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

A Veteran Owned 8% ABV Hard Seltzer that doesn't suck. Currently in 2,000+ locations!

Milestones

Hard AF Seltzer, LLC was organized in the State of Texas in April 2021.

Since then, we have:

• $1.2 Million in product sold in the first 2 years.
• Chain deals with H-E-B, Total Wine, Lowe's Food, and Piggly Wiggly.
• Available in 3,000+ locations in 12 states.
• Served in all stadiums at the University of Illinois for the next 3 years starting this fall.
• 3 year exclusive partnership with The Brown Jug Restaurant at University of Michigan.

Historical Results of Operations

Our company was organized in April 2021 and has limited operations upon which prospective investors may base an evaluation of its performance.

• Revenues & Gross Margin. For the period ended December 31, 2023, the Company had revenues of $256,350 compared to the year ended December 31, 2022, when the Company had revenues of $186,677. Our gross margin was -83.56% in fiscal year 2023, compared to -41.18% in 2022. The Company's 2022 revenue does not reflect the overall amount of product sold, since they were working with a shipping company that received most of the total cost to consumer. Though they sold approximately $610,000 in product, they only received $186,677 in revenue.
• Assets. As of December 31, 2023, the Company had total assets of $411,006, including $186,895 in cash. As of December 31, 2022, the Company had $193,905 in total assets, including $112,169 in cash.
• Net Loss. The Company has had net losses of $447,534 and net losses of $191,881 for the fiscal years ended December 31, 2023 and December 31, 2022, respectively.
• Liabilities. The Company's liabilities totaled $326,027 for the fiscal year ended December 31, 2023 and $36,392 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 $326,026 in debt.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 6 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

Hard AF Seltzer, LLC cash in hand is $10,000, as of June 2024. Over the last three months, revenues have averaged $35,000/month, cost of goods sold has averaged $50,000/month, and operational expenses have averaged $10,000/month, for an average burn rate of $25,000 per month. Our intent is to be profitable in 24 months.

There is seasonality to our business because of dry January and the ripple effects of that through our business.  We expect the summer and fall months to be significantly more active.  

Because we place bulk orders, it's difficult to predict exactly what our revenues and expenses might be.  Our expectation is that we'll end the year at $450k - $500k in revenue, and for expenses (including COGS) to be around $1M.  

We are not currently profitable.  We plan to continue to expand and grow the business, which may impact profitability in the short term.  

We may approach additional investors or take on debt in order to fund the business.  

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