Squarex, LLC

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 are developing a drug that prevents cold sores or oral herpes outbreaks in people with frequent outbreaks. The drug has completed Phase 2 clinical trials and has worked great. It significantly reduces the number and severity of cold sores, with 1 topical dose to the arm (not the face or lip) every 3 months. It acts by boosting immune function.
We expect to have the drug approved and for sale in about 3 years, and then be generating $600 million annual sales, with a market capitalization $5 billion or more.

No other opportunity in pharmaceuticals likely exists with (1) a market of this size, (2) a drug proven effective through Phase 2 clinicals trials, and (3) no other drug approved for the indication or even in clinical trials. These projections cannot be guaranteed.
Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future, if any.

Milestones

Squarex, LLC was incorporated in the State of Delaware in June 2012.

Since then, we have:

• Makes the only drug shown to reduce cold sore frequency and severity - competitors are “treatment only” & cannot prevent
• Successfully completed Phase 2 clinical trials with clear path to commercialization
• A single topical dose to the arm prevents outbreaks for over 4 months
• Clinical trials conducted at Harvard and Stanford
• Raised $5.75M in initial seed round
• Global Oral Herpes Market projected $1.29B by 2028
• Cofounded by former Executive Director of the American Board of Dermatology

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2020, the Company had revenues of $0 compared to the year ended December 31, 2019, when the Company had revenues of $0. Our gross margin was % in fiscal year 2020, compared to % in 2019.
• Assets. As of December 31, 2020, the Company had total assets of $4,918, including $4,509 in cash. As of December 31, 2019, the Company had $15,745 in total assets, including $14,037 in cash.
• Net Loss. The Company has had net losses of $411,793 and net losses of $742,002 for the fiscal years ended December 31, 2020 and December 31, 2019, respectively.
• Liabilities. The Company's liabilities totaled $500,489 for the fiscal year ended December 31, 2020 and $119,468 for the fiscal year ended December 31, 2019.

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 $1,000,000 in debt and $6,050,100 in equity.

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 12 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

Squarex, LLC cash in hand is $10,294, as of August 2021. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $9,517/month, for an average burn rate of $9,517 per month. Our intent is to be profitable in 48 months.

No material changes in our finances have happened since 12/31/20.  We have a low burn rate until we raise more money in this Reg CF raise on Wefunder and begin the next clinical trials and manufacturing the next batches of drug.

We expect no revenue in the next 36-48 months.  The pharmaceutical business model is that you need to spend large amounts of money in clinical trials and other development and testing for several years to get FDA approval and be able to sell a drug and get revenue. Once the drug is approved, profits will likely be very high. Our expenses will be about $200,000 per month if this raise is successful. These are forward-looking projections and can't be guaranteed.

Dr. McTavish is funding the company with small personal investments and loans. We are also in discussions with investment banks and venture capital groups about funding.