Lil’ Libros

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

Lil’ Libros is a family-trusted bilingual children's media publisher that has been built by our community. For the first time in history, you can own a piece of a leading independent book publisher. Lil’ Libros is committed to creating books with a focus on own voices while showcasing the quality and richness of our stories that will delight all children and adults alike.

We are building the first Latina-led community-owned children's media publisher. Like Disney and Scholastic, our vision is to become the go-to company for children's publishing, education, and entertainment. Together we can make this happen and at the same time, build wealth for our future and families. These are forward looking projections and are not guaranteed.

Milestones

Little Libros, LLC was organized in the State of California in September 2014.

Since then, we have:

• $1.7 MILLION gross revenue in 2020; $1.4 MILLION in 2019; $1.2 MILLION in 2018
• Over 1.5 MILLION children's books sold worldwide
• Sold at Target, Barnes & Noble, Walmart, MoMA, Whole Foods, Amazon, and 2,500+ independent retailers
• 18% YoY gross revenue growth in 2020, one of the most challenging years for small businesses.
• Strong direct-to-consumer (B2C) sales with 53% year-over-year (YoY) growth in 2020
• Consistent business-to-business (B2B) sales with 24% YoY growth in 2020
• 300K+ social media reach across all platforms

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2020, the Company had revenues of $1,714,931 compared to the year ended December 31, 2019, when the Company had revenues of $1,459,247. Our gross margin was 62.6% in fiscal year 2020, compared to 63.29% in 2019.
• Assets. As of December 31, 2020, the Company had total assets of $903,449, including $231,486 in cash. As of December 31, 2019, the Company had $609,573 in total assets, including $178,214 in cash.
• Net Income. The Company has had net income of $139,115 and net income of $60,345 for the fiscal years ended December 31, 2020 and December 31, 2019, respectively.
• Liabilities. The Company's liabilities totaled $606,399 for the fiscal year ended December 31, 2020 and $451,639 for the fiscal year ended December 31, 2019.

Liquidity & Capital Resources

To-date, the company has been financed with $585,827 in debt.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 3 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 3 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

Little Libros, LLC cash in hand is $73,498, as of October 2021. Over the last three months, revenues have averaged $198,169/month, cost of goods sold has averaged $55,014/month, and operational expenses have averaged $107,476/month, for an average net margin of $35,679 per month. Based on our forecasted earnings, we anticipate that our profitability will double in 24 months. 

We've earned approximately $1.4M in revenue YTD in 2021, a 17% increase from 2020 in comparison to the same date range. We are projecting between $2M-$2.5M in annual revenue (projection, not guaranteed).  This year, retailers opened doors to the public allowing additional revenue streams.  Last year, people were mostly shopping online.

Over the last three months, revenues have averaged $198,169 per month. Our cost of good sold has average $55,014 per month, and operational expenses $107,476 with an average net margin of $35,679 per month.  We expect our revenue to average $260,000, and expenses to average $125,000 in the next 3-6 months.

The company was profitable in 2020. Our gross revenue reached $1.7M with a net income of $139,115. We will use the capital to expand our catalog, create consumer products, and plan a successful subscription model for additional revenue. Our goal is to reach $12M in revenue by 2024.

The crowdfunding will help us leverage other sources of capital outside of the offering.  Our plan is to get access to outside capital from bank institutions with favorable terms to expand our financial resources.  This will help us maintain a good runway. These loans are non-equity and non-dilutive capital which protects and strengthens your equity investment.

The above narrative includes forward looking projections that are not guaranteed.