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 a manufacturer & distributor of top quality, hand crafted beer.  We also operate a tap room that can accommodate over 200 guests.

In five years, our goal is to be manufacturing and distributing product from multiple locations throughout the United States.  We also have designs to open a second tap room in the South Eastern region of the US. 

Milestones

SHBC Group Inc. was incorporated in the State of Connecticut in March 2017.

Since then, we have:

• We are a highly rated, established brand with "steady" growth since 2014.
• Upgrading from a 2.5 barrel brew house to a new 15 barrel brew house which will increase our production by over 500%
• New location is highly visible and centrally located in the ever growing Connecticut craft beer scene.

Historical Results of Operations

Our company was organized in March 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, 2019, the Company had revenues of $91,639 compared to the year ended December 31, 2018, when the Company had revenues of $411,922. Our gross margin was 53.0% in fiscal year 2019, compared to 43.11% in 2018.
• Assets. As of December 31, 2019, the Company had total assets of $473,000, including $65,000 in cash. As of December 31, 2018, the Company had $217,000 in total assets, including $24,000 in cash.
• Net Loss. The Company has had net losses of $4,300 and net losses of $64,680 for the fiscal years ended December 31, 2019 and December 31, 2018, respectively.
• Liabilities. The Company's liabilities totaled $190,250 for the fiscal year ended December 31, 2019 and $40,175 for the fiscal year ended December 31, 2018.

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 $290,000 in equity.

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

SHBC Group Inc. cash in hand is $65,000, as of May 2020. Over the last three months, revenues have averaged $5,000/month, cost of goods sold has averaged $6,000/month, and operational expenses have averaged $14,000/month, for an average burn rate of $15,000 per month. Our intent is to be profitable in 6 months.

We scaled down our activity in April of 2019 leading up to our relocation.  Our brewery is currently closed while we are building out our new location.  We continue to brew offsite with other breweries in our collective. (Connecticut Brewery Collective), in order to hit the ground running when our new taproom is open.  

Our revenues decrease from 2018 to 2019, since we toned down distribution in preparation of our move. Our brewery lease ended July 2019. Since then, we have been making beer out of a third-party brewing facility which does not allow for the same quality or quantity that we would like.

Do to COVID-19, we have planned taproom activity. We are still able to sell product to distributors. We expect to open our new taproom end of July 2020. We expect to need approximately $35,000-40,000 in capital to get the new taproom operational. In six months, we hope to generate $43,000/month in revenue from distribution and taproom sales. We expect expenses to be $26,000/month six months from now.

For additional capital, our previous investors have pledged additional funds if needed. We also have other investors in our close network that we can solicit.