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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 creating hydrofoils unleashing a new era of water transportation.
We produce personal recreational watercrafts that feature a fully computer stabilized hydrofoil.

Milestones

Boundary Layer Technologies Inc was incorporated in the State of Delaware in April 2018.  The company has a wholly owned subsidiary called Boundary Layer Technologies AU Pty Ltd.

Since then, we have:

• $3.5M+ hydrofoil watercraft pre-sales (deposits paid, final revenue to come later)
• $121M in Letters of Intent with Fortune 100 firms, ferry groups, & original equipment manufacturers
• Led by 2X YC-backed founder & world-class team from Mckinsey, Oracle, & Boeing
• Team has built 1st hydrofoiling container ship, e-foiling boats, self-landing rockets, & drones
• Massive $114B recreational & commercial boating market
• Backed by leading venture funds Y-Combinator (YC), Soma Capital, Fifty Years VC, & Climate Capital

Historical Results of Operations

• Revenues & Gross Margin. For the period ended December 31, 2023, the Company had revenues of $149,663 compared to the year ended December 31, 2022, when the Company had revenues of $0. Our gross margin was 100.0% in fiscal year 2023, compared to 0% in 2022.
• Assets. As of December 31, 2023, the Company had total assets of $716,765, including $265,102 in cash. As of December 31, 2022, the Company had $941,500 in total assets, including $342,147 in cash.
• Net Loss. The Company has had net losses of $964,452 and net losses of $1,826,872 for the fiscal years ended December 31, 2023 and December 31, 2022, respectively.
• Liabilities. The Company's liabilities totaled $1,460,781 for the fiscal year ended December 31, 2023 and $956,398 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 $700,000 in debt and $5,533,147 in SAFEs.

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. We plan to raise capital in 3 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

Boundary Layer Technologies Inc cash in hand is $220,291, as of December 2023. Over the last three months, revenues have averaged $57,789.52/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $50,000/month, for an average net margin of $7,789.52 per month. Our intent is to be profitable in 36 months.

Since the date our financials cover, we have some revenue from people who have placed reservations for the vehicles, which makes us look short-term profitable, even thought we expect to not be profitable for the year.  We have also sold two vehicles.  We also have a commercial supply and consulting project, and have some revenue from that.  

We plan to start taking down payments to sell the first units in early 2024.  We expect our costs to produce the first units to be about $1M, and we expect to generate about $1.1M in revenue from it.
We are not currently profitable.  Our currently plan is to raise $1M through the Community Round, and then do a $3M Seed Round in Q2 of 2024.  We may do a Series A 12 - 18 months after that, and a Series B 18 months after that.  We believe that we may be able to reach profitability after our Series A, at which point we may have raised about $15M.  

We have cash on hand to cover short term burn, and intend to raise additional funds in 2024.  
All projections in the above narrative are forward-looking and not guaranteed.