What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-14 compared with 2026-05-15 · 413 added, 343 removed, 269 unchanged (74% 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, 2025, which was filed with the SEC on March 6, 2026.

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, 2025, 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, 2025, 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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its faidr app, an industry-first audio platform, which utilizes proprietary AI technology to personalize and customize both radio and

podcast listening experiences.

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.

podcast listening experiences and Discovr Radio, a web-based portal that allows artists and record labels to promote songs on radio streams,

through an integration with the free faidr app.

faidr historically allowed

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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

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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.

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 with its advanced

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

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

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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.

The Company initially launched

faidr with a B2C subscription model in February of 2022 and is transitioning to a B2B subscription model.

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.

The Company initially

launched faidr with a B2C subscription model in February of 2022 and fully transitioned to a B2B subscription model in Q1 of 2026 after

announcing its intentions to transition in August of 2025.

The Company’s new

B2B business represents a strategic shift to AI driven music discovery.

Auddia targets artists, labels, distributors, and managers 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 are no longer required to enjoy faidr’s ad-free and content

personalization listening experience.

New music platforms like

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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 and

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

platform delivers 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 Discovr Radio platform

consists of a new AI Placement Engine and Artist Portal.

The AI Placement Engine puts 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 and fans.

Portal gives 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 allows artists, managers

and labels leverage analytics to support their own pitches for editorial placements, terrestrial radio play, and many other opportunities

within the music industry.

Auddia evolved its business

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

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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 that was released on January 20, 2026.

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

The faidr mobile App

is available today through the iOS and Android App stores.The Discovr Radio platform was released on January 20, 2026, and fully launched

with self-serve sign up and two tiers of monthly subscriptions in June of 2026.

We have funded our operations

with proceeds from the February 2021 IPO, Series A warrants exercised in July 2021 and common share issuance during June of 2023.

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

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

B and Series C issuances.

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 and issued preferred stock in our Series B and Series

Since our inception, we have incurred significant operating losses.

As of March 31, 2026, we had an accumulated

deficit of $99,595,218.

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:

Launch Discovr Radio to artists and labels and market our faidr App to consumers;

In April 2026, we raised approximately $12.0 million

before offering expenses of around $1.2 million.

As of June 30, 2026, we had an accumulated deficit of $102,570,485.

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:

Scale and grow Discovr Radio with artists and labels and market our faidr App to consumers;

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

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

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

faidr and Discovr Radio 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 or c) leveraging all social media outlets;

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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.

of March 31, 2026, we had cash and cash equivalents of $1,413,387.

Through the date of this

report, we have secured approximately $12.9 million in additional financing in 2026.

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

with a demonstrated market fit.

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, 2026, we had cash and cash

equivalents of $9,558,190.

During 2026 through June 30, 2026, we have secured approximately $12.9 million in additional financing in

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

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.

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 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.

On February 17, 2026, Auddia, acting upon the recommendation

of its special committee of independent directors, entered into a definitive merger agreement for a business combination between Auddia

and Thramann Holdings.

Upon closing of the proposed transaction, the Company

would be renamed McCarthy Finney and would trade under its new MCFN ticker symbol.

Auddia would become a wholly owned subsidiary of McCarthy

Finney, and each of the three Thramann Holdings entities would also be wholly owned by McCarthy Finney.

Jeff Thramann would remain as

CEO of McCarthy Finney and John Mahoney would remain as CFO.

Auddia’s current board members are expected to continue as members

of the board of the combined company.

Auddia shareholders at the time of closing are expected

to own a 20% economic interest of McCarthy Finney, with an 80% economic interest of the combined company expected to be owned at closing

by Jeff Thramann.

Under certain circumstances, these ownership percentages may be adjusted upward or downward based on the level of Auddia’s

cash at closing.

On February 17, 2026, Auddia, acting upon the

recommendation of its special committee of independent directors, entered into a definitive merger agreement for a business combination

between Auddia and Thramann Holdings.

Upon closing of the proposed transaction, the

Company would be renamed McCarthy Finney and would trade under its new MCFN ticker symbol.

Auddia would become a wholly owned subsidiary

of McCarthy Finney, and each of the three Thramann Holdings entities would also be wholly owned by McCarthy Finney.

Jeff Thramann would

remain as CEO of McCarthy Finney and John Mahoney would remain as CFO.

Auddia’s current board members are expected to continue as

members of the board of the combined company.

Auddia shareholders at the time of closing are

expected to own a 20% economic interest of McCarthy Finney, with an 80% economic interest of the combined company expected to be owned

at closing by Jeff Thramann.

Under certain circumstances, these ownership percentages may be adjusted upward or downward based on the

level of Auddia’s cash at closing.

The consideration to be paid to Thramann Holdings

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principal amount of McCarthy Finney notes with a two year maturity date.

The closing of the merger will be conditioned on Auddia

having at least $12 million cash on hand at closing in order to provide cash runway to fund McCarthy Finney to key future business milestones.

The closing of the merger will be conditioned

on Auddia having at least $12 million cash on hand at closing in order to provide cash runway to fund McCarthy Finney to key future business

There can be no assurances as to Auddia’s level of cash at closing.

The transaction has been unanimously approved by the

board of directors of both companies.

In connection with the approval of the merger agreement, Houlihan Capital provided a fairness opinion

to Auddia’s special committee and board of directors.

The proposed transaction is expected to close in the

second quarter of 2026, subject to customary closing conditions, including approvals by the Auddia stockholders, the effectiveness of

the S-4 registration statement to be filed with the SEC to register the shares of McCarthy Finney stock to be issued in connection with

the merger, and the continued listing of the combined company’s common stock on Nasdaq.

The proposed business combination is subject to a

number of known and unknown risk and uncertainties.

There can be no assurances that that such business combination will be approved by

stockholders or will ultimately be consummated.

The transaction has been unanimously approved

by the board of directors of both companies.

In connection with the approval of the merger agreement, Houlihan Capital provided a fairness

opinion to Auddia’s special committee and board of directors.

transaction is expected to close in the third quarter of 2026, subject to customary closing conditions, including approvals by

the Auddia stockholders, the effectiveness of the S-4 registration statement to be filed with the SEC to register the shares of McCarthy

Finney stock to be issued in connection with the merger, and the continued listing of the combined company’s common stock on Nasdaq.

The proposed business combination is subject to

a number of known and unknown risk and uncertainties.

There can be no assurances that that such business combination will be approved

by stockholders or will ultimately be consummated.

For more information about the business combination

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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 March 28, 2025, the Company

effectuated a 1-for-17 reverse stock split.

On March 31, 2026, the Company

effectuated a 1-for-7.7 reverse stock split.

The reverse stock splits

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

On March 28, 2025, the

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

On March 31, 2026, the

Company effectuated a 1-for-7.7 reverse stock split.

The reverse stock

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

No fractional shares were issued and any fractional

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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 2026, 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

Revenue consists of subscription fees paid by subscribers of our Discovr

Radio platform, recognized ratably over the applicable subscription period.

We expect this revenue stream to fluctuate based on subscriber

growth, retention, and pricing changes.

Operating expenses

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 (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 subscriptions.

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 subscriptions.

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

faidr and develop the Discovr Radio platform.

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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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 March 31, 2026,

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 March

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.

During the three and

six months ended June 30, 2026, we incurred audit, accounting and legal costs in connection with the proposed business combination.

Other income and

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 March

31, 2026 and 2025

The following table summarizes our results of operations:

Comparison of the Three Months Ended

June 30, 2026 and 2025

The following table summarizes our results of

Three Months Ended

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

Operating expenses:

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Loss from operations

Other income (expense):

Other expense:

Interest income (expense)

Total other income (expense)

Total other expense

Loss before Income taxes

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$ (1,568,653 )

Total revenues for the three

months ended March 31, 2026 and 2025 were $0 as we continue to develop and enhance our faidr App and build out our Discovr artist portal

to establish new revenue streams.

Total revenues for the

three months ended June 30, 2026 and 2025 were $7,584 and $0.

The increase was primarily related to a successful Discovr Radio platform

Sales and marketing

Sales and marketing expenses

increased by $215,005 or 91.3% to $450,446 for the three months ended March 31, 2026 compared to $235,441 for the three months ended

March 31, 2025.

The increase in sales and marketing expenses was primarily attributed to increase in marketing and promotional activities

and trade show expenses.

increased by $271,808 or 147% to $456,965 for the three months ended June 30, 2026 compared to $185,157 for the three months ended June

The increase in sales and marketing expenses was primarily attributed to increase in marketing and promotional activities and

trade show expenses.

Research and development

expenses decreased by $111,719 or 28.2% to $284,984 for the three months ended March 31, 2026 from $396,703 for the three months ended

March 31, 2025 primarily due to an decrease in research and development consulting fees incurred related to the launch of Discovr Radio

expenses increased by $169,536 or 72% to $405,951 for the three months ended June 30, 2026 from $236,415 for the three months ended June

30, 2025 primarily due to an increase in research and development related consulting fees to launch Discovr Radio Platform.

General and administrative

General and administrative expenses increased

by $158,183 or 25.1% to $789,075 for the three months ended March 31, 2026 compared to $630,891 for the three months ended March 31, 2025.

The increase was due to an increase related to public relations professional fees.

by $679,815 or 93% to $1,409,257 for the three months ended June 30, 2026 compared to $729,442 for the three months ended June 30, 2025.

The increase was due to bonuses and public relations professional fees.

Restructuring

Restructuring expenses increased by $432,041 or

for the three months ended March 31, 2026 compared to $0 for the three months ended March 31, 2025.

100% for the three months ended June 30, 2026 compared to $0 for the three months ended June 30, 2025.

The increase is due to audit and

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Depreciation and amortization

expenses decreased by $196,311 or (45.4%) to $236,096 for the three months ended March 31, 2026 compared to $432,407 for the three months

ended March 31, 2025.

expenses decreased by $96,227 or (27%) to $261,401 for the three months ended June 30, 2026 compared to $357,628 for the three months

ended June 30, 2025.

The decrease is due to fully amortized capitalized cost and lower capitalized software costs.

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Total other income (expenses)

increased by $8,453 or 545% to $6,901 for the three months ended March 31, 2026 compared to ($1,552) for the three months ended March

increased by $50,157 or 3,471% to $48,712 for the three months ended June 30, 2026 compared to ($1,445) for the three months ended June

30, 2025 primarily due to increase in interest income on return on funds in money market account.

Results of operations

Comparison of the Six Months Ended June

30, 2026 and 2025

The following table summarizes our results of

Six Months Ended

June 30, 2026

June 30, 2025

Operating expenses:

Direct cost of services

Sales and marketing

Research and development

General and administrative

Restructuring

Depreciation and amortization

Total operating expenses

Loss from operations

Other expense:

Interest income (expense)

Total other expense

Loss before Income taxes

Provision for Income taxes

$ (5,256,819 )

$ (3,321,218 )

Total revenues for the

six months ended June 30, 2026 and 2025 were $7,584 and $0.

The increase was primarily related to a successful Discovr Radio platform

pilot launch.

Sales and marketing

Sales and marketing expenses

increased by $486,813 or 116% to $907,411 for the six months ended June 30, 2026 compared to $420,598 for the six months ended June 30,

The increase in sales and marketing expenses was primarily attributed to increase in marketing and promotional activities and trade

show expenses for the launch of Discovr Radio.

Research and development

expenses increased by $57,817 or 9% to $690,935 for the six months ended June 30, 2026 from $633,118 for the six months ended June 30,

2025 primarily due to an increase in research and development related consulting fees to launch Discovr Radio Platform.

General and administrative

General and administrative expenses increased

by $837,999 or 62% to $2,198,332 for the six months ended June 30, 2026 compared to $1,360,333 for the six months ended June 30, 2025.

The increase was due to bonuses and corporate public market consulting.

Restructuring

Restructuring expenses increased by $904,730 or

100% for the six months ended June 30, 2026 compared to $0 for the six months ended June 30, 2025.

increase is due to audit and legal expenses related to reverse merger.

Depreciation and amortization

expenses decreased by $292,538 or (37%) to $497,497 for the six months ended June 30, 2026 compared to $790,035 for the six months ended

June 30, 2025.

The decrease is due to fully amortized capitalized cost and lower capitalized software costs.

Other income (expense),

Total other income (expenses)

increased by $58,611 or 1,955% to $55,613 for the six months ended June 30, 2026 compared to ($2,998) for the six months ended June 30,

2025 primarily due to increase in interest income on return on funds in money market account.

Since our inception in

until the corporate conversion in February 2021, we were organized as a Colorado limited liability company for federal and state income

tax purposes and treated as a partnership for U.S.

2012, until the corporate conversion in February 2021, we were organized as a Colorado limited liability company for federal and state

income tax purposes and treated as a partnership for U.S.

income tax purposes.

As such, we were not viewed as a taxpaying entity in any jurisdiction

and do not require a provision for income taxes.

Each member of our company was responsible for the tax liability, if any, related to

its proportionate share of our taxable income.

As such, we were not viewed as a taxpaying entity in any

jurisdiction and do not require a provision for income taxes.

Each member of our company was responsible for the tax liability, if any,

related to its proportionate share of our taxable income.

Effective on February

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Our existing cash was

$1,413,387 at March 31, 2026.

We secured approximately $12.9 million in additional funding in 2026 through May 12,

20 26, which will only be sufficient to fund our current operating plans into the first quarter of 2027.

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.

$9,558,190 at June 30, 2026.

We secured approximately $12.9 million in additional funding in 2026 through the date of this report, which

will only be sufficient to fund our current operating plans into the second quarter of 2027.

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.

As a result of the Company’s

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30, 2026, we had cash and cash equivalents of $9,558,190.

We have working capital of approximately $858,095 as of March 31, 2026.

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 $0.9 million of financing during the three months ended March 31, 2026, and an additional $12.0 million subsequent

to March 31, 2026, which will only be sufficient to fund our current operating plans into the first quarter of 2027.

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.

We have working capital of approximately $8,831,451 as of June 30, 2026.

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 $12.9 million of financing during the six months ended June 30, 2026 which will only be sufficient

to fund our current operating plans into the second quarter of 2027.

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.

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,

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.

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

to $50,000,000 and extended the commitment to December 31, 2027.

the year ended December 31, 2025, the Company issued 129,221 shares of Common stock under the Equity Line Common Stock Purchase

Agreement for total proceeds of $3.7 million.

At-the-Market Sales Agreement

We have entered into an

At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with Ascendiant Capital Markets, LLC, as sales agent (the

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.

Pursuant to the Common Stock Purchase

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

On July 30, 2025, we amended the equity line Common Stock Purchase Agreement from $10,000,000 to $50,000,000

and extended the commitment to December 31, 2027.

During the year ended December 31, 2025, the

Company issued 129,221 shares of Common stock under the Equity Line Common Stock Purchase Agreement for total proceeds of

$3.7 million.

At-the-Market Sales

The Company has entered

into an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with Ascendiant Capital Markets, LLC, as sales agent

(the “Agent”).

Under the Sales Agreement, the Company may sell shares of its common stock having an aggregate offering price

of up to $10,000,000 from time to time, through an “at the market offering” (the “ATM Offering”).

aggregate market value of shares that the Company can sell under the Sales Agreement will be subject to the limitations of General

Instruction I.B.6 of Form S-3, to the extent required under such instruction.

During the three months

ended March 31, 2026, the Company sold 98,043 shares under the Sales Agreement for proceeds of $0.9 million and currently has

$0.0 million of unsold availability under the ATM facility.

During the year ended December

31, 2025, the Company issued 130,879 shares for aggregate proceeds of approximately $2.8 under the ATM facility.

$2.3 Million Convertible

Series B Preferred Stock and Warrants Financing

On April 23, 2024, the Company

entered into a securities purchase agreement with accredited investors for a convertible preferred stock and warrants financing.

Company received $2,314,000 of gross proceeds in connection with the closing of this financing.

the closing, the Company issued 2,314 shares of Series B convertible preferred stock (“Series

B Preferred Stock”) at a purchase price of $1,000 per share of Series B Preferred Stock.

The Series B Preferred Stock is convertible into Common Stock at an initial conversion price

(“Conversion Price”) of $242.32 per share of Common Stock.

The Company also issued

warrants (“Warrants”) exercisable for 9,552 shares of Common Stock with a five-year

term and an initial exercise price of $242.32 per share, which has been subsequently adjusted

The proceeds of this financing, together with other available cash resources, were

used to repay outstanding debt and for general corporate purposes.

Holders of the Series B

Preferred Stock will be entitled to dividends in the amount of 10% per annum, payable quarterly.

The aggregate

market value of shares that the Company can sell under the Sales Agreement will be subject to the limitations of General Instruction I.B.6

of Form S-3, to the extent required under such instruction.

During the three and

six months ended June 30, 2026, the Company sold 0 and 98,043 shares, respectively under the Sales Agreement for proceeds of $0.9 million

and currently has $0.0 million of unsold availability under the ATM facility.

During the year ended

December 31, 2025, the Company issued 130,879 shares for aggregate proceeds of approximately $2.8 under the ATM facility.

Million Convertible Series B Preferred Stock and Warrants Financing

On April 23, 2024, the

Company entered into a securities purchase agreement with accredited investors for a convertible preferred stock and warrants financing.

The Company received $2,314,000 of gross proceeds in connection with the closing of this financing.

At the closing, the Company

issued 2,314 shares of Series B convertible preferred stock (“Series B Preferred Stock”) at a purchase price of $1,000 per

share of Series B Preferred Stock.

The Series B Preferred Stock is convertible into Common Stock at an initial conversion price (“Conversion

Price”) of $242.32 per share of Common Stock.

The Company also issued warrants (“Warrants”) exercisable for 9,552 shares

of Common Stock with a five-year term and an initial exercise price of $242.32 per share, which has been subsequently adjusted to $2.36.

The proceeds of this financing, together with other available cash resources, were used to repay outstanding debt and for general corporate

Holders of the Series

B Preferred Stock will be entitled to dividends in the amount of 10% per annum, payable quarterly.

The Company has the option to pay dividends

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the dividends, in which case the accrued dividend amount shall be added to the stated value of each share of Series B Preferred Stock.

As of March 31, 2026, the Company has elected to capitalize all dividends declared.

On February 19, 2025,

140 shares of Series B Preferred stock and capitalized dividends were converted to 4,326 shares of Common Stock.

In April 2025, 447 shares of Series B Preferred stock

and capitalized dividends were converted to 11,069 shares of Common stock.

In April 2025, 447 shares of Series B Preferred

stock and capitalized dividends were converted to 11,069 shares of Common stock.

On June 26, 2025, 192 shares of Series B Preferred

stock and capitalized dividends were converted to 4,484 shares of Common Stock.

August 5, 2025, the Company entered into a series of exchange agreements (the “Exchange

Agreements”) with certain accredited investors to exchange 569 outstanding shares of

the Company’s Series B preferred stock (including accrued dividends thereon) for 17,237

shares of common stock at an exchange price of $20.41 per common share.

The issuance of the

exchange common shares is intended to be exempt from registration pursuant to the exemptions

under Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”).

As of March 31, 2026, no Series B Preferred Stock remains outstanding.

On August 5, 2025, the Company entered into a

series of exchange agreements (the “Exchange Agreements”) with certain accredited investors to exchange 569 outstanding shares

of the Company’s Series B preferred stock (including accrued dividends thereon) for 17,237 shares of common stock at an exchange

price of $20.41 per common share.

The issuance of the exchange common shares is intended to be exempt from registration pursuant to the

exemptions under Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”).

As of June 30, 2026, no Series B Preferred Stock

remains outstanding.

$750,000 Series C Preferred Stock and Warrants

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

The Company received $750,000

of gross proceeds in connection with the closing of this financing.

At the closing, the Company 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

The Company received $750,000 of

gross proceeds in connection with the closing of this financing.

At the closing, the Company 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

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

of $36.73 per share of Common Stock.

The Company also issued warrants exercisable for 40,841 shares of Common Stock with a five year

term and an initial exercise price of $36.73 per share, which has been subsequently adjusted to $2.36.

Subsequent to March 31, 2026, on April 23, 2026,

the Company entered into an exchange agreement (the “Exchange Agreement”) with the accredited investors to exchange 750 outstanding

shares of the Company’s Series C preferred stock (including accrued dividends thereon) for 216,525 shares of common stock at an

exchange price of $3.91 per common share.

The Company also issued warrants exercisable for 40,841 shares of Common Stock with a five year term

and an initial exercise price of $36.73 per share, which has been subsequently adjusted to $2.36.

On April 23, 2026, the Company entered into an

exchange agreement (the “Exchange Agreement”) with the accredited investors to exchange 750 outstanding shares of the Company’s

Series C preferred stock plus capitalized dividends to date for 216,525 shares of common stock at an exchange price of $3.91 per common

No shares of Series C preferred stock remain outstanding.

As of April 24, 2026, no Series C Preferred Stock

remains outstanding.

The proceeds of this financing, together with other

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

As of June 30, 2026, no Series C Preferred

Stock remains outstanding.

The proceeds of this financing, together

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

April 2026 Registered Direct Offering

On April 27, 2026, the

Company closed a best-efforts registered direct offering (the "Offering") of 1,405,006 shares of common stock, together with,

in lieu of common stock for certain investors, 3,679,737 pre-funded warrants to purchase common stock (the "Pre-Funded Warrants"),

and accompanying common stock purchase warrants to purchase up to 5,084,743 shares of common stock (the "Common Warrants").

combined public offering price was $2.36 per share (or per Pre-Funded Warrant) and accompanying Common Warrant.

Gross proceeds were $11,999,993

(approximately $12.0 million), before deduction of a 7.0% cash fee payable to the placement agent and other offering expenses, together

totaling approximately $1.2 million.

Gross proceeds were allocated among the common stock, pre-funded warrants and common warrants on

a relative fair value basis.

The Pre-Funded Warrants

have an exercise price of $0.001 per share, which was pre-funded at closing, and no stated expiration date;

they remain exercisable until

exercised in full.

The Common Warrants have an exercise price of $2.36 per share and expire earlier of (i) five years from the initial

exercise date and (ii) the consummation of the Company's pending merger with Thramann Holdings, LLC (the "Merger").

All 3,679,737

Pre-Funded Warrants were exercised by April 30, 2026 for an aggregate exercise price of $3,680;

As of June 30, 2026, 1000 common warrants

were exercised at $2.36 with the proceeds of $2,360.

All 3,679,737 Pre-Funded

Warrants were exercised in full as of June 30, 2026.

Upon exercise, the Company received aggregate cash proceeds of $3,680 and reclassified

$5,812,540 from the Pre-Funded Warrants equity account to common stock and additional paid-in capital.

No Pre-Funded Warrants remain outstanding.

This exercise activity does not affect the fair value classification or measurement of the Common Warrant liability.

Cash Flow Analysis

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The following table summarizes

the statements of cash flows for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

the statements of cash flows for the six months ended June 30, 2026 and 2025:

For the Six Months Ended June 30,

Net cash provided by (used In):

6 unchanged sentences

$ (1,638,563 )

$ (1,016,406 )

Operating activities

Cash used in operating

activities for the three months ended March 31, 2026 was $2,275,114, primarily resulting from our net loss of ($2,281,553), change in

working capital of $252,435 primarily related to an increase in accounts payable and lease liability, and non-cash charges of $236,096

related to depreciation and amortization, $7,878 amortization of ROU and $14,897 in 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.

activities for the six months ended June 30, 2026 was $4,782,917, primarily resulting from our net loss of ($5,256,819), change in working

capital of $69,513 primarily related to a decrease in accounts payable and accrued liabilities, lease liability and prepaid assets, and

non-cash charges of $497,497 related to depreciation and amortization, $29,984 in share based compensation expense and $15,935 in amortization

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

three months ended March 31, 2026 was $307,517, consisting of capitalization of software development expenses and patent expenses.

six months ended June 30, 2026 was $561,911, consisting of capitalization of software development expenses and patent expenses.

Financing activities

Cash flows generated

in financing activities for the three months ended March 31, 2026 was $809,033 primarily related to cash proceeds from the issuance of

common shares partially offset by repayments to related party notes payable of $45,390 and offering costs of $37,500.

in financing activities for the six months ended June 30, 2026 was $11,716,032 primarily related to cash proceeds from the issuance of

offering of prefunded warrant, Common warrant and Common stock partially offset by repayments to notes payable of $60,520 and offering

costs of $1,117,723.

Funding Requirements

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incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $102,570,485

and $97,283,343 as of March 31, 2026 and December 31, 2025, respectively.

As of March 31, 2026 and December 31, 2025, we had cash and

cash equivalents of $1,413,387 and $3,186,985, respectively.

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

We secured $0.9 million of financing during the three months ended March 31, 2026, and an additional $12 million of financing subsequent

to March 31, 2026, which will only be sufficient to fund our current operating plans into the first quarter of 2027.

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.

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 $97,283,343 as of June 30, 2026 and December 31, 2025, respectively.

As of June 30, 2026 and December 31, 2025, we had cash and cash

equivalents of $9,558,190 and $3,186,985, respectively.

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

We secured $12.9 million of financing during the six months ended June 30, 2026 which will only be sufficient to fund our current operating

plans into the second quarter of 2027.

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

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,

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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