Davenport SAF-T Systems

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

The SAF-T VEST™ will detect a fall and deploy airbags to reduce risk of injury.

Our inventor, orthopedic surgeon Jay Davenport, was inspired by his experience caring for so many older adults who suffered devastating injuries from falls. These injuries often trigger the beginning of a slow decline in health from which many never recover.
We must no longer accept fall injuries as an unavoidable consequence of aging.

We are building the SAF-T VEST--a patented wearable technology designed to provide 360-degree fall injury protection from the hips to the head.
Fall injuries, especially among older adults, are a $50B public health crisis in the U.S. One in four seniors falls each year. Three million fall injuries are treated in the hospital ER.
The SAF-T VEST will detect a fall in progress, inflate a system of airbags in a fraction of a second, and absorb the impact of the fall with a cushioned landing.

In five years Davenport SAF-T Systems will be the market leader in advanced fall protection because our product will be comfortable, lightweight and fashionable. We'll have models suitable for bedtime, outdoors, warm and moderate climates. The SAF-T VEST will be indispensable in hospitals, nursing homes and other long-term care facilities. Data from our pilot studies will drive Medicare approval, making our solution available to all who need it--not just those who can afford it.

Milestones

Davenport SAF-T Systems LLC was incorporated in the State of Minnesota in January 2017.

Since then, we have:

• 🧑‍🧑‍‍‍⚡200+ inquiries from clinicians and consumers; 3 accelerators; 3 academic partnerships
• 💗🥰The SAF-T VEST uses sensors and airbags to protect you in a fall from the hips to the head.
• 👩‍⚕️👨‍🔬👨‍⚕️Our clinical, engineering and scientific leads have more than 70 years of experience.
• 💵A capture rate of just 1.2% of today's 56M+ senior market could drive $650M in sales revenue.
• We received a U.S. Patent in January 2021 and a Launch Minnesota Innovation Grant one year later.
• ⚙️Our early prototype already detects a fall and inflates a front airbag in less than a 1/2 second.
• ‍🤝‍Your investment will help us build advanced models that will be tested on healthy adults.

The Company is subject to risks and uncertainties common to early-stage companies. Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future.

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2023, the Company had revenues of $12,803 compared to the year ended December 31, 2022, when the Company had revenues of $4,339. Our gross margin was 100.0% in fiscal year 2023, compared to 100.0% in 2022.
• Assets. As of December 31, 2023, the Company had total assets of $8,479, including $794 in cash. As of December 31, 2022, the Company had $7,915 in total assets, including $230 in cash.
• Net Loss. The Company has had net losses of $76,880 and net losses of $16,277 for the fiscal years ended December 31, 2023 and December 31, 2022, respectively.
• Liabilities. The Company's liabilities totaled $23,939 for the fiscal year ended December 31, 2023 and $18,635 for the fiscal year ended December 31, 2022.

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 $18,000 in convertibles and $2,000 in SAFEs.

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 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

Davenport SAF-T Systems LLC cash in hand is $194, as of March 2024. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $1,800/month, for an average burn rate of $1,800 per month. Our intent is to be profitable in 36 months.There have been no material changes or trends to date. However we do foresee significant progress occurring later this year with the expected start of our advanced prototyping work. 
We do not expect to generate revenue ($0.00 revenue) in the next 3-6 months, as we'll be engaged in fundraising and directing any amounts raised to the build and test phase of the advanced SAF-T VEST prototype. We anticipate expenses will average about $250-$500 per month over the next three to six months. 

We'll need an estimated $340,000 to $350,000 in capital for our Phase 1 development, which will include engineering development of the advanced prototype plus safety and performance testing of the SAF-T VEST while worn by human subjects. Phase 2 will include larger scale testing and pilot studies in preparation for commercial launch. Phase 2 pilot studies, expected in late 2024 or early 2025, may generate revenues. We anticipate a 2nd round of funding to support our commercial launch. We anticipate $25,000 in revenue in 2025; $750,000 in 2026 and $5M in 2027. We anticipate $961,250 in expenses in 2025; $1.8M in 2026 and $4.9M in 2027. We are not currently profitable. We anticipate launching an equity round of funding in late 2024 or early 2025 in the amount of $2M. This would enable the design and execution of our broad based pilot studies and eventual launch, planned for late 2025.
We are currently engaged in a seed round of funding. Our first check was received in March and we continue to have productive conversations with both investors (angels and VC). In January 2022 we received an Innovation Grant from Launch Minnesota for up to $28,000. The grant is structured as a 50% reimbursement of payments for qualified expenses. We extended that grant period to August 2023 and received a total of $16,300 in reimbursements. 
We also continue to pursue grant opportunities with federal and state agencies as well as private foundations. 


All projections in the above narrative are forward-looking and not guaranteed.