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

In 2017, we launched our award-winning digital learning company on Shark Tank. Since then, we have earned more than $1.6 million in revenue, 300+ retail outlets, a 4.3 star rating on Amazon and closed a co-operation with Girls Scouts of America and PBS. We have sold more than 30,000 products and are excited to announce a new collaboration for a school product and curriculum – targeting both girls and boys.

SmartGurlz aims to be the LeapFrog of smart connected-toys, targeting $200 million in revenue and $1 billion company valuation.

Milestones

Smartgurlz US Inc was incorporated in the State of Delaware in May 2017.

Since then, we have:

• Award-winning products protected by patents, copyright and unique brain-based curriculum
• Nearly $1.6 million in revenue to date, 30,000 products sold and 4+ star rating on Amazon
• Morgan Stanley invested $200,000 and is a strategic investor through its accelerator program
• Signed TV licensing deal with PBS's Odd Squad
• Launching into profitable $40 billion schools market with former LEGO education distributor
• Featured on CNN, Fox and Friends, Fox Business News, Forbes and Financial Times

Historical Results of Operations

Our company was organized in May 2017 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 $381,870 compared to the year ended December 31, 2017, when the Company had revenues of $765,177. Our gross margin was 149.96% in fiscal year 2018, compared to 143.75% in 2017.
• Assets. As of December 31, 2018, the Company had total assets of $353,103, including $30,123 in cash. As of December 31, 2017, the Company had $535,156 in total assets, including $33,127 in cash.
• Net Loss. The Company has had net losses of $676,517 and net losses of $433,834 for the fiscal years ended December 31, 2018 and December 31, 2017, respectively.
• Liabilities. The Company's liabilities totaled $1,325,290 for the fiscal year ended December 31, 2018 and $843,938 for the fiscal year ended December 31, 2017.

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 $812,161 in debt, $700,000 in equity, and $472,000 in convertibles.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 9 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 6 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

Smartgurlz US Inc cash in hand is $100,000, as of April 2019. Over the last three months, revenues have averaged $100,000/month, cost of goods sold has averaged $23,000/month, and operational expenses have averaged $20,000/month, for an average net margin of $57,000 per month.

We are using the funds from this raise largely on a new product and on marketing for existing products.  Although we cannot guarantee it, we expect our revenues to be approximately 450,000 for the year by November 2019, and our operational expenses to be 170,000 for the year by November 2019.  

Since the date our financials cover, we have another $25,000 accounts receivable and another $100K committed from angel investors