Loop

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

The Private Family Network.

Loop is a private social network that helps families stay connected. We use an innovative hardware plus software solution, a digital picture frame and photos sharing app, that is simple private, and fun.

In 5 years, Loop hopes to be a public company with over $150M in annual revenue with a brand synonymous with family and trust. We aim to have operations in the US, Europe and Australia and our app will be a cultural phenomenon, the equivalent of Snapchat for your family. The Loop frame plans to exist in all the places people spend time - home, office, care facilities and even dorm rooms. Forward-looking projections cannot be guaranteed.

Milestones

California Labs, Inc. was incorporated in the State of Delaware in March 2014.

Since then, we have:

• Brought functional hardware product to market in 2021.
• $2M lifetime revenue.
• 4 million photos and interactions shared through the Loop app.

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2022, the Company had revenues of $1,214,505 compared to the year ended December 31, 2021, when the Company had revenues of $770,496.
• Assets. As of December 31, 2022, the Company had total assets of $937,028, including $44,706 in cash. As of December 31, 2021, the Company had $1,508,546 in total assets, including $226,664 in cash.
• Net Loss. The Company has had net losses of $546,144 and net losses of $597,205 for the fiscal years ended December 31, 2022 and December 31, 2021, respectively.
• Liabilities. The Company's liabilities totaled $5,075,729 for the fiscal year ended December 31, 2022 and $5,130,442 for the fiscal year ended December 31, 2021.

Liquidity & Capital Resources

To-date, the company has been financed with $2,879,962 in equity, $5,161,210 in convertibles, and $294,800 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 1 month. 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

California Labs, Inc. cash in hand is $71,000, as of January 2023. Over the last three months, revenues have averaged $292,000/month, cost of goods sold has averaged $170,000/month, and operational expenses have averaged $55,300/month, for an average net margin of $66,700 per month. Our intent is to be profitable in 9 months.

Since the date of our financials, we have approximately doubled our revenue and decreased our operating expenses by approximately 50%. 

In six months, we expect to be generating $200k a month in revenue while incurring approximately $180k in operating costs and COGS.

In order to reach profitability in approximately 9 months, we believe we'll need to raise a total of about $500k in capital. Our business has significant seasonality, which is why we were operating at a profit over the last three months.

Outside of this offering, we are concurrently soliciting high-net-worth individuals and institutional investors through Reg D.

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