Form 10-Q - Quarterly report [Sections 13 or 15(d)]

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended June 30, 2023

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ______________

Commission File Number 000-53952

SOW GOOD INC.

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

27-2345075

(I.R.S. Employer Identification No.)

1440 N. Union Bower, Irving, TX 75061

(Address of principal executive offices) (Zip Code)

Issuer’s telephone Number: (214) 623-6055

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

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 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 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	SOWG	OTCQB

The number of shares of registrant’s common stock outstanding as of August 14, 2023 was 4,868,083.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		3
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	3
	Condensed Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022	3
	Unaudited Condensed Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022	4
	Unaudited Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022	5
	Unaudited Condensed Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	7
	Notes to the Condensed Financial Statements (Unaudited)	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	34
ITEM 4.	CONTROLS AND PROCEDURES	34

PART II - OTHER INFORMATION		35
ITEM 1.	Legal Proceedings	35
ITEM 1A.	RISK FACTORS	35
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	35
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	35
ITEM 4.	MINE SAFETY DISCLOSURES	35
ITEM 5.	OTHER INFORMATION	35
ITEM 6.	EXHIBITS	36
	SIGNATURES	37

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

SOW GOOD INC.

CONDENSED BALANCE SHEETS


	June 30,			December 31,
	2023			2022
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	293,024		$	276,464
Accounts receivable, net		726,672			191,022
Prepaid expenses		119,843			137,692
Inventory		918,969			1,972,879
Total current assets		2,058,508			2,578,057

Property and equipment:
Construction in progress		–			2,487,673
Property and equipment		5,905,432			3,055,579
Less accumulated depreciation		(663,673	)		(508,257	)
Total property and equipment, net		5,241,759			5,034,995

Security deposit		58,765			24,000
Right-of-use asset		1,226,708			1,261,525

Total assets	$	8,585,740		$	8,898,577

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	376,349		$	452,606
Accrued expenses		657,411			385,028
Current portion of operating lease liabilities		56,011			52,543
Current maturities of notes payable, related parties, net of $699,297 of debt discounts at June 30, 2023		200,703			–
Current maturities of notes payable, net of $306,498 of debt discounts at June 30, 2023		93,502			–
Total current liabilities		1,383,976			890,177

Operating lease liabilities		1,272,626			1,301,355
Notes payable, related parties, net of $3,027,998 and $2,692,757 of debt discounts at June 30, 2023 and December 31, 2022, respectively		4,667,002			3,502,243
Notes payable, net of $262,705 and $336,085 of debt discounts at June 30, 2023 and December 31, 2022, respectively		467,295			393,915

Total liabilities		7,790,899			6,087,690

Commitments and contingencies		–			–

Stockholders' equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares issued and outstanding		–			–
Common stock, $0.001 par value, 500,000,000 shares authorized, 4,868,083 shares issued and outstanding		4,868			4,847
Additional paid-in capital		61,191,965			58,485,602
Accumulated deficit		(60,401,992	)		(55,679,562	)
Total stockholders' equity		794,841			2,810,887

Total liabilities and stockholders' equity	$	8,585,740		$	8,898,577

See accompanying notes to unaudited condensed financial statements.

SOW GOOD INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months						For the Six Months
	Ended June 30,						Ended June 30,
	2023			2022			2023			2022

Revenues	$	1,315,347		$	244,943		$	1,514,277		$	293,315
Cost of goods sold		2,695,820			150,603			2,772,500			198,094
Gross profit (loss)		(1,380,473	)		94,340			(1,258,223	)		95,221

Operating expenses:
General and administrative expenses:
Salaries and benefits		538,916			1,242,900			1,083,469			2,159,055
Professional services		63,329			53,295			109,535			115,988
Other general and administrative expenses		483,260			487,789			841,727			892,865
Total general and administrative expenses		1,085,505			1,783,984			2,034,731			3,167,908
Depreciation and amortization		7,413			67,693			83,631			132,919
Total operating expenses		1,092,918			1,851,677			2,118,362			3,300,827

Net operating loss		(2,473,391	)		(1,757,337	)		(3,376,585	)		(3,205,606	)

Other expense:
Interest expense, including $684,144 and $1,054,822 of warrants issued as a debt discount for the three and six months ending June 30, 2023, and $262,074 and $321,798 for the three and six months ending June 30, 2022, respectively		(847,509	)		(355,452	)		(1,345,845	)		(459,245	)
Total other expense		(847,509	)		(355,452	)		(1,345,845	)		(459,245	)

Net loss	$	(3,320,900	)	$	(2,112,789	)	$	(4,722,430	)	$	(3,664,851	)

Weighted average common shares outstanding - basic and diluted		4,854,208			4,837,950			4,850,815			4,823,974
Net loss per common share - basic and diluted	$	(0.68	)	$	(0.44	)	$	(0.97	)	$	(0.76	)

See accompanying notes to unaudited condensed financial statements.

SOW GOOD INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)


	For the Three Months Ended June 30, 2023
					Additional		Common					Total
	Common Stock				Paid-in		Stock		Accumulated			Stockholders'
	Shares		Amount		Capital		Payable		Deficit			Equity
Balance, March 31, 2023		4,847,384	$	4,847	$	59,484,859	$	–	$	(57,081,092	)	$	2,408,614
Common stock issued to officers and directors for services		20,699		21		125,208		–		–			125,229
Common stock warrants granted to related parties pursuant to debt financing		–		–		1,075,904		–		–			1,075,904
Common stock warrants granted to note holders pursuant to debt financing		–		–		374,153		–		–			374,153
Common stock options granted to officers and directors for services		–		–		112,974		–		–			112,974
Common stock options granted to employees and advisors for services		–		–		18,867		–		–			18,867
Net loss for the three months ended June 30, 2023		–		–		–		–		(3,320,900	)		(3,320,900	)
Balance, June 30, 2023		4,868,083	$	4,868	$	61,191,965	$	–	$	(60,401,992	)	$	794,841


	For the Three Months Ended June 30, 2022
					Additional		Common						Total
	Common Stock				Paid-in		Stock			Accumulated			Stockholders'
	Shares		Amount		Capital		Payable			Deficit			Equity
Balance, March 31, 2022		4,820,655	$	4,821	$	54,502,342	$	10,000		$	(45,104,556	)	$	9,412,607
Common stock warrants granted to related parties pursuant to debt financing		–		–		2,249,684		–			–			2,249,684
Common stock warrants granted to note holders pursuant to debt financing		–		–		444,330		–			–			444,330
Common stock issued to officers and directors for services		8,064		8		24,990		–			–			24,998
Common stock issued to advisory board for services		12,255		12		29,988		(10,000	)		–			20,000
Common stock options granted to officers and directors for services		–		–		296,002		–			–			296,002
Common stock options granted to employees and advisors for services		–		–		90,370		–			–			90,370
Net loss for the three months ended June 30, 2022		–		–		–		–			(2,112,789	)		(2,112,789	)
Balance, June 30, 2022		4,840,974	$	4,841	$	57,637,706	$	–		$	(47,217,345	)	$	10,425,202

(continued)

SOW GOOD INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)


	For the Six Months Ended June 30, 2023
					Additional		Common					Total
	Common Stock				Paid-in		Stock		Accumulated			Stockholders'
	Shares		Amount		Capital		Payable		Deficit			Equity
Balance, December 31, 2022		4,847,384	$	4,847	$	58,485,602	$	–	$	(55,679,562	)	$	2,810,887
Common stock issued to officers and directors for services		20,699		21		125,208		–		–			125,229
Common stock warrants granted to related parties pursuant to debt financing		–		–		1,948,325		–		–			1,948,325
Common stock warrants granted to note holders pursuant to debt financing		–		–		374,153		–		–			374,153
Common stock options granted to officers and directors for services		–		–		224,707		–		–			224,707
Common stock options granted to employees and advisors for services		–		–		33,970		–		–			33,970
Net loss for the six months ended June 30, 2023		–		–		–		–		(4,722,430	)		(4,722,430	)
Balance, June 30, 2023		4,868,083	$	4,868	$	61,191,965	$	–	$	(60,401,992	)	$	794,841


	For the Six Months Ended June 30, 2022
					Additional		Common						Total
	Common Stock				Paid-in		Stock			Accumulated			Stockholders'
	Shares		Amount		Capital		Payable			Deficit			Equity
Balance, December 31, 2021		4,809,070	$	4,809	$	54,342,027	$	26,066		$	(43,552,494	)	$	10,820,408
Common stock warrants granted to related parties pursuant to debt financing		–		–		2,249,684		–			–			2,249,684
Common stock warrants granted to note holders pursuant to debt financing		–		–		444,330		–			–			444,330
Common stock issued to officers and directors for services		19,649		20		51,044		(26,066	)		–			24,998
Common stock issued to advisory board for services		12,255		12		29,988		–			–			30,000
Common stock options granted to officers and directors for services		–		–		417,742		–			–			417,742
Common stock options granted to employees and advisors for services		–		–		102,891		–			–			102,891
Net loss for the six months ended June 30, 2022		–		–		–		–			(3,664,851	)		(3,664,851	)
Balance, June 30, 2022		4,840,974	$	4,841	$	57,637,706	$	–		$	(47,217,345	)	$	10,425,202

See accompanying notes to unaudited condensed financial statements.

SOW GOOD INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the Six Months
	Ended June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(4,722,430	)	$	(3,664,851	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debts expense		185,485			–
Depreciation and amortization		155,416			148,655
Common stock issued to officers and directors for services		125,229			24,998
Common stock awarded to advisors and consultants for services		–			30,000
Amortization of stock options		258,677			520,633
Amortization of stock warrants issued as a debt discount		1,054,822			321,798
Decrease (increase) in current assets:
Accounts receivable		(721,135	)		(181,699	)
Prepaid expenses		17,849			(28,884	)
Inventory		1,053,910			(394,062	)
Security deposits		(34,765	)		(14,000	)
Right-of-use asset		34,817			33,457
Increase (decrease) in current liabilities:
Accounts payable		(76,257	)		766,089
Accrued expenses		272,383			185,545
Lease liabilities		(25,261	)		(22,040	)
Net cash used in operating activities		(2,421,260	)		(2,274,361	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(362,180	)		(124,384	)
Cash paid for construction in progress		–			(1,884,720	)
Cash paid for intangible assets		–			(5,929	)
Net cash used in investing activities		(362,180	)		(2,015,033	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received from notes payable, related parties		2,400,000			3,120,000
Proceeds received from notes payable		400,000			580,000
Net cash provided by financing activities		2,800,000			3,700,000

NET CHANGE IN CASH AND CASH EQUIVALENTS		16,560			(589,394	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		276,464			3,345,928
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	293,024		$	2,756,534

SUPPLEMENTAL INFORMATION:
Interest paid	$	25,685		$	43,606
Income taxes paid	$	–		$	–

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Value of debt discounts attributable to warrants	$	2,322,478		$	2,694,014

See accompanying notes to unaudited condensed financial statements.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 1 – Organization and Nature of Business

Effective January 21, 2021, we changed our name from Black Ridge Oil & Gas, Inc. to Sow Good Inc. (“SOWG,” “Sow Good,” or the “Company”) to pursue the freeze dried fruits and vegetables business as acquired with our October 1, 2020 acquisition of S-FDF, LLC. Our common stock is traded on the OTCQB under the trading symbol “SOWG”. At that time, our common stock started to be quoted on the OTCQB under the trading symbol “SOWG”, from the former trading symbol “ANFC”. Prior to April 2, 2012, the Company name was Ante5, Inc., which became an independent company in April 2010. We became a publicly traded company when our shares began trading on July 1, 2010. From October 2010 through August 2019, we had been engaged in the business of acquiring oil and gas leases and participating in the drilling of wells in the Bakken and Three Forks trends in North Dakota and Montana and/or managing similar assets for third parties.

On October 1, 2020, the Company completed its acquisition of S-FDF, LLC pursuant to an Asset Purchase Agreement. In connection with the closing of the Asset Purchase Agreement, the Company acquired approximately $2.2 million in cash and certain assets and agreements related to the Seller’s freeze-dried fruits and vegetables business for human consumption and entered into certain employment and registration rights agreements.

On February 5, 2021, the Company raised over $2.5 million of capital from the sale of 631,250 newly issued shares at a share price of $4.00 in a private placement. The proceeds were used to find capital expenditures and working capital investment.

On May 5, 2021, the Company announced the launch of our direct-to-consumer freeze-dried consumer packaged goods (CPG) food brand, Sow Good. Sow Good launched with its first line of non-GMO products including 6 ready-to-make smoothies and 9 snacks.

On July 7, 2021, the Company raised over $3 million of capital from the sale of 714,701 newly issued shares at a share price of $4.25 in a private placement. Investors in the private placement included Sow Good’s Chief Executive Officer, Executive Chairman, and Chief Financial Officer, in addition to other Sow Good board members and a small group of accredited investors. The proceeds were used to invest in inventory ahead of pursuing larger business-to-business relationships, as well as funding incremental capital expenditures and general operating expenses.

On July 23, 2021, we launched six new gluten-free granola products under the Sow Good brand. Sow Good’s granola products are made with health-conscious ingredients such as freeze-dried fruit, almonds, hemp hearts, and coconut oil.

On December 31, 2021, we sold an aggregate $2,075,000 of promissory notes and warrants to purchase an aggregate 311,250 shares of common stock to related parties, representing 15,000 warrant shares per $100,000 of promissory notes. The warrants are exercisable at a price of $2.21 per share over a ten-year term. The proceeds were used for working capital investment and to ramp up our freeze-dried consumer packaged goods business.

On April 8, 2022, we sold an aggregate $3,700,000 of promissory notes and warrants to purchase an aggregate 925,000 shares of common stock, including $3,120,000 and warrants to purchase an aggregate 780,000 shares of common stock, to related parties. The warrants are exercisable at a price of $2.35 per share over a ten-year term. These proceeds were used for working capital investment and to ramp up our freeze dried consumer packaged goods business.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

On August 23, 2022, we closed on an offering to sell up to $2,500,000 of promissory notes and warrants to purchase an aggregate 625,000 shares of the Company’s common stock, exercisable over a ten-year period at a price of $2.60 per share, representing 25,000 warrant shares per $100,000 of Notes purchased. The notes mature on August 23, 2025. Interest on the notes accrue at a rate of 8% per annum, payable on January 1, 2025. Loans may be advanced to the Company from time to time from August 23, 2022 to the Maturity Date. On various dates from September 29, 2022 through March 7, 2023, the Company received aggregate proceeds of $2,250,000 from two of the Company’s Directors on the sale of these notes and warrants.

In the first quarter of 2023, the Company launched a freeze-dried candy product line with a 9-SKU offering that is projected to continue being a major driver of growth. And, in the second quarter of 2023, we completed the construction of our second and third freeze driers to facilitate the increased production demands for our recently launched candy products. Furthermore, the significant and rising demand for our freeze-dried candy products has led us to begin construction of our fourth and fifth freeze drier, which we expect to be completed in the first quarter of 2024.

On April 25, 2023 and May 11, 2023, Sow Good raised an aggregate $1.3 million from the sale of Promissory Notes and Warrants, including $900,000 received from related parties, resulting in approximately $293,000 of cash on hand as of June 30, 2023.

Note 2 – Basis of Presentation and Significant Accounting Policies

The interim condensed financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to not make the information presented misleading.

These statements reflect all adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. It is suggested that these interim condensed financial statements be read in conjunction with the audited financial statements for the year ended December 31, 2022, which were included in our Annual Report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.

Fair Value of Financial Instruments

The Company discloses the fair value of certain assets and liabilities in accordance with ASC 820 – Fair Value Measurement (“ASC 820”). Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short-term nature of the instruments. The Company had no items that required fair value measurement on a recurring basis.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Cash in Excess of FDIC Limits

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 under current regulations. The Company had $45,420 of cash in excess of FIDC insured limits at June 30, 2023, and has not experienced any losses in such accounts.

Property and Equipment

Property and equipment are stated at the lower of cost or estimated net recoverable amount. The cost of property, plant and equipment is depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based on the following life expectancy:


Software	3 years, or over the life of the agreement
Website	3 years
Office equipment	5 years
Furniture and fixtures	5 years
Machinery and equipment	7-10 years
Leasehold improvements	Fully extended lease-term

Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation and amortization are eliminated and any resulting gain or loss is reflected in operations. Depreciation was $155,416 and $148,655 for the six months ended June 30, 2023 and 2022, respectively. A total of $71,785 and $15,736 of the depreciation expense was allocated to inventory overhead, resulting in $83,631 and $132,919 of depreciation expense for the six months ended June 30, 2023 and 2022, respectively.

Impairment of Long-Lived Assets

Long-lived assets held and used by the Company are reviewed for possible impairment whenever events or circumstances indicate the carrying amount of an asset may not be recoverable or is impaired. Recoverability is assessed using undiscounted cash flows based upon historical results and current projections of earnings before interest and taxes. Impairment is measured using discounted cash flows of future operating results based upon a rate that corresponds to the cost of capital. Impairments are recognized in operating results to the extent that carrying value exceeds discounted cash flows of future operations.

Our intellectual property is comprised of indefinite-lived brand names acquired and have been assigned an indefinite life as we currently anticipate that these brand names will contribute cash flows to the Company perpetually. We evaluate the recoverability of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.

Inventory

Inventory, consisting of raw materials, material overhead, labor, and manufacturing overhead, are stated at the average cost or net realizable value and consists of the following:

Schedule of inventory
	June 30,		December 31,
	2023		2022
Finished goods	$	252,753	$	384,241
Packaging materials		83,441		416,663
Work in progress		–		864,460
Raw materials		582,775		307,515
Total inventory	$	918,969	$	1,972,879

During the six months ending June 30, 2023, the Company wrote down $1,919,686 of non-candy freeze dried inventory to pivot exclusively to its better selling candy products. No reserve for obsolete inventories has been recognized.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers (“ASC” 606”). Under ASC 606, the Company recognizes revenue from the sale of its freeze-dried food products, in accordance with a five-step model in which the Company evaluates the transfer of promised goods or services and recognizes revenue when customers obtain control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company has elected, as a practical expedient, to account for the shipping and handling as fulfillment costs, rather than as a separate performance obligation. Revenue is reported net of applicable provisions for discounts, returns and allowances. Methodologies for determining these provisions are dependent on customer pricing and promotional practices. The Company records reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on industry-based historical data, historical sales returns, if any, analysis of credit memo data, and other factors known at the time.

Accounts Receivable

Accounts receivable are carried at their estimated collectible amounts. Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance for doubtful accounts of $185,485 at June 30, 2023.

Basic and Diluted Earnings (Loss) Per Share

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

Stock-Based Compensation

The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC 2018-07 (ASC 2018-07). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance. Stock-based compensation was $383,906 and $575,631, consisting of $258,677 and $520,633 of stock options expense, using the Black-Scholes options pricing model and an effective term of 6 to 6.5 years based on the weighted average of the vesting periods and the stated term of the option grants and the discount rate on 5 to 7 year U.S. Treasury securities at the grant date, incurred in the six months ended June 30, 2023 and 2022, respectively, and $125,229 and $54,998 of expense related to shares of common stock issued to officers and consultants for services rendered in the six months ended June 30, 2023 and 2022, respectively. In addition, $1,054,822 and $321,798 of expenses related to the amortization of warrants in-the-money issued in consideration for debt financing for the six months ended June 30, 2023 and 2022, respectively.

Income Taxes

The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's financial statements upon adoption.

In July 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-03 to amend various SEC paragraphs in the Accounting Standards Codification to primarily reflect the issuance of SEC Staff Accounting Bulletin No. 120. ASU No. 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.” ASU 2023-03 amends the ASC for SEC updates pursuant to SEC Staff Accounting Bulletin No. 120; SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force (“EITF”) Meeting; and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. These updates were immediately effective and did not have a significant impact on our financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which creates an exception to the general recognition and measurement principle for contract assets and contract liabilities from contracts with customers acquired in a business combination. The new guidance will require companies to apply the definition of a performance obligation under accounting standard codification (“ASC”) Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. Under current GAAP, an acquirer in a business combination is generally required to recognize and measure the assets it acquires and the liabilities it assumes at fair value on the acquisition date. The new guidance will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. These amendments are effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption of ASU 2021-08 is not expected to have a material impact on the Company’s financial statements or related disclosures.

No other new accounting pronouncements, issued or effective during the period ended June 30, 2023, have had or are expected to have a significant impact on the Company’s financial statements.

Note 3 – Going Concern

As shown in the accompanying financial statements, as of June 30, 2023, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $60,401,992, and had cash on hand of $293,024. We are too early in our development stage to project revenue with a necessary level of certainty; therefore, we may not have sufficient funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund our operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company has commenced sales and continues to develop its operations.

In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these objectives.

The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. Our ability to scale production and distribution capabilities and further increase the value of our brands, is largely dependent on our success in raising additional capital.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 4 – Related Party

Debt Financing

On May 11, 2023, the Company received proceeds of $100,000 from Bradley Berman, one of the Company’s directors, on behalf of the Bradley Berman Irrevocable Trust, from the sale of notes and warrants pursuant to an offering to sell up to $1,500,000 of promissory notes and warrants to purchase an aggregate 375,000 shares of the Company’s common stock, exercisable over a ten-year period at a price of $2.50 per share, representing 25,000 warrant shares per $100,000 of Notes purchased. The notes mature on May 11, 2024. Interest on the Notes accrue at a rate of 8% per annum, payable in cash semi-annually on June 30 and December 31.

On April 25, 2023, we closed on an offering to sell up to $1,500,000 of promissory notes and warrants to purchase an aggregate 375,000 shares of the Company’s common stock, exercisable over a ten-year period at a price of $2.50 per share, representing 25,000 warrant shares per $100,000 of Notes purchased. The notes mature on April 25, 2024. Interest on the Notes accrue at a rate of 8% per annum, payable in cash semi-annually on June 30 and December 31. On April 25, 2023, the Company received proceeds of $750,000 and $50,000 from the Company’s Chairman, Mr. Goldfarb, and the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, respectively, on the sale of these notes and warrants.

On August 23, 2022, we closed on an offering to sell up to $2,500,000 of promissory notes and warrants to purchase an aggregate 625,000 shares of the Company’s common stock, exercisable over a ten-year period at a price of $2.60 per share, representing 25,000 warrant shares per $100,000 of Notes purchased. The notes mature on August 23, 2025. Interest on the Notes accrue at a rate of 8% per annum, payable on January 1, 2025. Loans may be advanced to the Company from time to time from August 23, 2022 to the Maturity Date. On various dates between January 5, 2023 and April 11, 2023, the Company received aggregate proceeds of $1,500,000 from two of the Company’s Directors on the sale of these notes and warrants.

Common Stock Issued to Directors for Services

On June 1, 2023, the Company issued an aggregate 20,699 shares of common stock amongst its five non-employee Directors for annual services to be rendered. The aggregate fair value of the common stock was $125,229, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

Note 5 – Fair Value of Financial Instruments

The Company discloses the fair value of certain assets and liabilities in accordance with ASC 820 – Fair Value Measurement (“ASC 820”). Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

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

Fair Value Measurements at June 30, 2023

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

293,024

–

Total assets

293,024

–

Liabilities

Notes payable, related parties, net of $3,727,295 of debt discounts

–

4,867,705

–

Notes payable, net of $569,203 of debt discounts

–

560,797

–

Total liabilities

–

5,428,502

–

293,024

5,428,502

–

Fair Value Measurements at December 31, 2022

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

276,464

–

Total assets

276,464

–

Liabilities

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

–

3,502,243

–

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

–

393,915

–

Total liabilities

–

3,896,158

–

276,464

3,896,158

–

There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the three months ended June 30, 2023.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 6 – Prepaid Expenses

Prepaid expenses consist of the following:

Schedule of prepaid expenses
	June 30,		December 31,
	2023		2022
Prepaid software licenses	$	60,961	$	36,424
Prepaid insurance costs		14,284		16,746
Trade show advances		25,728		18,707
Prepaid rent		13,340		27,043
Prepaid office and other costs		5,530		38,772
Total prepaid expenses	$	119,843	$	137,692

Note 7 – Property and Equipment

Property and equipment at June 30, 2023 and December 31, 2022, consists of the following:

Property and equipment
	June 30,			December 31,
	2023			2022
Office equipment	$	13,872		$	13,872
Machinery		4,357,267			1,643,010
Software		70,000			70,000
Website		71,589			71,589
Leasehold improvements		1,392,704			1,257,108
Construction in progress		–			2,487,673
		5,905,432			5,543,252
Less: Accumulated depreciation and amortization		(663,673	)		(508,257	)
Total property and equipment, net	$	5,241,759		$	5,034,995

Construction in progress consisted of costs incurred to build our second and third freeze driers, and to build out our offices within our facility in Irving, Texas. A total of $2,705,524 and $135,596 of these costs were capitalized as Machinery and Leasehold Improvements, respectively, when they were placed in service during the six months ended June 30, 2023.

The Company recognized depreciation of $155,416 and $148,655, of which $71,785 and $15,736 was allocated to inventory overhead, resulting in $83,631 and $132,919 of depreciation expense for the six months ended June 30, 2023 and 2022, respectively.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 8 – Leases

The Company leases its 20,945 square foot operating and office facility under a non-cancelable real property lease agreement that expires on August 31, 2025, with two five-year options to extend, at a monthly lease term of $10,036, with approximately a 3% annual escalation of lease payments commencing September 15, 2021, subject to the ASU 2016-02. In the locations in which it is economically feasible to continue to operate, management expects to enter into a new lease upon expiration. The operating and office facility lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

The components of lease expense were as follows:

Schedule of components of lease expense
	For the Six Months Ended
	June 30,
	2023		2022
Operating lease cost:
Amortization of right-of-use asset	$	34,817	$	33,457
Interest on lease liability		38,624		39,984
Total operating lease cost	$	73,441	$	73,441

Supplemental balance sheet information related to leases was as follows:


	June 30,		December 31,
	2023		2022
Operating lease:
Operating lease assets	$	1,226,708	$	1,261,525

Current portion of operating lease liability	$	56,011		52,543
Noncurrent operating lease liability		1,272,626		1,301,355
Total operating lease liability	$	1,328,637	$	1,353,898

Weighted average remaining lease term:
Operating leases		12.8 years		13.3 years

Weighted average discount rate:
Operating lease		5.75%		5.75%

Supplemental cash flow and other information related to operating leases was as follows:


	June 30,
	For the Six Months Ended
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	25,261	$	22,040

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

The future minimum lease payments due under operating leases as of June 30, 2023 is as follows:


Fiscal Year Ending	Minimum Lease
December 31,	Commitments
2023 (for the six months remaining)	$	64,843
2024		132,917
2025		136,905
2026		141,012
2027 and thereafter		1,412,988
Total	$	1,888,665
Less effects of discounting		560,028
Lease liability recognized	$	1,328,637

Note 9 – Notes Payable, Related Parties

Notes payable, related parties consists of the following at June 30, 2023 and December 31, 2022, respectively:


	June 30,		December 31,
	2023		2022

On May 11, 2023, the Company received $100,000 pursuant to a note and warrant purchase agreement from Bradley Berman, one of the Company’s Directors, on behalf of the Bradley Berman Irrevocable Trust, as lender. The unsecured note matures on May 11, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.	$	100,000	$	–

On April 25, 2023, the Company received $50,000 pursuant to a note and warrant purchase agreement from the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 12,500 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.		50,000		–

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)


On April 25, 2023, the Company received $750,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 187,500 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.	750,000	–

On April 11, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On March 7, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On March 2, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On February 1, 2023, the Company received $500,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 125,000 shares of common stock, exercisable at $2.60 per share over a ten-year term.	500,000	–

On January 5, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On December 21, 2022, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	250,000

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)


On September 29, 2022, the Company received $500,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 125,000 shares of common stock, exercisable at $2.60 per share over a ten-year term.	500,000	500,000

On September 29, 2022, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	250,000

On April 8, 2022, the Company received $2,000,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 500,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	2,000,000	2,000,000

On April 8, 2022, the Company received $100,000 pursuant to a note and warrant purchase agreement with the Company’s Chairman and CEO, Mr. & Mrs. Goldfarb, as lenders. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	100,000	100,000

On April 8, 2022, the Company received $100,000 pursuant to a note and warrant purchase agreement with IG Union Bower LLC, an entity owned by Ira Goldfarb, the Company’s Chairman, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	100,000	100,000

On April 8, 2022, the Company received $920,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 230,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	920,000	920,000

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)


On December 31, 2021, the Company received $1,500,000 pursuant to a note and warrant purchase agreement with the Company’s Chairman and CEO, Mr. & Mrs. Goldfarb, as lenders. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholders also received warrants to purchase 225,000 shares of common stock, exercisable at $2.21 per share over a ten-year term.		1,500,000		1,500,000

On December 31, 2021, the Company received $500,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 75,000 shares of common stock, exercisable at $2.21 per share over a ten-year term.		500,000		500,000

On December 31, 2021, the Company received $25,000 pursuant to a note and warrant purchase agreement from the Company’s former CFO, Bradley K. Burke, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 3,750 shares of common stock, exercisable at $2.21 per share over a ten-year term.		25,000		25,000

On December 31, 2021, the Company received $50,000 pursuant to a note and warrant purchase agreement from the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 7,500 shares of common stock, exercisable at $2.21 per share over a ten-year term.		50,000		50,000

Total notes payable, related parties		8,595,000		6,195,000
Less unamortized debt discounts:		3,727,295		2,692,757
Notes payable		4,867,705		3,502,243
Less: current maturities		200,703		–
Notes payable, related parties, less current maturities	$	4,667,002	$	3,502,243

The Company recorded total discounts of $5,458,686 of debt discounts on warrants granted to the related parties on various dates from December 31, 2021 through May 11, 2023. The discounts are being amortized to interest expense over the term of the notes, until repayment, using the straight-line method, which closely approximates the effective interest method. The Company recorded $913,787 and $288,149 of stock-based interest expense pursuant to the amortization of discounts during the six months ended June 30, 2023 and 2022, respectively.

The Company recognized $270,721 and $126,530 of interest expense for the six months ended June 30, 2023 and 2022, respectively.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 10 – Notes Payable

Notes payable consists of the following at June 30, 2023 and December 31, 2022, respectively:

Schedule of notes payable
	June 30,		December 31,
	2023		2022

On April 25, 2023, the Company received $400,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 100,000 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.	$	400,000	$	–

On April 8, 2022, the Company received $80,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholders also received warrants to purchase 20,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	80,000		80,000

On April 8, 2022, the Company received $500,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholders also received warrants to purchase 125,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.		500,000		500,000

On June 16, 2020, the Company entered into a loan authorization and loan agreement with the United States Small Business Administration (the “SBA”), as lender, pursuant to the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business (the “EIDL Loan Agreement”) encompassing a $150,000 Promissory Note issued to the SBA (the “EIDL Note”)(together with the EIDL Loan Agreement, the “EIDL Loan”), bearing interest at 3.75% per annum. In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated June 16, 2020, between the SBA and the Company (the “EIDL Security Agreement”) pursuant to which the EIDL Loan is secured by a security interest on all of the Company’s assets. Under the EIDL Note, the Company is required to pay principal and interest payments of $731 every month beginning June 16, 2022, as extended. All remaining principal and accrued interest is due and payable on June 16, 2050. The EIDL Note may be repaid at any time without penalty.	$	150,000	$	150,000

Total notes payable		1,130,000		730,000
Less unamortized debt discounts:		569,203		336,085
Notes payable		560,797		393,915
Less: current maturities		93,502		–
Notes payable, less current maturities	$	467,295	$	393,915

The Company recorded total discounts of $818,483, consisting of debt discounts on warrants granted to accredited investors on between April 8, 2022 and April 25, 2023. The discounts are being amortized to interest expense over the term of the notes, until repayment, using the straight-line method, which closely approximates the effective interest method. The Company recorded $141,035 and $33,649 of stock-based interest expense pursuant to the amortization of discounts during the six months ended June 30, 2023 and 2022, respectively.

The Company recognized $20,302 and $10,917 of interest expense on notes payable for the six months ended June 30, 2023 and 2022, respectively.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 11 – Changes in Stockholders’ Equity

Preferred Stock

The Company has 20,000,000 authorized shares of $0.001 par value preferred stock. No shares have been issued to date.

Common Stock

The Company has 500,000,000 authorized shares of $0.001 par value common stock. As of June 30, 2023, a total of 4,868,083 shares of common stock have been issued.

Common Stock Issued to Directors for Services

Note 12 – Options

The 2020 Equity Plan was approved by written consent of a majority of shareholders of record as of November 12, 2019 and adopted by the Board on December 5, 2019, as provided in the definitive information statement filed with Securities and Exchange Commission on January 10, 2020 (the “DEF 14C”). The description of the 2020 Equity Plan is qualified in its entirety by the text of the 2020 Equity Plan, a copy of which was attached as Annex C to the DEF 14C. On September 29, 2020, January 4, 2021, and March 19, 2021, the Board of Directors adopted and approved amendments that in aggregate increase the number of shares reserved for issuance under the 2020 Equity Plan to an aggregate total of 814,150 shares and such amendments were approved by a majority of shareholders of record on September 3, 2021.

Outstanding Options

Options to purchase an aggregate total of 637,396 shares of common stock at a weighted average strike price of $4.64, exercisable over a weighted average life of 7.8 years were outstanding as of June 30, 2023.

The Company recognized a total of $258,677 and $520,633 of compensation expense during the six months ended June 30, 2023 and 2022, respectively, related to common stock options issued to Officers, Directors, Employees and Advisors that are being amortized over the implied service term, or vesting period, of the options. The remaining unamortized balance of these options is $1,207,685 as of June 30, 2023.

Options Granted

On June 5, 2023, a total of nineteen employees and consultants were granted options to purchase an aggregate 46,405 shares of the Company’s common stock, having an exercise price of $6.05 per share, exercisable over a 10-year term. The options will vest 60% on the third anniversary, and 20% each anniversary thereafter until fully vested. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a call option value of $5.66, was $262,851. The options are being expensed over the vesting period, resulting in $3,598 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $259,253 of unamortized expenses are expected to be expensed over the vesting period.

Options Exercised

No options were exercised during the six months ended June 30, 2023 and 2022.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 13 – Warrants

Outstanding Warrants

Warrants to purchase an aggregate total of 2,291,250 shares of common stock at a weighted average strike price of $2.50, exercisable over a weighted average life of 9 years were outstanding as of June 30, 2023.

Warrants Granted

On May 11, 2023, warrants to purchase an aggregate 25,000 shares of common stock were issued to the Bradley Berman, one of the Company’s Directors, pursuant to a private placement debt offering in which aggregate proceeds of $100,000 were received in exchange for promissory notes and warrants to purchase an aggregate 25,000 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.50 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $4,469, was $112,371, of which $100,000 was recognized as a debt discount. The debt discount portion of the warrants are being expensed over the life of the loans, resulting in $13,699 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $86,301 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

On April 25, 2023, warrants to purchase an aggregate 12,500 shares of common stock were issued to the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, pursuant to a private placement debt offering in which aggregate proceeds of $50,000 were received in exchange for promissory notes and warrants to purchase an aggregate 12,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.50 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $3.74, was $46,769. The warrants are being expensed over the life of the loans, resulting in $8,457 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $38,312 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

On April 25, 2023, warrants to purchase an aggregate 187,500 shares of common stock were issued to a trust held by the Company’s Chairman, Mr. Goldfarb, pursuant to a private placement debt offering in which aggregate proceeds of $750,000 were received in exchange for promissory notes and warrants to purchase an aggregate 187,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.50 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $3.74, was $701,537. The warrants are being expensed over the life of the loans, resulting in $126,853 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $574,684 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

On April 25, 2023, warrants to purchase an aggregate 100,000 shares of common stock were issued to an accredited investor, pursuant to a private placement debt offering in which aggregate proceeds of $400,000 were received in exchange for promissory notes and warrants to purchase an aggregate 100,000 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.50 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $3.74, was $374,153. The warrants are being expensed over the life of the loans, resulting in $67,655 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $306,498 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

On April 11, 2023, warrants to purchase an aggregate 62,500 shares of common stock were issued to the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, pursuant to a private placement debt offering in which aggregate proceeds of $250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $3.64, was $227,598. The warrants are being expensed over the life of the loans, resulting in $49,884 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $177,714 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

On March 7, 2023, warrants to purchase an aggregate 62,500 shares of common stock were issued to the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, pursuant to a private placement debt offering in which aggregate proceeds of $250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $3.65, was $228,154. The warrants are being expensed over the life of the loans, resulting in $29,153 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $199,001 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

On March 2, 2023, warrants to purchase an aggregate 62,500 shares of common stock were issued to a trust held by the Company’s Chairman, Mr. Goldfarb, pursuant to a private placement debt offering in which aggregate proceeds of $250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were issued in-the-money and are fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 139% and a weighted average call option value of $3.66, was $228,464. The warrants are being expensed over the life of the loans, resulting in $30,294 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $198,170 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

On February 1, 2023, warrants to purchase an aggregate 125,000 shares of common stock were issued to a trust held by the Company’s Chairman, Mr. Goldfarb, pursuant to a private placement debt offering in which aggregate proceeds of $500,000 were received in exchange for promissory notes and warrants to purchase an aggregate 125,000 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants are fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 138% and a weighted average call option value of $2.21, was $276,462. The warrants are being expensed over the life of the loans, resulting in $44,104 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $232,358 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

On January 5, 2023, warrants to purchase an aggregate 62,500 shares of common stock were issued to the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, pursuant to a private placement debt offering in which aggregate proceeds of $250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants are fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 140% and a weighted average call option value of $2.23, was $139,341. The warrants are being expensed over the life of the loans, resulting in $25,520 of stock-based compensation expense during the six months ended June 30, 2023. As of June 30, 2023, a total of $113,821 of unamortized expenses are expected to be expensed over the remaining life of the outstanding debts.

Note 14 – Income Taxes

The Company accounts for income taxes under ASC Topic 740, Income Taxes, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.

Losses incurred during the period from April 9, 2011 (inception) to June 30, 2023 could be used to offset future tax liabilities. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized. As of June 30, 2023, net deferred tax assets were $9,384,000, with no deferred tax liability, primarily related to net operating loss carryforwards. A valuation allowance of approximately $9,384,000 was applied to the net deferred tax assets. Therefore, the Company has no tax expense for 2023 to date.

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no significant uncertain tax positions as of any date on or before June 30, 2023.

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 15 – Commitments

Legal Proceedings

The Company may be subject from time to time to various inquiries, administrative proceedings and litigation relating to matters arising in the normal course of business. The Company is not currently a defendant in any material litigation and is not aware of any threatened litigation that could have a material effect on the Company. Management is not able to estimate the minimum loss to be incurred, if any, as a result of the final outcome of the matters arising in the normal course of business but believes they are not likely to have a material adverse effect upon the Company’s financial position or results of operations and, accordingly, no provision for loss has been recorded.

Cash in Excess of FDIC Limits

The Company periodically maintains cash balances at banks in excess of federally insured amounts. The extent of loss, if any, to be sustained as a result of any future failure of a bank or other financial institution is not subject to estimation at this time.

Lease Commitments

Upon closing of the Asset Purchase Agreement, the Company assumed the Seller’s obligations under a real property lease for its 20,945 square foot facility in Irving, Texas, under which an entity owned entirely by Ira Goldfarb is the landlord. The lease term is through September 15, 2025, with two five-year options to extend, at a monthly lease term of $10,036, with approximately a 3% annual escalation of lease payments commencing September 15, 2021.

Note 16 – Subsequent Events

The Company evaluates events that have occurred after the balance sheet date through the date these financial statements were issued. No events occurred of a material nature that would have required adjustments to or disclosures in these financial statements except as follows:

Escrowed Cash

As of August 14, 2023, the Company is holding $1,100,000 in escrow related to a financing that will need to be returned if terms and conditions of the financing are not completed on or before August 31, 2023.

Options Granted

On July 13, 2023, an employee was granted options to purchase an aggregate 10,000 shares of the Company’s common stock, having an exercise price of $4.87 per share, exercisable over a 10-year term. The options will vest 60% on the third anniversary, and 20% each anniversary thereafter until fully vested. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 134% and a call option value of $4.53, was $45,296.

On July 6, 2023, two employees were granted options to purchase an aggregate 6,000 shares of the Company’s common stock, having an exercise price of $4.18 per share, exercisable over a 10-year term. The options will vest 60% on the third anniversary, and 20% each anniversary thereafter until fully vested. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 134% and a call option value of $3.89, was $23,353.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Cautionary Statements

We are including the following discussion to inform our existing and potential security holders generally of some of the risks and uncertainties that can affect our company and to take advantage of the “safe harbor” protection for forward-looking statements that applicable federal securities law affords.

From time to time, our management or persons acting on our behalf may make forward-looking statements to inform existing and potential security holders about our company. All statements other than statements of historical facts included in this report regarding our financial position, business strategy, plans and objectives of management for future operations and industry conditions are forward-looking statements. When used in this report, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “target,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes. Items making assumptions regarding actual or potential future sales, market size, collaborations, trends or operating results also constitute such forward-looking statements.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements include the following:

	·	volatility or decline of our stock price;
	·	low trading volume and illiquidity of our common stock;
	·	potential fluctuation in quarterly results;
	·	inability to maintain adequate liquidity to meet our financial obligations;
	·	failure to obtain sufficient sales and distributions for our freeze dried product offerings;
	·	supply chain disruption and delay;
	·	transportation, labor, and raw material cost increases;
	·	litigation, disputes and legal claims involving outside parties; and
	·	risks related to our ability to be traded on the OTCQB and meeting trading requirements

We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made.

Readers are urged not to place undue reliance on these forward-looking statements. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the United States Securities and Exchange Commission (the “SEC”) which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.

Overview and Outlook

Sow Good is an innovative, highly adaptive leader in the freeze dried food industry in both the direct-to-consumer and business-to-business sales channels. Beginning in the plant-based, better-for-you space in 2021, the Company built-out its manufacturing facility and completed construction of its first freeze drier. In the first quarter of 2023, anticipating rising market trends and a significant opportunity with disrupting the candy category, Sow Good launched its freeze dried candy line. The Company has entered into partnerships with major retailers such as FYE, Big Lots, and Hy-Vee, and has a growing pipeline of other large retailers. With this launch, Sow Good constructed an additional two freeze driers during the second quarter of 2023 to meet the rapidly increasing retail demand. With its continuous growth and consistent sell-out within retailers, Sow Good anticipates freeze dried candy to be a major driver of its growth and has begun the process of constructing an additional fourth and fifth freeze drier to meet anticipated demand.

Going Concern Uncertainty

As of June 30, 2023, the Company had incurred recurring losses from operations resulting in an accumulated deficit of $60,401,992, and had cash on hand of $293,024. We are too early in our development stage to project revenue with a necessary level of certainty; therefore, we may not have sufficient funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund our operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company has commenced sales and continues to develop its operations. In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these objectives.

The Company has incurred recurring losses from operations resulting in an accumulated deficit, experienced net negative cash flows from operations, and, as set forth above, the Company’s cash on hand may not be sufficient to sustain operations. We continue to pursue sources of additional capital through various financing transactions or arrangements, including equity financing or other means. We may not be successful in identifying suitable financing transactions in a sufficient time period or at all, and we may not obtain the capital we require by other means. If we do not succeed in raising additional capital, our resources may not be sufficient to fund our business. Our ability to scale production and distribution capabilities and further increase the value of our brands, is largely dependent on our success in raising additional capital.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The unaudited financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Results of Operations for the Three Months Ended June 30, 2023 and 2022

The following table summarizes selected items from the statement of operations for the three months ended June 30, 2023 and 2022, respectively.

	Three Months Ended
	June 30,						Increase /
	2023			2022			(Decrease)
Revenues	$	1,315,347		$	244,943		$	1,070,404
Cost of goods sold		2,695,820			150,603			2,545,217
Gross profit (loss)		(1,380,473	)		94,340			(1,474,813	)
Operating expenses:
General and administrative expenses:
Salaries and benefits		538,916			1,242,900			(703,984	)
Professional services		63,329			53,295			10,034
Other general and administrative expenses		483,260			487,789			(4,529	)
Total general and administrative expenses		1,085,505			1,783,984			(698,479	)
Depreciation and amortization		7,413			67,693			(60,280	)
Total operating expenses		1,092,918			1,851,677			(758,759	)
Net operating loss		(2,473,391	)		(1,757,337	)		716,054
Other expense:
Interest expense		(847,509	)		(355,452	)		492,057
Total other expense		(847,509	)		(355,452	)		492,057
Net loss	$	(3,320,900	)	$	(2,112,789	)	$	1,208,111

Revenues

Revenues consist primarily of online freeze dried foods product sales. The revenues were $1,315,347 for the three months ended June 30, 2023, compared to $244,943 for the three months ended June 30, 2022, an increase of $1,070,404, or 437%. Revenues increased as we pivoted to sales of our freeze dried candy and expanded our business-to-business sales during the current period, compared to the same period in the prior year.

Cost of Goods Sold

Cost of goods sold for the three months ended June 30, 2023 were $2,695,820, compared to $150,603 for the three months ended June 30, 2022, an increase of $2,545,217, or 1,690%. Cost of goods sold, primarily consisting of material costs and labor on the sales of freeze dried food products and a one-time inventory write down of $1,919,686 as we disposed of non-candy freeze dried products to pivot exclusively to our better selling candy products. Our gross profit margin was approximately negative 105% during the quarter, compared to 39% during the comparative period, and would have been 41%, compared to 39%, without the inventory impairment. Cost of goods sold and our gross profit decreased primarily due to this inventory impairment.

General and administrative expenses

Salaries and benefits

Salaries and benefits for the three months ended June 30, 2023 were $538,916, compared to $1,242,900 for the three months ended June 30, 2022, a decrease of $703,984, or 57%. Salaries and benefits included stock-based compensation expense for the three months ended June 30, 2023 of $257,070, compared to $431,370 for the three months ended June 30, 2022, a decrease of $174,300, or 40%. Stock-based compensation consists of $131,841 and $386,372 of stock options expense incurred in the three months ended June 30, 2023 and 2022, respectively, and $125,229 and $44,998 of expense related to shares of common stock issued to officers and consultants for services rendered in the three months ended June 30, 2023 and 2022, respectively. The decrease in salaries and benefits was primarily due to decreased personnel, in addition to our CEO absorbing the role of interim CFO.

Professional services

Professional services were $63,329 for the 2023 period, compared to $53,295 for the 2022 period, an increase of $10,034, or 19%. The increase was primarily due to increased recruiting fees in the current period.

Other general and administrative expenses

Other general and administrative expenses for the three months ended June 30, 2023 was $483,260, compared to $487,789 for the three months ended June 30, 2022, a decrease of $4,529, or 1%. The decrease is primarily attributable to decreased administrative infrastructure as we continue to scale the production and sales of our freeze dried products.

Depreciation

Depreciation expense for the three months ended June 30, 2023 was $7,413, compared to $67,693 for the three months ended June 30, 2022, a decrease of $60,280, or 89%. The decrease is attributable to increased overhead allocations to inventory during the current period, compared to the prior period.

Other expense

In the three months ended June 30, 2023, other expense was $847,509, consisting of $163,365 of interest expense, including interest on our EIDL loan with the SBA and loans from our officers and directors, and $684,144 related to the amortization of warrants issued as a debt discount on the loans from our officers and directors. During the comparative three months ended June 30, 2022, other expense was $355,452, consisting of $93,378 of interest expense, including interest on our EIDL loan with the SBA and loans from our officers and directors, and $262,074 related to the amortization of warrants issued as a debt discount on the loans from our officers and directors. Interest expense increased by $492,057, or 138%, primarily due to the increased amortization of warrants issued in-the-money on loans from our officers and directors in the current period.

Net loss

Net loss for the three months ended June 30, 2023 was $3,320,900, compared to $2,112,789 during the three months ended June 30, 2022, an increased net loss of $1,208,111, or 57%. The increased net loss was due primarily to $1,919,686 of inventory impairment and $492,057 of increased interest expense on debt financing issued with in-the-money warrants during the current period, as partially offset by $703,984 of improved labor costs and $1,070,404 of increased revenues over the comparative period.

Results of Operations for the Six Months Ended June 30, 2023 and 2022

The following table summarizes selected items from the statement of operations for the six months ended June 30, 2023 and 2022, respectively.

	Six Months Ended
	June 30,						Increase /
	2023			2022			(Decrease)
Revenues	$	1,514,277		$	293,315		$	1,220,962
Cost of goods sold		2,772,500			198,094			2,574,406
Gross profit (loss)		(1,258,223	)		95,221			(1,353,444	)
Operating expenses:
General and administrative expenses:
Salaries and benefits		1,083,469			2,159,055			(1,075,586	)
Professional services		109,535			115,988			(6,453	)
Other general and administrative expenses		841,727			892,865			(51,138	)
Total general and administrative expenses		2,034,731			3,167,908			(1,133,177	)
Depreciation and amortization		83,631			132,919			(49,288	)
Total operating expenses		2,118,362			3,300,827			(1,182,465	)
Net operating loss		(3,376,585	)		(3,205,606	)		(170,979	)
Other expense:
Interest expense		(1,345,845	)		(459,245	)		886,600
Total other expense		(1,345,845	)		(459,245	)		886,600
Net loss	$	(4,722,430	)	$	(3,664,851	)	$	1,057,579

Revenues

Revenues consist primarily of online freeze dried foods product sales. The revenues were $1,514,277 for the six months ended June 30, 2023, compared to $293,315 for the six months ended June 30, 2022, an increase of $1,220,962, or 416%. Revenues increased as we pivoted to sales of our freeze dried candy and expanded our business-to-business sales during the current period, compared to the same period in the prior year.

Cost of Goods Sold

Cost of goods sold for the six months ended June 30, 2023 were $2,772,500, compared to $198,094 for the six months ended June 30, 2022, an increase of $2,574,406, or 1,300%. Cost of goods sold, primarily consisting of material costs and labor on the sales of freeze dried food products and a one-time inventory write down of $1,919,686 as we disposed of non-candy freeze dried products to pivot exclusively to our better selling candy products. Our gross profit margin was approximately negative 83% during the current period, compared to 32% during the comparative period, and would have been 44%, compared to 32%, without the inventory impairment. Cost of goods sold and our gross profit decreased primarily due to this inventory impairment.

General and administrative expenses

Salaries and benefits

Salaries and benefits for the six months ended June 30, 2023 were $1,083,469, compared to $2,159,055 for the six months ended June 30, 2022, a decrease of $1,075,586, or 50%. Salaries and benefits included stock-based compensation expense for the six months ended June 30, 2023 of $383,906, compared to $575,631 for the six months ended June 30, 2022, a decrease of $191,725, or 33%. Stock-based compensation consists of $258,677 and $520,633 of stock options expense incurred in the six months ended June 30, 2023 and 2022, respectively, and $125,229 and $54,998 of expense related to shares of common stock issued to officers and consultants for services rendered in the six months ended June 30, 2023 and 2022, respectively. The decrease in salaries and benefits was primarily due to decreased personnel, in addition to our CEO absorbing the role of interim CFO.

Professional services

Professional services were $109,535 for the 2023 period, compared to $115,988 for the 2022 period, a decrease of $6,453, or 6%. The decrease was primarily due to legal fees incurred in connection with creating our brand in the comparative period that were not necessary in the current period.

Other general and administrative expenses

Other general and administrative expenses for the six months ended June 30, 2023 was $841,727, compared to $892,865 for the six months ended June 30, 2022, a decrease of $51,138, or 6%. The decrease is primarily attributable to decreased administrative infrastructure as we continue to scale the production and sales of our freeze dried products.

Depreciation

Depreciation expense for the six months ended June 30, 2023 was $83,631, compared to $132,919 for the six months ended June 30, 2022, a decrease of $49,288, or 37%. The decrease is attributable to increased overhead allocations to inventory during the current period, compared to the prior period.

Other expense

In the six months ended June 30, 2023, other expense was $1,345,845, consisting of $291,023 of interest expense, including interest on our EIDL loan with the SBA and loans from our officers and directors, and $1,054,822 related to the amortization of warrants issued as a debt discount on the loans from our officers and directors. During the comparative six months ended June 30, 2022, other expense was $459,245, consisting of $137,447 of interest expense on our EIDL loan with the SBA and loans from our officers and directors, and $321,798 related to the amortization of warrants issued as a debt discount on the loans from our officers and directors. Interest expense increased by $886,600, or 193%, primarily due to the increased amortization of warrants issued in-the-money on loans from our officers and directors in the current period.

Net loss

Net loss for the six months ended June 30, 2023 was $4,722,430, compared to $3,664,851 during the six months ended June 30, 2022, an increased net loss of $1,057,579, or 29%. The increased net loss was due primarily to $1,919,686 of inventory impairment and $886,600 of increased interest expense on debt financing issued with in-the-money warrants during the current period, as partially offset by $1,075,586 of improved labor costs and $1,220,962 of increased revenues over the comparative period.

Liquidity and Capital Resources

The following table summarizes our total current assets, liabilities and working capital at June 30, 2023 and December 31, 2022, respectively.

	June 30,		December 31,
	2023		2022
Current Assets	$	2,058,508	$	2,578,057

Current Liabilities	$	1,383,976	$	890,177

Working Capital	$	674,532	$	1,687,880

As of June 30, 2023, we had working capital of $674,532.

The following table summarizes our cash flows during the six months ended June 30, 2023 and 2022, respectively.

	Six Months Ended
	June 30,
	2023			2022
Net cash used in operating activities	$	(2,421,260	)	$	(2,274,361	)
Net cash used in investing activities		(362,180	)		(2,015,033	)
Net cash provided by financing activities		2,800,000			3,700,000

Net change in cash and cash equivalents	$	16,560		$	(589,394	)

Net cash used in operating activities was $2,421,260 and $2,274,361 for the six months ended June 30, 2023 and 2022, respectively, a period over period increase of $146,899. The increase was primarily due to increased inventory purchases, as partially offset by our increased revenues and diminished labor costs that began to improve our operations.

Net cash used in investing activities were $362,180 and $2,015,033 for the six months ended June 30, 2023 and 2022, respectively, a period over period decrease of $1,652,853. Cash used in investing activities were comprised of $3621,80 of fixed asset additions, as we completed our 2^nd and 3^rd freeze dried freezers and finalized our office leasehold improvements during the six months ended June 30, 2023, compared to $2,009,104 of fixed asset purchases and $5,929 of purchases on trademarks during the six months ended June 30, 2022.

Net cash provided by financing activities were $2,800,000 for the six months ended June 30, 2023, which was comprised of $2,400,000 of debt financing received from our officers and directors and $400,000 received from others under the same terms, compared to $3,700,000, comprised of $3,120,000 of debt financing received from our officers and directors and $580,000 received from others under the same terms, for the six months ended June 30, 2022.

Satisfaction of our cash obligations for the next 12 months

As of June 30, 2023, our balance of cash was $293,024 and we had total working capital of $674,532. Based on projections of cash expenditures in the Company’s current business plan, the cash on hand as of June 30, 2023 would be insufficient to sustain operations over the next year. We expect to incur significant costs related to the development and operation of our freeze dried foods business which will put a strain on our cash resources. Our plan for satisfying our cash requirements for the next twelve months is through cash on hand and additional financing in the form of equity or debt as needed. Our ability to scale production and distribution capabilities and further increase the value of our brands is largely dependent on our success in raising additional capital.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial conditions and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financial statements required us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these estimates.

Our critical accounting policies are more fully described in Note 2 of the footnotes to our financial statements appearing elsewhere in this Form 10-Q, and Note 2 of the footnotes to the financial statements provided in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item

ITEM 4. CONTROLS AND PROCEDURES.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

Our management, under the direction of our Chief Executive Officer and Interim Chief Financial Officer, who is one and the same, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2023. As part of such evaluation, management considered the matters discussed below relating to internal control over financial reporting. Based on this evaluation, our Chief Executive Officer and Interim Chief Financial Officer, has concluded that the Company’s disclosure controls and procedures were ineffective as of June 30, 2023 to ensure that the information required to be disclosed in our Exchange Act reports was recorded, processed, summarized and reported on a timely basis. As a small Company with limited resources that is mainly focused on the development and sales of our freeze dried products, the Company does 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 has resulted in certain audit adjustments and management believes that there may be a possibility for a material misstatement to occur in future periods while it employs the current number of personnel in its finance department.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

There have been no changes in the Company’s internal control over financial reporting during the three-month period ended June 30, 2023 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Other than routine legal proceedings incident to our business, there are no material legal proceedings to which we are a party or to which any of our property is subject.

ITEM 1A. RISK FACTORS.

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following issuances of our securities during the three-month period ended June 30, 2023 were exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.

On June 1, 2023, we issued a total of 20,699 shares of common stock, restricted in accordance with Rule 144, among five non-employee board members for services rendered.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

Exhibit		Description
3.1		Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission by Black Ridge Oil & Gas, Inc. on December 12, 2012)
3.2		Bylaws (incorporated by reference to Exhibit 3.2 of the Form 8-K filed with the Securities and Exchange Commission by Black Ridge Oil & Gas, Inc. on December 12, 2012)
3.3		Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission by Black Ridge Oil & Gas, Inc. on February 21, 2020)
3.4		Articles of Merger (incorporated by reference to Exhibit 3.01 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on January 22, 2021)
4.1		Form of Common Stock Warrant (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on August 25, 2022)
4.2		Form of Common Stock Warrant (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on April 14, 2022)
4.3		Form of Common Stock Warrant (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 1, 2023)
4.4		Form of Common Stock Warrant (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 15, 2023)
10.1		Amended Employment Agreement, dated January 4, 2021, between Claudia Goldfarb and Sow Good Inc. (incorporated by reference to Exhibit 10.20 of the Form 10-K filed with the Securities and Exchange Commission by Sow Good Inc. on March 31, 2021)
10.2		Amended Employment Agreement, dated January 4, 2021, between Ira Goldfarb and Sow Good Inc. (incorporated by reference to Exhibit 10.21 of the Form 10-K filed with the Securities and Exchange Commission by Sow Good Inc. on March 31, 2021)
10.3		Amendment to 2020 Stock Incentive Plan adopted in October 2020 (incorporated by reference to Exhibit 10.4 of the Form 10-Q filed with the Securities and Exchange Commission by Sow Good Inc. on May 13, 2021)
10.4		Amendment to 2020 Stock Incentive Plan adopted in January 2021 (incorporated by reference to Exhibit 10.5 of the Form 10-Q filed with the Securities and Exchange Commission by Sow Good Inc. on May 13, 2021)
10.5		Amendment to 2020 Stock Incentive Plan adopted in March 2021 (incorporated by reference to Exhibit 10.6 of the Form 10-Q filed with the Securities and Exchange Commission by Sow Good Inc. on May 13, 2021)
10.6		Note and Warrant Purchase Agreement, dated April 8, 2022, by and among the Company and the Purchasers named therein (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on April 14, 2022)
10.7		Form of 2022 Promissory Note (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on April 14, 2022)
10.8		Note and Warrant Purchase Agreement, dated August 23, 2022 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on August 25, 2022)
10.9		Form of August 2022 Promissory Note (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on August 25, 2022)
10.10		First Amendment to April 2022 Promissory Notes, dated August 23, 2022 (incorporated by reference to Exhibit 10.3 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on August 25, 2022)
10.11		Note and Warrant Purchase Agreement, dated April 25, 2023, by and among the Company and the Purchasers named therein (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 1, 2023)
10.12		Form of April 2023 Promissory Note (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 1, 2023)
10.13		Note and Warrant Purchase Agreement, dated May 11, 2023, by and among the Company and the Purchasers named therein (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 15, 2023)
10.14		Form of May 2023 Promissory Note (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on May 15, 2023)
31.1*		Section 302 Certification of Chief Executive Officer and Interim Chief Financial Officer
32.1*		Section 906 Certification of Chief Executive Officer and Interim Chief Financial Officer
101.INS*		XBRL Instance Document
101.SCH*		XBRL Schema Document
101.CAL*		XBRL Calculation Linkbase Document
101.DEF*		XBRL Definition Linkbase Document
101.LAB*		XBRL Labels Linkbase Document
101.PRE*		XBRL Presentation Linkbase Document

*Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SOW GOOD INC.

Dated: August 14, 2023	By:	/s/ Claudia Goldfarb
		Claudia Goldfarb, Chief Executive Officer and Interim Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)

EXHIBIT 31.1

CERTIFICATION

I, Claudia Goldfarb, certify that:

I have reviewed this report on Form 10-Q of Sow Good Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Dated: August 14, 2023

/s/ Claudia Goldfarb

Claudia Goldfarb, Chief Executive Officer and Interim Chief Financial Officer

(Principal Executive Officer and Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sow Good Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2023 (the “Report”) I, Claudia Goldfarb, Chief Executive Officer and Interim Chief Financial Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2023

/s/ Claudia Goldfarb

Claudia Goldfarb, Chief Executive Officer and Interim Chief Financial Officer

(Principal Executive Officer and Principal Financial Officer)

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2023	Aug. 14, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	000-53952
Entity Registrant Name	SOW GOOD INC.
Entity Central Index Key	0001490161
Entity Tax Identification Number	27-2345075
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	1440 N. Union Bower
Entity Address, City or Town	Irving
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75061
City Area Code	(214)
Local Phone Number	623-6055
Title of 12(b) Security	Common Stock
Trading Symbol	SOWG
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		4,868,083

CONDENSED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 293,024	$ 276,464
Accounts receivable, net	726,672	191,022
Prepaid expenses	119,843	137,692
Inventory	918,969	1,972,879
Total current assets	2,058,508	2,578,057
Property and equipment:
Construction in progress	0	2,487,673
Property and equipment	5,905,432	3,055,579
Less accumulated depreciation	(663,673)	(508,257)
Total property and equipment, net	5,241,759	5,034,995
Security deposit	58,765	24,000
Right-of-use asset	1,226,708	1,261,525
Total assets	8,585,740	8,898,577
Current liabilities:
Accounts payable	376,349	452,606
Accrued expenses	657,411	385,028
Current portion of operating lease liabilities	56,011	52,543
Current maturities of notes payable, related parties, net of $699,297 of debt discounts at June 30, 2023	200,703	0
Current maturities of notes payable, net of $306,498 of debt discounts at June 30, 2023	93,502	0
Total current liabilities	1,383,976	890,177
Operating lease liabilities	1,272,626	1,301,355
Notes payable, related parties, net of $3,027,998 and $2,692,757 of debt discounts at June 30, 2023 and December 31, 2022, respectively	4,667,002	3,502,243
Notes payable, net of $262,705 and $336,085 of debt discounts at June 30, 2023 and December 31, 2022, respectively	467,295	393,915
Total liabilities	7,790,899	6,087,690
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares issued and outstanding	0	0
Common stock, $0.001 par value, 500,000,000 shares authorized, 4,868,083 shares issued and outstanding	4,868	4,847
Additional paid-in capital	61,191,965	58,485,602
Accumulated deficit	(60,401,992)	(55,679,562)
Total stockholders' equity	794,841	2,810,887
Total liabilities and stockholders' equity	$ 8,585,740	$ 8,898,577

CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Debt discounts related party, current	$ 699,297
Debt discounts, current	306,498	$ 336,085
Debt discounts related party, non current	3,027,998	2,692,757
Debt discounts, non current	$ 262,705	$ 336,085
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	4,868,083	4,868,083
Common stock, shares outstanding	4,868,083	4,868,083

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Revenues	$ 1,315,347	$ 244,943	$ 1,514,277	$ 293,315
Cost of goods sold	2,695,820	150,603	2,772,500	198,094
Gross profit (loss)	(1,380,473)	94,340	(1,258,223)	95,221
General and administrative expenses:
Salaries and benefits	538,916	1,242,900	1,083,469	2,159,055
Professional services	63,329	53,295	109,535	115,988
Other general and administrative expenses	483,260	487,789	841,727	892,865
Total general and administrative expenses	1,085,505	1,783,984	2,034,731	3,167,908
Depreciation and amortization	7,413	67,693	83,631	132,919
Total operating expenses	1,092,918	1,851,677	2,118,362	3,300,827
Net operating loss	(2,473,391)	(1,757,337)	(3,376,585)	(3,205,606)
Other expense:
Interest expense, including $684,144 and $1,054,822 of warrants issued as a debt discount for the three and six months ending June 30, 2023, and $262,074 and $321,798 for the three and six months ending June 30, 2022, respectively	(847,509)	(355,452)	(1,345,845)	(459,245)
Total other expense	(847,509)	(355,452)	(1,345,845)	(459,245)
Net loss	$ (3,320,900)	$ (2,112,789)	$ (4,722,430)	$ (3,664,851)

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Interest expense on warrants issued as debt discount	$ 684,144	$ 262,074	$ 1,054,822	$ 321,798
Weighted Average Number of Shares Outstanding, Basic	4,854,208	4,837,950	4,850,815	4,823,974
Weighted Average Number of Shares Outstanding, Diluted	4,854,208	4,837,950	4,850,815	4,823,974
Earnings Per Share, Basic	$ (0.68)	$ (0.44)	$ (0.97)	$ (0.76)
Earnings Per Share, Diluted	$ (0.68)	$ (0.44)	$ (0.97)	$ (0.76)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Common Stock Payable [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2021	$ 4,809	$ 54,342,027	$ 26,066	$ (43,552,494)	$ 10,820,408
Beginning balance, shares at Dec. 31, 2021	4,809,070
Common stock issued to officers and directors for services	$ 20	51,044	(26,066)		24,998
Common stock issued to officers and directors for services, shares	19,649
Common stock warrants granted to related parties pursuant to debt financing		2,249,684			2,249,684
Common stock warrants granted to note holders pursuant to debt financing		444,330			444,330
Common stock options granted to officers and directors for services		417,742			417,742
Common stock options granted to employees and advisors for services		102,891			102,891
Net loss				(3,664,851)	(3,664,851)
Common stock issued to advisory board for services	$ 12	29,988			30,000
Common stock issued to advisory board for services, shares	12,255
Ending balance, value at Jun. 30, 2022	$ 4,841	57,637,706		(47,217,345)	10,425,202
Ending balance, shares at Jun. 30, 2022	4,840,974
Beginning balance, value at Mar. 31, 2022	$ 4,821	54,502,342	10,000	(45,104,556)	9,412,607
Beginning balance, shares at Mar. 31, 2022	4,820,655
Common stock issued to officers and directors for services	$ 8	24,990			24,998
Common stock issued to officers and directors for services, shares	8,064
Common stock warrants granted to related parties pursuant to debt financing		2,249,684			2,249,684
Common stock warrants granted to note holders pursuant to debt financing		444,330			444,330
Common stock options granted to officers and directors for services		296,002			296,002
Common stock options granted to employees and advisors for services		90,370			90,370
Net loss				(2,112,789)	(2,112,789)
Common stock issued to advisory board for services	$ 12	29,988	(10,000)		20,000
Common stock issued to advisory board for services, shares	12,255
Ending balance, value at Jun. 30, 2022	$ 4,841	57,637,706		(47,217,345)	10,425,202
Ending balance, shares at Jun. 30, 2022	4,840,974
Beginning balance, value at Dec. 31, 2022	$ 4,847	58,485,602		(55,679,562)	2,810,887
Beginning balance, shares at Dec. 31, 2022	4,847,384
Common stock issued to officers and directors for services	$ 21	125,208			125,229
Common stock issued to officers and directors for services, shares	20,699
Common stock warrants granted to related parties pursuant to debt financing		1,948,325			1,948,325
Common stock warrants granted to note holders pursuant to debt financing		374,153			374,153
Common stock options granted to officers and directors for services		224,707			224,707
Common stock options granted to employees and advisors for services		33,970			33,970
Net loss				(4,722,430)	(4,722,430)
Ending balance, value at Jun. 30, 2023	$ 4,868	61,191,965		(60,401,992)	794,841
Ending balance, shares at Jun. 30, 2023	4,868,083
Beginning balance, value at Mar. 31, 2023	$ 4,847	59,484,859		(57,081,092)	2,408,614
Beginning balance, shares at Mar. 31, 2023	4,847,384
Common stock issued to officers and directors for services	$ 21	125,208			125,229
Common stock issued to officers and directors for services, shares	20,699
Common stock warrants granted to related parties pursuant to debt financing		1,075,904			1,075,904
Common stock warrants granted to note holders pursuant to debt financing		374,153			374,153
Common stock options granted to officers and directors for services		112,974			112,974
Common stock options granted to employees and advisors for services		18,867			18,867
Net loss				(3,320,900)	(3,320,900)
Ending balance, value at Jun. 30, 2023	$ 4,868	$ 61,191,965		$ (60,401,992)	$ 794,841
Ending balance, shares at Jun. 30, 2023	4,868,083

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (4,722,430)	$ (3,664,851)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debts expense	185,485	0
Depreciation and amortization	155,416	148,655
Common stock issued to officers and directors for services	125,229	24,998
Common stock awarded to advisors and consultants for services	0	30,000
Amortization of stock options	258,677	520,633
Amortization of stock warrants issued as a debt discount	1,054,822	321,798
Decrease (increase) in current assets:
Accounts receivable	(721,135)	(181,699)
Prepaid expenses	17,849	(28,884)
Inventory	1,053,910	(394,062)
Security deposits	(34,765)	(14,000)
Right-of-use asset	34,817	33,457
Increase (decrease) in current liabilities:
Accounts payable	(76,257)	766,089
Accrued expenses	272,383	185,545
Lease liabilities	(25,261)	(22,040)
Net cash used in operating activities	(2,421,260)	(2,274,361)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(362,180)	(124,384)
Cash paid for construction in progress	0	(1,884,720)
Cash paid for intangible assets	0	(5,929)
Net cash used in investing activities	(362,180)	(2,015,033)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received from notes payable, related parties	2,400,000	3,120,000
Proceeds received from notes payable	400,000	580,000
Net cash provided by financing activities	2,800,000	3,700,000
NET CHANGE IN CASH AND CASH EQUIVALENTS	16,560	(589,394)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	276,464	3,345,928
CASH AND CASH EQUIVALENTS AT END OF PERIOD	293,024	2,756,534
SUPPLEMENTAL INFORMATION:
Interest paid	25,685	43,606
Income taxes paid	0	0
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Value of debt discounts attributable to warrants	$ 2,322,478	$ 2,694,014

Organization and Nature of Business

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Nature of Business

Note 1 – Organization and Nature of Business

Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

Note 2 – Basis of Presentation and Significant Accounting Policies

Fair Value of Financial Instruments

Use of Estimates

Cash in Excess of FDIC Limits

Property and Equipment


Software	3 years, or over the life of the agreement
Website	3 years
Office equipment	5 years
Furniture and fixtures	5 years
Machinery and equipment	7-10 years
Leasehold improvements	Fully extended lease-term

Impairment of Long-Lived Assets

Inventory

Inventory, consisting of raw materials, material overhead, labor, and manufacturing overhead, are stated at the average cost or net realizable value and consists of the following:

Schedule of inventory
	June 30,		December 31,
	2023		2022
Finished goods	$	252,753	$	384,241
Packaging materials		83,441		416,663
Work in progress		–		864,460
Raw materials		582,775		307,515
Total inventory	$	918,969	$	1,972,879

Revenue Recognition

Accounts Receivable

Basic and Diluted Earnings (Loss) Per Share

Stock-Based Compensation

Income Taxes

Recent Accounting Pronouncements

No other new accounting pronouncements, issued or effective during the period ended June 30, 2023, have had or are expected to have a significant impact on the Company’s financial statements.

Going Concern

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going Concern

Note 3 – Going Concern

Related Party

6 Months Ended

Jun. 30, 2023

Related Party

Note 4 – Related Party

Debt Financing

On August 23, 2022, we closed on an offering to sell up to $2,500,000 of promissory notes and warrants to purchase an aggregate 625,000 shares of the Company’s common stock, exercisable over a ten-year period at a price of $2.60 per share, representing 25,000 warrant shares per $100,000 of Notes purchased. The notes mature on August 23, 2025. Interest on the Notes accrue at a rate of 8% per annum, payable on January 1, 2025. Loans may be advanced to the Company from time to time from August 23, 2022 to the Maturity Date. On various dates between January 5, 2023 and April 11, 2023, the Company received aggregate proceeds of $1,500,000 from two of the Company’s Directors on the sale of these notes and warrants.

Common Stock Issued to Directors for Services

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 5 – Fair Value of Financial Instruments

The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

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

Fair Value Measurements at June 30, 2023

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

293,024

–

Total assets

293,024

–

Liabilities

Notes payable, related parties, net of $3,727,295 of debt discounts

–

4,867,705

–

Notes payable, net of $569,203 of debt discounts

–

560,797

–

Total liabilities

–

5,428,502

–

293,024

5,428,502

–

Fair Value Measurements at December 31, 2022

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

276,464

–

Total assets

276,464

–

Liabilities

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

–

3,502,243

–

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

–

393,915

–

Total liabilities

–

3,896,158

–

276,464

3,896,158

–

There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the three months ended June 30, 2023.

Prepaid Expenses

6 Months Ended

Jun. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid Expenses

Note 6 – Prepaid Expenses

Prepaid expenses consist of the following:

Schedule of prepaid expenses
	June 30,		December 31,
	2023		2022
Prepaid software licenses	$	60,961	$	36,424
Prepaid insurance costs		14,284		16,746
Trade show advances		25,728		18,707
Prepaid rent		13,340		27,043
Prepaid office and other costs		5,530		38,772
Total prepaid expenses	$	119,843	$	137,692

Property and Equipment

6 Months Ended

Jun. 30, 2023

Property and equipment:

Property and Equipment

Note 7 – Property and Equipment

Property and equipment at June 30, 2023 and December 31, 2022, consists of the following:

Property and equipment
	June 30,			December 31,
	2023			2022
Office equipment	$	13,872		$	13,872
Machinery		4,357,267			1,643,010
Software		70,000			70,000
Website		71,589			71,589
Leasehold improvements		1,392,704			1,257,108
Construction in progress		–			2,487,673
		5,905,432			5,543,252
Less: Accumulated depreciation and amortization		(663,673	)		(508,257	)
Total property and equipment, net	$	5,241,759		$	5,034,995

Leases

6 Months Ended

Jun. 30, 2023

Leases

Leases

Note 8 – Leases

The components of lease expense were as follows:

Schedule of components of lease expense
	For the Six Months Ended
	June 30,
	2023		2022
Operating lease cost:
Amortization of right-of-use asset	$	34,817	$	33,457
Interest on lease liability		38,624		39,984
Total operating lease cost	$	73,441	$	73,441

Supplemental balance sheet information related to leases was as follows:


	June 30,		December 31,
	2023		2022
Operating lease:
Operating lease assets	$	1,226,708	$	1,261,525

Current portion of operating lease liability	$	56,011		52,543
Noncurrent operating lease liability		1,272,626		1,301,355
Total operating lease liability	$	1,328,637	$	1,353,898

Weighted average remaining lease term:
Operating leases		12.8 years		13.3 years

Weighted average discount rate:
Operating lease		5.75%		5.75%

Supplemental cash flow and other information related to operating leases was as follows:


	June 30,
	For the Six Months Ended
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	25,261	$	22,040

The future minimum lease payments due under operating leases as of June 30, 2023 is as follows:


Fiscal Year Ending	Minimum Lease
December 31,	Commitments
2023 (for the six months remaining)	$	64,843
2024		132,917
2025		136,905
2026		141,012
2027 and thereafter		1,412,988
Total	$	1,888,665
Less effects of discounting		560,028
Lease liability recognized	$	1,328,637

Notes Payable, Related Parties

6 Months Ended

Jun. 30, 2023

Notes Payable Related Parties

Notes Payable, Related Parties

Note 9 – Notes Payable, Related Parties

Notes payable, related parties consists of the following at June 30, 2023 and December 31, 2022, respectively:


	June 30,		December 31,
	2023		2022

On May 11, 2023, the Company received $100,000 pursuant to a note and warrant purchase agreement from Bradley Berman, one of the Company’s Directors, on behalf of the Bradley Berman Irrevocable Trust, as lender. The unsecured note matures on May 11, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.	$	100,000	$	–

On April 25, 2023, the Company received $50,000 pursuant to a note and warrant purchase agreement from the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 12,500 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.		50,000		–


On April 25, 2023, the Company received $750,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 187,500 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.	750,000	–

On April 11, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On March 7, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On March 2, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On February 1, 2023, the Company received $500,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 125,000 shares of common stock, exercisable at $2.60 per share over a ten-year term.	500,000	–

On January 5, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On December 21, 2022, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	250,000


On September 29, 2022, the Company received $500,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 125,000 shares of common stock, exercisable at $2.60 per share over a ten-year term.	500,000	500,000

On September 29, 2022, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	250,000

On April 8, 2022, the Company received $2,000,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 500,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	2,000,000	2,000,000

On April 8, 2022, the Company received $100,000 pursuant to a note and warrant purchase agreement with the Company’s Chairman and CEO, Mr. & Mrs. Goldfarb, as lenders. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	100,000	100,000

On April 8, 2022, the Company received $100,000 pursuant to a note and warrant purchase agreement with IG Union Bower LLC, an entity owned by Ira Goldfarb, the Company’s Chairman, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	100,000	100,000

On April 8, 2022, the Company received $920,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 230,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	920,000	920,000


On December 31, 2021, the Company received $1,500,000 pursuant to a note and warrant purchase agreement with the Company’s Chairman and CEO, Mr. & Mrs. Goldfarb, as lenders. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholders also received warrants to purchase 225,000 shares of common stock, exercisable at $2.21 per share over a ten-year term.		1,500,000		1,500,000

On December 31, 2021, the Company received $500,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 75,000 shares of common stock, exercisable at $2.21 per share over a ten-year term.		500,000		500,000

On December 31, 2021, the Company received $25,000 pursuant to a note and warrant purchase agreement from the Company’s former CFO, Bradley K. Burke, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 3,750 shares of common stock, exercisable at $2.21 per share over a ten-year term.		25,000		25,000

On December 31, 2021, the Company received $50,000 pursuant to a note and warrant purchase agreement from the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 7,500 shares of common stock, exercisable at $2.21 per share over a ten-year term.		50,000		50,000

Total notes payable, related parties		8,595,000		6,195,000
Less unamortized debt discounts:		3,727,295		2,692,757
Notes payable		4,867,705		3,502,243
Less: current maturities		200,703		–
Notes payable, related parties, less current maturities	$	4,667,002	$	3,502,243

The Company recognized $270,721 and $126,530 of interest expense for the six months ended June 30, 2023 and 2022, respectively.

Notes Payable

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Notes Payable

Note 10 – Notes Payable

Notes payable consists of the following at June 30, 2023 and December 31, 2022, respectively:

Schedule of notes payable
	June 30,		December 31,
	2023		2022

On April 25, 2023, the Company received $400,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 100,000 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.	$	400,000	$	–

On April 8, 2022, the Company received $80,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholders also received warrants to purchase 20,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	80,000		80,000

On April 8, 2022, the Company received $500,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholders also received warrants to purchase 125,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.		500,000		500,000

On June 16, 2020, the Company entered into a loan authorization and loan agreement with the United States Small Business Administration (the “SBA”), as lender, pursuant to the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business (the “EIDL Loan Agreement”) encompassing a $150,000 Promissory Note issued to the SBA (the “EIDL Note”)(together with the EIDL Loan Agreement, the “EIDL Loan”), bearing interest at 3.75% per annum. In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated June 16, 2020, between the SBA and the Company (the “EIDL Security Agreement”) pursuant to which the EIDL Loan is secured by a security interest on all of the Company’s assets. Under the EIDL Note, the Company is required to pay principal and interest payments of $731 every month beginning June 16, 2022, as extended. All remaining principal and accrued interest is due and payable on June 16, 2050. The EIDL Note may be repaid at any time without penalty.	$	150,000	$	150,000

Total notes payable		1,130,000		730,000
Less unamortized debt discounts:		569,203		336,085
Notes payable		560,797		393,915
Less: current maturities		93,502		–
Notes payable, less current maturities	$	467,295	$	393,915

The Company recognized $20,302 and $10,917 of interest expense on notes payable for the six months ended June 30, 2023 and 2022, respectively.

Changes in Stockholders’ Equity

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Changes in Stockholders’ Equity

Note 11 – Changes in Stockholders’ Equity

Preferred Stock

The Company has 20,000,000 authorized shares of $0.001 par value preferred stock. No shares have been issued to date.

Common Stock

The Company has 500,000,000 authorized shares of $0.001 par value common stock. As of June 30, 2023, a total of 4,868,083 shares of common stock have been issued.

Common Stock Issued to Directors for Services

Options

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Options

Note 12 – Options

Outstanding Options

Options Granted

Options Exercised

No options were exercised during the six months ended June 30, 2023 and 2022.

Warrants

6 Months Ended

Jun. 30, 2023

Warrants

Warrants

Note 13 – Warrants

Outstanding Warrants

Warrants Granted

Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 14 – Income Taxes

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no significant uncertain tax positions as of any date on or before June 30, 2023.

Commitments

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments

Note 15 – Commitments

Legal Proceedings

Cash in Excess of FDIC Limits

Lease Commitments

Subsequent Events

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

Note 16 – Subsequent Events

Escrowed Cash

Options Granted

Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Fair Value of Financial Instruments

Use of Estimates

Cash in Excess of FDIC Limits

Property and Equipment


Software	3 years, or over the life of the agreement
Website	3 years
Office equipment	5 years
Furniture and fixtures	5 years
Machinery and equipment	7-10 years
Leasehold improvements	Fully extended lease-term

Impairment of Long-Lived Assets

Inventory

Inventory, consisting of raw materials, material overhead, labor, and manufacturing overhead, are stated at the average cost or net realizable value and consists of the following:

Schedule of inventory
	June 30,		December 31,
	2023		2022
Finished goods	$	252,753	$	384,241
Packaging materials		83,441		416,663
Work in progress		–		864,460
Raw materials		582,775		307,515
Total inventory	$	918,969	$	1,972,879

Revenue Recognition

Accounts Receivable

Basic and Diluted Earnings (Loss) Per Share

Stock-Based Compensation

Income Taxes

Recent Accounting Pronouncements

No other new accounting pronouncements, issued or effective during the period ended June 30, 2023, have had or are expected to have a significant impact on the Company’s financial statements.

Basis of Presentation and Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Schedule of estimated useful lives of assets


Software	3 years, or over the life of the agreement
Website	3 years
Office equipment	5 years
Furniture and fixtures	5 years
Machinery and equipment	7-10 years
Leasehold improvements	Fully extended lease-term

Schedule of inventory

Schedule of inventory
	June 30,		December 31,
	2023		2022
Finished goods	$	252,753	$	384,241
Packaging materials		83,441		416,663
Work in progress		–		864,460
Raw materials		582,775		307,515
Total inventory	$	918,969	$	1,972,879

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Valuation of financial instruments at fair value

Fair Value Measurements at June 30, 2023

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

293,024

–

Total assets

293,024

–

Liabilities

Notes payable, related parties, net of $3,727,295 of debt discounts

–

4,867,705

–

Notes payable, net of $569,203 of debt discounts

–

560,797

–

Total liabilities

–

5,428,502

–

293,024

5,428,502

–

Fair Value Measurements at December 31, 2022

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

276,464

–

Total assets

276,464

–

Liabilities

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

–

3,502,243

–

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

–

393,915

–

Total liabilities

–

3,896,158

–

276,464

3,896,158

–

There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the three months ended June 30, 2023.

Prepaid Expenses (Tables)

6 Months Ended

Jun. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of prepaid expenses

Schedule of prepaid expenses
	June 30,		December 31,
	2023		2022
Prepaid software licenses	$	60,961	$	36,424
Prepaid insurance costs		14,284		16,746
Trade show advances		25,728		18,707
Prepaid rent		13,340		27,043
Prepaid office and other costs		5,530		38,772
Total prepaid expenses	$	119,843	$	137,692

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2023

Property and equipment:

Property and equipment

Property and equipment
	June 30,			December 31,
	2023			2022
Office equipment	$	13,872		$	13,872
Machinery		4,357,267			1,643,010
Software		70,000			70,000
Website		71,589			71,589
Leasehold improvements		1,392,704			1,257,108
Construction in progress		–			2,487,673
		5,905,432			5,543,252
Less: Accumulated depreciation and amortization		(663,673	)		(508,257	)
Total property and equipment, net	$	5,241,759		$	5,034,995

Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases

Schedule of components of lease expense

Schedule of components of lease expense
	For the Six Months Ended
	June 30,
	2023		2022
Operating lease cost:
Amortization of right-of-use asset	$	34,817	$	33,457
Interest on lease liability		38,624		39,984
Total operating lease cost	$	73,441	$	73,441

Schedule of supplemental balance sheet information


	June 30,		December 31,
	2023		2022
Operating lease:
Operating lease assets	$	1,226,708	$	1,261,525

Current portion of operating lease liability	$	56,011		52,543
Noncurrent operating lease liability		1,272,626		1,301,355
Total operating lease liability	$	1,328,637	$	1,353,898

Weighted average remaining lease term:
Operating leases		12.8 years		13.3 years

Weighted average discount rate:
Operating lease		5.75%		5.75%

Schedule of supplemental cash flow and other information


	June 30,
	For the Six Months Ended
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	25,261	$	22,040

Schedule of future minimum lease payments


Fiscal Year Ending	Minimum Lease
December 31,	Commitments
2023 (for the six months remaining)	$	64,843
2024		132,917
2025		136,905
2026		141,012
2027 and thereafter		1,412,988
Total	$	1,888,665
Less effects of discounting		560,028
Lease liability recognized	$	1,328,637

Notes Payable, Related Parties (Tables)

6 Months Ended

Jun. 30, 2023

Notes Payable Related Parties

Schedule of Notes payable, related parties


	June 30,		December 31,
	2023		2022

On May 11, 2023, the Company received $100,000 pursuant to a note and warrant purchase agreement from Bradley Berman, one of the Company’s Directors, on behalf of the Bradley Berman Irrevocable Trust, as lender. The unsecured note matures on May 11, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.	$	100,000	$	–

On April 25, 2023, the Company received $50,000 pursuant to a note and warrant purchase agreement from the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 12,500 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.		50,000		–


On April 25, 2023, the Company received $750,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 187,500 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.	750,000	–

On April 11, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On March 7, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On March 2, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On February 1, 2023, the Company received $500,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 125,000 shares of common stock, exercisable at $2.60 per share over a ten-year term.	500,000	–

On January 5, 2023, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	–

On December 21, 2022, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	250,000


On September 29, 2022, the Company received $500,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 125,000 shares of common stock, exercisable at $2.60 per share over a ten-year term.	500,000	500,000

On September 29, 2022, the Company received $250,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note matures on August 23, 2025. The note bears interest at 8% per annum, payable on January 1, 2025. The noteholder also received warrants to purchase 62,500 shares of common stock, exercisable at $2.60 per share over a ten-year term.	250,000	250,000

On April 8, 2022, the Company received $2,000,000 pursuant to a note and warrant purchase agreement from a trust held by the Company’s Chairman, Mr. Goldfarb, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 500,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	2,000,000	2,000,000

On April 8, 2022, the Company received $100,000 pursuant to a note and warrant purchase agreement with the Company’s Chairman and CEO, Mr. & Mrs. Goldfarb, as lenders. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	100,000	100,000

On April 8, 2022, the Company received $100,000 pursuant to a note and warrant purchase agreement with IG Union Bower LLC, an entity owned by Ira Goldfarb, the Company’s Chairman, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	100,000	100,000

On April 8, 2022, the Company received $920,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholder also received warrants to purchase 230,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	920,000	920,000


On December 31, 2021, the Company received $1,500,000 pursuant to a note and warrant purchase agreement with the Company’s Chairman and CEO, Mr. & Mrs. Goldfarb, as lenders. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholders also received warrants to purchase 225,000 shares of common stock, exercisable at $2.21 per share over a ten-year term.		1,500,000		1,500,000

On December 31, 2021, the Company received $500,000 pursuant to a note and warrant purchase agreement from the Lyle A. Berman Revocable Trust, as beneficially controlled by one of the Company’s Directors, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 75,000 shares of common stock, exercisable at $2.21 per share over a ten-year term.		500,000		500,000

On December 31, 2021, the Company received $25,000 pursuant to a note and warrant purchase agreement from the Company’s former CFO, Bradley K. Burke, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 3,750 shares of common stock, exercisable at $2.21 per share over a ten-year term.		25,000		25,000

On December 31, 2021, the Company received $50,000 pursuant to a note and warrant purchase agreement from the Cesar J. Gutierrez Living Trust, as beneficially controlled by the brother of the Company’s CEO, as lender. The unsecured note bears interest at 8% per annum, compounded semi-annually, and shall be payable in cash semi-annually on June 30^th and December 31^st. The note matures on December 31, 2024. The noteholder also received warrants to purchase 7,500 shares of common stock, exercisable at $2.21 per share over a ten-year term.		50,000		50,000

Total notes payable, related parties		8,595,000		6,195,000
Less unamortized debt discounts:		3,727,295		2,692,757
Notes payable		4,867,705		3,502,243
Less: current maturities		200,703		–
Notes payable, related parties, less current maturities	$	4,667,002	$	3,502,243

Notes Payable (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of notes payable

Schedule of notes payable
	June 30,		December 31,
	2023		2022

On April 25, 2023, the Company received $400,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note matures on April 25, 2024. The note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period. The noteholder also received warrants to purchase 100,000 shares of common stock, exercisable at $2.50 per share over a ten-year term. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption.	$	400,000	$	–

On April 8, 2022, the Company received $80,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholders also received warrants to purchase 20,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.	80,000		80,000

On April 8, 2022, the Company received $500,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30^th and December 31^st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholders also received warrants to purchase 125,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.		500,000		500,000

On June 16, 2020, the Company entered into a loan authorization and loan agreement with the United States Small Business Administration (the “SBA”), as lender, pursuant to the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business (the “EIDL Loan Agreement”) encompassing a $150,000 Promissory Note issued to the SBA (the “EIDL Note”)(together with the EIDL Loan Agreement, the “EIDL Loan”), bearing interest at 3.75% per annum. In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated June 16, 2020, between the SBA and the Company (the “EIDL Security Agreement”) pursuant to which the EIDL Loan is secured by a security interest on all of the Company’s assets. Under the EIDL Note, the Company is required to pay principal and interest payments of $731 every month beginning June 16, 2022, as extended. All remaining principal and accrued interest is due and payable on June 16, 2050. The EIDL Note may be repaid at any time without penalty.	$	150,000	$	150,000

Total notes payable		1,130,000		730,000
Less unamortized debt discounts:		569,203		336,085
Notes payable		560,797		393,915
Less: current maturities		93,502		–
Notes payable, less current maturities	$	467,295	$	393,915

Organization and Nature of Business (Details Narrative) - USD ($)								5 Months Ended
	May 11, 2023	Apr. 25, 2023	Aug. 23, 2022	Apr. 08, 2022	Dec. 31, 2021	Jul. 07, 2021	Feb. 05, 2021	Mar. 07, 2023	Jun. 30, 2023	Dec. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Notes payable									$ 560,797	$ 393,915
Promissory Notes And Warrants [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares issued, shares				780,000
Issuance of debt		$ 1,500,000	$ 2,500,000	$ 3,700,000	$ 2,075,000
Warrants issued		375,000	625,000	925,000	311,250
Warrant purchased		25,000	25,000		15,000
Notes payable					$ 100,000
Warrant exercisable price		$ 2.50	$ 2.60	$ 2.35	$ 2.21
Number of shares issued				$ 3,120,000
Warrants issued			625,000
Maturity date		Apr. 25, 2024	Aug. 23, 2025
Interest rate		8.00%	8.00%
Issuance of debt	$ 1,300,000	$ 1,300,000
Promissory Notes And Warrants [Member] \| Two Directors [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Issuance of debt								$ 2,250,000
Private Placement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceed from sales of stock						$ 3,000,000	$ 2,500,000
Number of shares issued, shares						714,701	631,250
Share price						$ 4.25	$ 4.00

Basis of Presentation and Significant Accounting Policies (Details - Estimated Useful Lives)	6 Months Ended
	Jun. 30, 2023
Software [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years, or over the life of the agreement
Website [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7-10 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	Fully extended lease-term

Basis of Presentation and Significant Accounting Policies (Details - Inventory) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Finished goods	$ 252,753	$ 384,241
Packaging materials	83,441	416,663
Work in progress	0	864,460
Raw materials	582,775	307,515
Total inventory	$ 918,969	$ 1,972,879

Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Cash, Uninsured Amount	$ 45,420		$ 45,420
Depreciation expense			155,416	$ 148,655
Depreciation expenses allocated to inventory			71,785	15,736
Depreciation expenses	$ 7,413	$ 67,693	83,631	132,919
Inventory, write down			1,919,686
Allowance for doubtful accounts			185,485	0
Stock-based compensation			383,906	575,631
Expense related to shares of common stock issued			125,229	54,998
Amortization expense, warrants			1,054,822	321,798
Equity Option [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Stock-based compensation			$ 258,677	$ 520,633

Going Concern (Details Narrative) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accumulated deficit	$ 60,401,992	$ 55,679,562
Cash	$ 293,024	$ 276,464

Related Party (Details Narrative) - USD ($)							3 Months Ended
Related Party (Details Narrative) - USD ($)	Jun. 01, 2023	May 11, 2023	Apr. 25, 2023	Aug. 23, 2022	Apr. 08, 2022	Dec. 31, 2021	Apr. 11, 2023
Five Non Employee Directors [Member]
Related Party Transaction [Line Items]
Shares issued	20,699
Aggregate fair value of the common stock	$ 125,229
Promissory Notes And Warrants [Member]
Related Party Transaction [Line Items]
Issuance of Debt			$ 1,500,000	$ 2,500,000	$ 3,700,000	$ 2,075,000
Warrants Issued			375,000	625,000	925,000	311,250
Warrant exercisable price			$ 2.50	$ 2.60	$ 2.35	$ 2.21
Warrant purchased			25,000	25,000		15,000
Warrant purchased, value			$ 100,000	$ 100,000
Debt Instrument, Maturity Date			Apr. 25, 2024	Aug. 23, 2025
Interest rate			8.00%	8.00%
Promissory Notes And Warrants [Member] \| One Director [Member]
Related Party Transaction [Line Items]
Issuance of Debt							$ 1,500,000
Bradley Berman [Member]
Related Party Transaction [Line Items]
Proceeds from related party		$ 100,000
Bradley Berman [Member] \| Promissory Notes And Warrants [Member]
Related Party Transaction [Line Items]
Issuance of Debt		$ 1,500,000
Warrants Issued		375,000
Warrant exercisable price		$ 2.50
Warrant purchased		25,000
Warrant purchased, value		$ 100,000
Debt Instrument, Maturity Date		May 11, 2024
Interest rate		8.00%
Mr Goldfarb [Member]
Related Party Transaction [Line Items]
Proceeds from related party			$ 750,000
Cesar J Gutierrez [Member]
Related Party Transaction [Line Items]
Proceeds from related party			$ 50,000

Fair Value of Financial Instruments (Details) - Fair Value, Recurring [Member] - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 293,024	$ 276,464
Liabilities	0	0
Net assets over liabilities	293,024	276,464
Fair Value, Inputs, Level 1 [Member] \| Cash and Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	293,024	276,464
Fair Value, Inputs, Level 1 [Member] \| Notes Payable Related Parties [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	0	0
Fair Value, Inputs, Level 1 [Member] \| Notes Payable [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Liabilities	5,428,502	3,896,158
Net assets over liabilities	5,428,502	3,896,158
Fair Value, Inputs, Level 2 [Member] \| Cash and Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Fair Value, Inputs, Level 2 [Member] \| Notes Payable Related Parties [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	4,867,705	3,502,243
Fair Value, Inputs, Level 2 [Member] \| Notes Payable [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	560,797	393,915
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Liabilities	0	0
Net assets over liabilities	0	0
Fair Value, Inputs, Level 3 [Member] \| Cash and Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Fair Value, Inputs, Level 3 [Member] \| Notes Payable Related Parties [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	0	0
Fair Value, Inputs, Level 3 [Member] \| Notes Payable [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	$ 0	$ 0

Prepaid Expenses (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid software licenses	$ 60,961	$ 36,424
Prepaid insurance costs	14,284	16,746
Trade show advances	25,728	18,707
Prepaid rent	13,340	27,043
Prepaid office and other costs	5,530	38,772
Total prepaid expenses	$ 119,843	$ 137,692

Property and Equipment (Details-Property and equipment) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment plus construction in progress	$ 5,905,432	$ 5,543,252
Less: Accumulated depreciation and amortization	(663,673)	(508,257)
Total property and equipment, net	5,241,759	5,034,995
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment plus construction in progress	13,872	13,872
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment plus construction in progress	4,357,267	1,643,010
Software Development [Member]
Property, Plant and Equipment [Line Items]
Property and equipment plus construction in progress	70,000	70,000
Website [Member]
Property, Plant and Equipment [Line Items]
Property and equipment plus construction in progress	71,589	71,589
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment plus construction in progress	1,392,704	1,257,108
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property and equipment plus construction in progress	$ 0	$ 2,487,673

Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
Property and Equipment (Details Narrative) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Property and equipment:
Capitalized cost machinery	$ 2,705,524		$ 2,705,524
Capitalized cost leasehold improvements	135,596		135,596
Depreciation			155,416	$ 148,655
Depreciation expense was allocated to inventory			71,785	15,736
Depreciation and amortization	$ 7,413	$ 67,693	$ 83,631	$ 132,919

Leases (Details - Lease expense) - USD ($)	6 Months Ended
Leases (Details - Lease expense) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Operating lease cost:
Amortization of right-of-use asset	$ 34,817	$ 33,457
Interest on lease liability	38,624	39,984
Total operating lease cost	$ 73,441	$ 73,441

Leases (Details - Supplemental balance sheet information) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Operating lease:
Operating lease assets	$ 1,226,708	$ 1,261,525
Current portion of operating lease liability	56,011	52,543
Noncurrent operating lease liability	1,272,626	1,301,355
Total operating lease liability	$ 1,328,637	$ 1,353,898
Weighted average remaining lease term Operating leases	12 years 9 months 18 days	13 years 3 months 18 days
Weighted average discount rate Operating leases	5.75%	5.75%

Leases (Details - Other information) - USD ($)	6 Months Ended
Leases (Details - Other information) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$ 25,261	$ 22,040

Leases (Details - Future minimum lease payments) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Leases
2023 (for the six months remaining)	$ 64,843
2024	132,917
2025	136,905
2026	141,012
2027 and thereafter	1,412,988
Total	1,888,665
Less effects of discounting	560,028
Lease liability recognized	$ 1,328,637	$ 1,353,898

Leases (Details Narrative)	6 Months Ended
Leases (Details Narrative)	Jun. 30, 2023 USD ($)
Leases
Lease expiration date	Aug. 31, 2025
Monthly lease payment	$ 10,036

Notes Payable, Related Parties (Details) - USD ($)	6 Months Ended
Notes Payable, Related Parties (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Short-Term Debt [Line Items]
Total notes payable, related parties	$ 8,595,000	$ 6,195,000
Less unamortized derivative discounts:	3,727,295	2,692,757
Notes payable	4,867,705	3,502,243
Less: current maturities	200,703	0
Notes payable, less current maturities	4,667,002	3,502,243
Notes Payables Related Parties 1 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	100,000	0
Notes Payables Related Parties 2 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	50,000	0
Notes Payables Related Parties 3 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	750,000	0
Notes Payables Related Parties 4 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	250,000	0
Notes Payables Related Parties 5 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	250,000	0
Notes Payables Related Parties 6 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	250,000	0
Notes Payables Related Parties 7 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	500,000	0
Notes Payables Related Parties 8 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	250,000	0
Notes Payables Related Parties 9 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	250,000	250,000
Notes Payables Related Parties 10 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	500,000	500,000
Notes Payables Related Parties 11 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	250,000	250,000
Notes Payables Related Parties 12 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	2,000,000	2,000,000
Notes Payables Related Parties 13 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	100,000	100,000
Notes Payables Related Parties 14 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	100,000	100,000
Notes Payables Related Parties 15 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	920,000	920,000
Notes Payables Related Parties 16 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	1,500,000	1,500,000
Notes Payables Related Parties 17 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	500,000	500,000
Notes Payables Related Parties 18 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	25,000	25,000
Notes Payables Related Parties 19 [Member]
Short-Term Debt [Line Items]
Total notes payable, related parties	50,000	$ 50,000
Notes Payables Related Parties 1 [Member] \| Bradley Berman [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 100,000
Debt maturity date	May 11, 2024
Debt interest rate	8.00%
Redeem outstanding warrants price	$ 0.01
Common stock equals or exceeds	$ 9.00
Notes Payables Related Parties 2 [Member] \| Cesar J Gutierrez [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 50,000
Debt maturity date	Apr. 25, 2024
Debt interest rate	8.00%
Redeem outstanding warrants price	$ 0.01
Common stock equals or exceeds	$ 9.00
Notes Payables Related Parties 3 [Member] \| Mr Goldfarb [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 750,000
Debt maturity date	Apr. 25, 2024
Debt interest rate	8.00%
Redeem outstanding warrants price	$ 0.01
Common stock equals or exceeds	$ 9.00
Notes Payables Related Parties 4 [Member] \| Lyle A Berma [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 250,000
Debt maturity date	Aug. 23, 2025
Debt interest rate	8.00%
Notes Payables Related Parties 5 [Member] \| Lyle A Berma [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 250,000
Debt maturity date	Aug. 23, 2025
Debt interest rate	8.00%
Notes Payables Related Parties 6 [Member] \| Mr Goldfarb [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 250,000
Debt maturity date	Aug. 23, 2025
Debt interest rate	8.00%
Notes Payables Related Parties 7 [Member] \| Mr Goldfarb [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 500,000
Debt maturity date	Aug. 23, 2025
Debt interest rate	8.00%
Notes Payables Related Parties 8 [Member] \| Lyle A. Berman [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 250,000
Debt maturity date	Aug. 23, 2025
Debt interest rate	8.00%
Notes Payables Related Parties 9 [Member] \| Lyle A. Berman [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 250,000
Debt maturity date	Aug. 23, 2025
Debt interest rate	8.00%
Notes Payables Related Parties 10 [Member] \| Mr Goldfarb [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 500,000
Debt maturity date	Aug. 23, 2025
Debt interest rate	8.00%
Notes Payables Related Parties 11 [Member] \| Lyle A. Berman [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 250,000
Debt maturity date	Aug. 23, 2025
Debt interest rate	8.00%
Notes Payables Related Parties 12 [Member] \| Mr Goldfarb [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 2,000,000
Debt maturity date	Apr. 08, 2025
Debt interest rate	6.00%
Notes Payables Related Parties 13 [Member] \| Mr And Mrs Goldfarb [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 100,000
Debt maturity date	Apr. 08, 2025
Debt interest rate	6.00%
Notes Payables Related Parties 14 [Member] \| Ira Goldfarb [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 100,000
Debt maturity date	Apr. 08, 2025
Debt interest rate	6.00%
Notes Payables Related Parties 15 [Member] \| Lyle A. Berman [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 920,000
Debt maturity date	Apr. 08, 2025
Debt interest rate	6.00%
Notes Payables Related Parties 16 [Member] \| Mr And Mrs Goldfarb [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 1,500,000
Debt maturity date	Dec. 31, 2024
Debt interest rate	8.00%
Notes Payables Related Parties 17 [Member] \| Lyle A. Berman [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 500,000
Debt maturity date	Dec. 31, 2024
Debt interest rate	8.00%
Notes Payables Related Parties 18 [Member] \| Bradley K Burke [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 25,000
Debt maturity date	Dec. 31, 2024
Debt interest rate	8.00%
Notes Payables Related Parties 19 [Member] \| Cesar J Gutierrez Living Trust [Member]
Short-Term Debt [Line Items]
Debt face amount	$ 50,000
Debt maturity date	Dec. 31, 2024
Debt interest rate	8.00%

Notes Payable, Related Parties (Details Narrative) - USD ($)	6 Months Ended		16 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	May 11, 2023
Debt Instrument [Line Items]
Interest expense	$ 20,302	$ 10,917
Interest expense, other	270,721	126,530
Stock Based Warrant Expense [Member]
Debt Instrument [Line Items]
Interest expense	141,035	33,649
Notes Payable Related Parties [Member]
Debt Instrument [Line Items]
Amortization of Debt Discount (Premium)			$ 5,458,686
Notes Payable Related Parties [Member] \| Stock Based Warrant Expense [Member]
Debt Instrument [Line Items]
Interest expense	$ 913,787	$ 288,149

Notes Payable (Details) - USD ($)	6 Months Ended
Notes Payable (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Total notes payable	$ 1,130,000	$ 730,000
Less unamortized debt discounts	569,203
Less unamortized debt discounts	306,498	336,085
Notes payable	560,797	393,915
Less: current maturities	93,502	0
Notes payable, less current maturities	467,295	393,915
Notes Payable A [Member]
Debt Instrument [Line Items]
Debt face amount	$ 400,000
Debt maturity date	Apr. 25, 2024
Debt interest rate description	8.00%
Redeem outstanding warrants price	$ 0.01
Common stock equals or exceeds	$ 9.00
Total notes payable	$ 400,000	0
Notes Payable B [Member]
Debt Instrument [Line Items]
Debt face amount	$ 80,000
Debt maturity date	Apr. 08, 2025
Debt interest rate description	6.00%
Total notes payable	$ 80,000	80,000
Notes Payable C [Member]
Debt Instrument [Line Items]
Debt face amount	$ 500,000
Debt maturity date	Apr. 08, 2025
Debt interest rate description	6.00%
Total notes payable	$ 500,000	500,000
Notes Payable D [Member]
Debt Instrument [Line Items]
Debt face amount	$ 150,000
Debt maturity date	Jun. 16, 2050
Debt interest rate description	3.75%
Total notes payable	$ 150,000	$ 150,000

Notes Payable (Details Narrative) - USD ($)	6 Months Ended		13 Months Ended
Notes Payable (Details Narrative) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Apr. 25, 2023
Obligation with Joint and Several Liability Arrangement [Line Items]
Debt discounts granted to accredited investors			$ 818,483
Interest expense	$ 20,302	$ 10,917
Stock Based Warrant Expense [Member]
Obligation with Joint and Several Liability Arrangement [Line Items]
Interest expense	$ 141,035	$ 33,649

Changes in Stockholders’ Equity (Details Narrative) - USD ($)	Jun. 30, 2023	Jun. 01, 2023	Dec. 31, 2022
Equity [Abstract]
Preferred stock, shares authorized	20,000,000		20,000,000
Preferred stock, par value (in Dollars per share)	$ 0.001		$ 0.001
Common stock, shares authorized	500,000,000		500,000,000
Common stock, par value (in Dollars per share)	$ 0.001		$ 0.001
Common stock, shares issued	4,868,083		4,868,083
Aggregate shares of common stock		20,699
Fair value of the common stock		$ 125,229

Options (Details Narrative) - USD ($)		6 Months Ended
Options (Details Narrative) - USD ($)	Jun. 05, 2023	Jun. 30, 2023	Jun. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation		$ 383,906	$ 575,631
Options Held [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Exercisable term	10 years
Share based compensation		3,598
Unamortized share based compensation		$ 259,253
Granted options	46,405
Exercise price	$ 6.05
Volatility rate	138.00%
Weighted average call option value	$ 5.66
Call option value	$ 262,851
Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options outstanding		637,396
Strike Price		$ 4.64
Exercisable term		7 years 9 months 18 days
Share based compensation		$ 258,677	$ 520,633
Unamortized share based compensation		$ 1,207,685
Options exercised		0	0

Warrants (Details Narrative) - USD ($)										6 Months Ended
Warrants (Details Narrative) - USD ($)	May 11, 2023	Apr. 25, 2023	Apr. 11, 2023	Mar. 07, 2023	Mar. 02, 2023	Feb. 01, 2023	Jan. 05, 2023	Jul. 07, 2021	Feb. 05, 2021	Jun. 30, 2023	Jun. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation										$ 383,906	$ 575,631
Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares issued								714,701	631,250
Share price								$ 4.25	$ 4.00
Warrant [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 2.50
Number of shares issued	25,000
Number of shares issued, value	$ 100,000
Term	10 years
Share price	$ 0.01
Common stock equals or exceeds	$ 9.00
Volatility rate	138.00%
Weighted average call option value	$ 4,469
Call option value	$ 112,371
Debt discount	$ 100,000
Share based compensation										13,699
Unamortized share based compensation										86,301
Warrant [Member] \| Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants Issued	25,000
Proceeds from Notes Payable	$ 100,000
Warrant 1 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 2.50
Number of shares issued		25,000
Number of shares issued, value		$ 100,000
Term		10 years
Share price		$ 0.01
Common stock equals or exceeds		$ 9.00
Volatility rate		138.00%
Weighted average call option value		$ 3.74
Call option value		$ 46,769
Share based compensation										8,457
Unamortized share based compensation										38,312
Warrant 1 [Member] \| Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants Issued		12,500
Proceeds from Notes Payable		$ 50,000
Warrant 2 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 2.50
Number of shares issued		25,000
Number of shares issued, value		$ 100,000
Term		10 years
Share price		$ 0.01
Common stock equals or exceeds		$ 9.00
Volatility rate		138.00%
Weighted average call option value		$ 3.74
Call option value		$ 701,537
Share based compensation										126,853
Unamortized share based compensation										574,684
Warrant 2 [Member] \| Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants Issued		187,500
Proceeds from Notes Payable		$ 750,000
Warrant 3 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 2.50
Number of shares issued		25,000
Number of shares issued, value		$ 100,000
Term		10 years
Share price		$ 0.01
Common stock equals or exceeds		$ 9.00
Volatility rate		138.00%
Weighted average call option value		$ 3.74
Call option value		$ 374,153
Share based compensation										67,655
Unamortized share based compensation										306,498
Warrant 3 [Member] \| Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants Issued		100,000
Proceeds from Notes Payable		$ 400,000
Warrant 4 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 2.60
Number of shares issued			25,000
Number of shares issued, value			$ 100,000
Term			10 years
Share price			$ 0.01
Common stock equals or exceeds			$ 9.00
Volatility rate			138.00%
Weighted average call option value			$ 3.64
Call option value			$ 227,598
Share based compensation										49,884
Unamortized share based compensation										177,714
Warrant 4 [Member] \| Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants Issued			62,500
Proceeds from Notes Payable			$ 250,000
Warrant 5 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 2.60
Number of shares issued				25,000
Number of shares issued, value				$ 100,000
Term				10 years
Share price				$ 0.01
Common stock equals or exceeds				$ 9.00
Volatility rate				138.00%
Weighted average call option value				$ 3.65
Call option value				$ 228,154
Share based compensation										29,153
Unamortized share based compensation										199,001
Warrant 5 [Member] \| Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants Issued				62,500
Proceeds from Notes Payable				$ 250,000
Warrant 6 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 2.60
Number of shares issued					25,000
Number of shares issued, value					$ 100,000
Term					10 years
Share price					$ 0.01
Common stock equals or exceeds					$ 9.00
Volatility rate					139.00%
Weighted average call option value					$ 3.66
Call option value					$ 228,464
Share based compensation										30,294
Unamortized share based compensation										198,170
Warrant 6 [Member] \| Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants Issued					62,500
Proceeds from Notes Payable					$ 250,000
Warrant 7 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights						$ 2.60
Number of shares issued						25,000
Number of shares issued, value						$ 100,000
Term						10 years
Share price						$ 0.01
Common stock equals or exceeds						$ 9.00
Volatility rate						138.00%
Weighted average call option value						$ 2.21
Call option value						$ 276,462
Share based compensation										44,104
Unamortized share based compensation										232,358
Warrant 7 [Member] \| Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants Issued						125,000
Proceeds from Notes Payable						$ 500,000
Warrant 8 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights							$ 2.60
Number of shares issued							25,000
Number of shares issued, value							$ 100,000
Term							10 years
Share price							$ 0.01
Common stock equals or exceeds							$ 9.00
Volatility rate							140.00%
Weighted average call option value							$ 2.23
Call option value							$ 139,341
Share based compensation										25,520
Unamortized share based compensation										$ 113,821
Warrant 8 [Member] \| Private Placement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants Issued							62,500
Proceeds from Notes Payable							$ 250,000
Warrant [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants Outstanding										2,291,250
Class of Warrant or Right, Exercise Price of Warrants or Rights										$ 2.50
Weighted average life										9 years

Income Taxes (Details Narrative)	6 Months Ended
Income Taxes (Details Narrative)	Jun. 30, 2023 USD ($)
Income Tax Disclosure [Abstract]
Net deferred tax assets	$ 9,384,000
Deferred tax liabilities	0
Valuation allowance	9,384,000
Tax expense	$ 0

Commitments (Details Narrative)	6 Months Ended
Commitments (Details Narrative)	Jun. 30, 2023 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Lease expiration date	Sep. 15, 2025
Rent expenses	$ 10,036