Spinn

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

We make quality coffee simple - providing coffee lovers with a range of easy-to-use, sustainable, and high-quality brewing options. It’s convenience and taste, without the waste. Spinn’s coffee maker’s proprietary technology uses a unique centrifugal brewing process to extract the full flavor and aroma of coffee beans. Our machine grinds whole beans on demand. There’s zero need for pre-packaged pods or capsules.

Milestones

Spinn, Inc. was incorporated in the State of Delaware in March 2015.

Since then, we have:

• $13M revenue run rate, 328% YoY growth
• Backed by top VCs Spark Capital, Amazon’s Alexa Fund, Alexis Ohanian & Bar9 Ventures
• World-class team from Microsoft, Dell, Sony, Philips, Blue Bottle & La Marzocco
• 11M+ servings made & 65,000 active users
• 90,000 bags of coffee sold & 120+ local roasting partners
• 4.8/5 customer rating
• Powered by patented technology using centrifugal brewing process

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2022, the Company had revenues of $9,375,178 compared to the year ended December 31, 2021, when the Company had revenues of $4,101,403. Our gross margin was 21.73% in fiscal year 2022, compared to -31.39% in 2021.
• Assets. As of December 31, 2022, the Company had total assets of $10,836,538, including $3,515,008 in cash. As of December 31, 2021, the Company had $12,452,787 in total assets, including $2,464,488 in cash.
• Net Loss. The Company has had net losses of $8,948,990 and net losses of $12,272,796 for the fiscal years ended December 31, 2022 and December 31, 2021, respectively.
• Liabilities. The Company's liabilities totaled $15,602,246 for the fiscal year ended December 31, 2022 and $8,023,859 for the fiscal year ended December 31, 2021.

Liquidity & Capital Resources

To-date, the company has been financed with $36,800,000 in equity, $10,500,000 in debt, and $2,850,000 in SAFEs.

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

Spinn, Inc. cash in hand is $1,293,624, as of May 2023. Over the last three months, revenues have averaged $686,387/month, cost of goods sold has averaged $532,146/month, and operational expenses have averaged $745,039/month, for an average burn rate of $657,179 per month. Our intent is to be profitable in 17 months.

We have had no material changes in our finances since the date our financials cover. $500k of our cash on hand is restricted via a tax lien. We are working with a CPA firm to contest the tax lien. 

We are currently not profitable.  Our revenue grew 2x in 2022. We are currently cutting expenses in 2023. We are a seasonal business, and see that about 60% of our revenues come in during Q4.

We are in active conversations with our investors about a $15M raise.  We have $6 - $7M soft circled at the moment.  Our hope is that this is the last raise we do before reaching profitability, but it is also possible that we would expand into new markets or take other actions that would require additional capital.  

The company stopped paying the SVB and TPC loans beginning March 2023, to preserve its cash position. The Company breached certain covenants related to its loan arrangements. 

Roderick de Rode, CEO of Spinn, is in continuous discussion to work towards new terms and solutions with the lenders. The loan payment with TPC resumed on June 1st, 2023.

We are estimating $13M - $17M of revenues in 2023.  We are estimating $19M of expenses in 2023.

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