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

Loveseat.com is a thriving local online auction marketplace in San Diego & Los Angeles.  Today we are selling over 2,000 pieces of furniture and decor on a monthly basis.  We are raising money to scale up our operations in our current markets as well as to expand geographically, ultimately to every city in the United States.

We intend to take Loveseat nationwide.  While our only focus at this time is used home furnishings, there are many other categories where we think the Loveseat experience is significantly better than the incumbents.  By combining online auctions with a physical warehouse, we're able to eliminate the pricing friction of Craigslist and the shipping friction of eBay.  There is potential to build a $1b/year transactional marketplace focused exclusively on local used goods.

Milestones

Loveseat, Inc was incorporated in the State of Delaware in July 2015.

Since then, we have:

• Selling 500+ pieces of furniture weekly
• Strong traction in Los Angeles & San Diego
• Market opportunity north of $1b annually
• Take rate is 68% of Gross Merchandise Sales
• Solid founding team - Wharton / Venmo (exit) / Ticketleap (exit)

Historical Results of Operations

Our company was organized in July 2015 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 $1,920,425 compared to the year ended December 31, 2017, when the Company had revenues of $2,052,573. Our gross margin was 66.77% in fiscal year 2018, compared to 64.8% in 2017.
• Assets. As of December 31, 2018, the Company had total assets of $360,781, including $121,230 in cash. As of December 31, 2017, the Company had $571,495 in total assets, including $232,971 in cash.
• Net Loss. The Company has had net losses of $456,973 and net losses of $556,856 for the fiscal years ended December 31, 2018 and December 31, 2017, respectively.
• Liabilities. The Company's liabilities totaled $349,839 for the fiscal year ended December 31, 2018 and $112,565 for the fiscal year ended December 31, 2017.

Liquidity & Capital Resources

To-date, the company has been financed with $119,500 in debt, $1,793,332 in equity, and $229,702 in SAFEs.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 15 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 9 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

Loveseat, Inc cash in hand is $69,393, as of May 2019. Over the last three months, revenues have averaged $123,756/month, cost of goods sold has averaged $33,937/month, and operational expenses have averaged $104,521/month, for an average burn rate of $14,702 per month. Our intent is to be profitable in 6 months.

Since the end of 2018, we have fully transitioned our business to a local online auction marketplace and shut down the retail operations that remained in Los Angeles.

We expect our auction revenues to grow in Los Angeles as we have recently begun to focus exclusively on this line of business.  Due to our focus on auctions, we have reduced the overhead associated with both our real estate and our staffing.  The result of these efforts should bring us close to a breakeven state.

Depending on the aggregate raise in this round from both WeFunder investors and other direct investors, we plan on expanding into Orange County, which we expect to have an initial expense but also a significant increase in ongoing revenues.

We have existing investors who previously invested outside of WeFunder who have expressed an interest in investing in this round under the same terms as the WeFunder SAFE.