What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-19 compared with 2022-11-14 · 315 added, 299 removed, 151 unchanged (80% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Management’s Discussion

and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should

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

31, 2021, which was filed with the SEC on February 17, 2022.

31, 2022, which was filed with the SEC on March 23, 2023.

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

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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, Faidr and Vodacast.

The Faidr 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 Faidr 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 look to bring to market a premium AM/FM radio

listening experience through Faidr.

The Faidr App is intended to be downloaded by consumers who will pay a subscription fee 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 routine.

We believe Faidr 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, Faidr 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 Faidr App to include all major

radio stations on February 15, 2022 and launched marketing campaigns for Faidr to build an audience and demonstrate consumer interest.

We are currently providing consumers a free trial of the App and started trialing subscriptions with a subset of consumers in late second

We have been continuing to enhance the listening experience for consumers by:

1) advancing the training of our proprietary AI

technology primarily around talk stations and talk segments on music stations;

2) continual improvements to the user interface and consumer

interaction within the App;

and 3) exploring additional content choices, including podcasting, some of which will become available in

the App during the year.

We are running additional subscription trials during the first part of the fourth quarter and expect to provide

initial consumer subscription metrics during the fourth quarter.

Auddia is a technology company headquartered in

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

technologies for podcasts.

Auddia is leveraging these technologies within its industry-first audio Superapp, faidr (previously known as

the Auddia App).

faidr gives consumers the opportunity to listen

to any AM/FM radio station with no commercials while personalizing the listening experience through skips and the insertion of on-demand

content, including popular and new music, news, and weather.

The faidr app represents the first-time consumers can combine the local content

uniquely provided by AM/FM radio with commercial-free and personalized listening many consumers demand from digital-media consumption.

In addition to commercial-free AM/FM, faidr includes podcasts and exclusive content, branded faidrRadio, which includes new artist discovery,

curated music stations, and Music Casts.

Music Casts are unique to faidr.

Hosts and DJs can combine on-demand talk segments with dynamic

music streaming, which allows users to hear podcasts with full music track plays embedded in the episodes.

Auddia has also developed a podcasting platform

that 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, and monetize their content with new content distribution channels.

This podcast platform also gives

users the ability to go deeper into the stories through supplemental, digital content, and eventually comment and contribute their own

content to episode feeds.

Both of Auddia’s offerings address large

and rapidly growing audiences.

The Company has developed its AI platform on top

of Google’s TensorFlow open-source library that is being “taught” to know the difference between all types of audio

content on the radio.

For instance, the platform recognizes the difference between a commercial and a song and is learning the differences

between all other content to include weather reports, traffic, news, sports, DJ conversation, etc.

Not only does the technology learn

the differences between the various types of audio segments, but it also identifies the beginning and end of each piece of content.

The Company is leveraging this technology platform

within its premium AM/FM radio listening experience through the faidr App.

The faidr 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, podcasts and the faidrRadio exclusive

content offerings.

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

program an audio routine.

We believe the faidr App represents a significant differentiated audio streaming product, or Superapp, that

will be the first to come to market since the emergence of popular streaming music apps such as Pandora, Spotify, Apple Music, Amazon

We believe that the most significant point of differentiation is that in addition to ad-free AM/FM streaming, the faidr App

is intended to deliver non-music content that includes local sports, news, weather, traffic and the discovery of new music alongside exclusive

programming and podcasts.

No other radio streaming app available today, including category leaders like TuneIn, iHeart, and Audacy, can

compete with faidr’s full product offerings.

We launched an MVP version of faidr through several

consumer trials in 2021 to measure consumer interest and engagement with the App.

The full app launched on February 15, 2022, and included

all major U.S.

radio stations in the US.

In February 2023, we added faidrRadio, our exclusive content offerings, to the app.

for iOS were added in Q1, 2023.

The Company has also developed its podcasting

platform, which leverages technologies and proven product concepts to differentiate its podcasts offering from other competitors in the

radio streaming product category.

With podcasting growing and predicted to grow

at a rapid rate, the Auddia podcast platform was conceptualized to fill a void in the emerging audio media space.

The platform aims to

be the preferred podcasting solution for podcasters by enabling them to deliver digital content feeds that match the audio of their podcast

episodes, and by enabling podcasters to make additional revenue from new digital advertising channels;

subscription channels;

fees for exclusive content;

and through direct donations from their listeners.

Today, podcasters do not have a preference as to where

their listeners access their episodes, as virtually all listening options (mobile apps and web players) deliver only their podcast audio.

By creating a platform on which they can make net new and higher margin revenue, we believe that podcasters will promote faidr to their

listeners, thus creating a powerful, organic marketing dynamic.

One innovative and proprietary part of the podcast

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 Podcast Hub, a content management system

that also serves as a tool to plan and manage podcast episodes.

The digital feed activates a new digital ad channel that turns every audio

ad into a direct-response, relevant-to-the-story, 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 will appear fully synchronized in the faidr mobile App, and it also can be hosted and accessed independently

(e.g., through any browser), making the content feed universally distributable.

Over time, users will be able to comment, and

podcasters will be able to grant some users publishing rights to add content directly into the feed on their behalf.

This will create

another first for podcasting, a dialog between creator and fan, synchronized to the episode content.

The podcast capabilities within faidr will also

introduce 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.

The faidr mobile App is available today through

the iOS and Android App stores.

We also have developed a podcasting platform called

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.

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 content.

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 episodes.

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 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.

The Vodacast mobile App is available today through

the iOS and Android App stores.

We launched marketing campaigns for Vodacast during

the second quarter to continue to grow our user base and encourage listeners to download the Vodacast App and listen to all their favorite

Because podcasting is the type of audio content that music app users expect to find in their preferred apps and platforms (e.g.

TuneIn, iHeart, Audacy, Spotify), we are currently exploring the migration of podcasting and the full suite of tools and features from

Vodacast into our Faidr App to provide an all-inclusive and immersive listening experience.

During this time, we have paused direct marketing

promotion related to the Vodacast App while we explore podcasting into Faidr.

We have funded our operations with proceeds from

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Since inception we have incurred significant operating losses.

September 30, 2022, we had an accumulated deficit of approximately $70.0 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.

As a part of our capital strategy, we recently

implemented certain cost saving initiatives that reduced our quarterly cash spend.

This includes certain cost saving initiatives related

to our research and development and sales and marketing costs and includes a reduction of headcount and direct promotion of our Apps while

we continue to enhance our listening experience.

We expect that our expenses and capital requirements will increase again sometime in

the future, particularly if and as we:

continue training our proprietary AI technology and make additional product enhancements;

gain significant consumer interest in our products and increase marketing promotion to drive users to our Apps and convert users to subscribers;

identify and license new content that will add value to our products and drive consumer interest;

March 31, 2023, we had an accumulated deficit of $73.9 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:

nationally launch our faidr App and as we continue training our proprietary AI technology and make product enhancements;

continue to develop and expand our technology and functionality to advance the faidr app;

rollout our product on a national basis, which will include increasing our sales and marketing costs related to the promotion of our products.

faidr 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.

On November 14, 2022, the Company entered into

a secured debt financing agreement with one accredited investor who is an existing stockholder of the Company.

The Company will

receive $2 million in net proceeds from this financing.

In addition, on November 14, 2022, the Company entered into an equity line

stock purchase agreement with one accredited investor.

The equity line facility is for up to $10 million of potential sales subject

to certain limitations, would occur, at the Company's option, from time to time over the period ending December 31, 2023.

line will be structured as a registered take down off the Company's existing universal shelf S-3 registration statement which was declared

effective on April 18, 2022.

We may still need substantial additional funding to support our continuing operations and pursue our growth

Until such time as we can generate significant revenue from subscriptions, 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 in addition to the cost saving initiatives

we have already made effective.

As a result, we will 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

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and be forced to reduce or terminate our operations.

As of September 30, 2022, we had cash of approximately

$1.0 million, which we believe should fund our operating expenses and capital expenditure requirements through at least December 31, 2022.

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.

At March 31, 2023, the Company had cash of

As described above (see Note 8 – Subsequent Events), in April 2023 the Company raised $1.87 million that we believe

will fund our operations into the third quarter of fiscal 2023.

The Company has based this estimate, however, on assumptions that may

prove to be wrong.

We will need additional funding to complete the development of our full product line, scale products with a

demonstrated market fit and generate revenue and cash flow.

Management has plans to secure such additional funding.

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 efforts.

As a result of the Company’s recurring losses

from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding

the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to

the Company’s ability to continue as a going concern.

In April 2023, the Company announced that it had

begun to pursue an acquisition strategy to accelerate user acquisition and growth of revenue and cash flow.

The Company has explored numerous

potential acquisition targets of AM/FM streaming aggregators over the past year and a half and continues to explore new opportunities.

At present, the Company is in advanced active discussions with three properties.

Additional funding would be required to complete any

of these potential acquisitions.

Refer to Item 1A.

Risk Factors under PART II – OTHER INFORMATION in this Form 10-Q for risk

factors associated with this growth strategy.

Components of our results of operations

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costs incurred related to our technology and development of our Apps, including hosting and other technology related expenses.

our direct costs of services to increase in the future as we continue to develop and enhance our technology related to the Faidr and Vodacast

our direct costs of services to increase in the future as we continue to develop and enhance our technology related to the faidr and podcasting

Sales and marketing

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during the period.

We expect our sales and marketing expenses to fluctuate period by period as we continue to promote the national commercial

launch of our Faidr product and look to generate revenue for our products through customer acquisition, retention and subscription conversion.

We expect our sales and marketing expenses to fluctuate period by period as we release new upgrades and enhancements

within our Apps and look to generate revenue through customer acquisition, retention, and subscription conversion.

Research and development

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to be in excess of anticipated future net revenues are impaired and expensed during the period of such determination.

We recently implemented certain cost saving initiatives

which includes the reduction of a part of our research and development staff.

We still expect to continue to incur substantial research

and development expenses and capitalization in the future, even after the reduction of headcount as we continue to develop and enhance

our Faidr and Vodacast Apps.

We expect to continue

to incur research and development expenses and capitalization in the future as we continue to develop and enhance our faidr and podcasting

General and administrative

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auditing, tax, general legal services, and consulting services.

We expect our general and administrative expenses to increase in the future

as we expand our operating activities and prepare for 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.

We expect our general and administrative expenses to continue to increase

in the future as we right-size our operating activities and prepare for 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

Our other income and expense consist of interest income related to

our cash at financial institutions, debt extinguishment related to our PPP loans, 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 and will not incur any additional debt conversion charges.

The other income and expense category primarily

consists of interest expense attributed to the debt and conversion features of the Secured Bridge Note (aka the Prior Note).

our other expense to fluctuate period by period dependent upon either the payoff of the Prior Note or an extension of its term.

Results of operations

Comparison of the three months ended September 30, 2022 and 2021

The following table summarizes our results of operations:

Three Months Ended September 30,

Increase/(Decrease)

Comparison of the three months ended March 31, 2023, and 2022

The following table summarizes our results of

Three Months Ended March 31,

Operating expenses:

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$ (1,753,258 )

Total revenues were $0 for the three months ended

September 30, 2022 and September 30, 2021.

We are continuing to develop the new Faidr and Vodacast products to establish new revenue streams

and are currently running our first subscription trials and expect to start generating our first revenue during the fourth quarter of

Total revenues for the three months ended March

31, 2023, and 2022 were $0 as we continue to develop and enhance our faidr and podcasting Apps to establish new revenue streams.

Direct cost of services

Direct Cost of Services decreased $10,261 or 19.5%

from $36,501 for the three months ended September 30, 2021 compared to $32,712 for the three months ended September 30, 2022.

to incur direct cost of services expense related to hosting and other music services related to our Faidr App and expect these costs to

increase in the future.

Sales and marketing

Sales and marketing expenses increased by $89,717

or 42.9%, from $209,207 for the three months ended September 30, 2021 to $298,924 for the three months ended September 30, 2022 due to

our increase in promotional activity related to the national launch of our Faidr App.

The increase in marketing promotion was initially

focused on understanding consumer interest and demand for our Faidr App and is shifting focus around user behavior and retention on our

Research and development

Research and development expenses increased by

$62,275 or 52.2%, from $119,321 for the three months ended September 30, 2021 to $181,596 for the three months ended September 30, 2022

primarily related to additional staffing on our development team as we continued to advance the Faidr and Vodacast Apps.

and development staffing and related development costs were $576,491 and capitalized software expenses of $394,893 for the three months

ended September 30, 2022 as compared to staffing and related development costs of $462,987 and capitalized software expenses of $353,418

for the three months ended September 30, 2021.

The majority of development time was spent on our Faidr and Vodacast Apps.

We started amortizing

capitalized development costs associated with Faidr during Q1 2022 and continue to amortize development expense related to Vodacast.

General and administrative

General and administrative expenses decreased

by $1,068,124 or 66.4%, from $1,608,344 for the three months ended September 30, 2021 compared to $540,220 for the three months ended

September 30, 2022.

The decrease resulted primarily from decreased stock compensation expense related to employee stock options and lower

professional and recruiting fees that were incurred during 2021.

Depreciation and amortization

Depreciation and amortization expenses increased

by $196,084 or 249%, from $78,755 for the three months ended September 30, 2021 compared to $274,839 for the three months ended September

The increase is related to amortization of our Faidr and Vodacast Apps, which started amortization during Q1 2022 and Q4 2021,

respectively.

Other income (expense), net

Total other income (expense) decreased by $4,748

or 174.2%, from $2,725 for the three months ended September 30, 2021 to ($2,023) for the three months ended September 30, 2022.

was entirely related to interest expense.

Comparison of the nine months ended September 30, 2022 and 2021

The following table summarizes our results of operations:

Nine Months Ended September 30,

Increase/(Decrease)

Operating expenses:

Direct costs of service

Sales and marketing

Research and development

General and administrative

Depreciation and amortization

Total operating expense

Loss from operations

Other income (expense), net:

$ (5,133,959 )

$ (12,099,421 )

Total revenues were $0 for the three months ended

September 30, 2022 and September 30, 2021.

We are continuing to develop the new Faidr and Vodacast products to establish new revenue streams

and are currently running our first subscription trials and expect to start generating our first revenue during the fourth quarter of

Direct cost of services

Direct cost of services decreased by $23,726 or

15.6%, from $152,532 for the nine months ended September 30, 2021 compared to $128,806 for the nine months ended September 30, 2022.

continue to incur direct cost of services expense related to hosting and other music services related to our Faidr App and expect these

costs to increase in the future.

from $52,562 for the three months ended March 31, 2022, compared to $42,301 for the three months ended March 31, 2023.

This decrease was

primarily the result of a reduction in both platform hosting costs and other music services.

We continue to incur direct cost of services

expense related to hosting and other music services related to the faidr and podcasting Apps and expect these costs to increase in the

Sales and marketing

Sales and marketing expenses increased by $923,688

or 195.6%, from $472,322 for the nine months ended September 30, 2021 to $1,396,010 for the nine months ended September 30, 2022 due to

our increase in promotional activity related to the national launch of our Faidr App, and continued promotion for our Vodacast App.

increase in marketing promotion was initially focused on understanding consumer interest and demand for our Faidr App and has continued

with shifting focus around user behavior and retention on our App.

Sales and marketing expenses decreased by $131,948

or 37%, from $357,066 for the three months ended March 31, 2022, to $225,118 for the three months ended March 31, 2023, primarily attributed

to reduced staffing, consulting expense, and marketing and promotions spending as we right sized the marketing organization and ramped

down other spending from the Q1 2022 levels that were associated with the national launch of the faidr App.

We expect our sales and marketing

expenses to fluctuate period by period as we release new upgrades and enhancements within our Apps and look to generate revenue through

customer acquisition, retention, and subscription conversion.

Research and development

Research and development expenses increased by

219,634 or 83.8%, from $261,977 for the nine months ended September 30, 2021 to $481,611 for the nine months ended September 30, 2022

primarily related to additional staffing on our development team as we continue to advance the Faidr and Vodacast Apps.

Our research and

development staffing and related development costs were $2,155,128 and capitalized software expenses of $1,673,517 for the nine months

ended September 30, 2022 as compared to staffing and related development costs of $1,161,880 and capitalized software expenses of $904,956

for the nine months ended September 30, 2021.

The majority of development time was spent on our Faidr and Vodacast Apps.

We started amortizing

capitalized development costs associated with Faidr during Q1 2022 and continue to amortize development expense related to Vodacast.

$61,363 or 41.3%, from $148,763 for the three months ended March 31, 2022, to $210,126 for the three months ended March 31, 2023, primarily

related to reduced staffing, and an associated reduction in the level of capitalized software expenses.

Our research and development staffing

costs were $480,700 and capitalized software expenses were $270,574 for the three months ended March 31, 2023, as compared to staffing

costs of $809,976 and capitalized software expenses of $661,213 for the three months ended March 31, 2022.

We are continually developing

enhancements to both our faidr and podcasting Apps and will continue capitalize software costs to the extent that such development qualifies

for capitalization.

General and administrative

General and administrative expenses decreased

by $552,176 or 18.7%, from $2,952,679 for the nine months ended September 30, 2021 compared to $2,400,503 for the nine months ended September

The decrease resulted primarily from decreased stock compensation expense related to employee stock options and lower professional

and recruiting fees that were incurred during 2021.

by $90,904 or 8.9%, from $1,017,730 for the three months ended March 31, 2022, compared to $926,826 for the three months ended March 31,

The decrease resulted from reduced stock compensation expense related to cancelled employee stock option grants from Q1 2022.

compensation expense was $357,680 and $385,908 for the three months ended March 31, 2023, and 2022, respectively.

The remainder of the

expense reduction was attributed to the timing and a decrease in the cost of our D&O insurance policy.

Depreciation and amortization

Depreciation and amortization expenses increased

by $638,176 or 761.6%, from $83,795 for the nine months ended September 30, 2021 compared to $721,971 for the nine months ended September

The increase is related to amortization of our Faidr and Vodacast Apps, which started amortization during Q1 2022 and Q4 2021,

respectively.

by $266,908 or 151.5%, from $176,127 for the three months ended March 31, 2022, compared to $443,035 for the three months ended March

The increase is entirely related to the amortization of our faidr and podcasting Apps, which started amortization during Q1

2022 and Q4 2021, respectively.

Other income (expense), net

Total other expense decreased by $8,171,058 or

99.9%, from $8,176,116 for the nine months ended September 30, 2021 to $5,058 for the nine months ended September 30, 2022.

was mostly related 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.

In addition, we paid off and terminated our line of credit during 2021 and no

longer are incurring interest related to the line of credit.

Total other expense increased by $306,896, from

$1,010 for the three months ended March 31, 2022, to $307,906 for the three months ended March 31, 2023.

The increase is related to interest

expense attributed to the debt and conversion features of the Secured Bridge Note (aka the Prior Note), which included the finance charges

associated with debt issuance costs totaling $250,941 and interest expense of $55,000, respectively.

Liquidity and capital resources

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We have incurred operating losses since our inception

and have an accumulated deficit as a result of ongoing efforts to develop and commercialize our Faidr and Vodacast Apps.

As of September

and have an accumulated deficit as a result of ongoing efforts to develop and commercialize our faidr and podcasting Apps.

31, 2023, and December 31, 2022, we had cash of $239,040 and $1,661,434, respectively.

We reduced our future quarterly cash spend through

a series of cost saving initiatives during the third quarter of 2022 and deferral of promotional activity on the Faidr and Vodacast Apps.

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

develop and market our products and work through consumer conversion to subscriptions throughout 2022 and expect the start of subscription

conversion during 2023.

In February 2021, we completed an 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.

After deducting underwriters’ commissions and expenses, we received net proceeds of approximately $15.2

Due to the successful completion of the IPO, all of our existing convertible debt, accrued interest, accrued fees payable to

related parties, and promissory notes were converted into shares of common stock.

Following the Company’s IPO in February

2021, we paid down the outstanding principal balance on our bank line of credit from $6 million to $2 million.

We and the bank agreed

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

In July 2021, certain holders of our publicly

traded Series A Warrants exercised approximately 1.1 million warrants for approximately 1.1 million shares of common stock at the cash

exercise price of $4.5375 per share and as a result, we received additional cash proceeds of approximately $5.0 million.

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

During the year ended December 31, 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.

As described in more detail in Note 10, on November

14, 2022, the Company entered into a secured debt financing agreement for $2.0 million and an equity line facility for additional potential

The Company believes that its cash on hand as of September 30, 2022

combined with the $2.0 million of cash received from the November 14, 2022 secured debt financing plus funds available from the equity

line facility will be sufficient to fund current operating for the next twelve months.

The Company has based these estimates, however,

on assumptions that may prove to be wrong, and could spend available financial resources much faster than we currently expect.

will need to raise additional funds to continue funding our technology development and commercialization efforts beyond twelve months.

We have a deficiency in working capital in the

amount of approximately $2.2 million at March 31, 2023.

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.

Interim Bridge Financing

Additional Secured Bridge Note Financing

As previously disclosed, on November 14, 2022,

the Company entered into a Secured Bridge Note (“Prior Note”) financing with one accredited investor who is a significant

existing stockholder of the Company.

The Company received $2,000,000 of gross proceeds in connection with that financing.

On April 17, 2023, the Company entered into an

additional Secured Bridge Note (“New Note”) financing with the same accredited investor.

The Company received $750,000 of

gross proceeds in connection with the New Note financing.

The principal amount of the New Note is $825,000.

The New Note has a 10% interest rate and matures on July 31, 2023.

The New Note is secured by a lien on substantially all of the Company’s

At maturity, the investor has the option to convert

any original issue discount and accrued but unpaid interest on the New Note into shares of the Company’s common stock.

conversion price is $0.61 per share.

In connection with the New Note financing, the

Company issued to the investor 650,000 common stock warrants with a five-year term and a fixed $0.61 per share exercise price.

of such warrants are exercisable immediately.

The other 325,000 of such warrants would only become exercisable if the maturity date of

the New Note is extended in accordance with the terms of the New Note.

If the New Note remains outstanding as of July

31, 2023, the Company has the option to extend the maturity date of the New Note to November 30, 2023.

Upon such extension, the interest

rate on the New Note will be increased to 20% rather than 10%, and the 325,000 portion of the warrants shall become exercisable.

Amendments to Prior Secured Bridge Note Financing

In connection with the New Note financing, the

parties agreed to make certain amendments to the Prior Note financing.

The parties agreed to cancel the 300,000 common

stock warrants issued November 14, 2022, in connection with the Prior Note financing.

In addition, the Company issued to the investor

common stock warrants for 600,000 common shares, with an exercise price of $0.61 per common share and a five-year term.

300,000 of such

warrants are exercisable immediately.

The other 300,000 of such warrants would only become exercisable if the maturity date of the Prior

Note is extended in accordance with the terms of the Prior Note.

The investor will not be able to receive shares

upon conversion or exercise, unless prior stockholder approval is obtained, if the number of shares to be issued to the investor, when

aggregated with all other shares of common stock then owned by the investor beneficially or deemed beneficially owned by the investor,

would (i) result in the investor owning more than the Beneficial Ownership Limitation (as defined below), as determined in accordance

with Section 13 of the Securities Exchange Act of 1934 or (ii) otherwise constitute a Change of Control within the meaning of Nasdaq Rule

The “Beneficial Ownership Limitation” shall be 19.99% of the number of shares of the common stock outstanding immediately

prior to the proposed issuance of shares of common stock.

Equity Line Sales of Common Stock

As previously disclosed, on November 14, 2022,

the Company entered into a Common Stock Purchase Agreement (the “White Lion Purchase Agreement”) with White Lion Capital,

LLC, a Nevada limited liability company (“White Lion”) for an equity line facility.

On April 17 and April 20, 2023, the Company closed

on two sales of Common Stock under the White Lion Purchase Agreement.

The Company issued an aggregate of 1,962,220 common shares and received

aggregate proceeds of approximately $1.12 million.

The Company believes that with its cash on hand as

of March 31, 2023, of $239,040, combined with the proceeds from the New Note and the White Lion Common Stock sales of $750,000 and $1.12

million, respectively, and by exercising our option to extend the Prior Note to November 30, 2023, we will be able to fund our operations

into the third quarter of fiscal 2023.

The Company has based this estimate, however, on assumptions that may prove to be wrong.

need additional funding to complete the development of our full product line, scale products with a demonstrated market fit and generate

revenue and cash flow.

Management intends to secure such additional funding.

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 efforts.

Cash Flow Analysis

Our cash flows from operating activities have

historically been significantly impacted by 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.

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, 2022 and 2021:

Nine Months Ended September 30,

of cash flows for the three months ended March 31, 2023, and 2022:

Three Months Ended March 31,

Net cash provided by (used in):

6 unchanged sentences

$ (1,422,394 )

$ (1,983,741 )

Operating activities

Cash used in operating activities for the nine

months ended September 30, 2022 was $3,622,112, primarily resulting from our net loss of $5,133,959, partially offset by non-cash charges

of $1,420,457 primarily related to stock compensation expense and depreciation and amortization.

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 primarily consisted

of personnel-related expenditures, payments included costs of operations, and other sales efforts, research and development and administrative

Cash used in operating activities for the three

months ended March 31, 2023, was $1,073,241, primarily resulting from our net loss of $2,155,312 and change in working capital of $30,415

related to an increase in accounts payable and accrued liabilities, offset by non-cash charges of $1,051,656 related to depreciation and

amortization, share based compensation expense, and finance charges associated with the debt issuance costs of the Secured Bridge Note

(aka the Prior Note).

Cash used in operating activities for both periods consisted of personnel-related expenditures, marketing and promotion

costs, and public company administrative support costs such as legal and other professional support services.

Investing activities

Cash flows used in investing activities for the

nine months ended September 30, 2022 and 2021, consisted primarily of capitalization of software development expenses of $1,673,517 and

$904,957, respectively.

three months ended March 31, 2023, was $270,574, consisting entirely of capitalization of software development expenses.

Cash flows used in investing activities for the

three months ended March 31, 2022, was $665,023, primarily consisting of capitalization of software development expenses of $661,214.

Financing activities

Cash flows used in financing activities for the

nine months ended September 30, 2022 was $88,723 all from cash used in relation to the net settlement of share-based compensation.

Cash flows provided by financing activities for

the nine months ended September 30, 2021 was $13,251,608 primarily related to the issuance of common shares for $14,822,459 related to

our February 2021 IPO, $4,953,552 related to exercises of our Series A warrants in July 2021, and proceeds from the second PPP loan in

the amount of $267,482, 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.

three months ended March 31, 2023, was $78,580 related to cash paid by us related to the net-share settlement of vested restricted stock

units during the quarter.

Cash flows used in financing activities for the

three months ended March 31, 2022, was $88,722 related to cash paid by the company related to the net-share settlement of vested restricted

stock units during the quarter.

Funding Requirements

We historically have incurred significant losses

and negative cash flows from operations since our inception.

As of September 30, 2022, we had cash of approximately $1.0 million.

implemented cost saving initiatives to ensure our cash on hand will allow us enough time to finalize certain product enhancements and

optimize consumer adoption and subscription.

We expect these cost saving measures to reduce our quarterly cash burn rate to approximately

$1.0 million.

We recently entered into a debt financing agreement for $2.0 million in net proceeds.

In addition, we entered

into an equity line stock purchase agreement for up to $10.0 million in potential future proceeds, subject to certain limitations.

believe these combined financing arrangements, should capitalize our continued operations through Q3 2023.

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 therefore would need to raise additional funding sooner than we anticipate.

We expect to continue to incur costs associated

with operating as a public company, including legal, accounting, investor relations and other expenses.

Our future funding requirements

and timing will depend on many factors, including, but not limited to:

the scope, progress, results and costs related to our Faidr App and obtaining market adoption and subscription conversion;

and negative cash flows from operations since our inception and had an accumulated deficit of $73.9 million and $71.7 million as of March

31, 2023, and December 31, 2022, respectively.

As of March 31, 2023, and December 31, 2022, we had cash of $239,040 and $1.66 million,

respectively.

Our cash is comprised primarily of demand deposit accounts and money market funds.

At March 31, 2023, the Company had cash of

As described above (see Note 8 – Subsequent Events), in April 2023 the Company raised $1.87 million that we believe

will fund our operations into the third quarter of fiscal 2023.

The Company has based this estimate, however, on assumptions that may

prove to be wrong.

We will need additional funding to complete the development of our full product line, scale products with a

demonstrated market fit and generate revenue and cash flow.

Management has plans to secure such additional funding.

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 efforts.

As a result of the Company’s recurring losses

from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding

the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to

the Company’s ability to continue as a going concern.

We expect our expenses to increase in connection

with our ongoing activities, particularly as we continue the development, and marketing and promotion of faidr.

In addition, we expect

to continue to incur additional costs associated with operating as a public company, including 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 the market acceptance of our products

the ability to attract podcasters and content creators to faidr and retain listeners on the platform

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

3 unchanged sentences

The following table summarizes our contractual

obligations not on our Balance Sheet as of September 30, 2022 and the effects that such obligations are expected to have on our liquidity

obligations not on our Balance Sheet as of March 31, 2023, and the effects that such obligations are expected to have on our liquidity

and cash flows in future periods:

21 unchanged sentences

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

nine months ended September 30, 2022.

three months ended March 31, 2023.

Company recorded all adjustments necessary for a fair statement of the results

for the interim period and all such adjustments are of a normal recurring nature.

Emerging growth company and smaller reporting company status

19 unchanged sentences

Quantitative and Qualitative Disclosures about Market Risk

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

of the Exchange Act and are not required to provide the information required under this item.

We are a smaller reporting company as

defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

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