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

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We rate news articles and sources for reliability and bias. We currently do this with a small team of human analysts who have political views from across the spectrum. They are trained to look at the content of the news and score it according to our methodology. We provide the news source ratings themselves as a reference product for consumers and educators---mainly a Media Bias Chart. We also offer a software platform for educators to teach students how to rate the news themselves.

We want to be the industry leader in this emerging field of news content ratings, and be doing it in an automated fashion. There are content ratings for movies, TV, and video games, and it will soon be obvious that we need content ratings for bias and reliability of news. As the industry leader, consumers and business will rely on our news ratings; ad tech companies will use it for brand safety, publishers will use it to market themselves, and social media platforms will use it to screen content

Milestones

Ad Fontes Media, Inc. was incorporated in the State of Colorado in February 2018.

Since then, we have:

 -Organically grown into one of the most recognized and trusted news rating organizations due to the popularity of our Media Bias Chart

-Sold to over 1800 customers in three different product categories, achieved over 1M website visits in the first half of 2020, and grew revenues over 370% YoY in 2020

Historical Results of Operations

Our company was organized in February 2018 and has limited operations upon which prospective investors may base an evaluation of its performance.

• Revenues & Gross Margin. For the period ended December 31, 2019, the Company had revenues of $19,984.30 compared to the year ended December 31, 2018, when the Company had revenues of $42,759.36. Our gross margin was 85.39% in fiscal year 2019.
• Assets. As of December 31, 2019, the Company had total assets of $8,207.43, including $529.26 in cash. As of December 31, 2018, the Company had $26,065.85 in total assets, including $19,241.75 in cash.
• Net Loss. The Company has had net losses of $40,162.04 and net income of $$19,885.83 for the fiscal years ended December 31, 2019 and December 31, 2018, respectively.
• Liabilities. The Company's liabilities totaled $13,373.64 for the fiscal year ended December 31, 2019 and $$5,000 for the fiscal year ended December 31, 2018.

Liquidity & Capital Resources

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 9 months before we need to raise further capital.

We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.

We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 18 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.

Runway & Short/Mid Term Expenses

Ad Fontes Media, Inc. cash in hand is $1,500, as of June 2020. Over the last three months covered by our financials (ending May 31, 2020), revenues have averaged $3,325/month, cost of goods sold has averaged $200/month, and operational expenses have averaged $3,944/month, for an average burn rate of $819 per month. Our intent is to be profitable in 1 month.

In June of 2020, the company took out a working capital loan of $6,000 from their merchant provider. This loan has a flat fee of $958 remitting back to the merchant provider. Repayment is done daily via 30% of credit card sales collected. The current balance on the loan is $4404.60

Our monthly income in June and July increased in comparison to January-May 2020, with revenue in June of over $7100 and in July of over $5500. 

Our accounts receivable for August-October 2020 are projected to be higher due to contracts currently secured that are due to be paid during those months. Those trends are what account for our expected increased revenues over the next three to six months, which are listed below.

Revenues anticipated to be between $7-10K per month just continuing at our current growth rate, not including anticipated revenue increases due to investing in our growth. Expenses will increase commensurate with our revenue increases, because as we have more revenue to hire analysts and pay for software development, we will do so. 

We have the ability to adjust expenses according to revenue received by increasing or decreasing the number of analysts hired. Other sources of capital are unnecessary due to the ability to intentionally scale expenses as revenue grows, but the company could reliably secure up to $100,000 in debt funding if necessary between small business loans, working capital loans, home equity loans, and credit cards.