Lettuce Grow

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

VC-backed consumer brand taking on the broken $62B produce industry. Lettuce Grow is a mission-driven organization with the goal of empowering consumers to lead the transition to a sustainable food system. Lettuce Grow’s hydroponic gardening system, the Farmstand, helps people grow and harvest 20% of their own fresh produce, eliminating food waste and reducing water and carbon impact by more than 98%. Designed for home growers regardless of time, space, or growing experience, Lettuce Grow provides living starter plants that mature into nutritious food easily in the Farmstand, bringing joy and simplicity to harvesting your own produce.

Milestones

The Farm Project, PBC was organized in the State of Delaware in March 2017.

Since then, we have:

• $60M+ in cumulative revenue
• 6M fruits and vegetables grown across 50 states in USA, Canada, & UK
• 140,000 growers with 11 LTV:CAC ratio & 46-month average lifespan
• Celebrity co-founder Zooey Deschanel & award-winning team from MIT, Nokia, & L’Oreal with 3 exits
• Inc. 5000 fastest-growing company; #11 in California
• Forbes, FastCompany, Elle, Good Housekeeping, Bon Appétit, Better Homes, Poosh & Real Simple feature
• Backed by top VCs Structure Capital (Uber), Collaborative Fund (Sweetgreen), Gather (Misfits)

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2023, the Company had revenues of $11,637,033 compared to the year ended December 31, 2022, when the Company had revenues of $16,465,851. Our gross margin was 68.02% in fiscal year 2023, and 55.07% in 2022.
• Assets. As of December 31, 2023, the Company had total assets of $3,152,207, including $366,484 in cash. As of December 31, 2022, the Company had $5,988,096 in total assets, including $2,766,049 in cash.
• Net Loss. The Company has had net losses of $3,270,133 and net losses of $10,592,777 for the fiscal years ended December 31, 2023 and December 31, 2022, respectively.
• Liabilities. The Company's liabilities totaled $8,786,951 for the fiscal year ended December 31, 2023 and $10,169,544 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 $8,137,033 in debt, $5,935,322 in equity, and $13,530,000 in SAFEs.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 1 month 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 1 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

The Farm Project, PBC cash in hand is $370,699, as of August 2024. Over the last three months, revenues have averaged $630,000/month, cost of goods sold has averaged $326,000/month, and operational expenses have averaged $358,000/month, for an average burn rate of $54,000 per month. Our intent is to be profitable in 6 months.

We have continued to cut costs, particularly in headcount and marketing budgets. Reduced marketing spend has slowed new customer growth, resulting in fewer customer acquisitions and reduced topline revenue. At the same time, our unit economics, acquisition costs, and revenue per employee have improved. While we believe they warrant investing in additional scale, current market conditions have made it challenging to raise outside capital for e-commerce expansion. As such, we have focused much of our efforts preparing the company to go into retail distribution with a new product and to establish an omni-channel presence for existing products in order to expand customer reach and reduce marketing and fulfillment costs. 

We expect about $5M in revenue in the next 6 months with about $2.5M of product COGS and $2.7M of expenses.

Our business is seasonal. We expect to soon be profitable during the high season (Nov-Dec, Mar-May) but will have dips during the low season (Jan-Feb, Jun-Oct). We believe that we will begin to see marketing efficiencies for our core e-commerce business along with positive cash flows from our retail line within months of our retail launch which is planned for late 2024 and expect that about $2m of funding from this point will enable us to reach profitability on an annual basis.

We have a roster of existing investors that have been supportive to the company. We also periodically have discussions with venture capital firms that could be potential future investors in the business. Additionally, we believe that we will have access to additional debt financing resources once we secure purchase orders from retail partners. If necessary, we may also raise funds from VCs outside of Wefunder, along with potential debt funding.

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