What changed in this filing

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Item 1. Financial Statements

2022-05-12 compared with 2021-11-12 · 230 added, 316 removed, 280 unchanged (66% of the section changed)

Financial Statements

Condensed Balance Sheets

September 30,

Current assets:

Accounts receivable, net

Prepaids and other current assets

Total current assets

Non-current assets:

Property and equipment, net of accumulated depreciation of $ 697,550 and $ 687,123

Software development costs, net of accumulated amortization of $ 1,462,312 and $ 1,388,943

Deferred offering costs

Property and equipment, net

Software development costs, net

Prepaids and other non-current assets

Total non-current assets

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities

Line of credit

Convertible notes payable

Notes payable to related parties and deferred salary

Promissory notes payable

Accrued fees to a related party

Share-based compensation liability

Total current liabilities

Commitments and contingencies

Stockholders' equity (deficit):

Preferred stock - $ 0.001 par value, 10,000,000 authorized and 0 shares issued and outstanding at September 30, 2021 and December 31, 2020

Common stock - $ 0.001 par value, 100,000,000 authorized and 12,414,638 and 485,441 shares issued and outstanding at September 30, 2021 and December 31, 2020

Stockholders' equity:

Preferred stock - $ 0.001 par value, 100,000,000 authorized and

0 shares issued and outstanding at March 31, 2022 and December 31, 2021

Common stock - $ 0.001 par value, 100,000,000 authorized and

12,514,763 and 12,416,408 shares issued and outstanding at March 31, 2022 and December 31, 2021

Additional paid-in capital

2 unchanged sentences

( 64,838,389 )

Total stockholders’ equity (deficit)

( 13,103,250 )

Total liabilities and stockholders’ equity (deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Condensed Statements of Operations (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

Condensed Statements of

Operations (Unaudited)

Three Months Ended March 31,

Operating expenses:

3 unchanged sentences

General and administrative

Depreciation and amortization

Total operating expenses

1 unchanged sentence

( 1,752,248 )

( 3,923,305 )

( 2,099,854 )

Other income (expense):

Other (expense) income:

Finance charge – convertible debt

( 8,141,424 )

PPP loan extinguishment

Interest expense

( 1,379,735 )

Interest income

Total other income (expense)

( 8,176,116 )

Total other expense

( 8,428,758 )

4 unchanged sentences

$ ( 9,296,498 )

$ ( 927,187 )

$ ( 12,099,421 )

$ ( 3,479,548 )

Net loss per share attributable to common stockholders

4 unchanged sentences

these unaudited condensed financial statements.

Condensed Statements of Changes in Stockholders’

Equity (Deficit) (Unaudited)

Nine Months Ended September 30, 2021

Condensed Statements of

Changes in Shareholders’ Equity (Unaudited)

Three Months Ended March 31, 2021

Additional Paid-In

Balance, December 31, 2020

2 unchanged sentences

Issuance of common shares

Exercise of warrants

Conversion of debt obligations

2 unchanged sentences

( 9,296,498 )

Balance, September 30, 2021

Balance, March 31, 2021

$ ( 60,656,818 )

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2022

Additional Paid-In

Balance, December 31, 2021

$ ( 64,838,389 )

$ ( 9,228,877 )

Issuance of common shares

Exercise of warrants

Conversion of debt obligations

Collection of subscription receivable

Exercise of restricted stock units and warrants

Share-based compensation

( 3,479,548 )

Reclassification of share-based compensation award to liability

( 1,753,258 )

Balance, September 30, 2020

( 1,753,258 )

Balance, March 31, 2022

$ ( 66,591,647 )

1 unchanged sentence

these unaudited condensed financial statements.

Condensed Statements of Cash Flows (Unaudited)

Nine Months Ended September 30,

Condensed Statements of

Cash Flows (Unaudited)

Three Months Ended March 31,

Cash flows from operating activities:

4 unchanged sentences

Depreciation and amortization

Bad debt provision

Share-based compensation

Gain on PPP loan extinguishment

Issuance of common stock for consulting services

Change in assets and liabilities:

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Cash flows from financing activities:

Net settlement of share-based compensation awards

Proceeds from issuance of common shares

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Proceeds from issuance of promissory notes payable

Deferred offering costs capitalized

Proceeds from issuance of convertible notes payable

Proceeds from related party debt

Subscription receivable

Net cash provided by financing activities

Net increase (decrease) in cash

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and restricted cash

( 1,983,741 )

Cash, beginning of period

2 unchanged sentences

Cash paid for interest

$ ( 1,379,046 )

Cash paid for income taxes

1 unchanged sentence

Shares issued for conversion of indebtedness

PPP loan extinguishment

$ ( 268,662 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Notes to Condensed Financial Statements (Unaudited)

Notes to Condensed Financial

Statements (Unaudited)

Note 1 - Description of Business, Basis of Presentation and

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initial public offering (the “IPO”) of 3,991,818 units, at $4.125 per unit, consisting of one share of common stock and one

warrant to purchase one share of common stock at an exercise price of $4.54 per share.

In addition, the underwriters exercised their

option to purchase 598,772 Series A warrants to cover over-allotments and were issued 319,346 in representative warrants at an exercise

price of $5.15625 per share.

Series A warrant to purchase one share of common stock at an exercise price of $4.54 per share.

In addition, the underwriters exercised

their option to purchase 598,772 Series A warrants to cover over-allotments and were issued 319,346 in representative warrants at an

exercise price of $5.15625 per share.

After deducting underwriters commissions and expenses, the Company received net proceeds of approximately

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Unaudited interim financial information

The condensed financial statements of the Company

included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the

Certain information and footnote disclosures normally included in financial statements prepared in accordance with

GAAP have been condensed or omitted from this Quarterly Report, as is permitted by such rules and regulations.

Accordingly, these condensed

financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual

Report on Form 10-K.

The condensed financial statements of

the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission

Certain information and footnote disclosures normally included in financial statements prepared in accordance

with GAAP have been condensed or omitted from this Quarterly Report, as is permitted by such rules and regulations.

Accordingly, these

condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s

Annual Report on Form 10-K.

The results for any interim period are not necessarily indicative of results for any future period.

Use of Estimates

The preparation of condensed financial statements

in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities

and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and

expenses during the reporting period.

The preparation of financial statements in conformity

with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures

of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during

the reporting period.

Actual results could differ from those estimates.

The condensed financial statements include some

amounts that are based on management's best estimates and judgments.

The most significant estimates relate to valuation of capital stock,

warrants and options to purchase shares of the Company's common stock, and the estimated recoverability and amortization period for capitalized

The financial statements include some amounts

that are based on management's best estimates and judgments.

The most significant estimates relate to valuation of capital stock, warrants

and options to purchase shares of the Company's common stock, and the estimated recoverability and amortization period for capitalized

software development costs.

These estimates may be adjusted as more current information becomes available, and any adjustment could be

Reclassification of Presentation

Certain prior year amounts have been reclassified

for consistency with the current year presentation.

These reclassifications had no effect on the reported results of operations.

Risks and Uncertainties

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There can be no guarantee that the Company will be successful in addressing these or other

Cash and Restricted Cash

The Company considers

1 unchanged sentence

The Company had no

cash equivalents at September 30, 2021 or December 31, 2020.

cash equivalents at March 31, 2022 or December 31, 2021.

The Company maintains

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cash balance may at times exceed these limits.

At September 30, 2021 and December 31, 2020, the Company had approximately $7.8 million

and $0, respectively, in excess of federally insured limits.

The Company continually monitors its positions with, and the credit quality

of, the financial institutions with which it invests.

Deferred Offering Costs

The Company previously capitalized certain legal,

professional accounting and other third-party fees that were directly associated with in-process stock financings as deferred offering

costs until such financings were consummated.

After consummation of the Company’s IPO, these costs were recorded as a reduction

to additional paid-in capital generated as a result of the offering.

At March 31, 2022 and December 31, 2021, the Company had $ 3,861,550 and $ 5,845,291 , respectively,

in excess of federally insured limits.

The Company continually monitors its positions with, and the credit quality of, the financial

institutions with which it invests.

Software Development Costs

The Company accounts 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 is probable.

The Company ceases 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.

Costs 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 considered impaired and expensed during the period of such determination.

Software development costs of $ 661,213 and $ 292,075 were capitalized for the three months ended March 31, 2022 and 2021, respectively.

Amortization of capitalized software development costs were $ 168,036 and $ 0 for the three months ended March 31, 2022 and 2021, respectively

and are included in depreciation and amortization expense.

Revenue Recognition

Revenue will be measured according to Accounting

Standards Codification (“ASC”) 606, Revenue – Revenue from Contracts with Customers, and is recognized based on consideration

specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties.

recognize revenue when we satisfy a performance obligation by transferring control over a service or product to a customer.

We will report

revenues net of any tax assessed by a governmental authority that is both imposed on, and concurrent with, a specific revenue-producing

transaction between a seller and a customer in our condensed statements of operations.

Collected taxes will be recorded within Other

current liabilities until remitted to the relevant taxing authority.

Subscriber revenue will consist primarily of

subscription fees and other ancillary subscription-based revenues.

Revenue will be recognized on a straight-line basis when the performance

obligations to provide each service for the period are satisfied, which is over time as our subscription services are continuously available

and can be consumed by customers at any time.

There is no revenue recognized for unpaid trial subscriptions.

Customers may pay for the services in advance

of the performance obligation and therefore these prepayments are recorded as deferred revenue.

The deferred revenue will be recognized

as revenue in our statement of operations as the services are provided.

Share-Based Compensation

The Company accounts for share-based compensation

arrangements with employees, directors, and consultants and recognizes the compensation expense for share-based awards based on the estimated

fair value of the awards on the date of grant in accordance with ASC 718.

Compensation expense for all share-based awards

is based on the estimated grant-date fair value and recognized in earnings over the requisite service period (generally the vesting period).

The Company records share-based compensation expense related to non-employees over the related service periods.

Certain stock awards include a net-share settlement

feature that provides the grantee an option to withhold shares to satisfy tax withholding requirements and are classified as a share-based

compensation liability.

Cash paid to satisfy tax withholdings is classified as financing activities in the condensed statements of cash

Emerging Growth Company Status

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accounting standards that have different effective dates for public and private companies.

Note 2 – Revenue Recognition

Legacy platform phase out

From 2014 through 2020, the Company was successful

in deploying its platform across 580 major radio stations and 1.6 million monthly active users.

The Company’s legacy product served

the broadcast industry by providing a platform that allows for the delivery of actionable digital ads that are synchronized with broadcast

and streaming audio ads.

Broadcasters offer mobile and web digital interfaces to their listeners, typically for their individual stations.

Our Interactive Radio Platform provided mobile and web products that provide end users (listeners) with a visual display of everything

a radio station has played in recent history (referred to as a “station feed”).

In addition to displaying album art for songs

played, and digital insertions for station promotions and programs (e.g., a radio station contest), the station feed also included a

digital element for each audio ad that was played.

These interactive, synchronized digital ads generate additional revenue for broadcasters

and allowed for the collection of meaningful advertising analytics which we presented to broadcasters through an analytics dashboard.

The Company began phasing out its Interactive

Radio Platform in early 2020 and ceased operations related to the legacy platform by August 1, 2020.

Much of the core technology of this

platform is being leveraged for re-use with our new products, Auddia and Vodacast, currently under development.

Furthermore, our well

established relationships with more than a dozen broadcasters through the sales, marketing and digital services operations are being

maintained as we seek to deploy the Auddia App on a national scale.

The Company’s legacy contracts with customers

generally fell within two formats:

(1) those that encompass development services, access to the Company’s interactive technology

platform through a hosted business model and the ability to execute placement of spot advertising through the Company’s interactive

technology platform, or (2) contracts exclusively for digital advertising placement of spot ads through the Company’s mobile Apps

and web players.

The Company allocated the transaction price to each separate performance obligation as applicable within each contract

based upon their relative selling prices.

Development service fee revenue

Revenue generated from development services were

comprised of services for the development, design and customization of software applications for station branded mobile Apps and web/desktop

players for radio stations.

The mobile Apps enabled our customer’s users to interact with the live broadcast and streaming content

while providing attribution to each station and enabling local and national digital monetization capabilities.

The web/desktop player provided a listening platform

that enables full interactive radio capabilities for desktop users that prefer web based listening.

The Company determined that the development,

design, build and deployment, configuration, and customization are a bundle of professional services provided to the customer for the

purpose of the Mobile and Web Desktop Apps and were considered a single performance obligation.

Revenue was recognized over time as the

services are satisfied and any advanced payments received were not recognized as revenue but instead was recorded in a deferred contract

liability until the customer’s services were satisfied.

The Company no longer provides these services.

Platform services fee revenue

Revenue generated from platform services were

comprised of the customer’s use of the Company’s interactive technology platform that includes access rights to use the licensed

software, software hosting, support and maintenance, data tracking analytics, advertising trafficking and monitoring of the mobile App

and web/desktop player applications.

The Company determined that the hosting of software, license access, support, training, maintenance

and unspecified periodic upgrades or updates, monitoring hardware, interactive content management, access to content library, data and

analytics dashboard, programming and Ad campaign training were a bundle of product and services that have the same period and pattern

of transfer as the service to access the Company’s Platform and have been treated a single performance obligation.

recognized over time as the customer simultaneously receives and consumes the benefits provided by the Company’s platform services.

The Company no longer provides these services.

Advertising revenue

The Company legacy contracts generated advertising

revenue in two distinctive forms:

one which was from third party advertisers that placed ads on the Company’s mobile Apps and web

players which were separate customer contracts whereby such advertising access was the only service and performance obligation within

those contracts, and second was ad placements on the same platform but managed by the Company for its customers in connection with its

contracts to provide development services and Platform access services to its customers.

The external advertising revenues were comprised

of local and national interactive spots that were sourced and managed by customers or by third party service providers (such as Google),

whereby the Company received a portion of the dollars spent by the advertiser.

In late 2018, the Company decided to move to only internally

managed digital advertising for 2019 and discontinued revenue sharing agreements with clients for advertising sourced by the client.

Revenue was recognized as performance obligations were satisfied on a net basis as the Company was acting as an agent, which generally

occurred as ads were delivered through the platform.

We generally recognized revenue based on delivery information from the external

providers campaign trafficking systems.

The internal advertising revenues were comprised

of advertising fees for local and national interactive spot and local or digital only advertising campaign fees that were managed by

For these advertising spots, the Company retained all the money spent on the advertising campaigns run on the Company’s

interactive platform.

Revenue was recognized as performance obligations were satisfied, which generally occurred as ads were delivered

through the platform.

For Interactive and Digital Campaign and Spot

Ad Fees which could include customer digital and interactive spot ad campaigns, interactive spot campaigns, the revenue was recognized

at a point in time under the “as-invoiced” practical expedient, since customer usage driven variability was not required

to be estimated but rather is allocated to the distinct time period in which the variable activity occurred.

Certain customers received platform fee credits

or advertising discounts, which were considered as variable consideration in the determination of the transaction price.

These performance

obligations related to the fixed price arrangements were discounted ratably based on their relative standalone selling prices.

The Company no longer provides these services.

Practical expedients and exemptions

We expensed sales commissions when incurred because

the duration of the contracts for which we paid commissions were less than one year.

These costs were included in the sales and marketing

line item of our Statements of Operations.

Currently the Company does not have any significant acquisition costs which have been incurred

associated with the acquisition of its customer contracts and therefore, no deferred customer acquisition costs have been recorded.

We did not disclose the value of unsatisfied

performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize

revenue at the amount to which we had the right to invoice for services performed.

The following table presents revenues disaggregated

by revenue source:

Disaggregated revenue table

Three Months Ended September 30,

Nine Months Ended September 30,

Platform Service Fees (hosting services, support, data analytics)

Digital advertising served by 3 rd parties

Note 2 – Property & Equipment

and Software Development Costs

Property and equipment and software development

costs consisted of the following as of:

Schedule of property, equipment and software development costs

Computers and equipment

Accumulated depreciation

Total property and equipment, net

Software development costs

Accumulated amortization

( 1,703,716 )

( 1,535,680 )

Total software development costs, net

The Company recognized depreciation expense of

$ 8,091 and $ 2,183 for the three months ended March 31, 2022 and 2021, respectively related to property and equipment and amortization

expense of $ 168,036 and $ 0 for the three months ended March 31, 2022 and 2021, respectively related to software development costs.

Note 3 – Balance Sheet Disclosures

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Schedule of accounts payable and accrued liabilities

September 30,

Accounts payable and accrued expenses

Credit cards payable

Accrued interest

Wages payable

Accounts payable and accrued liabilities

2 unchanged sentences

previous line of credit with a different bank and this agreement was amended in July 2019 and March 2021.

The principal balance was paid

off in full as of July 8, 2021.

The principal balance was repaid

in full on July 8, 2021.

Interest accrued at a variable rate based on the bank’s prime rate plus 1% (4.25% at December 31, 2020)

1 unchanged sentence

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

expense for the three months ended September 30, 2021 and 2020 was ($2,720) and $65,855, respectively.

Interest expense for the nine

months ended September 30, 2021 and 2020 was $66,412 and $212,522, respectively.

expense for the three months ended March 31, 2022 and 2021 was $ 0 and $ 47,296 , respectively.

The line of credit was collateralized by all

assets of the Company, including $2 million of cash held in a control account at the lender.

assets of the Company, including $2,000,000 of cash held in a control account at the lender.

The Company also maintained a minimum balance

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Following the Company’s IPO in February

2021 the line of credit was amended and the Company paid down the outstanding principal balance on its bank line of credit from $6 million

to $2 million and the available principal balance for the line of credit was reduced from $6 million to $2 million.

Further, the $6 million

2021 the line of credit was amended and the Company paid down the outstanding principal balance on its bank line of credit from $6,000,000

to $2,000,000 and the available principal balance for the line of credit was reduced from $6,000,000 to $2,000,000.

Further, the $6,000,000

of cash collateral previously provided by the two shareholders was released.

The remaining principal balance of $2 million was paid off

in full and the line of credit was terminated as of July 8, 2021.

The remaining principal balance of $2,000,000 was repaid

in full and the line of credit was terminated on July 8, 2021.

The outstanding balance on the line of credit

at September 30, 2021 and December 31, 2020 was $0 and $6,000,000, respectively.

The shareholder who previously provided the $2,000,000

control account had a collateral agreement with the Company which is described in Note 5.

at December 31, 2020 was $6,000,000.

The shareholder who previously provided the $2,000,000 control account had a collateral agreement

with the Company which is described in Note 6.

This agreement was terminated in March 2021.

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ranging from 50% to 75% of the IPO price.

Interest expense for the three months ended September 30, 2021 and 2020 was $0 and $32,466,

respectively.

Interest expense for the nine months ended September 30, 2021 and 2020 was $16,586 and $96,207, respectively.

Interest expense for the three months ended March 31, 2022 and 2021 was $ 0 and $ 16,586 , respectively.

Accrued fees to a related party

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The amount of the cash collateral provided

by the shareholder to the bank was $2.0 million.

by the shareholder to the bank was $2,000,000.

The collateral agreement required a commitment to pay collateral fees of $710,000 (comprised

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of the collateral amount annually plus an annual renewal fee of $50,000.

Interest expense for the three months ended September 30, 2021

and 2020 was $0 and $326,359, respectively.

Interest expense for the nine months ended September 30, 2021 and 2020 was $208,727 and $981,534,

respectively.

The balance outstanding on the accrued collateral fees was $1,960,336 at December 31, 2020, excluding the $725,000 unsecured

note payable.

Interest expense for the three months ended March 31, 2022 and

2021 was $ 0 and $ 208,727 , respectively.

The balance outstanding on the accrued collateral fees was $1,960,336 at December 31, 2020, excluding

the $725,000 unsecured note payable.

This collateral agreement terminated in March 2021.

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would receive shares and warrants based on a formula that takes into account the number of shares and warrants the investor owned before

the investment in these Promissory Notes, as well as a portion of the bonus allocation of 1,038,342 shares made available to the

Interest expense for the three months ended September 30, 2021 and 2020 was $0 and $15,965, respectively.

Interest expense

for the nine months ended September 30, 2021 and 2020 was $14,454 and $23,091, respectively.

the investment in these Promissory Notes, as well as a portion of the bonus allocation of 1,038,342 shares made available to the investors.

Interest expense for the three months ended March 31, 2022 and 2021 was $ 0 and $ 14,454 , respectively.

In conjunction with the February 2021 IPO, all

of the Promissory Notes converted into 3,080,535 shares of common stock.

of the Promissory Notes collectively converted into 3,080,535 shares of common stock.

The Company recognized a finance charge to interest

expense of $ 8,141,424 related to the conversion of the convertible notes, notes payable to related parties and promissory notes during

the nine months ended September 30, 2021.

the three months ended March 31, 2021.

Note 6 – Notes Payable

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(the “Notes”) to three related parties for $ 80,000 , $ 200,000 and $ 50,000 , respectively.

The Notes did not accrue interest or

have a stated maturity date.

The Notes did not accrue interest

or have a stated maturity date.

The outstanding note payable for $ 80,000 was repaid in January 2020.

In December 2019, the two other note

holders elected to convert their notes into convertible Notes due December 31, 2021.

Two other existing investors, who were owed a total

of $17,197 for services by the Company, also agreed to convert their payables into convertible Notes.

During 2019 the Company issued

a note payable to a related party for consulting services incurred by the Company in the amount of $486,198.

In December 2019, the two other

note holders elected to convert their notes into convertible Notes due December 31, 2021.

Two other existing investors, who were owed

a total of $17,197 for services by the Company, also agreed to convert their payables into convertible Notes.

During 2019 the Company

issued a note payable to a related party for consulting services incurred by the Company in the amount of $ 486,198 .

As of December 31,

2020, the outstanding balance for consulting services was $ 440,904 .

In October 2019, a shareholder obtained $400,000

of short term financing from an unrelated lender.

The shareholder then agreed to make the proceeds of that short term financing available

to the Company.

In exchange, the Company assumed responsibility for all payments and charges (including principal, interest and fees)

required under such short term financing agreement.

Under the agreement the Company was advanced $188,000, net of $12,000 in closing

fees, and the remaining $200,000 was put into an escrow account owned and controlled by the shareholder.

A loan financing fee in the

amount of $100,000 was due upon maturity, of which the amount relating to 2019 of $75,000 was included in accrued expenses at December

In December 2019, the Company made a principal payment in the amount of $57,203, and accordingly, the outstanding principal

balance was $142,797 at December 31, 2019, and was included in Notes payable to related parties on the balance sheet.

The remaining balance

of $242,797 which included principal and loan financing fees, was repaid in January 2020.

In February 2020, the Company obtained a new

$500,000 short term loan from the same related party.

The Company was advanced $485,000, net of $15,000 in closing fees, and immediately

placed $140,741 into an escrow account, owned and controlled by the shareholder to provide funds for the scheduled repayments.

of the principal and loan financing fee occurs through weekly payments of $17,593 until the loan and financing fee is paid in full.

loan financing fee increases with the length of the payback period and was maximized at $165,000 after month five.

The outstanding balance

was repaid in February 2021.

The Company paid these Notes in the first quarter of 2021.

In February 2020, the Company obtained a $500,000

short term loan from a related party.

The Company was advanced $485,000, net of $15,000 in closing fees, and immediately placed $140,741

into an escrow account, owned and controlled by the shareholder to provide funds for the scheduled repayments.

Repayment of the principal

and loan financing fee occurs through weekly payments of $17,593 until the loan and financing fee is paid in full.

The loan financing

fee increased with the length of the payback period and was maximized at $165,000 after month five.

The outstanding balance was repaid

in February 2021.

Cares Act Paycheck Protection Program loan

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The First Loan was set to mature in April 2022

and the Second Loan matures in January 2023.

The PPP Loans bear interest at a rate of 1% per annum.

Beginning November 2020, the Company

was required to make 18 monthly payments of principal and interest in the amount of $14,370 related to the First Loan.

The PPP Loans

may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

The proceeds from the Loans may only be used

for payroll costs (including benefits), interest on mortgage obligations, rent, utilities and interest on certain other debt obligations.

The PPP Loans contain customary events of default

and the Second Loan was set to mature in January 2023.

The PPP Loans bore interest at a rate of 1% per annum.

Beginning November 2020,

the Company was required to make 18 monthly payments of principal and interest in the amount of $14,370 related to the First Loan.

PPP Loans may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

The proceeds from the Loans may only

be used for payroll costs (including benefits), interest on mortgage obligations, rent, utilities and interest on certain other debt

The PPP Loans contained customary events of default

relating to, among other things, payment defaults, making materially false and misleading representations to the lender or breaching

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Pursuant to the terms of the CARES Act and the

PPP, the Company applied for forgiveness for the First Loan.

PPP, the Company applied for forgiveness for both the PPP Loans.

On June 15, 2021, the Company received confirmation that the First Loan

was approved for forgiveness and the Company recorded $268,662 in PPP loan extinguishment to other income during the nine months ended

September 30, 2021.

The Company has applied to the lender for forgiveness for the amount due on the Second Loan and as noted in Note

10, the Company received confirmation of full forgiveness in November 2021.

The amount eligible for forgiveness is based on the amount

of Loan proceeds used by the Company (during the eight-week period after the lender makes the first disbursement of Loan proceeds) for

the payment of certain covered costs, including payroll costs (including benefits), interest on mortgage obligations, rent and utilities,

subject to certain limitations and reductions in accordance with the CARES Act and the PPP.

While the Company expects 100% of the Second

Loan to be forgiven, no assurance can be given that the Company will obtain forgiveness of the Second Loan in whole or in part.

was approved for forgiveness and the Company recorded $ 268,662 in PPP loan extinguishment to other income during the year ended December

On November 2, 2021, the Company received confirmation that the Second Loan was approved for forgiveness and the Company recorded

$ 267,482 in PPP loan extinguishment to other income during the year ended December 31, 2021.

The amount eligible for forgiveness was

based on the amount of Loan proceeds used by the Company (during the eight-week period after the lender makes the first disbursement

of Loan proceeds) for the payment of certain covered costs, including payroll costs (including benefits), interest on mortgage obligations,

rent and utilities, subject to certain limitations and reductions in accordance with the CARES Act and the PPP.

Note 7 – Commitments and Contingencies

6 unchanged sentences

separate six month renewal options, subject to fixed rate escalation increases.

The Company previously leased approximately 3,000 square

feet of office space that expired on April 30, 2021.

Rent expense was as follows:

Schedule of rent expense

Three Months Ended September 30

Nine Months Ended September 30

The Company exercised it’s first six month renewal

option to extend the lease through November 2022.

The Company previously leased approximately 3,000 square feet of office space that

expired on April 30, 2021.

Rent expense was $ 21,449 and $ 18,053 for the three months ended March 31, 2022 and 2021, respectively.

In the normal course of business, the Company

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litigation will not have a material adverse effect on the Company.

Note 8 - Share-based Issuances

Note 8 - Share-based Compensation

Stock Options

2 unchanged sentences

Schedule of stock option activity

Non-Qualified

Exercise Price

Outstanding - December 31, 2020

Outstanding -

December 31, 2021

Forfeited/canceled

Outstanding – September 30, 2021

- March 31, 2022

The following table presents the composition

1 unchanged sentence

Options outstanding and exercisable

Total - September 30, 2021

- March 31, 2022

________________________

1 unchanged sentence

average remaining contractual life, respectively.

During the three and nine months ended September

During the three months ended March 31, 2022,

the Company granted 293,750 stock options to certain executives and key employees.

Under the terms of the option agreements,

the options are subject to certain vesting requirements.

Under the terms of the option agreements, the options

are subject to certain vesting requirements.

The fair value of each award is determined using the Black-Scholes option-pricing model

which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock,

and the risk-free interest rate over the expected life of the option.

The expected volatility was determined considering comparable companies

historical stock prices as a peer group for the fiscal year the grant occurred and prior fiscal years for a period equal to the expected

life of the option.

The risk-free interest rate was the rate available from the St.

Louis Federal Reserve Bank with a term equal to the

expected life of the option.

The expected life of the option was estimated based on a mid-point method calculation.

Restricted Stock Units

1 unchanged sentence

restricted stock units outstanding:

Schedule of restricted stock units activity

Schedule of warrant activity

Exercise Price

Outstanding - December 31, 2020

Outstanding -

December 31, 2021

Forfeited/canceled

Outstanding – September 30, 2021

During the three and nine months ended September

Vested/issued

– March 31, 2022

During the three months ended March 31, 2022,

the Company granted 150,000 restricted stock units.

Under terms of the restricted stock agreements, the restricted stock units

are subject to a certain vesting schedule.

Under terms of the restricted stock agreements, the restricted stock units are subject

to a certain vesting schedule.

During the three months ended March 31, 2022,

certain restricted stock unit holders elected a net-share settlement for vested shares to satisfy income tax requirements.

applied modification accounting in accordance with ASC 718, and reclassified these share-based awards from equity classification to liability

classification.

The Company recognized a share-based compensation liability as of March 31, 2022 of $ 39,812 related to the fair value

of vested shares over the service period.

The Company recognized share-based compensation

expense related to stock options and restricted stock units of $735,592 and $767,543 for the three and nine months ended September 30,

expense related to stock options and restricted stock units of $ 385,908 and $ 16,131 for the three months ended March 31, 2022 and 2021,

respectively.

The remaining unvested share-based compensation expense of $2,844,328 is expected to be recognized over the next 46

The remaining unvested share-based compensation expense of $ 2,598,005 is expected to be recognized over the next 47 months.

The following table presents the activity for

warrants outstanding:

Schedule of warrants activity

Exercise Price

Schedule of warrant activity

Outstanding - December 31, 2021

Forfeited/cancelled/restored

Outstanding – September 30, 2021

Outstanding - March 31, 2022

In connection with the February 2021 IPO, the

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warrants contain a cashless exercise feature.

During the three months ended September 30, 2021

certain holders of our publicly traded Series A Warrants exercised 1,091,692 warrants for 1,091,692 million shares of common stock at

the cash exercise price of $ 4.5375 per share.

In addition, certain holders of our Pre-IPO warrants exercised 1,489 warrants for 1,117

shares of common stock at the net exercise price of $ 0.87 per share.

During the three months ended March 31, 2022

certain holders of our Pre-IPO warrants exercised 148 warrants for 112 shares of common stock at the net exercise price of $ 0.87 per

All of the outstanding warrants are exercisable

and have a weighted average remaining contractual life of approximately 4.19 years as of September 30, 2021.

and have a weighted average remaining contractual life of approximately 3.69 years as of March 31, 2022.

Note 9 – Net Loss Per Share

4 unchanged sentences

for basic net loss per share is adjusted by the effect of dilutive securities, including awards under our equity compensation plans.

As of September 30, 2021 and 2020, 4,632,777

shares and 654,141 shares, respectively of potentially dilutive weighted average shares were excluded from the calculation of diluted

net loss per share because their effect would have been anti-dilutive for the periods presented.

Note 10 – Subsequent Events

In November 2021, the Company received confirmation

from the SBA that the Second Loan was approved for forgiveness and recorded $267,482 in PPP loan extinguishment to other income.

As of March 31, 2022 and 2021, 6,248,131 shares

and 2,750,331 shares, respectively of potentially dilutive weighted average shares were excluded from the calculation of diluted net

loss per share because their effect would have been anti-dilutive for the periods presented.

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 1. Financial Statements