What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-08 · 348 added, 279 removed, 234 unchanged (73% 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,

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, 2024, which was filed with the SEC on March 5, 2025.

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, 2024, 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.”

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, 2024, 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 (the “Company”)

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podcast listening experiences.

faidr allows users to listen

to AM/FM radio stations without unwanted commercial breaks.

The app replaces these ad breaks in real time with streaming music similar

in format and genre to the radio station being played.

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, which includes new artist discovery, curated music stations, and exclusive music podcasts that allow hosts

to play full tracks within the episode.

On August 20, 2025, the

Company announced that it is in the process of building its proprietary Discovr Radio platform and integrating it into the newly configured

free faidr app for an anticipated launch in early 2026., The Discovr Radio platform, a web-based portal will allow artists and record

labels to promote songs on radio streams, through an integration with faidr.

faidr historically allowed

users to listen to AM/FM radio stations without unwanted commercial breaks.

The app replaces these ad breaks in real time with songs supplied

by Discovr Radio, giving artists exposure on mainstream airwaves.

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

and preference-based new music discovery.

In addition to commercial-free AM/FM, faidr includes podcasts with its Forward+ ad skipping

technology on iOS.

The combination of AM/FM

streaming and podcasting, with Auddia’s unique, AI technology-driven differentiators, addresses large (radio streamers) and rapidly

growing (podcast listeners) audiences.

We have developed our 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.

streaming and new-music distribution, with Auddia’s unique, AI technology-driven differentiators, addresses large (radio streamers)

and rapidly growing (independent and emerging artists) audiences and customer bases.

We have developed our

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 DJ conversation.

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end of each piece of content.

The faidr app is intended

to be downloaded by consumers who are willing to pay for a customizable, commercial-free listening experience.

Our advanced features allow

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

We believe the faidr App represents a significant

differentiated audio streaming product, the first to give audio streamers a more personalized middle ground between passive content like

broadcast radio and fully on-demand content like Spotify.

No other audio streaming app available today, including category leaders like

TuneIn, iHeart, and Audacy, can compete with faidr’s full product offerings.

The faidr app with its

advanced features allow users to skip any content heard on the station and request audio content on-demand.

We believe the faidr App represents

a significant differentiated audio streaming product, the first to give audio streamers a more personalized middle ground between passive

content like broadcast radio and fully on-demand content like Spotify.

No other audio 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

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

In the first half of

2025, we implemented new paywalls and are now testing various price points and marketing strategies aimed at optimizing subscription

The Company continues to look for opportunities to improve the value faidr delivers to consumers through content

enhancements, improvements in app functionality, and the development of new features.

Through these ongoing improvements to the

faidr app and the continuous optimization of the marketing message and strategy to reach the right audiences, the Company continues

to pursue the product market fit required to support a significant increase in marketing spend to drive users and revenue.

The faidr mobile App is available

today through the iOS and Android App stores.

The Company initially

launched faidr with a B2C subscription model in February of 2022 and is transitioning to a B2B subscription model before the end of the

year or Q1 of 2026.

In August 2025, the

Company announced a new B2B business model with a strategic shift to AI driven music discovery.

Auddia is targeting artists and labels

for SaaS subscription access to ad-free AM/FM streaming listeners on the faidr app, while faidr users will enjoy free access to AI driven

ad-free AM/FM streams on all music stations.

Consumer subscriptions will no longer be required to enjoy faidr’s ad-free and content

personalization listening experience.

New music platforms like

Bandcamp and SoundCloud are integral tools for artists to connect with new fans and even monetize their content, but those platforms only

cater to a subset of the total addressable market for an artist.

The Company believes the largest group of potential fans for most artists

remains on commercial radio, listening to music passively and not searching for new artists even though Company surveys and research indicate

radio listeners are interested in hearing new music when listening to their favorite radio stations.

Auddia’s new Discovr Radio

platform will deliver the experience of passively listening to commercial AM/FM radio streams while passively being exposed to new music

instead of radio ads.

Unlike other new music

discovery platforms, which allow artists to upload songs in the hopes that new listeners will find them among the other songs available,

Discovr Radio delivers guaranteed plays to artists, leveraging AI to place their songs into radio feeds as part of a custom programming

experience and as unique content during what would typically be an ad break.

This gives artists opportunities to be heard by the many

millions of streaming radio listeners worldwide.

The new Discovr Radio

platform will consist of a new AI Placement Engine and Artist Portal.

The AI Placement Engine will aim to put the right new song in front

of the right listener, on the right station, adjacent to the right artist, to optimize music discovery and the connection between artists

The Artist Portal will give artists performance analytics on number of total plays, likes and dislikes, demographic data, and

facilitate the connection of artists to their new fans.

In addition to streaming songs on live radio streams, the Discovr Radio offering

will eventually allow artists and labels to launch campaigns on streaming apps to promote new songs, albums, and tours.

Auddia is evolving its

business model from direct-to-consumer to business-to-business, shifting its focus from individual radio-streaming subscribers to artists

and labels as subscribers.

Through a modest monthly subscription, artist and label customers gain guaranteed radio plays—offering

a new channel for music promotion.

The faidr mobile App

is available today through the iOS and Android App stores and the MVP version of the Discovr Radio platform is expected to be released

before the end of Q1 of 2026.

The MVP is expected to be supported by a pilot program of participating customers.

We have funded our operations

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obtained debt financing through a related party during November 2022 and April 2023, which was subsequently repaid in April 2024.

we sold common shares during 2025 and 2024 pursuant to our equity line facility.

Since our inception, we have incurred significant operating

As of June 30, 2025, we had an accumulated deficit of $92,851,762.

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:

we sold common shares during 2025 and 2024 pursuant to our equity line facility and issued preferred stock in our Series B and Series

Since our inception, we have incurred significant operating losses.

As of September 30, 2025, we had an accumulated deficit

of $95,262,663.

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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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.

Until such time as we can generate significant revenue from product

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

collaborations with other companies or other strategic transactions.

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

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

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

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

product candidates.

Because of the numerous risks and uncertainties associated

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

or maintain profitability.

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

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

to achieve or maintain profitability.

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

If we fail to become profitable

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

forced to reduce or terminate our operations.

As of June 30, 2025, we had cash and cash equivalents

of $1,067,756.

If we fail to become

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

and be forced to reduce or terminate our operations.

As of September 30, 2025, we had cash and cash

equivalents of $2,727,165.

Through the date of this report, we have secured approximately $7.2 million in additional financing in 2025.

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.

However, 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 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.

However, 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.

Recent Developments

Proposed Business Combination

On August 5, 2025, the Company issued a press release

announcing that it had entered into a non-binding letter of intent (“LOI”) for a proposed business combination between the

Company and Thramann Holdings, LLC (“Holdings”).

On August 5, 2025, the Company issued a press

release announcing that it had entered into a non-binding letter of intent (“LOI”) for a proposed business combination between

the Company and Thramann Holdings, LLC (“Holdings”).

Holdings is a privately held holding company that controls LT350, Influence

Healthcare, and Voyex, three early stage AI-native companies founded by Jeff Thramann, Auddia’s founder, CEO and Executive Chairman.

The Company has established a special committee

of the board of directors to evaluate the related party transaction.

The special committee has engaged its own counsel and financial advisor.

The LOI contemplates a business combination between

Auddia and Holdings with Auddia becoming a public holding company trading under a new name and ticker symbol.

The transaction would result

in the portfolio companies of Holding and Auddia becoming subsidiaries of the public holding company.

Under the proposed terms, Holdings’

equity holders are expected to receive an 80% ownership interest in the combined company, with Auddia equity holders owning a 20% interest.

The proposed business combination is subject to a

number of known and unknown risk and uncertainties.

Auddia and Holdings with Auddia becoming a public holding company trading under the new name, McCarthy Finney and ticker symbol MCFN.

The transaction would result in the portfolio companies of Holding and Auddia becoming subsidiaries of the public holding company.

the proposed terms, Holdings’ equity holders are expected to receive an 80% ownership interest in the combined company, with Auddia

equity holders owning a 20% interest.

The proposed business combination is subject to

a number of known and unknown risk and uncertainties.

There can be no assurances that the parties will enter into a definitive business

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The overall strategy focuses on three

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

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

(1) acquiring retained customers of the Discovr Radio platform to generate significant subscription revenue, (2) acquiring retained

users of faidr to supply the audience to Discovr Radio customers (3) scaling the faidr userbase and the Discovr Radio customer base once

we’ve achieved product-market fit.

Nasdaq Deficiency Notices

During 2022, 2023 and

the Company received notices from Nasdaq indicating that the Company was not in compliance with (i) Nasdaq Listing Rule 5550(b)(1), which

requires companies listed on The Nasdaq Stock Market to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing

or (ii) Nasdaq Listing Rule 5550(a)(2) which requires companies listed on The Nasdaq Stock Market to maintain a minimum of a $1.00 bid

price for continued listing.

2024, the Company received notices from Nasdaq indicating that the Company was not in compliance with (i) Nasdaq Listing Rule 5550(b)(1),

which requires companies listed on The Nasdaq Stock Market to maintain a minimum of $2,500,000 in stockholders’ equity for continued

listing or (ii) Nasdaq Listing Rule 5550(a)(2) which requires companies listed on The Nasdaq Stock Market to maintain a minimum of a $1.00

bid price for continued listing.

On May 24, 2024, we received

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to a Mandatory Panel Monitor for a period of one year from the date of the letter in accordance with application of Listing Rule 5815(d)(4)(B).

On October 16, 2024, we received

a written notice from Nasdaq indicating that we were not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq

Listing Rule 5550(a)(2) for continued listing.

The bid price notice does not result in the immediate delisting of our common stock from

the Nasdaq Capital Market.

The bid price notice indicated that we have 180 calendar days (or until April 14, 2025) in which to regain

If at any time during this 180 calendar day period the bid price of our common stock closes at or above $1.00 per share for

a minimum of ten consecutive business days, the Nasdaq staff will provide us with a written confirmation of compliance and the matter

will be closed.

On October 16, 2024,

we received a written notice from Nasdaq indicating that we were not in compliance with the $1.00 minimum bid price requirement set forth

in Nasdaq Listing Rule 5550(a)(2) for continued listing.

The bid price notice does not result in the immediate delisting of our common

stock from the Nasdaq Capital Market.

The bid price notice indicated that we have 180 calendar days (or until April 14, 2025) in which

to regain compliance.

If at any time during this 180 calendar day period the bid price of our common stock closes at or above $1.00 per

share for a minimum of ten consecutive business days, the Nasdaq staff will provide us with a written confirmation of compliance and the

matter will be closed.

On April 14, 2025, Nasdaq

notified us that we were in compliance with the $1.00 minimum bid price requirement.

On February 27, 2024, the

On February 27, 2024,

the Company effectuated a 1-for-25 reverse stock split.

On March 28, 2025, the

Company effectuated a 1-for-17 reverse stock split.

On March 28, 2025, the Company

effectuated a 1-for-17 reverse stock split.

The reverse stock splits

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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 2025, 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 2025, 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 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.

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.

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 (users for faidr and Discovr Radio) 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.

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.

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.

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 faidr and develop the Discovr Radio platform.

General and administrative

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liability insurance premiums and investor relations activities.

Restructuring Costs

Our restructuring costs

consist primarily of employee severance and related benefits, contract termination fees, and other costs incurred in connection with actions

taken to streamline operations and align our cost structure with current business priorities.

During the three months ended September

30, 2025, we implemented a restructuring plan that included workforce reductions and the termination of certain consulting arrangements.

Additionally, we incurred legal and financial related costs in connection with the proposed business combination during the three months

ended September 30, 2025.

Other income and expense

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.

The other income and

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

Results of operations

Comparison of the Three Months Ended June

30, 2025 and 2024

The following table summarizes our results of operations:

Comparison of the Three Months Ended

September 30, 2025 and 2024

The following table summarizes our results of

Three Months Ended

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

Operating expenses:

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General and administrative

Restructuring

Depreciation and amortization

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Interest expense

Change in fair value of warrants

Total other expense

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Provision for income taxes

$ (1,568,653 )

$ (2,303,425 )

Total revenues for the three

months ended June 30, 2025 and 2024 were $0 as we continue to develop and enhance our faidr and podcasting Apps to establish new revenue

Total revenues for the

three months ended September 30, 2025 and 2024 were $0 as we continue to develop and enhance our faidr App and build out our Discovr artist

portal to establish new revenue streams.

Direct cost of services

Direct Cost of Services

increased by $8,339 or 16.6% to $58,566 for the three months ended June 30, 2025 compared to $50,227 for the three months ended June 30,

increased by $336 or 0.6% to $55,252 for the three months ended September 30, 2025 compared to $54,916 for the three months ended September

30, 2024 due to increased music licensing costs.

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Sales and marketing expenses

decreased by $31,711 or (14.6%) to $185,157 for the three months ended June 30, 2025 compared to $216,868 for the three months ended June

The decrease in sales and marketing expenses was primarily attributed to a slight decrease in marketing promotion costs.

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 $138,688 or (49.1%) to $143,762 for the three months ended September 30, 2025 compared to $282,450 for the three months ended

September 30, 2024.

The decrease in sales and marketing expenses was primarily attributed to a decrease in marketing promotion costs as

we are focus on building out our new Discovr artist portal.

Research and development

expenses increased by $76,827 or 48.1% to $236,415 for the three months ended June 30, 2025 from $159,588 for the three months ended June

30, 2024 primarily due to an increase in research and development consulting fees incurred.

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 increased by $84,541 or 36.3% to $317,626 for the three months ended September 30, 2025 from $233,085 for the three months ended

September 30, 2024 primarily due to an increase in research and development consulting fees incurred and lower amount capitalized

as a result IT staff restructuring.

We continue to develop enhancements to our faidr App and build out our Discovr artist portal and will

continue capitalize software costs to the extent that such development qualifies for capitalization.

General and administrative

General and administrative expenses decreased by $4,883

or (0.7%) to $729,442 for the three months ended June 30, 2025 compared to $734,325 for the three months ended June 30, 2024.

remained relatively flat due to ongoing professional fees that we incur from being a public company.

General and administrative expenses decreased

by $182,499 or (20.7%) to $698,940 for the three months ended September 30, 2025 compared to $881,439 for the three months ended September

The decrease was due to a decrease in accounting, legal, and stock option expense.

Restructuring

Restructuring expenses increased by $806,432 or

100% for the three months ended September 30, 2025 compared to $0 for the three months ended September 30, 2024.

We implemented changes

to our IT department.

These one-time restructuring expenses relate to payroll and benefits, severance, and onboarding of new outsourced

IT team and expenses related to the proposed business combination.

Depreciation and amortization

expenses decreased by $135,754 or (27.5%) to $357,628 for the three months ended June 30, 2025 compared to $493,382 for the three months

ended June 30, 2024.

Capitalized software costs have decreased, in which the ongoing amortization of our faidr and podcasting Apps has

also decreased.

expenses decreased by $138,014 or (27.8%) to $357,946 for the three months ended September 30, 2025 compared to $495,960 for the three

months ended September 30, 2024.

Capitalized software costs have decreased, in which the ongoing amortization of our faidr App has also

Other expense, net

Total other expenses

decreased by $647,590 or (99.8%) to $1,445 for the three months ended June 30, 2025 compared to $649,035 for the three months ended June

30, 2024, which was entirely due to the repayment of notes payable to related party in April 2024.

Comparison of the Six Months Ended June

30, 2025 and 2024

The following table summarizes our results of operations:

Six Months Ended

June 30, 2025

June 30, 2024

remained relatively flat and incrementally decreased by $385 or (24.4%) to $1,193 for the three months ended September 30, 2025 compared

to $1,578 for the three months ended September 30, 2024.

Comparison of the Nine Months Ended

September 30, 2025 and 2024

The following table summarizes our results of

Nine Months Ended

September 30, 2025

September 30, 2024

Operating expenses:

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General and administrative

Restructuring

Depreciation and amortization

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Provision for income taxes

$ (3,321,218 )

$ (4,510,753 )

Total revenues for the six

months ended June 30, 2025 and 2024 were $0 as we continue to develop and enhance our faidr and podcasting Apps to establish new revenue

Total revenues for the

nine months ended September 30, 2025 and 2024 were $0 as we continue to develop and enhance our faidr App and build out our new Discovr

artist portal to establish new revenue streams.

Direct cost of services

Direct Cost of Services

increased by $15,736 or 16.0% to $114,136 for the six months ended June 30, 2025 compared to $98,400 for the six months ended June 30,

2024 due to increased music licensing costs.

increased by $16,072 or 10.5% to $169,388 for the nine months ended September 30, 2025 compared to $153,316 for the nine months ended

September 30, 2024 due to increased music licensing costs.

Sales and marketing

Sales and marketing expenses

increased by $57,335 or 15.8% to $420,598 for the six months ended June 30, 2025 compared to $363,263 for the six months ended June 30,

The increase in sales and marketing expenses was primarily attributed to increased marketing promotion costs.

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 $81,353 or 12.6% to $564,360 for the nine months ended September 30, 2025 compared to $645,713 for the nine months ended

September 30, 2024.

The decrease in sales and marketing expenses was primarily attributed to a decrease in marketing promotion costs.

We are focused on the proposed business combination and business restructuring efforts.

Research and development

expenses increased by $308,023 or 94.7% to $633,118 for the six months ended June 30, 2025 from $325,095 for the six months ended June

30, 2024 primarily due to an increase in research and development consulting fees incurred.

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 increased by $392,564 or 70.3% to $950,744 for the nine months ended September 30, 2025 from $558,180 for the nine months ended

September 30, 2024 primarily due to an increase in research and development consulting fees incurred and lower amount capitalized

as a result IT staff restructuring.

We continue to develop enhancements to our faidr App and will continue capitalize software costs to

the extent that such development qualifies for capitalization.

General and administrative

General and administrative expenses decreased

by $584,791 or (30.1%) to $1,360,333 for the six months ended June 30, 2025 compared to $1,945,124 for the six months ended June 30, 2024.

The decrease resulted primarily from a decrease in stock compensation expense and professional fees, such as, accounting and legal expenses

due to potential acquisition efforts that occurred during the six months ended June 30, 2024 and were not present in 2025.

by $767,290 or (27.1%) to $2,059,273 for the nine months ended September 30, 2025 compared to $2,826,563 for the nine months ended September

The decrease resulted primarily from a decrease in stock compensation expense and professional fees, such as, accounting and

legal expenses due to potential acquisition efforts that occurred during the nine months ended September 30, 2024 and were not present

Restructuring

Restructuring expenses increased by $806,432 or

100% for the nine months ended September 30, 2025 compared to $0 for the nine months ended September 30, 2024.

We implemented changes

to our IT department.

These one-time restructuring expenses relate to payroll and benefits, severance, and onboarding of new outsourced

IT team and expenses related to the proposed business combination.

Depreciation and amortization

expenses decreased by $187,093 or (19.1%) to $790,035 for the six months ended June 30, 2025 compared to $977,128 for the six months ended

June 30, 2024.

Capitalized software costs have decreased, in which the ongoing amortization of our faidr and podcasting Apps has also

expenses decreased by $325,107 or (22.1%) to $1,147,981 for the nine months ended September 30, 2025 compared to $1,473,088 for the nine

months ended September 30, 2024.

Capitalized software costs have decreased, in which the ongoing amortization of our faidr App has also

Other expense, net

Total other expenses

decreased by $798,745 or (99.6%) to $2,998 for the six months ended June 30, 2025 compared to $801,743 for the six months ended June 30,

2024, which was entirely due to the repayment of notes payable to related party in April 2024.

Total other expenses decreased by $799,130 or (99.5%) to $4,191 for

the nine months ended September 30, 2025 compared to $803,321 for the nine months ended September 30, 2024, which was due to the change

in fair value of warrants issued in connection with the repayment of notes payable to related party in April 2024.

Liquidity and capital

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

As of September

30, 2025, we had cash and cash equivalents of $2,727,166.

We have working capital in the amount of approximately $0.6 million as of June

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.

We secured $1.5 million of financing during the six months ended June 30, 2025, and an additional

$1.9 million subsequent to June 30, 2025, which will only be sufficient to fund our current operating plans into the fourth quarter of

We have working capital of approximately $2.2 million as of September 30, 2025.

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.

We secured $5.1 million of financing during the nine months ended September 30, 2025, and an additional

$2.1 million subsequent to September 30, 2025, which will only be sufficient to fund our current operating plans into the third quarter

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

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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.

Equity Line Common Stock

Purchase Agreement

On November 25, 2024, we

entered into a new equity line Common Stock Purchase Agreement and a related registration rights agreement with White Lion.

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.

Equity Line Common

Stock Purchase Agreement

On November 25, 2024,

we entered into a new equity line Common Stock Purchase Agreement and a related registration rights agreement with White Lion.

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

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set forth in the Common Stock Purchase Agreement.

On July 30, 2025, we amended the equity line Common Stock Purchase Agreement from $10,000,000

to $50,000,000 in aggregate gross purchase price of newly issued shares of our common stock.

In April 2025, we issued

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we issued 970,000 shares of Common stock under the Equity Line Common Stock Purchase Agreement for total proceeds of $3.6 million.

At-the-Market Sales Agreement

During the six months ended

June 30, 2025, we issued 78,901 shares for aggregate proceeds of approximately $0.7 million pursuant to an At-the-Market Issuance

Sales Agreement (the “Sales Agreement”) with Ascendiant Capital Markets, LLC, as sales agent (the “Agent”).

At-the-Market Sales

During the nine months

ended September 30, 2025, we issued 78,901 shares for aggregate proceeds of approximately $0.7 million pursuant to an At-the-Market

Issuance Sales Agreement (the “Sales Agreement”) with Ascendiant Capital Markets, LLC, as sales agent (the “Agent”).

Under the Sales Agreement,

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the market offering” (the “ATM Offering”).

Series C Preferred Stock

and Warrants Financing

On June 30, 2025, we entered into a Securities Purchase

Agreement with accredited investors for a convertible preferred stock and warrants financing.

We received $750,000 of gross proceeds in

connection with the closing of this financing.

At the closing, we issued 750 shares of Series C convertible

preferred stock (“Series C Preferred Stock”) at a purchase price of $1,000 per share of Series C Preferred Stock.

C Preferred Stock is convertible into Common Stock at an initial conversion price (“Series C Conversion Price”) of $4.77 per

share of Common Stock.

We also issued warrants exercisable for 314,466 shares of Common Stock with a five year term and an initial exercise

price of $4.77 per share.

The proceeds of this financing, together with other

available cash resources, will be used for general corporate purposes.

Subsequent to September 30, 2025, and as of the date of this filing, we have

sold 928,860 shares under the Sales Agreement for proceeds of $2.1 million and currently have approximately $0.9 million of unsold availability

under the ATM facility.

Series C Preferred

Stock and Warrants Financing

On June 30, 2025, we entered into a Securities

Purchase Agreement with accredited investors for a convertible preferred stock and warrants financing.

We received $750,000 of gross proceeds

in connection with the closing of this financing.

At the closing, we issued 750 shares of Series

C convertible preferred stock (“Series C Preferred Stock”) at a purchase price of $1,000 per share of Series C Preferred Stock.

The Series C Preferred Stock is convertible into Common Stock at an initial conversion price (“Series C Conversion Price”)

of $4.77 per share of Common Stock.

We also issued warrants exercisable for 314,466 shares of Common Stock with a five year term and an

initial exercise price of $4.77 per share, which was subsequently adjusted to $2.2165.

The proceeds of this financing, together with

other available cash resources, will be used for general corporate purposes.

Cash Flow Analysis

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The following table summarizes

the statements of cash flows for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

the statements of cash flows for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

Net cash provided by (used in):

Operating activities

$ (2,508,649 )

$ (2,633,821 )

Investing activities

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Change in cash

$ (1,638,563 )

Operating activities

Cash used in operating

activities for the six months ended June 30, 2025 was ($2,508,649), primarily resulting from our net loss of ($3,321,218) and change in

working capital of $(90,723) primarily related to a decrease in accounts payable and accrued liabilities, offset by non-cash charges of

activities for the nine months ended September 30, 2025 was ($4,335,812), primarily resulting from our net loss of ($5,702,369), change

in working capital of $5,368 primarily related to an increase in accounts payable and accrued liabilities, and non-cash charges of $1,361,189

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 six months ended June 30, 2024 was ($2,633,821), primarily resulting from our net loss of ($4,510,753) and change in working capital

of $45,275, offset by non-cash charges of $1,922,207 related to depreciation and amortization, share based compensation expense, and the

change in fair value of warrants.

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 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 nine months ended September 30, 2024 was ($3,803,324), primarily resulting from our net loss of ($6,460,181) and change

in working capital of $112,262, offset by non-cash charges of $2,544,594 related to depreciation and amortization, share based compensation

expense, and the change in fair value of warrants.

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 six

months ended June 30, 2025 was $(490,650), consisting of capitalization of software development expenses and patent expenses.

Cash flows used in investing activities for the six

months ended June 30, 2024 were ($537,120), consisting of the capitalization of software development expenses and purchase of computer

Cash flows used in investing activities for the

nine months ended September 30, 2025 was $(534,012), consisting of capitalization of software development expenses and patent expenses.

Cash used in investing activities for the nine

months ended September 30, 2024 was ($799,535), consisting of the capitalization of software development expenses and purchase of computer

Financing activities

Cash flows generated

in financing activities for the six months ended June 30, 2025 was $1,360,736 and primarily related to cash proceeds from the issuance

in financing activities for the nine months ended September 30, 2025 was $4,890,671 and primarily related to cash proceeds from the issuance

of common shares of $4,368,296 and cash proceeds (net of issuance costs) from the issuance of Series C preferred stock of $700,000, partially

offset by offering costs of $178,192.

Cash flows generated in financing

activities for the six months ended June 30, 2024 were $4,248,590, which consisted of cash proceeds from the issuance of common shares

Cash provided by financing

activities for the nine months ended September 30, 2024 was $7,572,130, which consisted of cash proceeds from the issuance of common shares

of $8,176,048 and cash proceeds from the issuance of preferred shares of $2,238,575.

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incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $95,262,663

and $89,428,436 as of June 30, 2025 and December 31, 2024, respectively.

As of June 30, 2025 and December 31, 2024, we had cash and cash

equivalents of $1,067,756 and $2,706,319, respectively.

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

We secured $ 1.5 million of financing during the six months ended June 30, 2025, and an additional

$1.9 million subsequent to June 30, 2025, which will only be sufficient to fund our current operating plans into the fourth quarter of

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

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.

and $89,428,436 as of September 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025 and December 31, 2024, we had cash

and cash equivalents of $2,727,166 and $2,706,319, respectively.

Our cash is comprised primarily of demand deposit accounts and money

market funds.

We secured $ 5.1 million of financing

during the nine months ended September 30, 2025, and an additional $2.1 million subsequent to September 30, 2025, which will only be sufficient

to fund our current operating plans into the third quarter of 2026.

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,

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

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

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

Critical Accounting

Our financial statements

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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

Software Development

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.

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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.

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.

The 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.

The expected volatility was determined

considering comparable companies historical stock prices as a peer group for the fiscal year the grant occurred and prior fiscal years

for a period equal to the expected life of the option.

The risk-free interest rate was the rate available with a term equal to the expected

life of the option.

The 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.

The expected volatility was

determined considering comparable companies historical stock prices as a peer group for the fiscal year the grant occurred and prior fiscal

years for a period equal to the expected life of the option.

The risk-free interest rate was the rate available 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.

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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