What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-14 compared with 2023-11-14 · 427 added, 382 removed, 171 unchanged (83% of the section changed)

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

The following discussion and analysis should

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

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

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

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

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

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

Our actual results and the timing of selected

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

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

You should carefully read the “Risk

Factors” section of this Quarterly Report and of our Annual Report on Form 10-K for the year ended December 31, 2022, to gain an

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

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

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

The following discussion and analysis should be

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

our audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31,

2023, which was filed with the SEC on April 1, 2024.

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

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

our plans, objectives, expectations, intentions and projections.

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

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

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

You should carefully read the “Risk Factors” section

of this Quarterly Report and of our Annual Report on Form 10-K for the year ended December 31, 2023, to gain an understanding of the important

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

Please also see the section entitled

“Special Note Regarding Forward-Looking Statements.”

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.

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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.

faidr gives consumers the

opportunity to listen to any AM/FM radio station with commercial breaks replaced with personalized audio 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 – also with ads removed or easily skipped by listeners – as well as 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.

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.

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.

a differentiated podcasting capability with ad-reduction features and also 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 podcasting feature 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.

The combination of AM/FM streaming and

podcasting, with Auddia’s unique, technology-driven differentiators, addresses large and rapidly growing audiences.

The Company has developed

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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 Music, etc.

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.

by consumers who will pay a subscription fee in order to listen to any streaming AM/FM radio station and podcasts, all with commercial

interruptions removed from the listening experience, in addition to the faidrRadio exclusive content offerings.

Advanced features will

allow consumers to skip any content heard on the station and request request audio content on-demand.

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 Music, etc.

We believe that the most significant point of differentiation

is that in addition to ad-free AM/FM streaming and ad-free podcasts, 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.

No other radio streaming app available

today, including category leaders like TuneIn, iHeart, and Audacy, can compete with faidr’s full product offerings.

The Company 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,

Podcasts were added to the app for the iOS version before the end of Q1 2023 as planned and added to the Android app in May

Podcast functionality will continue to be enhanced through 2023 and into 2024.

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;

on-demand 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.

In February 2023, we added faidrRadio, our exclusive content

offerings, to the app.

Podcasts (standard) were added to the app for the iOS version before the end of Q1 2023 as planned and added to

the Android app in May of 2023.

Podcast functionality will continue to be enhanced through 2024, including the deployment of the Company’s

ad-reduction technology.

The Company also developed

a testbed differentiated podcasting capability called Vodacast, which leveraged 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 Vodacast podcast platform was conceptualized to fill a void in the emerging audio media space.

The platform was built to become 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, on-demand fees for exclusive content, and through direct donations from their listeners.

Throughout 2023 and early

2024, Auddia has been migrating their podcasting capabilities into the flagship faidr app with the intention to sunset the Vodacast platform

and instead bring the advanced podcasting functionality that was found on Vodacast into faidr as part of the overall strategy to build

a single audio Superapp.

This includes Auddia’s new podcast ad-reduction technology.

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 significant differentiation 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.

part of Auddia’s podcast capabilities, originally presented on their Vodacast differentiated podcasting capability, is the availability

of tools to create and distribute an interactive digital feed, which supplements podcast episode audio with additional digital.

content feeds allow podcasters to tell deeper stories to their listeners while giving podcasters access to digital revenue for the first

Podcasters will be able to build these interactive feeds using The Podcast Hub, a content management system that was originally

developed and trialed as part of Auddia’s Vodacast platform, which also serves as a tool to plan and manage podcast episodes.

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 interactive

feed for podcasts has been developed and tested on Vodacast and is expected to be another differentiator added into faidr for podcast

listeners later in 2024.

The podcast capabilities

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

Revenue and the initial inclusion of the new revenue channels that come with it will be added to podcasting in the faidr app, and the

first elements of this new monetization capability is expected to be commercially available before the end of 2023.

The faidr mobile App

is available today through the iOS and Android App stores.

Revenue” and the initial inclusion of the new revenue channels that come with it will be added to podcasting in the faidr app, and

the first elements of this new monetization capability is expected to be commercially available in 2024, beginning with subscription plans

to access ad-reduction in podcasts.

The faidr mobile App is available

today through the iOS and Android App stores.

We have funded our operations

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In addition, we sold common shares during April 2023,

and June 2023.

Since its inception, we have incurred significant operating losses.

Since inception we have incurred significant operating

As of September 30, 2023, we had an accumulated deficit of $78.3 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:

June 2023, and the first quarter of 2024 pursuant to our equity line facility.

Since our inception, we have incurred significant operating

As of March 31, 2024, we had an accumulated deficit of $82,750,658.

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;

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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;

continue to pursue and complete potential acquisitions of other companies;

hire additional business development, product management, operational and marketing personnel;

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add operational and general administrative personnel which will support our product development programs, commercialization efforts and our transition to operating as a public company.

As a result, we will

need substantial additional funding to support our continuing operations and pursue our growth strategy.

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

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of one or more of our product candidates.

Because of the numerous

risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when

or if we will be able to achieve or maintain profitability.

Because of the numerous risks

and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or

if we will be able to achieve or maintain profitability.

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

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at planned levels and be forced to reduce or terminate our operations.

As of September 30, 2023,

we had cash of $2,199,678.

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

As of March 31, 2024,

we had cash and cash equivalents of $2,732,538.

The Company secured approximately $3.6 million in additional financing in February and

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

a demonstrated market fit.

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

To accelerate

user acquisition, 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

two properties and is targeting to execute one or more agreements in the near term.

These business development transactions would require

additional funding.

accelerate user acquisition, 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 two potential targets and seeking to execute one or more agreements in the near term.

These business development transactions would

require additional funding.

Recent Developments

Mergers and Acquisitions

We are exploring various

merger and acquisition options as part of a broader strategy which aims to scale the business more rapidly;

accelerate user adoption and

subscriber growth;

enter new markets (international);

and open new pathways toward raising capital.

The overall strategy focuses on three

(1) acquiring users of a radio-streaming app, (2) bringing our proprietary ad-free products to the acquired userbase to generate

significant subscription revenue, and (3) bringing together other differentiated features into the larger audio Superapp platform.

The Company incurred

$301,097 in costs related to evaluating potential acquisitions during the three months ended March 31, 2024..

RFM Acquisition

On January 26, 2024,

we entered into a Purchase Agreement (the “RFM Purchase Agreement”), pursuant to which we agreed to acquire RadioFM (the “RFM

Acquisition”), which is currently a component of both AppSmartz and RadioFM (partnerships under common control).

The aggregate consideration

for the RFM Acquisition is $13,000,000 (plus $2,000,000 in contingent consideration if certain post-close milestones are reached), in

addition to the assumption of certain liabilities, as may be adjusted pursuant to the terms of the RFM Purchase Agreement.

In March 2024, the parties

mutually agreed to terminate the RFM Purchase Agreement.

Nasdaq Deficiency Notices

On May 23, 2023, we received a letter (the “Notice”)

from the Listing Qualifications Staff of the Nasdaq Stock Market, LLC (“Nasdaq”) indicating that, based upon the Company’s

reported stockholders’ equity of $2,095,247 at the end of March 31, 2023, we are not in compliance with the requirement to maintain

a minimum stockholders’s equity of $2,500,000 for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing

Rule 5550(b)(1) the “Stockholder’s Equity Requirement”).

We were provided a compliance period of 45 calendar days from

the date of the Notice, or until July 7, 2023, to submit a plan to regain compliance with the Stockholder’s Equity Requirement,

pursuant to Nasdaq Listing Rule 5810(c)(2)(A).

On July 10, 2023, the Company received a letter

from Nasdaq advising that the Company had been granted an extension to file a Form 10-Q for the quarter-ended June 30, 2023 evidencing

compliance with Stockholder’s Equity Requirement.

The stockholder’s equity balance as of June 30, 2023 was $4,331,777, which

is $1,831,778 over the $2.5 million Stockholders’ Equity Requirement.

On August 25, 2023,

Nasdaq confirmed that the Company had regained compliance with the Stockholders’ Equity Requirement and that this matter is now

Separately, on April

24, 2023 we received a letter from Nasdaq indicating that the Company is not in compliance with the $1.00 Minimum Bid Price requirement

set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market (the “Bid Price Requirement”).

The letter indicated

that the Company will be provided 180 calendar days (or until October 23, 2023) in which to regain compliance.

If at any time during this

180 calendar day period the bid price of the Company’s common stock closes at or above $1.00 per share for a minimum of ten consecutive

business days, Nasdaq will provide the Company with a written confirmation of compliance and the matter will be closed.

On October 24, 2023,

the Company received a written notice from the Nasdaq staff indicating that the Company had not regained compliance with the Bid Price

Requirement and was not eligible for an additional 180 calendar day compliance period.

As a result, the staff determined to delist the

Company’s Common Stock from Nasdaq, unless the Company timely requests an appeal of the Staff’s determination to a Hearings

Panel (the “Panel”), pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.

The Company has requested

a hearing before the Panel to appeal the October notice and to address compliance with the Bid Price Requirement.

While the appeal process

is pending, the suspension of trading of the Company’s common stock, will be stayed and the Common Stock will continue to trade

on Nasdaq until the hearing process concludes and the Panel issues a written decision.

The hearing is expected to occur in mid-January

The Company intends to

consider all options to regain and maintain compliance with all Nasdaq continued listing requirements.

The Company’s receipt

of these Nasdaq letters does not affect the Company’s business, operations or reporting requirements with the Securities and Exchange

The Nasdaq listing rules

require listed securities to maintain a minimum bid price of $1.00 per share.

As previously reported in our Current Report on Form 8-K

filed on November 28, 2023, we received a written notice from Nasdaq indicating that the Company was not in compliance with the $1.00

minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing.

As a result, the Nasdaq staff determined

to delist the Company’s Common Stock from Nasdaq, unless the Company timely requests an appeal of the Staff’s determination

to a Hearings Panel (the “Panel”), pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.

with the Panel occurred on January 18, 2024.

On November 21, 2023, we

received a written notice from Nasdaq indicating that we are not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires companies

listed on The Nasdaq Capital Market to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing (the “Stockholders’

Equity Requirement”).

In our quarterly report on Form 10-Q for the period ended September 30, 2023, we reported stockholders’

equity of $2,415,012, and, as a result, did not satisfy Listing Rule 5550(b)(1).

Nasdaq’s November written notice had no immediate

impact on the listing of our common stock.

Our hearing with the Panel occurred on January 18, 2024 and addressed all outstanding

listing compliance matters, including compliance with the Stockholders’ Equity Notice as well as compliance with the Bid Price Requirement.

On January 30, 2024, the

Panel granted the Company’s request for an exception to Nasdaq’s listing rules until April 22, 2024, to demonstrate compliance

with all applicable continued listing requirements for the Nasdaq Capital Market.

On March 20, 2024, we received a letter from Nasdaq

stating we had regained compliance with the minimum bid requirement.

The Panel reminded us that although we regained compliance with the

minimum bid requirement, we are also required to regain compliance with the equity requirement.

Therefore, this matter will remain open

until we demonstrate compliance with all requirements.

On April 16, 2024, the Company received a letter

from Nasdaq granting an exception to the Exchange’s listing rules until May 20, 2024, to demonstrate compliance with Listing Rule

5550(b)(1) (the “Equity Rule”.)

We intend to consider all

options to regain and maintain compliance with all Nasdaq continued listing requirements.

The Company filed an amendment

to its Certificate of Incorporation with the Secretary of State in Delaware which became effective as of 5:00 P.M.

Eastern Time on February

As a result, every twenty-five (25) issued shares of common stock were automatically combined into one share of common stock.

Shares of the Company’s

common stock were assigned a new CUSIP number (05072K 206) and began trading on a split-adjusted basis on February 27, 2024.

The reverse stock split did

not change the authorized number of shares of the Company’s common stock.

No fractional shares were issued and any fractional shares

resulting from the reverse stock split were rounded up to the nearest whole share.

Therefore, stockholders with less than 25 shares received

one share of stock.

The reverse stock split

applied to the Company’s outstanding warrants, stock options and restricted stock units.

The number of shares of common stock into

which these outstanding securities are convertible or exercisable were adjusted proportionately as a result of the reverse stock split.

The exercise prices of any outstanding warrants or stock options were also proportionately adjusted in accordance with the terms of those

securities and the Company’s equity incentive plans.

Impact of Inflation

We have recently experienced higher costs across

our business as a result of inflation, including higher costs related to employee compensation and outside services.

We expect inflation

to continue to have a negative impact throughout 2023, and it is uncertain whether we will be able to offset the impact of inflationary

pressures in the near term.

We have recently experienced higher costs across our

business as a result of inflation, including higher costs related to employee compensation and outside services.

We expect inflation to

continue to have a negative impact throughout 2024, and it is uncertain whether we will be able to offset the impact of inflationary pressures

in the near term.

Components of our results of operations

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Direct costs of services

Direct cost of services

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

We expect 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 Apps.

Direct cost of services consists

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

We expect 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 Apps.

Sales and marketing

Our sales and marketing

expenses consist primarily of salaries, direct to consumer promotional spend and consulting services, all of which are related to the

sales and promotion performed during the period.

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.

Our sales and marketing expenses

consist primarily of salaries, direct to consumer promotional spend and consulting services, all of which are related to the sales and

promotion performed during the period.

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

Since our inception,

we have focused significant resources on our research and development activities related to the software development of our technology.

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

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

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

intended use.

Since our inception, we have

focused significant resources on our research and development activities related to the software development of our technology.

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.

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

Software development costs are amortized over a useful life estimated by our management of three 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 impaired and expensed during the period of

such determination.

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 Apps.

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 impaired and expensed during the period of such determination.

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 Apps.

General and administrative

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Other income and expense

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).

We expect our other expense to fluctuate period by period dependent upon either the payoff of the Prior Note or an extension

The other income and expense

category primarily consists of interest expense attributed to the debt and conversion features of the Notes payable to related party.

Results of operations

Comparison of the three months ended

September 30, 2023, and 2022

The following table summarizes our results of

March 31, 2024

The following table summarizes our results of operations:

Three Months Ended

September 30,

Operating expenses:

Direct cost of services

Sales and marketing

Research and development

General and administrative

Depreciation and amortization

Total operating expenses

Loss from operations

Other (expense) income:

Interest expense

Total other expense

Loss before income taxes

Provision for income taxes

$ (2,116,482 )

$ (1,330,314 )

Total revenues for the

three months ended September 30, 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

increased $10,758 or 32.9% from $32,712 for the three months ended September 30, 2022, compared to $43,470 for the three months ended

September 30, 2023.

This increase was primarily the result of a slight increase in both platform hosting costs and other music services.

Sales and marketing

Sales and marketing expenses

increased by $17,373 or 5.8%, from $298,924 for the three months ended September 30, 2022, to $316,297 for the three months ended September

30, 2023, primarily attributed to increased marketing and promotions costs as compared to Q3 2022.

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

expenses increased by $45,537 or 25.1%, from $181,596 for the three months ended September 30, 2022, to $227,133 for the three months

ended September 30, 2023, primarily related to slightly increased staffing cost.

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

expenses increased by $237,276 or 43.9%, from $540,220 for the three months ended September 30, 2022, compared to $777,496 for the three

months ended September 30, 2023.

The increase resulted from an increase in stock compensation expense compared to Q3 2022.

Depreciation and amortization

expenses increased by $190,327 or 69.3%, from $274,839 for the three months ended September 30, 2022, compared to $465,166 for the three

months ended September 30, 2023.

The increase is entirely related to the increased amortization of our faidr and podcasting Apps.

Other income (expense),

Total other expenses

increased by $284,897, from $2,023 for the three months ended September 30, 2022, to $286,920 for the three months ended September 30,

The increase is related to actual and imputed interest expense attributed to the Secured Bridge Notes issued during November of

2022 and April 2023 (Refer to Note 4 of the condensed unaudited financial statements for additional information regarding the secured

bridge notes).

Comparison of the nine months ended

September 30, 2023, and 2022

Nine Months Ended

September 30,

March 31, 2024

March 31, 2023

Operating expenses:

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$ (2,155,312 )

Total revenues for the

nine months ended September 30, 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

Total revenues for the three

months ended March 31, 2024 and 2023 were $0 as we continue to develop and enhance our faidr and podcasting Apps to establish new revenue

Direct cost of services

increased $2,003 or 1.6% from $128,806 for the nine months ended September 30, 2022, compared to $130,809 for the nine months ended September

This increase was primarily the result of a slight increase in both platform hosting costs and other music services.

Direct Cost of Services increased

$5,872 or 13.9% from $42,301 for the three months ended March 31, 2023, compared to $48,173 for the three months ended March 31, 2024.

This increase was primarily the result of an increase in music service costs.

Sales and marketing

Sales and marketing expenses

decreased by $630,834 or 45.2%, from $1,396,010 for the nine months ended September 30, 2022, to $765,176 for the nine months ended September

30, 2023, primarily attributed to reduced staffing, consulting expense, and marketing and promotions costs as compared to the nine months

ended September 30, 2022 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.

decreased by $78,723 or 35.0% from $225,118 for the three months ended March 31, 2023 to $146,395 for the three months ended March 31,

2024, which was primarily attributed to reduced marketing promotion costs associated with the national launch of the faidr app.

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

expenses increased by $136,011 or 28.2%, from $481,611 for the nine months ended September 30, 2022, to $617,622 for the nine months ended

September 30, 2023, primarily related to increased staffing, and an associated reduction in the level of capitalized software expenses.

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.

expenses decreased by $44,619 or 21.2% from $210,126 for the three months ended March 31, 2023, to $165,507 for the three months ended

March 31, 2024, which was primarily due to lower consulting fees.

General and administrative

expenses increased by $196,328 or 8.2%, from $2,400,503 for the nine months ended September 30, 2022, compared to $2,596,831 for the nine

months ended September 30, 2023.

The increase resulted from an increase in stock compensation expense compared to 2022.

expenses increased by $283,973 or 30.6%, from $926,826 for the three months ended March 31, 2023, compared to $1,210,799 for the three

months ended March 31, 2024.

The increase was primarily driven by a $276,097 increase in accounting and legal fees related to the evaluation

of potential acquisitions and additional regulatory filings that occurred during the three months ended March 31, 2024..

Depreciation and amortization

expenses increased by $628,849 or 87.1%, from $721,971 for the nine months ended September 30, 2022, compared to $1,350,820 for the nine

months ended September 30, 2023.

expenses increased by $40,711 or 9.2%, from $443,035 for the three months ended March 31, 2023, compared to $483,746 for the three months

ended March 31, 2024.

The increase is entirely related to the increased amortization of our faidr and podcasting Apps.

Other income (expense),

Total other expense increased

by $1,128,340, from $5,058 for the nine months ended September 30, 2022, to $1,133,398 for the nine months ended September 30, 2023.

increase is related to interest expense attributed to the Secured Bridge Notes issued during November of 2022 and April of 2023, which

included the finance charges associated with debt issuance cost (refer to Note 4 of the condensed unaudited financial statements for additional

information regarding the secured bridge notes).

Total other expenses decreased

by $155,198, from $307,906 for the three months ended March 31, 2023, to $152,708 for the three months ended March 31, 2024.

expense for the three months ended March 31, 2024 includes the interest component on the notes payable, while the interest expense for

the three months ended March 31, 2023 includes both the interest expense and amortization of the original debt discount.

was fully amortized in 2023.

Liquidity and capital

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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 podcasting

As of September 30, 2023, and December 31, 2022, we had cash of $2,199,678 and $1,661,434, respectively.

We have a deficit in working

capital in the amount of approximately $1.4 million at September 30, 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.

existing cash of $2.2 million at September 30, 2023 will only be sufficient to fund our current operating plans into February 2024.

Company has based these estimates, however, on assumptions that may prove to be wrong.

We will need additional funding to complete the

development of our full product line and scale products with a demonstrated market fit.

Management has plans to secure such additional

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.

We had cash on hand of $2,199,678 as of September 30, 2023.

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

intends to secure such 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.

losses since our inception and have an accumulated deficit as a result of ongoing efforts to develop and commercialize our faidr and

podcasting Apps.

As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents of $2,732,538 and $804,556, respectively.

We have a deficit in working capital in the amount of approximately $1.4 million as of March 31, 2024.

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.

Company secured $3.56 million of additional financing in April 2024, which enabled us to pay down $2.75 million in connection with the

Secured Bridge Notes and will only be sufficient to fund our current operating plans into the third quarter of 2024.

The Company has

based these estimates, however, on assumptions that may prove to be wrong.

We will need additional funding to complete the development

of our full product line and scale products with a demonstrated market fit.

Management has plans to secure such additional funding.

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.

Interim Bridge Financings

As previously disclosed, we entered into a Secured

Bridge Note (“Prior Note”) financing on November 14, 2022 with one of our accredited investors who is a significant existing

shareholder of the Company.

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

On April 17, 2023, we

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

We 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.

As previously disclosed,

on November 14, 2022, we entered into a Secured Bridge Note (“Prior Note”) financing with one of our accredited investors,

a significant existing shareholder of the Company.

We received $2,000,000 of gross proceeds from the Prior Note financing.

On April 17, 2023, we entered

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

We received $750,000 of gross proceeds from the New Note financing.

The New Note was issued with a principal amount of $825,000, 10% interest

rate and a maturity date on July 31, 2023.

The New Note is secured by a lien on substantially all of our assets.

At maturity, the lender

has the option to convert any original issue discount and accrued but unpaid interest on the New Note into shares of our common stock.

The fixed conversion price is $0.61 per share.

In connection with the

New Note financing, we issued 650,000 common stock warrants to the investor with a five-year term and a fixed $0.61 per share exercise

325,000 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.

Further, if the New Note remains outstanding as of July

31, 2023, we have 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% from 10%, and the 325,000 portion of the warrants shall become exercisable.

Further, in connection

with the New Note financing, the parties agreed to make certain amendments to the Prior Note financing.

Specifically, the parties agreed

to cancel the 300,000 common stock warrants issued as part of the prior financing and, in lieu of the cancelled warrants, issued the investor

At maturity of the New

Note, the accredited investor, or our lender, has the option to convert any original issue discount and accrued but unpaid interest into

shares of our common stock at a fixed conversion price of $15.25 per share.

In connection with the New

Note financing, we issued 26,000 common stock warrants to the accredited investor with a five-year term and a fixed $15.25 per share exercise

price, from which 13,000 of these common stock warrants are exercisable immediately.

The remaining 13,000 common stock warrants would

only become exercisable if the maturity date of the New Note is extended in accordance with the terms of the New Note.

As of July 31,

2023, we extended the maturity date of the New Note to November 30, 2023.

Upon the July 31, 2023 extension, the interest rate on the New

Note increased to 20% from 10%, and the remaining portion of the 13,000 common stock warrants became exercisable.

As of November 30, 2023,

we extended the maturity date of the Prior Note and New Note to March 31, 2024.

All terms of the Prior Note and New Note, such as interest

rate and exercisable common stock warrants remained the same.

The accredited investor did not exercise the common stock warrants as of

December 31, 2023 or subsequent to December 31, 2023 and as of the date of this filing.

Further, in connection with

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

Specifically, the parties agreed to

cancel the 12,000 common stock warrants issued as part of the prior financing and, in lieu of the cancelled warrants, issued the investor

common stock warrants for 24,000 common shares with an exercise price of $15.25 per common share and a five-year term.

300,000 of such

warrants were exercisable immediately, while the other 300,000 warrants became exercisable upon the maturity date extension of the Prior

Note during May of 2023.

The investor will not

be able to receive shares upon conversion or exercise, unless prior shareholder 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 5635(b).

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

On November 14, 2022,

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

From the newly

issued 24,000 common stock warrants, 12,000 common stock warrants were exercisable immediately, while the other 12,000 common stock warrants

became exercisable at the time of extension of the maturity date of the Prior Note during May of 2023.

In order for the accredited

investor to receive common shares from a conversion or exercise of the common stock warrants, an approval is required from the shareholders,

if the number of common shares to be issued to the accredited investor, when aggregated with all other shares of common stock beneficially

or deemed beneficially owned by the accredited 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 5635(b).

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.

On April 9, 2024, the Company

and the investor entered into an Amendment and Waiver Agreement relating to the Bridge Notes (refer to Note 8 of the condensed unaudited

financial statements for additional information regarding the amendment to the secured bridge notes).

On April 26, 2024, the

Companay repaid $2.75 million of principal in connection with the Secured Bridge Notes.

Equity Line Sales of Common

On November 14, 2022, we

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.

3 unchanged sentences

and received aggregate proceeds of approximately $1.12 million.

Replacement Equity Line

with White Lion

November 6, 2023, we entered into a new Common Stock Purchase Agreement and a related registration rights agreement with White Lion.

to the new Common Stock Purchase Agreement, we have the right, but not the obligation to require White Lion to purchase, from time to

time until December 31, 2024, up to $10,000,000 in aggregate gross purchase price of newly issued shares of our common stock, subject

to certain limitations and conditions set forth in the Common Stock Purchase Agreement.

In connection with the new Common Stock Purchase

Agreement, the parties agreed to terminate the previous Common Stock Purchase Agreement with White Lion.

March 31, 2024, we sold 1,340,000 shares to White Lion for total proceeds of $3,606,508.

Through the date of this report, we have sold

1,940,000 shares to White Lion for total proceeds of $4,852,508.

We currently have effective registration statements that registers for

resale by White Lion up to 5,165,263 shares of common stock that we may issue to White Lion under the Equity Line Purchase Agreement.

After White Lion has acquired shares under the Equity Line Purchase Agreement, it may sell all, some or none of those shares.

White Lion by us pursuant to the Equity Line Purchase Agreement may result in substantial dilution to the interests of other holders

of our common stock.

Cash Flow Analysis

6 unchanged sentences

The following table summarizes

the statements of cash flows for the nine months ended September 30, 2023, and 2022:

Nine Months Ended September 30,

the statements of cash flows for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Net cash provided by (used in):

7 unchanged sentences

Operating activities

Cash used in operating

activities for the nine months ended September 30, 2023, was ($3,404,954), primarily resulting from our net loss of ($6,594,656) and change

in working capital of $188,517 related to an increase in accounts payable and accrued liabilities, offset by non-cash charges of $3,001,184

related to depreciation and amortization, share based compensation expense, and finance charges associated with the debt issuance costs

of the Secured Bridge Notes.

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.

Cash used in operating activities

for the three months ended March 31, 2024 was ($1,405,138), primarily resulting from our net loss of ($2,207,328) and change in working

capital of $145,155 primarily related to an increase in accounts payable and accrued liabilities, offset by non-cash charges of $657,035

related to depreciation and amortization and share based compensation expense.

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.

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, 2023, was $743,208, consisting entirely of capitalization of software development expenses.

activities for the three months ended March 31, 2024 was $273,388, consisting entirely of capitalization of software development expenses.

Cash flows used in investing

activities for the nine months ended September 30, 2022, was $1,677,326, primarily consisting of capitalization of software development

expenses of $1,673,517 and purchase of property and equipment of $3,809.

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

Financing activities

Cash flows generated

in financing activities for the nine months ended September 30, 2023, was $4,686,406 and related primarily to cash proceeds from the issuance

of common shares of $4,016,521 and proceeds from related party debt of $750,000.

in financing activities for the three months ended March 31, 2024 was $3,606,508 and related entirely to cash proceeds from the issuance

of common shares of $3,606,508.

Cash flows used in financing

activities for the nine months ended September 30, 2022, was $88,723 related to cash paid by the Company related to the net-share settlement

of vested restricted stock units during the quarter.

activities for the 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.

Funding Requirements

We historically have

incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $78.3 million

and $71.7 million as of September 30, 2023, and December 31, 2022, respectively.

As of September 30, 2023, and December 31, 2022, we had

cash of $2,199,678 and $1,661,434, respectively.

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

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

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.

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.

incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $82,750,658

and $80,543,330 as of March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024 and December 31, 2023, we had cash and

cash equivalents of $2,732,538 and $804,556, respectively.

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

We secured $3.56 million of additional financing in April 2024, which enabled us to pay down

$2.75 million in connection with the Secured Bridge Notes and will only be sufficient to fund our current operating plans into the third

quarter of 2024.

We have based these estimates, however, on assumptions that may prove to be wrong.

We will need additional funding to

complete the development of our full product line and scale products with a demonstrated market fit.

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.

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

effectively addressing any competing technological and market developments

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;

effectively addressing any

competing technological and market developments;

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

1 unchanged sentence

The following table summarizes

our contractual obligations not on our Balance Sheet as of September 30, 2023, and the effects that such obligations are expected to have

our contractual obligations not on our Balance Sheet as of March 31, 2024, and the effects that such obligations are expected to have

on our liquidity and cash flows in future periods:

2 unchanged sentences

Office lease (1)

Insurance premiums (2)

Total operating lease commitments

Represents minimum payments due for the lease of office space.

Represents premium payments due related to D&O insurance policy from February 2023 – February 2024

Off-balance sheet

We did not have during

the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the

Off-balance sheet arrangements

We did not have during the

periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Estimates

Our condensed financial

statements and accompanying notes have been prepared in accordance with U.S.

The preparation of these condensed financial statements

requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and

expenses, and related disclosures.

On an ongoing basis, we continually evaluate our estimates and assumptions believed to be reasonable

under current facts and circumstances.

Actual amounts and results may materially differ from these estimates made by management under

different assumptions and conditions.

Our critical accounting estimates are presented

in Part II, Item 7.

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

on Form 10-K for the year ended December 31, 2022 filed with SEC on March 23, 2023.

There were no material changes to our critical accounting

estimates during the nine months ended September 30, 2023.

Our financial statements

and accompanying notes have been prepared in accordance with U.S.

The preparation of these financial statements requires us to make

estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related

On an ongoing basis, we continually evaluate our estimates and assumptions believed to be reasonable under current facts

and circumstances.

Actual amounts and results may materially differ from these estimates made by management under different assumptions

and conditions.

Certain accounting policies

that require significant management estimates and are deemed critical to our results of operations or financial position, are described

Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial

condition and results of operations.

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

Software development costs are amortized over a useful life estimated by the Company’s management of three 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 impaired and expensed during the period of

such determination.

Equity-based compensation

Certain of our employees

and consultants have received grants of common shares in our company.

These awards are accounted for in accordance with guidance prescribed

for accounting for equity-based compensation.

Based on this guidance and the terms of the awards, the awards are equity classified.

common shares receive distributions if any in an order of priority in accordance with our limited liability company agreement.

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.

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

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.

Prior to our IPO in February

2021, we were a private company with no active public market for our common equity.

Therefore, we have periodically determined the overall

value of our company and the estimated per share fair value of our common equity at their various dates using contemporaneous valuations

performed with the assistance of a third-party specialist and in accordance with the guidance outlined in the American Institute of CPA’s

Practice Aid.

Emerging growth company and smaller reporting company status

18 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