What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-12 compared with 2021-08-13 · 295 added, 219 removed, 150 unchanged (77% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The following discussion and analysis should be read in conjunction

with the unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report and our audited financial

statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed

with the SEC on March 31, 2021.

This discussion and analysis and other parts of this Quarterly Report contain forward-looking statements

based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our

plans, objectives, expectations, intentions and projections.

Our actual results and the timing of selected events could differ materially

from those anticipated in these forward-looking statements as a result of several factors, including those set forth under Part II, Item

1A, “Risk Factors” and elsewhere in this Quarterly Report.

You should carefully read the “Risk Factors” section

of this Quarterly Report and of our Annual Report on Form 10-K for the year ended December 31, 2020 to gain an understanding of the important

factors that could cause actual results to differ materially from our forward-looking statements.

Please also see the section entitled

“Special Note Regarding Forward-Looking Statements.”

We are a technology company

that is reinventing how consumers engage with audio through the development of a proprietary AI platform for audio and innovative technologies

for podcasts.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should

be read in conjunction with the unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report

and our audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December

31, 2020, which was filed with the SEC on March 31, 2021.

This discussion and analysis and other parts of this Quarterly Report contain

forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such

as statements regarding our plans, objectives, expectations, intentions and projections.

Our actual results and the timing of selected

events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those

set forth under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report.

You should carefully read the “Risk

Factors” section of this Quarterly Report and of our Annual Report on Form 10-K for the year ended December 31, 2020 to gain an

understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.

also see the section entitled “Special Note Regarding Forward-Looking Statements.”

We are a technology

company that is reinventing how consumers engage with audio through the development of a proprietary AI platform for audio and innovative

technologies for podcasts.

We are leveraging these technologies to bring to market two industry first Apps, Auddia and Vodacast.

Auddia gives consumers

the opportunity to listen to any AM/FM radio station with no commercials while personalizing the listening experience through skips, the

insertion of on-demand content and the programming of audio routines to customize listening sessions such as a daily commute.

App represents the first time consumers can access the local content uniquely provided by radio in the commercial free and personalized

manner many consumers have come to demand for media consumption.

The Auddia app gives

consumers the opportunity to listen to any AM/FM radio station with no commercials while personalizing the listening experience through

skips, the insertion of on-demand content and the programming of audio routines to customize listening sessions such as a daily commute.

The Auddia App represents the first-time consumers can access the local content uniquely provided by radio in the commercial free and

personalized manner many consumers have come to demand for media consumption.

We are leveraging our

legacy technology platform to bring to market a premium AM/FM radio listening experience through the Auddia App.

The Auddia App is intended

to be downloaded by consumers who will pay a subscription fee in order to listen to any streaming AM/FM radio station without commercials.

legacy business to bring to market a premium AM/FM radio listening experience through the Auddia App.

The Auddia App is intended to be

downloaded by consumers who will pay a subscription fee in order to listen to any streaming AM/FM radio station without commercials.

Advanced features will allow consumers to skip any content heard on the station, request audio content on-demand, and program an audio

We believe the Auddia App represents a significant differentiated audio streaming product that will be the first to come to market

since the emergence of popular streaming music apps such as Pandora, Spotify, Apple Music, Amazon Music, etc.

We believe that the most

significant point of differentiation is that in addition to music, the Auddia App is intended to deliver non-music content that includes

local sports, news, weather, traffic and the discovery of new music.

Radio is the dominant audio platform for local content and new music

We finalized development

and testing of the minimally viable product (“MVP”) version of the Auddia App and launched our first consumer trial in July

2021 with additional consumer trials continuing during the third quarter of 2021 and anticipate a full commercial launch to follow later

We believe the Auddia App represents a significant differentiated audio streaming product that will be the first to come to

market since the emergence of popular streaming music apps such as Pandora, Spotify, Apple Music, Amazon Music, etc.

We believe that

the most significant point of differentiation is that in addition to music, the Auddia App is intended to deliver non-music content that

includes local sports, news, weather, traffic and the discovery of new music.

Radio is the dominant audio platform for local content

and new music discovery.

We launched the Auddia

App and initiated our first consumer trial in July 2021 in a single market in southern Virginia and northern North Carolina.

continue with additional consumer trials in Santa Rosa, CA and Montgomery and Sylacauga, Alabama during the fourth quarter of 2021 to

measure consumer interest and engagement with the Auddia App.

We are continuing to advance the training of our proprietary AI technology

and once complete we are anticipating nationally launching all stations.

The Auddia mobile App

is available today through the iOS and Android App stores.

We also have developed

a new podcasting platform called Vodacast.

Vodacast is a podcasting app that provides an interactive digital feed to supplement podcast

audio with additional content to tell deeper stories and give podcasters access to digital revenue for the first time.

The platform is

unique in that it is designed to add new monetization channels for podcasters while delivering a superior content experience for listeners.

Vodacast is a synchronized digital feed that listeners can view and interact with and which accompanies each episode.

Podcasters and their

digital teams will be able to build these interactive feeds using The Vodacast Hub, a content management system that also serves as a

tool to plan and manage a podcast episode.

The digital feed activates a new digital ad channel that turns every audio ad into a direct-response

digital ad, increasing the effectiveness and value of their established audio ad model.

The feed also presents a richer listening experience,

as any element of a podcast episode can be supplemented with images, videos, text copy and web links.

This feed appears fully synchronized

in the Vodacast mobile App, and it also can be hosted and accessed independently (e.g., through any browser), making the content feed

universally distributable.

a podcasting platform called Vodacast.

Vodacast provides a unique suite of tools that helps Podcasters create additional digital content

for their podcast episodes as well as plan their episodes, build their brand around their Podcast and monetize their content with new

monetization channels.

One innovative and proprietary part of the Vodacast platform is the availability of tools to create and distribute

an interactive digital feed which supplements podcast episode audio with additional digital.

These content feeds allow podcasters to

tell deeper stories to their listeners while giving podcasters access to digital revenue for the first time.

Podcasters will be able

to build these interactive feeds using The Vodacast Hub, a content management system that also serves as a tool to plan and manage podcast

The digital feed activates a new digital ad channel that turns every audio ad into a direct-response digital ad, increasing

the effectiveness and value of their established audio ad model.

The feed also presents a richer listening experience, as any element

of a podcast episode can be supplemented with images, videos, text and web links.

This feed appears fully synchronized in the Vodacast

mobile App, and it also can be hosted and accessed independently (e.g., through any browser), making the content feed universally distributable.

Vodacast will also introduce

an industry first multi-channel, highly flexible set of revenue channels that podcasters can activate in combination to allow listeners

to choose how they want to consume and pay for content.

“Flex Revenue” allows podcasters to continue to run their standard

audio ad model and complement those ads with direct-response enabled digital ads in each episode content feed, but it will also activate

subscriptions, on-demand fees for content (e.g., listen without audio ads for a micro payment fee) and direct donations from listeners.

Using these channels in combination, podcasters can maximize revenue generation and exercise higher margin monetization models, beyond

basic audio advertising.

These revenue channels are expected to be available to Podcasters starting late 2021 and into 2022.

The Vodacast mobile App

is available today through the iOS and Android App stores.

a unique and industry first multi-channel, highly flexible set of revenue channels that podcasters can activate in combination to allow

listeners to choose how they want to consume and pay for content.

“Flex Revenue” allows podcasters to continue to run their

standard audio ad model and complement those ads with direct response enabled digital ads in each episode content feed, increasing the

value of advertising on any podcast.

“Flex Revenue” will also activate subscriptions, on-demand fees for content (e.g., listen

without audio ads for a micro payment fee) and direct donations from listeners.

Using these channels in combination, podcasters can maximize

revenue generation and exercise higher margin monetization models, beyond basic audio advertising.

These revenue channels are expected

to be available to Podcasters starting late 2021 and into 2022.

The Vodacast mobile

App is available today through the iOS and Android App stores.

We have initiated efforts

to recruit podcast hosts to Vodacast to onboard their podcast, create digital feeds, and encourage their listening audience to download

and listen through the Vodacast App.

We expect to continue to attract podcasts and their listening audience to Vodacast through paid

promotion through the fourth quarter 2021 and into 2022.

We have funded our operations with proceeds from the February

2021 IPO and Series A warrants exercise in July 2021.

Since inception we have incurred significant operating losses.

As of September

30, 2021, we had an accumulated deficit of $63.5 million.

Our ability to generate product revenue sufficient to achieve profitability

will depend heavily on the successful development and commercialization of one or more of our Apps.

We expect that our expenses and capital

requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

· continue consumer trials of our Auddia

App and as we continue training our proprietary AI technology;

· continue to develop and expand our

technology and functionality to advance the Auddia and Vodacast Apps;

· rollout our product on a national

basis, which will include increasing our sales and marketing costs related to the promotion

of our products.

Auddia promotion will include a combination of a) purchasing ads directly

from broadcasters or b) participating broadcasters to promote without purchasing ads, but

sharing a portion of subscription proceeds based on listening activity on those stations;

· hire additional business development,

product management, operational and marketing personnel;

· continue market studies of our products;

· add operational and general administrative

personnel which will support our product development programs, commercialization efforts

and our transition to operating as a public company.

As a result, we may need substantial additional funding to

support our continuing operations and pursue our growth strategy.

Until such time as we can generate significant revenue from product

sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, which may include

collaborations with other companies or other strategic transactions.

We may be unable to raise additional funds or enter into such other

agreements or arrangements when needed on favorable terms, or at all.

If we fail to raise capital or enter into such agreements as and

when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our

product candidates.

Because of the numerous risks and uncertainties associated

with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve

or maintain profitability.

Even if we are able to generate product sales, we may not become profitable.

If we fail to become profitable

or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and

be forced to reduce or terminate our operations.

As of September 30, 2021, we had cash, cash equivalents and investments

of $8.1 million, which we believe will fund our operating expenses and capital expenditure requirements for at least the next 12 months.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than

See “—Liquidity and capital resources.” To finance our operations beyond that point, we will need to raise

additional capital, which cannot be assured.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable

to us, we may have to significantly delay, scale back or discontinue the development or commercialization of our Apps or other research

and development initiatives.

Components of our results of operations

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Direct cost of services

consist primarily of costs incurred related to our technology and development of our Apps, including hosting and other technology related

Historically, we had higher direct costs of services related to our legacy platform, however, since the termination of our legacy

services and platform in August 2020, these costs have been reduced.

We expect our direct costs of services to increase in the future

as we continue to develop and enhance our technology related to the Auddia and Vodacast Apps.

consists primarily of costs incurred related to our technology and development of our Apps, including hosting and other technology related

Historically, we had higher direct costs of services related to our legacy platform, however, since the termination of our

legacy services and platform in August 2020, these costs have been reduced.

We expect our direct costs of services to increase in the

future as we continue to develop and enhance our technology related to the Auddia and Vodacast Apps.

Research and development

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We account for costs incurred in the development of computer software as software research and development costs until the preliminary

project stage is completed, management has committed to funding the project, and completion and use of the software for its intended purpose

We cease capitalization of development costs once the software has been substantially completed and is available for its

intended use.

Software development costs are amortized over a useful life estimated by the Company’s management of five years.

associated with significant upgrades and enhancements that result in additional functionality are capitalized.

Capitalized costs are subject

to an ongoing assessment of recoverability based on anticipated future revenues and changes in software technologies.

Unamortized capitalized

software development costs determined to be in excess of anticipated future net revenues are impaired and expensed during the period of

such determination.

project stage is completed, management has committed to funding the project, and completion and use of the software for its intended

purpose is probable.

We cease capitalization of development costs once the software has been substantially completed and is available

for its intended use.

Software development costs are amortized over a useful life estimated by the Company’s management of three

Costs associated with significant upgrades and enhancements that result in additional functionality are capitalized.

costs are subject to an ongoing assessment of recoverability based on anticipated future revenues and changes in software technologies.

Unamortized capitalized software development costs determined to be in excess of anticipated future net revenues are impaired and expensed

during the period of such determination.

We expect to continue

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Our sales and marketing

expenses consist primarily of salaries and consulting services, related to the sales, promotion and commercial trials related to our products.

We expect our sales and marketing expenses to continue to increase as we look to commercialize and generate revenue for our products to

attract and retain users.

expenses consist primarily of salaries and consulting services, related to the sales, promotion and commercial trials related to our

We expect our sales and marketing expenses to continue to increase as we look to commercialize and generate revenue for our

products to attract and retain users.

General and administrative

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fees related to auditing, tax, general legal services, and consulting services.

We expect our general and administrative expenses to continue

to increase in the future as we expand our operating activities and prepare for potential commercialization of our products and support

our operations as a public company, including increased expenses related to legal, accounting, insurance, regulatory and tax-related services

associated with maintaining compliance with exchange listing and Securities and Exchange Commission requirements, directors and officers

liability insurance premiums and investor relations activities.

Other income and expense

We expect our general and administrative expenses to

continue to increase in the future as we expand our operating activities and prepare for potential commercialization of our products

and support our operations as a public company, including increased expenses related to legal, accounting, insurance, regulatory and

tax-related services associated with maintaining compliance with exchange listing and Securities and Exchange Commission requirements,

directors and officers liability insurance premiums and investor relations activities.

Other income and

Our other income and expense consist of interest

income related to our cash at financial institutions, debt extinguishment related to our PPP loan, interest expense from our line of credit,

and a finance charge related to conversion of outstanding debt into shares of common stock related to the February 2021 IPO.

our other expense to decrease as we paid off our outstanding balance on our line of credit,

income related to our cash at financial institutions, debt extinguishment related to our PPP loan, interest expense from our line of

credit, and a finance charge related to conversion of outstanding debt into shares of common stock related to the February 2021 IPO.

We expect our other expense to decrease as we paid off our outstanding balance on our line of credit.

Results of operations

Comparison of the three months ended

June 30, 2021 and 2020

September 30, 2021 and 2020

The following table summarizes our results

of operations:

Three Months Ended June 30,

Increase/(Decrease)

Three Months Ended September 30,

Operating expenses:

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$ (2,049,403 )

$ (1,122,216 )

Total revenues were

for the three months ended June 30, 2021, compared to $45,103 for the three months ended June 30, 2020.

The decrease in revenue can be

attributed to the August 2020 termination of our legacy platform which eliminated all platform fee and advertising revenue while we continue

to develop the new Auddia and Vodacast products to establish new revenue streams.

$0 for the three months ended September 30, 2021, compared to $1,040 for the three months ended September 30, 2020.

The decrease in revenue

can be attributed to the August 2020 termination of our legacy platform which eliminated all platform fee and advertising revenue while

we continue to develop the new Auddia and Vodacast products to establish new revenue streams.

Direct cost of services

decreased by $87,679 or 54%, from $163,737 for the three months ended June 30, 2020 compared to $76,058 for the three months ended June

This decrease primarily resulted from the termination of our legacy services and the decreased need for hosting, staff reductions

to the team working on the current platform, and other related direct expenses.

decreased by $5,878 or 14%, from $42,379 for the three months ended September 30, 2020 compared to $36,501 for the three months ended

September 30, 2021.

This decrease primarily resulted from the termination of our legacy services and the decreased need for hosting,

staff reductions to the team working on the current platform, and other related direct expenses.

We continue to incur direct cost of

services expense related to hosting and other music services related to our Auddia App and expect these costs to increase in the future.

Sales and marketing

Sales and marketing expenses

increased by $36,115 or 35%, from $103,496 for the three months ended June 30, 2020 compared to $139,611 for the three months ended June

30, 2021 as we increased marketing expenses primarily related to the promotion and development of the Auddia and Vodacast Apps.

Sales and marketing

expenses increased by $132,748 or 174%, from $76,459 for the three months ended September 30, 2020 compared to $209,207 for the three

months ended September 30, 2021 as we increased marketing expenses primarily related to the promotion of the Auddia and Vodacast Apps.

Research and development

expenses decreased by $18,943 or 19%, from $97,228 for the three months ended June 30, 2020 to $78,285 for the three months ended June

30, 2021 primarily related to higher capitalization of research and development time.

During the second quarter of 2021, the majority

of the research and development efforts were spent on our new Apps, Vodacast and Auddia, which have not been commercially released, therefore

$259,463 of research and development expenses were capitalized in the three months ended June 30, 2021 compared to $178,987 capitalized

in the three months ended June 30, 2020.

Higher capitalized costs were partially offset by hiring additional research and development

staff to continue development of our applications.

expenses increased by $28,356 or 31%, from $90,965 for the three months ended September 30, 2020 to $119,321 for the three months ended

September 30, 2021 primarily related to additional staffing on our development team as we continue to advance the Auddia and Vodacast

Our research and development staffing costs were $462,987 and capitalized software expenses of $353,418 for the three months ended

September 30, 2021 as compared to staffing costs of $259,626 and capitalized software expenses of $170,396 for the three months ended

September 30, 2020.

Majority of development time was spent on our Auddia and Vodacast Apps.

We have achieved MVP of our Vodacast App

and have started amortizing development expenses, however, we continue to make significant and enhancements to the Vodacast App and will

continue to incur capitalized costs on our Vodacast App.

We have not yet achieved MVP of our Auddia App and will continue to incur additional

capitalized costs.

General and administrative

expenses increased by $183,029 or 35%, from $526,455 for the three months ended June 30, 2020 compared to $709,484 for the three months

ended June 30, 2021.

The increase resulted primarily from increased costs related to being a public company and having higher legal and

other professional fees due to preparing to operate as a public company.

expenses increased by $1,409,994 or 509%, from $277,105 for the three months ended September 30, 2020 compared to $1,687,099 for the

three months ended September 30, 2021.

The increase resulted primarily from increased stock compensation expense related to employee

stock options granted during the third quarter.

Stock compensation expense was $735,592 and $17,262 for the three months ended September

30, 2021 and 2020, respectively.

The increase in general and administrative expenses also related to being a public company and having

higher legal and other professional fees due to preparing to operate as a public company.

Interest expense/Other

We had total other income

of $249,917 for the three months ended June 30, 2021 as compared to other expense of ($473,553) for the three months ended June 30, 2020,

of $2,725 for the three months ended September 30, 2021 as compared to other expense of ($441,319) for the three months ended September

30, 2020, which was a $444,044 or 101% change in other income / expense.

The other income during the three months ended June 30, 2021 related to

our extinguishment of debt related to our first PPP loan in the amount of $268,662, which was forgiven under the terms of the agreement.

This was offset by interest expense related to our line of credit.

Our other expense for the three months ended June 30, 2020 primarily

related to interest expense related to our higher line of credit balance and related party payable notes.

Comparison of the six months ended June

30, 2021 and 2020

This was primarily related to a significant reduction in interest

expense in the current year as a result of us paying off our line of credit balance.

Comparison of the nine months ended

September 30, 2021 and 2020

The following table summarizes our results

of operations:

Six Months Ended June 30,

Increase/(Decrease)

Nine Months Ended September 30,

Operating expenses:

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Total revenues were

for the six months ended June 30, 2021, compared to $109,879 for the six months ended June 30, 2020.

The decrease in revenue can be attributed

to the August 2020 termination of our legacy platform which eliminated all platform fee and advertising revenue while we continue to develop

the new Auddia and Vodacast products to establish new revenue streams.

$0 for the nine months ended September 30, 2021, compared to $110,919 for the nine months ended September 30, 2020.

The decrease in revenue

can be attributed to the August 2020 termination of our legacy platform which eliminated all platform fee and advertising revenue while

we continue to develop the new Auddia and Vodacast products to establish new revenue streams.

Direct cost of services

decreased by $164,172 or 55%, from $297,578 for the six months ended June 30, 2020 compared to $133,406 for the six months ended June

This decrease primarily resulted from the termination of our legacy services and the decreased need for hosting, staff reductions

to the team working on the current platform, and other related direct expenses.

decreased by $208,649 or 58%, from $361,181 for the nine months ended September 30, 2020 compared to $152,532 for the nine months ended

September 30, 2021.

This decrease primarily resulted from the termination of our legacy services and the decreased need for hosting,

staff reductions to the team working on the current platform, and other related direct expenses.

We continue to incur direct cost of

services expense related to hosting and other music services related to our Auddia App and expect these costs to increase in the future.

Sales and marketing

Sales and marketing expenses

increased by $57,693 or 28%, from $205,422 for the six months ended June 30, 2020 compared to $263,115 for the six months ended June 30,

2021 as we increased marketing expenses primarily related to the promotion and development of the Auddia and Vodacast Apps.

Sales and marketing

expenses increased by $211,664 or 81%, from $260,658 for the nine months ended September 30, 2020 compared to $472,322 for the nine months

ended September 30, 2021 as we increased marketing expenses primarily related to the promotion and development of the Auddia and Vodacast

Research and development

expenses decreased by $17,155 or 12%, from $142,437 for the six months ended June 30, 2020 to $125,282 for the six months ended June 30,

2021 primarily related to capitalization of research and development time.

During the first quarter of 2021, the majority of the research

and development efforts were spent on our new Apps, Vodacast and Auddia, which have not been commercially released.

We capitalized $551,538

of research and development expenses in the six months ended June 30, 2021 compared to $373,439 capitalized in the six months ended June

Higher capitalized costs were partially offset by hiring additional research and development staff to continue development of

our applications.

expenses increased by $28,574 or 12%, from $233,403 for the nine months ended September 30, 2020 to $261,977 for the three months ended

September 30, 2021 primarily related to additional staffing on our development team as we continue to advance the Auddia and Vodacast

Our research and development staffing costs were $1,161,880 and capitalized software expenses of $904,956 for the nine months ended

September 30, 2021 as compared to staffing costs of $773,128 and capitalized software expenses of $543,835 for the nine months ended

September 30, 2020.

Majority of development time was spent on our Auddia and Vodacast Apps.

We have achieved MVP of our Vodacast App

during the third quarter and have started amortizing development expenses, however, we continue to make significant and enhancements

to the Vodacast App and will continue to incur capitalized costs on our Vodacast App.

We have not yet achieved MVP of our Auddia App

and will continue to incur additional capitalized costs.

General and administrative

expenses increased by $206,677 or 18%, from $1,142,698 for the six months ended June 30, 2020 compared to $1,349,375 for the six months

ended June 30, 2021.

The increase resulted primarily from increased costs related to being a public company and having higher legal and

other professional fees due to preparing to operate as a public company.

expenses increased by $1,680,943 or 124%, from $1,355,531 for the nine months ended September 30, 2020 compared to $3,036,474 for the

nine months ended September 30, 2021.

The increase resulted primarily from increased stock compensation expense related to employee stock

options granted during the third quarter.

Stock compensation expense was $767,543 and $52,579 for the nine months ended September 30,

2021 and 2020, respectively.

The increase in general and administrative expenses also related to being a public company and having higher

legal and other professional fees due to preparing to operate as a public company.

Interest expense/Other

Total interest expense/other

expense increased by $7,304,739, from $874,102 for the six months ended June 30, 2020 compared to $8,178,841 for the six months ended

June 30, 2021.

The increase was due almost entirely to a finance charge of $8,141,424 to interest expense related to the conversion of

outstanding debt into 6.8 million shares of common stock related to the February 2021 IPO.

This was offset by our extinguishment of debt

related to our first PPP loan in the amount of $268,662, which was approved in full under the loan forgiveness program and reduced interest

expense related to lower outstanding line of credit and related party notes payable balances.

expense increased by $6,796,422, from $1,379,694 for the nine months ended September 30, 2020 compared to $8,176,116 for the nine months

ended September 30, 2021.

The increase was due almost entirely to a finance charge of $8,141,424 to interest expense related to the conversion

of outstanding debt into 6.8 million shares of common stock related to the February 2021 IPO.

This was offset by our extinguishment of

debt related to our first PPP loan in the amount of $268,662, which was approved in full under the loan forgiveness program and reduced

interest expense related to lower outstanding line of credit and related party notes payable balances.

Liquidity and capital

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Vodacast Apps.

As of June 30, 2021 and December 31, 2020 we had cash (including restricted cash) of $6.6M and $0.1M, respectively.

anticipate that operating losses and net cash used in operating activities will increase over the next 12 months as we continue to develop

and market our products and perform commercial trials on the Auddia App.

As of September 30, 2021 and December 31, 2020 we had cash of $8.1M and $0.1M, respectively.

We anticipate that operating

losses and net cash used in operating activities will increase over the next 12 months as we continue to develop and market our products,

perform commercial trials and work on nationally launching all stations on the Auddia App.

In February 2021, we completed an IPO of 3,991,818

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the bank agreed to reduce the maximum available balance for the line of credit to $2 million.

The outstanding balance under the line of

credit accrues interest at a variable rate based on the bank’s prime rate plus 1% (4.25% at June 30, 2021) but at no time less than

Monthly interest payments are required, with any outstanding principal due on July 10, 2021.

The line of credit is collateralized

by all assets of the Company.

During the six months ended June 30, 2021, we have reduced our bank debt by $4.0 million, used $2.0 million

of our cash to serve as collateral for our remaining $2.0 million of bank debt that replaces collateral previously provided by a related

party, paid down a significant percentage of our accounts payable, and eliminated all deferred compensation owed to a related party.

In July 2021, certain holders of our publicly

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we paid the remaining $2.0 million, out of our restricted cash, to pay off and terminate our line of credit.

As a result, we had approximately

$9.4 million in unrestricted cash as if July 8, 2021, after the warrant exercise and pay down of our line of credit balance.

During the nine months ended September 30, 2021,

we have reduced our bank debt by $6.0 million, paid down a significant percentage of our accounts payable, and eliminated all deferred

compensation owed to a related party.

Prior to our IPO, we

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Cash Flow Analysis

Our cash flows from operating

activities have historically been significantly impacted by revenues received, our investment in sales and marketing to drive growth,

and research and development expenses.

Our ability to meet future liquidity needs will be driven by our operating performance and the

extent of continued investment in our operations.

Failure to generate sufficient revenues and related cash flows could have a material

adverse effect on our ability to meet our liquidity needs and achieve our business objectives.

The following table

summarizes the statements of cash flows for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

Our cash flows from

operating activities have historically been significantly impacted by revenues received, our investment in sales and marketing to drive

growth, and research and development expenses.

Our ability to meet future liquidity needs will be driven by our operating performance

and the extent of continued investment in our operations.

Failure to generate sufficient revenues and related cash flows could have a

material adverse effect on our ability to meet our liquidity needs and achieve our business objectives.

The following

table summarizes the statements of cash flows for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

Net cash provided by (used in):

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Financing activities

Change in cash and restricted cash

Change in cash

Operating activities

Cash used in operating activities for the six

months ended June 30, 2021 was $3,133,635, primarily resulting from our net loss of $10,050,019 and changes in working capital of $993,369,

partially offset by non-cash charges of $7,909,753 primarily related to our conversion of outstanding debt to common stock from our February

Cash used in operating

activities for the nine months ended September 30, 2021 was $4,320,114, primarily resulting from our net loss of $12,099,421 and changes

in working capital of $944,792, partially offset by non-cash charges of $8,724,099 primarily related to our conversion of outstanding

debt to common stock from our February 2021 IPO.

Changes in working capital primarily related to paying off outstanding accounts payable.

Cash used in operating

activities for the six months ended June 30, 2021 was $1,216,952, primarily resulting from our net loss of $2,552,358, partially offset

by non-cash charges of $489,938 and changes in working capital of $845,468.

activities for the nine months ended September 30, 2020 was $1,601,108, primarily resulting from our net loss of $3,479,548, partially

offset by non-cash charges of $485,709 and changes in working capital of $1,392,731.

Cash used in operating

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Cash flows used in investing

activities for the six months ended June 30, 2021 consisted primarily of capitalization of software development expenses of $551,538.

activities for the nine months ended September 30, 2021 consisted primarily of capitalization of software development expenses of $904,957.

Cash flows used in investing

activities for the six months ended June 30, 2020 consisted primarily of capitalization of software development expenses of $373,439.

activities for the nine months ended September 30, 2020 consisted primarily of capitalization of software development expenses of $543,835.

Financing activities

Cash flows provided by

financing activities for the six months ended June 30, 2021 increased primarily related to the issuance of common shares for $14,822,459

related to our February 2021 IPO and proceeds from the second PPP loan in the amount of $267,482, partially offset by a $4,000,000 repayment

on our line of credit, and repayment of deferred salary and related party notes payable of $930,636.

Cash flows provided by

financing activities for the six months ended June 30, 2020 was $1,821,794 primarily related to the proceeds related to the issuance of

convertible notes payable of $1,372,619, related party debt of $426,779 and proceeds from our first PPP loan of $268,662, partially offset

by repayments of related party debt and deferred salary of $225,797.

Cash flows provided

by financing activities for the nine months ended September 30, 2021 increase by $20,182,244 related to the issuance of common shares

related to our February 2021 IPO, exercise of Series A warrants and proceeds from the second PPP loan, partially offset by a $6,000,000

repayment on our line of credit, and repayment of deferred salary and related party notes payable of $930,636.

Cash flows provided

by financing activities for the nine months ended September 30, 2020 was $1,920,356 primarily related to the proceeds related to the

issuance of convertible notes payable of $1,467,841, related party debt of $490,539 and proceeds from our first PPP loan of $268,662,

partially offset by repayments of related party debt and deferred salary of $257,797 and deferred offering costs capitalized of $91,624.

Funding Requirements

We historically have

incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $61.4M and $51.4M

as of June 30, 2021 and December 31, 2020, respectively.

As of June 30, 2021 and December 31, 2020, we had cash (including restricted

cash) of $6.6M and $0.1M, respectively.

We believe that the net proceeds from our February 2021 IPO and additional net proceeds of $5.0

million received from the July 2021 Series A Warrant exercises, will be sufficient to fund our current operating plans through at least

the next 12 months.

We have based these estimates, however, on assumptions that may prove to be wrong, and we could spend our available

financial resources much faster than we currently expect and need to raise additional funds sooner than we anticipate.

If we are unable

to raise capital when needed or on acceptable terms, we would be forced to delay, reduce or eliminate our technology development and commercialization

incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $63.4M and

$51.4M as of September 30, 2021 and December 31, 2020, respectively.

As of September 30, 2021 and December 31, 2020, we had cash of $8.1M

and $0.1M, respectively.

We believe that the net proceeds from our February 2021 IPO and additional net proceeds of $5.0 million received

from the July 2021 Series A Warrant exercises, will be sufficient to fund our current operating plans through at least the next 12 months.

We have based these estimates, however, on assumptions that may prove to be wrong, and we could spend our available financial resources

much faster than we currently expect and need to raise additional funds sooner than we anticipate.

If we are unable to raise capital

when needed or on acceptable terms, we would be forced to delay, reduce or eliminate our technology development and commercialization

Our cash is comprised

primarily of demand deposit accounts and money market funds.

We believe our existing cash and cash generated from operations will be sufficient

to meet our working capital and capital expenditure needs over at least the next 12 months.

We believe our existing cash and cash generated from operations will be

sufficient to meet our working capital and capital expenditure needs over at least the next 12 months.

We expect our expenses to increase substantially

in connection with our ongoing activities, particularly as we continue the development of the Auddia and Vodacast Apps.

In addition, we

expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations

and other expenses.

we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor

relations and other expenses.

Our future funding requirements will depend on many factors, including, but not limited to:

the scope, progress, results and costs related to commercial trials related to our Auddia App and obtaining market acceptance

the ability to attract and retain podcasters to our Vodacast App and retaining listeners on the platform

the costs, timing and ability to continue to develop our technology

effectively addressing any competing technological and market developments

avoiding and defending against intellectual property infringement, misappropriation and other claims

the scope, progress, results

and costs related to commercial trials and national launch related to our Auddia App and obtaining market acceptance

the ability to attract

and retain podcasters to our Vodacast App and retaining listeners on the platform

the costs, timing and ability

to continue to develop our technology

effectively addressing

any competing technological and market developments

avoiding and defending

against intellectual property infringement, misappropriation and other claims

Off-balance sheet

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is presented in Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual

Report on Form 10-K for the year ended December 31, 2020.

There were no material changes to our critical accounting policies during the

six months ended June 30, 2021.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our

Annual Report on Form 10-K for the year ended December 31, 2020.

There were no material changes to our critical accounting policies during

the nine months ended September 30, 2021.

Emerging growth company and smaller reporting company status

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smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative

Disclosures about Market Risk

We are a smaller reporting company as defined by Rule 12b-2

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis