Sow Good Inc.(SOWG) - 2019 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The company reported no revenue and a net loss, with its financial position dominated by its SPAC subsidiary, BRAC Condensed Consolidated Balance Sheets Total assets remained stable, dominated by restricted cash in a trust account, while stockholders' equity declined Condensed Consolidated Balance Sheet Highlights (as of March 31, 2019 vs. December 31, 2018) | Account | March 31, 2019 (Unaudited) | December 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $826,525 | $1,503,500 | | Total current assets | $927,003 | $1,557,448 | | Restricted cash and investments held in trust | $142,027,742 | $141,307,307 | | Total assets | $142,956,336 | $142,865,980 | | Total current liabilities | $790,064 | $659,351 | | Total liabilities | $790,064 | $659,351 | | Redeemable non-controlling interest | $141,341,003 | $140,738,954 | | Total stockholders' equity | $825,269 | $1,467,675 | Condensed Consolidated Statements of Operations The company generated no revenue, with a net loss improving year-over-year due to higher interest income Consolidated Statement of Operations Summary (For the Three Months Ended March 31) | Account | 2019 | 2018 | | :--- | :--- | :--- | | Total revenues | $0 | $0 | | Total operating expenses | $697,828 | $644,954 | | Net operating loss | ($697,828) | ($644,954) | | Total other income (expense) | $816,119 | $475,797 | | Net loss | ($68,288) | ($263,824) | | Net loss attributable to Black Ridge Oil & Gas, Inc. | ($670,337) | ($633,029) | | Net loss per common share | ($0.00) | ($0.00) | Condensed Consolidated Statements of Cash Flows Net cash used in operations increased, leading to a significant decrease in the company's cash balance Consolidated Cash Flow Summary (For the Three Months Ended March 31) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($771,799) | ($500,950) | | Net cash provided by investing activities | $94,824 | $0 | | Net cash provided by financing activities | $0 | $0 | | Net change in cash | ($676,975) | ($500,950) | | Cash at beginning of period | $1,503,500 | $1,477,089 | | Cash at end of period | $826,525 | $976,139 | Notes to the Condensed Consolidated Financial Statements Notes detail the consolidation of the BRAC SPAC, a proposed business combination, and a going concern uncertainty - The company's business is focused on acquiring oil and gas assets and sponsoring a special purpose acquisition company, Black Ridge Acquisition Corp (BRAC)[22][24] - BRAC is determined to be a variable interest entity (VIE) with the company as the primary beneficiary, leading to its consolidation in the financial statements[29][70] - There is substantial doubt about the company's ability to continue as a going concern, as its cash on hand of $826,525 is insufficient to fund expenses over the next year[49][50] - On December 19, 2018, BRAC entered into a business combination agreement to acquire Allied Esports Entertainment, Inc and WPT Enterprises, Inc from Ourgame International Holdings Ltd[67][122][124] - As of March 31, 2019, the parent company (BROG) has loaned BRAC an aggregate of $650,000 via convertible promissory notes to cover expenses related to the proposed business combination[79] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the proposed BRAC business combination, rising expenses, and a significant going concern risk Overview and Outlook The company's primary focus is the proposed merger with Allied Esports and WPT, amid a going concern uncertainty - The company is focused on its oil and gas business and its role as sponsor and manager of Black Ridge Acquisition Corp (BRAC), which is pursuing a business combination[137][147] - BRAC has entered into a merger agreement to acquire Allied Esports and WPT from Ourgame, aiming to create a combined esports and entertainment company[138][142] - A going concern uncertainty exists as the cash balance of $826,525 as of March 31, 2019, is insufficient to cover cash needs over the next year[144][145] Results of Operations Operating expenses increased due to costs from the proposed business combination, offset by higher interest income Comparison of Results of Operations (Three Months Ended March 31) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Total general and administrative expenses | $697,385 | $642,396 | | Net operating loss | ($697,828) | ($644,954) | | Other income (expense) | $816,119 | $475,797 | | Net loss attributable to Black ridge Oil & Gas, Inc. | ($670,337) | ($633,029) | - The increase in professional services expenses by 19% to $101,060 was primarily due to increased accounting and legal services for BRAC's proposed acquisition[156] - Other general and administrative expenses increased by 65% to $250,284, attributable to increased travel, filing fees, and investor relations related to the proposed business combination[157] - Other income increased significantly due to higher interest income from the restricted trust account, which was $811,335 in Q1 2019 compared to $417,712 in Q1 2018[159] Liquidity and Capital Resources The company's cash position is insufficient for the next year, necessitating additional financing or new revenue Working Capital Summary | Item | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Current Assets | $927,003 | $1,557,448 | | Current Liabilities | $790,064 | $659,351 | | Working Capital | $136,939 | $898,097 | - Net cash used in operating activities increased by $270,849 year-over-year, from $500,950 in Q1 2018 to $771,799 in Q1 2019, primarily due to higher G&A expenses[165] - The company plans to satisfy its cash requirements for the next twelve months through additional management service fees and by seeking additional financing via equity or debt[168] Quantitative and Qualitative Disclosures About Market Risk The company has no long-term debt and therefore reports no significant exposure to interest rate risk - The company currently has no long-term debt, so changes in interest rates are not expected to significantly impact its operations or cash flows[173] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period, March 31, 2019[175] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[176] PART II - OTHER INFORMATION Legal Proceedings The company is not party to any material legal proceedings - There are no material legal proceedings to which the company is a party[179] Risk Factors The company is exempt from providing risk factor disclosures as a smaller reporting company - The company is not required to provide risk factor information as it qualifies as a smaller reporting company[180] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[181] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[182] Other Information The company reported no other information required to be disclosed under this item - None[184] Exhibits This section lists filed exhibits, including promissory notes, certifications, and XBRL data files - Exhibits filed include two promissory notes from BRAC to the company, CEO/CFO certifications, and XBRL interactive data files[186]