10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________________ to ______________________

Commission File Number: 001-42037

SOW GOOD INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	27-2345075
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1440 N Union Bower Rd, Irving, TX	75061
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (214) 623-6055

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, par value $0.001 per share	SOWG	The Nasdaq Capital Market

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 ☒ No ☐

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 ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 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 ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

The number of shares of registrant’s common stock outstanding as of November 12, 2024 was 10,245,388

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (Unaudited)	4
	Condensed Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023	4
	Unaudited Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023	5
	Unaudited Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023	6
	Unaudited Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023	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	37
Item 4.	Controls and Procedures	38
PART II.	OTHER INFORMATION	39
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	62
Item 4.	Mine Safety Disclosures	62
Item 5.	Other Information	62
Item 6.	Exhibits	63
	Signatures	64

2

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING 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:

•our ability to compete successfully against competitors with significantly greater financial and relationship resources than us in the highly competitive industry in which we operate;

•our ability to maintain and enhance our brand;

•our ability to successfully implement our growth strategies related to launching new products;

•the effectiveness and efficiency of our marketing programs;

•our ability to manage current operations and to manage future growth effectively;

•our future operating performance;

•our ability to attract new customers or retain existing customers;

•our ability to protect and maintain our intellectual property;

•the government regulations to which we are subject;

•failure to obtain sufficient sales and distributions for our freeze dried product offerings;

•the potential for supply chain and shipping disruption and delay;

•the potential for transportation, labor, and raw material cost increases; and

•other risks and uncertainties included in our “Risk Factors.”

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. We have based these forward-looking statements and statements of belief on our current expectations and assumptions about future events as of the date of this report. 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. You should consider carefully the statements in “Item 1A. Risk Factors” and other sections of this report, which describe factors that could cause our actual results to differ from those set forth in the forward-looking statements.

Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. 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.

3

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

SOW GOOD INC.

CONDENSED BALANCE SHEETS

	September 30,			December 31,
	2024			2023
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	6,946,387		$	2,410,037
Accounts receivable, net		1,232,958			2,578,259
Inventory		19,434,041			4,123,246
Prepaid inventory		572,098			563,131
Prepaid expenses		202,430			563,164
Total current assets		28,387,914			10,237,837
Property and equipment:
Construction in progress		2,848,191			1,522,465
Property and equipment		9,430,983			6,287,422
Less accumulated depreciation		(1,550,550	)		(967,602	)
Total property and equipment, net		10,728,624			6,842,285
Security deposit		1,357,956			346,616
Right-of-use asset		17,193,154			4,061,820
Total assets	$	57,667,648		$	21,488,558
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,301,098		$	853,535
Accrued interest		398,617			860,693
Accrued expenses		1,839,323			648,947
Income tax payable - current		65,603			-
Current portion of operating lease liabilities		2,140,084			550,941
Current maturities of notes payable, related parties, net of $447,236 and $431,854 of debt discounts at September 30, 2024 and December 31, 2023, respectively		2,731,901			2,543,146
Current maturities of notes payable, net of $26,116 and $86,062 of debt discounts as of September 30, 2024 and December 31, 2023, respectively		213,134			313,938
Total current liabilities		8,689,760			5,771,200
Operating lease liabilities		16,005,280			3,671,729
Notes payable, related parties, net of $0 and $1,448,858 of debt discounts as of September 30, 2024 and December 31, 2023, respectively		-			4,171,142
Notes payable, net of $0 and $135,962 of debt discounts as of September 30, 2024 and December 31, 2023, respectively		150,000			594,038
Total liabilities		24,845,040			14,208,109
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, 10,245,388 and 6,029,371 shares issued and outstanding as of September 30, 2024 and December 31, 2023		10,245			6,029
Additional paid-in capital		91,086,537			66,014,415
Accumulated deficit		(58,274,174	)		(58,739,995	)
Total stockholders' equity		32,822,608			7,280,449
Total liabilities and stockholders' equity	$	57,667,648		$	21,488,558

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

4

SOW GOOD INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Revenues	$	3,554,157		$	5,034,203		$	30,608,526		$	6,548,479
Cost of goods sold		2,998,171			3,698,962			16,415,970			6,679,224
Gross profit		555,986			1,335,241			14,192,556			(130,745	)
Operating expenses:
General and administrative expenses:
Salaries and benefits		1,875,908			618,907			6,350,038			1,450,103
Professional services		320,289			294,720			1,382,393			404,256
Other general and administrative expenses		1,607,844			74,728			3,879,350			959,218
Total general and administrative expenses		3,804,041			988,355			11,611,781			2,813,577
Depreciation and amortization		8,583			9,261			23,060			94,638
Total operating expenses		3,812,624			997,616			11,634,841			2,908,215
Net operating income (loss)		(3,256,638	)		337,625			2,557,715			(3,038,960	)
Other income (expense):
Interest income		39,509			-			43,639			-
Interest expense		(225,095	)		(3,641	)		(1,243,428	)		(1,349,486	)
Loss on early extinguishment of debt		-			-			(696,502	)		-
Total other income (expense)		(185,586	)		(3,641	)		(1,896,291	)		(1,349,486	)
Income (loss) before income tax		(3,442,224	)		333,984			661,424			(4,388,446	)
Benefit (provision) for income tax		62,315			-			(195,603	)		-
Net income (loss)	$	(3,379,909	)	$	333,984		$	465,821		$	(4,388,446	)
Weighted average common shares outstanding - basic		10,245,388			5,123,735			8,651,223			4,942,182
Net income (loss) per common share - basic	$	(0.33	)	$	0.07		$	0.05		$	(0.89	)
Weighted average common shares outstanding - diluted		10,245,388			8,066,577			9,613,553			4,942,182
Net income (loss) per common share - diluted	$	(0.33	)	$	0.04		$	0.05		$	(0.89	)

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

5

SOW GOOD INC.

STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

For the Three Months Ended September 30, 2024

Additional

Total

Common Stock

Paid-in

Accumulated

Stockholders'

Shares

Amount

Capital

Deficit

Equity

Balance, June 30, 2024

10,245,388

10,245

89,899,666

(54,894,265

)

35,015,646

Common stock issued in public offering, net of offering costs

–

–

–

–

-

Common stock issued in private placement offering

–

–

–

–

-

Common stock issued to directors for services

–

–

–

-

-

Proceeds from exercise of stock options and warrants

–

–

–

–

-

Common stock options granted to directors and advisors for services

–

–

29,284

–

29,284

Common stock options granted to officers and employees for services

–

–

1,157,587

–

1,157,587

Net loss for the three months ended September 30, 2024

–

–

–

(3,379,909

)

(3,379,909

)

Balance, September 30, 2024

10,245,388

$

10,245

$

91,086,537

$

(58,274,174

)

$

32,822,608

	For the Three Months Ended September 30, 2023
					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Equity
Balance, June 30, 2023		4,868,083	$	4,868	$	59,117,367	$	(60,401,992	)	$	(1,279,757	)
Common stock issued in private placement offering		735,000		74		3,674,926	–				3,675,000
Common stock issued to directors for services	–		–		–		–				-
Common stock options granted to directors and advisors for services	–		–			29,296	–				29,296
Common stock options granted to officers and employees for services	–		–			111,463	–				111,463
Net income for the three months ended September 30, 2023	–		–		–			333,984			333,984
Balance, September 30, 2023		5,603,083	$	4,942	$	62,933,052	$	(60,068,008	)	$	2,869,986

	For the Nine Months Ended September 30, 2024
					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Equity
Balance, December 31, 2023		6,029,371	$	6,029	$	66,014,415	$	(58,739,995	)	$	7,280,449
Common stock issued in public offering, net of offering costs		1,380,000		1,380		11,973,596	–				11,974,976
Common stock issued in private placement offering		515,597		516		3,737,484	–				3,738,000
Common stock issued to directors for services		31,211		32		295,616	–				295,648
Proceeds from exercise of stock options and warrants		2,289,209		2,288		5,670,680	–				5,672,968
Common stock options granted to directors and advisors for services	–		–			86,892	–				86,892
Common stock options granted to officers and employees for services	–		–			3,307,854	–				3,307,854
Net income for the nine months ended September 30, 2024	–		–		–			465,821			465,821
Balance, September 30, 2024		10,245,388	$	10,245	$	91,086,537	$	(58,274,174	)	$	32,822,608

	For the Nine Months Ended September 30, 2023
					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Equity
Balance, December 31, 2022		4,847,384	$	4,847	$	58,485,602	$	(55,679,562	)	$	2,810,887
Common stock issued in private placement offering		735,000		74		3,674,926	–				3,675,000
Common stock issued to directors for services		20,699		21		125,208	–				125,229
Common stock warrants granted to related party note holders pursuant to debt financing	–		–			197,198	–				197,198
Common stock warrants granted to note holders pursuant to debt financing	–		–			50,682	–				50,682
Common stock options granted to directors and advisors for services	–		–			91,990	–				91,990
Common stock options granted to officers and employees for services	–		–			307,446	–				307,446
Net loss for the three months ended September 30, 2023	–		–		–			(4,388,446	)		(4,388,446	)
Balance, September 30, 2023		5,603,083	$	4,942	$	62,933,052	$	(60,068,008	)	$	2,869,986

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

6

SOW GOOD INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	465,821		$	(4,388,446	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Bad debts expense		176,032			-
Depreciation and amortization		582,948			306,092
Non-cash amortization of right-of-use asset and liability		791,360			15,245
Impairment of obsolete inventory		-			2,075,080
Common stock issued to directors for services		295,648			125,229
Amortization of stock options		3,394,746			399,436
Amortization of stock warrants issued as a debt discount		932,883			900,228
Loss on early extinguishment of debt		696,502			-
Decrease (increase) in current assets:
Accounts receivable		1,169,269			(1,197,608	)
Prepaid expenses		360,734			(10,760	)
Inventory		(15,319,762	)		(2,342,871	)
Security deposits		(1,011,340	)		(12,309	)
Increase (decrease) in current liabilities:
Accounts payable		447,563			257,091
Income tax payable		65,603			-
Accrued interest		(363,326	)		419,807
Accrued expenses		1,190,375			125,270
Net cash provided by used in operating activities		(6,124,944	)		(3,328,516	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(3,143,561	)		(1,326,276	)
Cash paid for construction in progress		(1,325,726	)		-
Net cash used in investing activities		(4,469,287	)		(1,326,276	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock offerings, net of offering costs of $859,024		15,712,976			3,675,000
Proceeds from the exercise of warrants and options		373,855			-
Proceeds received from notes payable, related parties		-			2,400,000
Proceeds received from notes payable		-			400,000
Repayments of borrowings		(956,250	)		-
Net cash provided by financing activities		15,130,581			6,475,000
NET CHANGE IN CASH AND CASH EQUIVALENTS		4,536,350			1,820,208
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		2,410,037			276,464
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	6,946,387		$	2,096,672
SUPPLEMENTAL INFORMATION:
Interest paid	$	667,293		$	27,878
Interest received	$	43,639			-
Income taxes paid	$	130,000			-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash exercise of warrants	$	5,299,113			-
Repayment of interest	$	(98,750	)		-
Repayments of borrowings	$	(5,200,363	)		-
Reclassification of construction in progress to property and equipment	$	2,864,649		$	1,766,110
Value of debt discounts attributable to warrants	$	-		$	247,880

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

7

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 1 – Organization and Nature of Business

Sow Good Inc. (“SOWG,” “Sow Good,” “us,” “our,” “we,” or the “Company”) is a U.S.-based freeze dried candy and snack manufacturer. Formerly Black Ridge Oil & Gas, Inc. (a business that participated in the acquisition and development of oil and gas leases and acquired by the Company in October 1, 2020) , the Company was initially focused on the production of freeze dried fruits and vegetables, a business later expanded to include freeze dried candy. At that time of the acquisition of Black Ridge Oil & Gas, Inc., the Company’s common stock began to be quoted on the OTCQB under the trading symbol “SOWG,” from the former trading symbol “ANFC.” Prior to April 2, 2012, Black Ridge Oil & Gas was known as Ante5, Inc., a publicly traded company since July 1, 2010. Effective February 15, 2024, Sow Good Inc. reincorporated to the State of Delaware from the State of Nevada under the name Sow Good Inc. pursuant to a plan of conversion . On May 2, 2024, trading of the Company’s common stock commenced on the Nasdaq Capital Market stock exchange.

In May 2021, the Company announced the launch of its first direct-to-consumer freeze dried consumer packaged goods (“CPG”) line of non-GMO products including ready-to-make smoothies, gluten-free granola and snacks. After launching a freeze dried candy product line in the first quarter of 2023, the Company now has twenty-one SKU offerings of candy, and three crunch ice cream SKU as of September 30, 2024, that together make up the entirety of the Company’s product portfolio. After launching its freeze dried candy product line the Company discontinued its smoothie, snack and granola products. During the second quarter of 2023, the Company completed the construction of its second and third freeze driers and to facilitate the increased production demands for its candy products. The significant and rising demand for freeze dried candy products has led the Company to add a fourth freeze drier in the first quarter of 2024, a fifth freeze drier in the second quarter of 2024 and a sixth freeze drier, which was completed in the third quarter of 2024.

Note 2 – Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and stated in U.S. dollars, consistent in all material respects with those applied in our financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Because these financial statements address interim periods, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Such interim financial information is unaudited but reflects all adjustments that in the opinion of management are necessary for the fair presentation of the interim periods presented. The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any future periods. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and the Registration Statement on Form S-1/A (File No. 333-277042), filed with the SEC on April 25, 2024 (the “Registration Statement”), pursuant to the Securities Act of 1933, as amended (“Securities Act”).

Segment Reporting

FASB ASC 280-10-50 requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding how to allocate resources. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP 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.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform with the current presentation.

8

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Environmental Liabilities

The Company was formerly a direct owner of assets in the oil and gas industry. The oil and gas industry is subject, by its nature, to environmental hazards and clean-up costs. At this time, management knows of no substantial losses from environmental accidents or events which would have a material effect on the Company.

Cash and Cash Equivalents

Cash equivalents include money market accounts which have maturities of three months or less. Cash equivalents are stated at cost plus accrued interest, which approximates market value.

Cash in Excess of FDIC Insured 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") and the Securities Investor Protection Corporation ("SIPC") up to $250,000 and $500,000, respectively, under current regulations. The Company had cash in excess of FDIC and SIPC insured limits of $2,586,671 at September 30, 2024. The Company had cash in excess of FDIC and SIPC insured limits of $1,837,840 at December 31, 2023. The Company has not experienced any losses in such accounts.

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 $149,809 at September 30, 2024 and no allowance for doubtful accounts at December 31, 2023.

The Company estimates its reserve based on historical loss information. The Company believes that historical loss information is a reasonable base on which to determine expected credit losses for trade receivables held at the reporting date because the composition of the trade receivables at the reporting date is consistent with that used in developing the historical credit-loss percentages. However, the Company will continue to monitor and adjust the historical loss rates to reflect the effects of current conditions and forecasted changes.

Inventory

Inventory is valued at the lower of average cost or net realizable value. The cost of substantially all of the Company’s inventory has been determined by the first-in, first-out ("FIFO") method.

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 (years)	3
Office equipment (years)	5
Furniture and fixtures (years)	5
Machinery and equipment (years)	7 - 10
Leasehold improvements	Lease-term or useful life

Construction in progress is stated at cost, which predominately relates to the cost of freezers and equipment not yet placed into service. No depreciation expense is recorded on construction-in-progress until such time as the relevant assets are completed and put into use.

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 of property and equipment was $216,164 and $150,676, for the three months ended September 30, 2024 and 2023, respectively, of which $207,580 and $141,415 was allocated to cost of goods sold, respectively. Depreciation of property and equipment was $582,948 and $306,092, for the nine months ended September 30, 2024 and 2023, respectively, of which $559,888 and $211,454 was allocated to cost of goods sold, respectively.

9

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. For the nine months ended September 30, 2024 and 2023, shipping and handling costs of $626,819 and $203,456, respectively, are included in cost of goods sold. 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.

Customer Concentration

For the three months ended September 30, 2024, our top four customers were responsible for 19.7%, 14.8%, 10.2%, and 10.0% of our revenues, respectively. For the three months ended September 30, 2023, our top two customers accounted for 46.1% and 19.6% of our revenues. Our top five customers accounted for 61.8% and 86.5% of our revenues during each of the three months ended September 30, 2024 and 2023, respectively.

For the nine months ended September 30, 2024, our top three customers accounted for 32.5%, 20.9% and 16.1% of our revenues, respectively. For the nine months ended September 30, 2023, our top three customers accounted for 42.4%, 15.1% and 11.0% of our revenues, respectively. Our top five customers accounted for 76% and 80% of our revenues during the nine months ended September 30, 2024 and 2023, respectively.

Supplier Concentration

For the three months ended September 30, 2024, our top three suppliers accounted for 87% of our purchases from vendors. For the three months ended September 30, 2023 our top three suppliers accounted for 68% of our purchases from vendors.

For the nine months ended September 30, 2024, our top three suppliers accounted for 76% of our purchases from vendors. For the nine months ended September 30, 2023 our top three suppliers accounted for 69% of our purchases from vendors.

The Company considers these vendors to be critical suppliers of candy for our freeze dried candy production.

Basic and Diluted Earnings (Loss) Per Share

The basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding. Diluted net income (loss) per common share is computed by dividing the net income (loss) adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods where potential dilutive securities would have an anti-dilutive effect and they 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 – Compensation – Stock Compensation (“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 related to the issuance of shares of common stock for services consisted of $295,648 and $125,229 for the nine months ended September 30, 2024 and 2023, respectively.

10

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Stock-based compensation related to amortization of stock option grants consisted of $1,186,871 and $140,759 for the three months ended September 30, 2024 and 2023, respectively. Stock-based compensation related to amortization of stock option grants consisted of $3,394,746 and $399,436 for the nine months ended September 30, 2024 and 2023, respectively. The fair values of service-based stock options are determined using the Black-Scholes options pricing model and an effective term of 2.3 to 7.3 years based on either the weighted average of the vesting periods and the stated term of the option grants or as calculated under the options valuation model, the discount rate on 5 to 7 year U.S. Treasury securities at the grant date. The Company uses a Monte Carlo simulation to value its performance-based and market-based stock options. Options are amortized over the implied service term, or the vesting period.

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.

Uncertain Tax Positions

In accordance with ASC 740 – Income Taxes (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Various taxing authorities can periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, to require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. The ASU’s amendments are effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its financial statements and related disclosures.

No other new accounting pronouncements, issued or effective during the nine months ended September 30, 2024, have had or are expected to have a significant impact on the Company’s financial statements.

11

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 3 – Related Party

Common Stock Sold for Cash

On March 28, 2024, the Company raised $3,738,000 of capital from the sale of 515,597 newly issued shares of common stock at a share price of $7.25 in a private placement exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. The stock sales included purchases by the following related parties:

	Shares		Amount
Ira and Claudia Goldfarb, Executive Chairman and CEO, respectively	17,242	$	125,000
Lyle A. Berman Revocable Trust, Director	68,966		500,000
Bradley Berman, Director	30,000		217,500
Edward Shensky	13,794		100,000
Brendon Fischer	8,000		58,000
Cesar J. Gutierrez	10,345		75,000
Alexandria Gutierrez	3,449		25,000
Ava Gutierrez	3,449		25,000
Brett Goldfarb	3,449		25,000
	158,694	$	1,150,500

On November 20, 2023, the Company entered into a Stock Purchase Agreement with multiple accredited investors to sell and issue to the purchasers, thereunder, an aggregate of 426,288 shares of the Company’s common stock at a price of $6.50 per share, resulting in total proceeds received of $2,770,872. The stock sales included purchases by the following related parties:

	Shares		Amount
Ira and Claudia Goldfarb, Executive Chairman and CEO, respectively	23,077	$	150,000
Bradley Berman, Director	10,000		65,000
Joe Mueller, Director	5,000		32,500
Alexandria Gutierrez	4,615		29,998
Cesar J. Gutierrez Living Trust	3,977		25,851
	46,669	$	303,348

On August 25, 2023, the Company entered into a Stock Purchase Agreement with multiple accredited investors to sell and issue to the purchasers, thereunder, an aggregate of 735,000 shares of the Company’s common stock at a price of $5.00 per Share, resulting in total proceeds received of $3,675,000. The stock sales included purchases by the following related parties:

	Shares		Amount
Ira and Claudia Goldfarb, Executive Chairman and CEO, respectively	100,000	$	500,000
Ira Goldfarb Irrevocable Trust	40,000		200,000
Lyle A. Berman Revocable Trust, Director	40,000		200,000
Bradley Berman, Director	10,000		50,000
Alexandria Gutierrez	5,000		25,000
	195,000	$	975,000

Common Stock Issued to Officers and Directors for Services

On February 9, 2024, the Company issued an aggregate 23,534 shares of common stock amongst its five non-employee Directors and three advisory Directors for annual services to be rendered. The aggregate fair value of the common stock was $519,280, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On January 11, 2024, the Company issued an aggregate 7,060 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 $56,480, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

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 $125,230, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

12

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Common Stock Options Awarded to Officers and Directors

On December 15, 2023, pursuant to the respective A&R Employment Agreements of Ira Goldfarb and Claudia Goldfarb, and the terms of the 2020 Equity Incentive Plan, Mr. Goldfarb was granted stock options entitling him to purchase up to 500,000 shares of common stock, and Mrs. Goldfarb was granted stock options entitling her to purchase 450,000 shares of common stock, at an exercise price of $9.75 per share. The shares will vest equally over a five-year period from grant date. In the case of a Change of Control (as defined in their respective A&R Employment Agreements) all shares granted in the Initial Option Grant will vest immediately.

Additionally, on December 15, 2023, pursuant to their respective A&R Employment Agreements, Mr. Goldfarb was granted additional stock options entitling him to purchase up to 500,000 shares of common stock, and Mrs. Goldfarb was granted an additional 450,000 options to purchase shares of common stock, at an exercise price of $40.00. The shares will vest upon the Company’s stock price trading on a national securities exchange operated by Nasdaq or the New York Stock Exchange with a closing transaction price above $40.00 per share for a period of twenty consecutive trading days. In the case of a Change of Control (as defined in the A&R Employment Agreements) all shares granted in the additional option grant will vest immediately.

On November 13, 2023, the Company appointed Keith Terreri as Chief Financial Officer, and granted options to purchase 27,000 shares of common stock having an exercise price of $6.19 per share. On March 2, 2024, Mr. Terreri tendered his resignation effective as of March 4, 2024. None of Mr. Terreri’s options were vested at the time his resignation was effective, so in accordance with the Terreri Employment Agreement, all 27,000 of his options are forfeited.

On July 22, 2022, pursuant to the Company’s 2020 Stock Incentive Plan, Mr. Creed was granted options to purchase 24,151 shares of the Company’s common stock at an exercise price of $3.90 per share. These options will vest 20% as of July 22, 2023 and 20% each anniversary thereafter until fully vested.

On April 11, 2022, pursuant to the Company’s 2020 Equity Plan, Mr. Mueller was granted options to purchase 24,151 shares of the Company’s common stock at an exercise price of $3.10 per share. These options will vest 20% as of April 11, 2023 and 20% each anniversary thereafter until fully vested.

Debt Financing and Related Warrants Granted

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. This term loan was 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 warrants were exercised on April 15, 2024. The notes matured 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 a private placement for 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 warrants were exercised on April 15, 2024. The notes matured 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 Executive 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 April 11, 2023, warrants to purchase an aggregate 62,500 shares of common stock were issued to a director pursuant to a private placement debt offering in which aggregate proceeds of $250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The warrants were exercised on April 15, 2024.

On December 21, 2022, the Company closed a private placement and concurrently entered into a note and warrant purchase agreement with related parties to sell an aggregate $2.075 million of promissory notes and warrants to purchase an aggregate 311,250 shares of common stock, representing 15,000 warrant shares per $100,000 of promissory notes. The warrants were exercisable at a price of $2.21 per share over a ten-year term. The warrants were exercised on April 15, 2024.

13

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

On August 23, 2022, we closed on a private placement for 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, 2023 to the maturity date. On December 21, 2022 and September 29, 2022, the Company received aggregate proceeds of $250,000 and $750,000 from two of the Company’s directors on the sale of these notes and warrants. Warrants issued under these borrowings were exercised on April 15, 2024.

On April 8, 2022, the Company closed a private placement and concurrently entered into a note and warrant purchase agreement to sell an aggregate $3,700,000 of promissory notes and warrants to purchase an aggregate 925,000 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. Accrued interest on the notes was payable semi-annually beginning September 30, 2022 at the rate of 6% per annum, but on August 23, 2022, the notes were amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The principal amount of the notes mature and become due and payable on April 8, 2025. The warrants are exercisable immediately and for a period of 10 years at a price of $2.35 per share. Proceeds to the Company from the sale of the securities were $3,700,000. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of common stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. Assuming full exercise thereof, further proceeds to the Company from the exercise of the warrant shares is calculated as $2,173,750. The offering closed simultaneously with execution of the purchase agreement. Of the aggregate $3,700,000 of notes, a total of $3,120,000 of notes were sold to officers or directors, along with 780,000 of the warrants. The warrants were exercised on April 15, 2024.

Leases

The Company leases a 20,945 square foot facility in Irving, Texas, for 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, with a current monthly lease rate of $11,296, with approximately 3% annual escalation of lease payments.

At September 30, 2024 and December 31, 2023, included in the operating lease liabilities was $1,257,743 and $1,301,354 in connection with this lease. For the nine months ended September 30, 2024 and 2023 the Company expensed $110,161 in each of the periods and paid cash of $99,030 and $96,146, respectively. For the three months ended September 30, 2024 and September 30, 2023 the Company expensed $36,720 in each of the periods and paid cash of $33,229 and $32,261, respectively.

Note 4 – Fair Value of Financial Instruments

The Company's financial statements are prepared in accordance with ASC 820, “Fair Value Measurement,” which requires the measurement of certain financial instruments at fair value. The Company's financial instruments primarily consist of cash and cash equivalents, and accounts receivable, which approximate fair value due to their short-term nature, and Term Loans issued in connection with detachable warrants, which are carried on the balance sheet net of the unamortized portion of the related discounts. For financial instruments or investments that are required to be reported at fair value on a recurring or nonrecurring basis under GAAP, the applicable guidance for fair value measurement requires the Company to include the determination of the appropriate fair value hierarchy level for each instrument. The fair value hierarchy levels consist of the following:

Level 1: Quoted Prices in Active Markets for Identical Assets or Liabilities - This level represents the highest degree of observability, where fair values are based on quoted market prices for identical assets or liabilities in active markets.

Level 2: Inputs Other Than Quoted Prices Included within Level 1 - Fair values in this level are based on inputs other than quoted market prices but are still observable, such as quoted market prices for similar assets or liabilities, or inputs derived from market data.

Level 3: Unobservable Inputs - This level includes fair values for which there are no observable inputs and relies on the reporting entity's own assumptions and estimates. These fair values are considered the least reliable and most subjective.

Detachable common stock warrants issued in connection with debt may be recorded as either liabilities or equity depending on the applicable accounting guidance. The Company determined that warrants issued in connection with our notes payable met the

14

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

definition of a freestanding financial instrument and qualified for treatment as permanent equity. Warrants recorded as equity are recorded at the fair market value determined at issuance date, and are not remeasured after that. We utilized the Black-Scholes valuation model to estimate the fair value of warrants granted at issuance date. The initial measurement of the fair value of the notes considers the present value of future cash flows, discounted at the current market rate of interest at the issuance date, and time to liquidity. The Company allocated the value of warrants between the relative fair value of the notes payable without the warrants, and the warrants themselves at the time of issuance. The allocated portion of the warrants was treated as a debt discount, and amortized over the term of the note. The amortization of the debt discount is recognized as interest expense. When a notes payable are issued at a discount, wherein a significant portion of the issuance is between related parties, the valuation of the notes and the discount involve significant judgment and the use of unobservable inputs, classifying it into Level 3 of the fair value hierarchy, requiring a nonrecurring fair value measurement. Changes other than additions, settlements, or discount amortization, in the fair value of the notes payable, net of discounts do not impact net income or cash flows.

The following schedule summarizes the valuation of financial instruments at fair value on a nonrecurring basis in the balances sheet as of September 30, 2024 and December 31, 2023:

	September 30, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Liabilities
Notes payable, related parties, net of debt discounts	$	2,731,901	$	3,041,132	$	6,714,288	$	7,008,684
Notes payable, net of debt discounts		363,134		228,716		907,976		953,847
Total liabilities	$	3,095,035	$	3,269,848	$	7,622,264	$	7,962,531

Note 5 – Inventory

Inventory

As of September 30, 2024 the Company's inventory consisted of raw materials, material overhead, labor, and manufacturing overhead, categorized as follows:

	September 30,		December 31,
	2024		2023
Finished goods	$	7,298,127	$	222,051
Packaging materials		1,370,836		815,883
Inventory in transit		712,307		571,970
Work in progress		8,147,885		691,290
Raw materials		1,904,886		1,822,052
Total inventory	$	19,434,041	$	4,123,246

Prepaid Inventory

The company had reported a total of $572,098 and $563,131 in prepaid inventory as of September 30, 2024 and December 31, 2023, respectively. Prepaid inventory primarily consists of deposits and advance payments to suppliers for the purchase of raw materials and finished goods expected to be received and utilized in production within the next financial period, which have not been shipped as of the balance sheet date.

The Company accounts for prepaid inventory at cost, which includes all charges necessary to bring the inventory items to their present location and condition. Upon shipment of the inventory, these amounts are reclassified from prepaid inventory to the appropriate inventory accounts on the balance sheet.

15

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 6 – Prepaid Expenses

Prepaid expenses consist of the following at September 30, 2024 and December 31, 2023:

	September 30,		December 31,
	2024		2023
Prepaid professional costs	$	-	$	382,524
Prepaid software licenses		68,237		35,252
Prepaid insurance costs		73,274		48,305
Trade shows and marketing services		60,919		29,964
Prepaid rent		-		67,119
Total prepaid expenses	$	202,430	$	563,164

Note 7 – Property and Equipment

Property and equipment at consist of the following at September 30, 2024 and December 31, 2023:

	September 30,			December 31,
	2024			2023
Machinery	$	7,712,953		$	4,714,626
Leasehold improvements		1,454,767			1,409,767
Software		70,000			70,000
Website		71,589			71,589
Office equipment		121,674			21,440
Construction in progress		2,848,191			1,522,465
		12,279,174			7,809,887
Less: Accumulated depreciation and amortization		(1,550,550	)		(967,602	)
Total property and equipment, net	$	10,728,624		$	6,842,285

Construction in progress consists of costs incurred to build out our manufacturing facilities in Texas, along with the construction of our freeze driers. These costs will be capitalized as Leasehold Improvements and Machinery, respectively, upon completion.

For the three months ended September 30, 2024 and 2023, respectively, depreciation of property and equipment was $216,164 and $150,676, of which and $207,580 and $141,415 was allocated to cost of goods sold, resulting in net depreciation expense of $8,583 and $9,261 included in operating expense. For the nine months ended September 30, 2024 and September 30, 2023, respectively, depreciation of property and equipment was $582,948 and $306,092, of which $559,888 and $211,454 was allocated to cost of goods sold, resulting in net depreciation expense of $23,060 and $94,638 included in operating expense.

Note 8 – Leases

The Company determines if an arrangement is a finance lease or operating lease at inception and recognizes right-of-use (“ROU”) assets and lease liabilities at commencement date based on the present value of the lease payments over the lease term. For operating leases, our right-of-use assets are amortized on a straight-line basis over the lease term with rent expense recorded to operating expenses. The Company has elected the practical expedient of not separating lease components from nonlease components. The depreciable life of related leasehold improvements is based on the shorter of the useful life or the lease term.

The Company leases its 20,945 square foot 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 rate of $11,296, with approximately a 3% annual escalation of lease payments commencing September 15, 2021, under which an entity owned entirely by Ira Goldfarb, the Company's Executive Chairman, is the landlord. The 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

16

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate for the lease at the time of commencement was 5.75%.

On May 22, 2024, the Company entered into an industrial lease (the “Lease”) with USCIF Pinnacle Building B LLC, a Delaware limited liability company. Pursuant to the terms of the Lease, the Company will lease approximately 324,000 rentable square feet from the Lessor at 4024 Rock Quarry Road, Dallas, Texas for a term of approximately 62 months, which the Company intends to use as industrial and manufacturing space. The Term of the Lease commenced on May 22, 2024. The Lease provides for graduated rent payments starting at $122,175 per month, increasing up to $297,289 per month by the end of the Lease, plus taxes, insurance and common area maintenance costs. The Company has provided a security deposit in the amount of $1,000,000 in connection with the Lease. The Lease may be renewed upon the extension in writing between the Company and the Lessor for a period of up to 60 months. The incremental borrowing rate for the lease at the time of commencement was 10.84%.

On January 19, 2024, Sow Good Inc., the Company entered into a sublease agreement with Papsa Merx S. de R.S. de C.V., a corporation registered in Mexico City, Mexico. Pursuant to the terms of the Sublease Agreement, the Company will sublease approximately 141 rentable square meters at Av. Roble 660, Valle del Campestre, 66265 San Pedro Garza García Municipality, Nuevo León, 66269 for a term of approximately seventeen months, which the Company intends to use as office space. The Term of the Lease Agreement commenced on February 1, 2024. The Sublease Agreement provides for rent payments at fixed price of $5,250 USD per month plus the corresponding Value Added Tax for the duration of the Term. The Company is also responsible for operating expenses of the Premises, which includes a maintenance fee, electricity and internet services. The Company is required to provide a deposit of guarantee in the amount of $5,250 USD in connection with the Sublease Agreement. The Sublease Agreement does not have a renewal period. The incremental borrowing rate for the lease at the time of commencement was 10.68%.

On October 26, 2023, the Company entered into a lease agreement with Prologis, Inc., a Maryland corporation, which the Company intends to use as production space. The Company leased approximately 51,264 square feet in Dallas, Texas for an initial term of approximately five years and two months. The lease commenced on November 1, 2023. The base rent payments started at approximately $42,500 per month in the first year, and increase each year, up to approximately $51,700 per month during the last year of the initial term. The Company is also responsible for operating expenses of the premises, which start at $7,835 per month, with an annual escalation of 4.3%. As a deposit on the lease, the Company is required to provide a letter of credit to the Landlord in the amount of $300,000. The lease may be extended for a period of five years, at the option of the Company, at a rate to be based on a fair market rent rate determined at the time of the extension. The incremental borrowing rate for the lease at the time of commencement was 9.38%.

On July 1, 2023, the Company entered into a lease for additional warehouse space in Irving, Texas, of approximately 9,000 feet under a 37-month lease at a rate of $8,456 per month, with approximately a 4% annual escalation of lease payments. The 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 incremental borrowing rate for the lease at the time of commencement was 8%.

The components of lease expense were as follows:

	For the Nine Months Ended
	September 30,
	2024		2023
Right-of-Use lease cost:
Amortization of right-of-use asset	$	1,423,179	$	79,213

17

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Supplemental balance sheet information related to leases was as follows:

	September 30,			December 31,
	2024			2023
Operating lease:
Operating lease assets	$	17,193,154		$	4,061,820
Current portion of operating lease liability	$	2,140,084		$	550,941
Noncurrent operating lease liability		16,005,280			3,671,729
Total operating lease liability	$	18,145,364		$	4,222,670
Weighted average remaining lease term:
Operating leases (in years)		4.9			5.9
Weighted average discount rate:
Operating lease		10.25	%		8.20	%

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

	For the Nine Months Ended
	September 30,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	1,553,753	$	128,840

The future minimum lease payments due under operating leases as of September 30, 2024 is as follows:

Fiscal Year Ending	Minimum Lease
December 31,	Commitments
2024 (for the three months remaining)	$	814,661
2025		4,314,293
2026		4,894,504
2027		5,004,433
2028 and thereafter		8,515,670
Total	$	23,543,561
Less effects of discounting		(5,398,197	)
Lease liability recognized	$	18,145,364

Note 9– Notes Payable, Related Parties

Notes payable, related parties consists of the following at September 30, 2024 and December 31, 2023, respectively:

	June 30,		December 31,
	2024		2023
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 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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The unsecured note matured on May 11, 2024.	$	-	$	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 note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with		-		50,000

18

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The unsecured note matured on April 25, 2024.
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 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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The unsecured note matured on April 25, 2024.	-	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. The warrants were exercised on April 15, 2024.	250,000	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. The warrants were exercised on April 15, 2024.	250,000	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. The warrants were exercised on April 15, 2024.	250,000	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. The warrants were exercised on April 15, 2024.	500,000	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. The warrants were exercised on April 15, 2024.	250,000	250,000
On December 31, 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. The warrants were exercised on April 15, 2024.	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. The warrants were exercised on April 15, 2024.	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. The warrants were exercised on April 15, 2024.	250,000	250,000

19

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

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 30th and December 31st. The noteholder also received warrants to purchase 500,000 shares of common stock, exercisable at $2.35 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds from certain warrant exercises were used to repay the note.		-		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 30th and December 31st. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. The noteholder also received warrants to purchase 230,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024 and proceeds were used to partially repay the note.		629,000		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 30th and December 31st. The noteholder also received warrants to purchase 75,000 shares of common stock, exercisable at $2.21 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024 and proceeds were used to partially repay the note.		16,712		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024 and proceeds were used to partially repay the note.		33,425		50,000
Total notes payable, related parties		3,179,137		8,595,000
Less unamortized debt discounts:		447,236		1,880,712
Notes payable		2,731,901		6,714,288
Less current maturities		2,731,901		2,543,146
Notes payable, related parties, less current maturities	$	-	$	4,171,142

20

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

In the nine months ended September 30, 2024, the Company recorded $696,502 of loss on the early extinguishments of debt related to the accelerated amortization of debt discounts related to the Warrant Exercise Transaction. In the three and nine months ended September 30, 2023, the Company recognized no loss on the early extinguishment of debt related to the accelerated amortization of debt discounts.

Note 10 – Notes Payable

Notes payable consists of the following at September 30, 2024 and December 31, 2023, respectively:

	September 30,		December 31,
	2024		2023
On April 25, 2023, the Company received $400,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. 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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The remaining portion of the note matured on April 25, 2024.	$	-	$	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 30th and December 31st. 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. The warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note.		33,000		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note.		206,250		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		389,250		1,130,000
Less unamortized debt discounts:		26,116		222,024
Notes payable		363,134		907,976
Less current maturities		213,134		313,938
Notes payable, less current maturities	$	150,000	$	594,038

21

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

The Company recognized interest expense related to notes payable, related parties, and other notes payable for the three and nine months ended September 30, 2024 and 2023, as follows:

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2024		2023			2024		2023
Interest on notes payable, related parties	$	64,105	$	140,014		$	285,459	$	405,131
Amortization of debt discounts on notes payable, related parties		142,735		(137,006	)		736,974		776,993
Interest on notes payable		5,812		16,647			25,086		42,553
Amortization of debt discounts on notes payable		12,443		(17,589	)		195,909		123,234
Interest - other		-		1,575			-		1,575
Total interest expense	$	225,095	$	3,641		$	1,243,428	$	1,349,486

Note 11 – 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.

Warrant Exercise Transaction

On April 15, 2024, the Company issued 2,186,250 shares of its common stock in connection with the exercise of warrants that were issued between December 2021 and May 2023 (the “Warrants”), with exercise prices varying from $2.21 to $2.60 (the “Warrant Exercise”). None of the Warrants were amended prior to or in connection with the Warrant Exercise. Each of the exercising holders of warrants (collectively, the “Holders”), received its warrants in connection with the incurrence by the Company of indebtedness pursuant to various tranches of promissory notes issued between December 2021 and May 2023 (collectively, the “Notes”). The Warrants were classified as permanent equity at inception. Due to a redemption feature in the Warrants allowing the Company to redeem the Warrants for $0.001 per Warrant if the daily volume weighted average price per share over thirty consecutive trading days is above $9.00, the Company received indications of intent to exercise Warrants from various Holders given the recent increase in trading price of the Company's common stock. With authorization from the Company's Board of Directors, each of the Holders was provided an opportunity to, and agreed to, amend certain of such Holder’s Notes (the “Notes Amendment”) to allow for the partial prepayment of principal in an aggregate amount equal to the exercise price of such Holder’s Warrants. In addition to the Notes Amendment, certain of the Holders elected use a portion of the accrued but unpaid interest under such Holder’s Notes to pay the exercise price of the Warrants. Certain of the Notes were repaid in full as a result of the Warrant Exercise and thereby did not need to be amended pursuant to the Notes Amendment (the Warrant Exercise, whether by partial or full repayment of principal, or by election to use a portion of accrued but unpaid interest under the Notes, together with the Notes Amendment, the “Warrant Exercise Transaction”). As a result of the Warrant Exercise Transaction, excluding the impact of deferred debt costs, the Company’s debt was reduced by $5,200,362, accrued interest payable was reduced by $98,750, common equity was increased by $5,299,112 and the Company issued an aggregate of 2,186,250 shares of common stock.

Certain of the Notes totaling $3,620,000 were fully repaid and the related debt discounts of $696,502 were fully expensed as a loss on the extinguishment of debt in the nine months ended September 30, 2024. The Notes subject to the Notes Amendment were partially repaid, this payment totaled $1,580,363, and the ratable portion of the related debt discounts totaling $215,773 was included as amortized interest in the nine months ended September 30, 2024. The remaining debt discounts will continue to be amortized as interest over the remaining term of the Notes. The Notes Amendment only allowed for the partial prepayment of principal and did not change any other terms of the Notes, and the present value of expected cash flows over the remaining life of the Notes remains substantially unchanged by the modification of these Notes.

Common Stock Sold for Cash

On May 2, 2024, the Company priced its registered underwritten public offering of 1,200,000 shares of the Company’s common stock, par value $0.001 at a price of $10.00 per share. In addition, the Company granted the underwriters a 30-day overallotment option to purchase up to 180,000 additional shares of common stock and issued to the underwriters warrants to purchase 120,000 shares of Common Stock. On May 1, 2024, the Company received approval to list its common stock on the Nasdaq Capital Market stock exchange (“Nasdaq”). Trading on Nasdaq commenced on May 2, 2024. On May 9, 2024, the underwriters purchased all of the Additional Shares pursuant to the full exercise of their overallotment option. Including proceeds from the Additional Shares, the proceeds from the public offering were approximately $11,974,976 net of offering expenses and underwriting discounts and commissions.

22

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

On March 28, 2024, the Company raised $3,738,000 of capital from the sale of 515,597 newly issued shares of common stock at a share price of $7.25 in a private placement exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. A total of 158,694 of these shares, or proceeds of $1,150,500 were purchased by officers, directors, and related parties.

On November 20, 2023, the Company entered into a Stock Purchase Agreement with multiple accredited investors to sell and issue to the purchasers, thereunder, an aggregate of 426,288 shares of the Company’s common stock at a price of $6.50 per share. Proceeds to the Company from the sale of the shares were $2,770,848. A total of 46,669 of these shares, or proceeds of $303,348 were purchased by officers and directors.

On August 25, 2023, the Company entered into a Stock Purchase Agreement with multiple accredited investors to sell and issue to the purchasers, thereunder, an aggregate of 735,000 shares of the Company’s common stock at a price of $5.00 per share. Proceeds to the Company from the sale of the shares were $3,675,000. A total of 195,000 of these shares, or proceeds of $975,000 were purchased by officers and directors.

Common Stock Issued to Directors for Services

On February 9, 2024, the Company issued an aggregate 23,534 shares of common stock amongst its five non-employee Directors and three advisory Directors for annual services to be rendered. The aggregate fair value of the common stock was $519,280, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On January 11, 2024, the Company issued an aggregate 7,060 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 $56,480, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On January 5, 2024, the Company appointed Edward Shensky as a member of the Board of Directors of the Company effective immediately. Pursuant to the Company’s Non-Employee Director Compensation Plan, Mr. Shensky received annualized compensation of $25,000, paid in cash or common stock.

On June 1, 2023, the Company issued an aggregate 21,095 shares of common stock amongst its five directors for annual services to be rendered. The aggregate fair value of the common stock was $125,230, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

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 of Directors 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 January 8, 2024, our stockholders took action by written consent to ratify the amendment to the 2020 Stock Incentive Plan (the “2020 Plan”) approved by the Board of Directors on December 15, 2023. On December 15, 2023, our Board of Directors approved an amendment to the 2020 Plan to effect an increase in the number of shares that remain available for issuance under the 2020 Plan by an additional 2,150,000 shares up to an aggregate of 2,964,150 shares available for issuance under the 2020 Plan (the “2020 Plan Amendment”). Before the 2020 Plan Amendment, the number of shares available for issuance under the 2020 Plan would be too limited to effectively operate as an incentive and retention tool for employees, officers, directors, non-employee directors and consultants of the Company and its affiliates (as defined in the 2020 Plan). The 2020 Plan and the approved increase will enable us to continue our policy of equity ownership by employees, officers, directors, non-employee directors and consultants of the Company and its affiliates as an incentive to contribute to the creation of long-term value for our stockholders.

Amendment to the 2020 Stock Incentive Plan

On January 8, 2024, our stockholders took action by written consent to ratify the amendment to the 2020 Stock Incentive Plan (the “2020 Plan”) approved by the Board of Directors on December 15, 2023. On December 15, 2023, our Board approved an amendment to the 2020 Plan to effect an increase in the number of shares that remain available for issuance under the 2020 Plan by an additional 2,150,000 shares up to an aggregate of 2,964,150 shares available for issuance under the 2020 Plan (the “2020 Plan Amendment”). Before the 2020 Plan Amendment, the number of shares available for issuance under the 2020 Plan would be too limited to effectively operate as an incentive and retention tool for employees, officers, directors, non-employee directors and consultants of the Company

23

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

and its affiliates (as defined in the 2020 Plan). The 2020 Plan and the approved increase enabled us to continue our policy of equity ownership by employees, officers, directors, non-employee directors and consultants of the Company and its affiliates as an incentive to contribute to the creation of long-term value for our stockholders.

2024 Stock Incentive Plan

Effective February 15, 2024, the Board of Directors adopted the 2024 Plan (the “2024 Plan”) under which a total of 3,000,000 share of our common stock have been reserved for issuance of Incentive Stock Options, or ISOs, Non-Qualified Stock Options, or NSOs, restricted share awards, stock unit awards, SARs, other stock-based awards, performance-based stock awards, (collectively, “stock awards”) and cash-based awards (stock awards and cash-based awards are collectively referred to as “awards”). ISOs may be granted only to our employees, including officers, and the employees of our parent or subsidiaries. All other awards may be granted to our employees, officers, our non-employee directors, and consultants and the employees and consultants of our subsidiaries, and affiliates.

Outstanding Options

Options to purchase an aggregate total of 2,626,382 shares of common stock were outstanding as of September 30, 2024, respectively, at a weighted average strike price of $19.91. The weighted average life of exercisable outstanding options was 8.7 years as of September 30, 2024.

The Company recognized compensation expense related to common stock options that are being amortized over the implied service term, or vesting period, of the options during the three and nine months ended September 30, 2024 and 2023, as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Directors	$	29,284	$	25,695	$	86,892	$	91,990
Officers		1,039,169		80,520		3,083,827		238,932
Employees		118,418		34,334		224,027		68,304
Total amortized options expense	$	1,186,871	$	140,759	$	3,394,746	$	399,436

The remaining unamortized balance of these options is $12,457,803 as of September 30, 2024 and the weighted-average period over which these awards are expected to be recognized is approximately 2.5 years.

Options Granted

During the nine months ended September 30, 2024, 23 employees were granted options to purchase an aggregate of 117,061 shares of the Company's common stock, having a weighted average exercise price of $13.62, 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 94 to 95% and an average call option fair value of $12.14, was $1,421,542. The options are being expensed over the vesting period.

Options Cancelled or Forfeited

Approximately 46,000 options with a weighted average strike price of $5.43 per share were forfeited by former employees during the nine months ended September 30, 2024.

Options Expired

During the nine months ended September 30, 2024, options expirations consisted of 333 options with a $195.00 strike price, and 14,491 options with a $5.41 strike price.

Options Exercised

A total of 50,459 options were exercised during the nine months ended September 30, 2024. No options were exercised during the nine months ended September 30, 2023. Proceeds from options exercises during the nine months ended September 30, 2024 amounted to $163,854.

24

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Options Exercisable

There were 350,353 options exercisable as of September 30, 2024.

Note 13 – Warrants

Warrants Exercised

A total of 2,186,250 warrants related to the issuance of debt were fully exercised at an average price of $2.50, and the proceeds were used to repay certain Notes Payable. The debt discounts relating to the warrants were either written off as a loss on early extinguishment of debt, to the extent that the related Notes Payable were fully retired, or amortized to interest expense for those Notes which were partially extinguished. The Company realized a loss on early extinguishment of debt of $696,502 for nine months ended September 30, 2024. Interest expense related to debt discount amortization was $932,883 and $900,228 for the nine months ended September 30, 2024 and 2023, respectively. Another 52,500 warrants were exercised at an exercise price of $4.00 during the period.

Warrants Granted

In connection with the Company’s underwritten public offering in May 2024, the Company issued to the underwriters warrants to purchase 138,000 shares of Common Stock. The grant was equal to 10% of the number of shares sold in this offering by Roth, (a total of 1,380,000 shares). The Representative’s Warrants will be exercisable upon issuance, will have an exercise price equal to 120%, (or $12.00) of the initial public offering price and will terminate fifth anniversary of the effective date of the registration statement. The Representative’s Warrants and the underlying shares of common stock are deemed compensation by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and will therefore be subject to FINRA Rule 5110(g)(1). In accordance with FINRA Rule 5110(g)(1), neither the Representative’s Warrants nor any shares issued upon exercise of the Representative's Warrants may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities by any person, for a period of 180 days immediately following the date of effectiveness or commencement of sales of the offering pursuant to which the Representative’s Warrants are being issued, subject to certain exceptions. The fair value of the warrants, was determined using the Black-Scholes option pricing model, and was recorded through additional paid in capital as an offset of the offering proceeds.

Outstanding Warrants

Warrants to purchase an aggregate total of 190,500 shares of common stock at a weighted average strike price of $9.80, exercisable over a weighted average life of 5 years, were outstanding as of September 30, 2024.

No warrants were cancelled or expired during the nine months ended September 30, 2024.

Note 14 - Earnings Per Share

Basic and diluted earnings per share for the three and nine months ended September 30, 2024 and September 30, 2023:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2024			2023		2024		2023
Net income (loss) attributable to common shareholders	$	(3,379,909	)	$	333,984	$	465,821	$	(4,388,446	)
Basic weighted average shares		10,245,388			5,123,735		8,651,223		4,942,182
Basic income (loss) per share	$	(0.33	)	$	0.07	$	0.05	$	(0.89	)
Diluted weighted average shares		10,245,388			8,066,577		9,613,553		4,942,182
Diluted income (loss) per share	$	(0.33	)	$	0.04	$	0.05	$	(0.89	)

The table below includes information related to stock options and warrants that were outstanding at the end of each respective the three and nine months ended September 30, 2024 and September 30, 2023. For periods in which the Company incurred a net loss, these amounts are not included in weighted average dilutive shares because their impact would be anti-dilutive. For each of the three and nine months ended September 30, 2024, there were approximately 1,019,000 options with a strike price greater than the average

25

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

share price for the respective periods, which have been excluded from the weighted average shares because including them would have been antidilutive under the treasury method.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Weighted average stock options		1,607,913		650,436		1,607,580		615,662
Weighted average price of stock options	$	8.00	$	4.64	$	8.00	$	4.64
Weighted average warrants		190,500		2,291,250		974,839		2,084,994
Weighted average price of warrants	$	9.80	$	2.50	$	3.01	$	2.50
Average price of common stock	$	15.74	$	5.52	$	13.84	$	4.56

Note 15 – Income Taxes

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

The Company recognized income tax expense of $195,603 and $0 for the periods ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the Company has a net operating loss carryover of approximately $40,943,066. Under existing Federal law, a portion of the net operating loss may be utilized to offset taxable income through the year ended December 31, 2037. A portion of the net operating loss (“NOL”) carryover begins to expire in 2031. For tax years beginning after December 31, 2017, pursuant to the enactment of the Tax Cuts and Jobs Act (“TCJA”) net operating losses now carry forward indefinitely but are limited to offsetting 80% of taxable income in a tax year. Of the total estimated net operating loss as of September 30, 2024 , approximately $18,957,573 of the Company’s NOL is subject to the TCJA net operating loss provisions.

ASC Topic 740 provides that a valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. As of September 30, 2024, the Company is increasing its valuation allowance from $12,984,109 to $13,033,251 due to a decrease in the net estimated deferred tax assets. At this time, the Company believes it is more likely than not that the benefit of the remaining net deferred tax assets will not be realized, the Company will continue to evaluate this valuation allowance quarterly.

The Company filed annual US Federal income tax returns and annual income tax returns for the state of Minnesota through 2020. Following the 2020 tax year, the Company has filed annual state franchise tax returns for the state of Texas. We are not subject to income tax examinations by tax authorities for years before 2020 for all returns. Income taxing authorities have conducted no formal examinations of our past federal or state income tax returns and supporting records.

The Company adopted the provisions of ASC Topic 740 regarding uncertainty in income taxes. The Company has found no significant uncertain tax positions as of any date on or before September 30, 2024. We account for income taxes under the provisions of ASC Topic 740, Income taxes, which provides for an asset and liability approach for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributable to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes. The Company has found no significant uncertain tax positions as of any date on or before September 30, 2024.

26

SOW GOOD INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 16 – Subsequent Events

Management has evaluated events and transactions subsequent to the balance sheet date through the date of this report (the day the financial statements were available to be issued) for potential recognition or disclosure in the financial statements. Management has not identified any items requiring recognition or disclosure.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated historical financial statements and the notes to those statements that appear elsewhere in this report. Certain statements in the discussion contain forward-looking statements based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors.

Overview and Outlook

Sow Good is a trailblazing U.S.-based freeze dried candy and snack manufacturer dedicated to providing consumers with innovative and explosively flavorful freeze dried treats. Sow Good has harnessed the power of our proprietary freeze drying technology and product-specialized manufacturing facility to transform traditional candy into a novel and exciting everyday confectioneries subcategory that we call freeze dried candy. We began commercializing our freeze dried candy products in the first quarter of 2023, and as of September 30, 2024, we have twenty-one stock keeping units (“SKUs”) in our Sow Good Candy line of treats and three SKUs in our Sow Good Crunch Cream line. We sell our treats using an omnichannel strategy primarily focused on the wholesale and retail channels with less than 2% of sales coming from e-commerce as of September 30, 2024. As of September 30, 2024, our treats are offered for sale in over 6,000 brick-and-mortar retail outlets in the United States. The rapid demand growth for our delectable treats since their retail debut in March 2023 highlights our consumers’ excitement for our novel and explosively flavorful treats that “satisfy your sweet tooth in fewer bites.”

We have custom-built a 20,945 square foot freeze drying facility in Irving, Texas, and have entered into additional co-manufacturing arrangements in China and Colombia. Freeze drying removes up to 99% of moisture from a product in its frozen state by applying a small amount of heat in an extremely low air pressure, near outer space-like environment, through the use of massive vacuum chambers, resulting in moisture being removed from the product at the speed of sound. This process of removing moisture from the product, which can take up to twenty-four hours, concentrates its flavor, creating a “hyper dried, hyper crunchy, and hyper flavorful” snackable treat. Our commitment to providing the most flavorful and crunchy treats extends into the product packaging process, where our employees are dedicated to hand-packaging our treats through our precision packaging process in vigilantly managed low humidity conditions to protect our treats from reintroduction to moisture.

We have built six bespoke freeze driers using proprietary technology tailored specifically to our products which allows us to freeze dry up to 24 million units of freeze dried candy per year, creating a truly state-of-the-art facility in Irving, Texas. We have placed deposits on six additional freeze driers, which we aim to have operational within the next nine months in our new 324,000 square foot facility in Dallas, Texas. In addition, due to strong customer demand, we have entered into co-manufacturing arrangements with third-party manufacturers whose freeze drying facilities meet our exacting production, sanitation and allergen control requirements, as well as our food quality and safety standards. Currently, all of our products manufactured by third parties are shipped to our facilities in Texas for packaging.

Sow Good, co-founded by Claudia and Ira Goldfarb, brings over a decade of manufacturing expertise to the CPG sector, specializing in advanced freeze-drying technology. With experience across pet, baby, and candy products, they have a proven track record of transforming niche trends into everyday consumer staples. Leveraging their proprietary technology, Sow Good aims to disrupt traditional categories, delivering innovative, high-quality products that emphasize long shelf life and natural preservation. Beyond product innovation, they are committed to job creation and positive community impact, making Sow Good a forward-thinking force in the industry.

We believe the candy category is stagnant, repetitive, and in need of revitalization to reengage and captivate consumers seeking innovative ways to satisfy their sweet cravings. We see our market opportunity existing at the intersection of two categories: the burgeoning freeze dried candy and non-chocolate confections. According to the NCA, the non-chocolate confections market grew 13.8% in sales in 2022, exceeding $10 billion, and according to Grand View Research is forecasted to grow at a compounded annual growth rate of 5.8% from 2023 to 2030. We believe the nascent freeze dried candy market is poised for exponential growth given increasing consumer preferences for novel and distinctive candy products. According to the NCA, approximately 61% of shoppers occasionally or frequently seek out products they have never purchased before.

Our products have launched in retailers nationwide from convenience and grocery stores to big-box retailers, such as Five Below, Target, Misfits Market/Imperfect Foods, TJX Canada, Big Lots, Hy-Vee, Cracker Barrel, Circle K, 7/11, HEB Kroger and Albertsons. In addition, we sell a substantial portion of our products through distributors such as Redstone Foods, CB Distributors and Nassau Distributors. We believe there is a significant growth opportunity in increasing our shelf presence, SKU portfolio, and number of stores with our existing customers. For many of these customers, we launched with a limited number of SKUs, with those SKUs routinely outpacing initial sales projections. As we scale production, we will have the ability to increase the availability of our products

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to these customers in current locations and distribution to more of their stores, while also broadening our SKU portfolio offerings. Bolstering our distribution and sales force will be a key growth driver for Sow Good so more of our products are available wherever our consumers choose to shop, whether it be a retail store, convenience store, or directly online. To further support our retail launches with existing customers and strengthen our brand name, we are also introducing our product displays with distinctive designs and product highlights to enhance our visibility in current stores and educate new consumers on the advantages of freeze dried treats. We believe this strategy will capture the attention of new consumers, further educate and attract current consumers, and ultimately, increase sales for our retailers.

Our highly differentiated omnichannel distribution strategy has three key components: retailers, e-commerce, and distributors. In aggregate, this omnichannel strategy provides us with a diverse set of consumers and customer partners, leading to a larger total addressable market opportunity than is normally available to products sold only in grocery stores, along with an opportunity to develop a direct relationship with our customers at our website, www.thisissowgood.com and our social medial pages.

Key Factors Affecting our Performance

We believe the growth of our business and our future success is dependent upon many factors. While the factors and trends described below present significant opportunities for us, they also pose important challenges that we must successfully address to enable us to sustain the growth of our business and improve our results of operations. These factors and trends in our business have driven fluctuations in revenues over the periods presented and are expected to be key drivers of our results of operations and liquidity position for the foreseeable future.

Ability to Compete Against Competitors with Greater Resources and Market Clout

We operate in a highly competitive industry against competitors with significantly greater financial and other resources. We have become aware of certain of our competitors using their market clout and marketing spend to limit our current and future customers from purchasing our products or reducing our shelf space. Our ability to keep our current customers, or grow our SKU portfolio on their shelves, and continue to expand our sales with new customers will depend on our competitors’ ability to leverage their market clout and financial resources to limit our access to consumers and our ability to compete with these larger competitors.

Ability to Grow Our Customer Base in Retail and Traditional Wholesale Distribution Channels

We are currently growing our customer base in a variety of physical retail and traditional wholesale distribution channels. Our products have launched in retailers nationwide from convenience and grocery stores to big-box retailers, such as Five Below, Target, Misfits Market/Imperfect Foods, TJX Canada, Big Lots, Hy-Vee, Cracker Barrel, Circle K, 7/11, HEB, Kroger and Albertsons. In addition, we sell a substantial portion of our products through distributors such as Redstone, CB Distributors and Nassau Distributors. We continue to increase our shelf presence, SKU portfolio and number of stores with existing customers. In addition, given the nascent state of the freeze dried candy segment and the number of potential retailer and wholesaler customers, we also believe there is a significant growth opportunity with customer acquisition in both the retail and wholesale channels, domestically and internationally. Customer acquisition in these channels depends on, among other things, our go-to-market function and our ability to meet the demand of customers who require large volumes of products.

Consumer Trends

We compete in the freeze dried candy and non-chocolate confections segments of the greater food industry. According to the NCA, the non-chocolate confections market grew 13.8% in sales in 2022, exceeding $10 billion, and according to Grand View Research is forecasted to grow at a compounded annual growth rate of 5.8% from 2023 to 2030. We believe the nascent freeze dried candy market is poised for exponential growth given increasing consumer preferences for novel and distinctive candy products. According to the NCA, approximately 61% of shoppers occasionally or frequently seek out products they have never purchased before. While we believe our products are designed to provide alternatives for consumers looking for innovative treats, we also believe our candy products have broad appeal due to our uncompromising approach to developing a product line suited to a wide base of consumer tastes. We believe our ability to attract the robust and growing consumer base seeking the novel, crunchy and hyper flavorful experience our products provide will allow us to add distribution points with our retail customers and increase our revenues, which we believe will help us scale and increase our gross margin from sales of our products.

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Ability to Optimize Our Liquidity Position While Scaling

Our primary focus is developing our production capacity and our customer base, which requires significant working capital for inventory and supply chain management, capital expenditures for additional freeze driers, expansion outside the United States, and additional sales and marketing expenditures. Our ability to effectively manage our liquidity position while increasing production capabilities and marketing efforts will impact our cash flow and capitalization, including the need for additional working capital through future equity offerings or debt arrangements.

Ability to Expand Our Product Line

Our goal is to substantially expand our product line over time to increase our growth opportunity and reduce product-specific risks through SKU diversification into multiple products, including freeze dried products beyond our freeze dried treats. Our pace of growth will be partially affected by the cadence and magnitude of new product launches over time. We believe the commercialization of any new products will require us to hire additional employees within our product design and commercialization team, thereby increasing our marketing expense, as well as research and development costs within our administrative expense.

Impact of inflation on operations.

We expect supplies and prices of the ingredients that we are going to use to be affected by a variety of factors, such as weather, seasonal fluctuations, demand, politics and economics in the producing countries. These factors subject us to shortages or interruptions in product supplies, which could adversely affect our revenue and profits. In addition, we may face limits on the ability to source some of the candy for our freeze dried candy products.

Seasonality

Because we are early in our lifecycle of growth, it is difficult to discern the exact magnitude of seasonality affecting our business from a demand standpoint. While evidence of any demand seasonality is currently difficult to assess because of our growth, we anticipate certain holiday cycles such as Halloween, Christmas, Easter and Valentine’s Day contributing to revenue fluctuations within a given year. In addition, we have become aware of external data showing a general trend in candy consumer behavior regarding reduced candy purchasing in summer months due to a variety of factors including greater levels of health consciousness during warm weather. Operationally, recent heat waves from July through October have presented challenges in transporting our freeze-dried treats. These conditions led to reduced shipments, higher inventory levels, and a decline in revenue. Additionally, some candy transported via external distribution channels during the extreme summer heat melted, impacting its shelf performance. We are actively working to remove affected products from shelves and replace them promptly to support recovery in product velocity. In the short term, these measures will impact our market reputation, sell-through rates, and operational results as we address these unforeseen challenges. We do anticipate a return to a normal cadence with the seasonal reduction in temperatures to a level where our treats can be shipped without damage. As a result, we anticipate an annual temporary decrease in shipments of our treats during summer months, which we believe is consistent with the greater candy industry trend.

Components of Results of Operations

Revenues

We derive revenues from the sales of our freeze dried treats. The Company recognizes revenues when orders are shipped to customers.

Cost of Goods Sold

Our cost of goods sold consists primarily of facilities costs, material costs, and labor on the production of freeze dried treats.

Operating Expenses

Our operating expenses consist of general and administrative expenses, which includes salaries and benefits expenses, professional services expenses and other general and administrative expenses, intangible asset impairment losses and goodwill impairment losses.

We expect our general and administrative expenses will increase as our business grows.

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Interest Expense

Interest expense consists primarily of the cash interest expense on outstanding debt and the amortization of the debt discount created upon the issuance of warrants in connection with debt.

Interest Income

Interest income consists primarily of the interest on short-term U.S Treasury Bonds.

Provision for Income Taxes

The Company recognized a federal income tax benefit of $62.3 thousand, and $0, for the three month periods ended September 30, 2024 and 2023, respectively. The Company recognized federal income tax of $195.6 thousand, and $0, for the nine months ended September 30, 2024 and 2023, respectively.

Segment Overview

Our chief operating decision makers, who are our Chief Executive Officer and our Executive Chairman, review financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance, as well as for strategic operational decisions and managing the organization. For each of the three month periods ended September 30, 2024 and 2023, we have determined that we have one operating segment and one reportable segment.

Results of Operations for the Three Months Ended September 30, 2024 and September 30, 2023.

The following table summarizes selected items from the statement of operations for the three month periods ended September 30, 2024 and September 30, 2023:

	Three Months Ended
	September 30,						Increase /
	2024			2023			(Decrease)			% Change
Revenues	$	3,554,157		$	5,034,203		$	(1,480,046	)		(29	%)
Cost of goods sold		2,998,171			3,698,962			(700,791	)		(19	%)
Gross profit (loss)		555,986			1,335,241			(779,255	)		58	%
Operating expenses:
General and administrative expenses:
Salaries and benefits		1,875,908			618,907			1,257,001			203	%
Professional services		320,289			294,720			25,569			9	%
Other general and administrative expenses		1,607,844			74,728			1,533,116			2052	%
Total general and administrative expenses		3,804,041			988,355			2,815,686			285	%
Depreciation and amortization		8,583			9,261			(678	)		(7	%)
Total operating expenses		3,812,624			997,616			2,815,008			282	%
Net operating income (loss)		(3,256,638	)		337,625			(3,594,263	)		1065	%
Other income (expense):
Interest income		39,509			-			39,509			100	%
Interest expense		(225,095	)		(3,641	)		(221,454	)		(6082	%)
Loss on early extinguishment of debt		-			-			-			100	%
Total other income (expense)		(185,586	)		(3,641	)		(181,945	)		(4997	%)
Net income (loss) before tax provision	$	(3,442,224	)	$	333,984		$	(3,776,208	)		1131	%

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Comparison of the three months ended September 30, 2024 and September 30, 2023

Revenues

Sales of freeze dried candy for the three months ended September 30, 2024 were $3.6 million, compared to $5.0 million for the three months ended September 30, 2023, a decrease of $1.5 million, or (29%), primarily driven by the Company’s decision to delay the majority of shipments to customers as the extreme heat during the period was negatively impacting the quality of the candy shipments. In addition, revenue was affected by an increase in promotional activity and customer allowances.

Cost of Goods Sold

Cost of goods sold for the three months ended September 30, 2024 were $3.0 million, compared to $3.7 million for the three months ended September 30, 2023, a decrease of $700.8 thousand, or (19%). The decrease in cost of goods sold is primarily related to the decline in revenue partially offset by higher costs related to the company’s new facility and a lower production yield.

Gross Profit

Gross profit for the three months ended September 30, 2024 was $556.0 thousand, compared to gross profit of $1.3 million for the three months ended September 30, 2023, a decrease of $779.3 thousand, or 58%. Gross profit decreased over the comparative period due to decreased revenues of $1.5 million partially offset by lower cost of goods sold of $700.8 thousand.

Our gross profit margin was 16% during the three months ended September 30, 2024, compared to 27% for the three months ended September 30, 2023. Our gross profit margin decreased primarily due to higher cost of goods sold as a percentage of sales.

Operating Expenses

Salaries and Benefits

Salaries and benefits for the three months ended September 30, 2024 were $1.9 million, compared to $618.9 thousand for the three months ended September 30, 2023, an increase of $1.3 million, or 203%. Salaries and benefits included stock-based compensation expense of $1.2 million for the three months ended September 30, 2024, compared to $111.5 thousand for the three months ended September 30, 2023, an increase of $1.0 million. Stock-based compensation consists of stock options expense for employees and officers of the Company. The increase in salaries and benefits was mainly due to the amortization of performance shares granted December 15, 2023.

Professional Services

General and administrative expenses related to professional services were $320.3 thousand for the three months ended September 30, 2024, compared to $294.7 thousand for the three months ended September 30, 2023, an increase of $25.6 thousand, or 9%. The increase was primarily due to increased professional service expenses as the Company scaled up the business and invested in system and process improvements.

Other General and Administrative Expenses

Other general and administrative expenses for the three months ended September 30, 2024 were $1.6 million, compared to $74.7 thousand for the three months ended September 30, 2023, an increase of $1.5 million, or 2052%. Other General and Administrative expense compared to the prior year period was primarily due to a $741.6 thousand increase in facilities costs to the extent they are not allocated to inventory related to the company’s new facility, a $325.4 thousand increase in bad debt expense due to a customer bankruptcy versus a recovery of bad debt in the prior year period, and a $265.2 thousand increase in marketing and advertising costs.

Depreciation

Depreciation of property and equipment for the three months ended September 30, 2024 and 2023, respectively, was $216.2 thousand and $150.7 thousand, of which $207.6 thousand and $141.4 thousand was allocated to cost of goods sold, which resulted in net depreciation expense of $8.6 thousand and $9.3 thousand, respectively.

Other Income (Expense)

In the three months ended September 30, 2024, other expense consisted mainly of interest expense derived from notes payable and the amortization of warrants issued as a debt discount of $225.1 thousand. During the period ended September 30, 2023, interest expense on notes payable was a net credit of $3.6 thousand, due to adjustments to amortized interest during the three month period ended September 30, 2023.

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Net Income (Loss)

Pretax net loss for the three months ended September 30, 2024 was $3.4 million, compared to pretax net income of $334.0 thousand during the three months ended September 30, 2023, decrease in earnings of $3.8 million, or 1,131%. The transition to pretax net loss from pretax net income was primarily due the decrease in gross profit of $779.3 thousand, or 58% and increased operating expenses of $2.8 million or 282%.

Provision for Income Taxes

The Company maintains a full valuation allowance related to our net deferred tax assets, primarily due to our historical net loss position. For the month periods ended September 30, 2024 and 2023, the Company recognized federal income tax benefit of tax of $62.3 thousand and a provision of $0, respectively.

Results of Operations for the Nine Months Ended September 30, 2024 and September 30, 2023.

The following table summarizes selected items from the statement of operations for the nine month periods ended September 30, 2024 and September 30, 2023:

	Nine Months Ended
	September 30,						Increase /
	2024			2023			(Decrease)			% Change
Revenues	$	30,608,526		$	6,548,479		$	24,060,047			367	%
Cost of goods sold		16,415,970			6,679,224			9,736,746			146	%
Gross profit (loss)		14,192,556			(130,745	)		14,323,301		N/A
Operating expenses:
General and administrative expenses:
Salaries and benefits		6,350,038			1,450,103			4,899,935			338	%
Professional services		1,382,393			404,256			978,137			242	%
Other general and administrative expenses		3,879,350			959,218			2,920,132			304	%
Total general and administrative expenses		11,611,781			2,813,577			8,798,204			313	%
Depreciation and amortization		23,060			94,638			(71,578	)		(76	%)
Total operating expenses		11,634,841			2,908,215			8,726,626			300	%
Net operating income (loss)		2,557,715			(3,038,960	)		5,596,675			184	%
Other income (expense):
Interest income		43,639			-			43,639			100	%
Interest expense		(1,243,428	)		(1,349,486	)		106,058			(8	%)
Loss on early extinguishment of debt		(696,502	)		-			(696,502	)		100	%
Total other income (expense)		(1,896,291	)		(1,349,486	)		(546,805	)		41	%
Net income (loss) before tax provision	$	661,424		$	(4,388,446	)	$	5,049,870			115	%

Revenues

Sales of freeze dried candy were $30.6 million for the nine months ended September 30, 2024, compared to $6.5 million for the nine months ended September 30, 2023, an increase of $24.1 million, or 367%. Revenues increased over the comparative period due to the pivot to freeze dried candy, the increased capacity from the installation of new freezers, and addition of new retail customers in the current period.

Cost of Goods Sold

Cost of goods sold for the nine months ended September 30, 2024 were $16.4 million, compared to $6.7 million for the nine months ended September 30, 2023, an increase of $9.7 million, or 146%. Our gross profit margin was 46% during the current period, compared to (2)% during the comparative period.

General and administrative expenses

Salaries and benefits

Salaries and benefits for the nine months ended September 30, 2024 were $6.4 million, compared to $1.5 million for the nine months ended September 30, 2023, an increase of $4.9 million, or 338%. Salaries and benefits included stock-based compensation

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expense for the nine months ended September 30, 2024 and 2023 of $3.3 million, compared to $307.4 thousand for the nine months ended September 30, 2023, an increase of $3.0 million, or 939%, mainly due to the amortization of performance shares granted December 15, 2023. Other increases in salaries and benefits were cash bonuses of $850.0 thousand, and wages and payroll tax increases of $375.9 thousand over the comparative period, as a result of sales growth.

Professional services

Professional services were $1.4 million for the nine months ended September 30, 2024, compared to $404.3 thousand for the nine months ended September 30, 2023, an increase of $978.1 thousand, or 242%. The increase was primarily due to an increase of $896.0 thousand in legal fees in connection with our underwritten public offering and Nasdaq listing and $263.0 thousand incurred in connection with the company growth, partially offset by a decrease of $180.0 thousand in other professional services costs.

Other general and administrative expenses

Other general and administrative expenses for the nine months ended September 30, 2024 was $3.9 million, compared to $1.0 million for the nine months ended September 30, 2023, an increase of $2.9 million, or 304%. The increase is primarily attributable to higher facilities and marketing costs driven by company growth.

Depreciation

Depreciation of property and equipment was $582.9 thousand and $306.1 thousand, of which and $559.9 thousand and $211.5 thousand was allocated to cost of goods sold, which resulted in net depreciation expense of $23.1 thousand and $94.6 thousand for the nine months ended September 30, 2024 and 2023, respectively.

Other expense

In the nine months ended September 30, 2024, other expense was $1.9 million, consisting of $1.2 million of interest expense on our notes payable and $696.5 thousand of loss on early extinguishment of debt. During the comparative nine months ended September 30, 2023, other expense was $1.3 million, consisting of interest expense on our notes payable. Interest expense decreased by $100.0 thousand or (8%), due to full and partial repayments of notes payable during the nine months ended September 30, 2024, which resulted in a loss on early extinguishment of debt, and decreased the principal upon which stated interest is calculated.

Net income (loss)

Pretax net income for the nine months ended September 30, 2024 was $661.4 thousand, compared to a pretax net loss of $4.4 million during the nine months ended September 30, 2023, a positive change of $5.0 million. The increased net income was due primarily to higher revenues coupled with increased margins.

Provision for Income Taxes

The Company maintains a full valuation allowance related to our net deferred tax assets, primarily due to our historical net loss position. For each of the nine month periods ended September 30, 2024 and 2023, the Company recognized federal income tax of $195,603, and $0, respectively.

Liquidity and Capital Resources

The following table summarizes our total current assets, liabilities and working capital at September 30, 2024 and December 31, 2023.

	September 30,		December 31,
	2024		2023
Current Assets	$	28,387,914	$	10,237,837
Current Liabilities	$	8,689,760	$	5,771,200
Working Capital	$	19,698,154	$	4,466,637

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As of September 30, 2024, we had working capital of $19.7 million, compared to working capital of $4.5 million as of December 31, 2023. The increased working capital is mainly attributable to increases in cash of $4.5 million, accounts receivable of $1.3 million, and inventory of $15.3 million, partially offset by the increase in the current portion of our lease liability of $1.6 million, and accrued expenses of $1.2 million. As of September 30, 2024, our balance of cash and cash equivalents was $6.9 million, compared to $2.4 million at December 31, 2023. We expect to continue to incur significant capital expenditures related to the development and operation of our freeze dried candy business. Our ability to scale production and distribution capabilities and further increase the value of our brands is largely dependent on our success in deploying additional capital. 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.

On May 2, 2024 we priced a registered underwritten public offering of 1,200,000 shares of our common stock at a price of $10.00 per share. On May 9, the underwriters exercised an overallotment option for the purchase of an additional 180,000 shares of our common stock. Together with the sale of the additional shares sold pursuant to the overallotment option, the offering netted approximately $12.0 million in proceeds, after underwriting discounts and offering costs.

Indebtedness

Promissory Notes and Warrants

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. On April 15, 2024, in connection with the Warrant Exercise Transaction, the promissory note’s aggregate principal amount was reduced to $37,500. The related proportional amount of unamortized debt discount of $9,991 as of April 15, 2024 is included as amortized interest for the three and nine months ended September 30, 2024.

On April 25, 2023, we closed on a private placement for 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. The fair value of the warrants was allocated as a debt discount and amortized over the life of the loan. On April 15, 2024, in connection with the Warrant Exercise Transaction, the promissory notes’ aggregate principal amount was reduced to $918,750. The related proportional amount of unamortized debt discount of $40,416 as of April 15, 2024 is included as amortized interest for the three and nine months ended September 30, 2024.

On April 11, 2023, warrants to purchase an aggregate 62,500 shares of common stock were issued to a director pursuant to a private placement debt offering in which aggregate proceeds of $250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants are fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. The fair value of the warrants was allocated as a debt discount and amortized over the life of the loan.

On December 31, 2022, the Company closed a private placement and concurrently entered into a note and warrant purchase agreement with related parties to sell an aggregate $2.075 million of promissory notes and warrants to purchase an aggregate 311,250 shares of common stock, representing 15,000 warrant shares per $100,000 of promissory notes. The warrants are exercisable at a price of $2.21 per share over a ten-year term. On April 15, 2024, in connection with the Warrant Exercise Transaction, the promissory note’s aggregate principal amount was reduced to $679,138. The related proportional amount of unamortized debt discount of $92,729, as of April 15, 2024, and $51,372 of unamortized debt discount related to a fully repaid note are included in interest expense and loss on early extinguishment of debt, respectively, for the three and nine months ended September 30, 2024.

On August 23, 2022, the Company closed on a private placement for up to $2.5 million 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, 2023 to the maturity date. On December 21, 2022 and September 29, 2022, the Company received aggregate proceeds of $0.25 million

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and $0.75 million from two of the Company’s directors on the sale of these notes and warrants. The fair value of the warrants was allocated as a debt discount and amortized over the life of the loan.

On April 8, 2022, the Company closed a private placement and concurrently entered into a note and warrant purchase agreement to sell an aggregate $3.7 million of promissory notes and warrants to purchase an aggregate 925,000 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. Accrued interest on the notes was payable semi-annually beginning September 30, 2022 at the rate of 6% per annum, but on August 23, 2022, the notes were amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The principal amount of the notes mature and become due and payable on April 8, 2025. The warrants are exercisable immediately and for a period of 10 years at a price of $2.35 per share. Proceeds to the Company from the sale of the securities were $3.7 million. 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 30 consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. Assuming full exercise thereof, further proceeds to the Company from the exercise of the warrant shares is calculated as approximately $2.2 million. The offering closed simultaneously with execution of the purchase agreement. Of the aggregate $3.7 million of notes, a total of $3,120,000 of notes were sold to officers or directors, along with 780,000 of the warrants. On April 15, 2024, in connection with the Warrant Exercise Transaction, of which a significant portion was with related parties, the promissory notes’ aggregate principal amount was reduced to $239,250. The related proportional amount of unamortized debt discount of $72,638 as of April 15, 2024, was included as interest expense for the three and nine months ended September 30, 2024, and $645,130 of unamortized debt discount related to fully repaid notes, was included as loss on extinguishment of debt for the three and nine months ended September 30, 2024.

Cash Flows

The following table summarizes our cash flows during the nine months ended September 30, 2024 and 2023, respectively.

	Nine Months Ended
	September 30,
	2024			2023
Net cash used in operating activities	$	(6,124,944	)	$	(3,328,516	)
Net cash used in investing activities		(4,469,287	)		(1,326,276	)
Net cash provided by financing activities		15,130,581			6,475,000
Net change in cash and cash equivalents	$	4,536,350		$	1,820,208

Net cash used in operating activities was $6.1 million for the nine months ended September 30, 2024, compared to $3.3 million of cash used in operating activities nine months ended September 30, 2023. The increase in cash used in operating activities was primarily due to increased inventory.

Net cash used in investing activities was $4.5 million for nine months ended September 30, 2024, compared to $1.3 million for the nine months ended September 30, 2023, an increase of $3.2 million. During the nine months ended September 30, 2024, cash used in investing activities was primarily used for additional freezers. Cash used in investing activities for the nine months ended September 30, 2023 was used to build out freezers and improve our office space.

Net cash provided by financing activities was $15.1 million and $6.5 million for the nine months ended September 30, 2024 and 2023, respectively. Net cash provided by financing activities for the nine months ended September 30, 2024 consisted of $12.0 million of net proceeds from a public offering of 1,380,000 shares at a price of $10.00 per share completed on May 9, 2024, and net proceeds of $3.7 million from private placement offerings to accredited investors and related parties from the issuance of 515,597 shares at $7.25 per share on March 28, 2024. Proceeds from warrant and options exercises totaled $5.7 million during the nine months ended September 30, 2024, which was used to pay down notes payable totaling approximately $6.2 million nine months ended September 30, 2024. Net cash provided by financing activities for the nine months ended September 30, 2023 was comprised of debt financing received from our officers, directors and other non-related parties of $2.8 million, and cash proceeds from the issuance of 735,000 shares of common stock of $3.7 million.

Contractual Obligations and Commitments

The Company is a party to a real property lease for its 20,945 square foot facility at 1440 N. Union Bower Rd., Irving, TX 75061, under which an entity owned entirely by Ira Goldfarb is the landlord. The lease term is through September 15, 2025, with two

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five-year options to extend, at a monthly lease term of $10.0 thousand, with approximately a 3% annual escalation of lease payments commencing September 15, 2021.

On May 22, 2024, the Company entered into an industrial lease (the “Lease”) with USCIF Pinnacle Building B LLC, a Delaware limited liability company. Pursuant to the terms of the Lease, the Company will lease approximately 324,000 rentable square feet from the Lessor at 4024 Rock Quarry Road, Dallas, Texas for a term of approximately 62 months, which the Company intends to use as industrial and manufacturing space. The term of the Lease commenced on May 22, 2024. The Lease provides for graduated rent payments starting at $122,175 per month, and increasing up to $297,289.14 per month by the end of the Lease, plus taxes, insurance and common area maintenance costs. The Company is required to provide a security deposit in the amount of $1,000,000 in connection with the Lease. The Lease may be renewed upon the extension in writing between the Company and the Lessor for a period of up to 60 months.

On January 19, 2024, the Company entered into a sublease agreement (the “Sublease Agreement”) with Papsa Merx S. de R.S. de C.V., a corporation registered in Mexico City, Mexico (the “Sublessor”). Pursuant to the terms of the Sublease Agreement, the Company will sublease approximately 141 rentable square meters at Av. Roble 660, Valle del Campestre, 66265 San Pedro Garza García Municipality, Nuevo León, 66269 (the “Premises”) for a term of approximately seventeen months (the “Term”), which the Company intends to use as office space. The Term of the Lease Agreement will commence on February 1, 2024 (the “Sublease Commencement Date”). The Sublease Agreement provides for rent payments at fixed price of $5.25 thousand per month plus the corresponding Value Added Tax (“VAT”) for the duration of the Term. The Company is also responsible for operating expenses of the Premises, which includes a maintenance fee, electricity and internet services. The Company is required to provide a deposit of guarantee in the amount of $5.25 thousand in connection with the Sublease Agreement. The Sublease Agreement does not have a renewal period.

On October 26, 2023, the Company entered into a lease agreement (the “2023 Lease Agreement”) with Prologis, Inc., a Maryland corporation (the “Landlord”). Pursuant to the terms of the 2023 Lease Agreement, beginning on November 1, 2023 the Company leases approximately 51,264 rentable square feet at Stemmons 10, 308 Mockingbird Lane, Dallas, TX 75247 for a term of approximately five years and two months (the “Initial Term”), which the Company intends to use as warehousing and distribution space. The 2023 Lease Agreement provides for base rent payments starting at approximately $42.5 thousand per month (taking into consideration an initial phase-in of the base rent obligation) in the first year of the Initial Term, and increase each year, up to approximately $51.7 thousand per month during the last year of the Initial Term. The 2023 Lease Agreement may be extended for a period of five years, at the option of the Company, at a rate to be based on a fair market rent rate determined at the time of the extension.

Off-Balance Sheet Arrangements

None.

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, 2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Commodity Price Risk

We do not expect any significant effects from commodity price risk outside of inherent inflationary risks.

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Interest Rate Risk

We are not a party to agreements that subject us to floating rates of interest and do not anticipate entering into any transactions that would expose us to any direct interest rate risk.

Foreign Currency Risk

We did not hold a material amount of cash in foreign jurisdictions as of September 30, 2024. However, we anticipate that as our foreign operations grow, we may hold more cash in foreign jurisdictions, particularly Mexico, Colombia and China, and possibly expose ourselves to greater currency fluctuation risk than we currently experience.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure the information we are required to disclose in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based on their evaluations as of September 30, 2024, our Chief Executive Officer, Claudia Goldfarb, and our Interim Chief Financial Officer, Brendon Fischer concluded that our disclosure controls and procedures are effective to accomplish their objectives and to ensure the information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting during the nine months ended September 30, 2024 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time in the ordinary course of business, we are a party to various types of legal proceedings. We do not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors.

Summary Risk Factors

The risk factors described below are a summary of the principal risk factors associated with an investment in the Company. These are not the only risks we face. You should carefully consider these risk factors, together with the risk factors set forth in Item 1A of our Annual Report on Form 10-K and the other reports and documents filed by us with the SEC.

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

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

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

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

•The retail food and non-chocolate confectionary and freeze dried candy segments are highly competitive. If new entrants with greater resources continue to take market share, or our competitors are more successful or offer better value to consumers, our business could decline.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sow Good was formed and commenced commercial sales of our products in 2021, and in 2023 we started producing and commercializing our freeze dried candy treats, including our Sow Good freeze dried candy line and our Crunch Cream line. On October 1, 2020, we completed our acquisition of S-FDF, LLC (the “Seller”), a Texas limited liability company, pursuant to an Asset Purchase Agreement, between the Company and the Seller, dated June 9, 2020, as subsequently amended effective October 1, 2020 (the “Asset Purchase Agreement”). The assets we purchased under the Asset Purchase Agreement were of a development stage business without any major customers or history of operations upon which to forecast future business trends. As a result, we have a limited operating history and limited experience manufacturing and selling our products, establishing relationships with consumers, customers, suppliers, vendors and distributors and building our brand reputation. These and other factors combine to make it more difficult for us to accurately forecast our future operating results, which in turn makes it more difficult for us to prepare accurate budgets and implement strategic plans. We expect that this uncertainty will continue to exist in our business for the foreseeable future. If we do not address these risks and uncertainties successfully, our operating results could differ materially from our estimates and forecasts, and from the expectations of investors or analysts, which could harm our business and result in a decline in the trading price of our common stock.

As a developing company, we will need to adopt and implement a plan to increase awareness of our products, secure distribution channels, and foster and strengthen our supply, manufacturing and distribution relationships. It is likely our strategic priorities will need to evolve over time and our business would be materially and adversely affected if we do not properly adapt our

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strategies to our changing needs and changes in the market. As our operations develop and grow, we expect to experience significant increases in our working capital requirements. Even if we obtain additional capital and achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may be unable to sustain or increase profitability and our failure to do so would adversely affect the Company’s business, including our ability to raise additional funds.

In the years ended December 31, 2023 and 2022, we incurred net losses of approximately $3.1 million and $12.1 million, respectively. In the three months ended September 30, 2024, we incurred net losses of approximately $3.4 million, as compared to a net income of $334.0 thousand in the three months ended September 30, 2023. We anticipate our operating expenses and capital expenditures will increase in the foreseeable future as we seek to expand our retail distribution, invest in our approach to build brand awareness, leverage our product development capabilities, and invest in production capacity and automation. As a result of our continuing investments to expand our business in these and other areas, we expect our expenses to increase, and we may not achieve or maintain profitability in the foreseeable future. Even if we are successful in broadening our consumer base, and increasing revenues from new and existing customers, we may not be able to generate additional revenues in amounts that are sufficient to cover our expenses. We may incur significant losses for a number of reasons, including as a result of the other risks and uncertainties described elsewhere in this filing. We cannot assure you that we will continue to achieve profitability in the future or that we will sustain profitability over any particular period of time.

We may need additional funding in order to fund our existing commercial operations, commercialize new products and grow our business.

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

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

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

•provide for additional capacity;

•increase our sales and marketing efforts and address competitive developments;

•provide for supply and inventory costs;

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

•acquire, license or invest in new technologies;

•acquire or invest in complementary businesses or assets; and

•finance capital expenditures and general and administrative expenses.

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

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•our ability to achieve revenue growth and improve gross margins;

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

•the effect of competing market developments including new market entrants with greater resources; and

•costs related to international expansion.

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

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

Our revenues grew from approximately $88.4 thousand for the year ended December 31, 2021 to approximately $428.1 thousand for the year ended December 31, 2022 and approximately $16.1 million for the year ended December 31, 2023. Our revenues for the nine months ended September 30, 2024 and 2023 were $30.6 million and $6.5 million, respectively. We expect that, in the future, as our revenue increases to higher levels, our revenue growth rate will decline. We also believe that growth of our revenue depends on several factors, including our ability to:

•expand our production capacity;

•increase awareness of our brand;

•expand our existing channels of distribution;

•develop additional channels of distribution;

•keep existing customers

•grow our customer base;

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

•effectively introduce new products;

•manufacture at a scale that satisfies future demand; and

•effectively source key raw materials.

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

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

Our strategy envisions the expansion of our business. If we fail to effectively manage our growth, our financial results could be adversely affected. Our rapid growth has placed and may continue to place significant demands on our organizational, administrative and operational infrastructure, including manufacturing operations, quality control, shipping, technical support and customer service, sales force management and general and financial administration. We must continue to refine and expand our

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business capabilities, including in sales, marketing, product development, information technology, equipment, facilities and personnel, as well as our systems and processes and our access to financing sources. We will also need to improve our operational, financial and management controls as well as our reporting systems and procedures. As we grow, we must continue to hire, train, supervise and manage new employees.

We cannot assure that we will be able to:

•meet our capital needs;

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

•allocate our human resources optimally;

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

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

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

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

•identify products that will be viewed favorably by customers;

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

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

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

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

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

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

As a public company, we are required to comply with the requirements of the Sarbanes-Oxley Act, including, among other things, maintaining effective disclosure controls and procedures and internal control over financial reporting. We continue to develop and refine our disclosure controls and other procedures that are designed to ensure that the information we are required to disclose in

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the reports that we file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers.

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

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

Risks Related to Our Business and Industry

The retail food and non-chocolate confectionary and freeze dried candy segments are highly competitive. If new entrants with greater resources continue to take market share, or our competitors are more successful or offer better value to consumers, our business could decline.

We operate in a very competitive environment that is characterized by competition from a number of other retailers in the market in which we operate. We compete with large national and regional food retail companies, some of which have greater financial and operational resources than us, and with smaller local retailers, some of which may have lower administrative costs than us. We have become aware of certain significantly larger competitors using their market clout and marketing spend to limit our current and future customers from purchasing our products or reducing our shelf space. Our ability to keep our current customers, or grow our SKU portfolio on their shelves, and continue to expand our sales with new customers will depend on our competitors’ ability to leverage their market clout and financial resources to limit our access to consumers and our ability to compete with these larger competitors. In addition, we may be at a competitive disadvantage relative to large national and regional competitors whose operations are more geographically diversified than ours. Any changes in our competitors’ merchandising and operational strategies could negatively affect our sales and profitability. In particular, if competitors seek to gain or retain market share by reducing prices, we would likely be forced to reduce our prices on similar product offerings in order to remain competitive, which may result in a decrease in our market share, revenues and profitability and may require a change in our operating strategies.

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

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

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

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

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

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

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

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

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

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

During the year ended December 31, 2023, three key suppliers, Redstone Foods, Albanese and Jiangsu Shengifan Foodstuff accounted for approximately 61% of our total raw material and packaging purchases. For the nine months ended September 30, 2024 and 2023, our top three suppliers accounted for 76% and 69%, respectively, of our purchases from vendors. Additionally, we do not have any contractual obligations for the continued supply of raw material and packaging from these key suppliers. As a result

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of this concentration in our supply chain, our business and operations would be negatively affected if any of our key suppliers were to experience significant disruption affecting the price, quality, availability or timely delivery of their products. While we have not had supply chain disruptions to date, and believe that we can quickly find additional sources for our raw material and packaging, in the event that our supply from our current suppliers is interrupted, our operations may be interrupted in the interim resulting in lost revenue, added costs such as, without limitation, shipping costs, and distribution delays that could harm our business and customer relationships until we are able to identify one or more alternative suppliers.

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

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

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

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

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

•the size and composition of our customer base;

•the number of products that we feature on our website;

•the quality and responsiveness of customer service;

•our selling and marketing efforts;

•the quality and price of the products that we offer;

•the convenience of the shopping experience that we provide;

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

•our reputation and brand strength.

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

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

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

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

As is typical in a rapidly evolving industry, the development process and demand and market acceptance for recently introduced products are subject to a high level of uncertainty and risk. Because the market for our products is new and evolving, it is difficult to predict with any certainty the size of this market and its growth rate, if any, and costs of manufacturing as a product is developed. We cannot guarantee that we will be successful in developing new or existing products or manufacturing new products, that our products will perform as expected, or that a market for our products will develop or that demand for our products will be sustainable. If we fail to develop or manufacture new products, or the market for new products fails to develop, develops more slowly than expected or becomes saturated with competitors, our business, financial condition and operating results would be materially adversely affected.

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

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

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

Maintaining a good reputation is critical to our business. Our reputation or brand image could be adversely impacted by, among other things, issues with the quality of our products, any failure to maintain high ethical, social and environmental sustainability practices for our operations, the views of management and other stakeholders, our impact on the environment, public pressure from investors or policy groups to change our policies, consumer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, including opportunities we choose to forego due to management philosophy, consumer perceptions of our use of social media, or consumer perceptions of statements made by us, our employees and executives, agents or other third-parties. Operationally, recent heat waves from July through October in the third quarter of 2024 have presented challenges in transporting our freeze-dried treats. These conditions led to reduced shipments, higher inventory levels, and a decline in revenue. Additionally, some candy transported via external distribution channels during the extreme summer heat melted, impacting its shelf performance. We are actively working to remove affected products from shelves and replace them promptly to support recovery in product velocity. In the short term, these measures will impact our market reputation, sell-through rates, and operational results as we address these unforeseen challenges.

In addition, negative publicity, including as a result of the social or political views of our management, employees, customers or vendors, or misconduct by our consumers, customers, vendors or employees, can also spread rapidly through social media. Should we not respond in a timely and appropriate manner to address negative publicity, our brand and reputation may be significantly

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harmed. Damage to our reputation or brand image or loss of consumer confidence in our services could adversely affect our business and financial results as well as require additional resources to rebuild or repair our reputation.

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

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

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

In addition, the price of candy, which is currently our main ingredient in our products, can be volatile. The candy of the quality we seek tends to trade on a negotiated basis, depending on supply and demand at the time of the purchase. Further, we intend to begin production of our own candy as feedstock in the near term. An increase in pricing of any candy or candy production ingredients that we are going to use in our products could have a significant adverse effect on our profitability. We cannot assure you that we will be able to secure our candy or candy ingredient supplies.

In addition, our costs are affected by general inflationary pressures related to transportation and shipping costs, particularly to the extent we have additional retail sales and smaller order quantities. As we move toward more refrigerated shipping solutions to mitigate the impact of extreme heat on our product quality, we will incur additional shipping expense. Such inflationary pressures could be passed on to the customer and could cause the price of our products to increase, which may impact the attractiveness of our freeze dried treats relative to other candy or snack options with cost sensitive consumers. We are also subject to a reduction in our profitability due to increased labor costs for our employees. As we look to expand our distribution and market, we may not be able to increase our sales prices to absorb these costs. We cannot provide assurances that we will be able to maintain profitability consistent with our goals. As we plan for the acquisition of additional freeze driers, we also anticipate that the costs for this equipment will be more than as well as the lead time to receive the equipment once ordered will be longer than we have planned. This could increase our capital needs and also delay our ability to ramp up production in a timely manner to correspond to demand.

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

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

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

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

Our confidentiality agreements with our employees, consultants, independent contractors and suppliers generally require that all information made known to them be kept strictly confidential. Nevertheless, trade secrets are difficult to protect. Our confidentiality agreements may not effectively prevent disclosure of our proprietary information and may not provide an adequate

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remedy in the event of unauthorized disclosure of such information. In addition, others may independently discover our trade secrets, in which case we would not be able to assert trade secret rights against such parties. Further, some of our manufacturing know-how and process has been implemented by or with our co-manufacturers. As a result, we may not be able to prevent others from using similar processes, which could adversely affect our business. In addition, we have not historically obtained confidentiality agreements or invention assignment agreements from all employees and consultants, which could impact our ability to protect our intellectual property and proprietary technology.

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

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

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

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

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

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

Food safety is a top priority for us, and we dedicate substantial resources to ensure that our customers enjoy safe and high-quality treats. However, foodborne illnesses and other food safety issues have occurred in the retail food industry in the past and could occur in the future. Also, our reliance on third-party food suppliers, distributors and food delivery aggregators increases the risk that foodborne illness incidents could be caused by factors outside of our control. A failure or perceived failure to meet our quality or safety standards, including product adulteration, contamination, or tampering, or allegations of mislabeling, whether actual or

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perceived, could occur in our operations or those of our co-manufacturers, distributors or suppliers. This could result in time consuming and expensive production interruptions, negative publicity, the destruction of product inventory, the discontinuation of sales or our relationships with such co-manufacturers, distributors, or suppliers, lost sales due to the unavailability of product for a period of time and higher-than-anticipated rates of returns of goods. The occurrence of health-related illnesses or other incidents related to the consumption of our products, including allergies, excessive consumption or death to a consumer, could also adversely affect the price and availability of affected ingredients, resulting in higher costs, disruptions in supply and a reduction in our sales.

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

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

Product liability exposure may subject us to significant liability.

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

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

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

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

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suffer losses. Inventory, equipment, and business interruption losses may not be covered by our insurance policies. Additionally, insurance coverage may not be available to us at commercially acceptable premiums in the future, or at all.

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

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

We sell a substantial portion of our products through retailers such as Five Below, Target, Misfits Market/Imperfect Foods, TJX Canada, Big Lots, Hy-Vee, Cracker Barrel, and Circle K, and distributors such as Redstone Foods, CB Distributors and Alpine Foods, and online through our website. The largest four purchasers of our products for the nine months ended September 30, 2024 accounted for approximately 72.7% of our revenues for that period.

The loss of, or business disruption at, one or more of these retailers or distributors or a negative change in our relationship with one of our key retailers or a disruption to any one of our sales channels could have a material adverse effect on our business. We have become aware of certain larger competitors using their market clout and marketing spend to limit certain of our key retailers from purchasing our products or reducing our shelf space. If we do not effectively compete with this larger competitors, maintain our relationship with existing retailers and distributors or develop relationships with new retailers and distributors, the growth of our business may be adversely affected, and our business may be harmed.

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

•the level of demand for our brands and product types;

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

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

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

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

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

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

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

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

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with health insurance coverage or workers’ compensation insurance), our operating expenses could increase and our business, financial condition and results of operations could be materially and adversely affected.

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

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

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

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

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

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

Inventory levels in excess of distributor and/or consumer demand may result in inventory write-downs or an increase in inventory holding costs and a potential negative effect on our liquidity. For example, as of September 30, 2024, our inventory grew to $19.4 million, relative to our cash and cash equivalents of $6.0 million, primarily as a result of our decision to halt shipping of our products during the third quarter and the beginning of October. As we plan to continue expanding our product offerings, we expect to include more products in our inventory, which will make it more challenging for us to manage our inventory effectively and will put more pressure on our storing system. If we fail to manage our inventory effectively, we may be subject to a heightened risk of inventory obsolescence, a decline in inventory values, and significant inventory write-downs or write-offs. In addition, we may be required to lower sale prices in order to reduce inventory level, which may lead to lower gross margins. High inventory levels may also require us to commit substantial capital resources, preventing us from using that capital for other important purposes. Any of the above may materially and adversely affect our results of operations and financial condition.

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

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

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

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

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

Our collection, use, and disclosure of information, including personal information, is subject to federal, state and foreign privacy and security regulations and binding industry standards; new or changed regulations could impose significant costs to our operation and failure to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm.

We are subject to numerous federal, state and local rules and regulations relating to the collection, processing, storing, sharing, disclosure, use, and security of personal information and other data. We also are or may in the future be subject to contractual obligations to protect data. We strive to comply with applicable laws, contractual obligations, and our own policies pertaining to the processing of personal information. Nevertheless, such laws, regulations, and other obligations may require us to change our business practices and may negatively impact our ability to expand our business and pursue business opportunities. We may incur significant

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expenses to comply with the laws, regulations, and other obligations that apply to us. Additionally, the privacy- and data protection-related laws, rules, and regulations applicable to us may be interpreted and applied in new ways or in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Further, new laws, rules, and regulations could be enacted with which we are not familiar or with which our practices do not comply.

Several U.S. jurisdictions have passed omnibus privacy laws that apply to us now or may apply in the future as we grow and expand, and other jurisdictions are considering imposing additional restrictions. Examples include the California Consumer Privacy Act (the “CCPA”), as amended by the California Privacy Rights Act (collectively, “CPRA”). Since the passage of the CCPA, more than ten (10) U.S. states have enacted omnibus privacy laws, which will go into effect at varying dates through 2026. The CCPA and other state omnibus laws provide consumers with substantial rights over their personal information, impose notice obligations on companies, and require companies to implement programs to manage such rights. As Company operates in the business-to-business space, Company will not be directly subject to the majority of the enacted state omnibus privacy laws. Nonetheless, to the extent that certain of these laws are applicable to us, and to the extent that other states enact laws in the future that are or may be applicable to us, we will need to expend resources to evaluate such regulations and implement compliance solutions. If we engage in email marketing or certain telemarketing activities, we will be subject to issue-specific laws pertaining to the use of information, including laws on marketing and advertising, such as the Telephone Consumer Protection Act and the Telemarketing Sales Rule and the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, and their state counterparts.

Further, if our operations bring us into the scope of non-U.S. privacy and data protection regulations, we may be subject to additional privacy and data protection regulations, which may require us to spend resources to comply with such programs and expose us to risk for any actual or perceived failure to comply.

We also are or may be subject to binding industry standards, including the Payment Card Industry Data Security Standard (“PCI-DSS”), due to our acceptance of payment cards. If we or our payment processors fail to comply with the PCI-DSS, we may incur significant fines or liability and lose access to major payment card systems. Industry groups may in the future adopt additional self-regulatory standards by which we are legally or contractually bound.

Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules. Any failure or perceived failure by us to comply with privacy or data protection laws, policies, or industry standards or any security incident that results in the unauthorized release of personal information may result in governmental enforcement actions and investigations, fines and penalties, litigation and/or adverse publicity, including by consumer advocacy groups, and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business. Such failures could have a material adverse effect on our financial condition and operations. If the third parties we work with violate applicable laws, contractual obligations or suffer a security incident, such violations may also put us in breach of our obligations under privacy laws and regulations and/or could in turn have a material adverse effect on our business.

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

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

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

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

•reformulating our treats to meet ingredients requirements of foreign jurisdictions;

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

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

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

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

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

•increased financial accounting and reporting burdens and complexities;

•longer sales cycles;

•requirements or preferences for domestic products;

•differing technical standards, existing or future regulatory and certification requirements and required features and functionality;

•orders restricting or blocking our services in particular geographies, or other government-imposed remedies as a result of content hosted on our services;

•political and economic conditions and uncertainty in each country or region in which we operate and general economic and political conditions and uncertainty around the world;

•changes in a specific country’s or region’s political or economic conditions;

•compliance with laws and regulations for non-U.S. operations, including anti-bribery laws, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our treats and develop our business in certain non-U.S. markets, and the risks and costs of non-compliance;

•heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact our financial condition and result in restatements of our consolidated financial statements;

•heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact our financial condition and result in restatements of our consolidated financial statements;

•fluctuations in currency exchange rates and related effects on our results of operations;

•difficulties in repatriating or transferring funds from or converting currencies in certain countries;

•communication and integration problems related to entering new markets with different languages, cultures and political systems;

•new and different sources of competition;

•differing labor standards, including restrictions related to, and the increased cost of, terminating employees in some countries;

•the need for localized subscription agreements;

•the need for localized language support and difficulties associated with delivering support, training and documentation in languages other than English;

•increased reliance on channel partners;

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•reduced protection for intellectual property rights in certain non-U.S. countries and practical difficulties of obtaining, maintaining, protecting and enforcing such rights abroad; and

•compliance with the laws of numerous foreign taxing jurisdictions, including withholding tax obligations, and overlapping of different tax regimes.

Any of these risks and challenges could adversely affect our operations, reduce our revenue or increase our operating costs, each of which could adversely affect our ability to expand our business outside of the United States and thereby our business more generally, as well as our results of operations, financial condition and growth prospects.

Compliance with laws and regulations applicable to our international operations substantially increases our cost of doing business. We may be unable to keep current with changes in government requirements as they change from time to time. Failure to comply with these regulations could have adverse effects on our business. In many foreign countries it is common for others to engage in business practices that are prohibited by our internal policies and procedures or U.S. or other regulations applicable to us. Although we have implemented policies and procedures designed to ensure compliance with these laws and policies, there can be no assurance that our employees, contractors, partners and agents will comply with these laws and policies. Violations of laws or our policies by our employees, contractors, partners or agents could result in delays in revenue recognition, financial reporting misstatements, enforcement actions, disgorgement of profits, fines, civil and criminal penalties, damages, injunctions, other collateral consequences and increased costs, including the costs associated with defending against such actions, or the prohibition of the importation or exportation of our treats, each of which could adversely affect our business, results of operations and financial condition.

Risks Related to the Regulatory Environment

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

Our operations are subject to extensive regulation by the FDA, and other federal, state, and local authorities in the U.S. and in any other jurisdictions in which we may sell our products. Specifically, for products manufactured or sold in the U.S., we are subject to the requirements of the Federal Food, Drug, and Cosmetic Act (“FDCA”) and regulations promulgated thereunder by the FDA. This comprehensive regulatory program governs, among other things, the manufacturing, ingredients, packaging, labeling, and safety of food. Under this program, the FDA requires that facilities that manufacture food products comply with a range of requirements, including hazard analysis and preventative controls regulations, current good manufacturing practices (“GMPs”), and supplier verification requirements. Our co-manufacturers prepare and package freeze dried candies per our specifications at their processing facilities and are subject to periodic inspection by foreign, federal, state, and local authorities. If our products are not manufactured, processed, packaged and labeled in conformity with our specifications and the strict regulatory requirements of the FDA or other regulatory authorities, we or our co-manufacturers may be subject to adverse inspectional findings or enforcement actions, which could materially impact our ability to market our products or result in a recall of our product, that have already been distributed. If the FDA or another regulatory authority determines that we or our suppliers or other business partners have not complied with applicable regulatory requirements, our business may be adversely impacted.

We seek to comply with applicable laws and regulations through expert personnel with experience to ensure quality-assurance compliance and contracting with third-party laboratories that conduct analyses of new products to establish nutrition labeling information and to help identify certain potential contaminants before distribution. Our existing compliance structures may be insufficient to address the current or changing regulatory environment. This may result in gaps in compliance coverage or the omission of necessary new compliance activity. The failure to comply with applicable laws and regulations, or maintain permits, licenses, or registrations relating to our or their operations, could subject us to civil remedies or penalties, including fines, injunctions, product recalls, warning letters, or restrictions on the marketing or manufacturing of products, as well as potential criminal sanctions, any of which could result in increased operating costs and reputational harm. In addition, changes to laws, regulations, or policies applicable to foods could leave us vulnerable to adverse governmental action and materially adversely affect our business, operating results, and financial condition.

Even inadvertent, non-negligent or unknowing violations of federal, state, or local regulatory requirements could expose us to adverse governmental action and materially adversely affect our business, operating results, and financial condition.

The FDCA, which governs the shipment of foods in interstate commerce, generally does not distinguish between intentional and unknowing, non-negligent violations of the law’s requirements. Most state and local laws operate similarly. Consequently, almost any deviation from subjective or objective requirements of the FDCA, or applicable state or local laws, leaves us vulnerable to a

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variety of administrative actions, enforcement actions, and/or civil and criminal penalties. Failure to comply with laws and regulations could materially adversely affect our business, operating results, and financial condition.

Risks Related to Ownership of Our Common Stock

We may not be able to maintain a listing of our common stock on the Nasdaq Capital Market.

Our common stock is currently listed on the Nasdaq Capital Market. We must meet certain financial and liquidity criteria to maintain the listing of our common stock on the Nasdaq Capital Market. If we fail to meet any listing standards or if we violate any listing requirements, our common stock may be delisted. A delisting of our common stock from the Nasdaq Capital Market may materially impair our stockholders’ ability to buy and sell our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock. The delisting of our common stock could significantly impair our ability to raise capital and the value of your investment.

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

The market price of our common stock is likely to continue to be highly volatile and could be subject to wide fluctuations in response to a number of factors, some of which are beyond our control, including but not limited to:

•dilution caused by our issuance of additional shares of common stock and other forms of equity securities, which we expect to make in connection with future capital financings to fund our operations and growth, to attract and retain valuable personnel and in connection with future strategic partnerships with other companies;

•quarterly variations in our revenues and operating expenses as we commence our production and sales;

•changes in the valuation of similarly situated companies, both in our industry and in other industries sales;

•challenges associated with timely SEC filings;

•changes in analysts’ estimates affecting our company, our competitors and/or our industry;

•changes in the accounting methods used in or otherwise affecting our industry;

•additions and departures of key personnel;

•fluctuations in interest rates and the availability of capital in the capital markets;

•significant sales of our common stock following the registration of shares;

•any guidance we may provide to the public, any changes in this guidance, or our failure to meet this guidance;

•announcements of new products by us or our competitors, and competition from new or existing products;

•addition or loss of significant customers, suppliers or other business partners;

•new laws or regulations applicable to our business or products, or changes to the interpretation of existing laws or regulations;

•announcements of significant acquisitions, strategic partnerships, or joint ventures by us or our competitors;

•outcome of litigation, regulatory matters, enforcement actions, or other disputes that may arise; and

•general economic, industry, and market conditions.

These and other factors are largely beyond our control, and the impact of these risks, singly or in the aggregate, may result in material adverse changes to the market price of our common stock and our results of operations and financial condition.

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Further, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the trading prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations may negatively impact the trading price of our common stock.

In the past, companies that have experienced volatility in the trading of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could harm our business.

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

We have never declared or paid any dividends on our common stock and do not intend to pay any dividends in the foreseeable future. We anticipate that we will retain all of our future earnings if any, to service debt, fund growth, develop our business, fund working capital needs, and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors should rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment in our common stock.

Future sales and issuances of our common stock, or securities convertible into or exercisable for our common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause the trading price of our common stock to decline.

In the future, we may sell shares of our common stock, or securities convertible into or exercisable for our common stock, in one or more transactions at prices and in a manner we determine from time to time. We also expect to issue additional shares of our common stock to directors, officers, employees, and consultants pursuant to our equity incentive plans. If we sell shares of our common stock, or securities convertible into or exercisable for our common stock, in subsequent transactions, or if shares of our common stock are issued pursuant to our equity incentive plans, investors may be materially diluted. In addition, new investors in such subsequent transactions could receive securities with rights senior to those of holders of our common stock.

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

We are a “smaller reporting company” under applicable SEC rules, meaning that the market value of our common stock held by non-affiliates is less than $700.0 million and our annual revenue was less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million, or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates was less than $700.0 million. As a smaller reporting company, we have chosen to present only the two most recent years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosure in this Annual Report on Form 10-K, and we have taken advantage of reduced disclosure obligations regarding executive compensation.

Our quarterly operating results may fluctuate significantly, period-to-period comparisons of our results may not be meaningful, and these fluctuations may cause the price of our common stock to decline.

Our quarterly results, including our revenues, operating expenses, operating margins, and profitability, may fluctuate significantly in the future, and period-to-period comparisons of our results may not be meaningful. Accordingly, the results of any one quarter should not be viewed as a prediction or indication of our future performance. In addition, our quarterly results may not fully reflect the underlying performance of our business.

Factors that may cause fluctuations in our quarterly results include, but are not limited to:

•our inability to retain our existing customers, and expand sales of our products to our existing customers;

•our ability to attract new customers and consumers to our brand, the type and amount of products purchased, and the cost of acquisition;

•the mix of our products sold during the period, and the gross margins associated with those sales;

•changes in our pricing policies, or those of our competitors;

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•the amount and timing of discounts, rebates, or promotional activity;

•the amount and timing of costs and operating expenses related to the expansion of manufacturing capacity, distribution channels, production capabilities, and operational infrastructure;

•the amount and timing of costs and operating expenses associated with developing and commercializing new products;

•the amount and timing of costs and operating expenses related to the acquisition of businesses, assets, technologies, or intellectual property rights;

•the timing and impact of any security breaches, service outages or other performance problems with our technology infrastructure and software solutions;

•the timing and costs associated with legal or regulatory actions;

•changes in the competitive dynamics of our industry, including innovation or consolidation among customers, suppliers, or competitors;

•loss of our executive officers or other key employees;

•trends and conditions impacting the consumer packaged goods industry, and the freeze dried goods category in particular;

•the impacts and disruptions caused by the COVID-19 pandemic, or any other pandemics, epidemics, disease outbreak, or similar widespread public health concern on our business and operating results, or incidence of disease;

•the effects of global events, such as the Russia-Ukraine and Israel-Hamas wars, on our business and the global economy; and

•general economic, political, social, and market conditions, including inflationary pressures.

Fluctuations in quarterly results, or for any other period, may negatively impact the value of our common stock, regardless of whether they impact or reflect the overall performance of our business. If our quarterly results, or results for any other period, fall below the expectations of investors or any securities analysts who follow our stock, or below any guidance we may provide, the trading price of our common stock could decline substantially.

Risks Related to Accounting and Tax Matters

Changes in tax laws or regulations that are applied adversely to us in the various tax jurisdictions to which we are subject could increase the costs of our products and harm our operating results.

New income, sales, use, or other tax laws, statutes, rules, regulations, or ordinances could be enacted at any time. Those enactments could harm our business, operating results, and financial condition. Further, existing tax laws, statutes, rules, regulations, or ordinances could be interpreted, changed, modified, or applied adversely to us. These events could require us to pay additional tax amounts on a prospective or retroactive basis, as well as require us to pay fines, and penalties, and interest for past amounts deemed to be due, any of which would harm our operating results.

Changes in existing financial accounting standards or practices may require us to restate our reported financial results or harm our operating results.

GAAP is subject to interpretation by the Financial Accounting Standards Board, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of a change. Adoption of such new standards and any difficulties in the implementation of changes in accounting principles, including the ability to modify our accounting systems, could cause us to fail to meet our financial reporting obligations, which could lead to regulatory enforcement actions, cause investors to lose confidence in our financial reports, and result in a decline in the trading price of our common stock.

General Risks

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The conflict in the Middle East between Israel and its adversaries, including Hamas, Hezbollah and Iran, may affect our operations.

A portion of our sales come from Israel, and because of this our business and operations are directly affected by economic, political, geopolitical and military conditions in Israel.

Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and terrorist organizations active in the region. These conflicts have involved missile strikes, hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions in Israel.

During the summer of 2006, Israel was engaged in an armed conflict with Hezbollah, a Lebanese Islamist Shiite militia group and political party. In December 2008 and January 2009 there was an escalation in violence among Israel, Hamas, the Palestinian Authority and other groups, as well as extensive hostilities along Israel’s border with the Gaza Strip, which resulted in missiles being fired from the Gaza Strip into Southern Israel. During November 2012 and from July through August 2014, Israel was engaged in an armed conflict with a militia group and political party who controls the Gaza Strip, which resulted in missiles being fired from the Gaza Strip into Southern Israel, as well as at areas more centrally located near Tel Aviv and at areas surrounding Jerusalem. On October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. Moreover, the clash between Israel and Hezbollah in Lebanon and Iran may escalate in the future into a greater regional conflict.

Any hostilities involving Israel, or the interruption or curtailment of trade within Israel or between Israel and its trading partners could adversely affect our operations and results of operations or could make it more difficult for us to raise capital. The conflict situation in Israel could also cause disruptions in our supply chain and international trade, including the export of our products. The conflict situation in Israel could also result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.

It is currently not possible to predict the duration or severity of the ongoing conflict or its effects on our business, operations and financial conditions. The ongoing conflict is rapidly evolving and developing, and could disrupt our business and operations in Israel or hamper our ability to raise additional funds, among others.

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

Our future success heavily depends on the continued service of our senior management and other key employees, especially the continued contributions of Ira and Claudia Goldfarb, our Executive Chairman and Chief Executive Officer, respectively, whose knowledge, leadership and technical expertise would be difficult to replace. Our executive officers or key personnel could terminate their employment with us at any time without penalty. In addition, we do not maintain key person life insurance policies on any of our employees. If one or more of our senior executives is unable or unwilling to continue to work for us in the present position, we may have to spend a considerable amount of time and resources searching, recruiting, and integrating a replacement into our operations, which would substantially divert management’s attention from our business and severely disrupt our business. This may also adversely affect our ability to execute our business strategy.

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

Our success depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions and the availability of discretionary income. There is no certainty regarding economic conditions in the United States, and credit and financial markets and confidence in economic conditions could deteriorate at any time. Accordingly, we may experience declines in revenue during economic turmoil or during periods of uncertainty. In addition, sustained periods of inflation may result in a decline in the amount of discretionary consumer spending and otherwise hamper our gross margins. Future economic conditions such as employment levels, business conditions, housing starts, interest rates, inflation rates, energy and fuel costs and tax rates could reduce consumer spending or change consumer purchasing habits. Any material decline in the amount of discretionary spending, leading cost-conscious consumers to be more selective in food products purchased, could have a material adverse effect on our revenue, results of operations, business and financial condition.

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

From time to time, we may consider opportunities to acquire other products or businesses that may expand the breadth of our markets or customer base. The success of future acquisitions will be dependent upon our ability to effectively integrate the acquired products and operations into our business. Integration can be complex, expensive and time-consuming. The failure to successfully integrate acquired products or businesses in a timely and cost-effective manner could materially adversely affect our business, prospects, results of operations and financial condition. The diversion of our management’s attention and any difficulties encountered in any integration process could also have a material adverse effect on our ability to manage our business. In addition, the integration process could result in the loss of key employees, the disruption of ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, any of which could adversely affect our ability to maintain the appeal of our brand and our relationships with customers, employees or other third parties or our ability to achieve the anticipated benefits of such acquisitions and could harm our financial performance. We do not know if we will be able to identify acquisitions we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully integrate any acquired products or businesses. Additionally, an additional risk inherent in any acquisition is that we fail to realize a positive return on our investment.

Claims, legal proceedings, and other disputes could divert our management’s attention, have a negative impact on our reputation, expose us to significant liabilities, and make it more difficult to obtain insurance coverage.

From time to time, we may be party to various claims, legal proceedings, and other disputes. We evaluate these matters to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we may establish reserves, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from our assessments and estimates.

Even when not merited, the defense of legal proceedings may divert our management’s attention, and we may incur significant expenses in defending these matters. The results of legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these proceedings may result in adverse monetary damages, penalties, or injunctive relief against us, which could have a material adverse effect on our operating results, financial condition, and liquidity. Any legal proceedings or other disputes, even if fully indemnified or insured, could have a negative impact on our reputation, and make it more difficult to compete effectively or to obtain adequate insurance in the future.

Further, while we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions and caps on amounts recoverable. Even if we believe a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and amount of our recovery.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following issuances of our securities during the nine months ended September 30, 2024 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 March 28, 2024, the Company raised $3,738,078 of capital from the sale of 515,597 newly issued shares of common stock at a share price of $7.25 in a private placement exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. Investors in the private placement included Sow Good’s Chief Executive Officer and Executive Chairman, in addition to certain other Sow Good board members, related parties, and accredited investors. The proceeds were used in funding incremental capital expenditures and general operating expenses.

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On May 2, 2024, the Company priced its registered underwritten public offering of 1,200,000 shares of the Company’s common stock, par value $0.001 at a price of $10.00 per share. In addition, the Company granted the underwriters a 30-day overallotment option to purchase up to 180,000 additional shares of common stock and issued to the underwriters warrants to purchase 120,000 shares of Common Stock. On May 1, 2024, the Company received approval to list its common stock on the Nasdaq Capital Market stock exchange (“Nasdaq”). Trading on Nasdaq commenced on May 2, 2024. On May 9, 2024, the underwriters purchased all of the Additional Shares pursuant to the full exercise of their overallotment option. Including proceeds from the Additional Shares, the proceeds from the public offering were approximately $11,974,976 net of offering expenses and underwriting discounts and commissions. The proceeds are currently anticipated to be used for general corporate purposes, which may include capital expenditures for the expansion of our production capacity, funding working and growth capital, the expansion of our sales and marketing function and the reduction of certain tranches of our indebtedness.

On April 15, 2024, the Company issued 2,186,250 shares of its common stock in connection with the exercise of warrants that were issued between December 2021 and May 2023 (the “Warrants”), with exercise prices varying from $2.21 to $2.60 (the “Warrant Exercise”). None of the Warrants were amended prior to or in connection with the Warrant Exercise. Each of the exercising holders of warrants (collectively, the “Holders”), received its warrants in connection with the incurrence by the Company of indebtedness pursuant to various tranches of promissory notes issued between December 2021 and May 2023 (collectively, the “Notes”). The Warrants were classified as permanent equity at inception. Due to a redemption feature in the Warrants allowing the Company to redeem the Warrants for $0.001 per Warrant if the daily volume weighted average price per share over thirty consecutive trading days is above $9.00, the Company received indications of intent to exercise Warrants from various Holders given the recent increase in trading price of the Company's common stock. With authorization from the Company's Board of Directors, each of the Holders was provided an opportunity to, and agreed to, amend certain of such Holder’s Notes (the “Notes Amendment”) to allow for the partial prepayment of principal in an aggregate amount equal to the exercise price of such Holder’s Warrants. In addition to the Notes Amendment, certain of the Holders elected use a portion of the accrued but unpaid interest under such Holder’s Notes to pay the exercise price of the Warrants. Certain of the Notes were repaid in full as a result of the Warrant Exercise and thereby did not need to be amended pursuant to the Notes Amendment (the Warrant Exercise, whether by partial or full repayment of principal, or by election to use a portion of accrued but unpaid interest under the Notes, together with the Notes Amendment, the “Warrant Exercise Transaction”). As a result of the Warrant Exercise Transaction, excluding the impact of deferred debt costs, the Company’s debt was reduced by $5,200,362, accrued interest payable was reduced by $98,750, common equity was increased by $5,299,112 and the Company issued an aggregate of 2,186,250 shares of common stock.

During the nine months ended September 30, 2024, the Company issued 50,459 shares of common stock upon the exercise of stock options by employees, directors, and consultants under its 2020 Stock Option Plan. The aggregate proceeds from the exercise of these options were approximately $163,854. The proceeds are currently anticipated to be used for general corporate purposes, which may include capital expenditures for the expansion of our production capacity, funding working and growth capital, the expansion of our sales and marketing function and the reduction of certain tranches of our indebtedness.

During the nine months ended September 30, 2024, the Company issued 52,500 shares of common stock upon the exercise of warrants by directors, and consultants under issued in 2020 as compensation for personal guarantees of debt. The aggregate proceeds from the exercise of these warrants were approximately $210,000. The proceeds are currently anticipated to be used for general corporate purposes, which may include capital expenditures for the expansion of our production capacity, funding working and growth capital, the expansion of our sales and marketing function and the reduction of certain tranches of our indebtedness.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None of the Company’s directors or officers adopted or terminated any purported Rule 10b5-1 plans and/or “non-Rule 10b5-1 trading arrangements,” as defined under applicable law.

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Item 6. Exhibits.

Exhibit No	Description
2.1	Agreement and Plan of Merger by and between Sow Good Inc. and Black Ridge Oil & Gas, Inc., dated January 20, 2021 (incorporated by reference to Exhibit 2.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on January 22, 2021)
2.2	Articles of Merger by and between Sow Good Inc. and Black Ridge Oil & Gas, Inc., dated January 20, 2021 (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on January 22, 2021)
2.3	Plan of Conversion of Sow Good Inc. (incorporated by reference to Exhibit 2.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on February 22, 2024)
3.1	Certificate of Incorporation (incorporated by reference to Exhibit 3.3 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on February 22, 2024)
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on February 22, 2024)
3.3	Articles of Conversion (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on February 22, 2024)
3.4	Certificate of Conversion (incorporated by reference to Exhibit 3.2 of the Form 8-K filed with the Securities and Exchange Commission by Sow Good Inc. on February 22, 2024)
4.1	Form of Common Stock Certificate of Sow Good Inc. (incorporated by reference to Exhibit 4.1 of the Form 10-K filed with the Securities and Exchange Commission by Sow Good Inc. on March 22, 2024)
4.2	Description of Securities (incorporated by reference to Exhibit 4.1 of the Form 10-K filed with the Securities and Exchange Commission by Sow Good Inc. on March 22, 2024)
31.1*	Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)
31.2*	Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)
32.1**	Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104*	Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)

* Filed herewith.

** The certifications attached as Exhibit 32.1 and 32.2 accompanying this Quarterly Report on Form 10-Q are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

63

SIGNATURES

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

	SOW GOOD INC.
Date: November 14, 2024	By:	/s/ Claudia Goldfarb
		Claudia Goldfarb, Chief Executive Officer (Principal Executive Officer)
Date: November 14, 2024	By:	/s/ Brendon Fischer
		Brendon Fischer, Interim Chief Financial Officer (Principal Financial Officer)

64

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Claudia Goldfarb, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of SOW GOOD INC.;

2.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;

3.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;

4.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:

a.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;

b.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;

c.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

d.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.

5.I have disclosed, based on Sow Good’s 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 (of persons performing the equivalent functions):

a.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

b.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: November 14, 2024

By:	/s/ Claudia Goldfarb
	Claudia Goldfarb, Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Brendon Fischer, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of SOW GOOD INC.;

2.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;

3.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;

4.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:

a.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;

b.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;

c.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

d.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.

5.I have disclosed, based on Sow Good’s 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 (of persons performing the equivalent functions):

a.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

b.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: November 14, 2024

By:	/s/ Brendon Fischer
	Brendon Fischer, Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

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 Quartelry Report of SOW GOOD INC. (the “Company”) on Form 10-Q for the period ending September 30, 2024 (the “Report”), I, Claudia Goldfarb, Chief Executive Officer, 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: November 14, 2024

By:	/s/ Claudia Goldfarb
Claudia Goldfarb, Chief Executive Officer
	(Principal Executive 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.

EX-32.2

Exhibit 32.2

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 Quartelry Report of SOW GOOD INC. (the “Company”) on Form 10-Q for the period ending September 30, 2024 (the “Report”), I, Brendon Fischer, Interim Chief Financial Officer, 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: November 14, 2024

By:	/s/ Brendon Fischer
Brendon Fischer, Interim Chief Financial Officer
	(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.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2024	Nov. 12, 2024
Document Information [Line Items]
Entity Central Index Key	0001490161
Entity Registrant Name	SOW GOOD INC.
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2024
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2024
Entity File Number	001-42037
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-2345075
Entity Address, Address Line One	1440 N Union Bower Rd
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, par value $0.001 per share
Trading Symbol	SOWG
Security Exchange Name	NASDAQ
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 Bankruptcy Proceedings, Reporting Current	true
Entity Common Stock, Shares Outstanding		10,245,388

XML

Condensed Balance Sheets - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 6,946,387	$ 2,410,037
Accounts receivable, net	1,232,958	2,578,259
Inventory	19,434,041	4,123,246
Prepaid inventory	572,098	563,131
Prepaid expenses	202,430	563,164
Total current assets	28,387,914	10,237,837
Property and equipment:
Construction in progress	2,848,191	1,522,465
Property and equipment	9,430,983	6,287,422
Less accumulated depreciation	(1,550,550)	(967,602)
Total property and equipment, net	10,728,624	6,842,285
Security deposit	1,357,956	346,616
Right-of-use asset	17,193,154	4,061,820
Total assets	57,667,648	21,488,558
Current liabilities:
Accounts payable	1,301,098	853,535
Accrued interest	398,617	860,693
Accrued expenses	1,839,323	648,947
Income tax payable - current	65,603	0
Current portion of operating lease liabilities	2,140,084	550,941
Total current liabilities	8,689,760	5,771,200
Operating lease liabilities	16,005,280	3,671,729
Total liabilities	24,845,040	14,208,109
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, 10,245,388 and 6,029,371 shares issued and outstanding as of September 30, 2024 and December 31, 2023	10,245	6,029
Additional paid-in capital	91,086,537	66,014,415
Accumulated deficit	(58,274,174)	(58,739,995)
Total stockholders' equity	32,822,608	7,280,449
Total liabilities and stockholders' equity	57,667,648	21,488,558
Related Party [Member]
Current liabilities:
Current maturities of notes payable	2,731,901	2,543,146
Notes payable, net	0	4,171,142
Nonrelated Party [Member]
Current liabilities:
Current maturities of notes payable	213,134	313,938
Notes payable, net	$ 150,000	$ 594,038

XML

Condensed Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
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	10,245,388	6,029,371
Common stock, shares outstanding	10,245,388	6,029,371
Related Party [Member]
Debt discounts, current	$ 447,236	$ 431,854
Debt discounts, non current	0	1,448,858
Nonrelated Party [Member]
Debt discounts, current	26,116	86,062
Debt discounts, non current	$ 0	$ 135,962

XML

Condensed Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
Revenues	$ 3,554,157	$ 5,034,203	$ 30,608,526	$ 6,548,479
Cost of goods sold	2,998,171	3,698,962	16,415,970	6,679,224
Gross profit	555,986	1,335,241	14,192,556	(130,745)
Operating expenses:
Salaries and benefits	1,875,908	618,907	6,350,038	1,450,103
Professional services	320,289	294,720	1,382,393	404,256
Other general and administrative expenses	1,607,844	74,728	3,879,350	959,218
Total general and administrative expenses	3,804,041	988,355	11,611,781	2,813,577
Depreciation and amortization	8,583	9,261	23,060	94,638
Total operating expenses	3,812,624	997,616	11,634,841	2,908,215
Net operating income (loss)	(3,256,638)	337,625	2,557,715	(3,038,960)
Other income (expense):
Interest income	39,509	0	43,639	0
Interest expense	(225,095)	(3,641)	(1,243,428)	(1,349,486)
Loss on early extinguishment of debt	0	0	(696,502)	0
Total other income (expense)	(185,586)	(3,641)	(1,896,291)	(1,349,486)
Income (loss) before income tax	(3,442,224)	333,984	661,424	(4,388,446)
Benefit (provision) for income tax	62,315	0	(195,603)	0
Net income (loss)	$ (3,379,909)	$ 333,984	$ 465,821	$ (4,388,446)
Basic weighted average shares	10,245,388	5,123,735	8,651,223	4,942,182
Basic income (loss) per share	$ (0.33)	$ 0.07	$ 0.05	$ (0.89)
Weighted average common shares outstanding - diluted	10,245,388	8,066,577	9,613,553	4,942,182
Net income (loss) per common share - diluted	$ (0.33)	$ 0.04	$ 0.05	$ (0.89)

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Statement of Stockholders' Equity - USD ($)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Related Party [Member]	Related Party [Member] Additional Paid-in Capital [Member]	Directors [Member]	Directors [Member] Common Stock [Member]	Directors [Member] Additional Paid-in Capital [Member]	Directors and Advisors [Member]	Directors and Advisors [Member] Additional Paid-in Capital [Member]	Officers and Employees [Member]	Officers and Employees [Member] Additional Paid-in Capital [Member]
Balance (in shares) at Dec. 31, 2022		4,847,384
Balance at Dec. 31, 2022	$ 2,810,887	$ 4,847	$ 58,485,602	$ (55,679,562)
Common stock issued in private placement offering	3,675,000	$ 74	3,674,926
Common stock issued in private placement offering (in shares)		735,000
Common stock issued for services (in shares)								20,699
Common stock issued for services							$ 125,229	$ 21	$ 125,208
Common stock options granted for services										$ 91,990	$ 91,990	$ 307,446	$ 307,446
Common stock warrants granted pursuant to debt financing	50,682		50,682		$ 197,198	$ 197,198
Net income (loss)	(4,388,446)			(4,388,446)
Balance (in shares) at Sep. 30, 2023		5,603,083
Balance at Sep. 30, 2023	2,869,986	$ 4,942	62,933,052	(60,068,008)
Balance (in shares) at Jun. 30, 2023		4,868,083
Balance at Jun. 30, 2023	(1,279,757)	$ 4,868	59,117,367	(60,401,992)
Common stock issued in private placement offering	3,675,000	$ 74	3,674,926
Common stock issued in private placement offering (in shares)		735,000
Common stock options granted for services										29,296	29,296	111,463	111,463
Net income (loss)	333,984			333,984
Balance (in shares) at Sep. 30, 2023		5,603,083
Balance at Sep. 30, 2023	2,869,986	$ 4,942	62,933,052	(60,068,008)
Balance (in shares) at Dec. 31, 2023		6,029,371
Balance at Dec. 31, 2023	7,280,449	$ 6,029	66,014,415	(58,739,995)
Common stock issued in public offering, net of offering costs (in shares)		1,380,000
Common stock issued in public offering, net of offering costs	11,974,976	$ 1,380	11,973,596
Common stock issued in private placement offering	3,738,000	$ 516	3,737,484
Common stock issued in private placement offering (in shares)		515,597
Common stock issued for services (in shares)								31,211
Common stock issued for services							$ 295,648	$ 32	$ 295,616
Proceeds from exercise of stock options and warrants (in shares)		2,289,209
Proceeds from exercise of stock options and warrants	5,672,968	$ 2,288	5,670,680
Common stock options granted for services										86,892	86,892	3,307,854	3,307,854
Net income (loss)	465,821			465,821
Balance (in shares) at Sep. 30, 2024		10,245,388
Balance at Sep. 30, 2024	32,822,608	$ 10,245	91,086,537	(58,274,174)
Balance (in shares) at Jun. 30, 2024		10,245,388
Balance at Jun. 30, 2024	35,015,646	$ 10,245	89,899,666	(54,894,265)
Common stock options granted for services										$ 29,284	$ 29,284	$ 1,157,587	$ 1,157,587
Net income (loss)	(3,379,909)			(3,379,909)
Balance (in shares) at Sep. 30, 2024		10,245,388
Balance at Sep. 30, 2024	$ 32,822,608	$ 10,245	$ 91,086,537	$ (58,274,174)

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Condensed Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ 465,821	$ (4,388,446)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Bad debts expense	176,032	0
Depreciation and amortization	582,948	306,092
Non-cash amortization of right-of-use asset and liability	791,360	15,245
Impairment of obsolete inventory	0	2,075,080
Amortization of stock options	3,394,746	399,436
Amortization of stock warrants issued as a debt discount	932,883	900,228
Loss on early extinguishment of debt	696,502	0
Decrease (increase) in current assets:
Accounts receivable	1,169,269	(1,197,608)
Prepaid expenses	360,734	(10,760)
Inventory	(15,319,762)	(2,342,871)
Security deposits	(1,011,340)	(12,309)
Increase (decrease) in current liabilities:
Accounts payable	447,563	257,091
Income tax payable	65,603	0
Accrued interest	(363,326)	419,807
Accrued expenses	1,190,375	125,270
Net cash provided by used in operating activities	(6,124,944)	(3,328,516)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(3,143,561)	(1,326,276)
Cash paid for construction in progress	(1,325,726)	0
Net cash used in investing activities	(4,469,287)	(1,326,276)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock offerings, net of offering costs of $859,024	15,712,976	3,675,000
Proceeds from the exercise of warrants and options	373,855	0
Proceeds received from notes payable, related parties	0	2,400,000
Proceeds received from notes payable	0	400,000
Repayments of borrowings	(956,250)	0
Net cash provided by financing activities	15,130,581	6,475,000
NET CHANGE IN CASH AND CASH EQUIVALENTS	4,536,350	1,820,208
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	2,410,037	276,464
CASH AND CASH EQUIVALENTS AT END OF PERIOD	6,946,387	2,096,672
SUPPLEMENTAL INFORMATION:
Interest paid	667,293	27,878
Interest received	43,639	0
Income taxes paid	130,000	0
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash exercise of warrants	5,299,113	0
Repayment of interest	(98,750)	0
Repayments of borrowings	(5,200,363)	0
Reclassification of construction in progress to property and equipment	2,864,649	1,766,110
Value of debt discounts attributable to warrants	0	247,880
Officers and Directors [Member]
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Common stock issued for services	$ 295,648	$ 125,229

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Condensed Statements of Cash Flows (Parenthetical)	9 Months Ended
	Sep. 30, 2024 USD ($)
Statement of Cash Flows [Abstract]
Offering costs	$ 859,024

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Pay vs Performance Disclosure - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (3,379,909)	$ 333,984	$ 465,821	$ (4,388,446)

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Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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Organization and Nature of Business

9 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Nature of Business

Note 1 – Organization and Nature of Business

Sow Good Inc. (“SOWG,” “Sow Good,” “us,” “our,” “we,” or the “Company”) is a U.S.-based freeze dried candy and snack manufacturer. Formerly Black Ridge Oil & Gas, Inc. (a business that participated in the acquisition and development of oil and gas leases and acquired by the Company in October 1, 2020) , the Company was initially focused on the production of freeze dried fruits and vegetables, a business later expanded to include freeze dried candy. At that time of the acquisition of Black Ridge Oil & Gas, Inc., the Company’s common stock began to be quoted on the OTCQB under the trading symbol “SOWG,” from the former trading symbol “ANFC.” Prior to April 2, 2012, Black Ridge Oil & Gas was known as Ante5, Inc., a publicly traded company since July 1, 2010. Effective February 15, 2024, Sow Good Inc. reincorporated to the State of Delaware from the State of Nevada under the name Sow Good Inc. pursuant to a plan of conversion . On May 2, 2024, trading of the Company’s common stock commenced on the Nasdaq Capital Market stock exchange.

In May 2021, the Company announced the launch of its first direct-to-consumer freeze dried consumer packaged goods (“CPG”) line of non-GMO products including ready-to-make smoothies, gluten-free granola and snacks. After launching a freeze dried candy product line in the first quarter of 2023, the Company now has twenty-one SKU offerings of candy, and three crunch ice cream SKU as of September 30, 2024, that together make up the entirety of the Company’s product portfolio. After launching its freeze dried candy product line the Company discontinued its smoothie, snack and granola products. During the second quarter of 2023, the Company completed the construction of its second and third freeze driers and to facilitate the increased production demands for its candy products. The significant and rising demand for freeze dried candy products has led the Company to add a fourth freeze drier in the first quarter of 2024, a fifth freeze drier in the second quarter of 2024 and a sixth freeze drier, which was completed in the third quarter of 2024.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and stated in U.S. dollars, consistent in all material respects with those applied in our financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Because these financial statements address interim periods, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Such interim financial information is unaudited but reflects all adjustments that in the opinion of management are necessary for the fair presentation of the interim periods presented. The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any future periods. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and the Registration Statement on Form S-1/A (File No. 333-277042), filed with the SEC on April 25, 2024 (the “Registration Statement”), pursuant to the Securities Act of 1933, as amended (“Securities Act”).

Segment Reporting

FASB ASC 280-10-50 requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding how to allocate resources. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP 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.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform with the current presentation.

Environmental Liabilities

The Company was formerly a direct owner of assets in the oil and gas industry. The oil and gas industry is subject, by its nature, to environmental hazards and clean-up costs. At this time, management knows of no substantial losses from environmental accidents or events which would have a material effect on the Company.

Cash and Cash Equivalents

Cash equivalents include money market accounts which have maturities of three months or less. Cash equivalents are stated at cost plus accrued interest, which approximates market value.

Cash in Excess of FDIC Insured 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") and the Securities Investor Protection Corporation ("SIPC") up to $250,000 and $500,000, respectively, under current regulations. The Company had cash in excess of FDIC and SIPC insured limits of $2,586,671 at September 30, 2024. The Company had cash in excess of FDIC and SIPC insured limits of $1,837,840 at December 31, 2023. The Company has not experienced any losses in such accounts.

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 $149,809 at September 30, 2024 and no allowance for doubtful accounts at December 31, 2023.

The Company estimates its reserve based on historical loss information. The Company believes that historical loss information is a reasonable base on which to determine expected credit losses for trade receivables held at the reporting date because the composition of the trade receivables at the reporting date is consistent with that used in developing the historical credit-loss percentages. However, the Company will continue to monitor and adjust the historical loss rates to reflect the effects of current conditions and forecasted changes.

Inventory

Inventory is valued at the lower of average cost or net realizable value. The cost of substantially all of the Company’s inventory has been determined by the first-in, first-out ("FIFO") method.

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 (years)	3
Office equipment (years)	5
Furniture and fixtures (years)	5
Machinery and equipment (years)	7 - 10
Leasehold improvements	Lease-term or useful life

Construction in progress is stated at cost, which predominately relates to the cost of freezers and equipment not yet placed into service. No depreciation expense is recorded on construction-in-progress until such time as the relevant assets are completed and put into use.

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 of property and equipment was $216,164 and $150,676, for the three months ended September 30, 2024 and 2023, respectively, of which $207,580 and $141,415 was allocated to cost of goods sold, respectively. Depreciation of property and equipment was $582,948 and $306,092, for the nine months ended September 30, 2024 and 2023, respectively, of which $559,888 and $211,454 was allocated to cost of goods sold, respectively.

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. For the nine months ended September 30, 2024 and 2023, shipping and handling costs of $626,819 and $203,456, respectively, are included in cost of goods sold. 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.

Customer Concentration

For the three months ended September 30, 2024, our top four customers were responsible for 19.7%, 14.8%, 10.2%, and 10.0% of our revenues, respectively. For the three months ended September 30, 2023, our top two customers accounted for 46.1% and 19.6% of our revenues. Our top five customers accounted for 61.8% and 86.5% of our revenues during each of the three months ended September 30, 2024 and 2023, respectively.

For the nine months ended September 30, 2024, our top three customers accounted for 32.5%, 20.9% and 16.1% of our revenues, respectively. For the nine months ended September 30, 2023, our top three customers accounted for 42.4%, 15.1% and 11.0% of our revenues, respectively. Our top five customers accounted for 76% and 80% of our revenues during the nine months ended September 30, 2024 and 2023, respectively.

Supplier Concentration

For the three months ended September 30, 2024, our top three suppliers accounted for 87% of our purchases from vendors. For the three months ended September 30, 2023 our top three suppliers accounted for 68% of our purchases from vendors.

For the nine months ended September 30, 2024, our top three suppliers accounted for 76% of our purchases from vendors. For the nine months ended September 30, 2023 our top three suppliers accounted for 69% of our purchases from vendors.

The Company considers these vendors to be critical suppliers of candy for our freeze dried candy production.

Basic and Diluted Earnings (Loss) Per Share

The basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding. Diluted net income (loss) per common share is computed by dividing the net income (loss) adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods where potential dilutive securities would have an anti-dilutive effect and they 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 – Compensation – Stock Compensation (“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 related to the issuance of shares of common stock for services consisted of $295,648 and $125,229 for the nine months ended September 30, 2024 and 2023, respectively.

Stock-based compensation related to amortization of stock option grants consisted of $1,186,871 and $140,759 for the three months ended September 30, 2024 and 2023, respectively. Stock-based compensation related to amortization of stock option grants consisted of $3,394,746 and $399,436 for the nine months ended September 30, 2024 and 2023, respectively. The fair values of service-based stock options are determined using the Black-Scholes options pricing model and an effective term of 2.3 to 7.3 years based on either the weighted average of the vesting periods and the stated term of the option grants or as calculated under the options valuation model, the discount rate on 5 to 7 year U.S. Treasury securities at the grant date. The Company uses a Monte Carlo simulation to value its performance-based and market-based stock options. Options are amortized over the implied service term, or the vesting period.

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.

Uncertain Tax Positions

In accordance with ASC 740 – Income Taxes (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Various taxing authorities can periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, to require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. The ASU’s amendments are effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its financial statements and related disclosures.

No other new accounting pronouncements, issued or effective during the nine months ended September 30, 2024, have had or are expected to have a significant impact on the Company’s financial statements.

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Related Party

9 Months Ended

Sep. 30, 2024

Related Party Transactions [Abstract]

Related Party

Note 3 – Related Party

Common Stock Sold for Cash

On March 28, 2024, the Company raised $3,738,000 of capital from the sale of 515,597 newly issued shares of common stock at a share price of $7.25 in a private placement exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. The stock sales included purchases by the following related parties:

	Shares		Amount
Ira and Claudia Goldfarb, Executive Chairman and CEO, respectively	17,242	$	125,000
Lyle A. Berman Revocable Trust, Director	68,966		500,000
Bradley Berman, Director	30,000		217,500
Edward Shensky	13,794		100,000
Brendon Fischer	8,000		58,000
Cesar J. Gutierrez	10,345		75,000
Alexandria Gutierrez	3,449		25,000
Ava Gutierrez	3,449		25,000
Brett Goldfarb	3,449		25,000
	158,694	$	1,150,500

On November 20, 2023, the Company entered into a Stock Purchase Agreement with multiple accredited investors to sell and issue to the purchasers, thereunder, an aggregate of 426,288 shares of the Company’s common stock at a price of $6.50 per share, resulting in total proceeds received of $2,770,872. The stock sales included purchases by the following related parties:

	Shares		Amount
Ira and Claudia Goldfarb, Executive Chairman and CEO, respectively	23,077	$	150,000
Bradley Berman, Director	10,000		65,000
Joe Mueller, Director	5,000		32,500
Alexandria Gutierrez	4,615		29,998
Cesar J. Gutierrez Living Trust	3,977		25,851
	46,669	$	303,348

On August 25, 2023, the Company entered into a Stock Purchase Agreement with multiple accredited investors to sell and issue to the purchasers, thereunder, an aggregate of 735,000 shares of the Company’s common stock at a price of $5.00 per Share, resulting in total proceeds received of $3,675,000. The stock sales included purchases by the following related parties:

	Shares		Amount
Ira and Claudia Goldfarb, Executive Chairman and CEO, respectively	100,000	$	500,000
Ira Goldfarb Irrevocable Trust	40,000		200,000
Lyle A. Berman Revocable Trust, Director	40,000		200,000
Bradley Berman, Director	10,000		50,000
Alexandria Gutierrez	5,000		25,000
	195,000	$	975,000

Common Stock Issued to Officers and Directors for Services

On February 9, 2024, the Company issued an aggregate 23,534 shares of common stock amongst its five non-employee Directors and three advisory Directors for annual services to be rendered. The aggregate fair value of the common stock was $519,280, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On January 11, 2024, the Company issued an aggregate 7,060 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 $56,480, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

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 $125,230, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

Common Stock Options Awarded to Officers and Directors

On December 15, 2023, pursuant to the respective A&R Employment Agreements of Ira Goldfarb and Claudia Goldfarb, and the terms of the 2020 Equity Incentive Plan, Mr. Goldfarb was granted stock options entitling him to purchase up to 500,000 shares of common stock, and Mrs. Goldfarb was granted stock options entitling her to purchase 450,000 shares of common stock, at an exercise price of $9.75 per share. The shares will vest equally over a five-year period from grant date. In the case of a Change of Control (as defined in their respective A&R Employment Agreements) all shares granted in the Initial Option Grant will vest immediately.

Additionally, on December 15, 2023, pursuant to their respective A&R Employment Agreements, Mr. Goldfarb was granted additional stock options entitling him to purchase up to 500,000 shares of common stock, and Mrs. Goldfarb was granted an additional 450,000 options to purchase shares of common stock, at an exercise price of $40.00. The shares will vest upon the Company’s stock price trading on a national securities exchange operated by Nasdaq or the New York Stock Exchange with a closing transaction price above $40.00 per share for a period of twenty consecutive trading days. In the case of a Change of Control (as defined in the A&R Employment Agreements) all shares granted in the additional option grant will vest immediately.

On November 13, 2023, the Company appointed Keith Terreri as Chief Financial Officer, and granted options to purchase 27,000 shares of common stock having an exercise price of $6.19 per share. On March 2, 2024, Mr. Terreri tendered his resignation effective as of March 4, 2024. None of Mr. Terreri’s options were vested at the time his resignation was effective, so in accordance with the Terreri Employment Agreement, all 27,000 of his options are forfeited.

On July 22, 2022, pursuant to the Company’s 2020 Stock Incentive Plan, Mr. Creed was granted options to purchase 24,151 shares of the Company’s common stock at an exercise price of $3.90 per share. These options will vest 20% as of July 22, 2023 and 20% each anniversary thereafter until fully vested.

On April 11, 2022, pursuant to the Company’s 2020 Equity Plan, Mr. Mueller was granted options to purchase 24,151 shares of the Company’s common stock at an exercise price of $3.10 per share. These options will vest 20% as of April 11, 2023 and 20% each anniversary thereafter until fully vested.

Debt Financing and Related Warrants Granted

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. This term loan was 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 warrants were exercised on April 15, 2024. The notes matured 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 a private placement for 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 warrants were exercised on April 15, 2024. The notes matured 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 Executive 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 April 11, 2023, warrants to purchase an aggregate 62,500 shares of common stock were issued to a director pursuant to a private placement debt offering in which aggregate proceeds of $250,000 were received in exchange for promissory notes and warrants to purchase an aggregate 62,500 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. The warrants were fully vested and exercisable over a period of 10 years at a price of $2.60 per share. The warrants were exercised on April 15, 2024.

On December 21, 2022, the Company closed a private placement and concurrently entered into a note and warrant purchase agreement with related parties to sell an aggregate $2.075 million of promissory notes and warrants to purchase an aggregate 311,250 shares of common stock, representing 15,000 warrant shares per $100,000 of promissory notes. The warrants were exercisable at a price of $2.21 per share over a ten-year term. The warrants were exercised on April 15, 2024.

On August 23, 2022, we closed on a private placement for 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, 2023 to the maturity date. On December 21, 2022 and September 29, 2022, the Company received aggregate proceeds of $250,000 and $750,000 from two of the Company’s directors on the sale of these notes and warrants. Warrants issued under these borrowings were exercised on April 15, 2024.

On April 8, 2022, the Company closed a private placement and concurrently entered into a note and warrant purchase agreement to sell an aggregate $3,700,000 of promissory notes and warrants to purchase an aggregate 925,000 shares of common stock, representing 25,000 warrant shares per $100,000 of promissory notes. Accrued interest on the notes was payable semi-annually beginning September 30, 2022 at the rate of 6% per annum, but on August 23, 2022, the notes were amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The principal amount of the notes mature and become due and payable on April 8, 2025. The warrants are exercisable immediately and for a period of 10 years at a price of $2.35 per share. Proceeds to the Company from the sale of the securities were $3,700,000. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of common stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. Assuming full exercise thereof, further proceeds to the Company from the exercise of the warrant shares is calculated as $2,173,750. The offering closed simultaneously with execution of the purchase agreement. Of the aggregate $3,700,000 of notes, a total of $3,120,000 of notes were sold to officers or directors, along with 780,000 of the warrants. The warrants were exercised on April 15, 2024.

Leases

The Company leases a 20,945 square foot facility in Irving, Texas, for 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, with a current monthly lease rate of $11,296, with approximately 3% annual escalation of lease payments.

At September 30, 2024 and December 31, 2023, included in the operating lease liabilities was $1,257,743 and $1,301,354 in connection with this lease. For the nine months ended September 30, 2024 and 2023 the Company expensed $110,161 in each of the periods and paid cash of $99,030 and $96,146, respectively. For the three months ended September 30, 2024 and September 30, 2023 the Company expensed $36,720 in each of the periods and paid cash of $33,229 and $32,261, respectively.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 4 – Fair Value of Financial Instruments

The Company's financial statements are prepared in accordance with ASC 820, “Fair Value Measurement,” which requires the measurement of certain financial instruments at fair value. The Company's financial instruments primarily consist of cash and cash equivalents, and accounts receivable, which approximate fair value due to their short-term nature, and Term Loans issued in connection with detachable warrants, which are carried on the balance sheet net of the unamortized portion of the related discounts. For financial instruments or investments that are required to be reported at fair value on a recurring or nonrecurring basis under GAAP, the applicable guidance for fair value measurement requires the Company to include the determination of the appropriate fair value hierarchy level for each instrument. The fair value hierarchy levels consist of the following:

Level 1: Quoted Prices in Active Markets for Identical Assets or Liabilities - This level represents the highest degree of observability, where fair values are based on quoted market prices for identical assets or liabilities in active markets.

Level 2: Inputs Other Than Quoted Prices Included within Level 1 - Fair values in this level are based on inputs other than quoted market prices but are still observable, such as quoted market prices for similar assets or liabilities, or inputs derived from market data.

Level 3: Unobservable Inputs - This level includes fair values for which there are no observable inputs and relies on the reporting entity's own assumptions and estimates. These fair values are considered the least reliable and most subjective.

Detachable common stock warrants issued in connection with debt may be recorded as either liabilities or equity depending on the applicable accounting guidance. The Company determined that warrants issued in connection with our notes payable met the

definition of a freestanding financial instrument and qualified for treatment as permanent equity. Warrants recorded as equity are recorded at the fair market value determined at issuance date, and are not remeasured after that. We utilized the Black-Scholes valuation model to estimate the fair value of warrants granted at issuance date. The initial measurement of the fair value of the notes considers the present value of future cash flows, discounted at the current market rate of interest at the issuance date, and time to liquidity. The Company allocated the value of warrants between the relative fair value of the notes payable without the warrants, and the warrants themselves at the time of issuance. The allocated portion of the warrants was treated as a debt discount, and amortized over the term of the note. The amortization of the debt discount is recognized as interest expense. When a notes payable are issued at a discount, wherein a significant portion of the issuance is between related parties, the valuation of the notes and the discount involve significant judgment and the use of unobservable inputs, classifying it into Level 3 of the fair value hierarchy, requiring a nonrecurring fair value measurement. Changes other than additions, settlements, or discount amortization, in the fair value of the notes payable, net of discounts do not impact net income or cash flows.

The following schedule summarizes the valuation of financial instruments at fair value on a nonrecurring basis in the balances sheet as of September 30, 2024 and December 31, 2023:

	September 30, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Liabilities
Notes payable, related parties, net of debt discounts	$	2,731,901	$	3,041,132	$	6,714,288	$	7,008,684
Notes payable, net of debt discounts		363,134		228,716		907,976		953,847
Total liabilities	$	3,095,035	$	3,269,848	$	7,622,264	$	7,962,531

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Inventory

9 Months Ended

Sep. 30, 2024

Inventory Disclosure [Abstract]

Inventory

Note 5 – Inventory

Inventory

As of September 30, 2024 the Company's inventory consisted of raw materials, material overhead, labor, and manufacturing overhead, categorized as follows:

	September 30,		December 31,
	2024		2023
Finished goods	$	7,298,127	$	222,051
Packaging materials		1,370,836		815,883
Inventory in transit		712,307		571,970
Work in progress		8,147,885		691,290
Raw materials		1,904,886		1,822,052
Total inventory	$	19,434,041	$	4,123,246

Prepaid Inventory

The company had reported a total of $572,098 and $563,131 in prepaid inventory as of September 30, 2024 and December 31, 2023, respectively. Prepaid inventory primarily consists of deposits and advance payments to suppliers for the purchase of raw materials and finished goods expected to be received and utilized in production within the next financial period, which have not been shipped as of the balance sheet date.

The Company accounts for prepaid inventory at cost, which includes all charges necessary to bring the inventory items to their present location and condition. Upon shipment of the inventory, these amounts are reclassified from prepaid inventory to the appropriate inventory accounts on the balance sheet.

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Prepaid Expenses

9 Months Ended

Sep. 30, 2024

Prepaid Expense, Current [Abstract]

Prepaid Expenses

Note 6 – Prepaid Expenses

Prepaid expenses consist of the following at September 30, 2024 and December 31, 2023:

	September 30,		December 31,
	2024		2023
Prepaid professional costs	$	-	$	382,524
Prepaid software licenses		68,237		35,252
Prepaid insurance costs		73,274		48,305
Trade shows and marketing services		60,919		29,964
Prepaid rent		-		67,119
Total prepaid expenses	$	202,430	$	563,164

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Property and Equipment

9 Months Ended

Sep. 30, 2024

Property and equipment:

Property and Equipment

Note 7 – Property and Equipment

Property and equipment at consist of the following at September 30, 2024 and December 31, 2023:

	September 30,			December 31,
	2024			2023
Machinery	$	7,712,953		$	4,714,626
Leasehold improvements		1,454,767			1,409,767
Software		70,000			70,000
Website		71,589			71,589
Office equipment		121,674			21,440
Construction in progress		2,848,191			1,522,465
		12,279,174			7,809,887
Less: Accumulated depreciation and amortization		(1,550,550	)		(967,602	)
Total property and equipment, net	$	10,728,624		$	6,842,285

Construction in progress consists of costs incurred to build out our manufacturing facilities in Texas, along with the construction of our freeze driers. These costs will be capitalized as Leasehold Improvements and Machinery, respectively, upon completion.

For the three months ended September 30, 2024 and 2023, respectively, depreciation of property and equipment was $216,164 and $150,676, of which and $207,580 and $141,415 was allocated to cost of goods sold, resulting in net depreciation expense of $8,583 and $9,261 included in operating expense. For the nine months ended September 30, 2024 and September 30, 2023, respectively, depreciation of property and equipment was $582,948 and $306,092, of which $559,888 and $211,454 was allocated to cost of goods sold, resulting in net depreciation expense of $23,060 and $94,638 included in operating expense.

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Leases

9 Months Ended

Sep. 30, 2024

Lessee Disclosure [Abstract]

Leases

Note 8 – Leases

The Company determines if an arrangement is a finance lease or operating lease at inception and recognizes right-of-use (“ROU”) assets and lease liabilities at commencement date based on the present value of the lease payments over the lease term. For operating leases, our right-of-use assets are amortized on a straight-line basis over the lease term with rent expense recorded to operating expenses. The Company has elected the practical expedient of not separating lease components from nonlease components. The depreciable life of related leasehold improvements is based on the shorter of the useful life or the lease term.

The Company leases its 20,945 square foot 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 rate of $11,296, with approximately a 3% annual escalation of lease payments commencing September 15, 2021, under which an entity owned entirely by Ira Goldfarb, the Company's Executive Chairman, is the landlord. The 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 incremental borrowing rate for the lease at the time of commencement was 5.75%.

On May 22, 2024, the Company entered into an industrial lease (the “Lease”) with USCIF Pinnacle Building B LLC, a Delaware limited liability company. Pursuant to the terms of the Lease, the Company will lease approximately 324,000 rentable square feet from the Lessor at 4024 Rock Quarry Road, Dallas, Texas for a term of approximately 62 months, which the Company intends to use as industrial and manufacturing space. The Term of the Lease commenced on May 22, 2024. The Lease provides for graduated rent payments starting at $122,175 per month, increasing up to $297,289 per month by the end of the Lease, plus taxes, insurance and common area maintenance costs. The Company has provided a security deposit in the amount of $1,000,000 in connection with the Lease. The Lease may be renewed upon the extension in writing between the Company and the Lessor for a period of up to 60 months. The incremental borrowing rate for the lease at the time of commencement was 10.84%.

On January 19, 2024, Sow Good Inc., the Company entered into a sublease agreement with Papsa Merx S. de R.S. de C.V., a corporation registered in Mexico City, Mexico. Pursuant to the terms of the Sublease Agreement, the Company will sublease approximately 141 rentable square meters at Av. Roble 660, Valle del Campestre, 66265 San Pedro Garza García Municipality, Nuevo León, 66269 for a term of approximately seventeen months, which the Company intends to use as office space. The Term of the Lease Agreement commenced on February 1, 2024. The Sublease Agreement provides for rent payments at fixed price of $5,250 USD per month plus the corresponding Value Added Tax for the duration of the Term. The Company is also responsible for operating expenses of the Premises, which includes a maintenance fee, electricity and internet services. The Company is required to provide a deposit of guarantee in the amount of $5,250 USD in connection with the Sublease Agreement. The Sublease Agreement does not have a renewal period. The incremental borrowing rate for the lease at the time of commencement was 10.68%.

On October 26, 2023, the Company entered into a lease agreement with Prologis, Inc., a Maryland corporation, which the Company intends to use as production space. The Company leased approximately 51,264 square feet in Dallas, Texas for an initial term of approximately five years and two months. The lease commenced on November 1, 2023. The base rent payments started at approximately $42,500 per month in the first year, and increase each year, up to approximately $51,700 per month during the last year of the initial term. The Company is also responsible for operating expenses of the premises, which start at $7,835 per month, with an annual escalation of 4.3%. As a deposit on the lease, the Company is required to provide a letter of credit to the Landlord in the amount of $300,000. The lease may be extended for a period of five years, at the option of the Company, at a rate to be based on a fair market rent rate determined at the time of the extension. The incremental borrowing rate for the lease at the time of commencement was 9.38%.

On July 1, 2023, the Company entered into a lease for additional warehouse space in Irving, Texas, of approximately 9,000 feet under a 37-month lease at a rate of $8,456 per month, with approximately a 4% annual escalation of lease payments. The 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 incremental borrowing rate for the lease at the time of commencement was 8%.

The components of lease expense were as follows:

	For the Nine Months Ended
	September 30,
	2024		2023
Right-of-Use lease cost:
Amortization of right-of-use asset	$	1,423,179	$	79,213

Supplemental balance sheet information related to leases was as follows:

	September 30,			December 31,
	2024			2023
Operating lease:
Operating lease assets	$	17,193,154		$	4,061,820
Current portion of operating lease liability	$	2,140,084		$	550,941
Noncurrent operating lease liability		16,005,280			3,671,729
Total operating lease liability	$	18,145,364		$	4,222,670
Weighted average remaining lease term:
Operating leases (in years)		4.9			5.9
Weighted average discount rate:
Operating lease		10.25	%		8.20	%

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

	For the Nine Months Ended
	September 30,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	1,553,753	$	128,840

The future minimum lease payments due under operating leases as of September 30, 2024 is as follows:

Fiscal Year Ending	Minimum Lease
December 31,	Commitments
2024 (for the three months remaining)	$	814,661
2025		4,314,293
2026		4,894,504
2027		5,004,433
2028 and thereafter		8,515,670
Total	$	23,543,561
Less effects of discounting		(5,398,197	)
Lease liability recognized	$	18,145,364

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Notes Payable, Related Parties

9 Months Ended

Sep. 30, 2024

Notes Payable [Abstract]

Notes Payable, Related Parties

Note 9– Notes Payable, Related Parties

Notes payable, related parties consists of the following at September 30, 2024 and December 31, 2023, respectively:

	June 30,		December 31,
	2024		2023
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 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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The unsecured note matured on May 11, 2024.	$	-	$	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 note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with		-		50,000

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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The unsecured note matured on April 25, 2024.
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 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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The unsecured note matured on April 25, 2024.	-	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. The warrants were exercised on April 15, 2024.	250,000	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. The warrants were exercised on April 15, 2024.	250,000	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. The warrants were exercised on April 15, 2024.	250,000	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. The warrants were exercised on April 15, 2024.	500,000	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. The warrants were exercised on April 15, 2024.	250,000	250,000
On December 31, 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. The warrants were exercised on April 15, 2024.	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. The warrants were exercised on April 15, 2024.	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. The warrants were exercised on April 15, 2024.	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 30th and December 31st. The noteholder also received warrants to purchase 500,000 shares of common stock, exercisable at $2.35 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds from certain warrant exercises were used to repay the note.		-		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 30th and December 31st. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. The noteholder also received warrants to purchase 230,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024 and proceeds were used to partially repay the note.		629,000		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 30th and December 31st. The noteholder also received warrants to purchase 75,000 shares of common stock, exercisable at $2.21 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024 and proceeds were used to partially repay the note.		16,712		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024 and proceeds were used to partially repay the note.		33,425		50,000
Total notes payable, related parties		3,179,137		8,595,000
Less unamortized debt discounts:		447,236		1,880,712
Notes payable		2,731,901		6,714,288
Less current maturities		2,731,901		2,543,146
Notes payable, related parties, less current maturities	$	-	$	4,171,142

In the nine months ended September 30, 2024, the Company recorded $696,502 of loss on the early extinguishments of debt related to the accelerated amortization of debt discounts related to the Warrant Exercise Transaction. In the three and nine months ended September 30, 2023, the Company recognized no loss on the early extinguishment of debt related to the accelerated amortization of debt discounts.

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Notes Payable

9 Months Ended

Sep. 30, 2024

Notes Payable [Abstract]

Notes Payable

Note 10 – Notes Payable

Notes payable consists of the following at September 30, 2024 and December 31, 2023, respectively:

	September 30,		December 31,
	2024		2023
On April 25, 2023, the Company received $400,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. 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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The remaining portion of the note matured on April 25, 2024.	$	-	$	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 30th and December 31st. 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. The warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note.		33,000		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note.		206,250		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		389,250		1,130,000
Less unamortized debt discounts:		26,116		222,024
Notes payable		363,134		907,976
Less current maturities		213,134		313,938
Notes payable, less current maturities	$	150,000	$	594,038

The Company recognized interest expense related to notes payable, related parties, and other notes payable for the three and nine months ended September 30, 2024 and 2023, as follows:

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2024		2023			2024		2023
Interest on notes payable, related parties	$	64,105	$	140,014		$	285,459	$	405,131
Amortization of debt discounts on notes payable, related parties		142,735		(137,006	)		736,974		776,993
Interest on notes payable		5,812		16,647			25,086		42,553
Amortization of debt discounts on notes payable		12,443		(17,589	)		195,909		123,234
Interest - other		-		1,575			-		1,575
Total interest expense	$	225,095	$	3,641		$	1,243,428	$	1,349,486

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Stockholders' Equity

9 Months Ended

Sep. 30, 2024

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Note 11 – 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.

Warrant Exercise Transaction

On April 15, 2024, the Company issued 2,186,250 shares of its common stock in connection with the exercise of warrants that were issued between December 2021 and May 2023 (the “Warrants”), with exercise prices varying from $2.21 to $2.60 (the “Warrant Exercise”). None of the Warrants were amended prior to or in connection with the Warrant Exercise. Each of the exercising holders of warrants (collectively, the “Holders”), received its warrants in connection with the incurrence by the Company of indebtedness pursuant to various tranches of promissory notes issued between December 2021 and May 2023 (collectively, the “Notes”). The Warrants were classified as permanent equity at inception. Due to a redemption feature in the Warrants allowing the Company to redeem the Warrants for $0.001 per Warrant if the daily volume weighted average price per share over thirty consecutive trading days is above $9.00, the Company received indications of intent to exercise Warrants from various Holders given the recent increase in trading price of the Company's common stock. With authorization from the Company's Board of Directors, each of the Holders was provided an opportunity to, and agreed to, amend certain of such Holder’s Notes (the “Notes Amendment”) to allow for the partial prepayment of principal in an aggregate amount equal to the exercise price of such Holder’s Warrants. In addition to the Notes Amendment, certain of the Holders elected use a portion of the accrued but unpaid interest under such Holder’s Notes to pay the exercise price of the Warrants. Certain of the Notes were repaid in full as a result of the Warrant Exercise and thereby did not need to be amended pursuant to the Notes Amendment (the Warrant Exercise, whether by partial or full repayment of principal, or by election to use a portion of accrued but unpaid interest under the Notes, together with the Notes Amendment, the “Warrant Exercise Transaction”). As a result of the Warrant Exercise Transaction, excluding the impact of deferred debt costs, the Company’s debt was reduced by $5,200,362, accrued interest payable was reduced by $98,750, common equity was increased by $5,299,112 and the Company issued an aggregate of 2,186,250 shares of common stock.

Certain of the Notes totaling $3,620,000 were fully repaid and the related debt discounts of $696,502 were fully expensed as a loss on the extinguishment of debt in the nine months ended September 30, 2024. The Notes subject to the Notes Amendment were partially repaid, this payment totaled $1,580,363, and the ratable portion of the related debt discounts totaling $215,773 was included as amortized interest in the nine months ended September 30, 2024. The remaining debt discounts will continue to be amortized as interest over the remaining term of the Notes. The Notes Amendment only allowed for the partial prepayment of principal and did not change any other terms of the Notes, and the present value of expected cash flows over the remaining life of the Notes remains substantially unchanged by the modification of these Notes.

Common Stock Sold for Cash

On May 2, 2024, the Company priced its registered underwritten public offering of 1,200,000 shares of the Company’s common stock, par value $0.001 at a price of $10.00 per share. In addition, the Company granted the underwriters a 30-day overallotment option to purchase up to 180,000 additional shares of common stock and issued to the underwriters warrants to purchase 120,000 shares of Common Stock. On May 1, 2024, the Company received approval to list its common stock on the Nasdaq Capital Market stock exchange (“Nasdaq”). Trading on Nasdaq commenced on May 2, 2024. On May 9, 2024, the underwriters purchased all of the Additional Shares pursuant to the full exercise of their overallotment option. Including proceeds from the Additional Shares, the proceeds from the public offering were approximately $11,974,976 net of offering expenses and underwriting discounts and commissions.

On March 28, 2024, the Company raised $3,738,000 of capital from the sale of 515,597 newly issued shares of common stock at a share price of $7.25 in a private placement exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. A total of 158,694 of these shares, or proceeds of $1,150,500 were purchased by officers, directors, and related parties.

On November 20, 2023, the Company entered into a Stock Purchase Agreement with multiple accredited investors to sell and issue to the purchasers, thereunder, an aggregate of 426,288 shares of the Company’s common stock at a price of $6.50 per share. Proceeds to the Company from the sale of the shares were $2,770,848. A total of 46,669 of these shares, or proceeds of $303,348 were purchased by officers and directors.

On August 25, 2023, the Company entered into a Stock Purchase Agreement with multiple accredited investors to sell and issue to the purchasers, thereunder, an aggregate of 735,000 shares of the Company’s common stock at a price of $5.00 per share. Proceeds to the Company from the sale of the shares were $3,675,000. A total of 195,000 of these shares, or proceeds of $975,000 were purchased by officers and directors.

Common Stock Issued to Directors for Services

On February 9, 2024, the Company issued an aggregate 23,534 shares of common stock amongst its five non-employee Directors and three advisory Directors for annual services to be rendered. The aggregate fair value of the common stock was $519,280, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On January 11, 2024, the Company issued an aggregate 7,060 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 $56,480, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

On January 5, 2024, the Company appointed Edward Shensky as a member of the Board of Directors of the Company effective immediately. Pursuant to the Company’s Non-Employee Director Compensation Plan, Mr. Shensky received annualized compensation of $25,000, paid in cash or common stock.

On June 1, 2023, the Company issued an aggregate 21,095 shares of common stock amongst its five directors for annual services to be rendered. The aggregate fair value of the common stock was $125,230, based on the closing price of the Company’s common stock on the date of grant. The shares were expensed upon issuance.

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Options

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Options

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 of Directors 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 January 8, 2024, our stockholders took action by written consent to ratify the amendment to the 2020 Stock Incentive Plan (the “2020 Plan”) approved by the Board of Directors on December 15, 2023. On December 15, 2023, our Board of Directors approved an amendment to the 2020 Plan to effect an increase in the number of shares that remain available for issuance under the 2020 Plan by an additional 2,150,000 shares up to an aggregate of 2,964,150 shares available for issuance under the 2020 Plan (the “2020 Plan Amendment”). Before the 2020 Plan Amendment, the number of shares available for issuance under the 2020 Plan would be too limited to effectively operate as an incentive and retention tool for employees, officers, directors, non-employee directors and consultants of the Company and its affiliates (as defined in the 2020 Plan). The 2020 Plan and the approved increase will enable us to continue our policy of equity ownership by employees, officers, directors, non-employee directors and consultants of the Company and its affiliates as an incentive to contribute to the creation of long-term value for our stockholders.

Amendment to the 2020 Stock Incentive Plan

On January 8, 2024, our stockholders took action by written consent to ratify the amendment to the 2020 Stock Incentive Plan (the “2020 Plan”) approved by the Board of Directors on December 15, 2023. On December 15, 2023, our Board approved an amendment to the 2020 Plan to effect an increase in the number of shares that remain available for issuance under the 2020 Plan by an additional 2,150,000 shares up to an aggregate of 2,964,150 shares available for issuance under the 2020 Plan (the “2020 Plan Amendment”). Before the 2020 Plan Amendment, the number of shares available for issuance under the 2020 Plan would be too limited to effectively operate as an incentive and retention tool for employees, officers, directors, non-employee directors and consultants of the Company

and its affiliates (as defined in the 2020 Plan). The 2020 Plan and the approved increase enabled us to continue our policy of equity ownership by employees, officers, directors, non-employee directors and consultants of the Company and its affiliates as an incentive to contribute to the creation of long-term value for our stockholders.

2024 Stock Incentive Plan

Effective February 15, 2024, the Board of Directors adopted the 2024 Plan (the “2024 Plan”) under which a total of 3,000,000 share of our common stock have been reserved for issuance of Incentive Stock Options, or ISOs, Non-Qualified Stock Options, or NSOs, restricted share awards, stock unit awards, SARs, other stock-based awards, performance-based stock awards, (collectively, “stock awards”) and cash-based awards (stock awards and cash-based awards are collectively referred to as “awards”). ISOs may be granted only to our employees, including officers, and the employees of our parent or subsidiaries. All other awards may be granted to our employees, officers, our non-employee directors, and consultants and the employees and consultants of our subsidiaries, and affiliates.

Outstanding Options

Options to purchase an aggregate total of 2,626,382 shares of common stock were outstanding as of September 30, 2024, respectively, at a weighted average strike price of $19.91. The weighted average life of exercisable outstanding options was 8.7 years as of September 30, 2024.

The Company recognized compensation expense related to common stock options that are being amortized over the implied service term, or vesting period, of the options during the three and nine months ended September 30, 2024 and 2023, as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Directors	$	29,284	$	25,695	$	86,892	$	91,990
Officers		1,039,169		80,520		3,083,827		238,932
Employees		118,418		34,334		224,027		68,304
Total amortized options expense	$	1,186,871	$	140,759	$	3,394,746	$	399,436

The remaining unamortized balance of these options is $12,457,803 as of September 30, 2024 and the weighted-average period over which these awards are expected to be recognized is approximately 2.5 years.

Options Granted

During the nine months ended September 30, 2024, 23 employees were granted options to purchase an aggregate of 117,061 shares of the Company's common stock, having a weighted average exercise price of $13.62, 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 94 to 95% and an average call option fair value of $12.14, was $1,421,542. The options are being expensed over the vesting period.

Options Cancelled or Forfeited

Approximately 46,000 options with a weighted average strike price of $5.43 per share were forfeited by former employees during the nine months ended September 30, 2024.

Options Expired

During the nine months ended September 30, 2024, options expirations consisted of 333 options with a $195.00 strike price, and 14,491 options with a $5.41 strike price.

Options Exercised

A total of 50,459 options were exercised during the nine months ended September 30, 2024. No options were exercised during the nine months ended September 30, 2023. Proceeds from options exercises during the nine months ended September 30, 2024 amounted to $163,854.

Options Exercisable

There were 350,353 options exercisable as of September 30, 2024.

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Warrants

9 Months Ended

Sep. 30, 2024

Warrants and Rights Note Disclosure [Abstract]

Warrants

Note 13 – Warrants

Warrants Exercised

A total of 2,186,250 warrants related to the issuance of debt were fully exercised at an average price of $2.50, and the proceeds were used to repay certain Notes Payable. The debt discounts relating to the warrants were either written off as a loss on early extinguishment of debt, to the extent that the related Notes Payable were fully retired, or amortized to interest expense for those Notes which were partially extinguished. The Company realized a loss on early extinguishment of debt of $696,502 for nine months ended September 30, 2024. Interest expense related to debt discount amortization was $932,883 and $900,228 for the nine months ended September 30, 2024 and 2023, respectively. Another 52,500 warrants were exercised at an exercise price of $4.00 during the period.

Warrants Granted

In connection with the Company’s underwritten public offering in May 2024, the Company issued to the underwriters warrants to purchase 138,000 shares of Common Stock. The grant was equal to 10% of the number of shares sold in this offering by Roth, (a total of 1,380,000 shares). The Representative’s Warrants will be exercisable upon issuance, will have an exercise price equal to 120%, (or $12.00) of the initial public offering price and will terminate fifth anniversary of the effective date of the registration statement. The Representative’s Warrants and the underlying shares of common stock are deemed compensation by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and will therefore be subject to FINRA Rule 5110(g)(1). In accordance with FINRA Rule 5110(g)(1), neither the Representative’s Warrants nor any shares issued upon exercise of the Representative's Warrants may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities by any person, for a period of 180 days immediately following the date of effectiveness or commencement of sales of the offering pursuant to which the Representative’s Warrants are being issued, subject to certain exceptions. The fair value of the warrants, was determined using the Black-Scholes option pricing model, and was recorded through additional paid in capital as an offset of the offering proceeds.

Outstanding Warrants

Warrants to purchase an aggregate total of 190,500 shares of common stock at a weighted average strike price of $9.80, exercisable over a weighted average life of 5 years, were outstanding as of September 30, 2024.

No warrants were cancelled or expired during the nine months ended September 30, 2024.

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Earnings Per Share

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

Earnings Per Share

Note 14 - Earnings Per Share

Basic and diluted earnings per share for the three and nine months ended September 30, 2024 and September 30, 2023:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2024			2023		2024		2023
Net income (loss) attributable to common shareholders	$	(3,379,909	)	$	333,984	$	465,821	$	(4,388,446	)
Basic weighted average shares		10,245,388			5,123,735		8,651,223		4,942,182
Basic income (loss) per share	$	(0.33	)	$	0.07	$	0.05	$	(0.89	)
Diluted weighted average shares		10,245,388			8,066,577		9,613,553		4,942,182
Diluted income (loss) per share	$	(0.33	)	$	0.04	$	0.05	$	(0.89	)

The table below includes information related to stock options and warrants that were outstanding at the end of each respective the three and nine months ended September 30, 2024 and September 30, 2023. For periods in which the Company incurred a net loss, these amounts are not included in weighted average dilutive shares because their impact would be anti-dilutive. For each of the three and nine months ended September 30, 2024, there were approximately 1,019,000 options with a strike price greater than the average

share price for the respective periods, which have been excluded from the weighted average shares because including them would have been antidilutive under the treasury method.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Weighted average stock options		1,607,913		650,436		1,607,580		615,662
Weighted average price of stock options	$	8.00	$	4.64	$	8.00	$	4.64
Weighted average warrants		190,500		2,291,250		974,839		2,084,994
Weighted average price of warrants	$	9.80	$	2.50	$	3.01	$	2.50
Average price of common stock	$	15.74	$	5.52	$	13.84	$	4.56

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Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 15 – Income Taxes

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

The Company recognized income tax expense of $195,603 and $0 for the periods ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the Company has a net operating loss carryover of approximately $40,943,066. Under existing Federal law, a portion of the net operating loss may be utilized to offset taxable income through the year ended December 31, 2037. A portion of the net operating loss (“NOL”) carryover begins to expire in 2031. For tax years beginning after December 31, 2017, pursuant to the enactment of the Tax Cuts and Jobs Act (“TCJA”) net operating losses now carry forward indefinitely but are limited to offsetting 80% of taxable income in a tax year. Of the total estimated net operating loss as of September 30, 2024 , approximately $18,957,573 of the Company’s NOL is subject to the TCJA net operating loss provisions.

ASC Topic 740 provides that a valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. As of September 30, 2024, the Company is increasing its valuation allowance from $12,984,109 to $13,033,251 due to a decrease in the net estimated deferred tax assets. At this time, the Company believes it is more likely than not that the benefit of the remaining net deferred tax assets will not be realized, the Company will continue to evaluate this valuation allowance quarterly.

The Company filed annual US Federal income tax returns and annual income tax returns for the state of Minnesota through 2020. Following the 2020 tax year, the Company has filed annual state franchise tax returns for the state of Texas. We are not subject to income tax examinations by tax authorities for years before 2020 for all returns. Income taxing authorities have conducted no formal examinations of our past federal or state income tax returns and supporting records.

The Company adopted the provisions of ASC Topic 740 regarding uncertainty in income taxes. The Company has found no significant uncertain tax positions as of any date on or before September 30, 2024. We account for income taxes under the provisions of ASC Topic 740, Income taxes, which provides for an asset and liability approach for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributable to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes. The Company has found no significant uncertain tax positions as of any date on or before September 30, 2024.

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Subsequent Events

9 Months Ended

Sep. 30, 2024

Subsequent Events [Abstract]

Subsequent Events

Note 16 – Subsequent Events

Management has evaluated events and transactions subsequent to the balance sheet date through the date of this report (the day the financial statements were available to be issued) for potential recognition or disclosure in the financial statements. Management has not identified any items requiring recognition or disclosure.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Segment Reporting

Segment Reporting

FASB ASC 280-10-50 requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding how to allocate resources. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP 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.

Reclassifications

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform with the current presentation.

Environmental Liabilities

Environmental Liabilities

The Company was formerly a direct owner of assets in the oil and gas industry. The oil and gas industry is subject, by its nature, to environmental hazards and clean-up costs. At this time, management knows of no substantial losses from environmental accidents or events which would have a material effect on the Company.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash equivalents include money market accounts which have maturities of three months or less. Cash equivalents are stated at cost plus accrued interest, which approximates market value.

Cash in Excess of FDIC Insured Limits

Cash in Excess of FDIC Insured 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") and the Securities Investor Protection Corporation ("SIPC") up to $250,000 and $500,000, respectively, under current regulations. The Company had cash in excess of FDIC and SIPC insured limits of $2,586,671 at September 30, 2024. The Company had cash in excess of FDIC and SIPC insured limits of $1,837,840 at December 31, 2023. The Company has not experienced any losses in such accounts.

Accounts Receivable

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 $149,809 at September 30, 2024 and no allowance for doubtful accounts at December 31, 2023.

The Company estimates its reserve based on historical loss information. The Company believes that historical loss information is a reasonable base on which to determine expected credit losses for trade receivables held at the reporting date because the composition of the trade receivables at the reporting date is consistent with that used in developing the historical credit-loss percentages. However, the Company will continue to monitor and adjust the historical loss rates to reflect the effects of current conditions and forecasted changes.

Inventory

Inventory

Inventory is valued at the lower of average cost or net realizable value. The cost of substantially all of the Company’s inventory has been determined by the first-in, first-out ("FIFO") method.

Property and Equipment

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 (years)	3
Office equipment (years)	5
Furniture and fixtures (years)	5
Machinery and equipment (years)	7 - 10
Leasehold improvements	Lease-term or useful life

Construction in progress is stated at cost, which predominately relates to the cost of freezers and equipment not yet placed into service. No depreciation expense is recorded on construction-in-progress until such time as the relevant assets are completed and put into use.

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 of property and equipment was $216,164 and $150,676, for the three months ended September 30, 2024 and 2023, respectively, of which $207,580 and $141,415 was allocated to cost of goods sold, respectively. Depreciation of property and equipment was $582,948 and $306,092, for the nine months ended September 30, 2024 and 2023, respectively, of which $559,888 and $211,454 was allocated to cost of goods sold, respectively.

Revenue Recognition

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. For the nine months ended September 30, 2024 and 2023, shipping and handling costs of $626,819 and $203,456, respectively, are included in cost of goods sold. 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.

Customer Concentration

Customer Concentration

For the three months ended September 30, 2024, our top four customers were responsible for 19.7%, 14.8%, 10.2%, and 10.0% of our revenues, respectively. For the three months ended September 30, 2023, our top two customers accounted for 46.1% and 19.6% of our revenues. Our top five customers accounted for 61.8% and 86.5% of our revenues during each of the three months ended September 30, 2024 and 2023, respectively.

For the nine months ended September 30, 2024, our top three customers accounted for 32.5%, 20.9% and 16.1% of our revenues, respectively. For the nine months ended September 30, 2023, our top three customers accounted for 42.4%, 15.1% and 11.0% of our revenues, respectively. Our top five customers accounted for 76% and 80% of our revenues during the nine months ended September 30, 2024 and 2023, respectively.

Supplier Concentration

Supplier Concentration

For the three months ended September 30, 2024, our top three suppliers accounted for 87% of our purchases from vendors. For the three months ended September 30, 2023 our top three suppliers accounted for 68% of our purchases from vendors.

For the nine months ended September 30, 2024, our top three suppliers accounted for 76% of our purchases from vendors. For the nine months ended September 30, 2023 our top three suppliers accounted for 69% of our purchases from vendors.

The Company considers these vendors to be critical suppliers of candy for our freeze dried candy production.

Basic and Diluted Earnings (Loss) Per Share

Basic and Diluted Earnings (Loss) Per Share

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

Stock-Based Compensation

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 – Compensation – Stock Compensation (“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 related to the issuance of shares of common stock for services consisted of $295,648 and $125,229 for the nine months ended September 30, 2024 and 2023, respectively.

Stock-based compensation related to amortization of stock option grants consisted of $1,186,871 and $140,759 for the three months ended September 30, 2024 and 2023, respectively. Stock-based compensation related to amortization of stock option grants consisted of $3,394,746 and $399,436 for the nine months ended September 30, 2024 and 2023, respectively. The fair values of service-based stock options are determined using the Black-Scholes options pricing model and an effective term of 2.3 to 7.3 years based on either the weighted average of the vesting periods and the stated term of the option grants or as calculated under the options valuation model, the discount rate on 5 to 7 year U.S. Treasury securities at the grant date. The Company uses a Monte Carlo simulation to value its performance-based and market-based stock options. Options are amortized over the implied service term, or the vesting period.

Income Taxes

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.

Uncertain Tax Positions

Uncertain Tax Positions

In accordance with ASC 740 – Income Taxes (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Various taxing authorities can periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, to require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. The ASU’s amendments are effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its financial statements and related disclosures.

No other new accounting pronouncements, issued or effective during the nine months ended September 30, 2024, have had or are expected to have a significant impact on the Company’s financial statements.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Summary of Property and Equipment Life Expectancy

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 (years)	3
Office equipment (years)	5
Furniture and fixtures (years)	5
Machinery and equipment (years)	7 - 10
Leasehold improvements	Lease-term or useful life

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Related Party (Tables)

9 Months Ended

Sep. 30, 2024

Related Party Transactions [Abstract]

Schedule of Stock Sales by Related Parties

The stock sales included purchases by the following related parties:

	Shares		Amount
Ira and Claudia Goldfarb, Executive Chairman and CEO, respectively	17,242	$	125,000
Lyle A. Berman Revocable Trust, Director	68,966		500,000
Bradley Berman, Director	30,000		217,500
Edward Shensky	13,794		100,000
Brendon Fischer	8,000		58,000
Cesar J. Gutierrez	10,345		75,000
Alexandria Gutierrez	3,449		25,000
Ava Gutierrez	3,449		25,000
Brett Goldfarb	3,449		25,000
	158,694	$	1,150,500

The stock sales included purchases by the following related parties:

	Shares		Amount
Ira and Claudia Goldfarb, Executive Chairman and CEO, respectively	23,077	$	150,000
Bradley Berman, Director	10,000		65,000
Joe Mueller, Director	5,000		32,500
Alexandria Gutierrez	4,615		29,998
Cesar J. Gutierrez Living Trust	3,977		25,851
	46,669	$	303,348

The stock sales included purchases by the following related parties:

	Shares		Amount
Ira and Claudia Goldfarb, Executive Chairman and CEO, respectively	100,000	$	500,000
Ira Goldfarb Irrevocable Trust	40,000		200,000
Lyle A. Berman Revocable Trust, Director	40,000		200,000
Bradley Berman, Director	10,000		50,000
Alexandria Gutierrez	5,000		25,000
	195,000	$	975,000

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Summary of Valuation of Financial Instruments at Fair Value on a Nonrecurring Basis

The following schedule summarizes the valuation of financial instruments at fair value on a nonrecurring basis in the balances sheet as of September 30, 2024 and December 31, 2023:

	September 30, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Liabilities
Notes payable, related parties, net of debt discounts	$	2,731,901	$	3,041,132	$	6,714,288	$	7,008,684
Notes payable, net of debt discounts		363,134		228,716		907,976		953,847
Total liabilities	$	3,095,035	$	3,269,848	$	7,622,264	$	7,962,531

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Inventory (Tables)

9 Months Ended

Sep. 30, 2024

Inventory Disclosure [Abstract]

Schedule of Inventory

As of September 30, 2024 the Company's inventory consisted of raw materials, material overhead, labor, and manufacturing overhead, categorized as follows:

	September 30,		December 31,
	2024		2023
Finished goods	$	7,298,127	$	222,051
Packaging materials		1,370,836		815,883
Inventory in transit		712,307		571,970
Work in progress		8,147,885		691,290
Raw materials		1,904,886		1,822,052
Total inventory	$	19,434,041	$	4,123,246

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Prepaid Expenses (Tables)

9 Months Ended

Sep. 30, 2024

Prepaid Expense, Current [Abstract]

Schedule of Prepaid Expenses

Prepaid expenses consist of the following at September 30, 2024 and December 31, 2023:

	September 30,		December 31,
	2024		2023
Prepaid professional costs	$	-	$	382,524
Prepaid software licenses		68,237		35,252
Prepaid insurance costs		73,274		48,305
Trade shows and marketing services		60,919		29,964
Prepaid rent		-		67,119
Total prepaid expenses	$	202,430	$	563,164

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Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2024

Property and equipment:

Schedule of Property and Equipment

Property and equipment at consist of the following at September 30, 2024 and December 31, 2023:

	September 30,			December 31,
	2024			2023
Machinery	$	7,712,953		$	4,714,626
Leasehold improvements		1,454,767			1,409,767
Software		70,000			70,000
Website		71,589			71,589
Office equipment		121,674			21,440
Construction in progress		2,848,191			1,522,465
		12,279,174			7,809,887
Less: Accumulated depreciation and amortization		(1,550,550	)		(967,602	)
Total property and equipment, net	$	10,728,624		$	6,842,285

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Leases (Tables)

9 Months Ended

Sep. 30, 2024

Lessee Disclosure [Abstract]

Summary of Components of Lease Expense

The components of lease expense were as follows:

	For the Nine Months Ended
	September 30,
	2024		2023
Right-of-Use lease cost:
Amortization of right-of-use asset	$	1,423,179	$	79,213

Schedule of Supplemental Balance Sheet Information

Supplemental balance sheet information related to leases was as follows:

	September 30,			December 31,
	2024			2023
Operating lease:
Operating lease assets	$	17,193,154		$	4,061,820
Current portion of operating lease liability	$	2,140,084		$	550,941
Noncurrent operating lease liability		16,005,280			3,671,729
Total operating lease liability	$	18,145,364		$	4,222,670
Weighted average remaining lease term:
Operating leases (in years)		4.9			5.9
Weighted average discount rate:
Operating lease		10.25	%		8.20	%

Summary of Supplemental Cash Flow and Other Information

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

	For the Nine Months Ended
	September 30,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	1,553,753	$	128,840

Schedule of Future Minimum Lease Payments

The future minimum lease payments due under operating leases as of September 30, 2024 is as follows:

Fiscal Year Ending	Minimum Lease
December 31,	Commitments
2024 (for the three months remaining)	$	814,661
2025		4,314,293
2026		4,894,504
2027		5,004,433
2028 and thereafter		8,515,670
Total	$	23,543,561
Less effects of discounting		(5,398,197	)
Lease liability recognized	$	18,145,364

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Notes Payable, Related Parties (Tables)

9 Months Ended

Sep. 30, 2024

Notes Payable [Abstract]

Summary of Notes Payable Related Parties

Notes payable, related parties consists of the following at September 30, 2024 and December 31, 2023, respectively:

	June 30,		December 31,
	2024		2023
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 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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The unsecured note matured on May 11, 2024.	$	-	$	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 note bears interest at 8% per annum, payable in cash semi-annually on June 30 and December 31, with		-		50,000

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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The unsecured note matured on April 25, 2024.
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 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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The unsecured note matured on April 25, 2024.	-	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. The warrants were exercised on April 15, 2024.	250,000	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. The warrants were exercised on April 15, 2024.	250,000	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. The warrants were exercised on April 15, 2024.	250,000	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. The warrants were exercised on April 15, 2024.	500,000	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. The warrants were exercised on April 15, 2024.	250,000	250,000
On December 31, 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. The warrants were exercised on April 15, 2024.	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. The warrants were exercised on April 15, 2024.	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. The warrants were exercised on April 15, 2024.	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 30th and December 31st. The noteholder also received warrants to purchase 500,000 shares of common stock, exercisable at $2.35 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds from certain warrant exercises were used to repay the note.		-		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 30th and December 31st. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. The noteholder also received warrants to purchase 25,000 shares of common stock, exercisable at $2.35 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. The noteholder also received warrants to purchase 230,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024 and proceeds were used to partially repay the note.		629,000		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 30th and December 31st. The noteholder also received warrants to purchase 75,000 shares of common stock, exercisable at $2.21 per share over a ten-year term. The warrants were exercised on April 15, 2024 and proceeds were used to repay the note.		-		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024 and proceeds were used to partially repay the note.		16,712		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024 and proceeds were used to partially repay the note.		33,425		50,000
Total notes payable, related parties		3,179,137		8,595,000
Less unamortized debt discounts:		447,236		1,880,712
Notes payable		2,731,901		6,714,288
Less current maturities		2,731,901		2,543,146
Notes payable, related parties, less current maturities	$	-	$	4,171,142

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Notes Payable (Tables)

9 Months Ended

Sep. 30, 2024

Notes Payable [Abstract]

Summary of Notes Payable

Notes payable consists of the following at September 30, 2024 and December 31, 2023, respectively:

	September 30,		December 31,
	2024		2023
On April 25, 2023, the Company received $400,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. 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 warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note. The remaining portion of the note matured on April 25, 2024.	$	-	$	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 30th and December 31st. 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. The warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note.		33,000		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 30th and December 31st. 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. The warrants were exercised on April 15, 2024, and the proceeds were used to partially repay the note.		206,250		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		389,250		1,130,000
Less unamortized debt discounts:		26,116		222,024
Notes payable		363,134		907,976
Less current maturities		213,134		313,938
Notes payable, less current maturities	$	150,000	$	594,038

Schedule of Interest Expense Related to Notes Payable, Related Parties, and Other Notes Payable

The Company recognized interest expense related to notes payable, related parties, and other notes payable for the three and nine months ended September 30, 2024 and 2023, as follows:

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2024		2023			2024		2023
Interest on notes payable, related parties	$	64,105	$	140,014		$	285,459	$	405,131
Amortization of debt discounts on notes payable, related parties		142,735		(137,006	)		736,974		776,993
Interest on notes payable		5,812		16,647			25,086		42,553
Amortization of debt discounts on notes payable		12,443		(17,589	)		195,909		123,234
Interest - other		-		1,575			-		1,575
Total interest expense	$	225,095	$	3,641		$	1,243,428	$	1,349,486

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Options (Tables)

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of compensation expense related to common stock options

The Company recognized compensation expense related to common stock options that are being amortized over the implied service term, or vesting period, of the options during the three and nine months ended September 30, 2024 and 2023, as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Directors	$	29,284	$	25,695	$	86,892	$	91,990
Officers		1,039,169		80,520		3,083,827		238,932
Employees		118,418		34,334		224,027		68,304
Total amortized options expense	$	1,186,871	$	140,759	$	3,394,746	$	399,436

XML

Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Earnings Per Share

Basic and diluted earnings per share for the three and nine months ended September 30, 2024 and September 30, 2023:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2024			2023		2024		2023
Net income (loss) attributable to common shareholders	$	(3,379,909	)	$	333,984	$	465,821	$	(4,388,446	)
Basic weighted average shares		10,245,388			5,123,735		8,651,223		4,942,182
Basic income (loss) per share	$	(0.33	)	$	0.07	$	0.05	$	(0.89	)
Diluted weighted average shares		10,245,388			8,066,577		9,613,553		4,942,182
Diluted income (loss) per share	$	(0.33	)	$	0.04	$	0.05	$	(0.89	)

Information Related to Stock Options and Warrants Outstanding

The table below includes information related to stock options and warrants that were outstanding at the end of each respective the three and nine months ended September 30, 2024 and September 30, 2023. For periods in which the Company incurred a net loss, these amounts are not included in weighted average dilutive shares because their impact would be anti-dilutive. For each of the three and nine months ended September 30, 2024, there were approximately 1,019,000 options with a strike price greater than the average

share price for the respective periods, which have been excluded from the weighted average shares because including them would have been antidilutive under the treasury method.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Weighted average stock options		1,607,913		650,436		1,607,580		615,662
Weighted average price of stock options	$	8.00	$	4.64	$	8.00	$	4.64
Weighted average warrants		190,500		2,291,250		974,839		2,084,994
Weighted average price of warrants	$	9.80	$	2.50	$	3.01	$	2.50
Average price of common stock	$	15.74	$	5.52	$	13.84	$	4.56

XML

Organization and Nature of Business - Additional Information (Details) - $ / shares	Feb. 15, 2024	Sep. 30, 2024	Dec. 31, 2023
Class of Stock [Line Items]
Common stock, par value (in dollars per share)		$ 0.001	$ 0.001
Plan Of Conversion
Class of Stock [Line Items]
Date of reincorporation	Feb. 15, 2024

XML

Summary of Significant Accounting Policies - Additional Information (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2024 USD ($) Suppliers Customer	Sep. 30, 2023 USD ($) Customer Suppliers	Sep. 30, 2024 USD ($) Suppliers Customer	Sep. 30, 2023 USD ($) Customer Suppliers	Dec. 31, 2023 USD ($)
Summary of Significant Accounting Policies [Line items]
Federal Deposit Insurance Corporation			$ 250,000
Securities Investor Protection Corporation			500,000
Cash uninsured amount	$ 2,586,671		2,586,671		$ 1,837,840
Allowance for doubtful accounts	149,809		149,809		$ 0
Depreciation	216,164	$ 150,676	582,948	$ 306,092
Cost of depreciation	207,580	141,415	559,888	211,454
Shipping and handling costs			626,819	203,456
Amortization of Stock Option Grants [Member]
Summary of Significant Accounting Policies [Line items]
Stock-based compensation expense	1,186,871	140,759	3,394,746	399,436
Employee Stock Option [Member]
Summary of Significant Accounting Policies [Line items]
Stock-based compensation expense			295,648	125,229
Stock-based compensation expense	$ 1,186,871	$ 140,759	$ 3,394,746	$ 399,436
Employee Stock Option [Member] | Minimum [Member]
Summary of Significant Accounting Policies [Line items]
Weighted average of vesting periods			2 years 3 months 18 days
Employee Stock Option [Member] | Maximum [Member]
Summary of Significant Accounting Policies [Line items]
Weighted average of vesting periods			7 years 3 months 18 days
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member]
Summary of Significant Accounting Policies [Line items]
Concentration risk percentage	19.70%	46.10%	32.50%	42.40%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Two [Member]
Summary of Significant Accounting Policies [Line items]
Concentration risk percentage	14.80%	19.60%	20.90%	15.10%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Three [Member]
Summary of Significant Accounting Policies [Line items]
Concentration risk percentage	10.20%		16.10%	11.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Four [Member]
Summary of Significant Accounting Policies [Line items]
Concentration risk percentage	10.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Top Two Customers [Member]
Summary of Significant Accounting Policies [Line items]
Number of customers | Customer		2
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Top Three Customers [Member]
Summary of Significant Accounting Policies [Line items]
Number of customers | Customer			3	3
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Top Four Customers [Member]
Summary of Significant Accounting Policies [Line items]
Number of customers | Customer	4
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Top Five Customers [Member]
Summary of Significant Accounting Policies [Line items]
Number of customers | Customer	5	5	5	5
Concentration risk percentage	61.80%	86.50%	76.00%	80.00%
Cost of Goods and Service, Product and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Three Suppliers [Member]
Summary of Significant Accounting Policies [Line items]
Concentration risk percentage	87.00%	68.00%	76.00%	69.00%
Number of suppliers | Suppliers	3	3	3	3

XML

Summary of Significant Accounting Policies - Summary of Property and Equipment Life Expectancy (Details)	Sep. 30, 2024
Software and Software Development Costs [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
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] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	10 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration]	us-gaap:UsefulLifeTermOfLeaseMember

XML

Related Party - Schedule of Stock Sales by Related Parties (Details) - USD ($)				9 Months Ended
	Mar. 28, 2024	Nov. 20, 2023	Aug. 25, 2023	Sep. 30, 2024	Sep. 30, 2023
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)	158,694	46,669	195,000
Amount	$ 1,150,500	$ 303,348	$ 975,000	$ 15,712,976	$ 3,675,000
Ira and Claudia Goldfarb [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)	17,242	23,077	100,000
Amount	$ 125,000	$ 150,000	$ 500,000
Bradley Berman [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)	30,000	10,000	10,000
Amount	$ 217,500	$ 65,000	$ 50,000
Edward Shensky [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)	13,794
Amount	$ 100,000
Brendon Fischer [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)	8,000
Amount	$ 58,000
Cesar J. Gutierrez [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)	10,345
Amount	$ 75,000
Ira Goldfarb [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)			40,000
Amount			$ 200,000
Mr. Mueller [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)		5,000
Amount		$ 32,500
Lyle A. Berman Revocable Trust [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)	68,966		40,000
Amount	$ 500,000		$ 200,000
Alexandria Gutierrez [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)	3,449	4,615	5,000
Amount	$ 25,000	$ 29,998	$ 25,000
Ava Gutierrez [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)	3,449
Amount	$ 25,000
Brett Goldfarb [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)	3,449
Amount	$ 25,000
Cesar J. Gutierrez Living Trust [Member]
Related Party Transaction [Line Items]
Common stock issued in private placement offering (in shares)		3,977
Amount		$ 25,851

XML

Related Party - Additional Information (Details) - USD ($)																			9 Months Ended
	Mar. 28, 2024	Mar. 02, 2024	Feb. 09, 2024	Jan. 11, 2024	Dec. 15, 2023	Nov. 20, 2023	Nov. 13, 2023	Aug. 25, 2023	Jun. 01, 2023	May 11, 2023	Apr. 25, 2023	Apr. 11, 2023	Dec. 21, 2022	Sep. 29, 2022	Aug. 23, 2022	Jul. 22, 2022	Apr. 11, 2022	Apr. 08, 2022	Sep. 30, 2024	May 31, 2024
Number of stock issued	158,694					46,669		195,000
Warrants to purchase aggregate shares																			190,500
Warrants exercisable term																		10 years	5 years
Warrants exercise price																			$ 4	$ 12
Note and Warrant Purchase Agreement [Member]
Proceeds from issuance of debt																		$ 3,700,000
Warrants to purchase aggregate shares																		925,000
Warrants exercise price																		$ 2.35
Class of warrant or right, number per $100,000 notes payable (in shares)																		25,000
Interest rate																		6.00%
Class of warrant or right, redemption price																		$ 0.01
Class of warrant or right, redemption, minimum volume weighted average sale price																		$ 9
Proceeds from warrant exercises																		$ 2,173,750
Sold to Officers or Directors [Member] | Note and Warrant Purchase Agreement [Member]
Proceeds from issuance of debt																		$ 3,120,000
Warrants to purchase aggregate shares																		780,000
Warrants Issued With Promissory Notes [Member]
Warrants to purchase aggregate shares										375,000	375,000				625,000
Warrants exercisable term										10 years	10 years				10 years
Warrants exercise price										$ 2.5	$ 2.5				$ 2.6
Class of warrant or right, number per $100,000 notes payable (in shares)										25,000	25,000				25,000
Debt instrument maturity date																			May 11, 2024
Interest rate										8.00%
Promissory Notes and Warrants [Member]
Proceeds from issuance of debt										$ 1,500,000	$ 1,500,000				$ 2,500,000
Interest rate											8.00%				8.00%
Promissory Notes and Warrants [Member] | One Director [Member]
Proceeds from issuance of debt													$ 250,000	$ 750,000
Five Nonemployee Directors [Member]
Stock issued during period, shares, issued for services			23,534	7,060					20,699
Stock issued during period, value, issued for services			$ 519,280	$ 56,480					$ 125,230
Mr. Creed [Member]
Stock options granted																24,151
Shares of common stock, exercise price																$ 3.9
Mr. Creed [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Options, vesting percentage																20.00%
Mr. Creed [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Options, vesting percentage																20.00%
Mr. Mueller [Member]
Number of stock issued						5,000
Stock options granted																	24,151
Shares of common stock, exercise price																	$ 3.1
Mr. Mueller [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Options, vesting percentage																	20.00%
Mr. Mueller [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Options, vesting percentage																	20.00%
Mr. Goldfarb [Member]
Stock options granted					500,000
Shares of common stock, exercise price					$ 9.75
Shares vesting period																			5 years
Mr. Goldfarb [Member] | Additional Options Pursuant To A&R Employment Agreement [Member]
Stock options granted					500,000
Mrs Goldfarb [Member]
Stock options granted					450,000
Mrs Goldfarb [Member] | Additional Options Pursuant To A&R Employment Agreement [Member]
Stock options granted					450,000
Shares of common stock, exercise price					$ 40
Common stock closing transaction price per share					$ 40
Number of consecutive trading days																			20 days
Keith Terreri [Member]
Stock options granted							27,000
Shares of common stock, exercise price							$ 6.19
Keith Terreri [Member] | Terreri Employment Agreement [Member]
Options vested		0
Options forfeited		27,000
Director [Member] | Promissory Notes and Warrants [Member]
Proceeds from issuance of debt										$ 100,000
Board of Directors Chairman [Member] | Promissory Notes and Warrants [Member]
Proceeds from issuance of debt											$ 750,000
Cesar J. Gutierrez Living Trust [Member]
Number of stock issued						3,977
Cesar J. Gutierrez Living Trust [Member] | Promissory Notes and Warrants [Member]
Proceeds from issuance of debt											$ 50,000
Lyle A. Berman Revocable Trust [Member]
Number of stock issued	68,966							40,000
Lyle A. Berman Revocable Trust [Member] | Warrants Issued With Promissory Notes [Member]
Proceeds from issuance of debt												$ 250,000
Warrants to purchase aggregate shares												62,500
Warrants exercisable term												10 years
Warrants exercise price												$ 2.6
Class of warrant or right, number per $100,000 notes payable (in shares)												25,000
Related Party [Member] | Warrants Issued With Promissory Notes [Member]
Proceeds from issuance of debt													$ 2,075,000.000
Warrants to purchase aggregate shares													311,250
Warrants exercise price													$ 2.21
Class of warrant or right, number per $100,000 notes payable (in shares)													15,000

XML

Related Party - Additional Information 2 (Details)				3 Months Ended		9 Months Ended
	Mar. 28, 2024 USD ($) $ / shares shares	Nov. 20, 2023 USD ($) $ / shares shares	Aug. 25, 2023 USD ($) $ / shares shares	Sep. 30, 2024 USD ($) ft²	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) ft²	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Number of stock issued | shares	158,694	46,669	195,000
Operating lease liabilities in connection with lease				$ 18,145,364		$ 18,145,364		$ 4,222,670
Operating lease cash payment						$ 1,553,753	$ 128,840
Facility in Irving, Texas [Member]
Area of real estate property | ft²				20,945		20,945
Lessor, operating lease, renewal term				5 years		5 years
Operating lease, monthly rate						$ 11,296
Operating lease, annual escalation of payments, percent						3.00%
Operating lease liabilities in connection with lease				$ 1,257,743		$ 1,257,743		$ 1,301,354
Operating lease, expense				36,720	$ 36,720	110,161	110,161
Operating lease cash payment				$ 33,229	$ 32,261	$ 99,030	$ 96,146
Multiple Accredited Investors [Member] | Stock Purchase Agreement [Member]
Proceeds from issuance or sale of equity		$ 2,770,872	$ 3,675,000
Number of stock issued | shares		426,288	735,000
Shares issued, price per share | $ / shares		$ 6.5	$ 5
Private Placement [Member]
Proceeds from issuance or sale of equity	$ 3,738,000
Number of stock issued | shares	515,597
Shares issued, price per share | $ / shares	$ 7.25

XML

Fair Value of Financial Instruments - Summary of Valuation of Financial Instruments at Fair Value on a Nonrecurring Basis (Details) - Fair Value, Nonrecurring [Member] - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, Fair Value Disclosure	$ 3,095,035	$ 7,622,264
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, Fair Value Disclosure	3,269,848	7,962,531
Related Party [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes payable, net of debt discounts	2,731,901	6,714,288
Related Party [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes payable, net of debt discounts	3,041,132	7,008,684
Nonrelated Party [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes payable, net of debt discounts	363,134	907,976
Nonrelated Party [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes payable, net of debt discounts	$ 228,716	$ 953,847

XML

Inventory - Schedule of Inventory (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Inventory Disclosure [Abstract]
Finished goods	$ 7,298,127	$ 222,051
Packaging materials	1,370,836	815,883
Inventory in transit	712,307	571,970
Work in progress	8,147,885	691,290
Raw materials	1,904,886	1,822,052
Total inventory	$ 19,434,041	$ 4,123,246

XML

Inventory - Additional Information (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Inventory Disclosure [Abstract]
Prepaid Inventory	$ 572,098	$ 563,131

XML

Prepaid Expenses - Schedule of Prepaid Expenses (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Prepaid Expense, Current [Abstract]
Prepaid professional costs	$ 0	$ 382,524
Prepaid software licenses	68,237	35,252
Prepaid insurance costs	73,274	48,305
Trade shows and marketing services	60,919	29,964
Prepaid rent	0	67,119
Total prepaid expenses	$ 202,430	$ 563,164

XML

Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 12,279,174	$ 7,809,887
Less: Accumulated depreciation and amortization	(1,550,550)	(967,602)
Total property and equipment, net	10,728,624	6,842,285
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	7,712,953	4,714,626
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,454,767	1,409,767
Software and Software Development Costs [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	70,000	70,000
Website [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	71,589	71,589
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	121,674	21,440
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,848,191	$ 1,522,465

XML

Property and Equipment - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Property, Plant and Equipment [Line Items]
Depreciation	$ 216,164	$ 150,676	$ 582,948	$ 306,092
Cost of Goods Sold [Member]
Property, Plant and Equipment [Line Items]
Depreciation	207,580	141,415	559,888	211,454
Operating Expense [Member]
Property, Plant and Equipment [Line Items]
Depreciation	$ 8,583	$ 9,261	$ 23,060	$ 94,638

XML

Leases - Additional Information (Details)	Oct. 26, 2023 USD ($) ft²	Jul. 01, 2023 USD ($) ft²	May 22, 2024 USD ($) ft²	Feb. 01, 2024 USD ($)	Sep. 15, 2022 USD ($) ft²
Sublease Agreement [Member]
Lessee, Lease, Description [Line Items]
Incremental borrowing rate				10.68
Fixed rent price, per month				$ 5,250
Operating and Office Facility [Member
Lessee, Lease, Description [Line Items]
Area of real estate property | ft²					20,945
Renewal term (Year)					5 years
Monthly lease payment					$ 11,296
Percentage of annual escalation of lease payments					3.00%
Incremental borrowing rate					5.75
Industrial Lease With USCIF Pinnacle Building B LLC [Member]
Lessee, Lease, Description [Line Items]
Lease rentable property | ft²			324,000
Renewal term (Year)			60 months
Monthly lease payment			$ 122,175
Incremental borrowing rate			10.84
Term of contract (Month)			62 months
Monthly lease payment increase			$ 297,289
Security deposit			$ 1,000,000
Warehouse Space in Irving, Texas [Member]
Lessee, Lease, Description [Line Items]
Area of real estate property | ft²		9,000
Monthly lease payment		$ 8,456
Incremental borrowing rate		8
Term of contract (Month)		37 months
Annual escalation rate		4.00%
Lease Agreement with Prologies, Inc [Member]
Lessee, Lease, Description [Line Items]
Area of real estate property | ft²	51,264
Monthly lease payment	$ 42,500
Incremental borrowing rate	9.38
Term of contract (Month)	5 years 2 months
Annual escalation rate	4.30%
Monthly lease payment increase	$ 51,700
Operating lease expenses of premises	7,835
Debt instrument, face amount	$ 300,000

XML

Leases - Summary of Components of Lease Expense (Details) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash Flow, Operating Activities, Lessee [Abstract]
Amortization of right-of-use asset	$ 1,423,179	$ 79,213

XML

Leases - Summary of Supplemental Cash Flow and Other Information (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Lessee Disclosure [Abstract]
Operating lease assets	$ 17,193,154	$ 4,061,820
Current portion of operating lease liability	2,140,084	550,941
Noncurrent operating lease liability	16,005,280	3,671,729
Total operating lease liability	$ 18,145,364	$ 4,222,670
Weighted average remaining lease term: Operating leases (in years) (Year)	4 years 10 months 24 days	5 years 10 months 24 days
Weighted average discount rate: Operating lease	10.25%	8.20%

XML

Leases - Supplemental Cash Flow and Other Information (Details) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Lessee Disclosure [Abstract]
Operating cash flows used for operating leases	$ 1,553,753	$ 128,840

XML

Leases - Schedule of Future Minimum Lease Payments (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
2024 (for the three months remaining)	$ 814,661
2025	4,314,293
2026	4,894,504
2027	5,004,433
2028 and thereafter	8,515,670
Total	23,543,561
Less effects of discounting	(5,398,197)
Lease liability recognized	$ 18,145,364	$ 4,222,670

XML

Notes Payable, Related Parties - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Related Party Transaction [Line Items]
Loss on early extinguishment of debt	$ 0	$ 0	$ (696,502)	$ 0
Notes Payable Related Parties [Member]
Related Party Transaction [Line Items]
Loss on early extinguishment of debt		$ 0	$ (696,502)	$ 0

XML

Notes Payable, Related Parties - Summary of Notes Payable Related Parties (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Director [Member] | Notes Payable 1 [Member]
Related Party Transaction [Line Items]
Notes payable		$ 100,000
Cesar J. Gutierrez Living Trust [Member] | Notes Payable 2 [Member]
Related Party Transaction [Line Items]
Notes payable		50,000
Cesar J. Gutierrez Living Trust [Member] | Notes Payable 20 [Member]
Related Party Transaction [Line Items]
Notes payable	$ 33,425	50,000
Board of Directors Chairman [Member] | Notes Payable 3 [Member]
Related Party Transaction [Line Items]
Notes payable		750,000
Board of Directors Chairman [Member] | Notes Payable 6 [Member]
Related Party Transaction [Line Items]
Notes payable	250,000	250,000
Board of Directors Chairman [Member] | Notes Payable 7 [Member]
Related Party Transaction [Line Items]
Notes payable	500,000	500,000
Board of Directors Chairman [Member] | Notes Payable 10 [Member]
Related Party Transaction [Line Items]
Notes payable	500,000	500,000
Board of Directors Chairman [Member] | Notes Payable 12 [Member]
Related Party Transaction [Line Items]
Notes payable		2,000,000
Board of Directors Chairman [Member] | Notes Payable 17 [Member]
Related Party Transaction [Line Items]
Notes payable	629,000	1,500,000
Lyle A. Berman Revocable Trust [Member] | Notes Payable 4 [Member]
Related Party Transaction [Line Items]
Notes payable	250,000	250,000
Lyle A. Berman Revocable Trust [Member] | Notes Payable 5 [Member]
Related Party Transaction [Line Items]
Notes payable	250,000	250,000
Lyle A. Berman Revocable Trust [Member] | Notes Payable 8 [Member]
Related Party Transaction [Line Items]
Notes payable	250,000	250,000
Lyle A. Berman Revocable Trust [Member] | Notes Payable 9 [Member]
Related Party Transaction [Line Items]
Notes payable	250,000	250,000
Lyle A. Berman Revocable Trust [Member] | Notes Payable 11 [Member]
Related Party Transaction [Line Items]
Notes payable	250,000	250,000
Lyle A. Berman Revocable Trust [Member] | Notes Payable 16 [Member]
Related Party Transaction [Line Items]
Notes payable		920,000
Lyle A. Berman Revocable Trust [Member] | Notes Payable 18 [Member]
Related Party Transaction [Line Items]
Notes payable		500,000
Former CFO [Member] | Notes Payable 13 [Member]
Related Party Transaction [Line Items]
Notes payable		100,000
Former CFO [Member] | Notes Payable 19 [Member]
Related Party Transaction [Line Items]
Notes payable	16,712	25,000
IG Union Bower LLC [Member] | Notes Payable 14 [Member]
Related Party Transaction [Line Items]
Notes payable		100,000
Related Party [Member]
Related Party Transaction [Line Items]
Less: current maturities	2,731,901	2,543,146
Notes payable, related parties, less current maturities	0	4,171,142
Related Party [Member] | Notes Payable, Other Payables [Member]
Related Party Transaction [Line Items]
Notes payable	3,179,137	8,595,000
Debt discounts	447,236	1,880,712
Notes payable	2,731,901	6,714,288
Less: current maturities	$ 2,731,901	2,543,146
Notes payable, related parties, less current maturities		$ 4,171,142

XML

Notes Payable, Related Parties - Summary of Notes Payable Related Parties (Parenthetical) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2024	May 31, 2024	May 11, 2023	Apr. 25, 2023	Apr. 11, 2023	Aug. 23, 2022	Apr. 08, 2022
Related Party Transaction [Line Items]
Warrant, shares (in shares)	190,500
Warrant, exercise price (in dollars per share)	$ 4	$ 12
Warrant, term (Year)	5 years						10 years
Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Maturity	May 11, 2024
Interest rate			8.00%
Warrant, shares (in shares)			375,000	375,000		625,000
Warrant, exercise price (in dollars per share)			$ 2.5	$ 2.5		$ 2.6
Warrant, term (Year)			10 years	10 years		10 years
Director [Member] | Notes Payable 1 [Member]
Related Party Transaction [Line Items]
Face amount	$ 100,000
Maturity	May 11, 2024
Interest rate	8.00%
Director [Member] | Notes Payable 1 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	25,000
Warrant, exercise price (in dollars per share)	$ 2.5
Warrant, term (Year)	10 years
Director [Member] | Notes Payable 6 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	62,500
Warrant, exercise price (in dollars per share)	$ 2.6
Warrant, term (Year)	10 years
Cesar J. Gutierrez Living Trust [Member] | Notes Payable 2 [Member]
Related Party Transaction [Line Items]
Face amount	$ 50,000
Maturity	Apr. 25, 2024
Interest rate	8.00%
Cesar J. Gutierrez Living Trust [Member] | Notes Payable 2 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	12,500
Warrant, exercise price (in dollars per share)	$ 2.5
Warrant, term (Year)	10 years
Cesar J. Gutierrez Living Trust [Member] | Notes Payable 20 [Member]
Related Party Transaction [Line Items]
Face amount	$ 50,000
Maturity	Dec. 31, 2024
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Cesar J. Gutierrez Living Trust [Member] | Notes Payable 20 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	7,500
Warrant, exercise price (in dollars per share)	$ 2.21
Warrant, term (Year)	10 years
Board of Directors Chairman [Member] | Notes Payable 3 [Member]
Related Party Transaction [Line Items]
Face amount	$ 750,000
Maturity	Apr. 25, 2024
Interest rate	8.00%
Board of Directors Chairman [Member] | Notes Payable 3 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	187,500
Warrant, exercise price (in dollars per share)	$ 2.5
Warrant, term (Year)	10 years
Board of Directors Chairman [Member] | Notes Payable 6 [Member]
Related Party Transaction [Line Items]
Face amount	$ 250,000
Maturity	Aug. 23, 2025
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Board of Directors Chairman [Member] | Notes Payable 7 [Member]
Related Party Transaction [Line Items]
Face amount	$ 500,000
Maturity	Aug. 23, 2025
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Board of Directors Chairman [Member] | Notes Payable 7 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	125,000
Warrant, exercise price (in dollars per share)	$ 2.6
Warrant, term (Year)	10 years
Board of Directors Chairman [Member] | Notes Payable 10 [Member]
Related Party Transaction [Line Items]
Face amount	$ 500,000
Maturity	Aug. 23, 2025
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Board of Directors Chairman [Member] | Notes Payable 10 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	125,000
Warrant, exercise price (in dollars per share)	$ 2.6
Warrant, term (Year)	10 years
Board of Directors Chairman [Member] | Notes Payable 12 [Member]
Related Party Transaction [Line Items]
Face amount	$ 2,000,000
Interest rate	6.00%
Warrant, exercise date	Apr. 15, 2024
Board of Directors Chairman [Member] | Notes Payable 12 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	500,000
Warrant, exercise price (in dollars per share)	$ 2.35
Warrant, term (Year)	10 years
Board of Directors Chairman [Member] | Notes Payable 17 [Member]
Related Party Transaction [Line Items]
Face amount	$ 1,500,000
Maturity	Dec. 31, 2024
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Board of Directors Chairman [Member] | Notes Payable 17 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	225,000
Warrant, exercise price (in dollars per share)	$ 2.21
Warrant, term (Year)	10 years
Lyle A. Berman Revocable Trust [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)					62,500
Warrant, exercise price (in dollars per share)					$ 2.6
Warrant, term (Year)					10 years
Lyle A. Berman Revocable Trust [Member] | Notes Payable 4 [Member]
Related Party Transaction [Line Items]
Face amount	$ 250,000
Maturity	Aug. 23, 2025
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Lyle A. Berman Revocable Trust [Member] | Notes Payable 4 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	62,500
Warrant, exercise price (in dollars per share)	$ 2.6
Warrant, term (Year)	10 years
Lyle A. Berman Revocable Trust [Member] | Notes Payable 5 [Member]
Related Party Transaction [Line Items]
Face amount	$ 250,000
Maturity	Aug. 23, 2025
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Lyle A. Berman Revocable Trust [Member] | Notes Payable 5 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	62,500
Warrant, exercise price (in dollars per share)	$ 2.6
Warrant, term (Year)	10 years
Lyle A. Berman Revocable Trust [Member] | Notes Payable 8 [Member]
Related Party Transaction [Line Items]
Face amount	$ 250,000
Maturity	Aug. 23, 2025
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Lyle A. Berman Revocable Trust [Member] | Notes Payable 8 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	62,500
Warrant, exercise price (in dollars per share)	$ 2.6
Warrant, term (Year)	10 years
Lyle A. Berman Revocable Trust [Member] | Notes Payable 9 [Member]
Related Party Transaction [Line Items]
Face amount	$ 250,000
Maturity	Aug. 23, 2025
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Lyle A. Berman Revocable Trust [Member] | Notes Payable 9 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	62,500
Warrant, exercise price (in dollars per share)	$ 2.6
Warrant, term (Year)	10 years
Lyle A. Berman Revocable Trust [Member] | Notes Payable 11 [Member]
Related Party Transaction [Line Items]
Face amount	$ 250,000
Maturity	Aug. 23, 2025
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Lyle A. Berman Revocable Trust [Member] | Notes Payable 11 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	62,500
Warrant, exercise price (in dollars per share)	$ 2.6
Warrant, term (Year)	10 years
Lyle A. Berman Revocable Trust [Member] | Notes Payable 16 [Member]
Related Party Transaction [Line Items]
Face amount	$ 920,000
Interest rate	6.00%
Warrant, exercise date	Apr. 15, 2024
Lyle A. Berman Revocable Trust [Member] | Notes Payable 16 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	230,000
Warrant, exercise price (in dollars per share)	$ 2.35
Warrant, term (Year)	10 years
Lyle A. Berman Revocable Trust [Member] | Notes Payable 18 [Member]
Related Party Transaction [Line Items]
Face amount	$ 500,000
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Lyle A. Berman Revocable Trust [Member] | Notes Payable 18 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	75,000
Warrant, exercise price (in dollars per share)	$ 2.21
Warrant, term (Year)	10 years
Former CFO [Member] | Notes Payable 13 [Member]
Related Party Transaction [Line Items]
Face amount	$ 100,000
Interest rate	6.00%
Warrant, exercise date	Apr. 15, 2024
Former CFO [Member] | Notes Payable 13 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	25,000
Warrant, exercise price (in dollars per share)	$ 2.35
Warrant, term (Year)	10 years
Former CFO [Member] | Notes Payable 19 [Member]
Related Party Transaction [Line Items]
Face amount	$ 25,000
Maturity	Dec. 31, 2024
Interest rate	8.00%
Warrant, exercise date	Apr. 15, 2024
Former CFO [Member] | Notes Payable 19 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	3,750
Warrant, exercise price (in dollars per share)	$ 2.21
Warrant, term (Year)	10 years
IG Union Bower LLC [Member] | Notes Payable 14 [Member]
Related Party Transaction [Line Items]
Face amount	$ 100,000
Interest rate	6.00%
Warrant, exercise date	Apr. 15, 2024
IG Union Bower LLC [Member] | Notes Payable 14 [Member] | Warrants Issued With Promissory Notes [Member]
Related Party Transaction [Line Items]
Warrant, shares (in shares)	25,000
Warrant, exercise price (in dollars per share)	$ 2.35
Warrant, term (Year)	10 years

XML

Notes Payable - Summary of Notes Payable (Details) - Nonrelated Party [Member] - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Less: current maturities	$ 213,134	$ 313,938
Notes payable, related parties, less current maturities	150,000	594,038
Notes Payable 1 [Member]
Debt Instrument [Line Items]
Notes payable		400,000
Notes Payable 2 [Member]
Debt Instrument [Line Items]
Notes payable	33,000	80,000
Notes Payable 3 [Member]
Debt Instrument [Line Items]
Notes payable	206,250	500,000
Notes Payable 4 [Member]
Debt Instrument [Line Items]
Notes payable	150,000	150,000
Notes Payable, Other Payables [Member]
Debt Instrument [Line Items]
Notes payable	389,250	1,130,000
Debt discounts	26,116	222,024
Notes payable	363,134	907,976
Less: current maturities	213,134	313,938
Notes payable, related parties, less current maturities	$ 150,000	$ 594,038

XML

Notes Payable - Summary of Notes Payable (Parenthetical) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2024	May 31, 2024	May 11, 2023	Apr. 25, 2023	Aug. 23, 2022	Apr. 08, 2022
Debt Instrument [Line Items]
Warrant, shares (in shares)	190,500
Warrant, exercise price (in dollars per share)	$ 4	$ 12
Warrant, term (Year)	5 years					10 years
Warrants Issued With Promissory Notes [Member]
Debt Instrument [Line Items]
Maturity	May 11, 2024
Interest rate			8.00%
Warrant, shares (in shares)			375,000	375,000	625,000
Warrant, exercise price (in dollars per share)			$ 2.5	$ 2.5	$ 2.6
Warrant, term (Year)			10 years	10 years	10 years
Nonrelated Party [Member] | Notes Payable 1 [Member]
Debt Instrument [Line Items]
Face amount	$ 400,000
Interest rate	8.00%
Nonrelated Party [Member] | Notes Payable 1 [Member] | Warrants Issued With Promissory Notes [Member]
Debt Instrument [Line Items]
Maturity	Apr. 25, 2024
Warrant, shares (in shares)	100,000
Warrant, exercise price (in dollars per share)	$ 2.5
Warrant, term (Year)	10 years
Warrant, exercise date	Apr. 15, 2024
Nonrelated Party [Member] | Notes Payable 2 [Member]
Debt Instrument [Line Items]
Face amount	$ 80,000
Maturity	Apr. 08, 2025
Interest rate	6.00%
Nonrelated Party [Member] | Notes Payable 2 [Member] | Warrants Issued With Promissory Notes [Member]
Debt Instrument [Line Items]
Warrant, shares (in shares)	20,000
Warrant, exercise price (in dollars per share)	$ 2.35
Warrant, term (Year)	10 years
Warrant, exercise date	Apr. 15, 2024
Nonrelated Party [Member] | Notes Payable 3 [Member]
Debt Instrument [Line Items]
Face amount	$ 500,000
Maturity	Apr. 08, 2025
Interest rate	6.00%
Nonrelated Party [Member] | Notes Payable 3 [Member] | Warrants Issued With Promissory Notes [Member]
Debt Instrument [Line Items]
Warrant, shares (in shares)	125,000
Warrant, exercise price (in dollars per share)	$ 2.35
Warrant, term (Year)	10 years
Warrant, exercise date	Apr. 15, 2024
Nonrelated Party [Member] | Notes Payable 4 [Member]
Debt Instrument [Line Items]
Face amount	$ 150,000
Interest rate	3.75%
Periodic payment	$ 731

XML

Notes Payable - Schedule of Interest Expense Related to Notes Payable, Related Parties, and Other Notes Payable (Details) - Notes Payable [Member] - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Debt Instrument [Line Items]
Amortization of debt discounts on notes payable, related parties	$ 142,735	$ (137,006)	$ 736,974	$ 776,993
Amortization of debt discounts on notes payable	12,443	(17,589)	195,909	123,234
Interest - other		1,575		1,575
Total interest expense	225,095	3,641	1,243,428	1,349,486
Related Party [Member]
Debt Instrument [Line Items]
Interest on notes payable, related parties	64,105	140,014	285,459	405,131
Nonrelated Party [Member]
Debt Instrument [Line Items]
Interest on notes payable, related parties	$ 5,812	$ 16,647	$ 25,086	$ 42,553

XML

Stockholders' Equity - Additional Information (Details) - USD ($)											3 Months Ended		9 Months Ended
	May 09, 2024	May 02, 2024	Apr. 15, 2024	Mar. 28, 2024	Feb. 09, 2024	Jan. 11, 2024	Jan. 05, 2024	Nov. 20, 2023	Aug. 25, 2023	Jun. 01, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	May 31, 2024	Dec. 31, 2023
Class of Stock [Line Items]
Preferred stock, shares authorized											20,000,000		20,000,000			20,000,000
Preferred stock, par value											$ 0.001		$ 0.001			$ 0.001
Warrants to purchase aggregate shares											190,500		190,500
Preferred stock issued											0		0			0
Warrants exercised (in shares)													52,500
Loss on extinguishment of debt											$ 0	$ 0	$ (696,502)	$ 0
Warrants exercise price											$ 4		$ 4		$ 12
Reduced accrued interest payable													$ (363,326)	419,807
Number of stock issued				158,694				46,669	195,000
Common stock, par value											$ 0.001		$ 0.001			$ 0.001
Proceeds from sale of shares				$ 1,150,500				$ 303,348	$ 975,000				$ 15,712,976	$ 3,675,000
Warrant Exercise [Member]
Class of Stock [Line Items]
Increased common equity			$ 5,299,112
Warrants exercised (in shares)			2,186,250
Notes repaid													3,620,000
Loss on extinguishment of debt													(696,502)
Class of warrant or right, redemption price			$ 0.001
Reduced accrued interest payable			$ (98,750)
Reduced debt			$ (5,200,362)
Class of warrant or right, redemption, minimum volume weighted average sale price			$ 9
Warrant Exercise [Member] | Notes Amendment [Member]
Class of Stock [Line Items]
Notes repaid													1,580,363
Debt discounts included as amortized interest													$ 215,773
Warrant Exercise [Member] | Maximum [Member]
Class of Stock [Line Items]
Warrants exercise price			2.6
Warrant Exercise [Member] | Minimum [Member]
Class of Stock [Line Items]
Warrants exercise price			$ 2.21
Stock Purchase Agreement November 20, 2023 [Member]
Class of Stock [Line Items]
Number of stock issued								426,288
Price per share								$ 6.5
Proceeds from sale of shares								$ 2,770,848
Stock Purchase Agreement August 2023 [Member]
Class of Stock [Line Items]
Number of stock issued									735,000
Price per share									$ 5
Proceeds from sale of shares									$ 3,675,000
Private Placement [Member]
Class of Stock [Line Items]
Proceeds from issuance or sale of equity				$ 3,738,000
Shares issued, price per share				$ 7.25
Number of stock issued				515,597
Initial Public Offering [Member]
Class of Stock [Line Items]
Shares issued, price per share		$ 10
Stock options granted		180,000
Warrants to purchase aggregate shares		120,000													138,000
Number of stock issued		1,200,000
Common stock, par value		$ 0.001
Public Offering [Member]
Class of Stock [Line Items]
Proceeds from sale of shares	$ 11,974,976
Five Directors [Member]
Class of Stock [Line Items]
Number of shares issued for services										21,095
Aggregate fair value of common stock										$ 125,230
Five Nonemployee Directors [Member]
Class of Stock [Line Items]
Number of shares issued for services					23,534	7,060				20,699
Aggregate fair value of common stock					$ 519,280	$ 56,480				$ 125,230
Officers and Directors [Member] | Stock Purchase Agreement November 20, 2023 [Member]
Class of Stock [Line Items]
Number of stock issued								46,669
Proceeds from sale of shares								$ 303,348
Officers and Directors [Member] | Stock Purchase Agreement August 2023 [Member]
Class of Stock [Line Items]
Number of stock issued									195,000
Proceeds from sale of shares									$ 975,000
Officers, Directors and Related Parties [Member] | Private Placement [Member]
Class of Stock [Line Items]
Number of stock issued				158,694
Proceeds from sale of shares				$ 1,150,500
Mr. Shensky [Member] | Non Employee Director Compensation Plan [Member]
Class of Stock [Line Items]
Employee Benefits and Share-Based Compensation							$ 25,000

XML

Options - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Feb. 15, 2024	Jan. 08, 2024
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Proceeds from options exercises			$ 163,854
Share-based compensation arrangement by share-based payment award, options, exercises in period (in shares)			50,459	0
Options exercisable	350,353		350,353
Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options strike price	$ 1,019,000		$ 1,019,000
Employee Stock Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, outstanding, number (in shares)	2,626,382		2,626,382
Options strike price			$ 19.91
Share-based compensation arrangement by share-based payment award, options, exercisable, weighted average remaining contractual term (in years)			8 years 8 months 12 days
Weighted-average period over which awards are expected to be recognized			2 years 6 months
Stock-based compensation expense	$ 1,186,871	$ 140,759	$ 3,394,746	$ 399,436
Share-based payment arrangement, nonvested award, option, cost not yet recognized, amount	12,457,803		$ 12,457,803
Share-based compensation arrangement by share-based payment award, options, forfeitures in period (in shares)			46,000
Share-based compensation arrangements by share-based payment award, options, forfeitures in period, weighted average exercise price (in dollars per share)			$ 5.43
Share-based compensation arrangement by share-based payment award, options, expirations in period (in shares)			333
Options expired			$ 14,491
Employee Stock Option [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Option expired strik price			$ 195
Employee Stock Option [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Option expired strik price			$ 5.41
Employee Stock Option [Member] | Twenty One Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock options granted			117,061
Shares of common stock, exercise price			$ 13.62
Share-based compensation arrangement by share-based payment award, fair value assumptions, call option value			12.14
Share-based compensation arrangement by share-based payment award, options, grants in period, grant date fair value	$ 1,421,542		$ 1,421,542
Share-based compensation arrangement by share-based payment award, expiration period (in years)			10 years
Employee Stock Option [Member] | Twenty One Employees [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, fair value assumptions, weighted average volatility rate			95.00%
Employee Stock Option [Member] | Twenty One Employees [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, fair value assumptions, weighted average volatility rate			94.00%
Employee Stock Option [Member] | Twenty One Employees [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options, vesting percentage			60.00%
Employee Stock Option [Member] | Twenty One Employees [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options, vesting percentage			20.00%
The 2020 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Additional number of shares available for issuance						2,150,000
Additional number of shares available for grant						2,964,150
The 2020 Plan Amendment [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Additional number of shares available for issuance						2,150,000
Additional number of shares available for grant						2,964,150
The 2024 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock reserved for issuance					3,000,000

XML

Options - Schedule of compensation expense related to common stock options (Details) - Employee Stock Option [Member] - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total amortized options expense	$ 1,186,871	$ 140,759	$ 3,394,746	$ 399,436
Directors [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total amortized options expense	29,284	25,695	86,892	91,990
Officers [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total amortized options expense	1,039,169	80,520	3,083,827	238,932
Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total amortized options expense	$ 118,418	$ 34,334	$ 224,027	$ 68,304

XML

Warrants - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	May 31, 2024	May 02, 2024	Dec. 31, 2023	Apr. 08, 2022
Class of Warrant or Right [Line Items]
Warrants exercise price	$ 4		$ 4		$ 12
Warrant, term (Year)	5 years		5 years					10 years
Warrants to purchase aggregate shares	190,500		190,500
Loss on early extinguishment of debt	$ 0	$ 0	$ (696,502)	$ 0
Percentage of number of shares sold in the offering					10.00%
Common stock, shares issued	10,245,388		10,245,388				6,029,371
Warrants exercised (in shares)			52,500
Warrants, weighted average strike price	$ 9.8		$ 9.8
Class of warrants or rights, expiration in period (in shares)			0
Initial Public Offering [Member]
Class of Warrant or Right [Line Items]
Warrants to purchase aggregate shares					138,000	120,000
Common stock, shares issued					1,380,000
Percentage of warrants exercisable upon issuance of exercise price					120.00%
Warrants Related Debt [Member]
Class of Warrant or Right [Line Items]
Warrants exercise price	$ 2.5		$ 2.5
Amortization of debt discount (premium)			$ 932,883	$ 900,228
Class of warrant or right, issued during the period (in shares)			2,186,250

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Earnings Per Share - Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Earnings Per Share [Abstract]
Net income (loss) attributable to common shareholders	$ (3,379,909)	$ 333,984	$ 465,821	$ (4,388,446)
Basic weighted average shares	10,245,388	5,123,735	8,651,223	4,942,182
Basic income (loss) per share	$ (0.33)	$ 0.07	$ 0.05	$ (0.89)
Diluted weighted average shares	10,245,388	8,066,577	9,613,553	4,942,182
Diluted income (loss) per share	$ (0.33)	$ 0.04	$ 0.05	$ (0.89)

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Earnings Per Share - Information Related to Stock Options and Warrants Outstanding (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Earnings Per Share [Abstract]
Weighted average stock options (in shares)	1,607,913	650,436	1,607,580	615,662
Weighted average price of stock options (in dollars per share)	$ 8	$ 4.64	$ 8	$ 4.64
Weighted average warrants (in shares)	190,500	2,291,250	974,839	2,084,994
Weighted average price of warrants (in dollars per share)	$ 9.8	$ 2.5	$ 3.01	$ 2.5
Average price of common stock (in dollars per share)	$ 15.74	$ 5.52	$ 13.84	$ 4.56

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Earnings Per Share - Additional Information (Details) - $ / shares	3 Months Ended	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2024
Minimum [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Options strike price	$ 1,019,000	$ 1,019,000

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Income Taxes - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Income Taxes [Line Items]
Income tax expense	$ (62,315)	$ 0	$ 195,603	$ 0
Operating loss carryforwards	40,943,066		$ 40,943,066
Operating loss carryforwards, expiration year			2031
Operating loss carryforwards, limitations on use			For tax years beginning after December 31, 2017, pursuant to the enactment of the Tax Cuts and Jobs Act (“TCJA”) net operating losses now carry forward indefinitely but are limited to offsetting 80% of taxable income in a tax year.
Deferred tax assets, valuation allowance	13,033,251		$ 13,033,251		$ 12,984,109
Significant unrecognized tax positions	0		0
Tax Cuts and Jobs Act [Member]
Income Taxes [Line Items]
Operating loss carryforwards	$ 18,957,573		$ 18,957,573