Sow Good Inc.(SOWG) - 2023 Q3 - Quarterly Report

Financial Performance - Revenues for the three months ended September 30, 2023, reached $5,034,203, a significant increase of $4,946,462 or 5,638% compared to $87,741 in the same period of 2022[121] - Net income for the three months ended September 30, 2023 was $333,984, a positive change of $1,981,256, or 120% compared to a net loss of $1,647,272 in the same period of 2022[128] - Revenues for the nine months ended September 30, 2023 were $6,548,479, an increase of $6,167,423, or 1,619% compared to $381,056 in the same period of 2022[131] - Net loss for the nine months ended September 30, 2023 was $4,388,446, a decrease of $923,677, or 17% compared to $5,312,123 in the same period of 2022[138] Cost and Expenses - Cost of goods sold for the same period was $2,717,254, an increase of $2,652,059 or 4,068% from $65,195 in 2022, with a gross profit margin of 49% compared to 26% in the prior year[122] - Cost of goods sold for the nine months ended September 30, 2023 was $5,046,434, an increase of $4,783,145, or 1,817% compared to $263,289 in the same period of 2022[132] - Gross profit margin for the nine months ended September 30, 2023 was approximately 23%, down from 31% in the comparative period[132] - Total operating expenses for the nine months ended September 30, 2023 were $4,541,005, a decrease of $82,037 compared to $4,623,042 in the same period of 2022[130] - Salaries and benefits increased by $473,882 or 60% to $1,262,332 in Q3 2023, driven by the need for additional personnel due to rapid growth[123] - Professional services expenses rose by $233,511 or 381% to $294,720, primarily due to advisory fees for raising capital for expansion[124] Capital and Cash Flow - The company secured additional capital of $3,675,000 through a share offering in Q3 2023 to support ongoing operations and reduce production constraints[118] - Net cash used in operating activities was $3,328,516 for the nine months ended September 30, 2023, a decrease of $820,530 compared to $4,149,046 in the same period of 2022[144] - Net cash provided by financing activities was $6,475,000 for the nine months ended September 30, 2023, compared to $4,450,000 in the same period of 2022[146] Assets and Working Capital - Current assets as of September 30, 2023 were $5,874,424, compared to $2,578,057 as of December 31, 2022[140] - Working capital as of September 30, 2023 was $3,145,708, an increase from $1,687,880 as of December 31, 2022[143] Market and Product Development - The company has launched twelve SKUs in its Sow Good Candy line and eight SKUs in the Sow Good Crunch Cream line, with products available in over 5,857 retail outlets[112] - The freeze-dried candy market is projected to grow significantly, with the non-chocolate confections market having grown 13.8% in 2022, exceeding $15 billion[113] - Video reviews of Sow Good's products on TikTok have garnered over 4 million views, indicating strong consumer interest and engagement[114] - The company plans to enhance its visibility in stores through distinctive product displays to educate consumers about freeze-dried treats[114] Concerns and Risks - As of September 30, 2023, the company had an accumulated retained deficit of $60,068,008 and cash on hand of $2,096,672, raising concerns about its ability to continue as a going concern[116]