KUBIENT, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements generally relate to future events or our future financial or
operating performance and may include statements concerning, among other things,
our business strategy (including anticipated trends and developments in, and
management plans for, our business and the markets in which we operate),
financial results, the impact of COVID-19 on our business, operations, and the
markets and communities in which we, our clients, and partners operate, results
of operations, revenues, operating expenses, and capital expenditures, sales and
marketing initiatives and competition. In some cases, you can identify
forward-looking statements because they contain words such as "may," "might,"
"will," "should," "expects," "plans," "anticipates," "could," "intends,"
"target," "projects," "contemplates," "believes," "estimates," "predicts,"
"suggests," "potential" or "continue" or the negative of these words or other
similar terms or expressions that concern our expectations, strategy, plans or
intentions. These statements are not guarantees of future performance; they
reflect our current views with respect to future events and are based on
assumptions and are subject to known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements to be
materially different from expectations or results projected or implied by
forward-looking statements.

We discuss many of these risks in other filings we make from time to time with
the Securities and Exchange Commission (the "SEC"). Also, these forward-looking
statements represent our estimates and assumptions only as of the date of this
Quarterly Report on Form 10-Q, which are inherently subject to change and
involve risks and uncertainties. Unless required by federal securities laws, we
assume no obligation to update any of these forward-looking statements, or to
update the reasons actual results could differ materially from those
anticipated, to reflect circumstances or events that occur after the statements
are made. Given these uncertainties, investors should not place undue reliance
on these forward-looking statements.

Investors should read this Quarterly Report on Form 10-Q and the documents that
we reference in this report and have filed with the SEC, including our Annual
Report on Form 10-K, filed with the SEC on March 30, 2021, with the
understanding that our actual future results may be materially different from
what we expect. We qualify all of our forward-looking statements by these
cautionary statements. Unless the context requires otherwise, references to the
"Company," "Kubient," "we," "us" and "our" refer to Kubient, Inc., a Delaware
corporation and its wholly-owned subsidiary, Fidelity Media, LLC, a Delaware
limited liability company. For explanations of certain terms used in this
prospectus, please read "Glossary" beginning on page A-1.

Overview

Kubient, a Delaware corporation, was incorporated in May 2017 to solve some of
the most significant problems facing the global digital advertising industry.

Our experienced team of marketing and technology veterans has developed the
Audience Cloud, a modular, highly scalable, transparent, cloud-based software
platform for real-time trading of digital, programmatic advertising. Our
platform's open marketplace gives both advertisers (ad space buyers) and
publishers (ad space sellers) the ability to use machine learning in the most
critical parts of any programmatic advertising inventory auction, while
simultaneously and significantly reducing those advertisers and publishers'
exposure to fraud, even in a pre-bid environment.

By becoming a one stop shop for advertisers and publishers, providing them with
the technology to deliver meaningful messages to their target audience, all in
one place, on a single platform that is computationally efficient, transparent,
and as safely fraud-free as possible, we believe that our platform (and the
application of its machine learning algorithms) leads to increased publisher
revenue, lower advertiser cost, reduced latency and increased economic
transparency during the advertising auction process.

Furthermore, we believe that our technology allows advertisers to reach entire
audiences rather than buying single impressions from disparate sources. We call
this approach Audience-Based Marketing. Combining this approach with our
proprietary solutions for fraud prevention and the reduction of latency in
auctions, we are confident that we are poised to alter the status quo as the
next generation of the industry's advertising inventory auction infrastructure.

                                       19

  Table of Contents



Recent Developments

New Members of the Board of Directors

On June 30, 2021, the Company held its Annual Meeting of Stockholders, at which,
among other things, two new members were elected to the Company’s board of
directors: Jonathan “Jon” Bond and Lawrence “Larry” Harris.

Jon Bond brings over 35 years of experience within the advertising and marketing
space and is often considered to be one of the industry's most recognized
thought leaders and entrepreneurs. He has had significant success holding senior
level executive roles and starting companies from the ground up, such as
Kirshenbaum Bond Senecal & Partners, LLC.

Larry Harris currently serves as the Founder and CEO of Alpha Precision Media,
Inc., an adtech company that leverages Amazon's data and technology to build
brand value and turbocharge sales. Additionally, he is also the Managing Partner
of Glarris Consulting, LLC, a consulting firm which provides strategic advisory
services to companies, organizations and startups.

The Company's board of directors has determined that both Mr. Bond and Mr.
Harris are each an "independent director" under the listing standards of The
Nasdaq Stock Market, LLC's standards and are "non-employee directors" for
purposes of Rule 16b-3 under Section 16 of the Securities Exchange Act of 1934,
as amended. Neither Mr. Bond nor Mr. Harris has any family relationships with
any of the executive officers or directors of the Company, neither Mr. Bond nor
Mr. Harris are a party to any transaction with the Company that would require
disclosure under Item 404(a) of Regulation S-K, and there are no arrangements or
understandings between each of Mr. Bond or Mr. Harris and any other persons
pursuant to which they were elected as a director.

While the Company does not have a formal policy with respect to compensation
payable to its non-employee directors for service as directors, both Mr. Bond
and Mr. Harris will receive cash compensation of $10,500 per quarter prorated
for the amount of time they serve on the Board prior to the determination of the
Company's standard non-employee director compensation package for fiscal year
2021, which will include equity awards for each year of service.

New Chief Product Officer

On April 9, 2021, Leon Zemel was appointed as the Company's new Chief Product
Officer to fill the vacancy created by the resignation of the Company's previous
Chief Product Officer on March 31, 2021. Mr. Zemel has over 20 years' experience
in the area of data analytics, programmatic advertising, and digital strategy,
having worked at some of the most successful enterprises in the Company's
industry, including DoubleVerify, Inc. (NYSE:DV), MediaMath, Sharecare, Inc.
(NASDAQ:SHCR), and Rocket Fuel, Inc. (NASDAQ:FUEL). Mr. Zemel has also served as
a member of the adjunct faculty of Columbia University, lecturing on Applied
Analytics for the school's Master of Science program.

Asset Purchase Agreement



On June 15, 2021, pursuant to an asset purchase agreement dated June 4, 2021, we
closed on the acquisition of a customer list and other assets of Advisio
Solutions, LLC for consideration consisting of: (i) $1,050,000 paid in cash and
(ii) the issuance of an aggregate of 100,000 restricted shares of our common
stock.


New Vice Presidents of Performance Media



On June 4, 2021, Mike Gavigan and Mark St. Amour joined Kubient's sales team as
Vice Presidents of Performance Media. Messrs. Gavigan and St. Amour were
previously employed by Advisio Solutions, LLC and have connected consumer brands
with their digital target audiences for the past 20 years, executing campaigns
from top brands and agencies while using digital acquisition as a core growth
strategy for clients.

                                       20

  Table of Contents



COVID-19

In March 2020, the World Health Organization declared COVID-19, a novel strain
of coronavirus, a pandemic. During 2020 and continuing into 2021, the global
economy has been, and continues to be, affected by COVID-19. While we continue
to see signs of economic recovery as certain governments began to gradually ease
restrictions, provide economic stimulus and vaccine distribution accelerated,
the rate of recovery on a global basis has been affected by resurgence of the
virus or its variants in certain jurisdictions causing reinstatement of
restrictions in certain jurisdictions. Starting in 2020 and continuing into
2021, the Company has taken proactive measures to protect the health and safety
of our employees and customers by closing our offices, requiring employees to
work from home and suspending travel, in-person meetings and visits with our
customers. We continue to monitor the effectiveness of these measures in light
of the daily evolution of the COVID-19 including the spread of the Delta
variant, in order to ensure the health and safety of our employees remains our
top priority.  During the third quarter of 2021, with the easing of many
COVID-19 restrictions, we opened our corporate office on a flexible basis. We
developed a health-safety plan, designed to adhere to the applicable guidelines
of the CDC, state and local officials to protect the safety of our workers.
While we continue to monitor the impact of the Delta variant, our employees may
continue to work from home for the duration of 2021 and beyond.

We experienced improvement in our financial results and noticed an increase in
customers' advertising budgets beyond pre-pandemic levels in the latter half of
the fiscal year 2020 and through the first three quarters of 2021. The Company
observed a corresponding increase in its advertising impression Volumes during
the same periods, with such advertising impression Volumes exceeding
pre-pandemic levels. However, there can be no assurances that the Company's
advertising impression Volumes and profit margins will stay above pre-pandemic
levels for the remainder of fiscal 2021 and beyond if there is a new resurgence
of the virus or its variants in certain jurisdictions. More specifically, the
impact of the Delta variant cannot be predicted at this time, and could depend
on numerous factors, including vaccination rates among the population, the
effectiveness of COVID-19 vaccines against the Delta variant and the response by
governmental bodies and regulators. We continue to closely monitor the evolving
effects of the COVID-19 pandemic on our business and to implement plans to take
appropriate actions to adapt to changing circumstances arising from the
pandemic. While advertising impression Volumes increased beyond pre-pandemic
levels, the COVID-19 pandemic has, and we expect will continue to have, an
adverse effect on our revenues and earnings in 2021, we do expect a recovery
throughout the year. We expect to continue to make significant capital
investments in the business. However, we continue to monitor the effects of
COVID-19 and will adjust our future level of capital investments accordingly.

Furthermore, the COVID-19 pandemic could have a long-term impact on the
Company's customers through the end of 2021 and well into 2022, which would
reduce their demand for Company services and products. The extent to which
COVID-19 or any other health epidemic may impact the Company's results beyond
2021 will depend on future developments that could be outside the Company's
control, and which are highly uncertain and cannot be predicted, including new
information that may emerge concerning the severity of the overall economic
impact of the COVID-19 pandemic. Accordingly, COVID-19 could continue to have a
material adverse effect on the Company's business, results of operations,
financial condition and prospects during 2021 and beyond. The Company's
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

Components of Our Results of Operations

Net Revenues

We provide a service to our customers (the buy-side ad networks who work for
advertisers) by connecting advertisers and publishers. For this service, we earn
a percentage of the amount that is paid by the advertiser, who wants to run a
digital advertising campaign, which, in some cases, is reduced by the amount
paid to the publisher, who wants to sell its ad space to the advertiser.

In addition, during the first quarter of 2020, we allowed two clients to beta
test KAI, our fraud prevention technology powered by machine learning. Our
Supply Side Platform also provides KAI with hundreds of millions of rows of data
in real-time which improves accuracy, and provides our clients the ability to
prevent the purchase of non-human or fraudulent advertising traffic. Beginning
in the fourth quarter of 2020, we began providing potential KAI customers with a
free KAI audit, which provides our prospective customer with the intricate
details of types and quantity of ad-fraud occurring on their platforms as a
means of demonstrating KAI's product differentiation and its ability to prevent
ad fraud. As of September 30, 2021, 14 KAI audits of prospective customers have
been completed, 8 of which were performed during the three months ended
September 30, 2021.

                                       21

  Table of Contents



Sales and Marketing

Sales and marketing expenses consists of costs associated with the sales and
marketing our technology platform, including compensation expenses related to
our sales and marketing personnel (including salaries, commissions, bonuses,
stock-based compensation and taxes), professional fees and fees for independent
contractors.

Technology

Technology expenses consists of costs associated with the development and
operation of our technology platform, including compensation expenses related to
our technology personnel (including salaries, commissions, bonuses, stock-based
compensation and taxes), fees for independent contractors, computer hosting and
technology-related subscription costs, and amortization expense of our
intangible assets.

General and Administrative

General and administrative expenses consists primarily of compensation expenses
related to our executive, finance and administrative personnel (including
salaries, bonuses, stock-based compensation and taxes), professional fees, rent
expense, general and administrative related subscription costs fees for
independent contractors.

Results of Operations

Three Months Ended September 30, 2021 Compared With Three Months Ended
September 30, 2020

The following table presents the results of operations for the three months
ended September 30, 2021 and 2020:

                                                              For the Three Months Ended
                                                                    September 30,
                                                                2021             2020

Net Revenues                                                $     676,986    $     280,401

Operating Expenses:
Sales and marketing                                               715,820          145,755
Technology                                                        776,573          545,639
General and administrative                                      1,514,913        1,022,106
Total Operating Expenses                                        3,007,306        1,713,500
Loss From Operations                                          (2,330,320)      (1,433,099)

Other (Expense) Income:
Interest expense                                                  (2,098)        (392,714)
Interest expense - related parties                                      -  

(200,821)

Amortization of beneficial conversion feature                           -  

(1,984,322)

Gain on settlement of notes and other payables                          -  

139,333

Interest income                                                    21,805  

3,395

Gain on forgiveness of accounts payable - supplier                      -                -
Loss on extinguishment of convertible note payable                      -  
     (297,272)
Other income                                                            -            1,000
Total Other Income (Expense)                                       19,707      (2,731,401)
Net Loss                                                      (2,310,613)      (4,164,500)
Deemed dividend related to warrant down round adjustment                -  

(1,682,000)

Net Loss Attributable to Common Shareholders                $ (2,310,613)  
 $ (5,846,500)




                                       22

  Table of Contents



Net Revenues

For the three months ended September 30, 2021, net revenues increased by
$396,585, or 141%, to $676,986 from $280,401 for the three months ended
September 30, 2020. The increase in revenue as compared to the 2020 period is
primarily due to the increase in revenue from one new customer during the three
months ended September 30, 2021.

Sales and Marketing

For the three months ended September 30, 2021, sales and marketing expenses
increased by $570,065, or 391%, to $715,820 from $145,755 for the three months
ended September 30, 2020. The increase is primarily a result of the expansion of
our sales and marketing department which resulted in increases in salary expense
of approximately $206,000 arising from an increase in sales and marketing
personnel headcount, as well as increased stock-based compensation expense of
approximately $65,000, consulting fees of approximately $79,000, selling expense
of approximately $133,000 and public relations expenses of approximately
$65,000.

Technology

For the three months ended September 30, 2021, technology expenses increased by
$230,934, or 42%, to $776,573 from $545,639 for the three months ended September
30, 2020. The increase is primarily due to increases in salary expense of
approximately $46,000 arising from an increase in technology personnel
headcount, as well as increased stock-based compensation of approximately
$30,000, consulting expenses of approximately $14,000, amortization of software
of approximately $54,000 and cloud hosting costs of approximately $78,000.

General and Administrative

For the three months ended September 30, 2021, general and administrative
expenses increased by $492,807, or 48%, to $1,514,913 from $1,022,106 for the
nine months ended September 30, 2020. The increase is primarily due to increases
in salary expense of approximately $202,000 arising from an increase in general
and administrative headcount, as well as increased stock-based compensation of
approximately $201,000, approximately $131,000 of insurance expense,
approximately $93,000 of office related expenses and approximately $48,000
in
taxes.

Other Income (Expense)

For the three months ended September 30, 2021, we recognized other income of
approximately $20,000 as compared to other expense of approximately $2,731,000
recognized during the three months ended September 30, 2020. The net increase in
other income is primarily due to the absence of the amortization of beneficial
conversion feature of approximately $1,984,000 and interest expense of
approximately $594,000 recognized in the three months ended September 30, 2020.

                                       23

  Table of Contents


Nine Months Ended September 30, 2021 Compared With Nine Months Ended September
30, 2020

The following table presents the results of operations for the nine months ended
September 30, 2021 and 2020:


                                                              For the Nine Months Ended
                                                                    September 30,
                                                                2021             2020

Net Revenues                                                $   1,882,311    $   1,753,851

Operating Expenses:
Sales and marketing                                             1,977,150          404,712
Technology                                                      1,916,020        1,521,329
General and administrative                                      3,878,765        2,141,023
Total Operating Expenses                                        7,771,935        4,067,064
Loss From Operations                                          (5,889,624)      (2,313,213)

Other (Expense) Income:
Interest expense                                                  (5,308)      (1,122,113)
Interest expense - related parties                                      -  

(403,372)

Amortization of beneficial conversion feature                           -  

(1,984,322)

Gain on settlement of notes and other payables                          -  

139,333

Interest income                                                    84,469  

3,499

Gain on forgiveness of accounts payable - supplier                      -  

236,248

Loss on extinguishment of convertible note payable                      -  
     (297,272)
Other income                                                          233           13,294
Total Other Income (Expense)                                       79,394      (3,414,705)
Net Loss                                                      (5,810,230)      (5,727,918)
Deemed dividend related to warrant down round adjustment                -  

(1,682,000)

Net Loss Attributable to Common Shareholders                $ (5,810,230)  
 $ (7,409,918)




Net Revenues

For the nine months ended September 30, 2021, net revenues increased by
$128,460, or 7%, to $1,882,311 from $1,753,851 for the nine months ended
September 30, 2020. The increase in revenue as compared to the 2020 period is
primarily due to increased revenue in the 2021 period of approximately $1.8
million generated from one new customer partially offset by the recognition of
approximately $1.3 million of revenue during the 2020 period in connection
with
the beta test of KAI.

Sales and Marketing
For the nine months ended September 30, 2021, sales and marketing expenses
increased by $1,572,438, or 389%, to $1,977,150 from $404,712 for the nine
months ended September 30, 2020. The increase is primarily a result of the
expansion of our sales and marketing department which resulted in increases in
salary expense of approximately $512,000 arising from an increase in sales and
marketing personnel headcount, as well as increased stock-based compensation of
approximately $274,000, consulting fees of approximately $153,000, selling
expense of approximately $354,000 and public relations costs of approximately
$197,000.

                                       24

  Table of Contents



Technology
For the nine months ended September 30, 2021, technology expenses increased by
$394,691, or 26%, to $1,916,020 from $1,521,329 for the nine months ended
September 30, 2020. The increase is primarily due to increases in salary expense
of approximately $131,000 arising from an increase in technology personnel
headcount, as well as increased stock-based compensation of approximately
$25,000, consulting expenses of approximately $39,000, amortization of software
of approximately $67,000 and cloud hosting costs of approximately $137,000.

General and Administrative

For the nine months ended September 30, 2021, general and administrative
expenses increased by $1,737,742, or 81%, to $3,878,765 from $2,141,023 for the
nine months ended September 30, 2020. The increase is primarily due to increases
in salary expense of approximately $708,000 arising from an increase in general
and administrative headcount, as well as increased stock-based compensation of
approximately $147,000, approximately $310,000 of insurance expense,
approximately $145,000 in taxes, and approximately $430,000 in professional
fees, partially offset by approximately $32,000 of office related expenses.

Other Income (Expense)

For the nine months ended September 30, 2021, we recognized other income of
approximately $79,000 as compared to other expense of approximately $3,415,000
recognized during the nine months ended September 30, 2020. The net increase in
other income is primarily due to the amortization of beneficial conversion
feature of approximately $1,984,000 and interest expense of approximately
$1,525,000 recognized in the nine months ended September 30, 2020.

Non-GAAP Measures

Adjusted EBITDA

The Company defines EBITDA as net income (loss) before interest, taxes and
depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA,
further adjusted to eliminate the impact of certain non-recurring items and
other items that we do not consider in our evaluation of our ongoing operating
performance from period to period. These items will include stock-based
compensation, restructuring and severance costs, transaction costs, acquisition
costs, certain other non-recurring charges and gains that the Company does not
believe reflects the underlying business performance.

                                       25

  Table of Contents


For the three and nine months ended September 30, 2021 and 2020, EBITDA and
Adjusted EBITDA consisted of the following:

                                                                    For the Three Months Ended        For the Nine Months Ended
                                                                          September 30,                     September 30,
                                                                      2021             2020             2021             2020
Net Loss Attributable to Common Shareholders                      $ 

(2,310,613) $ (5,846,500) $ (5,810,230) $ (7,409,918)
Interest expense

                                                          2,098          392,714            5,308        1,122,113
Interest expense - related parties                                            -          200,821                -          403,372
Interest income                                                        

(21,805) (3,395) (84,469) (3,499)
Amortization of beneficial conversion feature

  -        1,984,322                -        1,984,322
Depreciation and amortization                                           144,775           88,210          304,068          227,355
EBITDA                                                              (2,185,545)      (3,183,828)      (5,585,323)      (3,676,255)

Adjustments:
Deemed dividend related to warrant down round adjustment                      -        1,682,000                -        1,682,000
Stock-based compensation expense                                        263,247          (5,465)          523,999           78,477
Adjusted EBITDA                                                   $ (1,922,298)    $ (1,507,293)    $ (5,061,324)    $ (1,915,778)

Adjusted Loss Per Share                                           $      (0.13)    $      (0.27)    $      (0.37)    $      (0.45)

Weighted Average Common Shares Outstanding – Basic and Diluted 14,252,886 5,676,561 13,627,435 4,300,905

EBITDA and Adjusted EBITDA is a financial measure that is not calculated in
accordance with accounting principles generally accepted in the United States of
America ("U.S. GAAP"). Management believes that because Adjusted EBITDA excludes
(i) certain non-cash expenses (such as depreciation, amortization and
stock-based compensation) and (ii) expenses that are not reflective of the
Company's core operating results over time (such as stock-based compensation
expense), this measure provides investors with additional useful information to
measure the Company's financial performance, particularly with respect to
changes in performance from period to period. The Company's management uses
EBITDA and Adjusted EBITDA (i) as a measure of operating performance, (ii) for
planning and forecasting in future periods, and (iii) in communications with the
Company's board of directors concerning the Company's financial performance. The
Company's presentation of EBITDA and Adjusted EBITDA are not necessarily
comparable to other similarly titled captions of other companies due to
different methods of calculation and should not be used by investors as a
substitute or alternative to net income or any measure of financial performance
calculated and presented in accordance with U.S. GAAP. Instead, management
believes EBITDA and Adjusted EBITDA should be used to supplement the Company's
financial measures derived in accordance with U.S. GAAP to provide a more
complete understanding of the trends affecting the business.

Although Adjusted EBITDA is frequently used by investors and securities analysts
in their evaluations of companies, Adjusted EBITDA has limitations as an
analytical tool, and investors should not consider it in isolation or as a
substitute for, or more meaningful than, amounts determined in accordance with
U.S. GAAP. Some of the limitations to using non-GAAP measures as an analytical
tool are (i) they do not reflect the Company's interest income and expense, or
the requirements necessary to service interest or principal payments on the
Company's debt, (ii) they do not reflect future requirements for capital
expenditures or contractual commitments, and (iii) although depreciation and
amortization charges are non-cash charges, the assets being depreciated and
amortized will often have to be replaced in the future, and non-GAAP measures do
not reflect any cash requirements for such replacements.

Liquidity and Capital Resources

We measure our liquidity in a number of ways, including the following:

                    September,     December 31,
                       2021            2020

Cash               $ 28,746,456    $  24,782,128
Working capital    $ 27,293,660    $  23,570,158




                                       26

  Table of Contents



Availability of Additional Funds

As a result of its public offerings and the related note conversions, the
Company believes its current cash on hand is sufficient to meet its operating
and capital requirements for at least the next twelve months from the date these
financial statements are issued. Our operating needs include the planned costs
to operate our business, including amounts required to fund working capital and
capital expenditures. Our future capital requirements and the adequacy of our
available funds will depend on many factors, including our ability to
successfully commercialize our products and services, competing technological
and market developments, and the need to enter into collaborations with other
companies or acquire other companies or technologies to enhance or complement
our product and service offerings.

Nine Months Ended September 30, 2021 Compared With Nine Months Ended
September 30, 2020

Our sources and uses of cash were as follows:

Cash Flows From Operating Activities

We experienced negative cash flows from operating activities for the nine months
ended September 30, 2021 and 2020 in the amounts of $4,577,923 and $2,474,947,
respectively. The net cash used in operating activities for the nine months
ended September 30, 2021 was primarily a result of cash used to fund a net loss
of $5,810,230, adjusted for net non-cash expenses of $828,067, partially offset
by $408,579 of net cash provided by changes in the levels of operating assets
and liabilities. The net cash used in operating activities for the nine months
ended September 30, 2020 was primarily a result of cash used to fund a net loss
of $5,727,918, adjusted for net non-cash expenses of $3,488,774, and $235,803 of
net cash used in changes in the levels of operating assets and liabilities.

Cash Flows From Investing Activities

Net cash used in investing activities for the nine months ended September 30,
2021 and 2020 was $1,157,403 and $806,306, respectively, which was attributable
to purchases of intangible assets and property and equipment.

Cash Flows From Financing Activities

We experienced positive cash flows from financing activities for the nine months
ended September 30, 2021 and 2020 in the amounts of $9,699,654 and $11,658,302,
respectively. During the nine months ended September 30, 2021, $9,795,510 of net
proceeds were provided from exercises of options and warrants, partially offset
by $27,510 of cash used to pay deferred offering costs and $72,685 of cash was
used to partially repay our loan from JPMorgan Chase Bank, N.A., as lender,
pursuant to the Paycheck Protection Program of the Coronavirus Aid, Relief and
Economic Security Act, as amended. During the nine months ended September 30,
2020, $11,503,488 of proceeds were from the sale of common stock and warrants in
our IPO, $1,241,190 of proceeds were received from debt financings, partially
offset by $841,376 used for payment of initial public offering costs and
$245,000 that was used to repay debt.

Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any
relationships with any organizations or financial partnerships, such as
structured finance or special purpose entities, that would have been established
for the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes.

                                       27

  Table of Contents


Critical Accounting Policies and Significant Accounting Estimates

Our management's discussion and analysis of our financial condition and results
of operations are based on our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America, or U.S. GAAP. The preparation of these consolidated
financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities as of the date of the consolidated financial statements
as well as the reported expenses during the reporting periods. The accounting
estimates that require our most significant, difficult and subjective judgments
have an impact on revenue recognition, the determination of share-based
compensation and financial instruments. We evaluate our estimates and judgments
on an ongoing basis. Actual results may differ materially from these estimates
under different assumptions or conditions.

The following is not intended to be a comprehensive list of all of our
accounting policies or estimates. Our significant accounting policies are more
fully described in Note 2 to our condensed consolidated financial statements
included elsewhere in this quarterly report.

Revenue Recognition

The Company maintains a contract with each customer and supplier, which specify
the terms of the relationship and potential access to the Company's platform.
The Company provides a service to its customers (the buy-side ad networks who
work for advertisers) by connecting advertisers and publishers. For this
service, the Company earns a percentage of the amount that is paid by the
advertiser, who wants to run a digital advertising campaign, which, in some
cases, is reduced by the amount paid to the publisher, who wants to sell its ad
space to the advertiser.

The transaction price is determined based on the consideration to which it
expects to be entitled, including the impact of any implicit price concessions
over the course of the contract. The Company's performance obligation is to
facilitate the publication of advertisements. The performance obligation is
satisfied at the point in time that the ad is placed. Subsequent to a bid being
won, the associated fees are generally not subject to refund or adjustment.
Historically, any refunds and adjustments have not been material. The revenue
recognized is the amount the Company is responsible to collect from the customer
related to the placement of an ad (the "Gross Billing"), less the amount the
Company remits to the supplier for the ad space (the "Supplier Cost"), if any.
The determination of whether the Company is the principal or agent, and hence
whether to report revenue on a gross basis equal to the Gross Billing or on a
net basis for the difference between the Gross Billing and Supplier Cost,
requires judgment. The Company acts as an agent in arranging via its platform
for the specified good (the ad space) to be purchased by the advertiser, as it
does not control the goods or services being transferred to the end customer, it
does not take responsibility for the quality or acceptability of the ad space,
it does not bear inventory risk, nor does it have discretion in establishing
price of the ad space. As a result, the Company recognizes revenue on a net
basis for the difference between the Gross Billing and the Supplier Cost.

The Company invoices customers on a monthly basis for the amount of Gross
Billing in the relevant period. Invoice payment terms, negotiated on a
customer-by- customer basis, are typically between 45 to 90 days. However, for
certain agency customers with sequential liability terms as specified by the
Interactive Advertising Bureau, (i) payments are not due to the Company until
such agency customers has received payment from its customers, (ii) the Company
is not required to make a payment to its supplier until payment is received from
the Company's customer and (iii) the supplier is responsible to pursue
collection directly with the advertiser. As a result, once the Company has met
the requirements of each of the five steps under ASC 606, the Company's accounts
receivable are recorded at the amount of Gross Billing which represent amounts
it is responsible to collect and accounts payable, if applicable, are recorded
at the amount payable to suppliers. In the event step 1 under ASC 606 is not
met, the Company does not record either the accounts receivable or accounts
payable. Accordingly, both accounts receivable and accounts payable appear large
in relation to revenue reported on a net basis.

Accounts Receivable and Accounts Payable

Accounts receivable are carried at their contractual amounts, less an estimate
for uncollectible amounts. Management estimates the allowance for bad debts
based on existing economic conditions, the financial conditions of the
customers, and the amount and age of past due accounts.

                                       28

  Table of Contents


Receivables are considered past due if full payment is not received by the
contractual due date. Past due accounts are generally written off against the
corresponding accounts payable in the event that the Company's contract contains
sequential liability terms, with the excess receivable being written off against
the allowance for bad debts only after all collection attempts have been
exhausted.

Accounts receivable are recorded at the amount the Company is responsible to
collect from the customer. In the event that the Company does not collect the
Gross Billing amount from the customer, the Company generally is not
contractually obligated to pay the associated Supplier Cost.

Intangible Assets

Intangible assets are comprised of costs to acquire a customer list as well as
costs to acquire and develop computer software, including (i) the costs to
acquire third-party data which is used to improve the Company's artificial
intelligence platform for client use as well as (ii) the costs to acquire
third-party software as well as the related source code. The intangible assets
have estimated useful lives of two years for the computer software, five years
for the capitalized data and seven years for the customer list. Once placed into
service, the Company amortizes the cost of the intangible assets over their
estimated useful lives on a straight-line basis.

Impairment of Long-lived Assets

The Company reviews for the impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an asset might not
be recoverable. An impairment would be recognized when estimated future cash
flows expected to result from the use of the asset and its eventual disposition
are less than its carrying amount.

Stock-Based Compensation

The Company measures the cost of services received in exchange for an award of
equity instruments based on the fair value of the award. The fair value of the
award is measured on the grant date. The fair value amount is then recognized
over the period during which services are required to be provided in exchange
for the award, usually the vesting period. Upon the exercise of an award, the
Company issues new shares of common stock out of its authorized shares. The
Company accrues for any equity awards at fair value that have been contractually
earned but not yet issued.

© Edgar Online, source Glimpses

https://www.marketscreener.com/quote/stock/KUBIENT-INC-110711929/news/KUBIENT-INC-Management-s-Discussion-and-Analysis-of-Financial-Condition-and-Results-of-Operations-37005548/

Next Post

Greening Corporation Announces Their Latest Digital Marketing Solutions That Focus on Law Firms

Mon Nov 15 , 2021
Farmington Hills, Michigan–(Newsfile Corp. – November 14, 2021) – Greening Corporation with its new ideas and technical innovations have come up with their latest Digital Marketing Solutions that are law firm-centric. They call it digital legal marketing. Donovan J. Greening, the Founder and CEOTo view an enhanced version of this […]