Fuchsia Shoes

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

Fuchsia is direct-to-consumer brand focus on selling luxury artisanal products in a highly transparent way while removing the middle man. We built a transparent supply chain that leverages the already existing infrastructure of the artisan economy and bring it in front of global consumers. Removing middlemen from existing supply chain we make luxury products affordable for our consumers and at the same time add value to artisans by empowering local economies and scale ethical fashion globally.

In next 5 years, we want to become market leader when it comes to sustainable fashion and ethical fashion. We want to  change the story behind the things we buy by collaborating with these makers to develop a quality product that can succeed in the global markets to bring you craftsmanship and style that you can be proud to wear. We want to expand our selves into different fashion products from shoes to clothing. Also we would like to expand our presence beyond e-commerce to flagship store.

Milestones

Fuchsia Shoes Inc was incorporated in the State of Delaware in March 2016.

Since then, we have:

• Over 10,000 pairs of Fuchsia shoes sold so far
• Our 2016 Kickstarter campaign was the most biggest successful campaign for ballet flats
• 25% Repeat Purchase Rate within 30 days
• The founders have years of experience working for companies like Amazon and Microsoft
• GROWTH POTENTIAL: $30 billion U.S. non-athletic footwear industry, with growth driven by e-commerce sales, fashionable & comfortable shoes.
• Over $200,000 of direct to consumer sales in last 18 months

Historical Results of Operations

Our company was organized in March 2016 and has limited operations upon which prospective investors may base an evaluation of its performance.

• Revenues & Gross Margin. For the period ended December 31, 2018, the Company had revenues of $129,749.54 compared to the year ended December 31, 2017, when the Company had revenues of $119,092.67. Our gross margin was 47.52% in fiscal year 2018, compared to 39.39% in 2017.
• Assets. As of December 31, 2018, the Company had total assets of $26,520.53, including $15,020.53 in cash. As of December 31, 2017, the Company had $27,484.56 in total assets, including $15,984.56 in cash.
• Net Loss. The Company has had net losses of $56,946.48 and net losses of $68,838.68 for the fiscal years ended December 31, 2018 and December 31, 2017, respectively.
• Liabilities. The Company's liabilities totaled $106,398.49 for the fiscal year ended December 31, 2018 and $82,402 for the fiscal year ended December 31, 2017.

Liquidity & Capital Resources

To-date, the company has been financed with $20,000 in equity and $60,000 in convertibles.

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 6 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

Fuchsia Shoes Inc cash in hand is $15,000, as of January 2020. Over the last three months, revenues have averaged $13,200/month, cost of goods sold has averaged $4,416/month, and operational expenses have averaged $22,739/month, for an average burn rate of $13,955 per month. Our intent is to be profitable in 12 months.

We have grown our operational team on the ground and our manufacturing has scaled to more capacity since the date our financials covers. Our cost for production has gone down during last 12 months because of better strategies around procurement of raw material and scale of production. 

We have done a lot of work on our market to fit strategy. We know what audience works for us on facebook and other social platforms. Our manufacturing is all set to handle 10x scale of what we are producing today. With Wefunder finances we will focus on our user growth through these different channels and back these growth by our manufacturing scale. We don't have any other sources of capital as of now.  If needed, the company will lower its monthly burn rate in order to cover short term operations while additional capital is secured.

Our revenue for 2019 was $145k.  In 18 months, we hope to have reached 1.5M of revenue and have 950K of expenses for the 18 months prior. After 18 months, we plan to raise additional funds for the business.