Oakland Roots and Soul Sports Club

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

Oakland First, Always.

We started Oakland Roots & Soul Sports Club to show that it's possible to build a successful, professional sports team around a higher purpose; to harness the magic of Oakland and the power of sports as a force for social good.

We plan to have completed real estate projects including a training facility, a 10,000+ seat stadium for the Roots and Soul to play, and made progress on workforce housing for our players and the community. We plan to have Oakland Soul be part of the fully-professional USL SuperLeague. Maybe even win a championship or two!

Milestones

Oakland Pro Soccer LLC was incorporated in the State of California in July 2018.

Since then, we have:

• Oakland Roots & Soul Sports Club is the last, best hope for professional sports in Oakland.
• First purpose driven pro soccer team in Oakland, CA.
• "Coolest soccer team in the USA" (FourFourTwo Magazine) blending purpose, design, music, and sport.
• Our teams win. Roots have reached playoffs every year. In Soul's debut season they reached playoffs.
• Our game days mix Oakland culture, quality soccer, live music, local food, and passionate fans.
• Diverse ownership group includes NFL legend Marshawn Lynch, global rap star G-Eazy and many others.
• We're in USL, North America's biggest soccer league. Our games air on ESPN+, KTVU+, and TeleXitos.

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2023, the Company had revenues of $4,063,284 compared to the year ended December 31, 2022, when the Company had revenues of $3,775,068. Our gross margin was 92.77% in fiscal year 2023, compared to 86.96% in 2022.
• Assets. As of December 31, 2023, the Company had total assets of $9,151,089, including $858,870 in cash. As of December 31, 2022, the Company had $7,436,939 in total assets, including $777,596 in cash.
• Net Loss. The Company has had net losses of $10,118,284 and net losses of $9,946,863 for the fiscal years ended December 31, 2023 and December 31, 2022, respectively.
• Liabilities. The Company's liabilities totaled $11,833,434 for the fiscal year ended December 31, 2023 and $10,678,752 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.

Oakland Soccer Opportunity Fund LLC ("OSOF") is the entity into which accredited investors put their capital (it’s an opportunity zone fund). OSOF's purpose is to buy units in Oakland Pro Soccer LLC ("OPS"). OSOF has traditionally been the entity which has raised funds since we stood it up in 2019 to tap into the opportunity zone fund legislation as the original founding members of OPS did not contemplate the idea. OPS is the main operating entity and is the entity that is raising funds in this Wefunder offering.

Liquidity & Capital Resources

To-date, the company has been financed with $697,735 in debt, $39,879,173 in equity, and $12,850,000 in convertibles.

After the conclusion of this Offering, should we hit our minimum funding target, we will need to raise additional capital immediately to extend our runway.

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

Oakland Pro Soccer LLC cash in hand is $744,392, as of July 2024. Over the last three months, revenues have averaged $512,066/month, cost of goods sold has averaged $16,000/month, and operational expenses have averaged $1,071,227/month, for an average burn rate of $575,161 per month. Our intent is to be profitable in 120 months.

Since the date our financials cover, we raised capital from existing investors and additional capital at a higher valuation and same per unit price as last year. We also received additional loans from existing investors.

The Company will have conducted a “stock split” by the time of this community invest round to bring the per unit price down from $10,296 to $100 to make the community investment round easier to manage.

We have been working with the City of Alameda, Alameda County, and Prologis on a transaction where Prologis would acquire the practice facility acquisition and Prologis would lease the facility to the Roots and Soul. That negotiation continues and if it concludes, which is expected, the lease would be a long-term lease at a higher rate than the organization is paying now.

We submitted a proposal to lease the Malibu site for an interim stadium and are negotiating with the City, County, and JPA. Entered into a cooperation agreement with AASEG related to that site as well. The documents needed for planning approval for the Malibu site have been submitted and a planning meeting is scheduled for July 10, 2024.

The Company is negotiating with the JPA to lease the Coliseum for 2025. We expect that negotiations will be completed this summer which will allow for the field at the Coliseum to be changed from baseball to soccer and give the Roots and the Soul the ability to play matches in 2025 in the Coliseum.
The USL SuperLeague received D1 sanctioning, will begin play in August 2024.

Revenues should continue on a steady state through the summer, with the main drivers being single game ticket sales. Historically, ticket sales have picked up as the playoffs approach in the fall so we’d expect the same increase this fall. New sponsors may also sign agreements for the second half of the season but most revenue has been locked in through existing relationships. Expenses should also continue on the current trajectory with some increase as we continue to spend on stadium and practice facility planning.  We are estimating ~$900k - $1 million of additional revenue through the end of 2024, and an additional ~$6 million in costs through the end of 2024.

The Oakland Roots and Soul are not profitable. There will be significant future capital needs (millions of dollars a year) to fund the team’s operations although the intent is to shrink them and get the operating entity to cash flow positive. The critical change to reducing losses and the related cash requirements is moving to a larger scale stadium. To break even, the business model for the team requires revenues to grow in order to cover the fixed costs - compensation (salary, benefits, insurance, housing) for players, staff, and coaches is the primary cost along with league fees, facility and game day fees, and travel. We need to grow revenue - the primary sources are tickets, sponsorships, merchandise, food and beverage, and eventually player transfer fees. Tickets and sponsorships are directly related to the size of the stadium in which we play and we are limited by the size of the current location to ~5,000 people. We intend to put real estate investments into a related but separate entity to fund the acquisition and creation of a stadium.

The Oakland Roots and Soul are generating revenue which helps offset some but not all of our operating expenses. We also have been raising funds from accredited investors since the organization’s founding in 2018 and will continue to do so. 

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