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

Blue Earth Compost makes composting easy by offering food scrap collection services to homes, businesses, towns, and events. We turn your scraps into soil!

We aspire to be nationally recognized as one of the businesses that greened the waste hauling industry and changed the public's perception on food waste. Forward looking projections cannot be guaranteed.

Milestones

Blue Earth Compost, Inc was incorporated in the State of Connecticut in November 2014. 
The Company has elected to be taxed as a Subchapter S corporation for federal and state income tax purposes. Blue Earth Compost, Inc plans to convert to a C Corp before closing the fundraise.
Since then, we have:

• 🌿Make Green When You Invest in Green! We're a profitable company disrupting the waste industry.
• 💡One of the leading food scrap collection services in the nation.
• 💪Over 20 million pounds diverted & counting!
• 🌿That's equivalent to burning 500k less gallons of oil & 5k tons of CO2 out of the atmosphere
• 💵15% profit margin EBITDA with a 45% growth rate
• We Hire Local! We are dedicated to hiring in our community & paying a living wage.
• We're Going Net Zero! This campaign helps us finance our first electric vehicle powered by the 🌞.
• 📣98% New Customer Retention Rate & 90%+ say they would recommend us to friends and neighbors.

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2021, the Company had revenues of $809,422 compared to the year ended December 31, 2020, when the Company had revenues of $552,970. Our gross margin was 33.16% in fiscal year 2021, compared to 31.66% in 2020.
• Assets. As of December 31, 2021, the Company had total assets of $470,354, including $80,382 in cash. As of December 31, 2020, the Company had $303,886 in total assets, including $100,157 in cash.
• Net Income. The Company has had net income of $41,660 and net income of $50,300 for the fiscal years ended December 31, 2021 and December 31, 2020, respectively.
• Liabilities. The Company's liabilities totaled $324,819 for the fiscal year ended December 31, 2021 and $197,341 for the fiscal year ended December 31, 2020.

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 $660,417 in debt.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 36 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 12 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

Blue Earth Compost, Inc cash in hand is $18,217, as of November 2022. Over the last three months, revenues have averaged $115,000/month, cost of goods sold has averaged $32,100/month, and operational expenses have averaged $80,100/month, for an average net margin of $2,800 per month.
Revenues have been up in the first three quarters of 2022 and are expected to accelerate. However, because of inflation so have costs. Q4 is looking to be the most profitable quarter of the year. In addition, we closed on a $185,000 term loan from our bank to finance vehicle purchases in Q2.
We expect our revenues to average or exceed $125,000 per month over the next 3-6 months. Our margin has historically been about 15% and we hope to keep that the same moving forward. Inflation has cut into our margins, however and we currently sit closer to 10%. $295,000 is our expectation for expenses for November - January (3 months)
We are profitable and have been so over the last two years.

We have financed this business through bootstrapping and debt from banks and government agencies. 
The projections above are forward looking and cannot be guaranteed.