Correspondence 0000950170-24-048491 from Sow Good Inc. (SOWG)
Sow Good Inc.
Date: April 25, 2024 · CIK: 0001490161 · Accession: 0000950170-24-048491
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-277042
Referenced dates: April 19, 2024
Letter
DLA Piper LLP (US)
303 Colorado Street, Suite 3000
Austin, TX, 78701
www.dlapiper.com
Drew Valentine
Drew.valentine@us.dlapiper.com
T (512) 457-7019
April 25, 2024
Via Edgar
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Manufacturing
100 F Street, NE
Washington, D.C. 20549
Attention: Charles Eastman
Hugh West
Sarah Sidwell
Jay Ingram
Re: Sow Good Inc.
Registration Statement on Form S-1 Amendment No. 2
Filed on April 16, 2024
File No. 333-277042
Ladies and Gentlemen:
On behalf of Sow Good Inc., a Delaware corporation (the “Company”), we are transmitting this letter in response to comments received from the staff (the “Staff”) of the Securities and Exchange Commission the (“SEC”) by comment letter dated April 19, 2024 (the “Comment Letter”) with respect to the Company’s Registration Statement on Form S-1 Amendment No. 2 (the “Registration Statement”). This letter is being submitted together with Amendment No. 4 (“Amendment No. 4”) to the Registration Statement, and is being provided to supplement our responses in our previous correspondence submitted on April 22, 2024 (the “April 22 Correspondence”) which was submitted along with Amendment No. 3 to the Registration Statement. The bold and numbered paragraphs below correspond to the numbered paragraphs in the Comment Letter.
Division of Corporation Finance
April 25, 2024
Page 2
Prospectus Summary
Recent Developments, page 4
3. We note you issued common stock in a private placement offering ("2024 PIPE") on March 28, 2024 at a price of $7.25 per share. We also note that the closing price of your stock, on the same date, was $10.50. Please explain to us how you determined the fair value of the common stock in the 2024 PIPE (i.e., $7.25). In your response, discuss how you considered your market activity (i.e., stock price, trading volume, etc.) and provide us with the authoritative guidance you used to support your accounting treatment.
Response: To supplement our previously provided response to this comment, we are attaching hereto as Exhibit A the supplemental information referred to in the first paragraph of our response to this comment in the April 22 Correspondence.
Dilution, page 40
5. Please provide to us supplementally your computations of historical net tangible book value (deficit), pro forma net tangible book value, and pro forma as adjusted net tangible book value, as discussed in the paragraphs preceding the dilution table.
Response: To supplement our previously provided response to this comment, we are attaching hereto as Exhibit B the supplemental information referred to in the first paragraph of our response to this comment in the April 22 Correspondence.
* * * *
Division of Corporation Finance
April 25, 2024
Page 3
We and the Company appreciate the Staff’s attention to the review of Amendment No. 4. Please do not hesitate to contact me at (512) 457-7019, or in my absence Jordyn Giannone at (212) 335-4542, if you have any questions regarding this letter or Amendment No. 4.
Very truly yours,
DLA Piper LLP (US)
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CORRESP
DLA Piper LLP (US)
303 Colorado Street, Suite 3000
Austin, TX, 78701
www.dlapiper.com
Drew Valentine
Drew.valentine@us.dlapiper.com
T (512) 457-7019
April 25, 2024
Via Edgar
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Manufacturing
100 F Street, NE
Washington, D.C. 20549
Attention: Charles Eastman
Hugh West
Sarah Sidwell
Jay Ingram
Re: Sow Good Inc.
Registration Statement on Form S-1 Amendment No. 2
Filed on April 16, 2024
File No. 333-277042
Ladies and Gentlemen:
On behalf of Sow Good Inc., a Delaware corporation (the “Company”), we are transmitting this letter in response to comments received from the staff (the “Staff”) of the Securities and Exchange Commission the (“SEC”) by comment letter dated April 19, 2024 (the “Comment Letter”) with respect to the Company’s Registration Statement on Form S-1 Amendment No. 2 (the “Registration Statement”). This letter is being submitted together with Amendment No. 4 (“Amendment No. 4”) to the Registration Statement, and is being provided to supplement our responses in our previous correspondence submitted on April 22, 2024 (the “April 22 Correspondence”) which was submitted along with Amendment No. 3 to the Registration Statement. The bold and numbered paragraphs below correspond to the numbered paragraphs in the Comment Letter.
Division of Corporation Finance
April 25, 2024
Page 2
Prospectus Summary
Recent Developments, page 4
3. We note you issued common stock in a private placement offering ("2024 PIPE") on March 28, 2024 at a price of $7.25 per share. We also note that the closing price of your stock, on the same date, was $10.50. Please explain to us how you determined the fair value of the common stock in the 2024 PIPE (i.e., $7.25). In your response, discuss how you considered your market activity (i.e., stock price, trading volume, etc.) and provide us with the authoritative guidance you used to support your accounting treatment.
Response: To supplement our previously provided response to this comment, we are attaching hereto as Exhibit A the supplemental information referred to in the first paragraph of our response to this comment in the April 22 Correspondence.
Dilution, page 40
5. Please provide to us supplementally your computations of historical net tangible book value (deficit), pro forma net tangible book value, and pro forma as adjusted net tangible book value, as discussed in the paragraphs preceding the dilution table.
Response: To supplement our previously provided response to this comment, we are attaching hereto as Exhibit B the supplemental information referred to in the first paragraph of our response to this comment in the April 22 Correspondence.
* * * *
Division of Corporation Finance
April 25, 2024
Page 3
We and the Company appreciate the Staff’s attention to the review of Amendment No. 4. Please do not hesitate to contact me at (512) 457-7019, or in my absence Jordyn Giannone at (212) 335-4542, if you have any questions regarding this letter or Amendment No. 4.
Very truly yours,
DLA Piper LLP (US)
/s/ Drew Valentine
Drew Valentine
Partner
DLA Piper (US) LLP
Enclosures
cc: Ira Goldfarb (Sow Good Inc.)
Claudia Goldfarb (Sow Good Inc.)
Jordyn Giannone (DLA Piper LLP (US))
John J. Slater (Latham & Watkins LLP)
Division of Corporation Finance
April 25, 2024
Page 4
Exhibit A
Ticker
SOWG
Start
2/1/2024
End
3/28/2024
3/28/2024
Date
SOWG
Volume
Daily VWAP
30 Day VWAP
2/2/2024
$ 7.40
320
7.1865
9.21
2/5/2024
$ 8.50
720
8.6667
9.21
2/6/2024
$ 8.35
110
8.35
9.21
2/9/2024
$ 9.70
400
9.6333
9.21
2/12/2024
$ 7.55
910
7.8221
9.21
2/14/2024
$ 7.50
10,000
7.51
9.21
2/16/2024
$7.97
1,000
7.56
9.21
2/20/2024
$7.52
380
7.095
9.21
2/23/2024
$7.26
280
7.25
9.21
2/27/2024
$7.62
850
7.35
9.21
2/29/2024
$9.25
900
8.5759
9.21
3/1/2024
$9.25
1,030
9.25
9.21
3/4/2024
$8.50
960
9.27
9.21
3/5/2024
$9.50
2,420
10.1028
9.21
3/6/2024
$9.00
4,400
7.98
9.21
3/7/2024
$9.00
100
9
9.21
3/8/2024
$8.50
600
8.5625
9.21
3/12/2024
$8.50
100
8.5
9.21
3/13/2024
$8.85
1,490
8.49
9.21
3/14/2024
$8.50
100
8.5
9.21
3/15/2024
$7.53
1,500
7.9064
9.21
3/18/2024
$7.25
270
7.25
9.21
3/19/2024
$7.49
130
7.49
9.21
3/20/2024
$7.50
570
7.49
9.21
3/21/2024
$7.85
100
7.85
9.21
3/22/2024
$10.19
12,550
8.8097
9.21
3/25/2024
$9.50
8,520
9.7061
9.21
3/26/2024
$9.50
3,300
9.5
9.21
3/27/2024
$10.05
7,120
10.0087
9.21
Division of Corporation Finance
April 25, 2024
Page 5
3/28/2024
$10.50
23,520
10.3472
9.21
Average Closing Price
$ 8.52
Discount to Avg Closing Price
14.90%
Discount to 30-day VWAP
21.28%
Discount to 3/28 VWAP
29.93%
Division of Corporation Finance
April 25, 2024
Page 6
Exhibit B
Par Value
0.001
PIPE
Amount Received
$3,738,078.25
Shares Issued
515,597
Warrant Exercise
Notes Paydown
Amount Received
$5,299,122.50
Principal Paydown
5,200,362.50
Shares Issued
2,186,250
Accrued Interest Reduction
98,750.00
12/31 Debt Discount
2,102,736.00
Pro Forma Debt Discount
1,079,546.00
PIPE +Warrants Received
$9,037,200.75
Debt Discount Reduction
1,023,190.00
Dec 31 C&CE
$2,410,037.00
PIPE +Dec 31 C&CE
$6,148,115.25
Equity Compensation Grants
Offering+PIPE+DEC 31 C&CE
$19,222,685.25
Shares Issued After 12/31
30,591
CS Line Item Impact
$30.59
Offering Shares
APIC Impact
$286,116.61
Amount
$15,000,000.00
Accumulated Deficit Impact
$286,147.20
Indicative Price
22
Offering Shares
681,818
Overallotment
102,273
Total Offering w/Shoe
784,091
Total PIPE+Warrant Shares Issued
2,701,847
Outstanding 12/31
6,029,371
Pro Forma CS Outstanding
8,761,809
Restricted Shares
4,202,404
As Adjusted CS Outstanding
9,443,627
w/PIPE and Warrants
6,904,251
Pro Forma CS
$8,761.81
As Adjust CS
$9,443.63
Dec 31 APIC
$66,014,415.00
Pro Forma APIC
$76,352,160.55
As Adjusted APIC
$91,342,716.92
Acculated Deficit
(58,739,995)
Pro Forma Accumulated Deficit
(60,049,332)
Pro Forma As Adjusted Accumulated Deficit
(60,049,332)
Dec 31 Stokholders Equity
7,280,449
Pro Forma Stockholders Equity
$6,311,590.16
As Adusted Stockholders Equity
$31,302,828.35
Dec 31 LTD (Net of DD)
$7,622,264.00
Dec 31 LTD - Notes Reduction (Net of PF DD)
$3,445,091.50
Dec 31 Cap
$14,902,713.00
Pro Forma Cap
$19,756,681.66
As Adjusted Cap
$34,747,919.85
Dilution Calculation
C&CE Pro Forma (PIPE Proceeds)
$6,148,115.25
Net Tangible Book Value
C&CE As Adjusted (PIPE+Offering)
$19,222,685.25
Cash and cash equivalents
2,410,037
C&CE As Adj+OverAllotment
$21,315,185.25
Inventory
4,123,246
LTD Reduction (Notes) Pro Forma , Pro Forma As Adjusted
$5,200,363.00
Security Deposit
346,616
LTD Reduction (Accrued Interest) Pro Forma, Pro Forma As Adjusted
$98,750.00
Construction in Progress
1,522,465
Dec 31 Share Count
6,029,371
Property and equipment
6,287,422
Pro Forma Share Count
8,761,809
Less Accumulated Depreciation
(967,602)
As Adjusted Share Count
9,443,627
Total Assets
13,722,184.00
As Adjusted Share Count w/ Overallotment
9,545,900
Reps Warrants Sharecount
68,182
Long term debt
9,725,000.00
Re Warrants Cash
$1,800,000
AP
853,535.00
Accrued interest
860,693.00
Accrued expense
648,947.00
Current portion of op lease
550,941.00
Operating leases
3,671,729.00
Total Liabilities
16,310,845.00
Net Tangible Book Value
(2,588,661.00)
12/31 per share
(0.43)
Pro Forma Net Tangible Book Value
Cash and cash equivalents
6,148,115
Inventory
4,123,246
Security Deposit
346,616
Construction in Progress
1,522,465
Property and equipment
6,287,422
Less accum:
(967,602)
Total assets
17,460,262.25
Long term debt
4,524,637.00
AP
853,535.00
Accrued interest
761,943.00
Accrued expense
648,947.00
Current portion of op lease
550,941.00
Operating leases
3,671,729.00
Total Liabilities
11,011,732.00
Net Tangible Book Value
6,448,530.25
Pro Forma per share
0.74
Increase vs. GAAP
1.17
Pro Forma As Adjusted Net Tangible Book Value
Cash and cash equivalents
19,222,685
Inventory
4,123,246
Security Deposit
346,616
Construction in Progress
1,522,465
Property and equipment
6,287,422
Less accum:
(967,602)
Total Assets
30,534,832.25
Long term debt
4,524,637.00
AP
853,535.00
Assumed Public Offering Price
22.00
Accrued interest
761,943.00
Historical net tangible book value (deficit) per share as of December 31, 2023
(0.43)
Accrued expense
648,947.00
Pro forma increase in net tangible book value per share as of December 31, 2023
1.17
Current portion of op lease
550,941.00
Pro forma net tangible book value per share as of December 31, 2023
0.74
Operating leases
3,671,729.00
Increase in pro forma net tangible book value per share attributable to investors in this offering
1.33
Total Liabilities
11,011,732.00
Pro forma as adjusted net tangible book value per share after this offering
2.07
Dilution in pro forma as adjusted net tangible book value per share to new common stock investors in this offering
19.93
Net Tangible Book Value
19,523,100.25
As Adjusted per share
2.07
Increase vs. Pro Forma
1.33
$1.00 increase Pro Forma As Adjusted Net Tangible Book Value
Cash and cash equivalents
19,856,776
Inventory
4,123,246
Security Deposit
346,616
Construction in Progress
1,522,465
Property and equipment
6,287,422
Less accum:
(967,602)
Total Assets
31,168,923.16
Long term debt
4,524,637.00
AP
853,535.00
Accrued interest
761,943.00
Accrued expense
648,947.00
Current portion of op lease
550,941.00
Operating leases
3,671,729.00
Total Liabilities
11,011,732.00
Net Tangible Book Value
20,157,191.16
As Adj per share
2.13
Vs. PF As Adjusted per share
0.07
Vs. Share Price
19.87
Green Shoe increase Pro Forma As Adjusted Net Tangible Book Value
Cash and cash equivalents
21,315,185
Inventory
4,123,246
Security Deposit
346,616
Construction in Progress
1,522,465
Property and equipment
6,287,422
Less accum:
(967,602)
Total Assets
32,627,332.25
Long term debt
4,524,637.00
AP
853,535.00
Accrued interest
761,943.00
Accrued expense
648,947.00
Current portion of op lease
550,941.00
Operating leases
3,671,729.00
Total Liabilities
11,011,732.00
Net Tangible Book Value
21,615,600.25
As Adj per share
2.26
Increase vs. Pro Forma
1.53
vs. share price
19.74
Representative Warrants Pro Forma As Adjusted Net Tangible Book Value
Cash and cash equivalents
21,022,685
Inventory
4,123,246
Security Deposit
346,616
Construction in Progress
1,522,465
Property and equipment
6,287,422
Less accum:
(967,602)
Total Assets
32,334,832.25
Long term debt
4,524,637.00
AP
853,535.00
Accrued interest
761,943.00
Accrued expense
648,947.00
Current portion of op lease
550,941.00
Operating leases
3,671,729.00
Total Liabilities
11,011,732.00
Net Tangible Book Value
21,323,100.25
As Adjusted per share
2.24
Increase vs. Pro Forma
1.51
Vs. Share Price