Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

Basement Sports is the world’s first mixed reality sports gaming platform, where users can set up or join various sports leagues, one-day tournaments or one-off games with friends or ranked competitors.  'Mixed' means old school (physical game play with indoor toys) meets new school (IOS and Android App for all of the interactive score keeping).  Baseball is the first sport and sub-venture.

In five years, we hope to be a major player in a cross-section of several multi-billion dollar industries (app games, toys, fantasy sports and youth sports) with 15-20 sports, in every country, plus editions for non-sports games as well. These projections cannot be guaranteed.

Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future, if any.

Milestones

Basement Sports, Inc. was incorporated in the State of Delaware in October 2019.

Since then, we have:

• We are tackling one of society's greatest challenges - childhood (and adult) obesity; by getting kids active every day, while having fun.
• The global gaming market is worth $152 billion (2019), with 45% of that, $68.5 billion, coming directly from mobile games.
• The global toy market stands at $90.4 billion. Our Starter Kit and Accessories provide multiple revenue streams, like personalized jerseys.
• Youth Sports is a rapidly growing $22 billion industry; but more kids are also quitting. Research shows the need for more unstructured play.

Historical Results of Operations

Our company was organized in October 2019 and has limited operations upon which prospective investors may base an evaluation of its performance.

• Revenues & Gross Margin. For the period ended December 31, 2019, the Company had revenues of $0
• Assets. As of December 31, 2019, the Company had total assets of $0, including $0 in cash.
• Net Loss. The Company has had net losses of $31,790 for 2019.
• Liabilities. The Company's liabilities totaled $31,790 for 2019.

Related Party Transaction

Refer to Question 26 of this Form C for disclosure of all related party transactions.

Liquidity & Capital Resources

To date, the Company has been financed with $50,000 in debt.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 12 months before we need to raise further capital.

We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.

We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 9 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.

Runway & Short/Mid Term Expenses

Basement Sports, Inc. cash in hand is $0, as of May 2020. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $10,000/month, for an average burn rate of $10,000 per month. Our intent is to be profitable in 18 months.

Since the date of our financials, not much has changed as we are still in a predictable 'expenses only' product development, pre-revenue stage.

Our revenues and expenses 6 months from now largely depends on the amount of capital raised, as that will impact how many additional sports - beyond the flagship Baseball game/toy/app - we develop in 2020.  Our goal is to get to at least 6 total sports by end of 2020, each sport naturally costing some development and marketing expenses.  In our base case, Expenses are projected to be $800,000 in Q3 (this includes COGS for Product Sales), with Revenues at $474,000 across 4 sports.  Q4 brings us up to 6 sports and $1.6 million in Revenues with $1.75 million in Expenses. These projections cannot be guaranteed.

We're already in market with our apps in IOS and Android, and for Production to move actively and consistently in support of a true supply chain for the Baseball Starter Kit & Accessories, that $70,000 'threshold' will get us there, with physical inventory and items in market by September or October 2020 (depending on timing of funding); b.labs is already pre-funding some of this through the credit facility.

We can rely on addition capital from Basement Sports' parent company, b.labs Ventures, having recently (in July 2019) exited from its position in a DIY/Hardware industry venture named Ajustco (for $2.6 million), it is committing up to $1 million in investment, as and when needed, into Basement Sports.  The structure has yet to be determined, and may work as a Credit Line, or a Convertible Note.  Shared management between the companies makes it seamless in terms of decision making and deployment of capital.  Rest assured, that the Founder of both companies is heavily invested and committed to Basement Sports as his and b.labs #1 focus.