and similar references refer to Sow Good Inc., together with its subsidiaries.

 

TRADEMARKS, SERVICE MARKS AND TRADE NAMES

 

This prospectus includes our trademarks, service marks and trade names, including but not limited to Sow Good, which are protected under applicable intellectual property laws. This prospectus also contains trademarks, trade names, and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade names, and service marks referred to in this prospectus may appear without the ®, ™, or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent permitted under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names, and service marks. We do not intend our use or display of other parties’ trademarks, trade names, or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

 

MARKET AND INDUSTRY DATA

 

Unless otherwise indicated, information contained in this prospectus concerning the industries and markets in which we operate and competitive position is based on information from independent industry and research studies and reports, other third-party sources, and management estimates. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates and information. Although we have not independently verified the accuracy or completeness of any third-party information, we believe the information in this prospectus concerning the industries and markets in which we operate and competitive positions is reliable. Management estimates are derived from publicly available information released by independent industry analysts and other third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data, and our experience in, and knowledge of, such industries and markets, which we believe to be reasonable. In addition, projections, assumptions, and estimates of the future performance of the industries and markets in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those described in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

 

NON-GAAP FINANCIAL MEASURES

 

This prospectus contains “non-GAAP financial measures” that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with generally accepted accounting principles (“GAAP”). Specifically, we make use of the non-GAAP financial measure “Adjusted EBITDA.” Adjusted EBITDA has been presented in this prospectus as a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP.

 

For a discussion of the use of Adjusted EBITDA and a reconciliation of the most directly comparable GAAP measure, see “Prospectus SummarySummary Condensed Financial and Other DataNon-GAAP Financial Measures.”

 

 

PROSPECTUS SUMMARY

 

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our common stock. You should carefully read the entire prospectus, including the sections entitled Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations, and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Some of the statements in this prospectus constitute forward-looking statements. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise indicated or the context otherwise requires, references in this prospectus to the Company, Sow Good, we, us and our refer to Sow Good Inc. and its consolidated subsidiaries.

 

Overview

 

Sow Good is a trailblazing U.S.-based freeze dried candy and snack manufacturer dedicated to providing consumers with innovative and explosively flavorful freeze dried treats. Sow Good has harnessed the power of our proprietary freeze drying technology and product-specialized manufacturing facility to transform traditional candy into a novel and exciting everyday confectionaries subcategory that we call freeze dried candy. We began commercializing our freeze dried candy products in the first quarter of 2023, and as of December 31, 2023, we have fourteen stock keeping units (“SKUs”) in our Sow Good Candy line of treats and four SKUs in our Sow Good Crunch Cream line. We sell our treats across retail, wholesale distributors, and online e-commerce channels, which comprise 63%, 34%, and 2% of our sales through the third quarter of 2023, respectively. As of December 31, 2023, our treats are offered for sale in over 5,857 brick-and-mortar retail outlets in the United States, Canada, and Israel. The rapid demand growth for our delectable treats since their retail debut in March 2023 highlights our consumers’ excitement for our novel and explosively flavorful treats that “satisfy your sweet tooth in fewer bites.”

 

We have custom-built a 20,945 square foot freeze drying facility in Irving, Texas, as well as co-manufacturing arrangements in China and Colombia, that together allow us to freeze dry fourteen million units per year to our demanding quality and safety specifications. Freeze drying removes up to 99% of moisture from a product in its frozen state by applying a small amount of heat in an extremely low air pressure, near outer space-like environment, through the use of massive vacuum chambers, resulting in moisture being removed from the product at the speed of sound. This process of removing moisture from the product, which can take up to twenty-four hours, concentrates its flavor, creating a “hyper dried, hyper crunchy, and hyper flavorful” treat. Our commitment to providing the most flavorful and crunchy treats extends into the product packaging process, where our 194 employees dedicated to hand-packaging, as of December 31, 2023, put our treats through our hand-packed precision packaging process in vigilantly managed low humidity conditions to protect our treats from reintroduction to moisture.

 

We have built four bespoke freeze driers using proprietary technology tailored specifically to our products, creating a truly state-of-the-art facility in Irving, Texas. We are in the process of fabricating and operationalizing two additional freeze driers, which we anticipate will come online in our Irving, Texas facility in the second quarter of 2024. In addition, due to strong customer demand, we have entered into co-manufacturing arrangements with third-party manufacturers whose freeze drying facilities meet our exacting production, sanitation and allergen control requirements, as well as our food quality and safety standards. Currently, all of our products manufactured by third-parties are shipped to our facilities in Texas for packaging. However, we are in the process of opening a facility in Monterrey, Mexico which will receive and package all of our treats made by co-manufacturers, and eventually house additional internal freeze driers for further increased capacity, alongside office space for certain of our corporate and marketing functions.

 

We believe in building a company that creates good experiences for our customers and growth for our investors and employees through our core pillars: (i) innovation—creating novel products that delight our consumers; (ii) scalability—building strong business and manufacturing foundations to support rapid growth and accelerated retail launches; (iii) manufacturing excellence—harnessing our executive team’s manufacturing expertise and continuously refining our processes to maximize efficiencies and reduce energy intake and waste, effectively lowering our costs, increasing margins, and improving our sustainability practices; (iv) meaningful employment opportunities—providing developmental opportunities for our communities by cultivating a growth-oriented and opportunity-rich workplace for our employees, top to bottom, and increasing our employee headcount sevenfold since March 2023; and (v) food quality standards—achieving superior product outcomes by using humidity control throughout our entire facilities, and methodical hand-packed precision packaging process of our treats, which takes additional time and expense when compared to an automated system, but ensures optimal flavor and texture, and maximum protection of product integrity, thereby minimizing customer product return rates.

 

Sow Good is led by co-founders Claudia and Ira Goldfarb, who have over a decade of manufacturing experience with an extensive freeze drying background, dedication to job creation, and proven track record of identifying and growing niche trends into everyday categories. Under their leadership, our revenues have grown from $428.1 thousand during the year ended December 31, 2022 to approximately $6.5 million for the nine-month period ended September 30, 2023, with approximately $5.0 million of that being recorded in the three-month period ended September 30, 2023. For the period ended September 30, 2023 our Adjusted EBITDA was approximately $(0.3) million compared to approximately $(3.5) million for the period ended September 30, 2022. See “Prospectus SummarySummary Condensed Financial and Other DataNon-GAAP Financial Measures” for a description of Adjusted EBITDA and a reconciliation to the nearest comparable GAAP metric.

 

 

Our Market Opportunity

 

We believe the candy category is stagnant, repetitive, and in need of revitalization to reengage and captivate consumers seeking innovative ways to satisfy their sweet cravings. We see our market opportunity as existing at the intersection of two burgeoning categories: freeze dried candy and non-chocolate confections. According to the National Confectioners Association (“NCA”), the non-chocolate confections market grew 13.8% in sales in 2022, exceeding $10 billion, and according to Grand View Research is forecasted to grow at a compounded annual growth rate of 5.8% from 2023 to 2030. We believe the nascent freeze dried candy market is poised for exponential growth given increasing consumer preferences for novel and distinctive candy products. According to the NCA, approximately 61% of shoppers occasionally or frequently seek out products they have never purchased before. Given our exceptional performance in retail launches, surging customer demand, and increasing production capacity, we are confident that we can catapult freeze dried candy from a trendy spark on social media to a stable, top-performing consumer confectionary category in retail.

 

Our Competitive Strengths

 

We believe we are well-positioned competitively to become the leader in the rapidly developing freeze dried candy market due to our distinctive branding, manufacturing expertise, ability to innovate, and advantage of being an early mover in the category.

 

A Distinctive and Trusted Brand Name

 

We believe we have a distinctive brand that consumers trust and helps distinguish our product on crowded retail shelves. Since Sow Good’s inception, we have invested heavily to elevate the Sow Good brand by creating a distinctive and cohesive brand design that sparks consumer curiosity and a desire to sample additional flavors carried by Sow Good. In addition, we use premium packaging materials to communicate the high-quality nature of our products and differentiate ourselves from competitive offerings. We further support our brand efforts through our informative and user-friendly direct-to-consumer website and growing social media presence, where consumers have notably taken to posting unpaid, authentic reviews. Video reviews of Sow Good’s products that are organically generated by TikTok users have amassed over 4.5 million views as of December 31, 2023. Retailers have applauded our strong brand presentation and we believe this has been a contributing factor in our success in securing coveted shelf space upon our launch of our freeze dried candy treats.

 

Manufacturing Expertise

 

Sow Good spent over two years and over $10.0 million dollars to develop a state of the art manufacturing facility and freeze drying equipment calibrated specifically for our products prior to the commercial launch of our freeze dried treats. Manufacturing our treats requires careful handling so as to protect the integrity of their crunch factor, a characteristic of freeze dried candy. These treats are fragile and can easily crumble into unusable product if not handled appropriately. In addition, subtle changes during the freeze drying process can result in dramatic variations in product quality and yield, which makes it very difficult to consistently manufacture freeze dried treats with optimal crunch and flavor at scale successfully. We have overcome these hurdles and achieved scale manufacturing of freeze dried treats by utilizing proprietary technology to custom build three large-scale freeze driers and by developing manufacturing processes that are tailored specifically for each of our products to ensure maximum flavor, crunch, and consistency. We believe the technical knowledge and expertise required to build a freeze drier facility matching our current capacity poses a substantial barrier to entry for competitors in the confectionary space. Moreover, our primary manufacturing facility located in Irving, Texas is a Safe Quality Food (“SQF”) II-certified facility, with a 97 score on our most recent food safety audit, which exemplifies our commitment to maintaining the highest standards in food safety, pathogen prevention, and allergen protocols.

 

 

Early Mover Advantage

 

Given that the freeze dried candy segment of the market is new, we believe we materially benefit from being among the first companies to enter the market at scale, with retail-ready branding and packaging, a diverse and comprehensive product assortment, and seasoned and experienced sales and branding teams. Our early entry into the market has afforded us the time to learn and gain the necessary experience needed to effectively scale and refine the manufacturing, packaging, and distribution processes needed to be successful. We also further utilize our early insights into the burgeoning market to develop a broad product portfolio which include flavor profiles appealing to a broad audience that we believe retailers are seeking. When combined with the strength of our emerging brand, we believe this has allowed us to quickly capture limited available shelf space at retailers. As we continue to expand our presence, we believe the Sow Good brand will be viewed as a pioneer in the category, which should afford increased brand recognition and loyalty. When taken together, we believe these advantages should allow us to establish an early dominant market share in the category that would be difficult to displace due to the barriers to entry for companies just starting out in this market segment. We believe these factors may potentially deter new competitive entrants into the market.

 

Innovative Product-Development Process

 

Innovation is at the heart of our company. We are vigilantly monitoring emerging confectionary trends online and in retail and identifying niche markets, turning them into category staples as evidenced by our successful launch of our Crunch Cream line. We also have highly communicative retail relationships in which retailers inform us of new candy trends they detect in their stores, informing our next freeze dried candy development and launches. We utilize a test kitchen that is integrated with our in-house manufacturing capability and expertise to swiftly test, develop, and launch new products without sacrificing quality. For example, we launched our Crunch Cream line within nine weeks of ideation. By integrating our strong insight on industry trends with our agility, adaptability, and proficiency in new product development, we can take a product from inception to production in just a few months while maintaining our high food quality standards. We believe this allows us to introduce innovative freeze dried treats to the market that will further elevate the status of the Sow Good brand, entrench our existing customer relationships, and provide advantaged entry into new ones.

 

Our Growth Strategy

 

With no major direct competitors in the freeze dried candy space and the fact that there is minimal retail presence for the category, we are capitalizing on our early mover advantage and rapid scaling experience to become the dominant player in this fast growing market. Sow Good is seeking to build significant brand recognition, as well as develop a trust and understanding with consumers that our products will consistently offer explosive and exciting taste. Our growth strategy is based on six primary elements: (i) increasing production capacity; (ii) deepening existing customer relationships; (iii) new customer expansion; (iv) expanding our product offering; (v) driving margin expansion; and (vi) vertically integrating our operations.

 

Increase Production Capacity:

 

Merely by meeting the current level of demand for our treats, we anticipate our net sales surging exponentially. Our initial retail launches of our freeze dried candy line significantly exceeded sales projections. The growing demand from new customers and desire for additional product volume from existing customers has necessitated a significant increase in production capacity. To try to meet this demand, we have increased our workforce sevenfold since March 2023, transitioned to a 24/7 production cycle, and leased 62,000 square feet of warehousing space in the Dallas metroplex to be able to scale and streamline distribution. In addition to scaling production of our four freeze driers as of February 10, 2024, we are in the process of building two additional freeze driers for our Irving facility. We anticipate these additional two freeze driers being operational in the first half of the calendar year 2024.

 

To help bridge the gap between the demand for our treats from our customers and our capacity to manufacture and package those treats in our Irving, Texas facilities, we have entered into co-manufacturing arrangements in China and Colombia to provide additional freeze drying capacity. Further, we are developing an approximately 103,000 square foot facility in Monterrey, Mexico that will provide in the short-term scalable packaging support for the treats co-manufactured in China and Colombia, allowing us to increase our co-manufacturing production. We anticipate adding additional freeze-drying capacity at our Monterrey, Mexico facility in second half of the calendar year 2024 or early 2025.

 

 

Deepen Existing Customer Relationships:

 

Our products have launched in retailers nationwide from convenience and grocery stores to big-box retailers, such as Five Below, Target, Misfits Market/Imperfect Foods, TJX Canada, Big Lots, Hy-Vee, Cracker Barrel and Circle K. In addition, we sell a substantial portion of our products through distributors such as Redstone Foods, C.B. Distributors and Alpine Foods. Video reviews of Sow Good’s products that are organically generated by TikTok users have amassed over 4.5 million views as of December 31, 2023. We believe there is a significant growth opportunity in increasing our shelf presence, SKU portfolio, and number of stores with our existing customers. For many of these customers, we launched with a limited number of SKUs and are now significantly outpacing initial sales projections. As we scale production, we will have the ability to increase the availability of our products to these customers in current locations and distribution to more of their stores, while also broadening our SKU portfolio offerings. Bolstering our distribution will be a key growth driver for Sow Good so more of our products are available wherever our consumers choose to shop, whether it be a retail store, convenience store, or directly online. To further support our retail launches with existing customers and strengthen our brand name, we are also introducing our product displays with distinctive designs and product highlights to enhance our visibility in current stores and educate new consumers on the advantages of freeze dried treats. We believe this strategy will capture the attention of new consumers, further educate and attract current consumers, and ultimately, increase sales for our retailers.

 

New Customer Expansion:

 

Based on our estimate of what penetration for a leading consumer packaged goods (“CPG”) brand should be at maturity, we believe Sow Good’s omnichannel distribution footprint should eventually be multiples of its current size. Currently, our products are marketed and sold through a diverse set of retail channels, including conventional, natural and specialty grocery, club, and convenience stores, and on our website. Increasing our customer base across distribution channels will be a key growth driver for Sow Good and our goal is to expand our customer base so that our products are available wherever our consumers choose to shop, whether it be a retail store, convenience store or directly online. While expanding distribution, we are simultaneously increasing our brand awareness through online and offline marketing initiatives to accelerate the sell-through velocity of our products once they reach the shelves of our customers. We anticipate a portion of the use of proceeds from this offering to fund marketing initiatives to bolster sales and new retail launches.

 

Expand Our Product Offering:

 

We are working to increase the breadth of products offered to customers by leveraging our innovation expertise. We seek to achieve this by developing new candy products that complement our existing portfolio as well as the expansion into adjacent product categories. This is illustrated by the launch of our Crunch Cream freeze dried ice cream bars and sandwiches line in October 2023. We believe the expansion of our product offerings will help drive revenue and margin growth through (i) improving brand recognition, (ii) expanding existing customer relationships, and (iii) capturing new customers seeking unique products. In addition, as our product offering portfolio grows, we anticipate manufacturing efficiencies that provide for increased margin expansion and profitability.

 

Drive Margin Expansion:

 

Our near-term goal is to increase our net income at a faster rate than our sales growth. We believe that this can be achieved by taking several actions that will drive margin expansion. Our primary margin driver will be the expansion of our production and packaging capacity, as well as a portion of our corporate and administrative functions to Monterrey, Mexico, where the cost and availability of labor are significantly more favorable than our current labor market in Irving, Texas. In terms of other margin expansion initiatives, first, we plan to reduce our per-unit production cost by leveraging fixed costs as production volumes increase. Second, we aim to capture operating efficiencies from the refinement of our manufacturing process, which will further reduce our per-unit production cost. Third, we intend to utilize our sales data and market knowledge to manage our sales mix toward higher margin products over time. Fourth, we are actively pursuing cost reductions in our raw materials by implementing changes to our sourcing strategy. Fifth, we are developing product line expansions that optimize the efficiency of our freeze drying process. Finally, while we expect an increase in general and administrative expenses as we strengthen internal operating functions, we believe these expenses will grow at a slower rate than sales as we solidify our sales function, allowing for further margin improvement.

 

Vertically Integrate Our Operations:

 

A key part of driving our margin expansion is continuing to build our vertically integrated business model. The core of this strategy is our highly efficient manufacturing process, which enables rapid expansion of production capacity, provides fixed-cost leverage on increased volumes and optimizes our ability to control quality. In addition to manufacturing capabilities, we have internalized mechanical engineering, branding, design, packaging, digital marketing, customer service and data analytic capabilities, along with finance, research and development and human resource functions. Our broad in-house capabilities and manufacturing capacity are expected to enable significant fixed-cost leverage going forward in manufacturing, as well as most other operating expense line items.

 

 

Recent Developments

 

Certain Preliminary Fourth Quarter and Full-Year 2023 Results

 

The Company is in the process of finalizing its financial results as of and for the quarterly period ended December 31, 2023. Based on available information to date:

 

 

fourth quarter 2023 revenue is expected to be between $9.54 and $9.57 million, marking a quarterly record and significant increase compared to $0.05 million in the fourth quarter of 2022;

 

 

the Company’s preliminary fourth quarter 2023 revenue is expected to be an approximate 90% sequential increase over its third quarter 2023 revenue of $5.03 million and an approximate 46% increase over the September year-to-date revenue of $6.55 million; and

 

 

full year 2023 preliminary revenue is expected to be between $16 million and $16.12 million, a significant increase compared to $0.43 million in 2022.

 

The preliminary results set forth above are unaudited, based on management’s initial review of the Company’s results as of and for the year ended December 31, 2023, and subject to revisions based upon the Company’s year-end closing procedures and the completion of the external audit of the Company’s year-end financial statements. Actual results may differ from these preliminary unaudited results due to the completion of year-end closing procedures, final adjustments and other developments arising between now and the time that the Company’s financial results are finalized. In addition, these preliminary unaudited results are not a comprehensive statement of the Company’s financial results for the year ended December 31, 2023, should not be viewed as a substitute for full, audited financial statements prepared in accordance with generally accepted accounting principles, and are not necessarily indicative of the Company’s results for any future period.

 

Risk Factor Summary

 

Investing in our common stock involves substantial risks. The risks described in the section titled “Risk Factors” immediately following this summary may cause us to not realize the full benefits of our strengths or to be unable to successfully execute all or part of our strategy. Some of the more significant risks include the following:

 

 

We have a limited operating history in our current form and have incurred significant operating losses. As a result of continuing investments to expand our business, we may not achieve or sustain profitability.

 

 

Even if this offering is successful, we may need additional funding in order to fund our existing commercial operations, commercialize new products and grow our business.

 

 

Our rapid growth may not be indicative of our future growth, and our limited operating history may make it difficult to assess our future viability.

 

 

We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.

 

 

We have previously identified material weaknesses and significant deficiencies in our internal control over financial reporting for our financial year ended December 31, 2022. If we experience additional material weaknesses in the future, we may not be able to accurately or timely report our financial condition or results of operations and investors may lose confidence in our financial reports and the market price of our common stock could be adversely affected.

 

 

The retail food and non-chocolate confectionary and freeze dried candy segments are highly competitive. If our competitors are more successful or offer better value to consumers, our business could decline.

 

 

Failure to maintain sufficient internal production capacity, source appropriate external production capacity, or to enter into third-party agreements on terms that are beneficial for us may result in our inability to meet customer demand and/or may increase our operating costs and capital expenditures.

 

 

Loss of one or more of our co-manufacturers or our failure to timely identify and establish relationships with new co-manufacturers could harm our business and impede our growth.

 

 

We rely on a small number of suppliers to provide our raw materials for some of our treats, and our supply chain may be interrupted and prevent us from obtaining the necessary materials we need to operate.

 

 

 

Consumer preferences for our products could change rapidly, and if we are unable to respond quickly to new trends, our business may be adversely affected.

 

 

Any damage to our reputation or brand image could adversely affect our business or financial results.

 

 

Fluctuations in various food and supply, transportation and shipping costs could adversely affect our operating results.

 

 

We may not be able to protect our intellectual property and proprietary technology adequately, which may impact our commercial success.

 

 

Food safety concerns and concerns about the health risk of our products may have an adverse effect on our business.

 

 

Our ability to maintain and expand our distribution network and attract consumers, customers, distributors, retailers and brokers will depend on a number of factors, some of which are outside our control.

 

 

Our success depends in part on the effectiveness of our digital marketing strategy and the expansion of our social media presence, but there are risks associated with these efforts.

 

 

Failure to manage inventory at optimal levels could adversely affect our business, financial condition and results of operations.

 

 

Information security events, or real or perceived errors, failures, or bugs in our systems; other technology disruptions; or failure to comply with laws and regulations relating to information security could negatively impact our business, reputation and customer relationships.

 

 

Our international sales and operations, including our planned business development activities outside of the United States, subject us to additional risks and challenges that can adversely affect our business, results of operations and financial condition.

 

 

Our operations are subject to regulation by the FDA and other federal, state, and local authorities in the U.S., and in any other jurisdictions in which we may sell our products, and there is no assurance that we will be in compliance with all laws and regulations.

 

 

Our common stock is currently quoted on the OTCQB, which may have an unfavorable impact on our stock price and liquidity.

 

 

Our ability to uplist our common stock to Nasdaq Capital Market is subject to us meeting applicable listing criteria.

 

 

The market price of our common stock is, and is likely to continue to be, highly volatile and subject to wide fluctuations.

 

 

We have never paid dividends on our common stock and we do not intend to pay dividends for the foreseeable future.

 

 

We are a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.

 

 

If you purchase shares of our common stock in this offering, you will incur immediate and substantial dilution.

 

 

Our management has broad discretion in the use of the net proceeds received in this offering and may not use the net proceeds effectively.

 

 

The concentration of our stock ownership limits our stockholders’ ability to influence corporate matters.

 

 

Our business depends substantially on the continuing efforts of our senior management and other key personnel, including Ira and Claudia Goldfarb, our Executive Chairman and the Chief Executive Officer, respectively, and our business may be severely disrupted if we lose their services.

 

 

 

A worsening of economic conditions or a decrease in consumer spending may adversely impact our ability to implement our business strategy.

 

 

The failure to successfully integrate newly acquired products or businesses could negatively impact our profitability.

 

Corporate Information

 

We were incorporated in Delaware 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 were engaged in the business of acquiring oil and gas leases and participated in the drilling of wells in the Bakken and Three Forks trends in North Dakota and Montana and managing similar assets for third parties. In December 2012, we reincorporated in Nevada. Effective January 21, 2021, we changed our name from Black Ridge Oil & Gas, Inc. to Sow Good Inc. to pursue the freeze dried fruits and vegetables business as acquired with our October 1, 2020 acquisition of S-FDF, LLC. Prior to April 2, 2012, the Company name was Ante5, Inc., which became an independent company in April 2010. On May 5, 2021, the Company announced the launch of our freeze dried CPG food brand, Sow Good. Prior to the effectiveness of the registration statement of which this prospectus forms a part, we will convert into a Delaware corporation pursuant to a statutory conversion. See “Corporate Conversion.”

 

Our principal executive offices are located at 1440 N. Union Bower Road, Irving, Texas 75061, and our telephone number is (214) 623-6055. Our website addresses are www.thisissowgood.com and www.sowginc.com. Information contained on, or that can be accessed through, our websites are not incorporated by reference into this prospectus, and you should not consider information on our websites to be part of this prospectus.

 

Implications of Being a Smaller Reporting Company

 

We are a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our common stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. As a smaller reporting company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we have chosen and may continue to choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

 

 

THE OFFERING

 

Shares of common stock offered by us

       shares (           shares if the underwriters exercise their over-allotment option in full).

   

Shares of common stock to be outstanding after this offering

       shares (           shares if the underwriters exercise their over-allotment option in full).

   

Over-allotment option to purchase additional shares of common stock

       shares.

   

Use of proceeds

We estimate, based upon an assumed public offering price of $       per share (which is the midpoint of the price range set forth on the cover page of this prospectus), that we will receive net proceeds from this offering of approximately $       (or $       if the underwriters exercise their over-allotment option in full), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

   
 

We currently expect to use the net proceeds from this offering for general corporate purposes, which may include capital expenditures for the expansion of our production capacity in Monterrey, Mexico, funding working and growth capital, the expansion of our sales and marketing function and the reduction of our indebtedness. The expected use of net proceeds from this offering represents our intentions based upon our present plans and business conditions, which could change in the future as or plans and business conditions evolve. We may find it necessary or advisable to use the net proceeds for other purposes, and we will have
broad discretion in the application and specific allocations of the net proceeds of this offering. We intend to invest the net proceeds we receive from this offering that are not used as described above in short- and intermediate-term, interest-bearing obligations, investment-grade instruments or other securities. See “Use of Proceeds.”

   

Dividend policy

We currently intend to retain all available funds and any future earnings to fund the development and growth of our business, and therefore we do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors, subject to compliance with contractual restrictions and covenants in the agreements governing our current and future indebtedness. Any such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability, industry trends, and other factors that our board of directors may deem relevant. See “Dividend Policy.” 

   

Risk factors

See the section titled “Risk Factors” and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock.

   

Trading symbol

Currently, our common stock is quoted on the OTCQB under the symbol “SOWG.” We intend to list our common stock on the Nasdaq Capital Market under the symbol “SOWG.”

 

The number of shares of our common stock to be outstanding after this offering is based on 5,603,083 shares of our common stock outstanding as of September 30, 2023, assuming a public offering price of $       per share of common stock, which is the midpoint of the price range set forth on the cover page of this prospectus, and excludes:

 

 

999 shares of our common stock are issuable upon the exercise of options outstanding under the Amended and Restated 2012 Stock Incentive Plan (the “2012 Plan”) as of September 30, 2023;

 

 

2,000 shares of our common stock are issuable upon the exercise of options outstanding under the 2016 Non-Qualified Stock Option Plan (the “2016 Plan”) as of September 30, 2023;

 

 

647,708 shares of our common stock are issuable upon the exercise of options outstanding under the 2020 Stock Incentive Plan (the “2020 Plan”) as of September 30, 2023;

 

 

 

 

 

2,291,250 shares of our common stock issuable upon the exercise of outstanding warrants at a weighted average exercise price of $2.50 per share as of September 30, 2023;

 

 

3,000,000 shares of our common stock will be reserved for future issuance under our 2024 Stock Incentive Plan (the “2024 Plan”), which will become effective prior to the completion of this offering, as well as any automatic increases in the number of shares of common stock reserved for future issuance under the 2024 Plan.

 

Unless we indicate otherwise or the context otherwise requires, all information in this prospectus assumes or gives effect to:

 

 

the Corporate Conversion;

 

 

the filing and effectiveness of our Certificate of Incorporation, or our Charter, and the adoption of our Bylaws, each of which will occur prior to the closing of this offering;

 

 

no exercise by the underwriters of their option to purchase up to             additional shares of common stock from us to cover over-allotments; and

 

 

a public offering price of $       per share of common stock, which is the midpoint of the range set forth on the cover page of this prospectus.

 

 

 

SUMMARY CONDENSED FINANCIAL AND OTHER DATA

 

The summary statements of operations for the years ended December 31, 2021 and 2022 and the summary balance sheet data as of December 31, 2021 and 2022 have been derived from our audited condensed financial statements included elsewhere in this prospectus. The summary statements of operations for the nine months ended September 30, 2022 and 2023 and the summary balance sheet data as of September 30, 2023 have been derived from our unaudited condensed financial statements included elsewhere in this prospectus. You should read the financial data set forth below in conjunction with our financial statements and the accompanying notes and the information in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected for any period in the future.

 

Combined Statement of Operations Data:

 

   

Years Ended December 31,

   

Nine Months Ended September 30,

 
   

2022

   

2021

   

2023

   

2022

 
                                 

Revenues

  $ 428,132     $ 88,440     $ 6,548,479     $ 381,056  

Cost of goods sold(1)

    308,293       81,311       5,046,434       263,289  

Gross Profit (loss)

    119,839       7,129       1,502,045       117,767  
                                 

Operating expenses:

                               

General and administrative:

                               

Salaries and benefits(1)

    3,662,313       3,473,661       2,644,087       2,947,505  

Professional services(1)

    245,546       357,945       404,256       177,197  

Other general and administrative(1)

    1,625,952       1,550,970       1,265,056       1,296,294  

Intangible asset impairment

    310,173                    

Goodwill impairment

    4,887,297       1,524,030              

Total general and administrative

    10,731,281       6,906,606       4,313,399       4,420,996  

Depreciation and amortization

    274,053       208,448       227,606       202,046  

Total operating expenses:

    11,005,334       7,115,054       4,541,005       4,623,042  
                                 

Net operating loss

    (10,885,495 )     (7,107,925 )     (3,038,960 )     (4,505,275 )
                                 

Other income (expense):

                               

Interest expense

    (1,277,965 )     (5,911 )     (1,349,486 )     (843,240 )

Gain on disposal of property and equipment

                      36,392  

Total other income (expense)

    (1,241,573 )     233,769       (1,349,486 )     (806,848 )
                                 

Net loss

  $ (12,127,068 )   $ (6,874,156 )     (4,388,446 )     (5,312,123 )

 


 

(1)

Includes stock-based compensation expense as follows:

 

   

Year ended December 31,

   

Nine months ended
September 30,

 
   

2022

   

2021

   

2023

   

2022

 
                                 

Salaries and benefits

  $ 862,079     $ 1,377,379     $ 524,665     $ 731,499  

Total stock-based compensation expense

  $ 862,079     $ 1,377,379     $ 524,665     $ 731,499  

 

 

In addition to statement of operations data as determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our business performance.

 

   

Year ended December 31,

   

Nine months ended
September 30,

 
   

2022

   

2021

   

2023

   

2022

 

Other Financial Data:

                               

Adjusted EBITDA(1)

  $ (4,526,393 )   $ (3,998,068 )   $ (288,517 )   $ (3,549,889 )

 

(1)

This financial measure is not calculated in accordance with GAAP. See “—Non-GAAP Financial Measures” below for information regarding our use of this non-GAAP financial measure and a reconciliation of such measure to its nearest comparable financial measure calculated and presented in accordance with GAAP.

 

Balance Sheet Data:

   

As of December 31,

   

As of September 30,

 
   

2022

   

2023

 
           

(unaudited)

 

Cash and cash equivalents

  $ 276,464     $ 2,096,672  

Total current assets

    2,578,057       5,874,424  

Total assets

    8,898,577       13,517,164  

Total current liabilities

    890,177       2,728 ,716  

Total liabilities

    6,087,690       10,647,178  

Total stockholders’ equity

    2,810,887       2,869,986  

 

Non-GAAP Financial Measures

 

Adjusted EBITDA is a supplemental measure of our performance that is not required by or presented in accordance with GAAP. We define Adjusted EBITDA as net loss before depreciation, interest expense, net and income tax benefit, adjusted to eliminate non-cash intangible asset impairment, goodwill impairment, inventory write-down and stock-based compensation. The most directly comparable GAAP measure is net income (loss). Adjusted EBITDA is not recognized terms under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. In addition, in evaluating Adjusted EBITDA, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of Adjusted EBITDA. The presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Because not all companies use identical calculations, the presentations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.

 

We present this non-GAAP measure because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA is useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses Adjusted EBITDA to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation, and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone provide.

 

 

There are a number of limitations related to the use of Adjusted EBITDA rather than net loss, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. Some of these limitations are:

 

 

Adjusted EBITDA excludes stock-based compensation expense as it has recently been, and will continue to be for the foreseeable future, a significant recurring non-cash expense for our business;

 

 

Adjusted EBITDA excludes depreciation and amortization expense and, although this is a non-cash expense, the assets being depreciated and amortized may have to be replaced in the future;

 

 

Adjusted EBITDA does not reflect the cash requirements necessary to service interest on our debt which affects the cash available to us;

 

 

Adjusted EBITDA does not reflect the monies earned from our investments since it does not reflect our core operations;

 

 

Adjusted EBITDA does not reflect change in fair value of financial instruments since it does not reflect our core operations and is a non-cash expense;

 

 

Adjusted EBITDA does not reflect income tax expense that affects cash available to us; and

 

 

the expenses and other items that we exclude in our calculations of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating results.

 

In addition, other companies may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.

 

The following table reconciles Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP.

 

   

Year ended
December 31,

   

Nine months ended
September 30,

 
   

2022

   

2021

   

2023

   

2022

 
                                 

Net income (loss)

  $ (12,127,068 )   $ (6,874,156 )   $ (4,388,446 )   $ (5,312,123 )

Stock-based compensation expense

    862,079       1,377,379       524,665       731,499  

Depreciation and amortization(1)

    299,553       208,448       306,092       223,887  

Interest expense

    1,277,965       5,911       1,349,486       843,240  

Intangible Asset Impairment

    310,173                    

Goodwill Impairment

    4,887,297       1,524,030              

Inventory Write Down

                1,919,686        

(Gain) Loss on Disposal of Property

    (36,392 )     8,036           (36,392 )

Gain on Early Extinguishment of Debt

          (113,772 )            

Gain on Investment in Allied Esports Entertainment

          (133,944 )            

Adjusted EBITDA

  $ (4,526,393 )   $ (3,998,068 )   $ (288,517 )   $ (3,549,889 )

 

 

(1)

This item includes $25,500 and $0 of depreciation included in cost of goods sold for the years ended December 31, 2022 and 2021, respectively, and $150,271 and $21,841 for the nine months ended September 30, 2023 and 2022, respectively.

 

 

RISK FACTORS

 

Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors and all other information contained in this prospectus, including Managements Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and related notes, before purchasing our common stock. If any of the following risks occur, our business, financial condition, and results of operations could be materially and adversely affected. In that case, the trading price of our common stock could decline and you may lose some or all of your investment.

 

Risks Related to Our Operating History, Financial Position and Capital Needs

 

We have a limited operating history in our current form and have incurred significant operating losses. As a result of continuing investments to expand our business, we may not achieve or sustain profitability.

 

In its current form, Sow Good was formed and commenced commercial sales of our products in 2021, and in 2023 we started producing and commercializing our freeze dried candy treats, including our Sow Good freeze dried candy line and our Crunch Cream line. Prior to the formation of Sow Good in its current form, on October 1, 2020, we completed our 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 (the “Asset Purchase Agreement”). The assets we purchased under the Asset Purchase Agreement were of a development stage business without any major customers or history of operations upon which to forecast future business trends. As a result, we have a limited operating history and limited experience manufacturing and selling our products, establishing relationships with consumers, customers, suppliers, vendors and distributors and building our brand reputation. These and other factors combine to make it more difficult for us to accurately forecast our future operating results, which in turn makes it more difficult for us to prepare accurate budgets and implement strategic plans. We expect that this uncertainty will continue to exist in our business for the foreseeable future. If we do not address these risks and uncertainties successfully, our operating results could differ materially from our estimates and forecasts, and from the expectations of investors or analysts, which could harm our business and result in a decline in the trading price of our common stock.

 

As a developing company, we will need to adopt and implement a plan to increase awareness of our products, secure distribution channels, and foster and strengthen our supply, manufacturing and distribution relationships. It is likely our strategic priorities will need to evolve over time and our business would be materially and adversely affected if we do not properly adapt our strategies to our changing needs and changes in the market. As our operations develop and grow, we expect to experience significant increases in our working capital requirements. Even if we obtain additional capital and achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may be unable to sustain or increase profitability and our failure to do so would adversely affect the Company’s business, including our ability to raise additional funds.

 

In the years ended December 31, 2021 and 2022, we incurred net losses of approximately $6.9 million and $12.1 million, respectively. We anticipate our operating expenses and capital expenditures will increase substantially in the foreseeable future as we seek to expand our retail distribution, invest in our approach to build brand awareness, leverage our product development capabilities, and invest in production capacity and automation. As a result of our continuing investments to expand our business in these and other areas, we expect our expenses to increase significantly, and we may not achieve profitability in the foreseeable future. Even if we are successful in broadening our consumer base, and increasing revenues from new and existing customers, we may not be able to generate additional revenues in amounts that are sufficient to cover our expenses. We may incur significant losses for a number of reasons, including as a result of the other risks and uncertainties described elsewhere in this prospectus. We cannot assure you that we will continue to achieve profitability in the future or that we will sustain profitability over any particular period of time.

 

 

Even if this offering is successful, we may need additional funding in order to fund our existing commercial operations, commercialize new products and grow our business.

 

To date, we have financed our operations through private placements of our equity, equity-linked and debt securities. We have devoted substantially all our financial resources and efforts to developing our products, workforce, and manufacturing capabilities. Our long-term growth and success are dependent upon our ability ultimately to expand our manufacturing capacity and generate cash from operating activities. There is no assurance that we will be able to generate sufficient cash from operations or access the capital we need to grow our business. Our inability to obtain additional capital could have a material adverse effect on our ability to fully implement our business plan as described herein and grow our business, to a greater extent than we can with our existing financial resources.

 

Based on our current business plan, we believe the net proceeds from this offering, together with our current cash and cash equivalents and cash receipts from sales, will enable us to conduct our planned operations for at least the next twelve months. If our available cash balances, net proceeds from this offering and/or anticipated cash flow from operations are insufficient to satisfy our liquidity requirements because of lower demand for our products or due to other risks described herein, we may seek to sell common stock or other securities, enter into an additional credit facility or seek another form of third-party funding, including debt financing. The amount of additional capital we may require, the timing of our capital needs and the availability of financing to fund those needs will depend on a number of factors, including our strategic initiatives and operating plans, the performance of our business and the market conditions for debt or equity financing. Although we believe various debt and equity financing alternatives will be available to us to support our working capital needs, financing arrangements on acceptable terms may not be available to us when needed. Additionally, these alternatives may require significant cash payments for interest and other costs or could be highly dilutive to our existing stockholders. Any such financing alternatives may not provide us with sufficient funds to meet our long-term capital requirements.

 

We may consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons, including to:

 

 

provide for additional capacity;

 

 

increase our sales and marketing efforts and address competitive developments;

 

 

provide for supply and inventory costs;

 

 

fund development and marketing efforts of any future products or additional features to then-current products;

 

 

acquire, license or invest in new technologies;

 

 

acquire or invest in complementary businesses or assets; and

 

 

finance capital expenditures and general and administrative expenses.

 

Our present and future funding requirements will depend on many factors, including:

 

 

our ability to achieve revenue growth and improve gross margins;

 

 

the cost of expanding our operations and offerings, including our sales and marketing efforts;

 

 

the effect of competing market developments; and

 

 

costs related to international expansion.

 

The various ways we could raise additional capital carry potential risks. If we raise funds by issuing equity securities, dilution to our stockholders could result. Any equity securities issued also could provide for rights, preferences, or privileges senior to those of holders of shares of our common stock. If we raise funds by issuing debt securities, those debt securities would have rights, preferences, and privileges senior to those of holders of shares of our common stock. The terms of any debt securities issued or borrowings made pursuant to a credit agreement could impose significant restrictions on our operations. If we raise additional funds through collaborations and licensing arrangements, we might be required to relinquish significant rights or grant licenses on terms that are not favorable to us.

 

 

Our rapid growth may not be indicative of our future growth, and our limited operating history may make it difficult to assess our future viability.

 

Our revenues grew from approximately $0.1 million for the year ended December 31, 2021 to approximately $0.4 million for the year ended December 31, 2022 and approximately $6.5 million for the nine months ended September 30, 2023. We expect that, in the future, as our revenue increases to higher levels, our revenue growth rate will decline. We also believe that growth of our revenue depends on several factors, including our ability to:

 

 

expand our production capacity;

 

 

increase awareness of our brand;

 

 

expand our existing channels of distribution;

 

 

develop additional channels of distribution;

 

 

grow our customer base;

 

 

cost-effectively increase online sales at our direct website and third-party marketplaces;

 

 

effectively introduce new products;

 

 

manufacture at a scale that satisfies future demand; and

 

 

effectively source key raw materials.

 

We may not successfully accomplish any of these objectives. In addition, we may face increased competition from current or new competitors that may reduce our market share and thereby limit our growth. Since the initial commercialization of our freeze dried candy treats in March 2023, we have not yet demonstrated the ability to sustain rapid growth over a long period of time or achieve profitability at scale. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history or had previously achieved profitability.

 

We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.

 

Our strategy envisions the expansion of our business. If we fail to effectively manage our growth, our financial results could be adversely affected. Our rapid growth has placed and may continue to place significant demands on our organizational, administrative and operational infrastructure, including manufacturing operations, quality control, technical support and customer service, sales force management and general and financial administration. We must continue to refine and expand our business capabilities, including in sales, marketing, product development, information technology, equipment, facilities and personnel, as well as our systems and processes and our access to financing sources. We will also need to improve our operational, financial and management controls as well as our reporting systems and procedures. As we grow, we must continue to hire, train, supervise and manage new employees.

 

We cannot assure that we will be able to:

 

 

meet our capital needs;

 

 

expand our systems effectively or efficiently or in a timely manner;

 

 

allocate our human resources optimally;

 

 

identify and engage qualified employees and consultants, or retain valued employees and consultants; or

 

 

incorporate effectively the components of any business that we may acquire in our effort to achieve growth.

 

 

If we are unable to manage our growth effectively, we may be unable to execute our business plan, which could have a material adverse effect on our business and our results of operations. Managing our planned growth effectively will require us to:

 

 

maintain a low cost of customer acquisition relative to customer lifetime value;

 

 

identify products that will be viewed favorably by customers;

 

 

enhance our facilities and purchase additional equipment at our facility in Irving, Texas; and

 

 

successfully hire, train and motivate additional employees, including additional personnel for our production, sales and marketing efforts and our finance and accounting functions.

 

The expansion of our products and customer base may result in increases in our overhead and selling expenses. Any increase in expenditures in anticipation of future sales that do not materialize would adversely affect our profitability. In addition, if we are unable to effectively manage the growth of our business, the quality of our products may suffer and we may be unable to address competitive challenges, which would adversely affect our overall business, operations and financial condition.

 

We have previously identified material weaknesses and significant deficiencies in our internal control over financial reporting for our financial year ended December 31, 2022. If we experience additional material weaknesses in the future, we may not be able to accurately or timely report our financial condition or results of operations and investors may lose confidence in our financial reports and the market price of our common stock could be adversely affected.

 

We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Interim Chief Financial Officer, of the effectiveness of our internal controls over financial reporting as of December 31, 2022. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control — Integrated Framework (2013).” Based on this assessment, management believed that, as of December 31, 2022, our internal control over financial reporting was ineffective based on those criteria. As a small company with limited resources that is mainly focused on the development and sales of our freeze dried treats, the Company did not employ a sufficient number of staff in its finance department to possess an optimal segregation of duties or to provide optimal levels of oversight. This resulted in certain audit adjustments and management believed that there may be a possibility for a material misstatement to occur in future periods while it employed that number of personnel in its finance department.

 

To address and fully remediate this material weakness, management performed additional analyses and other procedures to ensure that the financial statements for the year ended December 31, 2022 fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Additionally, our remediation efforts for this material weakness included the hiring of additional staff members in our accounting and finance departments in 2023.

 

As a public company, we are required to comply with the requirements of the Sarbanes-Oxley Act, including, among other things, maintaining effective disclosure controls and procedures and internal control over financial reporting. We continue to develop and refine our disclosure controls and other procedures that are designed to ensure that the information we are required to disclose in the reports that we file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers.

 

 

We must continue to improve our internal control over financial reporting. Once we are no longer considered to be a smaller reporting company, our management will then be required to make a formal assessment of the effectiveness of our internal control over financial reporting pursuant to Sarbanes-Oxley Act Section 404(a), and we may in the future be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with these requirements within the prescribed time period, we will be engaging in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of our internal control over financial reporting, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. There is a risk that we will not be able to conclude, within the prescribed time period or at all, that our internal control over financial reporting is effective as required by Section 404 of the Sarbanes-Oxley Act.

 

We cannot assure you that there are not, and will not be material weaknesses in our internal control over financial reporting in the future. Any failure to maintain effective internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or operating results. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain these and other effective control systems required of public companies, could also restrict our future access to the capital markets.

 

Risks Related to Our Business and Industry

 

The retail food and non-chocolate confectionary and freeze dried candy segments are highly competitive. If our competitors are more successful or offer better value to consumers, our business could decline.

 

We operate in a very competitive environment that is characterized by competition from a number of other retailers in the market in which we operate. We compete with large national and regional food retail companies, some of which have greater financial and operational resources than us, and with smaller local retailers, some of which may have lower administrative costs than us. We may be at a competitive disadvantage relative to certain of our large national and regional competitors whose operations are more geographically diversified than ours.

 

Increased competition could hurt our business. The freeze dried candy is fragmented and in its early stages of development, but it is becoming increasingly competitive. New competitors may easily enter the freeze dried candy market on which we are focused. The competitors may offer an equivalent or superior product to that of the Company. We expect the number of companies offering products and services in our market segment to increase.

 

If we are unable to compete effectively in our markets, our business could decline disproportionately to our competitors, and our results of operations and financial condition could be adversely affected. We can provide no assurance that we will be able to continue to compete successfully in any of our markets. Our inability to continue to compete successfully in any of our markets could have a material adverse effect on our business, prospects, liquidity, financial condition, and results of operations.

 

Failure to maintain sufficient internal production capacity, source appropriate external production capacity, or to enter into third-party agreements on terms that are beneficial for us may result in our inability to meet customer demand and/or may increase our operating costs and capital expenditures.

 

We intend to rely on internal production capacity and third-party co-manufacturers to fulfill our growing production needs and meet the demand for our treats. We have plans to expand our own production facilities, but in the short-term may need to increase our reliance on third parties to provide production and supply certain services for a number of our products. A failure by us or our co-manufacturers to comply with food safety, environmental, or other laws and regulations, or to produce products of the quality and taste-profile we expect, or with efficiency and at costs we expect, may also disrupt our supply of products. In addition, we may experience increased distribution and warehousing costs due to capacity constraints resulting from our growth. If we need to enter into additional co-manufacturing or distribution agreements in the future, we can provide no assurance that we would be able to find acceptable third-party providers or enter into agreements on satisfactory terms or at all. In addition, we will likely need to expand our internal capacity, which could increase our operating costs and could require significant capital expenditures. If we cannot maintain sufficient and satisfactory production, warehousing and distribution capacity, either internally or through third party agreements, we may be unable to meet customer demand and/or our manufacturing, distribution and warehousing costs may increase, which could negatively affect our business.

 

 

Loss of one or more of our co-manufacturers or our failure to timely identify and establish relationships with new co-manufacturers could harm our business and impede our growth.

 

We intend to rely on international co-manufacturers to provide us with a portion of our production capacity. The terms of these co-manufacturing agreements vary, and some of these arrangements are short-term or based on purchase orders. Volumes produced under each of these agreements can fluctuate significantly based upon the product’s life cycle, product promotions, alternative production capacity, and other factors, none of which are under our direct control. Any of the co-manufacturers with whom we do not have a written contract could seek to alter or terminate its relationship with us at any time, leaving us with periods during which we have limited or no ability to manufacture our products. If we need to replace a co-manufacturer, there can be no assurance that additional capacity will be available when required on acceptable terms, or at all.

 

An interruption in, or the loss of operations at, one or more of our co-manufacturing facilities, which may be caused by work stoppages, labor shortages, strikes or other labor unrest, production disruptions, product quality issues, local economic and political conditions, restrictive governmental actions, border closures, disease outbreaks or pandemics (such as COVID-19), the outbreak of hostilities, acts of war, terrorism, fire, earthquakes, severe weather, flooding or other natural disasters at one or more of these facilities, could delay, postpone or reduce production of some of our products, which could have a material adverse effect on our business, results of operations and financial condition until such time as such interruption is resolved or an alternate source of production is secured.

 

We believe there are a limited number of competent, high-quality co-manufacturers in the industry that meet our strict quality and control standards, and as we seek to continue to obtain additional or alternative co-manufacturing arrangements in the future, there can be no assurance that we would be able to do so on satisfactory terms, in a timely manner, or at all. Additionally, as we expand our operations internationally, we will need to further develop relationships with co-manufacturers overseas to meet sales demand, and there can be no assurance that we will be able to successfully do so. Therefore, the loss of one or more co-manufacturers, any disruption or delay at a co-manufacturer or any failure to identify and engage co-manufacturers for new products, product extensions and expanded operations could delay, postpone or reduce production of our products, which could have a material adverse effect on our business, results of operations and financial condition.

 

We rely on a small number of suppliers to provide our raw materials for some of our treats, and our supply chain may be interrupted and prevent us from obtaining the necessary materials we need to operate.

 

We rely on suppliers and vendors to meet our high-quality standards and supply products in a timely and efficient manner. There is, however, no assurance that quality ingredients will continue to be available to meet our specific and growing needs. This may be due to, among other reasons, problems with our suppliers’ and vendors’ businesses, finances, labor relations, ability to export or import materials, product quality issues, costs, production, insurance and reputation, as well as disease outbreaks or pandemics such as the COVID-19 pandemic, acts of war, terrorism, natural disasters, fires, earthquakes, flooding or other catastrophic occurrences. If for any reason our suppliers or vendors became unable or unwilling to continue to provide services to us, this would likely lead to an interruption in our ability to import our products until we found another source that could provide these services. Failure to find a suitable replacement, even on a temporary basis, would have a material adverse effect on our ability to meet our current production targets, make it difficult to grow and would have an adverse effect on our results of operations.

 

During the first nine months of 2023, three key suppliers, Redstone Foods, Albanese and Guangdong accounted for approximately 75% of our total raw material and packaging purchases. As a result of this concentration in our supply chain, our business and operations would be negatively affected if any of our key suppliers were to experience significant disruption affecting the price, quality, availability or timely delivery of their products. In the event that our supply from our current suppliers is interrupted, our operations may be interrupted resulting in lost revenue, added costs such as, without limitation, shipping costs, and distribution delays that could harm our business and customer relationships until we are able to identify and enter into an agreement with one or more alternative suppliers.

 

 

The challenges of competing with other non-chocolate confectionary businesses may result in reductions in our revenue and operating margins.

 

The retail food industry is very competitive, and particularly so in the non-chocolate confectionary segment. We compete with many companies on the basis of taste, quality and price of product offered, and customer service. Our success depends, in part, upon the popularity of our products and our ability to develop new items that appeal to a broad range of consumers. Shifts in consumer preferences away from products like ours, our inability to develop new items that appeal to a broad range of consumers, or changes in our offerings that eliminate products popular with some consumers could harm our business. In addition, aggressive pricing by our competitors or the entrance of new competitors into our markets could reduce our revenue and operating margins by forcing us to reduce our prices on similar product offerings in order to remain competitive. We also compete with other employers in our markets for workers and may become subject to higher labor costs as a result of such competition. Recently there has been a significant increase in labor costs.

 

We have been able to compete successfully by differentiating ourselves from our competitors by providing an expanding selection of freeze dried treats, competitive pricing and convenience. If changes in consumer preferences decrease the competitive advantage attributable to these factors, or if we fail to otherwise positively differentiate our product offering or customer experience from our competitors, our business, financial condition, and results of operations could be materially and adversely affected.

 

Many of our current competitors have, and potential competitors may have, longer operating histories, greater brand recognition, larger fulfillment infrastructures, greater technical capabilities, significantly greater financial, marketing, and other resources and larger customer bases than we do. These factors may allow our competitors to derive greater revenues and profits from their existing customer bases, acquire customers at lower costs or respond more quickly than we can to new or emerging technologies and changes in consumer preferences or habits. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns, and adopt more aggressive pricing policies (including but not limited to predatory pricing policies and the provision of substantial discounts), which may allow them to build larger customer bases or generate revenues from those customer bases more effectively than we are able to execute upon. There can be no assurance that we will be able to successfully compete against these competitors.

 

We expect competition in the non-chocolate confectionary and freeze dried candy segments generally to continue to increase. We believe that our ability to compete successfully in this market depends upon many factors both within and beyond our control, including:

 

 

the size and composition of our customer base;

 

 

the number of products that we feature on our website;

 

 

the quality and responsiveness of customer service;

 

 

our selling and marketing efforts;

 

 

the quality and price of the products that we offer;

 

 

the convenience of the shopping experience that we provide;

 

 

our ability to distribute our products and manage our operations; and

 

 

our reputation and brand strength.

 

 

Given the rapid changes affecting the global, national, and regional economies generally and the food and beverage industry, we may not be able to create and maintain a competitive advantage in the marketplace. Our success will depend on our ability to respond to, among other things, changes in consumer preferences, laws and regulations, market conditions, and competitive pressures. Any failure by us to anticipate or respond adequately to such changes could have a material adverse effect on our financial condition, operating results, liquidity, cash flow and our operational performance.

 

If we fail to compete successfully in this market, our business, financial condition, and results of operations would be materially and adversely affected.

 

Consumer preferences for our products, or for freeze dried candy generally, could change rapidly, and if we are unable to respond quickly to new trends, our business may be adversely affected.

 

Our business is focused on the development, manufacture, marketing, and sale of freeze dried treats. Consumer preferences, and therefore demand for our products, could change rapidly as a result of a number of factors, including consumer demand for specific nutritional content, dietary habits, or restrictions, including perceptions regarding food quality, concerns regarding the health effects of certain ingredients or macronutrient ratios, shifts in preferences for product attributes, laws and regulations governing product claims, brand reputation and loyalty, and product pricing. Further, freeze dried candy as a market entrant is in its nascent stage and may not see wide-spread acceptance. A significant shift in consumer demand away from our products, or towards competitive products, could limit our product sales, reduce our market share, and negatively impact our brand reputation, any of which could adversely affect our business, operating results, and financial condition.

 

Our ability to maintain and expand our distribution network and attract consumers, customers, distributors, retailers and brokers will depend on a number of factors, some of which are outside our control.

 

We sell a substantial portion of our products through retailers such as Five Below, Target, Misfits Market/Imperfect Foods, TJX Canada, Big Lots, Hy-Vee, Cracker Barrel, and Circle K, and distributors such as Redstone Foods, C.B. Distributors and Alpine Foods, and through our website. The largest four retailers of our products for the nine months ended September 30, 2023 were Five Below, C.B. Distributors, Redstone Foods, and Alpine Foods, accounting for approximately 76% of our revenues for that period.

 

The loss of, or business disruption at, one or more of these retailers or distributors or a negative change in our relationship with one of our key retailers or a disruption to any one of our sales channels could have a material adverse effect on our business. If we do not maintain our relationship with existing retailers and distributors or develop relationships with new retailers and distributors, the growth of our business may be adversely affected, and our business may be harmed.

 

In addition, we may not be able to successfully manage all or any of the following factors in any of our current or prospective geographic areas of distribution:

 

 

the level of demand for our brands and products types;

 

 

our ability to price our products at levels competitive with those of competing products; and

 

 

our ability to deliver products in the quantity and at the time ordered by consumers, distributors, retailers and brokers.

 

Our inability to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on our relationships in that particular geographic area, thus limiting our ability to maintain or expand our market, which will likely adversely affect our revenues and financial results.

 

Further, if we are required to obtain additional or alternative distribution agreements or arrangements with our distributors or retailers in the future, we cannot be certain that we will be able to do so on satisfactory terms or in a timely manner. Our inability to enter into satisfactory distribution agreements may inhibit our ability to implement our business plan or to establish markets necessary to expand the distribution of our products successfully.

 

 

If we fail to grow the value and enhance the visibility of our brand, our business could suffer.

 

While we believe we have a strong brand reputation, a key component of our growth strategy involves growing the value and enhancing the visibility of our “Sow Good” brand. Our ability to maintain, position and enhance our brand will depend on a number of factors, including the market acceptance of our current and future product offerings, the nutritional content of our products, food quality and safety, quality assurance, our advertising and marketing efforts, and our ability to build relationships with customers and consumers. Any negative publicity, regardless of its accuracy, could materially adversely affect our business. Brand value is often based on perceptions of subjective qualities, and any incident that erodes the loyalty of our customers, suppliers, or consumers, could significantly reduce the value of our brand and harm our business.

 

Any damage to our reputation or brand image could adversely affect our business or financial results.

 

Maintaining a good reputation is critical to our business. Our reputation or brand image could be adversely impacted by, among other things, any failure to maintain high ethical, social and environmental sustainability practices for our operations, the views of management and other stakeholders, our impact on the environment, public pressure from investors or policy groups to change our policies, consumer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, including opportunities we choose to forego due to management philosophy, consumer perceptions of our use of social media, or consumer perceptions of statements made by us, our employees and executives, agents or other third-parties. Negative publicity, including as a result of the social or political views of our management, employees, customers or vendors, or misconduct by our consumers, customers, vendors or employees, can also spread rapidly through social media. Should we not respond in a timely and appropriate manner to address negative publicity, our brand and reputation may be significantly harmed. Damage to our reputation or brand image or loss of consumer confidence in our services could adversely affect our business and financial results as well as require additional resources to rebuild or repair our reputation.

 

Fluctuations in various food and supply, transportation and shipping costs could adversely affect our operating results.

 

Supplies and prices of the ingredients that we are going to use to may be affected by a variety of factors, such as weather conditions (including the effects of climate change), natural disasters, seasonal fluctuations, demand, politics and economics in the production areas. These factors subject us to shortages or interruptions in product supplies, which could adversely affect our revenue and profits.

 

We rely on our suppliers to meet our quality standards and to supply ingredients and other products in a timely and safe manner, and in accordance with our product specifications. We have developed and implemented a series of measures to ensure the safety and quality of our third-party supplied products, including using contract specifications, certificates of analysis for some products or ingredients, sample testing by suppliers, and sensory based testing. However, no safety and quality measures can eliminate the possibility that suppliers may provide us with products that are inconsistent with our specifications, below our quality standards, improperly labeled, or unsafe for consumption. If this was to occur, in addition to the risks associated with negative customer and consumer experiences, we could face the possible seizure or recall of our products, or the imposition of civil or criminal sanctions, any of which could have an adverse impact on our business.

 

In addition, the price of candy, which is currently our main ingredient in our products, can be volatile. The candy of the quality we seek tends to trade on a negotiated basis, depending on supply and demand at the time of the purchase. An increase in pricing of any candy that we are going to use in our products could have a significant adverse effect on our profitability. We cannot assure you that we will be able to secure our candy supply. In addition, we may face limits on the ability to source some of the candy for our freeze dried treats.

 

In addition, our costs are affected by general inflationary pressures related to transportation and shipping costs, particularly to the extent we have additional retail sales and smaller order quantities. We are also subject to a reduction in our profitability due to increased labor costs for our employees. As we look to expand our distribution and market, we may not be able to increase our sales prices to absorb these costs. We cannot provide assurances that we will be able to maintain profitability consistent with our goals. As we plan for the acquisition of additional freeze driers, we also anticipate that the costs for this equipment will be more than as well as the lead time to receive the equipment once ordered will be longer than we have planned. This could increase our capital needs and also delay our ability to ramp up production in a timely manner to correspond to demand.

 

 

In addition, we purchase and use significant quantities of cardboard, film, and plastic to package our products. The costs of these products may also fluctuate based on a number of factors beyond our control, including changes in the competitive environment, availability of substitute materials, and macroeconomic conditions. If we are not successful in managing our raw material and packaging costs, if we are unable to increase our prices to fully or partially offset the increased costs, or if such price increases reduce our sales volumes, then such cost increases will adversely affect our operating results.

 

Food safety concerns and concerns about the health risk of our products may have an adverse effect on our business.

 

Food safety is a top priority for us, and we dedicate substantial resources to ensure that our customers enjoy safe and high-quality treats. However, foodborne illnesses and other food safety issues have occurred in the retail food industry in the past and could occur in the future. Also, our reliance on third-party food suppliers, distributors and food delivery aggregators increases the risk that foodborne illness incidents could be caused by factors outside of our control. A failure or perceived failure to meet our quality or safety standards, including product adulteration, contamination, or tampering, or allegations of mislabeling, whether actual or perceived, could occur in our operations or those of our co-manufacturers, distributors or suppliers. This could result in time consuming and expensive production interruptions, negative publicity, the destruction of product inventory, the discontinuation of sales or our relationships with such co-manufacturers, distributors, or suppliers, lost sales due to the unavailability of product for a period of time and higher-than-anticipated rates of returns of goods. The occurrence of health-related illnesses or other incidents related to the consumption of our products, including allergies, excessive consumption or death to a consumer, could also adversely affect the price and availability of affected ingredients, resulting in higher costs, disruptions in supply and a reduction in our sales.

 

Noncompliance with applicable food product quality and safety regulations can result in enforcement action by applicable regulatory agencies, including product recalls, market withdrawals, product seizures, warning letters, injunctions, or criminal or civil liability. Such incidents could also expose us to product liability, negligence or other lawsuits, including consumer class action lawsuits. Any claims brought against us may exceed or be outside the scope of our existing or future insurance policy coverage or limits. Any judgment against us that is more than our policy limits or not covered by our policies or not subject to insurance would have to be paid by us, which would affect our results of operations and financial condition. Moreover, negative publicity also could be generated from false, unfounded or nominal liability claims or limited recalls. The occurrence of foodborne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, which could result in disruptions in our supply chain, significantly increase costs and/or lower margins for us.

 

In addition, there is increasing consumer awareness of, and increased media coverage on, the alleged adverse health impacts of consumption of various food products globally. Our products contain fats, sugar and other compounds and allergens, the health effects of which are the subject of public scrutiny, including the suggestion that excessive consumption of sugar and other compounds can lead to a variety of adverse health effects. An unfavorable report on the health effects of certain compounds present in our products, or negative publicity or litigation arising from other health risks such as obesity, could significantly reduce the demand for our products. Additionally, there may be new laws and regulations that could impact the ingredients and nutritional content of our product offerings, or laws and regulations requiring us to disclose the nutritional content of our product offerings or otherwise restrict sales of our treats. A decrease in consumer traffic as a result of these health concerns, laws or regulations or negative publicity could materially and adversely affect our business.

 

Product liability exposure may subject us to significant liability.

 

We may face an inherent business risk of exposure to product liability and other claims and lawsuits in the event that the development or use of our technology or prospective products is alleged to have resulted in adverse effects. The sale of products for human use and consumption involves the risk of injury or illness to consumers. Such injuries may result from inadvertent mislabeling, tampering by unauthorized third parties or product contamination or spoilage. Under certain circumstances, we may be required to recall or withdraw products, suspend production of our products, or cease operations, which may lead to a material adverse effect on our business. In addition, our customers may stop placing or cancel orders for such products as a result of such events.

 

 

Even if a situation does not necessitate a recall or market withdrawal, product liability claims might be asserted against us. While we are subject to governmental inspection and regulations and believe our facilities and those of our co-manufacturers and suppliers comply in all material respects with all applicable laws and regulations, if the consumption of any of our products causes, or is alleged to have caused, a health-related illness or death to a consumer, we may become subject to claims or lawsuits relating to such matters. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or physical harm could cause consumers to lose confidence in the safety and quality of our products. Moreover, claims or liabilities of this type might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others. Although we maintain product liability and product recall insurance in an amount that we believe to be consistent with market practice, we cannot be sure that we will not incur claims or liabilities for which we are not insured or that exceed the amount of our insurance coverage. A product liability judgment against us or a product recall could have a material adverse effect on our business, financial condition, results of operations or liquidity.

 

We have no control over our products once purchased by consumers. Accordingly, consumers may store or prepare our products in a manner that is inconsistent with our directions or store our products for longer than approved periods of time, which may adversely affect the quality and safety of our products.

 

Although we believe our insurance coverage to be adequate and consistent with industry practice, we may not have sufficient insurance coverage, and we may not be able to obtain sufficient coverage at a reasonable cost. An inability to obtain product liability insurance at acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of our products. Further, any claim under our insurance policies may be subject to certain exceptions, may not be honored fully, in a timely manner, or at all, and we may not have purchased sufficient insurance to cover all losses incurred. If we were to incur substantial liabilities or if our business operations were interrupted for a substantial period, we could incur costs and suffer losses. Inventory, equipment, and business interruption losses may not be covered by our insurance policies. Additionally, insurance coverage may not be available to us at commercially acceptable premiums in the future, or at all.

 

Overall, we may not be able to avoid significant product liability exposure. A product liability claim could hurt our financial performance. Even if we ultimately avoid financial liability for this type of exposure, we may incur significant costs in defending ourselves that could hurt our financial performance and condition.

 

Our customers generally are not obligated to continue purchasing products from us.

 

Most of our customers are retailers or distributors that buy from us under purchase orders, and we generally do not have long-term agreements with or commitments from these customers for the purchase of products. We cannot provide assurance that our customers will maintain or increase their sales volumes or orders for the products supplied by us or that we will be able to maintain or add to our existing customer base. Decreases in our customers’ sales volumes or orders for products supplied by us may have a material adverse effect on our business, financial condition or results of operations.

 

If we face labor shortages or increased labor costs, our results of operations and our growth could be adversely affected.

 

Labor is a significant component of the cost of operating our business. Our ability to meet our labor needs while controlling labor costs is subject to external factors, such as employment levels, prevailing wage rates, minimum wage legislation, union activities, changing demographics, health and other insurance costs and governmental labor and employment requirements. In the event of increasing wage rates, if we fail to increase our wages competitively, the quality of our workforce could decline, while increasing our wages could cause our earnings to decrease. If we face labor shortages or increased labor costs because of increased competition for employees from our competitors and other industries, higher employee-turnover rates, or increases in the federal- or state-mandated minimum wage, change in exempt and non-exempt status, or other employee benefits costs (including costs associated with health insurance coverage or workers’ compensation insurance), our operating expenses could increase and our business, financial condition and results of operations could be materially and adversely affected.

 

 

Our success depends in part on the effectiveness of our digital marketing strategy and the expansion of our social media presence, but there are risks associated with these efforts.

 

Our digital marketing strategy is integral to our business, as well as to the achievement of our growth strategies. Maintaining, positioning, and enhancing our brand will depend in part on the success of our marketing efforts. As part of these efforts, we rely on social media and other digital marketing to retain customers, attract new customers and consumers to our brand, and enhance the overall visibility of our brand in the market. However, there are a variety of risks associated with these efforts, including the potential for negative comments about or incidents involving us, whether or not accurate, as well as the potential for the improper disclosure of proprietary information about us or consumers. In addition, there is a risk of the U.S. Federal Trade Commission (“FTC”), or other government agency, or other litigation claiming that our marketing does not meet applicable legal requirements or guidance, is not truthful, is misleading, or is unfair or deceptive to consumers. Further, the growing use of social and digital media may increase the speed and extent that information, or misinformation, and opinions about us and our products can be shared. For example, many social media platforms immediately publish content created or uploaded by their participants, often without filters or checks regarding the accuracy of the content posted. Negative publicity about us, our brand or our products on social or digital media could seriously damage our brand and reputation, as well as our significant social media presence. In addition, the misuse of social media and digital marketing platforms by us, our employees, customers, consumers, social media influencers, or business partners could increase our costs, lead to litigation, or result in negative publicity that could damage our reputation. If we do not maintain and enhance the favorable perception of our brand, we may not be able to increase product sales, which could prevent us from achieving our strategic objectives.

 

Any failure to adequately store, maintain and deliver our products could materially adversely affect our business, reputation, financial condition, and operating results.

 

Our ability to adequately store, maintain, and deliver our products is critical to our business. Keeping our food products at specific temperatures and humidity levels maintains food safety and quality. In the event of extended power outages, labor disruptions, natural disasters or other catastrophic occurrences, failures of the refrigeration systems in our third-party delivery trucks, or other circumstances, our inability to store inventory at appropriate temperatures and low humidity could result in significant product inventory losses, as well as increased risk of food-borne illnesses and other food safety incidents. Improper handling or storage of food by a customer, without any involvement or fault of ours or our retail customers, could result in food-borne illnesses, which could result in negative publicity and harm to our brand and reputation. Any failure to adequately store, maintain, or transport our products could negatively impact the safety, quality and merchantability of our products and the experience of our customers. The occurrence of any of these risks could materially adversely affect our business, reputation, financial condition, and operating results.

 

Failure to manage inventory at optimal levels could adversely affect our business, financial condition and results of operations.

 

We are required to manage a large volume of inventory of products effectively for our business. We depend on our forecasts for the anticipated demand for our products to make procurement plans and manage our inventory. Our forecast for demand, however, may not accurately reflect the actual market demands, which depends on a number of factors including, without limitation, launches of new products, changes in product life cycles and pricing, product defects, changes in consumer spending patterns, supplier back orders and other supplier-related issues, distributors’ and retailers’ procurement plans, as well as the volatile economic environment in the markets where we sell our products. In addition, when we launch a new product with new components or raw material, it may be difficult to establish relationships, determine appropriate raw material and product selection, and accurately forecast market demand for such product. We cannot assure you that we will be able to maintain proper inventory levels for our business at all times, and any such failure may have a material and adverse effect on our business, financial condition and results of operations.

 

 

Inventory levels in excess of distributor and/or consumer demand may result in inventory write-downs or an increase in inventory holding costs and a potential negative effect on our liquidity. As we plan to continue expanding our product offerings, we expect to include more products in our inventory, which will make it more challenging for us to manage our inventory effectively and will put more pressure on our storing system. If we fail to manage our inventory effectively, we may be subject to a heightened risk of inventory obsolescence, a decline in inventory values, and significant inventory write-downs or write-offs. In addition, we may be required to lower sale prices in order to reduce inventory level, which may lead to lower gross margins. High inventory levels may also require us to commit substantial capital resources, preventing us from using that capital for other important purposes. Any of the above may materially and adversely affect our results of operations and financial condition.

 

Conversely, if we underestimate distributor or consumer demand, or if our supplier fails to provide products to us in a timely manner, we may experience inventory shortages, which may, in turn, require us to purchase our products at higher costs, result in unfulfilled product orders, leading to a negative impact on our financial condition and our relationships with distributors or consumers. Under-stocking can lead to missed sales opportunities, while over-stocking could result in inventory depreciation and decreased shelf space for products that are in higher demand. These results could adversely affect our business, financial condition and results of operations.

 

We may not be able to protect our intellectual property and proprietary technology adequately, which may impact our commercial success.

 

We believe that our intellectual property and proprietary technology has substantial value and has contributed significantly to the success of our business. We rely on a combination of copyrights, trademarks, trade dress, trade secrets, and trademarks laws, as well as confidentiality agreements and other contractual restrictions, to protect our intellectual property. However, these legal means afford only limited protection and may not adequately protect our intellectual property or permit us to gain or keep any competitive advantage.

 

Our trademarks, including our Sow Good logo, are valuable assets that reinforce our brand and consumers’ favorable perception of our products. We also rely on unpatented proprietary expertise, recipes and formulations, and other trade secrets and copyright protection to develop and maintain our competitive position. Our continued success depends in part upon our ability to protect and preserve our intellectual property.

 

Our confidentiality agreements with our employees, consultants, independent contractors and suppliers generally require that all information made known to them be kept strictly confidential. Nevertheless, trade secrets are difficult to protect. Our confidentiality agreements may not effectively prevent disclosure of our proprietary information and may not provide an adequate remedy in the event of unauthorized disclosure of such information. In addition, others may independently discover our trade secrets, in which case we would not be able to assert trade secret rights against such parties. Further, some of our manufacturing know-how and process has been implemented by or with our co-manufacturers. As a result, we may not be able to prevent others from using similar processes, which could adversely affect our business. In addition, we have not historically obtained confidentiality agreements or invention assignment agreements from all employees and consultants, which could impact our ability to protect our intellectual property and proprietary technology.

 

We cannot assure you that the steps we have taken to protect our intellectual property rights are adequate, that our intellectual property rights can be successfully defended and asserted in the future, or that third parties will not infringe upon or misappropriate any such rights. In addition, our trademark rights and related registrations may be challenged in the future and could be canceled or narrowed. Failure to protect our trademark rights could prevent us in the future from challenging third parties who use names and logos similar to our trademarks, which may in turn cause consumer confusion or negatively affect customers’ or consumers’ perception of our brand and products. In addition, if we do not keep our trade secrets confidential, others may produce products with our recipes or formulations. Moreover, intellectual property disputes and proceedings and infringement claims may result in a significant distraction for management and significant expense, which may not be recoverable regardless of whether we are successful. Such proceedings may be protracted with no certainty of success, and an adverse outcome could subject us to liability, force us to cease use of certain trademarks or other intellectual property, or force us to enter into licenses with others.

 

 

Third parties may initiate legal proceedings alleging that we are infringing or otherwise violating their intellectual property rights.

 

Our commercial success depends on our ability to develop and commercialize our products without infringing the intellectual property or proprietary rights of third parties. However, from time to time, we may be subject to legal proceedings and claims in the ordinary course of business with respect to intellectual property. Intellectual property disputes can be costly to defend and may cause our business, operating results, and financial condition to suffer. Whether merited or not, we may face allegations that we or parties indemnified by us have infringed or otherwise violated the patents, trademarks, copyrights, or other intellectual property rights of third parties. Such claims may be made by competitors seeking to obtain a competitive advantage or by other parties.

 

It may also be necessary for us to initiate litigation to defend ourselves in order to determine the scope, enforceability, and validity of third-party intellectual property or proprietary rights, or to establish our respective rights. Regardless of whether claims that we are infringing patents or other intellectual property rights have merit, such claims can be time-consuming, divert management’s attention and financial resources, and can be costly to evaluate and defend. Results of any such litigation are difficult to predict and may require us to stop commercializing or using our products, obtain licenses, modify our products while we develop non-infringing substitutes, or incur substantial damages, settlement costs, or face a temporary or permanent injunction prohibiting us from marketing or providing the affected products. If we require a third-party license, it may not be available on reasonable terms or at all, and we may have to pay substantial royalties, upfront fees, or grant cross-licenses to intellectual property rights for our products and solutions. We may also have to redesign our products so they do not infringe third-party intellectual property rights, which may not be possible or may require substantial monetary expenditures and time, during which our products may not be available for commercialization or use. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable to uphold its contractual obligations. If we cannot or do not obtain a third-party license to the infringed intellectual property, license the intellectual property on reasonable terms, or obtain similar intellectual property from another source, our revenue and earnings could be adversely impacted.

 

Further, some third parties may be able to sustain the costs of complex litigation more effectively than we can because they have substantially greater resources. And even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock. Moreover, any uncertainties resulting from the initiation and continuation of any legal proceedings could have a material adverse effect on our ability to raise the funds necessary to continue our operations. Assertions by third parties that we violate their intellectual property rights could therefore have a material adverse effect on our business, financial condition, and results of operations.

 

Information security events, or real or perceived errors, failures, or bugs in our systems; other technology disruptions; or failure to comply with laws and regulations relating to information security could negatively impact our business, reputation and customer relationships.

 

Our continued success depends in part on our systems, applications, and software continuing to operate to meet our business demands. We rely on information technology systems and infrastructure for substantially all aspects of our business operations. We use mobile applications, social networking, and other online activities to connect with our customers, consumers, suppliers, and employees. Our business involves the storage and transmission of confidential information and intellectual property, including information pertaining to customers, consumers, vendors, distributors, and suppliers, and employees. We also may maintain financial and strategic information about us and our business partners. Further, as we pursue new initiatives that enhance our operations and cost structure, potentially including acquisitions, we may also be required to expand and improve our information technologies, resulting in a larger technological presence and corresponding exposure to cybersecurity risk. Like all technology and information systems, such use gives rise to cybersecurity risks, including security incidents, espionage, system disruption through material errors, failures, vulnerabilities, or bugs, particularly when new features or capabilities are released, theft, and inadvertent release of information. Our technology and information systems may be subject to computer viruses or malicious code, break-ins, phishing impersonation attacks, attempts to overload our servers with denial-of-service or other attacks, ransomware, and similar incidents or disruptions from unauthorized access or use of our computer systems, as well as unintentional incidents causing data leakage, any of which could lead to interruptions, delays, or website or mobile app shutdowns. Electronic security attacks designed to gain access to personal, sensitive, or confidential data are constantly evolving, and such attacks continue to grow in sophistication. If we fail to assess and identify cybersecurity risks associated with new initiatives or acquisitions, we may become increasingly vulnerable to such risks.

 

 

While we have implemented measures designed to prevent security incidents and cyber attacks, our preventative measures and incident response efforts may not be effective. The theft, destruction, loss, misappropriation, misuse, or release of sensitive or confidential information or intellectual property, or interference with our information technology systems or the technology systems of third parties on which we rely, could result in business disruption, negative publicity, reputational harm, violation of privacy laws, loss of customers, and liability, all of which could have a material adverse effect on our business, operating results, and financial condition. Additionally, as a result of a security incident, we could be subject to demands, claims, and litigation by private parties and investigations, related actions, and penalties by regulatory authorities. Moreover, we could incur significant costs in notifying affected persons and entities and otherwise complying with the multitude of laws and regulations relating to the unauthorized access to, or acquisition, use, or disclosure of personal information.

 

Further, our operations depend on the continuing and efficient operation of our information technology, communications systems and infrastructure, and on cloud-based platforms, including platforms operated by vendors. Any of these systems and infrastructure are vulnerable to damage or interruption from earthquakes, vandalism, sabotage, terrorist attacks, floods, fires, power outages, telecommunications failures, computer viruses or other deliberate attempts to harm the systems. The occurrence of a natural or intentional disaster, any decision to close a facility we are using without adequate notice, or particularly an unanticipated problem at a cloud- based virtual server facility, could result in harmful interruptions in our service, resulting in adverse effects to our business. Although we have invested in the protection of data and information technology, there can be no assurances that our efforts will protect us against significant breakdowns, breaches in our systems, or other cyber incidents that could have a material adverse effect on our reputation, business, operations, or financial condition of the company.

 

Our international sales and operations, including our planned business development activities outside of the United States, subject us to additional risks and challenges that can adversely affect our business, results of operations and financial condition.

 

As part of our growth strategy, we expect to continue to expand our international operations and manufacturing capacity, and provide our treats in additional languages and on-board new customers outside the United States. Any new markets or countries into which we attempt to conduct business may not be receptive to our business development activities. We believe that our ability to attract new customers is directly correlated to the level of engagement we achieve with our customers in their home countries. To the extent that we are unable to effectively engage with non-U.S. customers, we may be unable to effectively grow in international markets.

 

Our international operations also subject us to a variety of additional risks and challenges, including:

 

 

increased management, travel, infrastructure and legal compliance costs associated with having operations and developing our business in multiple jurisdictions;

 

 

providing our treats and operating our business across a significant distance, in different languages, among different cultures and time zones, including the potential need to modify our marketing and products to ensure that they are culturally appropriate and relevant in different countries;

 

 

compliance with non-U.S. data privacy, protection and security laws, rules and regulations, including data localization requirements, and the risks and costs of non-compliance;

 

 

 

legislative changes that may impose fines or other penalties for failure to comply with certain content removal, law enforcement cooperation and disclosure obligations;

 

 

longer payment cycles and difficulties enforcing agreements, collecting accounts receivable or satisfying revenue recognition criteria, especially in emerging markets;

 

 

hiring, training, motivating and retaining highly-qualified personnel, while maintaining our unique corporate culture;

 

 

increased financial accounting and reporting burdens and complexities;

 

 

longer sales cycles;

 

 

requirements or preferences for domestic pr