Filing summary
Issuer mismatch: The request identifies Sow Good Inc., but the supplied Form 10-Q is for Black Ridge Oil & Gas, Inc. (OTCQB: ANFC), not Sow Good. The figures below summarize the supplied filing.
Business context and reporting period
Unaudited quarterly report for the three and six months ended June 30, 2019. Black Ridge reported no revenue and described its focus as pursuing oil-and-gas investments for partners while sponsoring and managing Black Ridge Acquisition Corp. (BRAC), a special-purpose acquisition company. BRAC’s business combination with Allied Esports and World Poker Tour closed on August 9, 2019, after quarter-end.
Financial performance and liquidity
| Metric | Q2 2019 / June 30, 2019 | Comparable period / prior balance |
|---|---|---|
| Revenue | $0 | $0 in Q2 2018 |
| Operating expenses | $661,285 | $559,739 in Q2 2018 |
| Net loss attributable to Black Ridge | $630,687 | $531,575 in Q2 2018 |
| Six-month net loss attributable to Black Ridge | $1,301,024 | $1,164,604 in first-half 2018 |
| Cash and cash equivalents | $268,067 | $1,503,500 at December 31, 2018 |
| Working capital | $101,535 | $898,097 at December 31, 2018 |
| Total liabilities | $274,843 | $659,351 at December 31, 2018 |
| Restricted trust investments | $142,048,087 | $141,307,307 at December 31, 2018 |
| Six-month operating cash flow | $(2,127,947) | $(1,194,598) in first-half 2018 |
Six-month investing cash inflow was $892,514, primarily from trust withdrawals for taxes and franchise fees; financing cash flow was zero. Interest income from trust assets was $824,290 in Q2 and $1,635,625 in the first half. With no revenue, operating margins are not meaningful. The filing reports no long-term liabilities at June 30 and states the company had no long-term debt. Most reported assets were restricted for BRAC public shareholders, not available as ordinary corporate liquidity.
Changes, outlook, risks, and unusual items
- Q2 general and administrative expenses rose $103,923 year over year to $661,105, driven mainly by professional services and other costs associated with BRAC’s proposed acquisition. First-half operating expenses increased $154,420 year over year.
- Management disclosed substantial doubt about the company’s ability to continue as a going concern: cash and expected management fees were insufficient to fund needs over the following year, and additional financing or fee arrangements might not be obtained.
- After quarter-end, BRAC holders redeemed shares for $95.1 million at the July extension vote and another $31.1 million in connection with the August business-combination closing. The deal terms were amended, including reducing and then waiving the minimum-cash condition. BRAC assumed $10 million of Ourgame/Noble debt and the transaction also involved $14 million of bridge notes, secured after closing and convertible at the lesser of $8.50 per share or the applicable transaction price.
- At closing, Black Ridge held 2,685,500 BRAC shares, approximately 11.6% of shares outstanding; 537,100 shares were committed under its management incentive plan. Black Ridge ceased consolidating BRAC after the closing. A subsequent consulting agreement was expected to pay Black Ridge approximately $349,000 through December 31, 2019; management said that cash plus available funds still would not cover the next year’s needs.
- Management identified risks including limited liquidity, low trading volume and stock-price volatility, difficulty raising capital or growing the business, and risks related to its BRAC holdings. It reported effective disclosure controls as of June 30, 2019 and no material legal proceedings.
Important facts for investors to verify
- Confirm the intended issuer: this filing is for Black Ridge Oil & Gas, Inc., not Sow Good Inc.
- Review the August 9, 2019 business-combination closing disclosures and subsequent filings for final transaction financing, debt, share ownership, and dilution.
- Assess available unrestricted cash and the company’s ability to fund operations, given the explicit going-concern uncertainty and lack of revenue during the reported periods.
- Verify the terms, security, conversion, and repayment status of assumed bridge debt and other transaction obligations.
- Check the status and actual receipts under the post-closing consulting agreement and any additional capital or management-fee arrangements.