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

FluentWorlds uses the latest breakthroughs in AI, speech recognition and 3D modeling to create immersive worlds for students to learn English. We've seen a 300% jump in revenue over the last year and are now raising capital to drive sales, hire more developers and expand the product to other languages. With a 4.8 rating in the iTunes store, thousands of subscribers and a global ambassador network, we're poised to make a major splash in the $63 billion per year ESL industry. 

We're looking to become the dominant player in the ESL market through our use of video gaming, 3D, and AI-driven technologies. In addition to expanding FluentWorlds to teach other languages - such as Spanish and Mandarin - we also hope to roll out an OnDemand service: an UBER for language learning that will connect people for live tutoring sessions. Our goals are to reach $100 Million in sales by 2022; exit options will include an IPO or being acquired by a massive player in the industry.

Milestones

Virtual Immersive Educational Worlds, Inc. was incorporated in the State of Delaware in September 2014.

Since then, we have:

• Over 500K downloads with revenue up 300% year-over-year
• Co-founder was previously CEO of 2 high-growth tech companies: HireVue and Fusion-io.
• Custom speech recognition technology built by the leader of the Amazon Alexa team. 
• Thousands of subscribers with a 90% retention rate. 
• One of the top 100 educational Apps in the iTunes store.
• Partnered with mobile telecom providers with access to over 100 million users.
• Platform advantage: a recent study found that 86% of students studying in 3D showed improvements in understanding and recall, compared to 52% in 2D.

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2018, the Company had revenues of $164,036 compared to the year ended December 31, 2017, when the Company had revenues of $39,619. Our gross margin was 100.0% in fiscal year 2018, compared to 100.0% in 2017.
• Assets. As of December 31, 2018, the Company had total assets of $11,399, including $11,013 in cash. As of December 31, 2017, the Company had $57,141 in total assets, including $55,983 in cash.
• Net Loss. The Company has had net losses of $946,270 and net losses of $895,345 for the fiscal years ended December 31, 2018 and December 31, 2017, respectively.
• Liabilities. The Company's liabilities totaled $31,367 for the fiscal year ended December 31, 2018 and $2,980,063 for the fiscal year ended December 31, 2017.

Liquidity & Capital Resources



After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 8 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 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. 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

Virtual Immersive Educational Worlds, Inc. cash in hand is $150,000, as of January 2019. Over the last three months, revenues have averaged $12,500/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $40,000/month, for an average burn rate of $27,500 per month. Our intent is to be profitable in 3 months.

Sales have increased 300%; Our revenue model through Facebook advertising proved profitable; for every dollar spent on ads, we saw two dollars back in sales. Our user retention has increased from 75% to 89%. 

There will be a slight dip in February/March sales due to scaling back on some advertising but will pick up rapidly upon funding, as there is a direct correlation between amount of dollars spent on advertising and sales made. In general terms, for every dollar spent on ads, the company gets 2 dollars in sales. By summer of 2019, we expect (although cannot guarantee) revenues to increase from 12,500 a month to 50,000 a month with an infusion of marketing dollars. The Company DOES have other sources of capital - the Founders of the company, Dr. LINDA BRADFORD AND DAVID BRADFORD can continue to fund.