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

First farm-to-body tampon with hemp fiber - leading innovation for period care.

As healthcare providers, we wanted better ingredients in period products and were disappointed in the lack of traceability and natural materials innovation for something as important as tampons. With Trace, we have soil-level info and the regenerative fibers we need for tampons we can feel good about putting in our bodies and in the environment.

Trace brings the world’s first hemp fiber and Climate Beneficial™ cotton tampon because we want better materials for our bodies and the earth.


Trace will grow a full portfolio of period care products made from regenerative fibers like hemp. We will expand into Whole Foods and Target as well as into foreign markets, and we also see manufacturing and fiber distribution services in our future!

Milestones

Trace Femcare, Inc. was incorporated in the State of Tennessee in August 2020.

Since then, we have:

• Founder named as Top 150 FemTech Leaders by Femtech Analytics
• Founded and backed by female healthcare professionals
• Successful commercial production trials complete
• Patent-pending technology
• Vertically-integrated, traceable supply chain with fibers grown in the USA
• Raw materials inventory acquired for production through Q1 2024
• Partnered with Carhartt, Reformation, Outerknown, etc. in the California Cotton Climate Coalition

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, 2023, the Company had revenues of $3,869 compared to the year ended December 31, 2022, when the Company had revenues of $0. Our gross margin was 46.24% in fiscal year 2023, compared to % in 2022.
• Assets. As of December 31, 2023, the Company had total assets of $164,634, including $10,193 in cash. As of December 31, 2022, the Company had $317,944 in total assets, including $199,950 in cash.
• Net Loss. The Company has had net losses of $380,232 and net losses of $55,369 for the fiscal years ended December 31, 2023 and December 31, 2022, respectively.
• Liabilities. The Company's liabilities totaled $245,000 for the fiscal year ended December 31, 2023 and $185,000 for the fiscal year ended December 31, 2022.

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 $200,000 in convertibles and $290,000 in SAFEs.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 2 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

Trace Femcare, Inc. cash in hand is $10,193, as of December 2023. Over the last three months, revenues have averaged $322/month, cost of goods sold has averaged $173/month, and operational expenses have averaged $31,306/month, for an average burn rate of $31,157 per month. Our intent is to be profitable in 20 months.

Since the end of 2023 fiscal year, our revenues have decreased to $95/month and our monthly cash burn has decreased to $15,000 per month

We expect $20,000 month over month revenues in the next 6 months with expenses of $60,000 per month.

We believe we will need an additional $1.5M in financing to achieve profitability in Q3 of 2025. We are unable to hire additional team or finance marketing expenses to meaningfully grow our revenues until we bring in approximately $500,000 by summer 2024. Those projections cannot be guaranteed.  We have angel and other institutional investors we may approach for additional financing.   All projections in the above narrative are forward-looking and not guaranteed.