The SMART Tire Company

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

Reinventing tires w/NASA for $1T electric, autonomous and space industries.

Pneumatic (air-filled) tires haven't changed much in 100 years. However, NASA has been working for decades developing new tire technologies for outer space. Our mission is to bring this space age innovation back down to earth, as we usher in a new era of electric and autonomous vehicles. Safer, cleaner transportation can impact all of our lives.

We make the world's first fuel-efficient, eco-friendly, lightweight & smooth riding airless tires.

In 5 years, SMART tires aims to be the tire of choice for bicycles & scooters, solving tradeoffs between air-filled and airless tires.

We're aiming for our tires to embark on NASA missions to Mars and the moon, including the first human mission in decades.

Back on earth, we're hoping to be launching the first tires specially made for EVs, saving billions of lbs of rubber & plastic waste, increasing energy efficiency, and eliminating flats.

Next up: we're looking to save millions of gallons of jet fuel.

Projections mentioned above cannot be guaranteed.

Milestones

The SMART Tire Company, Inc. was originally organized as an LLC in August 2020. In March of 2021, the Company reorganized as a Delaware corporation. Patents mentioned in this Form C are owned by the Company.

Since then, we have:

• Hyundai Motors and Kia Official Collaboration
• Exclusive NASA license & 5x new patent pending tire inventions
• Multiple Global 500 Aerospace Customers with Space Industry Revenue
• $300B market opportunity in terrestrial tires, key supplier to future $1T private space industry
• 5000+ customer waiting list for our groundbreaking METL™ bicycle wheelsets
• Patented space tire for the Mars and Moon supply chain
• 12+ years and $10M+ in government funding and research previously invested into this technology (different entity)

The Company is subject to risks and uncertainties common to early-stage companies. Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future.

Historical Results of Operations

Our company was organized in August 2020 and has limited operations upon which prospective investors may base an evaluation of its performance.

• Revenues & Gross Margin. For the period ended December 31, 2022, the Company had revenues of $100,895 compared to the year ended December 31, 2021, when the Company had revenues of $0. Our gross margin was 89.85% in fiscal year 2022.
• Assets. As of December 31, 2022, the Company had total assets of $314,248, including $49,209 in cash. As of December 31, 2021, the Company had $969,754 in total assets, including $845,099 in cash.
• Net Loss. The Company has had net losses of $788,442 and net losses of $436,449 for the fiscal years ended December 31, 2022 and December 31, 2021, respectively.
• Liabilities. The Company's liabilities totaled $1,492,977 for the fiscal year ended December 31, 2022 and $1,407,637 for the fiscal year ended December 31, 2021.

Liquidity & Capital Resources

To-date, the company has been financed with $156,362 in equity and $1,356,381 in SAFEs.

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

The SMART Tire Company, Inc. cash in hand is $45,451.24, as of February 2023. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $58,598.98/month, for an average burn rate of $58,598.98 per month. Our intent is to be profitable in 12 months.

The company currently has $100,800 in account receivables, and an additional $50,000 anticipated revenue from an accelerator / paid proof of concept program. Overall burn rate remains around $50,000/month.

The company anticipates a minimum of $150,800 in revenue over the next 3 months. Projected 6-month revenue is $250,000 - $500,000 based on current clients and sales. Depending on the outcome of major NASA contracts, this could be substantially higher. We expect to incur approximately $300k in expenses over the next six months.

The company is not currently profitable. The company is currently a supplier to multiple NASA bids for the Lunar Terrain Vehicle. Selection for this contract would contribute greatly to reaching profitability in 2023. Otherwise, we anticipate revenue to exceed expenses by 2024. Approximate funding needs to profitability are estimated at $3M-$5M, but may vary greatly with the award of grants, contracts etc over the next 12 months.

The company has applied for one SBIR Phase I grant through the National Science Foundation, and is evaluating others. Lunar tire revenue is currently ~$100k in open invoices, and we expect at least this much additional revenue over the short term duration of the campaign.

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