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

Our company makes treats for your dog that are so good you wouldn't mind eating them yourself, which, yes, you can do (Jackie prefers the Scrumptious Pumpkin, while John is more of a Carob Chip Delight guy). We believe that our brand is on track for acquisition within the next five years, with the potential to be a global player in our industry.

In the last two years, we have received two separate inquiries for acquisition, as recently as this past April. Each company perceived our value to be between $500k and $1M annually, and both have left the door open for potential further discussion once we meet that threshold, which we are hoping (but can't guarantee) to reach within the next twenty-four months.

Milestones

Fetch! Gourmet Dog Treats, LLC was incorporated in the State of New York in January 2015.

Since then, we have:

• Over 30k happy dogs treated to more than 170k pounds of biscuits worth over $500k in sales to date.
• We've added an average of 42 brand partners annually since 2015 without advertising.
• 750% increase in revenue generated by our growing network of brand partners (from inception to today).
• We stand out! We have been recognized by the media, industry leaders, & celebrity influencers alike.
• We've bootstrapped nearly 100% of our growth to date.
• We are dedicated and passionate owners, putting all revenue back into the company, never a salary.

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2019, the Company had revenues of $160,292 compared to the year ended December 31, 2018, when the Company had revenues of $124,952. Our gross margin was 49.22% in fiscal year 2019, compared to 57.65% in 2018.
• Assets. As of December 31, 2019, the Company had total assets of $13,380, including $782 in cash. As of December 31, 2018, the Company had $6,532 in total assets, including $2,986 in cash.
• Net Income. The Company has had net income of $3,441 and net income of $713 for the fiscal years ended December 31, 2019 and December 31, 2018, respectively.
• Liabilities. The Company's liabilities totaled $95,183 for the fiscal year ended December 31, 2019 and $40,973 for the fiscal year ended December 31, 2018.

Liquidity & Capital Resources

To-date, the company has been financed with $89,085 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 24 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

Fetch! Gourmet Dog Treats, LLC cash in hand is $4,500, as of July 2020. Over the last three months, revenues have averaged $5,848/month, cost of goods sold has averaged $869/month, and operational expenses have averaged $3,691/month, for an average net margin of $1,288 per month. 

We are currently down 60.13% over last year in sales.  This is due to the COVID-19 Pandemic.

We have had to change our operations to mostly online sales and curbside delivery. We are currently up by 47% in online sales over last year.  Employing this channel allows our Company the highest profit margins. By creating an updated and optimized site we were able to offer customers specialty items not available to our wholesale brand partners, such as seasonal and special occasion cookies, cakes and gift baskets.

We have also added a subscription service online. The subscription economy is booming, having grown 100% each year from 2011 to 2016 and hasn’t slowed down since. And pet owners want to get in on this phenomenon. Our subscription service allows customers to sign up and receive monthly allotments of their favorite treats without worrying about shopping on a regular basis

Wholesale is also up by 17% over last year at this time. This channel offers our Company the largest opportunity for national growth and exposure. Although the margins are smaller, we would have the ability to move massive quantities of treats at one time. In expanding Company sales through wholesale and distribution channels, we will focus on targeting the following: Independently Owned Pet Boutiques, Doggy Day Care/Pet Spa/Grooming, Veterinarian Clinics, Specialty Retailers: Cupcakeries, Country Stores, Ladies Boutiques, Co-ops.

Additionally, fetch! Gourmet Dog Treats already enjoys established relationships with Chewy.com and Amazon.com, both marketing and selling our treats within the continental United States, while adhering to our strict MAP policies. It is a foot in the door of a market forecast to explode. American Pet Products Association (APPA) analysts calculated that sales of pet products and services in the United States reached US$95.7 billion in 2019. Pet food and treats made up the largest portion of the total with 2019 sales of US$36.9 billion, led by dog and cat food. APPA analysts forecast that the pet food and treats category sales would increase 4% in 2020. This industry forecast provides evidence that consumers for fetch! Gourmet Dog Treats are ready and waiting for the products our Company is ready and waiting to supply.

But due to the pandemic, our retail sales are down by 77.52%. Most of the events have been cancelled for 2020 because of social distancing.  

Once doors open again, we plan to push more of our local customers to our bakery location in Williamsville, NY by advertising our loyalty program and offering services like free pick up and free local delivery. We plan to use these services to help drive additional sales and continue to build brand loyalty and awareness in western New York. Having a retail bakery is not a long-term goal of fetch!, but we utilize the option as it exists in our current facility

Revenue: 

Our pre-pandemic projections included revenue totaling $300K in 2020. While not entirely unattainable, we have scaled back expectations for this year to focus on full execution upon funding for Q4 2020 and beyond. We will achieve our goal in three different areas:

1.  eCommerce:  50% of total revenue or $150K. Our products are now selling on Chewy.com and Amazon.com, which we will be utilizing to help drive sales back to our Shopify website. In our financial plan, we have created a budget of $1,500 per month of digital advertising to drive traffic and increase sales by targeting our specific audience and offering occasional incentives, such as percentage off, BOGO, free shipping, loyalty programs, extra points, and then strategically re-targeting for repeat business.

2.  Wholesale/Distribution:  40% of total revenue or $120K. Currently, our best selling item both in wholesale and through distribution is our Dipped Peanut Butter Bones, which we sell by the case. If we were to focus on only this item, we could realistically reach our goal by selling a minimum of 263 cases of bones per month. Our revenue goal becomes easier to achieve when considering the Dipped Bones are just one of many SKU's that we carry. We will also focus more time and energy on brand support for these stores by working with our partners to develop visual assets that they can use, like shelf-talkers, and through strategic geo-targeted digital ad campaigns.

3.  Retail:  10% of revenue or $30K. We plan to push more of our local customers to our bakery location in Williamsville, NY, by advertising our loyalty program and offering services like free pick up and free local delivery. We plan to use these services to help drive additional sales and continue to build brand loyalty and awareness in western New York. Having a retail bakery is not a long-term goal of fetch!, but we utilize the option as it exists in our current facility.

We are also in the process of designing new packaging. Not only will this lower our COGS, but our updated packaging follows the industry standard and allows for much more detail on the package that we can use to help grab attention and sell at the same time.

Expense: 

Our product COGS is averaging 35%, or the product margin is 65%.  We continue to look for ways to cut costs and have the opportunity to continue to lower our direct cost of goods sold by taking advantage of all of the resources available with our co-packer, The Pound Bakery, especially by running full-size batches, upgrading our packaging, and purchasing materials and supplies in bulk at a discount whenever possible.

Our annual non-product expenses are $90K. Pre-pandemic estimates for 2020 projected an increase to $190K, covering all operating costs, including the addition of more employees, and adding a substantial marketing budget to support production and drive sales. As we begin Q3 2020, we are currently at $17k in non-product expenses and are projecting to finish anywhere between $34k and $100k depending on the outcome of our funding campaign.

Currently, our sources of capital are from sales of the product, personal loans from friends and family, high-interest, short-term loans through Kabbage, PayPal Business Loans, Quickbooks Financial Capital, Shopify Capital, Square Capital, and Fernwood Capital.